FILE NO. 333-119658
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT 1

to the

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

NEWAVE, INCORPORATED

(Name of small business issuer in its charter)

Utah 5960 87-0520575
------- ---------- ----------
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
Organization No.)

404 EAST 1ST STREET, #1345, LONG BEACH, CA 90802
Telephone: (562) 983-5331
(Address and telephone number of principal executive offices)

404 EAST 1ST STREET, #1345, LONG BEACH, CA 90802
Telephone: (562) 983-5331
(Address of principal place of business or intended principal place of
business)

Michael Hill
Chief Executive Officer
404 EAST 1ST STREET, #1345
LONG BEACH, CA 90802
Telephone: (562) 983-5331

COPY TO:
Amy M. Trombly, Esq.
Trombly Business Law
1163 Walnut St., Ste. 7
Newton, MA 02461
Telephone: (617) 243-0060
Fax: (309) 406-1426

(Name, address and telephone number of agent for service)

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

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

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

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

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

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

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is declared effective. This prospectus is not
an offer to sell these securities, and we are not soliciting offers to buy these
securities, in any state where the offer or sale is not permitted.

PROSPECTUS
NEWAVE, INCORPORATED
OFFERING UP TO 3,770,801 COMMON SHARES

This prospectus relates to the resale of up to 3,770,801 shares of our common
stock, which represents 33% of our outstanding securities, by current
shareholders and Preston Capital Partners, LLC, who will become a stockholder
pursuant to a "put right" under an Investment Agreement, also referred to as an
Equity Line of Credit, that we have entered into with Preston Capital Partners.
A "put right" permits us to require Preston Capital Partners to buy shares
pursuant to the terms of the Investment Agreement. That Investment Agreement
permits us to "put" up to $4.5 million in shares of our common stock to Preston
Capital Partners. We are not selling any securities in this offering and
therefore will not receive any proceeds from this offering. We will, however,
receive proceeds from the sale of securities pursuant to our exercise of the put
right under the Investment Agreement with Preston Capital Partners, and the
possible future exercise of the warrants held by Dutchess Private Equities Fund
and eFund Capital Partners. All costs associated with this registration will be
borne by us.

The shares of common stock are being offered for sale by the selling
stockholders at prices established on the Over-the-Counter Bulletin Board or in
negotiated transactions during the term of this offering. Our common stock is
quoted on the Over-the-Counter Bulletin Board under the symbol NWAV.OB. On
November 24, 2004, the last reported sale price of our common stock was $3.80
per share.

Preston Capital Partners and Legacy Trading Co., LLC are "underwriters" within
the meaning of the Securities Act of 1933, as amended, in connection with the
resale of our common stock under the Investment Agreement. Preston Capital
Partners will pay us 98% of the lowest closing best bid price of our common
stock during the five consecutive trading day period immediately following the
date of our notice to them of our election to put shares pursuant to the Equity
Line of Credit. The shares held by Dutchess Private Equities Fund, Dutchess
Private Equities Fund II, eFund Capital Partners, eFund Small Cap Fund, Jennifer
Strohl, Dominic Bohnett, Shirley Oaks and Sharon Paugh were issued by us
pursuant to debenture agreements entered into between us and the above listed
parties. The debentures are convertible into our common stock at the lesser
of 75% of the lowest closing bid price of the common stock during the
fifteen full trading days prior to the conversion date or 100% of the
average of the five lowest closing bid prices of the common stock for the
thirty trading days immediately following the first reverse split in the stock
price. The shares held by Robert Gleckman, Pacific Shore Investments, Luminary
Ventures and Marketbyte, were issued by us pursuant to consulting agreements
with them. The shares held by Michael Hill, Jeremiah Soria, Aaron Gravitz, Todd
Hill, and Jonathon Moysich and Dutchess Advisors were Founders' Shares.

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD PURCHASE SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

You should rely only on the information provided in this prospectus or any
supplement to this prospectus and information incorporated by reference. We have
not authorized anyone else to provide you with different information. Neither
the delivery of this prospectus nor any distribution of the shares of common
stock pursuant to this prospectus shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of this
prospectus.

Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. It is a criminal offense to make any
representation to the contrary.

Subject to Completion, the date of this prospectus is December 9, 2004.

TABLE OF CONTENTS

PROSPECTUS SUMMARY 3
RISK FACTORS 6
USE OF PROCEEDS 11
DILUTION 12
SELLING SECURITY HOLDERS 12
PLAN OF DISTRIBUTION 14
LEGAL PROCEEDINGS 15
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16
DESCRIPTION OF SECURITIES 18
INTEREST OF NAMED EXPERTS AND COUNSEL 18
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES 18
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS 18
DESCRIPTION OF BUSINESS 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 23
DESCRIPTION OF PROPERTY 27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 27
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 31
EXECUTIVE COMPENSATION 32
FINANCIAL STATEMENTS F-1 - F-18

PROSPECTUS SUMMARY

The following information is a summary of the prospectus. You should read the
entire prospectus carefully, including the financial statements and the notes
relating to the financial statements.

Our unaudited financial statements for the fiscal quarter ended September 30,
2004, reflect a net loss of ($515,029). We predict that we will need $3.5
million over the next twelve months to effectuate our business plan. We
currently plan to meet our capital requirements primarily through the issuance
of equity securities or new borrowing arrangements. However, financing may not
be available in amounts or on terms acceptable to us, if at all. If we cannot
raise funds on acceptable terms, or achieve positive cash flow, we may be forced
to curtail operations or may ultimately cease to exist.

We incorporated in the State of Utah on March 11, 1994 as Utah Clay
Technologies, Inc. On December 23, 2004, we changed our name to NeWave, Inc. We
acquired our operating subsidiary, Onlinesupplier.com, on January 15, 2004.

Our integrated suite of electronic commerce products enables individuals and
businesses to conduct electronic commerce over the Internet at affordable price
levels. Our products integrate transaction processing, accounting and financial
systems, customer relationship management, advertising, merchant processing and
a wide array of wholesale products. Our suite of products is accessed by our
customers through our online club membership. Through our membership program, we
charge our members a monthly fee for unlimited access to our products and
services.

Our website offers wholesale merchandise in categories such as:

- - Consumer Electronics
- - Home, Garden and Outdoor Living Products
- - Kitchenware and Housewares
- - Sports and Outdoor Equipment
- - Automobile Accessories
- - Tools and Hardware
- - Jewelry
- - Travel Accessories

Furthermore, our online membership program provides the following services and
capabilities:

- - Automated Webstore Generation and Customization
- - Web Hosting
- - Merchant Processing Capabilities
- - Domain Name Registration
- - Online Training Modules

We are a publicly traded company, which trades on the Over-the-Counter Bulletin
Board of the National Quotation Service under the ticker symbol "NWAV.OB"

HOW TO CONTACT US

The address of our principal executive office is 404 East 1st Street, #1345,
Long Beach, California 90802. Our telephone number is (562) 983-5331. Our
website addresses are www.newave-inc.com and onlinesupplier.com. Information
contained on our websites do not constitute part of this report and should not
be used to hyperlink to our website.

SALES BY OUR SELLING STOCKHOLDERS

This prospectus relates to the resale of up to 3,770,801 shares of our common
stock by Dutchess Private Equities Fund, Dutchess Private Equities Fund II,
Dutchess Advisors, eFund Capital Partners, eFund Small Cap Fund, Preston Capital
Partners, Michael Hill, Marketbyte, Luminary Ventures, Robert Gleckman, Pacific
Shore Investments, Jennifer Strohl, Sharon Paugh, Aaron Gravitz, Dominic
Bohnett, Jeremiah Soria, Todd Hill, Shirley Oaks and Jonathon Moysich. Preston
Capital Partners will become a stockholder pursuant to a "put right" under an
Investment Agreement. The table below sets forth the shares that we are
registering pursuant to the Registration Statement to which this prospectus is a
part:

Stockholder Number of
Shares(1)
- --------------------------------------------- ------------------
Dutchess Private Equities Fund, LP 595,300 shares
Dutchess Private Equities Fund II, LP 716,471 shares
Dutchess Advisors, LLC 200,000 shares
Preston Capital Partners, LLC 1,014,000 shares
eFund Capital Partners, LLC 489,706 shares
eFund Small Cap Fund, LP 158,824 shares
Michael Hill 125,000 shares
Marketbyte, LLC 125,000 shares
Luminary Ventures 50,000 shares
Robert Gleckman 25,000 shares
Pacific Shore Investments, LLC 25,000 shares
Jennifer Strohl 28,000 shares
Sharon Paugh 10,000 shares
Aaron Gravitz 25,000 shares
Dominic Bohnett 113,500 shares
Jeremiah Soria 5,000 shares
Todd Hill 10,000 shares
Jonathon Moysich 5,000 shares
Shirley Oaks 50,000 shares
Total common stock being registered 3,770,801 shares

THE OFFERING

Common stock offered 3,770,801 shares

Use of proceeds We will not receive any proceeds from the
sale by the selling stockholders of our
common stock. We will receive proceeds from
our Investment Agreement with Preston Capital
Partners and the possible exercise of
warrants by Dutchess Private Equities Fund II
and eFund Capital Partners. The proceeds from
our exercise of the put right pursuant to the
Investment Agreement will be used for general
corporate and working capital purposes or
other appropriate uses as approved by our
Board of Directors. See "Use of Proceeds."

Symbol for our common stock Our common stock trades on the
OTCBB Market under the symbol
"NWAV.OB"

INVESTMENT AGREEMENT

The Investment Agreement we have with Preston Capital Partners allows us to
"put" to Preston Capital Partners up to $4,500,000. The purchase price for our
common stock identified in the put notice shall be equal to 98% of the lowest
closing best bid price of our common stock during the five days after we deliver
the put notice to Preston Capital Partners. We can initiate a new put after we
close on the prior put.

Preston Capital Partners will only purchase shares when we meet the following
conditions:

- - a registration statement has been declared effective and remains effective
for the resale of the common stock subject to the Equity Line;
- - our common stock has not been suspended from trading for a period of five
consecutive trading days and we have not been notified of any pending or
threatened proceeding or other action to delist or suspend our common
stock;
- - we have complied with our obligations under the Investment Agreement and
the Registration Rights Agreement;
- - no injunction has been issued and remain in force, or action commenced by a
governmental authority which has not been stayed or abandoned, prohibiting
the purchase or the issuance of our common stock;
- - the issuance of the common stock will not violate the shareholder approval
requirements of the Over The Counter Bulletin Board

The Investment Agreement will terminate when any of the following events occur:
- - Preston Capital Partners has purchased an aggregate of $4,500,000 of our
common stock;
- - 36 months after the SEC declares this registration statement effective.

OUR CAPITAL STRUCTURE AND SHARES ELIGIBLE FOR FUTURE SALE

Shares of common stock outstanding as of September 30, 2004 11,295,039

Shares of common stock potentially issuable upon
exercise of the put right to Preston Capital Partners 1,000,000

Shares of common stock potentially issuable upon
conversion of debentures to Preston Capital Partners 14,000

Shares of common stock potentially issuable to
Dutchess Private Equities Fund 495,300

Shares of common stock potentially issuable to
Dutchess Private Equities Fund II 706,471

Shares of common stock potentially issuable to
eFund Capital Partners 479,706

Shares of common stock potentially issuable to
eFund Small Cap Fund 158,824

Shares of common stock potentially issuable to
Jennifer Strohl 28,000

Shares of common stock potentially issuable to
Sharon Paugh 10,000

Shares of common stock potentially issuable to
Dominic Bohnett 113,500

Shares of common stock potentially issuable to
Shirley Oaks 50,000
------------

Total 14,350,840

For the purpose of determining the number of shares subject to registration with
the Securities and Exchange Commission, we have assumed that we will issue not
more than 1,000,000 shares pursuant to the exercise of our put right under the
Investment Agreement, although the number of shares that we will actually issue
pursuant to that put right may be more than or less than 1,000,000, depending on
the trading price of our common stock. We currently have no intent to exercise
the put right in a manner that would result in our issuance of more than
1,000,000 shares, but if we were to exercise the put right in that manner, we
would be required to file a subsequent registration statement with the
Securities and Exchange Commission and for that registration statement to be
deemed effective prior to the issuance of any such additional shares.

You should be aware that there is an inverse relationship between our stock
price and the number of shares we may be required to issue pursuant to the
convertible debentures we issued to Dutchess Private Equities Fund. If our
stock price declines, we will be required to issue a greater number of shares if
Dutchess Private Equities Fund converts the debentures into common stock.

You should be aware that there is an inverse relationship between our stock
price and the number of shares to be issued pursuant to our Investment Agreement
with Preston Capital Partners. If our stock price declines, we will be required
to issue a greater number of shares under the Investment Agreement for a given
advance. This inverse relationship is demonstrated by the table below, which
shows the number of shares to be issued under the Investment Agreement at a
price of $3.88 per share per share and 25%, 50% and 75% discounts to that price.

Offering price: $3.88 75% 50% 25% -
Discount 2% 2% 2% 2%
PURCHASE PRICE:(1) $0.95 $1.90 $2.85 $3.80
NO. OF SHARES:(2) 4,733,852 2,366,926 1,577,951 1,183,463
TOTAL OUTSTANDING:(3) 16,028,891 13,661,965 12,872,990 12,478,502
PERCENT OUTSTANDING:(4) 29.5% 17.3% 12.3% 9.5%
<FN>
(1) Represents a recent market price.

(2) Represents the number of shares of common stock to be issued at the prices
set forth in the table to generate $4.5 million in gross proceeds.

(3) Represents the total number of shares of common stock outstanding after the
issuance of the shares, assuming no issuance of any other shares of common
stock.

(4) Represents the shares of common stock to be issued as a percentage of the
total number shares of common stock outstanding (assuming no exercise or
conversion of any options, warrants or other convertible securities).

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors, other information included in
this prospectus and information in our periodic reports filed with the SEC. If
any of the following risks actually occur, our business, financial condition or
results of operations could be materially and adversely affected, and you may
lose some or all of your investment.

RISKS ABOUT OUR BUSINESS

WE HAVE AN ACCUMULATED DEFICIT AND MAY INCUR ADDITIONAL LOSSES, THEREFORE WE MAY
NOT BE ABLE TO MEET OUR DEBT SERVICE OBLIGATIONS.

As of September 30, 2004, we had liabilities of $1,751,604. We make annual or
semi-annual interest payments on the debt under our convertible notes, which are
due in 2008 and 2009. Our debt could limit our ability to obtain additional
financing for working capital, capital expenditures, debt service requirements,
or other purposes in the future, as needed, to plan for, or react to, changes in
technology and in our business and competition, and to react in the event of an
economic downturn.

We may not be able to meet our debt service obligations. If we are unable to
generate sufficient cash flow or obtain funds for required payments, or if we
fail to comply with covenants in our debt, we will be in default.

WE FACE INTENSE COMPETITION, WHICH MAY REDUCE OUR SALES, OPERATING PROFITS, OR
BOTH.

The market segments in which we compete are rapidly evolving and intensely
competitive. We have many competitors in different industries, including both
the retail and eCommerce services industries.

Many of our current and potential competitors such as SMC and Bargain.com have
longer operating histories, larger customer bases, greater brand recognition,
and significantly greater financial, marketing, and other resources than we
have. They may be able to secure merchandise from vendors on more favorable
terms and may be able to adopt more aggressive pricing policies. Competitors in
both the retail and eCommerce service industries also may be able to devote more
resources to technology development and marketing than we do.

Competition in the eCommerce channel may intensify. Other companies in the
retail and eCommerce service industries may enter into business combinations or
alliances that strengthen their competitive positions. As various Internet
market segments obtain large, loyal customer bases, participants in those
segments may expand into the market segments in which we operate. In addition,
new and expanded Web technologies may further intensify the competitive nature
of online retail. The nature of the Internet as an electronic marketplace
facilitates competitive entry and comparison shopping and renders it inherently
more competitive than conventional retailing formats. This increased competition
may reduce our sales, operating profits, or both.

WE DEPEND ON OUR RELATIONSHIPS WITH THIRD PARTIES, THE LOSS OF WHICH MAY RESULT
IN LOSS OF CUSTOMERS.

We depend on our merchant and banking relationships, as well as strategic
relationships with third parties, who provide payment processing to all our
customers. Failure of these financial institutions and third parties to
continue to provide services in a satisfactory way to our customers could result
in our loss of the business of the merchants to whom we sell products and
services. If these financial institutions and third parties do not continue to
provide services to our customers, we may not be able to find other third party
service providers. In that instance, our customers may terminate their
agreements with us and move their business to our competitors, which could
adversely affect on our revenues and earnings.

IF WE CANNOT PASS ALONG INCREASED FEES FROM VISA AND MASTERCARD TO OUR
CUSTOMERS, WE WILL HAVE TO ABSORB THE INCREASES WHICH WOULD INCREASE OUR
OPERATING COSTS AND REDUCE OUR PROFIT MARGIN.

From time to time VISA and MasterCard increase the fees that they charge
processors. We may attempt to pass these increases along to our merchant
customers, but this might result in the loss of those customers to our
competitors who do not pass along the increases. Our revenues from merchant
account processing are dependant upon our continued merchant relationships which
are highly sensitive and can be canceled if customer charge-backs escalate and
generate concern that the company has held back sufficient funds in reserve
accounts to cover these charge-backs. Cancellation by our merchant providers
would most likely result in the loss of new customers and lead to a reduction in
our revenues.

WE DEPEND ON CERTAIN CUSTOMERS AND IF WE LOSE ONE OF OUR SIGNIFICANT CUSTOMERS,
OUR REVENUES MAY SUBSTANTIALLY DECREASE AND OUR BUSINESS MAY FAIL.

We sell a substantial portion of our product to one customer, Memberworks, Inc.,
which makes up approximately 12% of our revenue. During the period ended
December 31, 2003, sales to that customer totaled $138,820. At December 31,
2003, amounts due from that customer included in trade accounts receivable were
$93,714. If this customer stops generating orders for us altogether, and we are
unable to obtain comparable orders from other customers, our revenues would
decrease.

WE RELY ON CO-MARKETING ALLIANCES TO GENERATE ADDITIONAL REVENUE FROM OUR
EXISTING CUSTOMERS.

We have co-marketing arrangements with strategic partners in which we agree to
market their services to our existing customers. These "upsell" services account
for approximately 47% of our total current revenue. If these partners either
fail provide to adequate services to our customers or decline to renew our
agreements, our gross revenue could decline which would effect our overall
financial stability.

WE MAY EXPERIENCE BREAKDOWNS IN OUR HOSTING SERVICES, INFRASTRUCTURE OR PAYMENT
PROCESSING SYSTEMS, WHICH MAY EXPOSE US TO LIABILITIES AND CAUSE CUSTOMERS TO
ABANDON OUR PRODUCTS AND SERVICES.

We would be unable to deliver our payment processing services or hosting
services if our system infrastructures break down or are otherwise interrupted.
Events that could cause system interruptions are:
- -Acts of God such as fire or earthquakes,
- -power loss,
- -terrorist attacks,
- -telecommunications failure,
- -unauthorized entry by hackers, or
- -other events.

Although we regularly back up data from operations and take other measures to
protect against loss of data, there is still some risk that our services may
breakdown or we will lose data. Despite the security measures we maintain, our
infrastructure may be vulnerable to computer viruses, hackers, rouge employees
or other sources of disruption. Any problem of this nature could result in
significant liability to customers or financial institutions and also may deter
potential customers from using our services. We attempt to limit this sort of
liability through back-up systems, contractual provisions, insurance, and other
security measures. However, these contractual limitations on liability may not
be enforceable, and our insurance coverage may not be adequate to cover all
liabilities we might sustain. Also, a breach of our e-commerce security measures
could reduce demand for our services. The e-commerce industry is intensely
focused on the need for Internet security, particularly with respect to the
transmission and storage of confidential personal and financial data. Any
compromise or elimination of our security could erode customer confidence in our
systems and could result in lower demand for our services or possible
litigation.

IF WE ARE UNSUCCESSFUL IN MAKING, INTEGRATING, AND MAINTAINING COMMERCIAL
AGREEMENTS, STRATEGIC ALLIANCES, AND OTHER BUSINESS RELATIONSHIPS, THEN OUR
BUSINESS COULD SUFFER.

Our business plan contemplates that we will enter into commercial agreements,
strategic alliances, and other business relationships with third parties. We
have entered into agreements to provide eCommerce services to other businesses
and we plan to enter into similar agreements in the future. Under these
agreements, we may perform services such as: providing our technology services
such as search, browse, and personalization; permitting other businesses and
individuals to offer products or services through our websites; and powering
third-party websites, either with or without providing accompanying fulfillment
services. These arrangements are complex and require substantial personnel and
resource commitments by us, which may constrain the number of agreements we are
able to enter into and may affect our ability to integrate and deliver services
under the relevant agreements. If we fail to implement, maintain, and
successfully develop the various components of these commercial relationships,
which may include fulfillment, customer service, inventory management, tax
collection, payment processing, licensing of third party software, hardware, and
content, and engaging third parties to perform hosting and other services, these
initiatives may not be viable. The amount of compensation we receive under
certain of these agreements is dependent on the volume of sales that the other
company makes. Therefore, if the other business's website or product or services
offering is not successful, we may not receive all of the compensation we are
otherwise due under the agreement or may not be able to maintain the agreement.
Moreover, we may not be able to succeed in our plans to enter into additional
commercial relationships and strategic alliances on favorable terms.

As our commercial agreements expire or otherwise terminate, we may be unable to
renew or replace these agreements on comparable terms, or at all. In the past,
we amended several of our commercial agreements to reduce future cash proceeds
to be received by us, shorten the term of our commercial agreements, or both.
Some of our agreements involve high margin services, such as marketing and
promotional agreements, and as these agreements expire they may be replaced, if
at all, by agreements involving lower margin services. In addition, several past
commercial agreements were with companies that experienced business failures and
were unable to meet their obligations to us. We may in the future enter into
further amendments of these agreements or encounter other parties that have
difficulty meeting their contractual obligations to us, which could adversely
affect our operating results.

IF WE LOSE KEY SENIOR MANAGEMENT PERSONNEL OUR BUSINESS COULD BE NEGATIVELY
AFFECTED.

