As filed with the Securities and Exchange Commission on July 27,2001

                    Registration Statement No. 333-_________

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C.  20549

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

<TABLE>
<CAPTION>
                                    FORM S-1
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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

<S>                                                                        <C>
                            OMNI NUTRACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)


            UTAH                                               87-0468225
       (State of other                                      (I.R.S. Employer
       jurisdiction of                                       Identification
       incorporation or                                          Number)
        organization)

                              5310 BEETHOVEN STREET
                          LOS ANGELES, CALIFORNIA 90066
                                 (310) 306-3636
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)



                                   KLEE IRWIN
                            CHIEF EXECUTIVE OFFICER
                            OMNI NUTRACEUTICALS, INC.
                               5310 BEETHOVEN ST.
                              LOS ANGELES, CA 90066
                                 (310) 306-3636
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                              ---------------------
</TABLE>

                                          1
<PAGE>

                              Copies to:
                              Jeffrey P. Berg, Esq.
                              Luce, Forward, Hamilton & Scripps LLP
                              11755 Wilshire Blvd., Suite 5200
                              Los Angeles, CA 90025
                              Phone: (310) 481-5218

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

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

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

     If  this  Form  is  filed to register additional securities for an offering
pursuant  to  Rule  462(b) under the Securities Act, 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,
please  check  the  following  box.
                              ---------------------
<TABLE>
<CAPTION>



CALCULATION OF REGISTRATION FEE
-------------------------------
<S>                              <C>             <C>              <C>          <C>
                                 PROPOSED
                                 MAXIMUM
TITLE OF EACH CLASS OF. . . . .  PROPOSED        AGGREGATE        AMOUNT OF
 SECURITIES TO BE . . . . . . .  AMOUNT TO BE    MAXIMUM          OFFERING     REGISTRATION
REGISTERED. . . . . . . . . . .  REGISTERED (1)  OFFERING PRICE   PRICE (1)    FEE (1)
                                 PER SHARE (1)
                                 --------------
Common stock, par value $0.01 .       6,512,310  $    1,497,831  $ 1,497,831   $          375
-------------------------------  --------------  ---------------  -----------  --------------
</TABLE>





(1)     Calculated in accordance with Rule 457(c) based on the high and low sale
prices  of  the common stock as reported on the NASD Bulletin Board published by
the  National  Quotation  Bureau,  Inc.  on  June  25,  2001.

     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,  AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL  BECOME  EFFECTIVE  ON  SUCH  DATE  AS  THE COMMISSION, ACTING PURSUANT TO
SECTION  8(A),  MAY  DETERMINE.



                                        2
<PAGE>

<TABLE>
<CAPTION>

                            OMNI NUTRACEUTICALS, INC.
                              CROSS REFERENCE SHEET
                    PURSUANT TO ITEM 501(B) OF REGULATION S-K
                SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
              REQUIRED BY ITEMS 1 THROUGH 12, PART I, OF FORM S-1
<S>                                                                                       <C>
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION                 LOCATION IN PROSPECTUS

1.  Forepart of the Registration Statement and Outside Front   Outside Front Cover Page of Prospectus
    Cover Page of Prospectus.

2.  Inside Front and Outside Back Cover Pages of               Inside Front and Outside Back Cover Pages of Prospectus;
    Prospectus                                                 Additional Information

3.  Summary Information, Risk Factors and Ratio of             Prospectus Summary; Risk Factors; Selected Financial Data
    Earnings to Fixed Charges

4.  Use of Proceeds                                            Use of Proceeds; Selling Stockholders and Plan of
                                                         . . . Distribution

5.  Determination of Offering Price                            Plan of Distribution

6.  Dilution                                                   Not Applicable

7.  Selling Security Holders                                   Outside Front Cover Page of Prospectus; Selling Stockholders
                                                               and Plan of Distribution

8.  Plan of Distribution                                       Outside Front Cover Page of Prospectus; Selling Stockholders
                                                               and Plan of Distribution