We depend on the continued services and performance of our senior management and
other key personnel, particularly Michael Hill, our Chief Executive Officer and
Director. Mr. Hill has been the primary employee involved in the integration of
our subsidiaries Online Supplier and Auction Liquidator. We do not have "key
person" life insurance policies. The loss of any of our executive officers or
other key employees could harm our business.

IF OUR WEBSITES ARE NOT CONTINUALLY AVAILABLE TO OUR CUSTOMERS AND THE PUBLIC OR
THERE IS LACK OF INTEGRATION AND REDUNDANCY IN OUR SYSTEMS, OUR SALES MAY
DECREASE.

Customer access to our websites directly affects the volume of goods we sell and
the services we offer and thus affects our net sales. We experience occasional
system interruptions that make our websites unavailable or prevent us from
efficiently fulfilling orders or providing services to third parties, which may
reduce our net sales and the attractiveness of our products and services. If we
are unable to continually add additional software and hardware and upgrade in an
effective manner our systems and network infrastructure, it could cause system
interruptions that adversely affect our operating results.

Our websites could be damaged or interrupted by fire, flood, power loss,
telecommunications failure, acts of war or terrorism, acts of God, computer
viruses, physical or electronic break-ins, and similar events or disruptions.
Any of these events could result in website interruption and delays that could
prevent us from accepting and fulfilling customer orders.

Should this occur, it would make our product offerings less attractive to our
customers and our service offerings less attractive to third parties. While we
do have backup systems for certain aspects of our operations, our systems are
not fully redundant and our disaster recovery planning may not be sufficient for
all eventualities. In addition, we may have inadequate insurance coverage or
insurance limits to compensate us for losses from a major interruption. If any
of this were to occur, it could damage our reputation and be expensive to
remedy.

WE COULD BE LIABLE IF WE FAIL TO MITIGATE BREACHES OF SECURITY ON OUR WEBSITE
AND FRAUDULENT ACTIVITIES OF USERS OF OUR PAYMENTS PROGRAM, WHICH COULD INCREASE
OUR EXPENSES AND LOWER OUR OPERATING RESULTS.

A fundamental requirement for eCommerce is the secure transmission of
confidential information over public networks. Although we have developed
systems and processes that are designed to protect consumer information and
prevent fraudulent credit card transactions and other security breaches, failure
to mitigate fraud or breaches may adversely affect our operating results. The
law relating to the liability of providers of online payment services is
currently unsettled. We guarantee payments made through our payments program
available to sellers on Marketplace and certain other programs up to certain
limits for buyers, and we may be unable to prevent users from fraudulently
collecting payments when goods may not be shipped to a buyer. As our payments
program grows, our liability risk will increase. Any costs we incur as a result
of liability because of our payments program's guarantee or otherwise could harm
our business. In addition, the functionality of our payments program depends on
certain third-party vendors delivering services. If these vendors are unable or
unwilling to provide services, our payments program and our businesses that use
it may not be viable.

RISKS TO OUR INDUSTRY

IF GOVERNMENT REGULATION OF THE INTERNET AND ECOMMERCE RESULTS IN UNFAVORABLE
CHANGES, OUR BUSINESS COULD BE HARMED.

We are subject to general business regulations and laws, as well as regulations
and laws specifically governing the Internet and eCommerce. Existing and future
laws and regulations may impede the growth of the Internet or other online
services. These regulations and laws may cover taxation, user privacy, data
protection, pricing, content, copyrights, distribution, electronic contracts and
other communications, consumer protection, the provision of online payment
services, broadband residential Internet access, and the characteristics and
quality of products and services. It is not clear how existing laws governing
issues such as property ownership, sales and other taxes, libel, and personal
privacy apply to the Internet and eCommerce. Unfavorable resolution of these
issues may harm our business. On November 11, 2004 the Federal Communications
Commission ruled that providers of Internet-based phone call services fall under
jurisdiction of the federal government and cannot be regulated by states. We
executed an agreement with an Internet-based phone call services provider
VoiceGlo to resell their Internet-based telephony service to our customers. It
is currently unclear how the Federal Communications Commission ruling will
affect our business.

WE MAY BE SUBJECT TO LIABILITY FOR PAST SALES, THEREFORE DECREASING OUR FUTURE
SALES

In accordance with current industry practice, we do not collect sales taxes or
other taxes with respect to shipments of most of our goods into states other
than California. Our fulfillment center and customer service center networks,
and any future expansion of those networks, along with other aspects of our
evolving business, may result in additional sales and other tax obligations. One
or more states or foreign countries may seek to impose sales or other tax
collection obligations on out-of-jurisdiction companies that engage in
eCommerce. A successful assertion by one or more states or foreign countries
that we should collect sales or other taxes on the sale of merchandise or
services could result in substantial tax liabilities for past sales, decrease
our ability to compete with traditional retailers, and otherwise harm our
business.

Currently, decisions of the U.S. Supreme Court restrict the imposition of
obligations to collect state and local sales and use taxes with respect to sales
made over the Internet. However, a number of states, as well as the U.S.
Congress, have been considering various initiatives that could limit or
supersede the Supreme Court's position regarding sales and use taxes on Internet
sales. If any of these initiatives addressed the Supreme Court's constitutional
concerns and resulted in a reversal of its current position, we could be
required to collect sales and use taxes in states other than California. The
imposition by state and local governments of various taxes upon Internet
commerce could create administrative burdens for us and could increase our costs
and decrease our future sales.

IF WE DO NOT ADAPT QUICKLY ENOUGH TO CHANGING CUSTOMER REQUIREMENTS AND INDUSTRY
STANDARDS, OUR EXISTING WEBSITES AND PROPRIETARY TECHNOLOGY MAY BECOME OBSOLETE.

Technology in the eCommerce industry changes rapidly. We may not be able to
adapt quickly enough to changing customer requirements and preferences and
industry standards. Competitors often introduce new products and services with
new technologies. These changes and the emergence of new industry standards and
practices could render our existing websites and proprietary technology
obsolete.

RISKS ABOUT OUR STOCK AND THIS OFFERING

IF WE SELL SECURITIES PURSUANT TO OUR INVESTMENT AGREEMENT WITH PRESTON CAPITAL
PARTNERS, THEN EXISTING STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION.

The sale of shares pursuant to our Investment Agreement with Preston Capital
Partners may have a dilutive impact on our stockholders. As a result, our net
income per share could decrease in future periods, and the market price of our
common stock could decline. In addition, the lower our stock price at the time
we exercise our put option, the more shares we will have to issue to Preston
Capital Partners to draw down on the full equity line with Preston Capital
Partners. For example, at 25%, 50%, and 75% discounts to our current stock
price, we would be required to issue Preston Capital Partners 1,577,951,
2,366,926, and 4,733,852 shares respectively. If our stock price decreases, then
our existing stockholders would experience greater dilution.

PRESTON CAPITAL PARTNERS WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE OF
OUR COMMON STOCK, WHICH COULD CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.

Our common stock to be issued under our agreement with Preston Capital Partners
will be purchased at a 2% discount to the lowest closing best bid price for the
five days immediately following our notice to Preston Capital Partners of our
election to exercise our put right. Preston Capital Partners has a financial
incentive to sell our common stock immediately upon receiving the shares to
realize the profit between the discounted price and the market price. If Preston
Capital Partners sells our shares, the price of our stock could decrease. If our
stock price decreases, Preston Capital Partners may have a further incentive to
sell the shares of our common stock that it holds. The discounted sales under
our agreement with Preston Capital Partners could cause the price of our common
stock to decline.

WE MUST COMPLY WITH PENNY STOCK REGULATIONS, WHICH COULD EFFECT THE LIQUIDITY
AND PRICE OF OUR STOCK.

The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stocks." Penny stocks are generally equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ, provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. Prior to a transaction in a penny stock, a
broker-dealer is required to:

- - Deliver a standardized risk disclosure document prepared by the SEC;

- - Provides the customer with current bid and offers quotations for the penny
stock;

- - Explain the compensation of the broker-dealer and its salesperson in the
transaction;

- - Provide monthly account statements showing the market value of each penny
stock held in the customer's account;

- - Make a special written determination that the penny stock is a suitable
investment for the purchaser and receives the purchaser's executed
acknowledgement of the same; and

- - Provide a written agreement to the transaction.

These requirements may have the effect of reducing the level of trading activity
in the secondary market for our stock. Because our shares are subject to the
penny stock rules, you may find it more difficult to sell your shares.

OUR SECURITIES HAVE BEEN THINLY TRADED ON THE OVER-THE-COUNTER BULLETIN BOARD,
WHICH MAY NOT PROVIDE LIQUIDITY FOR OUR INVESTORS.

Our securities are quoted on the Over-the-Counter Bulletin Board. The
Over-the-Counter Bulletin Board is an inter-dealer, over-the-counter market that
provides significantly less liquidity than the NASDAQ Stock Market or national
or regional exchanges. Securities traded on the Over-the-Counter Bulletin Board
are usually thinly traded, highly volatile, have fewer market makers and are not
followed by analysts. The Securities and Exchange Commission's order handling
rules, which apply to NASDAQ-listed securities, do not apply to securities
quoted on the Over-the-Counter Bulletin Board. Quotes for stocks included on the
Over-the-Counter Bulletin Board are not listed in newspapers. Therefore, prices
for securities traded solely on the Over-the-Counter Bulletin Board may be
difficult to obtain and holders of our securities may be unable to resell their
securities at or near their original acquisition price, or at any price.
Investors must contact a broker-dealer to trade over-the-counter bulletin board
securities. As a result, you may not be able to buy or sell our securities at
the times that you may wish.

Even though our securities are quoted on the Over-the-Counter Bulletin Board,
the Over-the-Counter Bulletin Board may not permit our investors to sell
securities when and in the manner that they wish. Because there are no automated
systems for negotiating trades on the Over-the-Counter Bulletin Board, they are
conducted via telephone. In times of heavy market volume, the limitations of
this process may result in a significant increase in the time it takes to
execute investor orders. Therefore, when investors place market orders to buy or
sell a specific number of shares at the current market price it is possible for
the price of a stock to go up or down significantly during the lapse of time
between placing a market order and its execution.

OUR STOCK PRICE IS HIGHLY VOLATILE AND YOU MAY LOSE SOME OR ALL OF YOUR
INVESTMENT

We have a relatively short operating history and, as an eCommerce company, we
have a rapidly evolving and unpredictable business model. Trading prices of our
common stock may fluctuate in response to a number of events and factors, such
as:

- - general economic conditions changes in interest rates

- - conditions or trends in the Internet and the eCommerce industry;

- - fluctuations in the stock market in general and market prices for Internet
related companies in particular;

- - quarterly variations in operating results;

- - new products, services, innovations, and strategic developments by our
competitors or us, or business combinations and investments by our
competitors or us;

- - changes in Internet regulation;

- - changes in our capital structure, including issuance of additional debt or
equity to the public;

- - additions or departures of key personnel;

- - corporate restructurings, including layoffs or closures of facilities; and

- - certain analyst reports, news and speculation.

Any of these events may cause our stock price to rise or fall and may adversely
affect our business and financing opportunities.

WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE; THEREFORE, YOU MAY
NEVER SEE A RETURN ON YOUR INVESTMENT.

We do not anticipate the payment of cash dividends on our common stock in the
foreseeable future. We anticipate that any profits from our operations will be
devoted to our future operations. Any decision to pay dividends will depend upon
our profitability at the time, cash available and other factors.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered and
sold from time to time by certain selling stockholders. We will not receive any
proceeds from the sale of the shares. However, we will receive proceeds from the
sale of our common shares pursuant to our Investment Agreement with Preston
Capital Partners. Additionally, we may receive proceeds from the sale of our
common shares to Dutchess Private Equities Fund II and eFund Small Cap Fund if
Dutchess Private Equities Fund II and eFund Small Cap Fund exercise warrants
that they currently hold.

For illustrative purposes, we have set forth below our intended use of proceeds
for the range of net proceeds indicated below to be received under the
Investment Agreement. The Gross Proceeds represent the total dollar amount that
Preston Capital Partners is obligated to purchase. The table assumes estimated
offering expenses of $25,000.

Proceeds Proceeds
If 100% Sold If 50% Sold
------------- ------------
Gross Proceeds $4,500,000 $2,250,000
Estimated Expenses of the Offering $ 25,000 $ 25,000
------------- ------------
Net Proceeds $4,475,000 $2,225,000
============= ===========

Priority Priority
------------- ------------

Working capital and general corporate expenses 1st $2,000,000 $1,000,000
Expansion of internal operations 2nd $1,000,000 $500,000
Potential acquisition costs (1) 3rd $1,475,000 $725,000
------------- ------------
$4,475,000 $2,225,000
============= ===========
<FN>
(1) From time to time we evaluate opportunities to make acquisitions of assets
or businesses that we believe would help us achieve our goal of profitability,
but we are not currently negotiating or planning any material acquisitions.

Proceeds of the offering which are not immediately required for the purposes
described above will be invested in United States government securities,
short-term certificates of deposit, money market funds and other high-grade,
short-term interest-bearing investments.

We cannot accurately predict when we will receive proceeds pursuant to the
warrants because we do not know when the holders will choose to exercise the
warrants. It is also possible that the warrants will expire without being
exercised.

DILUTION
--------

Our net tangible book value as of September 30, 2004 was ($1,124,894), or
($0.09959) per share of common stock. Net tangible book value is determined by
dividing our tangible book value (total tangible assets less total liabilities)
by the number of outstanding shares of our common stock. Since this offering is
being made by the selling stockholders, none of these proceeds will be paid to
us, however, the private offering proceeds will be paid to us and our net
tangible book value will be positively affected by this offering. Thus, our net
tangible book value will be impacted by the common stock to be issued to the six
accredited investors. The amount of dilution will depend on the initial shares
issued. The following example shows the dilution to new investors at an offering
price of $3.88 per share.

If we assume that we were to issue 3,276,500 shares of common stock at an
assumed offering price of $3.88 per share, less $25,000 of offering expenses,
our net tangible book value as of September 30, 2004 would have been
$11,562,926, or $.79353 per share. This represents an immediate increase in net
tangible book value to existing shareholders of $.89312 per share and an
immediate dilution to new shareholders of $3.08647 per share.

Net tangible book value per share before this offering ($1,124,894)
Net tangible book value after this offering 11,562,926
Assumed average public offering price per share $3.88
Net tangible book value per share after this offering $.79353
Dilution of net tangible book value per share to new investors $3.08647
Increase in net tangible book value
per share to existing shareholders $.89312

You should be aware that there is an inverse relationship between our stock
price and the number of shares to be issued under the Investment Agreement to
Preston Capital Partners. That is, as our stock price declines, we would be
required to issue a greater number of shares under the Investment Agreement for
a given advance. This inverse relationship is demonstrated by the table below,
which shows the number of shares to be issued under the Investment Agreement at
a price of $3.88 per share per share and 25%, 50% and 75% discounts to that
price.

(2) Represents the number of shares of common stock to be issued at the prices
set forth in the table to generate $4.5 million in gross proceeds.

(3) Represents the total number of shares of common stock outstanding after the
issuance of the shares, assuming no issuance of any other shares of common
stock.

SELLING SECURITY HOLDERS

Based upon information available to us as of September 30, 2004, the following
table sets forth the name of the selling stockholders, the number of shares
owned, the number of shares registered by this prospectus and the number and
percent of outstanding shares that the selling stockholders will own after the
sale of the registered shares, assuming all of the shares are sold. The
information provided in the table and discussions below has been obtained from
the selling stockholders. The selling stockholders may have sold, transferred or
otherwise disposed of, or may sell, transfer or otherwise dispose of, at any
time or from time to time since the date on which they provided the information
regarding the shares beneficially owned, all or a portion of the shares of
common stock beneficially owned in transactions exempt from the registration
requirements of the Securities Act of 1933.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated
by the Commission under the Securities Exchange Act of 1934. Unless otherwise
noted, each person or group identified possesses sole voting and investment
power with respect to the shares, subject to community property laws where
applicable.

In some cases, the "Shares Being Offered" column will reflect a higher number of
shares than the "Ownership Before Offering" column. This occurs when the
selling shareholder has not yet received the shares being registered on this
registration statement because the selling shareholder holds a warrant or other
right to acquire shares of common stock but has not yet exercised that right.

Ownership Before Offering Shares Being Offered Ownership After Offering(1) Percentage
Owned After
The Offering
(2)
------------------------- -------------------- ------------------------ ---------------------

Dutchess Private Equities
Fund, LP (3) 100,000 495,300 0 0%
Dutchess Private Equities
Fund II, LP (3) 10,000 706,471 0 0%
Dutchess Advisors, LLC (3) 1,400,000 200,000 1,200,000 11%
Preston Capital Partners, LLC (4) 0 1,014,000 (6) 0 0%
eFund Capital Partners, LLC (5) 2,010,000 479,706 1,530,294 14%
eFund Small Cap Fund, LP (5) 1,000,000 158,824 841,176 7.4%
Michael Hill (7) 2,555,000 125,000 2,430,000 22.6%
Marketbyte, LLC (8) 250,000 125,000 125,000 1%
Luminary Ventures (9) 250,000 50,000 200,000 2.2%
Robert Gleckman (10) 50,000 25,000 25,000 *%
Pacific Shore Investments LLC (11) 50,000 25,000 25,000 *%
Jennifer Strohl(12) 0 28,000 0 0%
Sharon Paugh (12) 0 10,000 0 0%
Aaron Gravitz (14) 1,275,000 250,000 1,250,000 11.3%
Dominic Bohnett (13) 95,500 113,500 95,500 *%
Jeremiah Soria (14) 148,750 5,000 143,750 1.3%
Todd Hill (14) 255,000 10,000 245,000 2.3%
Jonathon Moysich (14) 5,000 5,000 0 0%
Shirley Oaks (12) 0 50,000 0 0%
* Less than 1%
<FN>
(1) The numbers assume that the selling stockholders have sold all of the
shares offered hereby prior to completion of this Offering.
(2) Based on 11,295,039 shares outstanding as of September 30, 2004.
(3) Two of our directors, Michael Novielli and Douglas Leighton, are the
Managing Members of Dutchess Capital Management which is the General
Partner of Dutchess Private Equities Fund and Dutchess Private Equities
Fund, II. Our director, Theodore Smith, is the Executive Vice President of
Dutchess Advisors. Dutchess Advisors and Dutchess Private Equities Fund
acquired their shares in connection with our merger with NeWave in January
2004. Dutchess Private Equities Fund II acquired its shares pursuant to an
investment agreement. Voting control for Dutchess Advisors, Dutchess
Private Equities Fund and Dutchess Private Equities Fund II is held by
Mssrs. Leighton and Novielli.
(4) The Managing Member of Preston Capital Partners is John Wykoff. Mr. Wykoff
has had no relationship with us within the past three years. Preston will
acquire their shares pursuant to the Equity Line of Credit Agreement.
(5) One of our directors and Chief Financial Officer, Barrett Evans is the
Managing Partner of eFund Capital Partners. eFund Capital Partners and
eFund Small Cap Fund acquired their shares in connection with our merger
with NeWave in January 2004. Voting control for eFund Capital Partners and
eFund Small Cap Fund is held by Barrett Evans.
(6) Represents shares we may issue as a result of exercising our right to put
shares to Preston Capital Partners pursuant to an Equity Line of Credit.
Since we are not obligated to use the Equity Line of Credit and the amount
of shares that the Company may issue pursuant to the Equity Line is partly
based on the future market price of our common stock, we cannot predict
with accuracy the actual number of shares we may issue to Preston Capital.
(7) Mr. Hill is our Chief Executive Officer and a Director. Mr. Hill acquired
his shares in connection with our merger with NeWave in January 2004.
(8) We have a consulting agreement with Marketbyte. Marketbyte's principal is
Larry Isen and its shares were acquired pursuant to a consulting agreement.
Mr. Isen has had no prior relationship with us in the past three years.
(9) We have a consulting agreement with Luminary Ventures. Luminary's
principals are Larry Donnazetti and Bob Eubanks and its shares were
acquired pursuant to a consulting agreement. Mssrs. Donnazetti and Eubanks
have had no prior relationship with us in the past three years.
(10) We have a consulting agreement with Mr. Gleckman. Mr. Gleckman's
shares were acquired pursuant to a consulting agreement. Mr. Gleckman has
had no prior relationship with us in the past three years.
(11) We have a consulting agreement with Pacific Shore Investments. Pacific
Shore's principal is Robert Gleckman and its shares were acquired pursuant
to a consulting agreement. Mr. Gleckman has had no prior relationship with
us in the past three years.
(12) Jennifer Strohl, Sharon Paugh, Shirley Oaks purchased their shares from us.
Ms. Strohl, Ms. Paugh and Ms. Oaks are relatives of Mr. Hill.
(13) Dominic Bohnett purchased his shares from us. Mr. Bohnett has had no prior
relationship to us within the past three years.
(14) Aaron Gravitz, Jerimiah Soria, Todd Hill and Jonathon Moysich acquired
their shares in connection with our merger with NeWave in January 2004.
Todd Hill is the brother of our Chief Executive Officer Michael Hill.
Mssrs. Gravitz, Soria, Hill and Moysich are employees of ours.

PLAN OF DISTRIBUTION

The selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The selling stockholders
may sell the shares from time to time:

- - in transactions on the Over-the-Counter Bulletin Board or on any national
securities exchange or U.S. inter-dealer system of a registered national
securities association on which our common stock may be listed or quoted at the
time of sale; or

- - in private transactions and transactions otherwise than on these exchanges or
systems or in the over-the-counter market;

- - at prices related to such prevailing market prices, or

- - in negotiated transactions, or

- - in a combination of such methods of sale; or

- - any other method permitted by law.

The selling stockholders may be deemed underwriters. The selling stockholders
may effect such transactions by offering and selling the shares directly to or
through securities broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of the shares for whom such
broker-dealers may act as agent or to whom the selling stockholders may sell as
principal, or both, which compensation as to a particular broker-dealer might be
in excess of customary commissions.

Preston Capital Partners and Legacy Trading Co. and any broker-dealers who act
in connection with the sale of its shares are "underwriters" within the meaning
of the Securities Act, and any discounts, concessions or commissions received by
them and profit on any resale of the shares as principal will be deemed to be
underwriting discounts, concessions and commissions under the Securities Act.
Legacy Trading Co. and any broker-dealers who act in connection with the sale of
the shares are registered broker-dealers or associated persons of registered
broker-dealers.