9.  Description of Securities to Be Registered                 Outside Front Cover Page of Prospectus; Dividend Policy;
                                                               Shares Eligible for Future Sale; Principal Stockholders;
                                                               Selling Stockholders and Plan of Distribution; Description of
                                                               Securities

10.  Interests of Named Experts and Counsel                    Legal Matters

11.  Information of Named Experts and Counsel                  Outside Front Cover Page of Prospectus; Prospectus
                                                               Summary; Risk Factors; Dividend Policy; Capitalization;
                                                               Selected Financial Data; Management's Discussion and
                                                               Analysis of Financial Condition and Results of Operations;
                                                               Business; Management; Compensation of Executive Officers
                                                               and Directors; Certain Relationships and Related
                                                               Transactions; Shares Eligible for Future Sale; Financial
                                                               Statements

Disclosure of Commission Position on Indemnification       Not Applicable
for Securities Act Liabilities

</TABLE>

                                        3
<PAGE>


THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE  CHANGED.  THESE  SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS
IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION  WHERE  THE  OFFER  OR  SALE  IS  NOT  PERMITTED.


                   SUBJECT TO COMPLETION, DATED JULY 27, 2001

                                   PROSPECTUS

                            OMNI NUTRACEUTICALS, INC.

                                6,512,310 SHARES
                                  COMMON STOCK
                         OFFERED BY SELLING STOCKHOLDERS
                                   ----------

     This  prospectus  relates  to  the  public  offering,  which  is  not being
underwritten,  of 6,512,310 shares of our common stock, which is held by some of
our  current  stockholders,  or  the  selling  shareholders.

     The  prices  at  which  such  selling  stockholders may sell shares will be
determined  by  the  prevailing  market  price  for  the shares or in negotiated
transactions.  We  will  not  receive  any  of the proceeds from the sale of the
shares.

     Our  common  stock  is  quoted  on the NASD Bulletin Board published by the
National  Quotation Bureau, Inc. under the symbol "ZONE."  On June 25, 2001, the
average  of  the  high  and  low  price  for  the  common  stock  was  $0.23.

     Investing  in  our  common stock involves risks.  See the sections entitled
"Risk  Factors" at page 4 in this prospectus for certain risks and uncertainties
that  you  should  consider.

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

                                   -----------

                  The date of this prospectus is July 27, 2001

                                        4
<PAGE>

                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations,"  "Business"  and  elsewhere in this prospectus are "forward-looking
statements."  These  forward-looking statements include, but are not limited to,
statements  about  our  plans, objectives, expectations and intentions and other
statements  contained  in  this  prospectus that are not historical facts.  When
used  in  this  prospectus,  the words "expect," "anticipate," "intend," "plan,"
"believe,"  "seek," "estimate" and similar expressions are generally intended to
identify  forward-looking  statements.  Because these forward-looking statements
involve  risks  and  uncertainties, there are important factors that could cause
actual  results  to  differ  materially from those expressed or implied by these
forward-looking  statements,  including  our plans, objectives, expectations and
intentions  and  other  factors  discussed  under  "Risk  Factors."

                               PROSPECTUS SUMMARY

     This  summary  highlights  selected information contained elsewhere in this
prospectus  and  may not contain all of the information that you should consider
before  investing  in  our  common stock.  You should read carefully this entire
prospectus,  including  "Risk Factors" and our consolidated financial statements
and  related  notes  included  elsewhere  in  this  prospectus  before making an
investment  decision.  In  addition,  we  incorporate  by  reference  important
business  and  financial  information  in  this  prospectus.

OUR  COMPANY

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the general public. Our products are produced primarily from natural ingredients
and are formulated for the purposes of achieving specific dietary or nutritional
goals.  We  develop  and  market  natural remedies for weight loss, pain relief,
cholesterol  control  and other specific health and nutrition needs.  All of our
products are natural nutritional supplements are subject to regulation under the
Dietary  Health  Supplement & Education Act of 1994, or DHSEA.  Our products are
widely  distributed  through  mass  market  retailers  such  as  GNC,  Wal-Mart,
Rite-Aid,  Costco, Eckerd and Walgreens, in over 7,500 health food stores either
directly  or  through  distributors, and internationally through distributors in
over  20  countries.

     Our portfolio of branded products includes, but is not limited to, Nature's
Secret,  Diet  System  6, PhenSafe, Harmony Formulas, Dr. Linus Pauling Vitamins
and  Inholtra  Natural  Pain  Relief  among others.  We have registered numerous
trademarks  and  have  pending trademark applications domestically and worldwide
relating  to  our  branded  products,  including without limitation, Bar Bites ,
BurnMore  ,  Candistroy  ,  Cellulite  Burner  ,  Crave  Less  , Diet System 6 ,
Endurance Energy , Evening Multi , Fulfill , Ginkgo Smart , Ginza-Plus , Harmony
Formulas  and  Design , Home Nutrition , Inholtra , Liver Support , Marital Arts
Nutrition  ,  Memory  Sharp  ,  Mind  Energy , Morning Multi , Nature's Secret ,
Parastroy  ,  PhenSafe  ,  Redo  , Rezyme , Super Cleanse , System-Six , The New
Grapefruit  Diet  ,  Thinsolution  ,  Ultimate  Breakfast  ,  Ultimate Cleanse ,
Veroxin-7  and  Yohimbe-Plus  .  Omni Nutraceuticals, Inc. and our logo are also
registered  trademarks  of  Omni  Nutraceuticals,  Inc.

     The  nutrition  industry  is  primarily  comprised  of  companies  that
manufacture,  distribute  and/or  sell:

-     vitamins,  minerals  and  meal  supplements,  or  VMS;
-     herbals  and  botanicals;
-     sports  nutrition;
-     natural  personal  care  products;  and
-     natural  foods  including  organics.

     In  the  last  several  years,  public awareness of the positive effects of
vitamins  and  nutritional  supplements  on  good  health has been heightened by
widely  publicized  reports  of  scientific findings supporting such claims. The
rise and acceptance of alternative medicine has greatly contributed to increased
sales  of  nutritional  supplements.  Because  the  market  for  these  products
represents  a  rapidly  evolving  industry,  one  that  is  growing  at a nearly
double-digit  rate,  it  is  anticipated  that  sales  will  increase  for  the
foreseeable  future.

                                        5
<PAGE>

     The  aging of the "baby boom" generation, combined with consumers' tendency
to  purchase  more dietary supplements as they age, has been an important source
of  growth  for  the  VMS  segment of the nutritional industry.  There will be a
significant expansion of the population segment of 40 years and over in the next
decade,  and  this  segment  displays  the  highest  usage of vitamins and other
supplements.

     The  nationwide  trend  toward  preventive  medicine  in response to rising
healthcare  costs  has  been  an underlying driver for this industry.  There has
been  a  heightened  awareness  and understanding of preventive medicine and the
connection  between  vitamins and health amongst the general public, health care
professionals,  employers,  government agencies, and managed care organizations.
Issues  regarding  preventive  care  and  the  benefits  of vitamins and dietary
supplements  have  received  widespread  media  coverage.

     Our  point  of  sale advertising is designed to convey the effectiveness of
our  products. We have established our reputation with retailers through quality
products,  timely  delivery  and  superior  packaging.  Through  our  ability to
position  products  in  the  marketplace and our strong reputation, we have been
able  to  secure  favorable shelf spacing from many of our retail customers. Our
sales,  marketing  and  distribution infrastructure is designed to integrate new
brands  with  minor  incremental  costs  and  synergistic  potential.  Recent
limitations in capital, however, have limited the amount of advertising to point
of  sale  displays.

     Historically,  we have distributed our products though three main segments:
mass-market  retailers,  which  accounted for 48.1% of 2000 shipments, specialty
health food stores and distributors, which accounted for 28.6% of 2000 shipments
and  international  distribution,  which  accounted for 23.3% of 2000 shipments.
With  increased  advertising  in  the  future,  we  should be able to convey the
effectiveness  of  our  products.  In  certain  instances,  we  enter into co-op
advertising  arrangements  with  our  customers.