On or prior to the effectiveness of the registration statement to which this
prospectus is a part, we will advise the selling stockholders that they and any
securities broker-dealers or others who may be deemed to be statutory
underwriters will be governed by the prospectus delivery requirements under the
Securities Act. Under applicable rules and regulations under the Securities
Exchange Act, any person engaged in a distribution of any of the shares may not
simultaneously engage in market activities with respect to the common stock for
the applicable period under Regulation M prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
security owners will be governed by the applicable provisions of the Securities
and Exchange Act, and the rules and regulations thereunder, including without
limitation Rules 10b-5 and Regulation M, which provisions may limit the timing
of purchases and sales of any of the shares by the selling stockholders. All of
the foregoing may affect the marketability of our securities.

On or prior to the effectiveness of the registration statement to which this
prospectus is a part, we will advise the selling stockholders that the
anti-manipulation rules under the Securities Exchange Act may apply to sales of
shares in the market and to the activities of the selling security owners and
any of their affiliates. We have informed the selling stockholders that they may
not:

- - engage in any stabilization activity in connection with any of the shares;

- - bid for or purchase any of the shares or any rights to acquire the shares;

- - attempt to induce any person to purchase any of the shares or rights to
acquire the shares other than as permitted under the Securities Exchange
Act; or

- - effect any sale or distribution of the shares until after the prospectus
shall have been appropriately amended or supplemented, if required, to
describe the terms of the sale or distribution.

We have informed the selling stockholders that they must affect all sales of
shares in broker's transactions, through broker-dealers acting as agents, in
transactions directly with market makers, or in privately negotiated
transactions where no broker or other third party, other than the purchaser, is
involved.

The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any broker-dealers, and any profits
received on the resale of shares, may be deemed to be underwriting discounts and
commissions under the Securities Act if the broker-dealers purchase shares as
principal.

In the absence of the registration statement to which this prospectus is a part,
certain of the selling stockholders would be able to sell their shares only
pursuant to the limitations of Rule 144 promulgated under the Securities Act. We
expect to incur approximately $25,000 in expenses related to this registration
statement. Our expenses consist mainly of accounting and legal fees.

We engaged Legacy Trading Co. as our placement agent with respect to the
securities to be issued under the Equity Line of Credit. To our knowledge,
Legacy Trading Co. has no affiliation or business relationship with Preston
Capital Partners. Legacy Trading Co. will be our exclusive placement agent in
connection with the Investment Agreement. Preston Capital Partners shall not be
obligated to sell any Securities and this Offering by Legacy Trading Co. shall
be solely on a "best efforts" basis. Additionally, Legacy Trading Co. shall
render consulting services to us with respect to the Investment Agreement and
shall be available for consultation in connection with the advances to be
requested by us pursuant to the Investment Agreement. We agreed to pay Legacy
Trading Co. 1% of the gross proceeds from each put with an aggregate maximum of
$10,000 over the term of our agreement. The Placement Agent agreement terminates
when our Investment Agreement with Preston Capital Partners terminates pursuant
to the terms of that Investment Agreement.

LEGAL PROCEEDINGS

On February 20, 2004, we initiated legal proceedings in Superior Court, County
of Santa Barbara, Anacapa Division against Paydirt, L.P., a Utah limited
partnership, alleging causes of action for usury, unfair business practices and
unfair competition in connection with loan agreements entered into with Paydirt
in September and November 2003. This action is entitled NeWave, Inc. et al. v.
Paydirt, Case No. 01156046 (S.B.S.C.). The parties to the lawsuit dispute
whether we currently owe Paydirt the sum of $225,829. Paydirt retained
California counsel, who removed our superior court action to the United States
District Court, Central District of California. On April 5, 2004, Paydirt filed
a motion to dismiss our action. While this motion was pending, Paydirt initiated
an action in the State of Utah, Washington County entitled Paydirt, LP v.
NeWave, Inc. et al., Civil No. 040500597 (Wash. County, Utah). On May 3, 2004,
the District Court dismissed our complaint without prejudice to our filing the
action in Utah. Subsequently, we have settled the lawsuit by agreeing to make a
payment to Paydirt of $180,000. We agreed to pay $30,000 up front and the
remaining amount in equal monthly installments of $12,500 for the next twelve
months.

We believe that there are no other claims or litigation pending, the outcome of
which could have a material adverse effect on our financial condition or
operating results.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age, positions, and offices or
employments for the past five years as of September 17, 2004, of our executive
officers and directors. Members of the board are elected and serve for one year
terms or until their successors are elected and qualify. All of the officers
serve at the pleasure of our Board of Directors.

NAME AGE POSITION

Michael Hill 28 Chief Executive Officer, Director
Michael A. Novielli 39 Chairman of the Board of Directors
Barrett Evans 32 Director, Chief
Financial Officer
Douglas H. Leighton 35 Director
Theodore J. Smith 27 Director

BIOGRAPHIES OF OFFICERS AND DIRECTORS

Set forth below is a brief description of the background of our officers and
directors based on information provided by them to us.

MICHAEL HILL has been our Chief Executive Officer and Director since January 15,
2004. Prior to this he previously had acted as President and Chief Executive
Officer of Intravantage Marketing, another Santa Barbara based marketing firm,
from 1999 until 2003, while simultaneously serving as a consultant for several
smaller organizations. From January 1998 until starting Intavantage Marketing,
he was the Vice President of International Specialties, Inc.

BARRETT EVANS has been our director since January 15, 2004 and our Chief
Financial Officer since January 7, 2003. Mr. Evans is eFund Capital Partner's
Managing Partner. In 1990, Mr. Evans started his career with Cruttenden Roth, a
regional emerging growth focused investment bank. At Cruttenden, Mr. Evans
developed significant relationships with institutional investors. Additionally,
Mr. Evans was engaged in all facets of investment banking from private debt and
equity financing to Initial Public Offerings, retail brokerage and institutional
trading, Mezzanine financing and bridge capital. Mr. Evans founded BRE
Investments & Consulting, LLC. in 1996. BRE Investments & Consulting evolved
into what is now eFund Capital Partners in 1999. At eFund Capital Partners, Mr.
Evans has utilized his institutional contacts to help fund numerous start-up
companies and has advised these companies on a wide range of issues including
raising capital, securing management and overall business strategy. Mr. Evans
received his Bachelor's degree from the University of California, Santa Barbara.
He also serves as a Director for Xtreme Companies, Inc.

MICHAEL A. NOVIELLI has served as our director since January 15, 2003. Mr.
Novielli is a Managing Partner of Dutchess Capital Management and Dutchess
Advisors. A co-founder of Dutchess in 1996, Mr. Novielli advises the senior
management of issuers in which Dutchess Private Equities Fund has invested, in
areas of business development, legal, accounting and regulatory compliance.
Prior to co-founding Dutchess, Mr. Novielli was a partner at Scharff, Witchel &
Company, a 40 year-old, full service investor relations firm, where he consulted
with publicly-traded companies on areas of finance and business development.
Prior to joining Scharff, Mr. Novielli was Vice-President of Institutional
Sales-Private Placements at Merit Capital Associates, an independent NASD
registered broker-dealer. Before joining Merit, Mr. Novielli began his
investment career at PaineWebber, where he served for approximately three years
as a registered representative servicing high net worth individuals and
institutional clientele. Mr. Novielli has held series 7, 63 and 65 licenses and
received his B.S. in Business from the University of South Florida in 1987. He
also serves as a Director for Xtreme Companies, Inc., and Network Installation
Corp.

DOUGLAS LEIGHTON has served as our director since January 15, 2004. Mr. Leighton
is a Managing Partner of Dutchess Capital Management and Dutchess Advisors. A
co-founder of Dutchess in 1996, Mr. Leighton oversees trading and portfolio risk
management of investments made on behalf of Dutchess Private Equities Fund.
Prior to co-founding Dutchess, Mr. Leighton was founder and president of
Boston-based Beacon Capital from 1990-1996, which engaged in money management.
Mr. Leighton has held series 7, 63 and 65 licenses as well as registered
investment advisor status and holds a BS/BA in Economics & Finance from the
University of Hartford. He also serves as a Director for Xtreme Companies, Inc.,
and Network Installation Corp.

THEODORE J. SMITH has served as our director since January 15, 2004. Mr. Smith
serves as Executive Vice President of Dutchess Advisors whom he joined in 1998
and is a liaison between Dutchess Capital Management on behalf of Dutchess
Private Equities Fund and senior management of companies in the Fund's
portfolio. Prior to joining Dutchess in 1998, Mr. Smith was a principal at
Geneva Atlantic Capital, LLC where he focused on assisting corporate clients
with SEC compliance matters, business plan preparation and presentation and
capital markets financing. Mr. Smith received his B.S. in Finance and Marketing
from Boston College. Mr. Smith has also served as a director of several public
as well as private companies. He also serves as a Director for Xtreme Companies,
Inc., and Network Installation Corp.

BOARD OF DIRECTORS

We currently have five members of our Board of Directors, who are elected to
annual terms and until their successors are elected and qualified. Executive
officers are appointed by the Board of Directors on an annual basis and serve
until their successors have been duly elected and qualified. There are no family
relationships among any of our directors, officers or key employees.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management. The following
table sets forth certain information concerning the beneficial ownership of our
outstanding classes of stock as of September 30, 2004, by each person known by
us to (i) own beneficially more than 5% of each class, (ii) by each of our
Directors and Executive Officers and (iii) by all Directors and Executive
Officers as a group. Unless otherwise indicated below, to our knowledge, all
persons listed below have sole voting and investment power with respect to their
shares of common stock except to the extent that authority is shared by spouses
under applicable law.

The number of shares of common stock issued and outstanding on September 30,
2004 was 11,295,039 shares. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of common stock
issued and outstanding on September 30, 2004, plus shares of common stock
subject to options held by such person on September 30, 2004 and exercisable
within 60 days thereafter.

Name and Address Common Shares Percentage
of Beneficial Owner Beneficially Owned Owned
- ---------------------------------------------------------------------------------- ------------------- ---------------
Michael Hill(a) 404 East 1st Street, #1345, Long Beach, CA 90802 2,640,000 23.37%
Barrett Evans(b) 301 East Ocean Blvd., Long Beach, CA 90802 3,125,000 27.67%
Michael A. Novielli(c) 100 Mill Plain Rd., 3rd Floor, Danbury, CT 06811 1,619,000 14.33%
Douglas Leighton(d) 312 Stuart St, Third Floor, Boston, MA 02116 1,619,000 14.33%
Theodore J. Smith(e) 312 Stuart St, Third Floor, Boston, MA 02116. 1,510,000 13.37%
Dutchess Private Equities, LP (f), 312 Stuart Street, 3rd Floor, Boston, MA 02116 100,000 *%
Dutchess Private Equities, II, LP (g), 312 Stuart Street, 3rd Floor, Boston, MA 02116 10,000 *%
Dutchess Advisors, LLC (h), 312 Stuart Street, 3rd Floor, Boston, MA 02116 1,400,000 12.39%
eFund Capital Partners, LLC (i) 301 East Ocean Blvd. Suite 640,
Long Beach, CA 90802 2,010,000 17.80%
eFund Small-Cap Fund, LP (j) 301 East Ocean, Suite 640, Long Beach, CA 90802 1,000,000 8.85%
All directors and current executive officers as a group (5 Persons) 7,384,000 65.37%
* Less than 1%
<FN>
(a) Mr. Hill has sole voting and dispositive power of 2,555,000 shares of common
stock issued to him as of May 31, 2004.

(b) Mr. Evans has sole voting and dispositive power 70,000 shares issued to him
February 2, 2004. Mr. Evans is also the managing member of eFund Capital
Partners and eFund Small-Cap fund and the shares issued to those entities as
listed below (please see (i) and (j) below).

(c) Mr. Novielli has sole voting and dispositive power of 109,000 shares. Mr.
Novielli is a managing member of Dutchess Capital Management which acts as
general partner to Dutchess Private Equities Fund, Dutchess Private Equities
Fund, II and Dutchess Advisors.(please see (f) and (g) below).

(d) Mr. Leighton has sole voting and dispositive power of 109,000 shares. In
addition, Mr. Leighton is a managing member of Dutchess Capital Management which
acts as general partner to Dutchess Private Equities Fund, Dutchess Private
Equities Fund, II and Dutchess Advisors.(please see (f) and (g) below).

(e) Mr. Smith has sole voting and dispositive power of 110,000. Our director,
Theodore Smith, is the Executive Vice President of Dutchess Advisors.

(f) Dutchess Private Equities Fund owns 100,000 shares of common stock. Dutchess
acquired 100,000 shares pursuant to conversion of a Preferred C Share. In
addition, we entered into investment agreements with Dutchess Private Equities
Fund for $522,000, respectively, whereby we issued convertible debentures. The
debentures are convertible into our common stock at the lesser of 75% of the
lowest closing bid price of the common stock during the fifteen full trading
days prior to the Conversion Date or 100% of the average of the five lowest
closing bid prices of the common stock for the thirty trading days immediately
following the first reverse split in the stock price. As of September 17, 2004,
the debentures were convertible into 178,309 shares of common stock based on the
debenture conversion formula. Dutchess Private Equities Fund purchased the
debenture. Mr. Leighton and Mr. Novielli are managing members of Dutchess
Capital Management which acts as general partner Dutchess Private Equities Fund,
LP. Dutchess also owns a warrant to purchase up to 185,000 shares of common
stock at $3.75 per share. Mr. Leighton and Mr. Novielli are managing members of
Dutchess Capital Management which acts as general partner Dutchess Private
Equities Fund, LP and have sole voting and dispositive power over the shares
owned by Dutchess.

(g) Dutchess Private Equities Fund II owns 10,000 shares of common stock.
Dutchess received 10,000 shares as an incentive for an investment. We entered
into investment agreements with Dutchess Private Equities Fund II for $504,000
whereby we issued convertible debentures. The debentures are convertible into
our common stock at the lesser of 75% of the lowest closing bid price of the
common stock during the previous fifteen trading days or 100% of the average bid
prices of the common stock for the twenty trading days prior to closing. As of
September 17, 2004, the debentures were convertible into 185,293 shares of
common stock based on the debenture conversion formula. Dutchess Private
Equities Fund II purchased the debenture. Dutchess also owns a warrant to
purchase up to 150,000 shares of common stock at $4.25 per share, a warrant to
purchase 150,000 shares of common stock at $3.50, and a warrant to purchase
120,000 shares of common stock at $3.10 per share. Mr. Leighton and Mr. Novielli
are managing members of Dutchess Capital Management which acts as general
partner Dutchess Private Equities Fund, II, LP and have sole voting and
dispositive power over the shares owned by Dutchess.

(h) Dutchess Advisors is controlled by Mr. Novielli and Mr. Leighton.

(i) eFund Capital Partners owns 2,010,000 shares of common stock. Barrett Evans
is eFund Capital Partners' Managing Member. We entered into an investment
agreement with eFund Small-Cap Fund for $535,000 whereby we issued a convertible
debenture. The Debenture is convertible into our common stock at the lesser of
75% of the lowest closing bid price of the common stock during the previous
fifteen trading days or 100% of the average bid prices of the common stock for
the twenty trading days prior to closing. As of September 17, 2004, the
debenture was convertible into 197,140 shares of our common stock based on the
debenture conversion formula. eFund also owns a warrant to purchase up to
150,000 shares of common stock at $4.25 per share. Barrett Evans is eFund Capital
Partners' Managing Member and has sole voting and dispositive power over the
shares owned by eFund.

(j) eFund Small-Cap Fund owns 1,000,000 shares of common stock. Barrett Evans is
the Managing Partner of eFund Small-Cap Fund. We entered into an investment
agreement with eFund Small-Cap Fund for $100,000 whereby we issued a convertible
debenture. The Debenture is convertible into our common stock at the lesser of
75% of the lowest closing bid price of the common stock during the previous
fifteen trading days or 100% of the average bid prices of the common stock for
the twenty trading days prior to closing. As of September 17, 2004, the
debenture was convertible into 36,765 shares of our common stock based on the
debenture conversion formula. eFund also owns a warrant to purchase up to
100,000 shares of common stock at $3.10 per share. Barrett Evans is eFund Small
Cap's Managing Member and has sole voting and dispositive power over the shares
owned by eFund.

DESCRIPTION OF SECURITIES
COMMON STOCK

Our Articles of Incorporation authorize us to issue 100,000,000 shares of common
stock, par value $.001 per share.

VOTING RIGHTS. Each share of our common stock entitles the holder thereof to one
vote, either in person or by proxy, at meetings of stockholders. Our Board of
Directors is elected annually at each annual meeting of the stockholders.

DIVIDEND POLICY. All shares of common stock are entitled to participate in
dividends when, as and if declared by our Board of Directors out of the funds
legally available therefore.

MISCELLANEOUS RIGHTS AND PROVISIONS. Holders of common stock have no preemptive
or other subscriptions rights, conversions rights, and redemption or sinking
fund provisions. In the event of the liquidation or dissolution, whether
voluntary or involuntary each share of common stock is entitled to share in any
assets available for distribution to holders of the equity after satisfaction of
all liabilities and distributions to preferred shareholders.

INTEREST OF NAMED EXPERTS AND COUNSEL

No expert or counsel within the meaning of those terms under Item 509 of
Regulation S-B will receive a direct or indirect interest in the small business
issuer or was a promoter, underwriter, voting trustee, director, officer, or
employee of NeWave, Incorporated. Nor does any such expert have any contingent
based agreement with us or any other interest in or connection to us.

DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES

ARTICLE VI of our Articles of Incorporation authorizes indemnification of its
directors and officers, and advancement of expenses, to the extent set forth
respectively in Sections 902 and 904 of the Utah Revised Business Corporation
Act.

ARTICLE VI of our Bylaws states that to the extent and in the manner permitted
by the laws of the state of Utah, and specifically as is permitted under the
Utah Revised Business Corporation Act, the corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement.

We have been advised that in the opinion of the Securities and Exchange
Commission, insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event a claim for indemnification against such
liabilities (other than our payment of expenses incurred or paid by our
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. We generally use words such as "believe," "may," "could,"
"intend," "expect," "anticipate," "plan," and similar expressions to identify
forward-looking statements, including statements regarding our expansion plans.
You should not place undue reliance on these forward-looking statements. Our
actual results could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks described in
our "Risk Factor" section and elsewhere in this report. Although we believe the
expectations reflected in the forward-looking statements are reasonable, they
relate only to events as of the date on which the statements are made, and our
future results, levels of activity, performance or achievements may not meet
these expectations. We do not intend to update any of the forward-looking
statements after the date of this document to conform these statements to actual
results or to changes in our expectations, except as required by law.

DESCRIPTION OF BUSINESS

HISTORY

We incorporated in the State of Utah on March 1, 1994 as Utah Clay Technology,
Inc. From our formation until January 15, 2004, our business plan included:

(1) locating kaolin deposits in Utah;
(2) obtaining the legal rights to these deposits;
(3) conducting exploratory operations;
(4) testing the extracted minerals in the laboratory; and
(5) selling samples of the processed form of our kaolin to a commercial company
for market evaluation.

Although we did obtain certain legal rights to properties possibly containing
kaolin, due to a lack of capital, we never commenced mining operations. As a
result, we had no revenues since our inception. On January 15, 2004, we
abandoned the business plan for Utah Clay Technologies. On the same date,
pursuant to an Agreement and Plan of Reorganization with NeWave, Inc., a Utah
corporation, Utah Clay Technologies, Inc. changed its name to NeWave, Inc. and
OnlineSupplier.com became our wholly-owned subsidiary. We own and operate an
online membership club that offers a comprehensive line of products and services
at wholesale prices through our membership program. As a result of this change
in our focus and direction, the entire former management team and board of
directors resigned and we employed a new management team and appointed a new
board of directors.

On January 30, 2004, the State of Utah recognized our name change to NeWave,
Inc. We acquired our operating subsidiary, Onlinesupplier.com, on January 15,
2004 and its operations are therefore not reflected on our financial statements
for the fiscal year ending December 31, 2003. We organized our subsidiary,
Auction Liquidator, Inc., in September 2004 and it began to generate immaterial
revenues in October 2004.

Through our wholly-owned subsidiary, Onlinesupplier.com, we offer a
comprehensive line of products and services at wholesale prices through our
online club membership. Additionally, our technology allows both large complex
organizations and small stand-alone businesses to create, manage, and maintain
effective website solutions for eCommerce. Onlinesupplier.com's web address is
www.onlinesupplier.com. Auction Liquidator was organized to leverage the
"Onlinesupplier" customer base to market the eBay drop-off concept. Auction
Liquidator's web address is www.auctionliquidator.com

Memberworks, Inc. makes up approximately 12% of our revenue. This is a
significant customer and the loss of this relationship could cause result in
decreasing revenues. However, we intend to expand and diversify our customer
base to reduce our dependency on Memberworks over the next twelve months.

We are a publicly traded company, which trades on the Over-the-Counter Bulletin
Board of the National Quotation Service under the ticker symbol "NWAV.OB"

The address of our principal executive office is 404 East 1st Street, #1345,
Long Beach, California 90802. Our telephone number is (562) 983-5331. Our
website address is www.newave-inc.com. Information contained on our website does
not constitute part of this report and our address should not be used as a
hyperlink to our website.

INDUSTRY BACKGROUND
eCommerce Industry

Online shopping has established itself as a large and rapidly growing channel
for consumers and merchants to buy and sell goods and services. According to
Forrester Research, U.S. online retail sales will grow at a steady 19% CAGR over
the next five years, from $95.7 billion in 2003 to $229.9 billion in 2008.
Additionally, roughly 5 million new U.S. households will shop online each of
the next five years, creating a total of 63 million U.S. online shopping
households in 2008.

We believe that the key forces driving the growth of online shopping are
convenience, selection and savings. The Internet offers around-the-clock access
to millions of products and thousands of stores, unlike in-store shopping. It
contains shopping information from a wide variety of sources, including merchant
websites, manufacturer websites and other online content providers. Consumers
utilize this convenience, selection and information to save time and money.