     Our  principal  executive offices are located at 5310 Beethoven Street, Los
Angeles,  California  90066.  Our  telephone  number  is  (310)  306-3636.

THE  OFFERING

Common  stock  offered  by  the  selling  stockholders  6,512,310  shares

Common  stock  outstanding                             36,067,061  shares

Our  common stock is quoted on the NASD Bulletin Board published by the National
Quotation  Bureau,  Inc.  under  the  symbol  "ZONE."

The  above  information is based on 36,067,061 shares outstanding as of June 25,
2001  and  is  based  on:

- the  conversion  of  200  shares of Series A Convertible Preferred Stock into
  1,572,682  shares  of  common stock at an exercise price of $0.13 per share;
  and excludes

- 3,037,500 shares of common stock underlying warrants, at an exercise price per
  share  ranging  from  $0.96  to  $6.00;  and

- 6,730,653  shares of common stock underlying options, at an exercise price
  per  share  ranging  from  $0.25  to  $7.25.

RISK  FACTORS

     The  securities  offered  hereby  are highly speculative and involve a high
degree of risk.  These factors include, but are not limited to, risks related to
our historical lack of profitability, the government regulation of our products,
legislative  and  regulatory  restrictions impacting our business operations and
industry  and  the market for the securities offered hereby.  Only investors who
can  afford  the  loss  of  their entire investment should make an investment in
these  securities.

                                        6
<PAGE>

                     SUMMARY OF CONSOLIDATED FINANCIAL DATA

     The  Summary  Consolidated Financial Data set forth below should be read in
conjunction  with  the  Consolidated Financial Statements and notes thereto, the
information  under  "Selected Consolidation Financial Data," and the information
under  "Management's  Discussion and Analysis of Financial Condition and Results
of  Organization"  included  elsewhere  in  this  prospectus.
<TABLE>
<CAPTION>

STATEMENT  OF
OPERATIONS DATA (1)          Three Months Ended
                                  March 31,                Year Ended December 31,

(in thousands, except per    2001        2000       2000     1999     1998     1997     1996
share  data)              (unaudited) (unaudited)             as
                                                          previously
                                                           restated
<S>                         <C>       <C>       <C>        <C>        <C>      <C>       <C>
Net sales                   $ 5,751   $ 8,039   $ 29,609   $ 30,922   $30,547  $29,353   $28,592
Income (loss) before
discontinued operations      (1,310)   (6,546)   (15,337)   (10,422)    1,018   (4,717)   (1,791)
Discontinued operations        (246)     (230)    (1,155)      (633)
Net income (loss)            (1,556)   (8,726)   (16,492)   (11,055)    1,018   (4,717)   (1,791)
Pro forma net income
(loss) (unaudited)              N/A       N/A        N/A        N/A       273   (5,482)       N/A
Historical Earnings (loss)
per common share
- Basic and diluted         $ (0.05)  $ (0.30)  $  (0.71)  $  (0.39)  $  0.04  $ (0.17)  $ (0.07)
Pro Forma Earnings (loss)
Per common share
- Basic and diluted
(unaudited)                     N/A       N/A       N/A        N/A    $  0.01  $ (0.20)      N/A
</TABLE>

<TABLE>
<CAPTION>
BALANCE SHEET DATA (AT PERIOD END):       March 31,                     December 31,
(in thousands)                                2001       2000        1999         1998     1997     1996
<S>                        <C>          <C>              <C>       <C>      <C>      <C>
                                          (unaudited)            as previously
                                                                   restated
Working Capital (Deficit)                 $ (12,549)  $  (11,141)  $(8,558)     $ 4,395  $ 3,588  $ 4,483
Total Assets                                 26,324       27,305    29,533       13,087   11,337   15,832
Long Term Debt, Net of Current Portion        6,852        7,440    10,187        1,423    1,298    1,276
Shareholders' Investment                      1,321        2,569     (316)        5,869    5,387   10,256
</TABLE>


     The  statement  of  operations  data for the years ended December 31, 1998,
1999  and  2000  and the three months ended March 31, 2001 (unaudited) and March
31,  2000  (unaudited)  and the balance sheet data at December 31, 1999 and 2000
and  the  quarter ended March 31, 2001 are derived from our audited consolidated
financial  statements  appearing elsewhere in this prospectus. The balance sheet
data at December 31, 1997 and 1996, and the statement of operations data for the
year  ended December 31, 1997 and the period from March 15, 1996 to December 31,
1996 are derived from our audited consolidated financial statements not included
in this prospectus. The statement of operations data for the period from January
1,  1996  to  March  14,  1996  represents  data of a predecessor company and is
derived  from  its  unaudited  consolidated financial statements not included in
this  prospectus.

                                        7
<PAGE>

                                  RISK FACTORS

     This  offering  involves  a  high  degree  of  risk.  You  should carefully
consider  the  following  information  about  these  risks,  as  well  as  other
information  contained  or  incorporated  by  reference  in  this prospectus, or
contained  elsewhere in our reports, proxy statements and other available public
information,  as filed with the Commission,  before you decide to buy any shares
of  our  common  stock.  Any  of  the following risks could materially adversely
affect  our business, operating results and financial condition and could result
in  a  complete loss of your investment.  Only investors who can afford the loss
of  their  entire  investment  should  make  an  investment in these securities.

WE  HAVE A HISTORY OF OPERATING LOSSES THAT ARE LIKELY TO CONTINUE IN THE FUTURE

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants  included  in our audited financial statements,
included  elsewhere  in  this  prospectus for the years ended December 31, 2000,
1999  as  previously  restated  and  1998,  respectively, to the effect that our
losses  from  operations  for  the year ended December 31, 2000, and the working
capital  deficit and the retained deficit at December 31, 2000 raise substantial
doubt  about  our  ability  to  continue  as  a going concern.  We have incurred
significant  losses  in  two  of  the  last  three  years.  We have historically
financed  our activities through working capital provided from operations, loans
and  the  private  placement of our debt and equity securities.  As of March 31,
2001,  our  retained deficit was $42.9 million. In the first quarter of the year
2000,  we  implemented an operating plan to improve the financial results of the
business, concentrating initially on major cost reductions.  In doing so, we are
also  focusing  on  product  margins,  which have gradually eroded as the mix of
products sold changes and the competition for retail shelf space erodes pricing.

     We  expect  to  incur  continuing losses because we plan to spend available
resources  on  marketing new and existing products. We cannot assure you that we
will market any products successfully, operate profitably in the future, or that
we  will not require significant additional financing in order to accomplish our
business  plan.

WE WILL NEED RELIEF FROM OUR OBLIGATIONS TO PAY OUR SECURED CREDITOR IN THE NEAR
TERM  AND  WE MAY NEED ADDITIONAL FINANCING TO MAINTAIN AND EXPAND OUR BUSINESS,
AND  SUCH  FINANCING  MAY  NOT  BE  AVAILABLE  ON  FAVORABLE  TERMS,  IF AT ALL.