We believe that individuals and businesses desire an integrated package that is
inexpensive, comprehensive and easily navigable. We believe current electronic
commerce applications in the market do not include complete functionality such
as webstore generation, merchant processing capabilities, customer management,
online training modules, domain name registration and an array of wholesale
products. Accordingly, we believe there is a large demand for a complete
electronic commerce product for individuals and businesses and that demand is
not being currently met by any provider of electronic commerce products.

OUR WEBSITE, PRODUCTS AND SERVICES

We are a progressive internet-based direct marketing company and provider of
product fulfillment solutions headquartered in Long Beach, CA. We bring value to
consumers by designing and implementing membership programs that offer the
services and discounts needed to stay competitive in today's online marketplace.
As a consumer-driven organization, we offer a program that can fit the needs of
today's multi-faceted customer. From payment solutions to product distribution,
we give our customers access to every major area of e-commerce and provide a
one-stop portal into the world of profitable internet driven business solutions.

Our wholly-owned subsidiary Online Supplier is in the business of providing its
members the necessary tools to create and run a successful Internet auction
business. We not only provide future business owners guidance in starting their
own online business but also give them access to an array of wholesale
merchandise and value-added services via our online membership program for
resale online.

Our membership-based website Onlinesupplier.com provides our customers access to
an array of various products and services designed to create or enhance their
shopping experience and to promote our customers own ecommerce solution. We
store approximately 450 products in our warehouse for distribution. Our members
pay a monthly subscription fee, which allows them unlimited access to our
product and service offerings.

Our website wholesales approximately 1,100 products in such categories as:

- - Consumer Electronics;
- - Home, Garden and Outdoor Living Products;
- - Kitchenware and Housewares;
- - Sports and Outdoor Equipment;
- - Automobile Accessories;
- - Tools and Hardware;
- - Jewelry; and
- - Travel Accessories.

For an additional monthly fee, our customers are also offered access to
discounted value-added services such as: prescription drug plans, roadside
assistance, tax and legal services, and discounted entertainment packages. These
services are currently offered to our customers through third party arrangements
with suppliers such as MemberWorks Incorporated and GE Financial Services.
Furthermore, our online membership program provides the following services and
capabilities:

- - Automated Webstore Generation and Customization;
- - Merchant Processing Capabilities;
- - Domain Name Registration; and
- - Online Training Modules (that includes online auction training).
- - Web hosting

We generate revenues from the monthly membership fees and product sales via our
website.

In September 2004, we organized Auction Liquidator, Inc. as a wholly-owned
subsidiary to pursue opportunities related to eBay "drop off" or consignment
stores. As of June 30, 2004, through their wholly-owned and majority-owned
subsidiaries and affiliates, eBay had websites directed toward the United
States, Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong,
Ireland, Italy, The Netherlands, New Zealand, Singapore, South Korea, Spain,
Sweden, Switzerland, Taiwan and the United Kingdom. eBay pioneered online
trading by developing an Internet-based marketplace in which a community of
buyers and sellers are brought together to buy and sell almost anything. The
eBay online service permits sellers to list items for sale, buyers to bid on
items of interest, and all eBay users to browse through listed items in a
fully-automated, topically-arranged service that is available online seven days
a week.

Auction Liquidator was organized to leverage the "Onlinesupplier" customer base
to market the eBay drop-off concept. Customers desiring to sell an item on eBay
but lacking technical knowledge or wishing to outsource the sale, can drop off
the item at soon to be announced locations. The item is then shipped to Auction
Liquidator's warehouse located in Long Beach, California where it will be
photographed, detailed and eventually auctioned on eBay with a starting bid of
$1.00. Once the item has sold, Auction Liquidator would receive the sale
proceeds and deliver final payment to the customers less Auction Liquidator's
commission of 22% - 35% and eBay's commission of 1.5% - 5.25%, depending on the
sale price, and an eBay transaction cost of 2.9%. The customer incurs no other
charges including shipping which is paid by Auction Liquidator. If the item is
not successfully sold, it is returned to the customer at no cost. Auction
Liquidators began to generate immaterial revenues in October 2004 and is
expected to be fully operational by January 1, 2005. We are aware of several
competitors in the eBay "drop-off" store arena including Auction Drop,
Quikdrop and Door to Door auctions.

STRATEGIC RELATIONSHIPS AND ALLIANCES

In order to provide the above-listed products and services we have entered into
strategic relationships or alliances:

In June 2004, we entered into a Lead Marketing Agreement with Vandalay Venture
Group, Inc. d/b/a Applied Merchant for an initial term of 60 days, automatically
renewable for successive periods of one year. In exchange for our providing
Applied Merchant with a number of brokered leads on a weekly basis, Applied
Merchant will pay us fifty percent of the net monthly residual amount collected
from leads marketed pursuant to the Agreement.

On August 11, 2004, we entered into an ASP Software Subscription Agreement with
NetChemistry, Inc. for a term of two years, automatically renewable.
NetChemistry agreed to create a private label, branded solution for licensing
our product and allowing the ability to provide self-serve managed eCommerce and
non-eCommerce Web sites to our customers. In exchange, we agreed to pay
NetChemistry a minimum monthly fee of $5,000, which includes the first 1,666
sites hosted at $3 each for the Newave Sales Web Sites, and $3 per site per
month on sites 1 - 16,666 and $1 per site per month on sites 16,667+ for NeWave
Sales Web Sites built using NetChemistry software. We also agreed to pay
NetChemistry $7,000 for setup and $3,000 to purchase a server.

CUSTOMERS

As of September 17, 2004, we had approximately 25,000 current paid members
although we have serviced over 100,000 paid members since our inception. Our
customers consist primarily of individuals desiring assistance with organizing
their own internet-based business.

SALES AND MARKETING

Sales: As of September 17, 2004, we employed 150 telephone sales representatives
that assist customers with making and processing orders. In addition, we
employed 50 customer service representatives that address any issues that may
arise while a customer is utilizing a product or service.

Marketing: We primarily market our products throughout the United States. We
advertise and market our products in industry magazines, local and regional news
publications, online search engines, opt-in email marketing, and network
marketing. By working with independent sales agents, we have been able to expand
our reach to customers nationwide that are looking for our products. In
addition, our online marketing campaign has significantly expanded our marketing
effort that has decreased our marketing cost per acquisition.

We have recently signed TV game show host and celebrity personality Bob Eubanks
to a personal services contract. Through his company Luminary Ventures, Mr.
Eubanks will perform promotional and business development services for us and
our wholly-owned subsidiary Onlinesupplier.com.

SUPPLIERS

Although we continue to increase our direct purchasing from manufacturers, we
source a significant amount of inventory from relatively few vendors. However,
no vendor accounts for 10% or more of our inventory purchases. We do not have
long-term contracts or arrangements with most of our vendors to guarantee the
availability of merchandise, particular payment terms, or the extension of
credit limits. If our current vendors were to stop selling merchandise to us on
acceptable terms, we may not be able to acquire merchandise from other suppliers
in a timely and efficient manner and on acceptable terms.

COMPETITION

The environment for our products and services is intensely competitive. Our
current and potential competitors include:

(1) physical-world retailers, catalog retailers, publishers, distributors and
manufacturers of our products, many of which possess significant brand
awareness, sales volume, and customer bases, and some of which currently sell,
or may sell, products or services through the Internet, mail order, or direct
marketing, such as, Wal-Mart Stores, Target Corporation, Kmart Corporation,
Costco Wholesale Corporation, Sam's Club, BJ's Wholesale Club, Inc., and Best
Buy,Inc.;
(2) other online eCommerce sites such as, Amazon, Sam's Club Online,
Wal-Mart.com USA, LLC;
(3) a number of indirect competitors, including media companies, Web portals,
and Web search engines that are involved in online commerce, either directly or
in collaboration with other retailers, such as Yahoo, AOL and Google; and
(4) companies that provide eCommerce services, including website developers and
third-party fulfillment and customer-service providers, such as Yahoo, Go-Daddy,
MSN, Network Solutions, Register.com, and Buydomains.

Additionally, we are aware of several competitors in the eBay "drop-off" store
arena including Auction Drop, Quikdrop and Door to Door auctions.

We believe that the principal competitive factors in our market segments include
selection, price, availability, convenience, information, discovery, brand
recognition, personalized services, accessibility, customer service,
reliability, speed of fulfillment, ease of use, and ability to adapt to changing
conditions, as well as our customers' overall trust in the entire experience in
transactions with us or facilitated by us on behalf of third-party sellers. For
services we offer to business and individual sellers, additional competitive
factors include the quality of our services and tools and the speed of
performance for our services. As the market segments in which we operate
continue to grow, other companies may also enter into business combinations or
alliances that strengthen their competitive positions.

INTELLECTUAL PROPERTY

We have filed for a trademark for Online Supplier, onlinesupplier.com (date of
use: August 18, 2003), NeWave, Inc.-tomorrow's innovations, today (date of use:
August 18, 2003), and Auction Liquidator, auctionliquidator.com, and Stop, Drop,
n' Cash (date of use: September 1, 2004). We do not have any other patents or
trademarks. We regard copyrights, domain names, trade dress, trade secrets,
proprietary technologies, and similar intellectual property as important to our
success, and we rely on trademark, and copyright law, trade-secret protection,
and confidentiality and/or license agreements with our employees, customers,
partners, and others to protect our proprietary rights. We have licensed in the
past, and expect that we may license in the future, certain of proprietary
rights, technologies or copyrighted materials, from third parties and we rely on
those third parties to defend their proprietary rights, copyrights and
technologies. We do not currently have any licenses that are material to our
business.

We also may not be able to acquire or maintain appropriate domain names in all
countries in which we intend to do business. Furthermore, regulations governing
domain names may not protect our trademarks and similar proprietary rights. We
may be unable to prevent third parties from acquiring domain names that are
similar to, infringe upon, or diminish the value of our trademarks and other
proprietary rights.

Policing unauthorized use of our proprietary rights is inherently difficult, and
we may not be able to determine the existence or extent of any unauthorized use.
The protection of our intellectual property may require the expenditure of
significant financial and managerial resources. Moreover, we cannot be certain
that the steps we take to protect our intellectual property will adequately
protect our rights or that others will not independently develop or otherwise
acquire equivalent or superior technology or other intellectual property rights.

TECHNOLOGY

Using a combination of our own proprietary technologies and commercially
available, licensed technologies, we have implemented numerous features that
simplify and improve the customer shopping experience, enable third parties to
generate customized eCommerce solutions on our platform, and facilitate our
fulfillment and customer service operations. Our current strategy is to focus
our development efforts on creating and enhancing the specialized, proprietary
software that is unique to our business, and to license or acquire
commercially-developed technology for other applications where available and
appropriate.

OPERATIONS

Customer Service Center: We sublease approximately 16,000 sq/ft of office space
in Goleta California, which houses our customer service center. This space
accommodates our sales force as well. As of September 17, 2004, we employed 150
telephone sales representatives and 50 customer service representatives to
process customer orders through our inbound call center.

Warehousing and Shipping: Additionally, we lease approximately 2,200 sq/ft which
serves as our product warehouse and shipping center. When sales are processed in
our inbound call center the orders are processed, fulfilled and shipped from our
warehouse. Shipments are made via UPS signature guarantee.

Third Party Suppliers: Some of the products we have listed on our website are
fulfilled and shipped by third party suppliers. In addition, some of the
products we sell may expose us to product liability claims relating to personal
injury, death, or property damage caused by these products, and may require us
to take actions such as product recalls. Certain businesses and individuals also
sell products using our eCommerce platform that may increase our exposure to
product liability claims, such as if these sellers do not have sufficient
resources to protect themselves from these claims. Although we maintain
liability insurance, we cannot be certain that our coverage will be adequate for
liabilities actually incurred or that insurance will continue to be available to
us on economically reasonable terms, or at all. In addition, some of our vendor
agreements with our suppliers and third party sellers do not indemnify us from
product liability.

EMPLOYEES

As of September 17, 2004, we employed 210 employees, including customer service
representatives, telephone sales representatives, and administrative and
management personnel. We have never experienced work stoppages, and we are not a
party to any collective bargaining agreement. As we grow, we will be required to
hire additional employees to service our customer demand.

REGULATORY RESTRICTIONS ON OUR BUSINESS

We are subject to general business regulations and laws, as well as regulations
and laws specifically governing the Internet, telecommunication sales and
eCommerce. These existing and future laws and regulations may impede the growth
of the Internet or other online services. These regulations and laws may cover
taxation, user privacy, data protection, pricing, content, copyrights,
distribution, electronic contracts and other communications, consumer
protection, the provision of online payment services, broadband residential
Internet access, and the characteristics and quality of products and services.

It is not clear how existing laws governing issues such as property ownership,
sales and other taxes, libel, and personal privacy apply to the Internet,
eCommerce and our Company. Unfavorable resolution of these issues may harm our
business. Specifically, our inbound telephone center is regulated by the Federal
Trade Commission and Federal Communication Commission. Under the Federal Trade
Commission's Telemarketing Sales Rule and the Federal Communication Commission's
Telephone Consumer Protection Act, we are subject to the Do Not Call Registry,
limited in the use of pre-acquired account information, required to get certain
authorizations and consents with regard to billing, required to make certain
disclosure statements, prohibited from making misrepresentations, limited to
when we may call consumers, required to transmit Called ID information,
restricted in the trafficking of data, required to keep certain records,
prohibited from abandoning certain outbound calls, and are subject to fines for
unlawful activity. Furthermore, some of our merchant, advertising and marketing
efforts are regulated by the same organizations and statutes, such as the
CAN-SPAM Act limiting the transmission of unsolicited commercial electronic mail
via the Internet, California Online Privacy Protection Act of 2003 requiring
owners of commercial Web sites or online services to post a privacy policy, the
Fair and Accurate Credit Transaction Act of 2003 ensuring that everyone is
treated fairly when applying for credit and protecting consumers against
identity theft, California Financial Information Privacy Act prohibiting the
sharing of nonpublic personal information of a consumer with nonaffiliated third
parties without the explicit prior consent of the consumer, California Civil
Code Section 1798.82 requiring businesses to notify customers if an unauthorized
person may have obtained access to their personal information and California
Civil Code Section 1798.83 requiring disclosure of sharing for marketing
purposes.

While we believe that we maintain all requisite licenses and permits and are in
compliance with all applicable federal, state, local and foreign regulations, we
may not be able to maintain all requisite licenses and permits. The failure to
satisfy those and other regulatory requirements could have a material adverse
effect on our business' financial condition and results of operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

You should read this section together with our consolidated financial statements
and related notes thereto.

CRITICAL ACCOUNTING POLICIES

We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations are discussed
throughout this section where such policies affect our reported and expected
financial results. Our preparation of our Consolidated Financial Statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of our financial statements, and the reported amounts of revenue and
expenses during the reporting period. There can be no assurance that actual
results will not differ from those estimates.

Our accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment relate to revenue recognition, the provision for
uncollectible accounts receivable, property and equipment, advertising and
issuance of shares for service.

We estimate the likelihood of customer payment based principally on a customer's
credit history and our general credit experience. To the extent our estimates
differ materially from actual results, the timing and amount of revenues
recognized or bad debt expense recorded may be materially misstated during a
reporting period.

Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets, e.g.
computers (5 years), software (3 years), office equipment and furniture (3-7
years), .
Leasehold improvements are amortized over the remaining lease term at the date
of installation. Expenditures for maintenance and repairs are charged to expense
as incurred.

We expense advertising costs as incurred.

We account for the issuance of equity instruments to acquire goods and services
based on the fair value of the goods and services or the fair value of the
equity instrument at the time of issuance, whichever is more reliably
measurable.

We recognize income when the products are shipped, and when the service is
provided. We apply the provisions of the SEC Staff Accounting Bulletin ("SAB")
No. 104, "Revenue Recognition in Financial Statements" which provides guidance
on the recognition, presentation and disclosure of revenue in financial
statements. Our revenues earned from membership setup fees and monthly charges
are recorded when the credit card transaction is processed. Current terms of
the onlinesupplier.com membership agreement stipulate that the customer pays a
nonrefundable $6.95 fee to setup an account. The customer then has a fourteen
day period to review our offerings. If the customer does not cancel the service
within the fourteen day window, a charge of $29.95 is billed to the customer's
credit card on a monthly basis. SAB No. 104 outlines the basic criteria that
must be met to recognize revenue and provides guidance for the disclosure of
revenue recognition policies. Our revenue recognition policy for sale of
products is in compliance with SAB No. 104. Revenue from the sale of products is
recognized when a formal arrangement exists, the price is fixed, or
determinable, the delivery is completed and collectibility is reasonably
assured. Generally, we extend credit to our customers and do not require
collateral. We perform ongoing credit evaluations of our customers and historic
credit losses have been within management's expectations.

Our unaudited financial statements for the quarter ended September 30 2004,
reflect a net loss of ($515,029) and negative cash flows from operations of
($747,991). These conditions may raise a substantial doubt about our ability to
continue as a going concern if we do not acquire sufficient additional funding
or alternative sources of capital to meet our working capital needs. We have
raised capital by issuing convertible debentures and anticipate that we will
continue to be able to do so in the foreseeable future. We believe this will
generate the additional cash required to fund our operations and allow us to
meet our obligations.

The Company is currently raising capital by issuing convertible debentures and
plans to raise money through its Equity Line of Credit. Management believes this
will generate the additional cash required to fund the Company's operations and
allow it to meet its obligations.

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO THE PERIOD
BEGINNING AUGUST 18, 2003 AND ENDED SEPTEMBER 30, 2003

NeWave, Inc. dba Onlinesupplier.com commenced operations in August 2003;
therefore there were no operations for the three and nine months ended September
30, 2003, however, results for our inception date of August 18, 2003 through
September 30, 2003 are included.

REVENUES

We generated Revenues of $2,105,183 and $4,761,562 for the three and nine months
ended September 30, 2004, respectively, as compared to $334,267 for the period
beginning August 18, 2003 and ended September 30, 2003. As a result of our
expansion, revenues increased due to an increase in OnlineSupplier membership
enrollment and commissions received from third parties for services marketed to
OnlineSupplier members.

OPERATING EXPENSES
- -------------------

We incurred Operating Expenses of $2,400,616 and $7,215,750 for the three and
nine months ended September 30, 2004, respectively, as compared to $458,100 for
the period beginning August 18, 2003 and ended September 30, 2003. The increase
in Operating Expenses is due to the increase in costs associated with our
expansion which include increasing advertising, salaries, consulting expense,
rent, telephone and Director's fees respectively of $706,435, $815,013, $78,180,
$77,271, $65,799 and $0 for the three months ended September 30, 2004, and
$1,807,616, $2,005,123, $272,009, $188,044, $142,072 and $1,548,000 for the nine
month period ended September 30, 2004 as compared to $140,806, $134,126,
$10,301, $12,319,$12,958 and $0 for the period beginning August 18, 2003 and
ended September 30, 2003.

NET LOSS
- ---------

We had a loss of ($515,029) and ($3,344,334) for the three and nine months ended
September 30, 2004, respectively, as compared to a net loss of ($123,833) for
the period beginning August 18, 2003 and ended September 30, 2003. The increase
in net loss is due to the increase in Operating Expenses resulting from our
expansion.

BASIC AND DILUTED LOSS PER SHARE
- -------------------------------------

Our basic and diluted loss per share for the three and nine months ended
September 30, 2004 was ($0.05) and ($0.31), respectively.

LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------

We must continue to raise capital to further develop our wholly-owned
subsidiaries OnlineSupplier and Auction Liquidator. We believe we have
sufficient capital to continue to operate for the next twelve months, however if
we are unable to raise any additional capital, the further development of our
operations may be curtailed because we may not be able to devote resources to
expanding and further developing our business. We plan to raise up to $4.5
million through our Equity Line of Credit and by issuing convertible debentures.
As of September 30, 2004, we had total Current Assets of $1,586,684 and Current
Liabilities of $692,281. Cash and cash equivalents were $188,930. Our
Stockholder's Deficit at September 30, 2004 was ($247,998).

We had a net usage of cash due to operating activities for the nine months ended
September 30, 2004 of ($747,991) as compared to ($272,476) for the period
beginning August 18, 2003 and ended September 30, 2003. We had net cash provided
by financing activities of $1,185,813 for the nine months ended September 30,
2004, as compared to $345,935 for the period beginning August 18, 2003 and ended
September 30, 2003. We had a net use of cash from Investing Activities in
September 30, 2004 of $(248,892) as compared to ($58,317) for the quarter ended
September 30, 2003. The deficit is due to our purchase of additional equipment
for the business. We received a substantial portion of cash flow from financing
activities, $1,185,813, specifically through the issuance of convertible
debentures. Total cash on hand increased from $0 at the beginning of the period
to $188,930 for the end of the period.

CAPITAL COMMITMENTS
- --------------------

We issued a note payable to an unrelated party in 2003. This note was settled
for $180,000 in August of 2004, payable $30,000 in August 2004, and $12,500 per
month thereafter. As of September 30, 2004, the balance of this note was
$125,000.

We entered into a consulting agreement with Barrett Evans, a member of the Board
of Directors, on August 18, 2003. The term of the agreement was for twelve
months at $10,000 per month. We paid $6,230 on the agreement during the three
months ended September 30, 2004 and owe $96,136 at September 30, 2004.

We entered into a consulting agreement with Michael Hill, our Chief Executive
Officer, on August 18, 2003. The term of the agreement was for twelve months at
$12,000 per month. We paid $51,000 on the agreement during the three months
ended September 30, 2004 and owe $38,591 at September 30, 2004.

On March 2, 2004, we entered into a Consulting Agreement with Luminary Ventures,
Inc. where in exchange for services, we agreed to pay the consultant the sum of
$10,000 per month for non-accountable expenses. Payment may be made either: (i)
in cash or (ii) shares of our common stock. The term of this agreement is twelve
months.

We owe Paydirt, LP, $180,000 pursuant to a lawsuit settlement entered into on
May 3, 2004. We agreed to pay $30,000 upfront and the remaining amount in equal
monthly installments of $12,500 for the next twelve months. As of September 30,
2004, the balance of this was $125,000.

FINANCING ACTIVITIES
- ---------------------

On July 9, 2004, we issued convertible debentures of $180,000 to Dutchess
Private Equities Fund, II. The debentures convert on July 9, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. The debenture was issued at a
discount of $30,000. On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 150,000 of our common shares at an exercise price
at $3.50 per share.