     We  have  historically  financed  our  operations  through  working capital
provided  from  operations,  loans  and the private placement of equity and debt
securities.  In  2000,  we raised the gross amount of approximately $8.1 million
through  a  private  placement  of  our  securities.  The  net  proceeds of that
financing,  together with our existing financial resources and any revenues from
our  sales,  distribution,  licensing and manufacturing relationships, should be
sufficient to meet our operating and capital requirements through July 15, 2001.
On  June  15, 2001, we entered into an amendment to our Secured Credit Agreement
which,  among  other  things  extended  the  repayment  date  of  the  aggregate
outstanding  principal balance of the credit facility from June 15, 2001 to July
30,  2002.  On  July  20, 2001 our Secured Credit Agreement was amended so that,
among  other  things,  our  permitted  overadvance was increased by $200,000. On
September  30, 2001, our permitted overadvance will revert to current levels. As
of  June  25,  2001  the  borrowing  under  our  Secured  Credit  Agreement  was
approximately  $16.7  million.  Under  the  terms  of our amended Secured Credit
Agreement  we are required to make monthly interest payments on the 15th of each
month  that  are presently approximating $130,000 per month. We may not have the
resources  to  make  these  payments.  We  may  not  be able to pay the required
interest  payment  on September 15, 2001 and we may need to seek relief from the
lender  from  that  payment  and/or future payments. Our failure to receive such
relief  could  have a material adverse effect on our financial condition and our
ability  to  continue  to  operate.  If  we need additional financing, we cannot
assure  you  that it will be available on favorable terms, if at all. If we need
funds  and  cannot  raise  them  on  acceptable  terms,  we  may  not be able to

-     sustain  our  business  operations;
-     execute  our  growth  plan;
-     take  advantage  of  future  opportunities,  including  acquisitions,  as
      feasible;
-     respond  to  customers  and  competition.

THE  ISSUANCE  OF ADDITIONAL SHARES OF COMMON STOCK UPON CONVERSION OF PREFERRED
STOCK  MAY  CAUSE  SIGNIFICANT  DILUTION  OF  EXISTING  SHAREHOLDERS' INTERESTS.

                                        8
<PAGE>

     Significant  dilution  of  existing shareholders' interests may occur if we
issue  additional  shares  of  common stock underlying outstanding shares of our
preferred  stock  or  preferred  stock.  The  number  of  shares of common stock
issuable  upon  conversion of the preferred stock may constitute a significantly
greater  percentage  of  the  total  outstanding shares of common stock, as such
conversion  is  based on a formula tied to the market price of the common stock.

     The exact number of shares of common stock into which currently outstanding
preferred  stock may ultimately be convertible will vary over time as the result
of  ongoing  changes in the trading price of the common stock.  Decreases in the
trading  price  of  the  common  stock will result in increases in the number of
shares  of  common  stock  issuable upon conversion of the preferred stock.  The
conversion  of  the preferred stock would dilute the book value and earnings per
share  of  common  stock  held  by  existing  shareholders.

     The  Securities  Purchase  Agreement,  dated October 27, 2000, provides, in
part,  that  to  the  extent  that the number of shares required to be issued in
connection  with  conversions  of preferred stock exceeds 19.9% or approximately
6,520,700  shares of common stock outstanding at the closing, we are required to
redeem the preferred stock representing such excess common shares at 140% of its
face  amount,  plus  accrued  dividends.  If this were to occur, we may not have
adequate  cash to redeem such excess and would then be in breach of the terms of
the  securities  purchase  stock  agreements.

OUR  PRODUCTS  RETURN  POLICIES  MAY  HAVE  A  MATERIAL  ADVERSE EFFECT UPON OUR
OPERATIONS.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales velocity.  We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our gross profit was negatively impacted in 1999 and 2000 for returns.  Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed the high levels experienced in the year 2000 or will be in line with past
return  percentages.  The  risk  of returns is amplified by the current industry
trend,  which  shows  negative  growth.  If  this trend continues, retailers may
decide  to reduce inventory levels from their suppliers, by returning goods from
their  warehouse  distribution  centers.

WE  ARE  RELIANT  ON  A  LIMITED  NUMBER  OF  PRODUCTS  TO  GENERATE  REVENUES.

     We currently offer approximately 313 products and derive more than 31.8% of
our total shipments during 2000 from the sale of Ultimate Cleanse   and Inholtra
products. As a result of the limited number of products from which we derive our
revenue,  the  risks  associated  with  our business increase since a decline in
market demand for one or more products, for any reason, could have a significant
adverse  impact  on  the  results  of  our  operations.

     We  may  face costly product liability and other legal claims by consumers.