On August 15, 2004, we issued convertible debentures of $144,000 to Dutchess
Private Equities Fund, II. The debentures convert on August 15, 2009. The holder
of the debentures can convert the face value of the debenture plus accrued
interest into shares of our common stock at the lesser of (i) 75% of the lowest
closing bid price during the 15 full trading days prior to the conversion date
or (ii) 100% of the average of the five lowest closing bid prices for the 30
trading days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $24,000. On August 18, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 120,000 of our common shares at an exercise price
at $3.10 per share.

On August 15, 2004, we issued convertible debentures of $60,000 to eFund Small
Cap Fund, LP. The debentures convert on August 15, 2009. The holder of the
debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On August 18, 2004, we issued a warrant to eFund Capital
Partners, to purchase 50,000 of our common shares at an exercise price at $3.10
per share.

On September 25, 2004, we issued convertible debentures of $222,000 to Dutchess
Private Equities Fund. The debentures convert on September 25, 2009. The holder
of the debentures can convert the face value of the debenture plus accrued
interest into shares of our common stock at the lesser of (i) 75% of the lowest
closing bid price during the 15 full trading days prior to the conversion date
or (ii) 100% of the average of the five lowest closing bid prices for the 30
trading days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $37,000. On September 25, 2004, we issued a warrant to Dutchess
Private Equities Fund, to purchase 185,000 of our common shares at an exercise
price at $3.75 per share.

On September 25, 2004, we issued convertible debentures of $60,000 to eFund
Small Cap Fund, LP. The debentures convert on September 24, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On September 25, 2004, we issued a warrant to eFund Capital
Partners, to purchase 50,000 of our common shares at an exercise price at $3.75
per share.

On March 3, 2004, we entered into an Investment Agreement with Preston Capital
Partners, also referred to as an Equity Line of Credit. This agreement provides
that, following notice to Preston, we may put to Preston up to $4.5 million in
shares of our common stock for a purchase price equal to 98% of the lowest
closing bid price on the Over-the-Counter Bulletin Board of our common stock
during the five day period following that notice. For each put, Preston shall be
required to purchase the number of shares having an aggregate purchase price
equal to the lesser of (i) the put amount set forth in the put notice, and (ii)
20% of the aggregate trading volume of the common stock during the applicable
during the five days after we deliver the put notice to Preston Capital Partners
the average of the lowest closing bid price of our common stock during the five
days after we deliver the put notice to Preston Capital Partners . We cannot use
the Equity Line of Credit until we have an effective registration statement that
registers the resale of the shares of common stock that we will issue pursuant
to the Equity Line of Credit. We filed a registration statement with the SEC on
October 8, 2004. As of November 22, 2004, the SEC has not declared the
registration statement effective.

We believe our Investment Agreement with Preston will be sufficient to fund
operations and capital requirements as presently planned over the next twelve
months.

SUBSIDIARIES
- ------------

As of September 30, 2004, we had two subsidiaries, Onlinesupplier.com, Inc. and
Auction Liquidator, Inc.

DESCRIPTION OF PROPERTY

The address of our principal executive office is 404 East 1st ST., #1345, Long
Beach, CA 90802. We also lease two additional spaces. We sublease approximately
16,000 sq/ft of office space in Goleta, California, which houses our customer
service center and administration offices. This space accommodates our sales
force as well. The lease is month to month and the base rent is $15,642/month
plus expenses estimated at $0.22 per square foot and plus pro rata share of
utilities payable monthly in advance on the first day of each calendar month of
the term of this sublease. Additionally, we lease approximately 2,200 sq/ft
which serves as our product warehouse and shipping center. The lease is month to
month and the rent is $2,340/month.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the period ended December 31, 2003, a board member, Barrett Evans,
provided a short term line of credit and provided debt financing to us on a 30
day revolving rate of 0% provided the amount was paid in full at the end of each
30 day period. Repayments during the period ended December 31, 2003, totaled
$630,333. All advances from this finance company were short term borrowings
which were repaid within a month of the actual advance, in most cases. In no
instance did the advances remain outstanding for a prolonged period of time,
over three months. This transaction is no less favorable than if we had entered
into it on an arms length basis with an unrelated third party because the
Company was not aware of any other creditors willing to provide a loan for 0%
Interest.

During the period ended December 31, 2003, Shirley Oaks, Sharon Paugh, Jennifer
Strohl, all of whom are family members of an officer of ours provided
short-term, non-interest bearing debt financing to us, totaling $92,464.
Repayments during the period ended December 31, 2003 totaled $8,773 and the rest
was converted to common stock in the first quarter of 2004. This transaction is
no less favorable than if we had entered into it on an arms length basis with an
unrelated third party because we were not aware of any other creditors willing
to provide debt with 0% interest.

During the period ended December 31, 2003, we received certain office equipment
as a contribution of capital from eFund Capital Partners which is a finance
company controlled by one of our board members and Chief Financial Officer,
Barrett Evans. Accordingly, the office equipment has been recorded at its fair
market value of $145,000, and additional paid in capital has been increased by a
corresponding amount. This transaction is no less favorable than if we had
entered into it on an arms length basis with an unrelated third party because we
valued the equipment at market value. We were not aware of other vendors willing
to provide similar equipment at the same or better price.

As of December 31, 2003, we had an unsecured note due to Dutchess Private
Equities Fund, which is controlled by two board members of ours, Douglas
Leighton and Michael Novielli, of $150,000, bearing an interest rate of 6%. The
note commenced on December 13, 2003, and was due on demand. In January 2004, we
issued convertible debt, bearing an interest rate of 6%, in exchange for this
unsecured note. Given our limited operations, risk factors, speculative nature
and illiquidity of our stock this transaction is no less favorable than if we
had entered into it on an arms length basis with an unrelated third party
because we were not aware of any other creditors willing to provide debt
to the Company on better terms.

As of December 31, 2003, we had consulting fees payable our board member and
Chief Financial Officer, Barrett Evans, totaling $25,943; an owner who is also
an employee of ours, Aaron Gravitz, totaling $14,500; and an owner who is also
an officer of ours, Michael Hill, totaling, $50,000. Formal payment terms have
yet to be established. Given our limited operations, risk factors, speculative
nature and illiquidity of our stock this transaction is no less favorable than
if we had entered into it on an arms length basis with an unrelated third party
because we were not aware of any other creditors willing to provide debt to us
on better terms.

On January 5, 2004, we issued convertible debentures of $250,000 to Dutchess
Private Equities Fund. The debentures convert on January 5, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in the stock price. The
convertible debentures shall pay 6% cumulative interest, payable in cash or
stock at our option, at the time of conversion. Given our limited operations,
risk factors, speculative nature and illiquidity of our stock this transaction
is no less favorable than if we had entered into it on an arms length basis with
an unrelated third party because the Company was not aware of any other
creditors willing to provide debt to the Company on better terms.

On January 25, 2004, we issued convertible debentures of $50,000 to a beneficial
owner, Dutchess Private Equities Fund. The debentures convert on January 25,
2009. The holder of the debentures can convert the face value of the debenture
plus accrued interest into shares of our common stock at the lesser of (i) 75%
of the lowest closing bid price during the 15 full trading days prior to the
Conversion Date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price. The convertible debentures shall pay 6% cumulative interest,
payable in cash or stock at our option, at the time of conversion. Given our
limited operations, risk factors, speculative nature and illiquidity of our
stock this transaction is no less favorable than if we had entered into it on an
arms length basis with an unrelated third party because we were not aware of any
other creditors willing to provide debt to us on better terms.

On January 25, 2004, we contracted to issue 25,000 shares of our common stock to
a beneficial owner, Dutchess Private Equities Fund as an incentive for an
investment. These shares were valued at $38,625. Given our limited operations,
risk factors, speculative nature and illiquidity of our stock this transaction
is no less favorable than if we had entered into it on an arms length basis with
an unrelated third party because we were not aware of any other creditors
willing to provide debt to us on better terms.

On January 26, 2004, we issued convertible debentures of $50,000 to a beneficial
owner, eFund Capital Partners. The debentures convert on January 26, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in stock price.
The convertible debentures shall pay 6% cumulative interest, payable in cash or
stock at our option, at the time of conversion. Given our limited operations,
risk factors, speculative nature and illiquidity of our stock this transaction
is no less favorable than if we had entered into it on an arms length basis with
an unrelated third party because the Company was not aware of any other
creditors willing to provide debt to the Company on better terms.

On January 26, 2004, we contracted to issue 25,000 shares of our common stock to
a beneficial owner, eFund Capital Partners as an incentive for an investment.
These shares were valued at $43,041. Given our limited operations, risk factors,
speculative nature and illiquidity of our stock this transaction is no less
favorable than if we had entered into it on an arms length basis with an
unrelated third party because the we were not aware of any other creditors
willing to provide debt to us on better terms.

On February 4, 2004, we issued a debenture to a beneficial owner, Dutchess
Private Equities Fund totaling $155,000. The debenture does not earn any
interest. The term of the debenture was 14 calendar days. The debenture was paid
in full and there is no balance outstanding. Given our limited operations, risk
factors, speculative nature and illiquidity of our stock this transaction is no
less favorable than if we had entered into it on an arms length basis with an
unrelated third party because the we were not aware of any other creditors
willing to provide debt with 0% interest.

On February 17, 2004, we issued a beneficial owner, Dutchess Advisors 1,400,000
shares of our common stock for conversion of 14 shares of Series C Convertible
Preferred stock, which were originally valued at $0, since at that time we had
no equity and a shareholder deficit of ($901,936). Pursuant to the terms of the
Series C Convertible Preferred Stock each share of Series C Convertible
Preferred Stock converts into 100,000 shares of common stock. Given our limited
operations, risk factors, speculative nature and illiquidity of our stock this
transaction is no less favorable than if we had entered into it on an arms
length basis with an unrelated third party.

On February 17, 2004, we issued 100,000 shares of our common stock to a
beneficial owner, Dutchess Private Equities Fund for conversion of 1 share of
Series C Convertible Preferred stock, which were originally valued at $0, since
at that time we had no equity and a shareholder deficit of ($901,936). Pursuant
to the terms of the Series C Convertible Preferred Stock each share of Series C
Convertible Preferred Stock converts into 100,000 shares of common stock. Given
our limited operations, risk factors, speculative nature and illiquidity of our
stock this transaction is no less favorable than if we had entered into it on an
arms length basis with an unrelated third party.

On February 17, 2004, we issued 2,000,000 shares of our common stock to a
beneficial owner, eFund Capital Partners for conversion of 20 shares of Series C
Convertible Preferred stock, which were originally valued at $0, since at that
time we had no equity and a shareholder deficit of ($901,936). Pursuant to the
terms of the Series C Convertible Preferred Stock each share of Series C
Convertible Preferred Stock converts into 100,000 shares of common stock. Given
our limited operations, risk factors, speculative nature and illiquidity of our
stock this transaction is no less favorable than if we had entered into it on an
arms length basis with an unrelated third party.

On February 17, 2004, we issued 2,555,000 shares of our common stock to our
Chief Executive Officer, Michael Hill for conversion of 25.55 shares of Series C
Convertible Preferred stock, which where originally valued at $0, since at that
time we had no equity and a shareholder deficit of ($901,936). Pursuant to the
terms of the Series C Convertible Preferred Stock each share of Series C
Convertible Preferred Stock converts into 100,000 shares of common stock. Given
our limited operations, risk factors, speculative nature and illiquidity of our
stock this transaction is no less favorable than if we had entered into it on an
arms length basis with an unrelated third party.

On February 19, 2004, we issued convertible debentures of $305,000 to a
beneficial owner, eFund Capital Partners for $155,000 advanced in 2003, and
$155,000 advanced in 2004. The debentures convert on February 19, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the Conversion
Date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in stock price.
The convertible debentures shall pay 6% cumulative interest, payable in cash or
stock at our option, at the time of conversion. Given our limited operations,
risk factors, speculative nature and illiquidity of our stock this transaction
is no less favorable than if we had entered into it on an arms length basis with
an unrelated third party because the Company was not aware of any other
creditors willing to provide debt to the Company on better terms.

On February 19, 2004, we contracted to issue 152,500 shares of our common stock
to a beneficial owner, eFund Capital Partners as an incentive for an investment.
These shares were valued at $221,125. Given our limited operations, risk
factors, speculative nature and illiquidity of our stock this transaction is no
less favorable than if we had entered into it on an arms length basis with an
unrelated third party because we were not aware of any other creditors
willing to provide debt to us on better terms.

On March 9, 2004, we were issued a revolving credit facility by beneficial
owners, Dutchess Private Equities Fund and eFund totaling $50,000. The Revolver
carries an interest rate or 1% per month, and a minimum payment is due each
month of $500. We also had another $100,000 of notes payable outstanding to
another shareholder of ours. These notes bear interest at 15% and matured on
March 4, 2004. Given our limited operations, risk factors, speculative nature
and illiquidity of our stock this transaction is no less favorable than if we
had entered into it on an arms length basis with an unrelated third party
because we were not aware of any other creditors willing to provide debt to us
on better terms.

On March 10, 2004, we issued 10,000 shares of our common stock to each
beneficial owner Dutchess Private Equities Fund II and eFund Capital Partners
amounting to $25,000 each as an incentive for a loan. The shares were valued at
$34,500. Given our limited operations, risk factors, speculative nature and
illiquidity of our stock this transaction is no less favorable than if we had
entered into it on an arms length basis with an unrelated third party because
the Company was not aware of any other creditors willing to provide debt to the
Company on better terms.

On April 1, 2004, we issued convertible debentures of $90,000 to a beneficial
owner, Dutchess Private Equities Fund, II. The debentures convert on April 1,
2009. The holder of the debentures can convert the face value of the debenture
plus accrued interest into shares of our common stock at the lesser of (i) 75%
of the lowest closing bid price during the 15 full trading days prior to the
conversion date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price. The convertible debentures shall pay 8% cumulative interest. We
must make minimum payments of $1,000 per month to Dutchess Private Equities Fund
II. On April 1, 2004, we issued a warrant to Dutchess Private Equities Fund, II,
to purchase 90,000 of our common shares at an exercise price at $4.25 per share.
Given our limited operations, risk factors, speculative nature and illiquidity
of our stock this transaction is no less favorable than if we had entered into
it on an arms length basis with an unrelated third party because we were not
aware of any other creditors willing to provide debt to us on better terms.

On April 2, 2004, we issued convertible debentures of $90,000 to a beneficial
owner, eFund Capital Partners. The debentures convert on April 2, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in the stock
price. The convertible debentures shall pay 8% cumulative interest. We must make
minimum payments of $1,000 per month to the eFund Capital Partners. On April 2,
2004, we issued a warrant to eFund Capital Partners, to purchase 90,000 of our
common shares at an exercise price at $4.25 per share. Given our limited
operations, risk factors, speculative nature and illiquidity of our stock this
transaction is no less favorable than if we had entered into it on an arms
length basis with an unrelated third party because we were not aware of any
other creditors willing to provide debt to us on better terms.

On May 5, 2004, we issued convertible debentures of $90,000 to a beneficial
owner, Dutchess Private Equities Fund, II. The debentures convert on May 5,
2009. The holder of the debentures can convert the face value of the debenture
plus accrued interest into shares of our common stock at the lesser of (i) 75%
of the lowest closing bid price during the 15 full trading days prior to the
conversion date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price after the date in the preamble. The convertible debentures shall pay
8% cumulative interest. We must make minimum payments of $1,000 per month to
Dutchess Private Equities Fund, II. On May 5, 2004, we issued a warrant to
Dutchess Private Equities Fund, II, to purchase 90,000 of our common shares at
an exercise price at $4.25 per share. Given our limited operations, risk
factors, speculative nature and illiquidity of our stock this transaction is no
less favorable than if we had entered into it on an arms length basis with an
unrelated third party because we were not aware of any other creditors willing
to provide debt to us on better terms.

On May 5, 2004, we issued convertible debentures of $90,000 to a beneficial
owner, eFund Capital Partners. The debentures convert on May 5, 2009. The holder
of the debentures can convert the face value of the debenture plus accrued
interest into shares of our common stock at the lesser of (i) 75% of the lowest
closing bid price during the 15 full trading days prior to the conversion date
or (ii) 100% of the average of the five lowest closing bid prices for the 30
trading days immediately following the first reverse split in the stock price.
The convertible debentures shall pay 8% cumulative interest. We must make
minimum payments of $1,000 per month to the eFund Capital Partners. On May 5,
2004, we issued a warrant to eFund Capital Partners, to purchase 90,000 of our
common shares at an exercise price at $4.25 per share. Given our limited
operations, risk factors, speculative nature and illiquidity of our stock this
transaction is no less favorable than if we had entered into it on an arms
length basis with an unrelated third party because we were not aware of
any other creditors willing to provide debt to us on better terms.

On July 9, 2004, we issued convertible debentures of $180,000 to a beneficial
owner, Dutchess Private Equities Fund, II. The debentures convert on July 9,
2009. The holder of the debentures can convert the face value of the debenture
plus accrued interest into shares of our common stock at the lesser of (i) 75%
of the lowest closing bid price during the 15 full trading days prior to the
conversion date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price. The convertible debentures shall pay 8% cumulative interest,
payable in cash or stock at our option, at the time of conversion. The debenture
was issued at a discount of $30,000. On July 9, 2004, we issued a warrant to
Dutchess Private Equities Fund, II, to purchase 150,000 of our common shares at
an exercise price at $3.50 per share. Given our limited operations, risk
factors, speculative nature and illiquidity of our stock this transaction is no
less favorable than if we had entered into it on an arms length basis with an
unrelated third party because we were not aware of any other creditors
willing to provide debt to us on better terms.

On August 15, 2004, we issued convertible debentures of $144,000 to a beneficial
owner, Dutchess Private Equities Fund, II. The debentures convert on August 15,
2009. The holder of the debentures can convert the face value of the debenture
plus accrued interest into shares of our common stock at the lesser of (i) 75%
of the lowest closing bid price during the 15 full trading days prior to the
conversion date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price. The convertible debentures shall pay 8% cumulative interest,
payable in cash or stock at our option, at the time of conversion. This
debenture was issued at a discount of $24,000. On August 18, 2004, we issued a
warrant to Dutchess Private Equities Fund, II, to purchase 120,000 of our common
shares at an exercise price at $3.10 per share. Given our limited operations,
risk factors, speculative nature and illiquidity of our stock this transaction
is no less favorable than if we had entered into it on an arms length basis with
an unrelated third party because the Company was not aware of any other
creditors willing to provide debt to the Company on better terms.

On August 15, 2004, we issued convertible debentures of $60,000 to a beneficial
owner, eFund Small Cap Fund, LP. The debentures convert on August 15, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in stock price.
The convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On August 18, 2004, we issued a warrant to eFund Capital
Partners, to purchase 50,000 of our common shares at an exercise price at $3.10
per share. Given our limited operations, risk factors, speculative nature and
illiquidity of our stock this transaction is no less favorable than if we had
entered into it on an arms length basis with an unrelated third party because
the Company was not aware of any other creditors willing to provide debt to the
Company on better terms.

On September 25, 2004, we issued convertible debentures of $222,000 to a
beneficial owner, Dutchess Private Equities Fund. The debentures convert on
September 25, 2009. The holder of the debentures can convert the face value of
the debenture plus accrued interest into shares of our common stock at the
lesser of (i) 75% of the lowest closing bid price during the 15 full trading
days prior to the conversion date or (ii) 100% of the average of the five lowest
closing bid prices for the 30 trading days immediately following the first
reverse split in stock price. The convertible debentures shall pay 8% cumulative
interest, payable in cash or stock at our option, at the time of conversion.
This debenture was issued at a discount of $37,000.On September 25, 2004, we
issued a warrant to Dutchess Private Equities Fund, to purchase 185,000 of our
common shares at an exercise price at $3.75 per share. Given our limited
operations, risk factors, speculative nature and illiquidity of our stock this
transaction is no less favorable than if we had entered into it on an arms
length basis with an unrelated third party because we were not aware of any
other creditors willing to provide debt to us on better terms.

On September 25, 2004, we issued convertible debentures of $60,000 to a
beneficial owner, eFund Small Cap Fund, LP. The debentures convert on September
25, 2009. The holder of the debentures can convert the face value of the
debenture plus accrued interest into shares of our common stock at the lesser of
(i) 75% of the lowest closing bid price during the 15 full trading days prior to
the conversion date or (ii) 100% of the average of the five lowest closing bid
prices for the 30 trading days immediately following the first reverse split in
stock price. The convertible debentures shall pay 8% cumulative interest,
payable in cash or stock at our option, at the time of conversion. This
debenture was issued at a discount of $10,000. On September 25, 2004, we issued
a warrant to eFund Capital Partners, to purchase 50,000 of our common shares at
an exercise price at $3.75 per share. Given our limited operations, risk
factors, speculative nature and illiquidity of our stock this transaction is no
less favorable than if we had entered into it on an arms length basis with an
unrelated third party because we were not aware of any other creditors willing
to provide debt to us on better terms.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Bid and ask quotations for our common shares are routinely submitted by
registered broker dealers who are members of the National Association of
Securities Dealers on the NASD Over-the-Counter Electronic Bulletin Board. These
quotations reflect inner-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions. The high and low bid
information for our shares for each quarter for the last two years, so far as
information is reported, through the quarter ended December 31, 2004, as
reported by the Bloomberg Financial Network, are as follows:

Quarter Ended High Bid Low Bid
31-Mar-02 $ 0.86 $ 0.22
30-Jun-02 $ 0.51 $ 0.15
30-Sep-02 $ 0.20 $ 0.02
31-Dec-02 $ 0.03 $ 0.00
31-Mar-03 $ 2.00 $ 0.05
30-Jun-03 $ 0.35 $ 0.15
30-Sep-03 $ 5.35 $ 0.80
31-Dec-03 $ 3.50 $ 3.10
31-Mar-04 $ 4.75 $ 3.50
30-Jun-04 $ 5.05 $ 3.20
30-Sep-04 $ 4.05 $ 2.80
31-Dec-04* $ 4.50 $ 3.00
* THROUGH November 26, 2004

SHAREHOLDERS

As of September 30, 2004, there were approximately 158 holders of record of our
common stock.