     The  products  we  carry  are particularly susceptible to product liability
claims.  Any  claim of product liability by a consumer against us, regardless of
merit,  could  be  costly  financially  and  could  divert  the attention of our
management.  It  could  also  create  negative  publicity,  which would harm our
business.  Although we maintain product liability insurance in the amount of $15
million,  it  may  not  be  sufficient  to  cover  a  claim  if  one  is  made.

     Like  other  retailers, distributors and manufacturers of products that are
ingested,  we  face  an inherent risk of exposure to product liability claims in
the event that the use of the products that we sell results in injury. We may be
subjected  to  various  product  liability  claims,  including  claims  that the
products  we  sell  contain  contaminants,  are  improperly  labeled  or include
inadequate instructions as to use or inadequate warnings concerning side effects
and  interactions  with  other  substances.  We  cannot  predict whether product
liability  claims  will be brought against us in the future or the effect of any
resulting  adverse publicity on our business. Moreover, we may not have adequate
resources  in  the event of a successful claim against us. We do not have formal
indemnification  arrangements  with the third-party vendors from which we source
our  products.  If  our  insurance  protection is inadequate and our third-party
vendors  do  not  indemnify  us,  the  successful assertion of product liability
claims  against  us  could  result  in potentially significant monetary damages.

                                        9
<PAGE>

     Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption, some of our products contain innovative ingredients or combinations
of  ingredients.  There is little long-term experience with human consumption of
some  of  these  innovative  product ingredients or combinations in concentrated
form.  In  addition, interactions of these products with other similar products,
prescription  medicines and over-the-counter drugs have not been fully explored.

     Because  we will be dealing with large numbers of end users, we will have a
significant  level  of  legal  exposure  due  to  this  volume  of  customer
relationships.  The most serious area of exposure will be in relation to product
advertising claims and the product quality. People may purchase products from us
expecting  certain  physical results, unique to nutritional products. If they do
not  perceive  the  results  to  be  in  accordance  with the claims made on the
packaging  or  on our Web site, certain individuals or groups of individuals may
seek  monetary  retribution.  However,  we  have no assurance that our insurance
company will comply with coverage in all instances or that such coverage will be
adequate  to  cover  all  potential  losses.

OUR  SUCCESS  IS  DEPENDENT UPON THE SUCCESSFUL INTRODUCTION OF OUR NEW PRODUCTS
AND  THE  SUCCESS  IN  EXPANDING  THE  DEMAND  FOR  EXISTING  BRANDS.

     We  believe the growth of our net sales is substantially dependent upon our
ability  to  introduce new products and to expand the demand for existing brands
such as Nature's Secret, Irwin Naturals and others.  At present, we have limited
resources  to  spend on advertising and therefore we will be relying, to a large
extent,  on  point  of  sale  displays  to generate interest in new products and
existing  brands.  We  introduced  Inholtra  Joint  Pain,  a new product, to the
mass-market  in  May  2001.  If we do not achieve velocity rates that our target
mass-market  customers  demand,  the  Joint Pain product may be removed from our
customers' shelves.  Our ability to meet future debt obligations is dependent in
large  measure  on  the  success  of  this product and the expansion of existing
brands.  We seek to introduce additional products each year.  The success of new
products is dependent upon a number of factors, including our ability to develop
products  that will appeal to consumers and respond to market trends in a timely
manner.  There can be no assurance that our efforts to develop new products will
be  successful  or  that  consumers  will accept our new products.  In addition,
products  currently  experiencing  strong  popularity  and  rapid growth may not
maintain  their  sales  volumes  over  time.

WE  DO  NOT  HAVE  LONG-TERM  CONTRACTS  WITH  MANUFACTURERS  OR  DISTRIBUTORS.