DIVIDEND POLICY

We have never declared a cash dividend on our common stock and our Board of
Directors does not anticipate that we will pay cash dividends in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion
of our board of directors and will depend upon our financial condition,
operating results, capital requirements, restrictions contained in our
agreements and other factors which our board of directors deems relevant.

EXECUTIVE COMPENSATION

Annual Compensation Long Term Compensation
--------------------------------------- ----------------------------------------------------------
Awards Payouts
------------------------------ -----------------------
Restricted
Other Stock Securities
Bonus Annual Awards Underlying LTIP All Other
Name and Principal Position Year (1) Salary ($) ($) Comp ($) ($) Options/SARs Payout ($) Comp. ($)
- ---------------------------- -------- ---------- ----- -------- ---------- ------------- ---------- ----------
Michael Hill, Chief
Executive 2003 $9,000 0 0 0 0 0
Officer and Director (1)

Dennis Engh, President(1) 2003 $72,000 0 0 0 0 0
2002 $72,000 0 0 0 0 0
2001 $72,000 0 0 0 0 0
<FN>
(1) Mr. Dennis Engh served as our President until his resignation on January 15,
2004. Prior to January 15, 2004, we did not have a CEO and only had a President.
Mr. Engh's successor, Michael Hill, was entitled to receive $156,000 salary per
annum according to his Consulting Agreement dated August 18, 2003. However,
through December 31, 2003, Mr. Hill only earned $9,000 and accrued $50,000. He
has orally agreed to be paid $156,000 per year through the fiscal year ending
December 31, 2004. Mr. Hill received compensation in the form of shares our
common stock as a Director in 2004.

EXECUTIVE COMPENSATION

We do not currently have employment agreements with our executive officers.
However, Michael Hill, our Chief Executive Officer, has orally agreed to be paid
$156,000 per year through the fiscal year ending December 31, 2004.

DIRECTOR COMPENSATION

On February 13, 2004, we issued 150,000 registered shares of our common stock to
each director for services. We do not have a formal plan to compensate our
directors.

ADDITIONAL INFORMATION

Our common stock is registered with the SEC. We file with the SEC periodic
reports on Forms 10-KSB, 10-QSB and 8-K. We intend to send annual reports
containing audited financial statements to our shareholders. Additionally, we
filed with the Securities and Exchange Commission a registration statement on
Form SB-2 under the Securities Act of 1933 for the shares of common stock in the
offering, of which this prospectus is a part. This prospectus does not contain
all of the information in the registration statement and the exhibits and
schedules that were filed with the registration statement. For further
information we refer you to the registration statement and the exhibits and
schedules that were filed with the registration statement.

Statements contained in this prospectus about the contents of any contract or
any other document that is filed as an exhibit to the registration statement are
not necessarily complete, and we refer you to the full text of the contract or
other document filed as an exhibit to the registration statement. A copy of the
registration statement and the exhibits and schedules that were filed with the
registration statement may be inspected without charge at the Public Reference
Room maintained by the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of all or any part of the registration
statement may be obtained from the Securities and Exchange Commission upon
payment of the prescribed fee. Information regarding the operation of the Public
Reference Room may be obtained by calling the Securities and Exchange Commission
at 1-800-SEC-0330.

The Securities and Exchange Commission maintains a web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the SEC. The address of the site is
www.sec.gov.

FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
NeWave, Inc.
Irvine, California

We have audited the accompanying balance sheet of NeWave, Inc., as of December
31, 2003, and the statements of operations, stockholders' equity and cash flows
for the five months ended December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NeWave, Inc. as of December 31,
2003, and the results of its operations and its cash flows for the five months
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.

Rose, Snyder & Jacobs
A Corporation of Certified Public Accountants

ENCINO, CALIFORNIA

August 17, 2004

NEWAVE, INC.
BALANCE SHEET
DECEMBER 31, 2003
ASSETS

CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
Accounts receivable, net of allowance for doubtful accounts
of $125,000 at December 31, 2003. . . . . . . . . . . . . . . . . . 209,744
Employee advances . . . . . . . . . . . . . . . . . . . . . . . . . 19,820
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,101
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . 13,130
----------

TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 279,795
----------

PROPERTY & EQUIPMENT, net of accumulated depreciation
and amortization of $33,365. . . . . . . . . . . . . . . . . . . 205,941
----------

TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 485,736
==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Book overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,914
Current portion of long-term debt . . . . . . . . . . . . . . . . . 80,000
Related party loans . . . . . . . . . . . . . . . . . . . . . . . . 581,502
Accounts payable and accrued expenses . . . . . . . . . . . . . . . 159,706
----------

TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . 846,122
----------

LONG TERM LIABILITIES
Long-term debt, less current portion. . . . . . . . . . . . . . . . 100,000
----------

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 946,122
----------

COMMITMENTS AND CONTINGENCIES, NOTE 6

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, 20,000,000 shares authorized shares at $.001 par
value, 27,590 shares issued and outstanding at December 31, 2003. 28
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 144,972
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . (605,386)
----------

TOTAL SHAREHOLDERS' EQUITY (DEFICIT). . . . . . . . . . . . . . . . (460,386)
----------

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT). . . . . . . . . . . . . . . . . . . . . . . . . $ 485,736
==========

F-2

NEWAVE, INC
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD AUGUST 2003 THROUGH DECEMBER 31, 2003

NET REVENUE . . . . . . . . $1,151,517

OPERATING EXPENSES
Salaries. . . . . . . . . . 603,936
Advertising . . . . . . . . 425,473
Consulting fees . . . . . . 134,326
Other operating expenses. . 530,754
-----------
1,694,489
-----------

LOSS FROM OPERATIONS. . . (542,972)
-----------

OTHER INCOME (EXPENSES)
Interest expense. . . . . . (62,414)
-----------

LOSS BEFORE INCOME TAXES. (605,386)
-----------

Provision for income taxes. -
-----------

NET LOSS. . . . . . . . . $ (605,386)
===========

Earnings per share, basic $ ((25.77)

Earnings per share, diluted $ ((25.77)

Weighted average number of common
shares outstanding
for the five months ended
December 31, 2003 23,492

F-3

NEWAVE, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 2003 THROUGH DECEMBER 31, 2003

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . $ (605,386)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . 33,365
Bad debt expense. . . . . . . . . . . . . . . 125,000
(Increase) in current assets:
Accounts receivable . . . . . . . . . . . . . (334,744)
Employee advances . . . . . . . . . . . . . . (19,820)
Inventory . . . . . . . . . . . . . . . . . . (37,101)
Other current assets. . . . . . . . . . . . . (13,130)
Increase in current liabilities:
Accrued expenses and accounts payable . . . 159,706
-----------

NET CASH USED IN OPERATING ACTIVITIES . . . . (692,110)
-----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment. . . . . . (94,306)
-----------

NET CASH USED IN INVESTING ACTIVITIES . . . . (94,306)
-----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Book overdraft. . . . . . . . . . . . . . . . 24,914
Proceeds from related party debt. . . . . . . 1,247,230
Payments on related party debt. . . . . . . . (665,728)
Proceeds from long-term borrowings. . . . . . 188,000
Payments on long-term borrowings. . . . . . . (8,000)
-----------

NET CASH PROVIDED BY FINANCING ACTIVITIES . . 786,416
-----------

NET INCREASE (DECREASE) IN CASH . . . . . . . -

CASH AT BEGINNING OF PERIOD . . . . . . . . . -
-----------

CASH AT END OF PERIOD . . . . . . . . . . . . $ -
===========

SUPPLEMENTAL DISCLOSURE OF CASHFLOWS
Interest paid . . . . . . . . . . . . . . . . 25,000
Income taxes paid . . . . . . . . . . . . . . -
Noncash transactions:
Contribution of property and equipment . . 145,000
See independent auditors' report.

F-4

NEWAVE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION, AUGUST 18, 2003 THROUGH DECEMBER 31, 2003

ADDITIONAL
COMMON STOCK PAID IN ACCUMULATED
----------------------------
DATE MEMO ISSUED PAR CAPITAL DEFICIT TOTAL
- ------------------ ---------------------------------- ----------- --------------- ------------- ---------- ----------

BALANCE @ 08/18/03 - $ - $ - $ - $ -
---------------------------------- ----------- --------------- ------------- ----------

08/18/03 . . . . . Stock issuance, founder shares 8,000,000 8,000 (8,000) - -
Contribution of office
08/18/03 . . . . . Equipment from Efund - - 145,000 - 145,000
12/24/03 . . . . . Dutchess Advisors, LLC 1,400,000 1,400 (1,400) - -
12/24/03 . . . . . Dutchess Private Equities Fund, LP 100,000 100 (100) - -
12/31/03 . . . . . .Adjustment for Reverse Split (9,472,410) (9,472) (9,472) - -
12/31/03 . . . . . Net loss - - - (605,386) (605,386)

BALANCE @ 12/31/03 27,590 $ 28 $ 144,972 $(605,386) $(460,386)
=========== =============== ============= ========== ==========

F-5

NEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND BASIS OF PRESENTATION
- --------------------------------------

NeWave, Inc., dba Onlinesupplier.com (the "Company"), a privately held Nevada
corporation, was organized on February 14, 2001. The Company commenced
operations in August 2003. The Company offers a comprehensive line of products
and services at wholesale prices through an online club membership.
Additionally, the Company creates, manages and maintains effective website
solutions for eCommerce. The Company is doing business under
"Onlinesupplier.com".

On December 23, 2003, NeWave dba Onlinesupplier.com entered into a definitive
reorganization agreement with NeWave Inc., formerly known as Utah Clay
Technology, Inc, a publicly traded Utah Corporation. On January 15, 2004, all
outstanding shares of the Company's common stock were acquired by NeWave, Inc.
The purchase price consisted of $150,000 and the assumption of $165,000 in
convertible debt for 576,968 shares of NeWave dba Onlinesupplier.com's common
stock. Pursuant to the acquisition, NeWave dba Onlinesupplier.com became a
wholly-owned subsidiary of NeWave, Inc. Although from a legal perspective,
NeWave, Inc. acquired NeWave dba Onlinesupplier.com, the transaction is viewed
as a recapitalization of NeWave dba Onlinesupplier.com accompanied by the an
issuance of stock by NeWave dba Onlinesupplier.com for the net assets of NeWave,
Inc. This is because NeWave, Inc. did not have operations immediately prior to
the transaction, and following the reorganization, NeWave dba Onlinesupplier.com
was the operating company.

GOING CONCERN
- --------------

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
contemplate continuation of the Company as a going concern. The accompanying
financial statements do not reflect any adjustments that might result if the
Company is unable to continue as a going concern. The Company's losses and
negative cash flows from operations might indicate that the Company will be
unable to continue as a going concern. The ability of the Company to continue as
a going concern and appropriateness of using the going concern basis is
dependent upon, among other things, profitability of future operations and
additional cash infusion.

The Company is raising capital on an ongoing basis through traditional debt
financing, and through the issuance of convertible debentures. Management
believes this will generate the additional cash required to fund the Company's
operations and allow it to meet its obligations.

USE OF ESTIMATES
- ------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the accompanying
financial statements. Significant estimates made in preparing these financial
statements include the allowance for doubtful accounts, valuation allowance and
useful lives for depreciable and amortizable assets. Actual results could differ
from those estimates.

ACCOUNTS RECEIVABLE
- --------------------

The Company maintains an allowance for doubtful accounts for estimated losses
that may arise if any of its customers are unable to make required payments.
Management specifically analyzes the age of customer balances, historical bad
debt experience, customer credit-worthiness, and changes in customer payments
terms when making estimates of the uncollectibility of the Company's trade
accounts receivable balances. If the Company determines that the financial
conditions of any of its customers deteriorated, whether due to customer
specific or general economic issues, an increase in the allowance may be made.
Accounts receivable are written off when all collection attempts have failed.

F-6

INVENTORIES
- -----------

Inventories consist of a variety of wholesale goods purchased for individual
resale and are stated at the lower of cost, determined by the first-in,
first-out ("FIFO") method, or market. Management reviews on-hand inventory on a
weekly basis to identify possible obsolescence of inventory. Items identified
as obsolete inventory are compiled on a quarterly basis and are written-off from
inventory accordingly. The Company has not experience significant write-offs in
the past.

PROPERTY & EQUIPMENT
- ----------------------

FAIR VALUE OF FINANCIAL INSTRUMENTS
- ---------------------------------------

The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable, notes payable and accrued liabilities are
carried at cost, which approximates their fair value, due to the relatively
short maturity of these instruments.

REVENUE RECOGNITION
- --------------------

The Company recognizes income when the products are received by the customer.
The Company applies the provisions of SEC Staff Accounting Bulletin ("SAB") No.
104, "Revenue Recognition in Financial Statements" which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements.
The Company's revenues earned from membership setup fees and monthly charges are
recorded when the credit card transaction is processed. Current terms of the
onlinesupplier.com membership agreement stipulate that the customer pays a
nonrefundable $6.95 fee to set up an account. The customer then has a fourteen
day period to review the Company's offerings. If the customer does not cancel
the service within the fourteen day window, a charge of $29.95 is billed to the
customer's credit card on a monthly basis. SAB No. 104 outlines the basic
criteria that must be met to recognize revenue and provides guidance for the
disclosure of revenue recognition policies. The Company's revenue recognition
policy for sale of products is in compliance with SAB No. 104. Revenue from the
sale of products is recognized when a formal arrangement exists, the price is
fixed or determinable, the delivery is completed and collectibility is
reasonably assured. Generally, the Company extends credit to its customers and
does not require collateral. The Company performs ongoing credit evaluations of
its customers and historic credit losses have been within management's
expectations.

In 2003, the Company had four revenue streams: web hosting fees from its
customer's online stores, cross selling of services provided by affiliated
service providers, sales of customer lead information generated from potential
customers who decide not to use the Company's services and lastly, product sales
from the Company's online store. In 2004, the Company added additional revenue
streams: advertising income and commissions earned from referrals to affiliated
credit card processing service providers. The Company does not provide multiple
deliverables to its customers as described in EITF 00-21. Instead, the Company
generally uses one revenue stream to develop potential revenues from another
source, not from the same source. As such, the Company does not anticipate
that the adoption of EITF 00-21 has a material effect on the financial
statements.

The Company generates leads for Applied Merchant as potential customers of the
Company contact the Company's customer service department. The Company can not
reasonably determine the actual incremental cost incurred in the process of
generating each telephone call from a potential customer and therefore costs
are expensed as incurred.

The Company accounts for sales returns related to product sales on an individual
basis, as they occur. Sales returns related to product sales have not been
significant in the past.

NET LOSS PER SHARE
- ---------------------

Net loss per common share is computed using the weighted average number of
common shares outstanding during the periods presented. Convertible debentures
may have a dilutive effect on the Company's earnings per share in the future but
are not included in the calculation for the period from August 19, 2003 through
December 31, 2003 because they have an anti-dilutive effect in these periods.

F-7

Weighted Average Shares from Inception, 8/18/2003 through 12/31/2003

Outstanding shares 8/18/2003 Pre Split Reverse Split After Split
through 12/23/2003 8,000,000 7,525,926 344.33 21,857
Outstanding shares 12/23/2003
through 12/31/2003 9,500,000 562,963 344.33 1,635
--------------- ----------
Weighted average shares
5 months ended 12/31/03 8,088,889 23,492
Net income (605,386) (605,386)
EPS (0.07) (25.77)

ADVERTISING COSTS
- ------------------

Advertising and promotional materials are expensed when incurred. Total
advertising costs were $425,473 for the period from commencement of operations
through December 31, 2003.

SHIPPING AND HANDLING COSTS
- ------------------------------

Shipping and handling costs are expensed when incurred. The Company recognizes
all revenues and change of title to be FOB shipping point. All sales are
recorded upon shipment from the Company's warehouses. The Company does not
generally bill its customers for shipping and handling fees associated with the
sale and delivery of products. Total shipping and handling costs were $5,816 for
the period from commencement of operations through December 31, 2003, and
are recorded as other operating expenses.

INCOME TAXES
- -------------
The Company uses the liability method of accounting for income taxes. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to the financial statements carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. The measurement of deferred tax assets and liabilities is based
on provisions of applicable tax law. The measurement of deferred tax assets is
reduced, if necessary, by a valuation allowance based on the portion of tax
benefits that are more likely than not, not to be realized based on available
evidence.

No provision was made for Federal income tax since the Company has a significant
operating loss. Through December 31, 2003, the Company incurred a net operating
loss of $605,386. The net operating loss carry forwards may be used to reduce
taxable income through the year 2022. The availability of the Company's net
operating loss carry forwards are subject to limitation if there is a 50% or
more positive change in the ownership of the Company's stock. A valuation
allowance for 100% of the deferred tax asset, which is mainly is comprised of
loss carryforwards, has been recorded due to the uncertainty of its realization.

2. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2003 consists of the following:

Computers and office equipment $ 171,306
Software 68,000
-------
239,306
Less accumulated depreciation and amortization (33,365)
--------
$ 205,941

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at December 31, 2003 consists of the
following:

Accounts payable $ 82,475
Salaries and payroll taxes payable 77,231
------
$ 159,706

F-8

4. RELATED PARTY TRANSACTIONS

During the period ended December 31, 2003, a board member of the Company
provided debt financing to the Company totaling $45,000. Repayments during the
period ended December 31, 2003 totaled $19,057.

During the period ended December 31, 2003, a finance company controlled by a
board member of the Company provided debt financing to the Company totaling
$804,971. Repayments during the period ended December 31, 2003 totaled $630,333.
All advances from this finance company were short term borrowings which were
repaid within a month of the actual advance, in most cases. In no instance did
the advances remain outstanding for a prolonged period of time, over three
months.

During the period ended December 31, 2003, an owner who is also an officer of
the Company provided debt financing to the Company totaling $59,095. Repayments
during the period ended December 31, 2003 totaled $7,000.

During the period ended December 31, 2003, family members of an owner who is
also an officer of the Company provided debt financing to the Company totaling
$92,464. Repayments during the period ended December 31, 2003 totaled $8,773.

During the period ended December 31, 2003, an owner who is also an employee of
the Company provided debt financing to the Company totaling $20,700. Repayments
during the period ended December 31, 2003 totaled $565.

During the period ended December 31, 2003, an individual provided debt financing
to the Company totaling $225,000. This individual was given an equity incentive
to provide the debt financing. There were no repayments during the period ended
December 31, 2003.

During the period ended December 31, 2003, the Company received certain office
equipment as a contribution of capital from a finance company controlled by a
board member of the Company. Accordingly, the office equipment has been recorded
at its fair market value of $145,000, and additional paid in capital has been
increased by a corresponding amount.

As of December 31, 2003, the Company has an unsecured note due to a related
party of $50,000, bearing an interest rate of 15%. The note commenced on August
28, 2003, and is due on demand. This note was subsequently repaid in June 2004.

As of December 31, 2003, the Company has an unsecured note due to a related
party of $50,000, bearing an interest rate of 15%. The note commenced on
September 3, 2003, and is due on demand. This note was subsequently repaid in
June 2004.

As of December 31, 2003, the Company has an unsecured note due to a finance
company which is controlled by a board member of the Company of $150,000,
bearing an interest rate of 6%. The note commenced on December 13, 2003, and is
due on demand. In January 2004, the Company issued convertible debt, bearing an
interest rate of 6%, in exchange for this unsecured note.

As of December 31, 2003, the Company has a non-interest bearing note due to a
family member of an owner who is also an officer of the Company of $50,000. The
note commenced on August 28, 2003. This note was exchanged for 50,000 of the
Company's common shares in January 2004.

As of December 31, 2003, the Company has a non-interest bearing note due to a to
a family member of an owner who is also an officer of the Company of $10,000.
The note commenced on August 28, 2003. This note was exchanged for 10,000 of the
Company's common shares in January 2004.

As of December 31, 2003, the Company has an unsecured note due to a related
party of $125,000 bearing an interest rate of 6%. The note commenced on January
10, 2003 and is due on demand. In January 2004, the Company issued convertible
debt, bearing an interest rate of 6%, in exchange for this unsecured note.

As of December 31, 2003, the Company has an unsecured note due to an owner who
is also an employee of the Company of $5,635, bearing an interest rate of 8%.
The note commenced on August 18, 2003 and is due on demand.

As of December 31, 2003, the Company has consulting fees payable to a board
member, an owner who is also an employee of the Company and an owner who is also
an officer of the Company totaling $25,943, $14,500 and $50,000, respectively.
Formal payment terms have yet to be established.

As of December 31, 2003, the Company has a non-interest bearing note due to an
owner who is also an officer of the Company of $2,095. This note is due on
demand.

As of December 31, 2003, the Company has a non-interest bearing note due to a to
a family member of an owner who is also an officer of the Company of $23,691.
This note was exchanged for 28,000 of the Company's common shares in January
2004.

As of December 31, 2003, the Company has a non-interest bearing note due to a
company which is controlled by a board member of the Company of $24,638. Formal
payment terms have yet to be established.

F-9

5. LONG-TERM DEBT

The Company has an unsecured non-interest bearing note due to a finance company
of $180,000. This note is the amount due as of December 31, 2003 with regard to
a legal settlement consummated in August 2004. A payment of $30,000 was made in
August 2004. Payments of $12,500 are to be made beginning in September 2004
through August 2005.

The aggregate annual principal payments for long-term debt for the years
following December 31, 2003, are as follows, and reflect the effect of the
refinancings and pre-payments of long-term debt as discussed above:

2004 $ 80,000
2005 100,000
Total $ 180,000

6. COMMITMENTS AND CONTINGENCIES

LEGAL MATTERS
-------------

The Company is involved in certain legal actions and claims arising in the
ordinary course of business. It is the opinion of management, that such
litigation and claims will be resolved without a material effect on the
Company's financial position or statement of operations.

7. LEASES

The Company occupies its offices in Goleta, California without a formal lease on
a month-to-month basis. Monthly rent was $12,364 during the period ended
December 31, 2003. This agreement was subsequently terminated and the Company
vacated the premises in July 2004.

The Company signed a formal lease for office space at another location in
Goleta, California on April 9, 2004. The lease commenced on April 15, 2004 and
has a term of five years and one half month. Monthly rent is scheduled at
$15,642.

Minimum future rental payments under non-cancelable operating leases as of
December 31, 2003 for each of the next five years and in the aggregate are as
follows:

2004 $ 109,494
2005 187,704
2006 187.704
2007 187,704
2008 187,704
Thereafter 62,568
-------
Total $ 922,878

8. CONCENTRATION OF CREDIT RISK

The Company sells a substantial portion of its product to one customer. During
the period ended December 31, 2003, sales to that customer aggregated $138,820.
At December 31, 2003, amounts due from that customer included in trade accounts
receivable, were $93,714.

9. SUBSEQUENT EVENTS

The Company effectuated a 344.33 to 1 reverse stock split of its common stock on
February 9, 2004. All shares have been stated to retroactively affect this
reverse stock split.

10. REVENUES

Categorized revenues are as follows:

Membership revenues. . $415,942
- ---------------------- --------
Cross-selling revenues $538,173
- ---------------------- --------
Lead revenues. . . . . $143,723
- ---------------------- --------
Product sales. . . . . $ 53,679
- ---------------------- --------
$1,151,517

F-10

NEWAVE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS

Unaudited Audited
Sept 30, December 31,
2004 2003
---------- ------------
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 188,930 -
Accounts receivable, net of allowance for doubtful accounts
of $185,000 and $125,000, respectively. . . . . . . . . . . . . . . . . 254,868 209,744
Loans receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,402 -
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,319 37,101
Prepaid Consulting Services . . . . . . . . . . . . . . . . . . . . . . 910,688 -
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . 150,477 13,130
Receivable from related parties. . . . . . . . . . . . . . . . . . . . 30,000 -
Employee advances. . . . . . . . . . . . . . . . . . . . . . . . . . . - 19,820
----------- -----------

TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . $1,586,684 $279,795
----------- -----------

PROPERTY & EQUIPMENT, net of accumulated depreciation
and amortization of $91,672 and $33,365, respectively . . . . . . . . 396,526 205,941
------------ ----------

DEPOSITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,392 -

TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,999,602 $485,736
============ ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,849 $ 24,914
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . 394,795 159,706
Loans payable - related parties . . . . . . . . . . . . . . . . . . . . 50,000 581,502
Current portion of notes payable . . . . . . . . . . . . . . . . . . . . 128,637 80,000
------------ ----------

TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . 692,281 846,122
------------ ----------

LONG TERM LIABILITIES
Convertible debt, net of discount of $774,677. . . . . . . . . . . . . 1,059,323 100,000
------------ ----------

TOTAL LONG TERM LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 1,059,323 100,000
------------ ----------

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,604 946,122
------------ ----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, authorized 100,000,000 shares at $.001 par
value, issued and outstanding 11,295,039 shares as of September 30, 2004. 11,297 28
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 4,351,457 144,972
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (4,055,417) (605,386)
Subscription Receivable. . . . . . . . . . . . . . . . . . . . . . . . . (59,880) -
Share to be Issued. . . . . . . . . . . . . . . . . . . . . . . . . . . 541 -
------------ ----------

TOTAL SHAREHOLDERS' EQUITY (DEFICIT). . . . . . . . . . . . . . . . . . 247,998 (460,386)
------------ ----------

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT). . . . . . . . . . . . . . . . . . . . . . . . . . . $1,999,602 485,736
============ ==========
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

F-11

NEWAVE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Nine Months August 18, 2003
Ended September 30, Ended September 30, thru September 30,
2004 2004 2003
------------------- ------------------- ------------------

REVENUE . . . . . . . . . . . . $ 2,105,183 $ 4,761,562 $ 334,267

OPERATING EXPENSES
Salaries . . . . . . . . . . 815,013 2,005,123 134,126

Advertising . . . . . . . . . 706,435 1,807,616 140,806

Directors' Fees . . . . . . . 1,548,000

Other operating expenses . . 879,168 1,855,011 175,891
----------------- ------------------ -----------------

TOTAL OPERATING EXPENSES . . . 2,400,616 7,215,750 458,100
----------------- ------------------ -----------------

Loss from operations. . . . . . (295,433) (2,454,188) 116,556
----------------- ------------------ -----------------

OTHER INCOME (EXPENSES)

Interest expense. . . . . . . . (219,596) (890,146) (7,277)
------------------ ------------------ -----------------

TOTAL OTHER INCOME
(EXPENSES). . . . . . . . . . (219,596) (890,146) 7,277
------------------ ------------------- -----------------

NET LOSS. . . . . . . . . . . . (515,029) (3,344,334) (123,833)
------------------ ------------------- -----------------

BASIC AND DILUTED LOSS
PER SHARE . . . . . . . . . . $ (0.05) $(0.31) $(5.33)
================== =================== =================

WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING. 11,227,980 10,923,658 23,234
================== =================== =================

SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

F-12

NEWAVE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Nine From August
months ended 18, 2003 thru
September 30, September 30,
2004 2003
---------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . $ (3,344,334) $ (123,833)
Adjustment to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization . . . . . . . . 771,569 -
Bad debt expense . . . . . . . . . . . . . . 90,000 -
Issuance of stock for directors fees. . . . . . . 1,548,000 -
Debt conversion feature expense . . . . . . . . . 458,500 -
Debt Inducement Expense. . . . . . . . . . . . . 337,291 -
(Increase) / decrease in current assets:
Accounts receivable. . . . . . . . . . . . . . . (135,124) (160,235)
Accounts receivable - other . . . . . . . . .. . 14,418 (9,800)
Prepaid Expenses . . . . . . . . . . . . . . . . (440,000) -
Inventory. . . . . . . . . . . . . . . . . . . . (9,218) -
Other current assets . . . . . . . . . . . . . . (167,347) -
Other assets. . . . . . . . . . . . . . . . . .. (16,392) -
Increase in current liabilities:
Accrued expenses and accounts payable. . . . . 144,646 21,392
---------------- ------------

NET CASH USED IN OPERATING ACTIVITIES. . . . . . (747,991) (272,476)
---------------- ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment . . . . . . . (248,892) (58,317)
---------------- -----------

NET CASH USED IN INVESTING ACTIVITIES. . . . . . (248,892) (58,317)
---------------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for acquisition of Utah Clay, Inc. . . . (150,000) -
Proceeds from line of credit. . . . . . . .. . . 1,918,382 8,735
Payments on line of credit. . . . . . . .. . . .. (1,824,447) -
Proceeds from issuance of convertible debentures 1,660,300 -
Proceeds from issuance of stock. . . . . . . . . 1,000 -
Payment to reacquire stock. . . . . . . . . . . (15,000) -
Proceeds from bank borrowings. . . . . . . .. . - 6,200
Payments on bank borrowings. . . . . . . . . . . (1,998) -
Payments on long term borrowings. . . . . . . . (55,000) -
Proceeds from related party debts. . . . . . . . 50,000 -
Payment on Related Party Debts. . . . . . . .. . (317,424) 331,000
---------------- -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . 1,185,813 345,935
---------------- -----------

NET INCREASE IN CASH. . . . . . . . . . . . . . 188,930 15,142

CASH AT BEGINNING OF PERIOD. . . . . . . . . . . 0 0
---------------- ----------

CASH AT END OF PERIOD. . . . . . . . . . . . . . $ 188,930 15,142
================ ==========
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

F-13

NEWAVE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2004

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND BASIS OF PRESENTATION
----------------------------------

NeWave, Inc., formerly known as Utah Clay Technology, Inc. (together with its
subsidiary, the "Company") historically engaged in the mining, processing and
marketing of minerals. After experiencing losses, NeWave sold substantially all
of its assets relating to its prior operations. On December 23, 2003, NeWave,
Inc. entered into an Agreement and Plan of Reorganization with NeWave dba
Onlinesupplier.com in which NeWave dba Onlinesupplier became a wholly owned
subsidiary of NeWave, Inc. The Agreement and Plan of Reorganization was
consummated on January 15, 2004.

The Company currently offers an online club membership for a comprehensive line
of products and services at wholesale prices. The Company's main source of
revenue comes from membership fees from their clients. Additionally, the Company
creates, manages and maintains effective website solutions for eCommerce. The
Company is doing business under the name "Onlinesupplier.com".

Although from a legal perspective, NeWave, Inc. acquired NeWave dba
Onlinesupplier.com, the transaction is viewed as a recapitalization of NeWave
dba Onlinesupplier.com accompanied by an issuance of stock by NeWave
Onlinesupplier.com for the net assets of NeWave, Inc. This is because NeWave,
Inc. did not have operations immediately prior to the transaction, and following
the reorganization, NeWave Onlinesupplier.com was the operating company. NeWave,
Inc. dba Onlinesupplier.com commenced operations in August 2003.

The accompanying unaudited condensed interim financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for the presentation of interim financial information, but
do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. The 2003 audited
financial statements were filed on September 2, 2004 with the Securities and
Exchange Commission and are hereby referenced. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results for the three-months period ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2004.

GOING CONCERN
- --------------

The accompanying financial statements have been prepared on a going concern
basis of accounting, which contemplates continuity of operations, realization of
assets and liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern. The Company's
losses and negative cash flows from operations might indicate that the Company
will be unable to continue as a going concern. The ability of the Company to
continue as a going concern and appropriateness of using the going concern basis
is dependent upon, among other things, profitability of future operations and
additional cash infusion.

PRINCIPLES OF CONSOLIDATION
- -----------------------------

The accompanying financial statements include the accounts of NeWave, Inc.,
formerly Utah Clay Technology, Inc. (legal acquired, the "Parent"), and its 100%
subsidiary NeWave dba Onlinesupplier.com. All significant intercompany accounts
and transactions have been eliminated in the consolidation. The results for the
nine months ended September 30, 2004 include the accounts of NeWave dba
Onlinesupplier.com, and the results of operations of the Parent from January 15,
2004 through September 30, 2004. The 2003 results only include the operations of
NeWave dba Onlinesupplier.com

USE OF ESTIMATES
- ------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the accompanying
financial statements. Significant estimates made in preparing these financial
statements include the allowance for doubtful accounts, deferred tax asset
valuation allowance and useful lives for depreciable and amortizable assets.
Actual results could differ from those estimates.

CASH EQUIVALENTS
- -----------------

The Company considers all highly liquid investments purchased with an original
maturity at date of purchase of three months or less to be cash equivalents.
Cash and cash equivalents are carried at cost, which approximates market value.

F-14

PREPAID CONSULTING SERVICES
- -----------------------------

During the nine months ended September 30, 2004,the Company issued 50,000 shares
of common stock valued at $175,000 for business consulting services to be
rendered during the next 12 months. A retainer fee of $10,000 is also payable at
September 30, 2004 in relation to these services; and an additional $10,000 was
paid in September 2004. During the nine months ended September 30, 2004, the
Company made deposits totaling $440,000 for a marketing contract to be
consummated during the three months ended December 31, 2004. During the three
months ended March 31, 2004, the Company issued 580,000 shares common shares
valued at $969,350 and paid $25,000 cash for advertising and legal services to
be rendered during the following 8 to 12 months. The Company expensed $298,363
and $718,663 during the three months and nine months ended September 30, 2004,
respectively, leaving a prepaid balance outstanding of $910,668 at September 30,
2004.

ACCOUNTS RECEIVABLE
- --------------------

The Company maintains an allowance for doubtful accounts for estimated losses
that may arise if any of its customers are unable to make required payments.
Management specifically analyzes the age of customer balances, historical bad
debt experience, customer credit-worthiness, and changes in customer payments
terms when making estimates of the uncollectability of the Company's trade
accounts receivable balances. If the Company determines that the financial
conditions of any of its customers deteriorated, whether due to customer
specific or general economic issues, increase in the allowance may be made.
Accounts receivable are written off when all collection attempts have failed.

INVENTORIES
- -----------

PROPERTY & EQUIPMENT
- ----------------------

Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets,
e.g. computers (5 years), software (3 years), office equipment and furniture
(3-7 years), tenant improvements (life of the lease - approximately 60 months).
Leasehold improvements are amortized over the remaining lease term at the date
of installation.

FAIR VALUE OF FINANCIAL INSTRUMENTS
- ---------------------------------------

The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried at
cost, which approximates their fair value, due to the relatively short maturity
of these instruments. As of September 30, 2004 and December 31, 2003, the
Company's notes payable have stated borrowing rates that are consistent with
those currently available to the Company and, accordingly, the Company believes
the carrying value of these debt instruments approximates their fair value.

REVENUE RECOGNITION
- --------------------

NET LOSS PER SHARE
- ---------------------

Net loss per common share is computed using the weighted average number of
common shares outstanding during the periods presented. Convertible debentures
may have a dilutive effect on the Company's earnings per share in the future but
are not included in the calculation for the three months and nine months ended
September 30, 2004 and for the period from August 18, 2003 through September 30,
2003 because they have an anti-dilutive effect in these periods.

F-15

WEIGHTED AVERAGE SHARES FROM INCEPTION, 8/18/2003 THROUGH 9/30/2003

Pre Split Reverse Split After Split
Outstanding shares 8/18/2003
through 9/30/2003 8,000,000 8,000,000 344.33 23,234
Net loss (123,833)
EPS (5.33)

ADVERTISING COSTS
- ------------------

Advertising and promotional activities are expensed when incurred. Total
advertising costs were $706,435 and $1,807,616 for the three months and nine
months ended September 30, 2004, respectively, and $140,806 for the period from
August 18, 2003 through September 30, 2003.

INCOME TAXES
- -------------

The Company uses the liability method of accounting for income taxes. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to the financial statements carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. The measurement of deferred tax assets and liabilities is based
on provisions of applicable tax law. The measurement of deferred tax assets is
reduced, if necessary, by a valuation allowance based on the portion of tax
benefits that are more likely than not, not to be realized based on available
evidence.

No provision was recorded for Federal income tax since the Company has a
significant operating loss. Through December 31, 2003, the Company incurred a
net operating loss of $605,386. The net operating loss carry forwards may be
used to reduce taxable income through the year 2022. The availability of the
Company's net operating loss carry forwards are subject to limitation if there
is a 50% or more positive change in the ownership of the Company's stock. A
valuation allowance for 100% of the deferred tax asset, which is mainly is
comprised of loss carryforwards, has been recorded due to the uncertainty of its
realization.

2. NOTES PAYABLE AND RELATED PARTIES

The Company issued a note payable to an unrelated party in 2003. This note was
settled for $180,000 in August of 2004, payable $30,000 in August 2004, and
$12,500 per month thereafter. As of September 30, 2004, the remaining balance of
this note was $125,000, which is presented as current.

The Company entered into a consulting agreement with Barrett Evans, a member of
the Board of Directors, on August 18, 2003. The term of the agreement was for
twelve months at $10,000 per month. The Company paid $6,230 on the agreement
during the three months ended September 30, 2004 and owes $96,136 at September
30, 2004.

The Company entered into a consulting agreement with Michael Hill, the Chief
Executive Officer, on August 18, 2003. The term of the agreement was for twelve
months at $12,000 per month. The Company paid $51,000 on the agreement during
the three months ended September 30, 2004 and owes $38,591 at September 30,
2004.

3. CONVERTIBLE DEBENTURES

During the quarter ended March 31, 2004, the Company issued a total of $533,000
worth of 6%, 5-Year Term, Convertible Debentures.

The Debentures pay six percent (6%) cumulative interest and are subject to
automatic conversion at the end of five years from the date of issuance at which
time all Debentures outstanding will be automatically converted based upon the
formula set forth in the agreement. The Debentures convert at the lower of a)
75% of the lowest closing bid price of the common stock during the 15 trading
days immediately preceding conversion or b) 100% of the average of the five
lowest closing bid prices for the 30 trading days immediately following the
first reverse split in the stock price. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture for
the quarter ended March 31, 2004 has been recorded is interest expense in the
amount of $202,000. Some of the debentures provided for the holders to be
granted shares as inducement to contract the debentures. Inducement expense
totaling $337,291 was recorded as interest expense during the three months ended
March 31, 2004.

During the quarter ended June 30, 2004, the Company issued a discounted total of
$300,000 worth of 8%, 5-Year Term, Convertible Debentures. The total discount in
the amount of $60,000 is amortized over the 5-year term of the debentures. Total
amortization was $2,500 for the three months ended June 30, 2004.

F-16

The Debentures pay eight percent (8%) cumulative interest and are subject to
automatic conversion at the end of five (5) years from the date of issuance at
which time all Debentures outstanding will be automatically converted based upon
the formula set forth in the agreement. The Debentures convert at the lower of
a) 75% of the lowest closing bid price of the common stock during the 15 trading
days immediately preceding conversion or b) 100% of the average of the five
lowest closing bid prices for the 30 trading days immediately following the
first reverse split in the stock price. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture for
the quarter ended June 30, 2004 has been recorded in the amount of $90,000.

During the quarter ended September 30, 2004, the Company issued a discounted
total of $666,000 worth of 8%, 5-Year Term, Convertible Debentures. The total
discount in the amount of $111,000 is amortized over the 5-year term of the
debentures. The holders of the debentures are also granted warrants to purchase
550,000 shares of common stock. The value of the warrant is $411,157, which is
amortized over the 5 year term of the debentures . Total amortization was
$54,778 for the three months ended September 30, 2004. The warrants associated
with the convertible debenture are not detachable.

The Debentures shall pay eight percent (8%) cumulative interest and are subject
to automatic conversion at the end of five (5) years from the date of issuance
at which time all Debentures outstanding will be automatically converted based
upon the formula set forth in the agreement. The Debentures convert at the lower
of a) 75% of the lowest closing bid price of the common stock during the 15
trading days immediately preceding conversion or b) 100% of the average of the
five lowest closing bid prices for the 30 trading days immediately following the
first reverse split in the stock price. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture for
the quarter ended September 30, 2004 has been recorded in the amount of
$166,500, equal to 25% of the face value of each note.

4. COMMITMENTS AND CONTINGENCIES

Management believes that there are no claims or litigation pending, the outcome
of which could have a material adverse effect on the financial condition or
operating results.

5. RECAPITALIZATION

On January 15, 2004, the Company consummated an Agreement and Plan of
Reorganization with NeWave dba Onlinesupplier.com, a Nevada Corporation,
pursuant to which the Onlinesupplier.com became a wholly owned subsidiary of
NeWave, Inc.

All the shares of NeWave dba Onlinesupplier.com were acquired by the Parent in
exchange for 100% of the common shares of the Parent. In addition, the Company
issued 94 shares of Class C Convertible Preferred Stock to the shareholders of
NeWave, Inc. (Parent), and 1 share of Class C Preferred Stock to Dutchess
Private Equities Fund L.P. as an incentive for an investment of a convertible
debenture in the amount of $250,000 cash and the release of all outstanding debt
of UCT with the exception of $165,000 debt related to certain convertible
debentures of UCT issued in November and December 2001. 14 shares of 95 total
Series C Preferred shares were issued to Dutchess Advisors, LLC. Thus, Dutchess
Private Equity Fund, L.P. and Dutchess Advisors, LLC together own 15 shares of
the Class C Preferred Stock of the Registrant. The 95 Class C Preferred Stock
shares were converted into 9,500,000 shares of the Company's common stock after
giving effect to reverse stock split.

The acquisition of NeWave dba Onlinesupplier.com was accounted for as a
recapitalization of NeWave dba Onlinesupplier.com followed by an issuance of
stock by NeWave dba Onlinesupplier.com for the assets of the Parent.

6. EQUITY

COMMON STOCK
- -------------

During the quarter ended March 31, 2004, the following common stock transactions
were made:

The Company issued 80,000 shares of the Company's common stock and agreed to
issue an additional 500,000 shares for services totaling $969,350.

The Company issued 750,000 shares of the Company's common stock for board
compensation amounting to $1,548,000.

The Company issued 77,290 shares of the Company's common stock for the
conversion of $165,000 previously-issued debenture.

The Company issued 20,000 shares of the Company's common stock and agreed to
issue an additional 203,000 shares as an incentive for an investment in
debentures. The value of these shares is estimated at $337,291.

The Company effectuated the 344.33 to 1 reverse stock split on February 9, 2004.
All shares have been stated to retroactively affect this reverse stock split.

During the quarter ended June 30, 2004, the following common stock transactions
were made:

F-17

The Company physically issued 250,000 shares of the Company's common stock which
were to be issued in the three months ended March 31, 2004 for services
amounting to $430,000.

The Company also issued 50,000 shares of common stock for $100,000 of services
during the three months ended June 30, 2004.

During the quarter ended September 30, 2004, the following common stock
transactions were made:

The Company physically issued 100,473 shares of the Company's common stock which
were to be issued in the three months ended March 31, 2004 in relation to the
merger agreement consummated on January 15, 2004

The Company also issued 50,000 shares of common stock for $75,000 of services
during the three months ended September 30, 2004.

The Company issued warrants to purchase 550,000 and 850,000 shares of common
stock during the three months and nine months ended September 30, 2004,
respectively.

7. Equity Line of Credit

The Company entered into an Investment Agreement with Preston Capital Partners,
LLC, also referred to as an Equity Line of Credit. This agreement provides that,
following notice to Preston, the Company may put to Preston up to $4.5 million
in shares of its common stock for a purchase price equal to 98% of the lowest
closing bid price on the Over-the-Counter Bulletin Board of our common stock
during the five day period following that notice. The number of shares that we
will be permitted to put pursuant to the Investment Agreement will be equal to
an amount up to $1,000,000.

The Company believes its Investment Agreement with Preston will be sufficient to
fund operations and capital requirements as presently planned over the next
twelve months.

8. Revenues

Categorized revenues are as follows:

NEWAVE REVENUE BREAKOUT

3 months ended 9 months ended 8/18/03 thru
9/30/2004 9/30/2004 9/30/2003
-------------- -------------------- ---------

Membership revenues. . . . . 857,349 2,136,077 158,131
Cross-selling revenues . . . 696,660 1,642,736 122,244
Lead revenues. . . . . . . . 442,751 854,388 45,525
Product sales. . . . . . . . 48,243 59,828 8,367
Advertising income . . . . . 19,400 19,400 -
Merchant commission revenues 40,780 49,134 -
-------------- -------------------- ---------
2,105,183 4,761,563 334,267
============== ==================== =========

F-18

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

INDEMNIFICATION OF DIRECTORS AND OFFICERS

ARTICLE VI of our Bylaws states that to the extent and in the manner permitted
by the laws of the State of Utah, and specifically as is permitted under the
Utah Revised Business Corporation Act, the corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement.

EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth our expenses in connection with this registration
statement. All of these expenses are estimates, other than the fees and expenses
of legal counsel and filing fees payable to the Securities and Exchange
Commission.

Filing Fee--Securities and Exchange Commission $1,800
Legal Expenses $6,000
Accounting Expenses $7,000
Blue Sky Fees and Expenses $1,000
Printing Expenses $3,000
Miscellaneous expenses $7,100
---------
Total: $25,000

RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended March 31, 2004, the following common stock transactions
were made:

On January 25, 2004, we issued convertible debentures of $50,000 to Dutchess
Private Equities Fund. The debentures convert on January 25, 2009. The holder of
the debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 6% cumulative interest, payable in cash or
stock at our option, at the time of conversion.

On January 25, 2004, we contracted to issue 25,000 shares of our common stock
to Dutchess Private Equities Fund as an incentive for an investment. These
shares were valued at $38,625.

On January 26, 2004, we issued convertible debentures of $50,000 to eFund
Capital Partners. The debentures convert on January 26, 2009. The holder of the
debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 6% cumulative interest, payable in cash or
stock at our option, at the time of conversion.

On January 26, 2004, we contracted to issue 25,000 shares of our common stock to
eFund Capital Partners as an incentive for an investment. These shares were
valued at $43,041.

On February 4, 2004, we issued a debenture to a related party totaling $155,000.
The term of the debenture was 14 calendar days. The debenture was paid in full
and there is no balance outstanding.

On February 19, 2004, we issued convertible debentures of $305,000 to eFund
Capital Partners for $155,000 advanced in 2003, and $155,000 advanced in 2004.
The debentures convert on February 19, 2009. The holder of the debentures can
convert the face value of the debenture plus accrued interest into shares of our
common stock at the lesser of (i) 75% of the lowest closing bid price during the
15 full trading days prior to the conversion date or (ii) 100% of the average of
the five lowest closing bid prices for the 30 trading days immediately following
the first reverse split in stock price. The convertible debentures shall pay 6%
cumulative interest, payable in cash or stock at our option, at the time of
conversion.

On February 19, 2004, we contracted to issue 152,500 shares of our common stock
to eFund Capital Partners as an incentive for an investment. These shares were
valued at $221,125.

On March 3, 2004, we issued convertible debentures of $28,000 to Preston Capital
Partners. The debentures convert on March 3, 2009. The holder of the debentures
can convert the face value of the debenture plus accrued interest into shares of
our common stock at the lesser of (i) 75% of the lowest closing bid price during
the 15 full trading days prior to the conversion date or (ii) 100% of the
average of the five lowest closing bid prices for the 30 trading days
immediately following the first reverse split in stock price. The convertible
debentures shall pay 6% cumulative interest, payable in cash or stock at our
option, at the time of conversion.

On March 9, 2004, we were issued a revolving credit facility by Dutchess Private
Equities Fund and eFund totaling $50,000. The Revolver carries an interest rate
or 1% per month, and a minimum payment is due each month of $500. We also had
another $100,000 of notes payable outstanding to another shareholder of ours.
These notes bear interest at 15% and matured on March 4, 2004.

On March 10, 2004, we issued 10,000 shares of our common stock to each Dutchess
Private Equities Fund II and eFund Capital Partners amounting to $25,000 each as
an incentive for a loan. The shares were valued at $34,500.

We issued 80,000 shares of the our common stock and agreed to issue an
additional 500,000 shares for services totaling $969,350.

We issued 77,290 shares of our common stock for the conversion of $165,000
previously-issued debenture from December 2001.

We effectuated a 344.33 to 1 reverse stock split on February 9, 2004. All shares
have been stated to retroactively affect this reverse stock split.

We issued 250,000 shares of our common stock which were to be issued in the
three months ended March 31, 2004 for services amounting to $430,000.

During the quarter ended June 30, 2004, the following common stock transactions
were made:

On April 1, 2004, we issued convertible debentures of $90,000 to Dutchess
Private Equities Fund, II. The debentures convert on April 1, 2009. The holder
of the debentures can convert the face value of the debenture plus accrued
interest into shares of our common stock at the lesser of (i) 75% of the lowest
closing bid price during the 15 full trading days prior to the conversion date
or (ii) 100% of the average of the five lowest closing bid prices for the 30
trading days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest. We must make minimum
payments of $1,000 per month to Dutchess Private Equities Fund II. On April 1,
2004, we issued a warrant to Dutchess Private Equities Fund, II, to purchase
90,000 of our common shares at an exercise price at $4.25 per share.

On April 2, 2004, we issued convertible debentures of $90,000 to eFund Capital
Partners. The debentures convert on April 2, 2009. The holder of the debentures
can convert the face value of the debenture plus accrued interest into shares of
our common stock at the lesser of (i) 75% of the lowest closing bid price during
the 15 full trading days prior to the conversion date or (ii) 100% of the
average of the five lowest closing bid prices for the 30 trading days
immediately following the first reverse split in the stock price. The
convertible debentures shall pay 8% cumulative interest. We must make minimum
payments of $1,000 per month to eFund Capital Partners. On April 2, 2004, we
issued a warrant to eFund Capital Partners, to purchase 90,000 of our common
shares at an exercise price at $4.25 per share.

On May 5, 2004, we issued convertible debentures of $90,000 to Dutchess Private
Equities Fund, II. The debentures convert on May 5, 2009. The holder of the
debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price after the date
in the preamble. The convertible debentures shall pay 8% cumulative interest. We
must make minimum payments of $1,000 per month to Dutchess Private Equities
Fund, II. On May 5, 2004, we issued a warrant to Dutchess Private Equities Fund,
II, to purchase 90,000 of our common shares at an exercise price at $4.25 per
share.

On May 5, 2004, we issued convertible debentures of $90,000 to eFund Capital
Partners. The debentures convert on May 5, 2009. The holder of the debentures
can convert the face value of the debenture plus accrued interest into shares of
our common stock at the lesser of (i) 75% of the lowest closing bid price during
the 15 full trading days prior to the conversion date or (ii) 100% of the
average of the five lowest closing bid prices for the 30 trading days
immediately following the first reverse split in the stock price. The
convertible debentures shall pay 8% cumulative interest. We must make minimum
payments of $1,000 per month to eFund Capital Partners. On May 5, 2004, we
issued a warrant to eFund Capital Partners, to purchase 90,000 of our common
shares at an exercise price at $4.25 per share.

We issued 50,000 shares of our common stock for $100,000 of services during the
three months ended June 30, 2004.

On July 9, 2004, we issued convertible debentures of $180,000 to Dutchess
Private Equities Fund, II, L.P. The debentures convert on July 9, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in stock price.
The convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. The debenture was issued at a
discount of $30,000. On July 9, 2004, we issued a warrant to Dutchess Private
Equities Fund, II, to purchase 150,000 of our common shares at an exercise price
at $3.50 per share.

On August 15, 2004, we issued convertible debentures of $60,000 to eFund Small
Cap Fund, LP. The debentures convert on August 15, 2009. The holder of the
debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On August 18, 2004, we issued a warrant to eFund Capital
Partners, LLC to purchase 50,000 of our common shares at an exercise price at
$3.10 per share.

On September 25, 2004, we issued convertible debentures of $222,000 to Dutchess
Private Equities Fund, LP. The debentures convert on September 25, 2009. The
holder of the debentures can convert the face value of the debenture plus
accrued interest into shares of our common stock at the lesser of (i) 75% of the
lowest closing bid price during the 15 full trading days prior to the conversion
date or (ii) 100% of the average of the five lowest closing bid prices for the
30 trading days immediately following the first reverse split in stock price.
The convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $37,000. On September 25, 2004, we issued a warrant to Dutchess
Private Equities Fund, to purchase 185,000 of our common shares at an exercise
price at $3.75 per share.

On September 25, 2004, we issued convertible debentures of $60,000 to eFund
Small Cap Fund. The debentures convert on September 24, 2009. The holder of the
debentures can convert the face value of the debenture plus accrued interest
into shares of our common stock at the lesser of (i) 75% of the lowest closing
bid price during the 15 full trading days prior to the conversion date or (ii)
100% of the average of the five lowest closing bid prices for the 30 trading
days immediately following the first reverse split in stock price. The
convertible debentures shall pay 8% cumulative interest, payable in cash or
stock at our option, at the time of conversion. This debenture was issued at a
discount of $10,000. On September 25, 2004, we issued a warrant to eFund Capital
Partners, to purchase 50,000 of our common shares at an exercise price at $3.75
per share.

During the quarter ended September 30, 2004, the following common stock
transactions were made:

We issued 100,473 shares of our common stock which were to be issued in the
three months ended March 31, 2004 in relation to the merger agreement
consummated on January 15, 2004.

We issued 50,000 shares of common stock for $175,000 of business consulting
services to be rendered during the next 12 months.

The securities issued in the foregoing transactions were made in reliance upon
an exemption from registration under Rule 701 promulgated under Section 3(b) of
the Securities Act. Alternatively, these issuances of securities were undertaken
under Rule 506 of Regulation D under the Securities Act of 1933, as amended, by
the fact that:

- the sale was made to a sophisticated or accredited investor,
as defined in Rule 502;

- we gave the purchaser the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering and to
obtain any additional information which we possessed or could
acquire without unreasonable effort or expense that is necessary
to verify the accuracy of information furnished;

- at a reasonable time prior to the sale of securities, we advised
the purchaser of the limitations on resale in the manner contained
in Rule 502(d)2;

- neither we nor any person acting on our behalf sold the securities
by any form of general solicitation or general advertising; and

- we exercised reasonable care to assure that the purchaser of the
securities is not an underwriter within the meaning of
Section 2(11) of the Securities Act of 1933 in compliance with
Rule 502(d).

UNDERTAKINGS

The Registrant hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

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

(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and

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

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

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

Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.

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

EXHIBITS

EXHIBIT NUMBER DESCRIPTION
- --------------- -----------

2.1 Agreement and Plan of Reorganization between Utah Clay Technology, Inc. and
NeWave, Inc., D.B.A. Online Supplier NeWave Shareholders and Dutchess
Advisors, Ltd., dated December 24, 2003 (filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K filed on February 12, 2004 and
incorporated herein by reference).

3.1 Articles of Incorporation (filed as Exhibit 3.(i) to the Registrant's
Registration Statement on Form SB-2/A filed on April 11, 2000 and
incorporated herein by reference).

3.2 Amended Articles of Incorporation (filed as Exhibit 3.(i) to the
Registrant's Quarterly Report on Form 10QSB filed on November 14, 2001 and
incorporated herein by reference).

3.3 Articles of Amendment to Articles of Incorporation, dated January 30, 2004
(filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10QSB
filed on May 24, 2004 and incorporated herein by reference).

3.4 Bylaws (filed as Exhibit 3.(ii) to the Registrant's Registration Statement
on FormSB-2/A filed on April 11, 2000 and incorporated herein by
reference).

4.1 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund, dated January 5, 2004 (filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10QSB filed on May 24, 2004 and incorporated
herein by reference).

4.2 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund, dated January 25, 2004 (filed as Exhibit 4.2 to the Registrant's
Quarterly Report on Form 10QSB filed on May 24, 2004 and incorporated
herein by reference).

4.3 Debenture Agreement between the Registrant and eFund Capital Partners, LLC,
dated January 26, 2004 (filed as Exhibit 4.3 to the Registrant's Quarterly
Report on Form 10QSB filed on May 24, 2004 and incorporated herein by
reference).

4.4 Debenture Agreement between the Registrant and eFund Capital Partners, LLC,
dated February 19, 2004 (filed as Exhibit 4.4 to the Registrant's Quarterly
Report on Form 10QSB filed on May 24, 2004 and incorporated herein by
reference).

4.5 Debenture Agreement between the Registrant and Preston Capital Partners,
LLC dated March 3, 2004 (filed as Exhibit 4.5 to the Registrant's Quarterly
Report on Form 10QSB filed on May 24, 2004 and incorporated herein by
reference).

4.6 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund II, dated April 1, 2004 (filed as Exhibit 4.6 to the Registrant's
Quarterly Report on Form 10-QSB filed on August 23, 2004 and incorporated
herein by reference).

4.7 Debenture Agreement between the Registrant and eFund Capital Partners,
dated April 2, 2004 (filed as Exhibit 4.7 to the Registrant's Quarterly
Report on Form 10-QSB filed on August 23, 2004 and incorporated herein by
reference).

4.8 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund II, dated May 5, 2004 (filed as Exhibit 4.8 to the Registrant's
Quarterly Report on Form 10-QSB filed on August 23, 2004 and incorporated
herein by reference).

4.9 Debenture Agreement between the Registrant and eFund Capital Partners,
dated May 5, 2004 (filed as Exhibit 4.9 to the Registrant's Quarterly
Report on Form 10-QSB filed on August 23, 2004 and incorporated herein by
reference).

4.10 Warrant Agreement between the Registrant and Dutchess Private Equities Fund
II, LP, dated April 1, 2004 (filed as Exhibit 4.10 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.11 Warrant Agreement between the Registrant and eFund Capital Partners dated
April 2, 2004 (filed as Exhibit 4.11 to the Registrant's Registration
Statement on Form SB-2 filed on October 8, 2004 and incorporated herein by
reference).

4.12 Warrant Agreement between the Registrant and Dutchess Private Equities Fund
II, LP, dated May 5, 2004 (filed as Exhibit 4.12 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.13 Warrant Agreement between the Registrant and eFund Capital Partners dated
May 5, 2004 (filed as Exhibit 4.13 to the Registrant's Registration
Statement on Form SB-2 filed on October 8, 2004 and incorporated herein by
reference).

4.14 Warrant Agreement between the Registrant and Dutchess Private Equities Fund
II, LP, dated July 9, 2004 (filed as Exhibit 4.14 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.15 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund II, LP, dated July 9, 2004 (filed as Exhibit 4.15 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.16 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund II, LP, dated August 15, 2004 (filed as Exhibit 4.16 to the
Registrant's Registration Statement on Form SB-2 filed on October 8, 2004
and incorporated herein by reference).

4.17 Debenture Agreement between the Registrant and eFund Small Cap Fund, LP
dated August 15, 2004 (filed as Exhibit 4.17 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.18 Warrant Agreement between the Registrant and Dutchess Private Equities Fund
II, LP dated August 18, 2004 (filed as Exhibit 4.18 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.19 Warrant Agreement between the Registrant and eFund Small Cap Fund, LP dated
August 18, 2004 (filed as Exhibit 4.19 to the Registrant's Registration
Statement on Form SB-2 filed on October 8, 2004 and incorporated herein by
reference).

4.20 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund, LP dated September 25, 2004 (filed as Exhibit 4.20 to the
Registrant's Registration Statement on Form SB-2 filed on October 8, 2004
and incorporated herein by reference).

4.21 Debenture Agreement between the Registrant and eFund Small Cap Fund, LP
dated September 25, 2004 (filed as Exhibit 4.21 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

4.22 Warrant Agreement between the Registrant and Dutchess Private Equities
Fund, LP dated September 25, 2004 (filed as Exhibit 4.22 to the
Registrant's Registration Statement on Form SB-2 filed on October 8, 2004
and incorporated herein by reference).

4.23 Warrant Agreement between the Registrant and eFund Small Cap Fund, LP dated
September 25, 2004 (filed as Exhibit 4.23 to the Registrant's Registration
Statement on Form SB-2 filed on October 8, 2004 and incorporated herein by
reference).

4.24 Debenture Agreement between the Registrant and Dutchess Private Equities
Fund, dated February 4, 2004.

*5.1 Opinion of Counsel Amy M. Trombly, Esq.

10.1 Sublease between the Registrant and Pinnacle Sales Group, LLC, dated August
18, 2003 (filed as Exhibit 10.1 to the Registrant's 10KSB filed on April
14, 2004 and incorporated herein by reference).

10.2 Sublease Agreement between and the Registrant and Mammoth Moving Inc.,
dated July 14, 2003 (filed as Exhibit 10.2 to the Registrant's 10KSB filed
on April 14, 2004 and incorporated herein by reference).

10.3 Investment Agreement between the Registrant and Preston Capital Partners,
LLC dated September 13, 2004 (filed as Exhibit 10.3 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

10.4 Registration Rights Agreement between the Registrant and Preston Capital
Partners, LLC, dated September 13, 2004 (filed as Exhibit 10.4 to the
Registrant's Registration Statement on Form SB-2 filed on October 8, 2004
and incorporated herein by reference).

10.5 Placement Agent Agreement between the Registrant, Preston Capital Partners,
and Legacy Trading Co., LLC, Inc. dated September 13, 2004 (filed as
Exhibit 10.5 to the Registrant's Registration Statement on Form SB-2 filed
on October 8, 2004 and incorporated herein by reference).

10.6 Registration Rights Agreement between the Registrant and Dutchess Private
Equities Fund, LP, dated January 14, 2004 (filed as Exhibit 10.1 to the
Registrant's 10QSB filed on May 24, 2004 and incorporated herein by
reference).

10.7 Registration Rights Agreement between the Registrant and Dutchess Private
Equities Fund, LP, dated January 26, 2004 (filed as Exhibit 10.2 to the
Registrant's 10QSB filed on May 24, 2004 and incorporated herein by
reference).

10.8 Registration Rights Agreement between the Registrant and eFund Capital
Partners, LLC, dated January 26, 2004 (filed as Exhibit 10.3 to the
Registrant's 10QSB filed on May 24, 2004 and incorporated herein by
reference).

10.9 Registration Rights Agreement between the Registrant and eFund Capital
Partners, LLC dated February 19, 2004 (filed as Exhibit 10.4 to the
Registrant's 10QSB filed on May 24, 2004 and incorporated herein by
reference).

10.10 Registration Rights Agreement between the Registrant and Preston Capital
Partners, LLC Partners, LLC dated March 3, 2004 (filed as Exhibit 10.5 to
the Registrant's 10QSB filed on May 24, 2004 and incorporated herein by
reference).

10.11 Consulting Agreement between the Registrant and Luminary Ventures, Inc.,
dated March 2, 2004 (filed as Exhibit 99.1 to the Registrant's S-8 filed on
March 11, 2004 and incorporated herein by reference).

10.12 Consulting Agreement between the Registrant and Jeffrey Conrad, dated
January 30, 2004 (filed as Exhibit 99.2 to the Registrant's S-8 filed on
February 13, 2004 and incorporated herein by reference).

10.13 Consulting Agreement between the Registrant and Catherine Basinger, dated
January 30, 2004 (filed as Exhibit 99.3 to the Registrant's S-8 filed on
February 13, 2004 and incorporated herein by reference).

10.14 Consulting Agreement between the Registrant and Barrett Evans, dated
August 18, 2003 (filed as Exhibit 10.11 to the Registrant's Quarterly
Report on Form 10-QSB filed on August 23, 2004 and incorporated herein by
reference).

10.15 Consulting Agreement with Michael Hill, dated August 18, 2003 (filed as
Exhibit 10.12 to the Registrant's Quarterly Report on Form 10-QSB filed on
August 23, 2004 and incorporated herein by reference).

10.16 Lead Marketing Agreement between the Registrant and Vandalay Venture
Group, Inc. d/b/a Applied Merchant, dated June, 2004 (filed as Exhibit
10.13 to the Registrant's Quarterly Report on Form 10-QSB filed on August
23, 2004 and incorporated herein by reference).

10.17 Standard Multi-Tenant Office Lease between the Registrant and La Patera
Investors dated April 9, 2004 (filed as Exhibit 10.17 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

10.18 ASP Software Subscription Agreement between the Registrant and Net
Chemistry, dated August 11, 2004 (filed as Exhibit 10.18 to the
Registrant's Registration Statement on Form SB-2 filed on October 8, 2004
and incorporated herein by reference).

10.19 Consulting Agreement between the Registrant and Pacific Shore Investments,
LLC, dated August 15, 2004 (filed as Exhibit 10.19 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

10.20 Membership Agreement between the Registrant and Memberworks, dated
September 30, 2003 (filed as Exhibit 10.20 to the Registrant's Registration
Statement on Form SB-2 filed on October 8, 2004 and incorporated herein by
reference).

10.21 Amendment to Membership Agreement between the Registrant and Memberworks,
Dated August 17, 2004 (filed as Exhibit 10.21 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

10.22 Revolving Credit Facility between the Registrant and Dutchess Private
Equities Fund and eFund, dated March 9, 2004 (filed as Exhibit 10.23 to the
Registrant's Quarterly Report on Form 10-QSB filed on November 22, 2004 and
incorporated herein by reference).

10.23 Line of Credit Agreement between the Registrant and Barrett Evans, dated
August 18, 2003.

10.24 Debt Financing Agreement between the Registrant and Shirley Oaks dated
January 26, 2004.

10.25 Consulting Agreement between the Registrant and Aaron Gravitz, dated x.

10.26 Debt Financing Agreement between the Registrant and Sharon Paugh dated
January 26, 2004.

10.27 Debt Financing Agreement between the Registrant Jennifer Strohl, dated
March 22, 2004.

21.1 List of Subsidiaries (filed as Exhibit 21.1 to the Registrant's
Registration Statement on Form SB-2 filed on October 8, 2004 and
incorporated herein by reference).

23.1 Consent of Independent Auditors (filed herewith).

*23.2 Consent of Counsel (Contained in Exhibit 5.1)

* To be filed by amendment

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Long
Beach, in the State of California, on December 9, 2004.

NEWAVE, INCORPORATED

By:/s/ Michael Hill
-------------------------------------
Michael Hill
Chief Executive Officer and Director

In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.

Signature Date

/s/ Michael Hill December 9, 2004
- - ---------------------------------------------
Michael Hill, Chief Executive Officer
and Director

/s/ Barrett Evans December 9, 2004
- ------------------------------------------------
Barret Evans
Director, Chief Financial Officer, Principal Financial Officer
and Principal Accounting Officer

/s/ Michael Novielli December 9, 2004
- - ----------------------------------------------
Michael Novielli, Director

/s/ Douglas Leighton December 9, 2004
- - ----------------------------------------------
Douglas Leighton, Director

/s/ Theodore J. Smith, Jr. December 9, 2004
- - ----------------------------------------------
Theodore J. Smith, Jr., Director