     We  purchase all of our products from third-party manufacturers pursuant to
purchase  orders,  but  without  any long term manufacturing agreements.  In the
event  that  a  current  manufacturer  is  unable  to meet our manufacturing and
delivery  requirements  at  some  time  in  the future, we may suffer short-term
interruptions  of delivery of certain products while we establish an alternative
source.  While  alternative sources are in most cases readily available, we have
also  established relationships with two third-party manufacturers for all large
volume  products to further limit our exposure to this type of interruption,  We
also  rely on third-party carriers for product shipments, including shipments to
and  from  our  distribution facilities.  We are therefore subject to the risks,
including  employee strikes and inclement weather, associated with our carrier's
ability to provide delivery services to meet our fulfillment and shipping needs.
Failure  to  deliver  products  to our customers in a timely and accurate manner
would  harm  our  reputation  and  our  business  and  results  of  operations.

WE  ARE  DEPENDENT  ON  OUR  BUSINESS  RELATIONSHIPS WITH OUR LARGEST CUSTOMERS.

     During  2000,  we  had two customers who accounted for more than 10% of our
business.  Our  top  10 customers account for approximately 60% of our business.
The  loss  of any one of or a significant number of these customers would have a
material  adverse effect on our growth.  We do not have long-term contracts with
any  of  our  customers.  There  is  no  assurance that our major customers will
continue  as  major  customers.  The loss of a significant number of other major
customers,  or  a  significant  reduction  in  purchase  volume  by or financial
difficulty  of  such  customers,  for  any reason, could have a material adverse
effect  on  our  business,  financial  condition  and  results  of  operations.

INDUSTRY  TRENDS  INDICATE  THAT  OUR  SALES  IN  OUR  INDUSTRY  ARE IN DECLINE.

                                       10
<PAGE>

     The  total  United  States  retail  market for nutritional supplements, the
vitamin,  mineral  and supplement market, or VMS is highly fragmented.  Industry
sources  report that the VMS sector grew substantially during most of the 1990s,
in  many  years at a double digit pace.  However, there is evidence, that during
the  year  2000,  the  industry  rate  of  growth  became  negative.

     Information  Resources,  Inc.,  or  IRI, tracks sales data within the food,
drug,  and  mass-market  channels  of  distribution.  In  the twelve weeks ended
February 4, 2001, vitamin and supplement sales in these channels of distribution
fell  9.3% when compared to the same period a year earlier.  Sales for the prior
52  weeks  fell  4.0%  when  compared to the same 52-week period a year earlier.
During  the  12-week  period,  sales  of  herbal  products fell 20.8% and in the
52-week  period  such  sales  fell  13.2%.

     In  addition  to  the  trends  in  our specific industry, the United States
economy  has  experienced  a  significant  downturn  in recent months, which may
contribute  significantly  to  downward  trends  in  our  industry.

     There  also  can  be  no  assurance that the industry growth rates of prior
years can be regained.  In addition, there can be no assurance that the industry
growth rate will not continue to decline in future operating periods or that the
growth  rate of the U.S. economy may not be negative.  Such a failure to achieve
and  sustain growth in the industry or in the U.S. economy as a whole may have a
material  adverse  effect  on  our ability to return its results to its historic
rates  of  growth  and  its  results  of  operations.

THE  VMS  INDUSTRY  IS  HIGHLY  COMPETITIVE.

     Numerous  companies,  many  of  which  have  greater  size  and  financial,
personnel,  distribution  and  other  resources  than us, compete with us in the
development,  manufacture  and  marketing  of  VMS  supplements.  Our  principal
competition  in  the health food store distribution channel comes from a limited
number of large nationally known manufacturers and many smaller manufacturers of
dietary  supplements.  In  the  mass-market  distribution channel, our principal
competition  comes  from  broad  line  manufacturers,  major  private  label
manufacturers  and  other  companies.

     In  addition,  large  pharmaceutical  companies  have begun to compete with
others  and  with  us  in  the  dietary  supplement  industry. Packaged food and
beverage  companies compete with us on a limited basis in the dietary supplement
market.  Increased competition from such companies could have a material adverse
effect  on  us because such companies have greater financial and other resources
available  to  them  and  possess  manufacturing,  distribution  and  marketing
capabilities  far  greater  than  ours.

     We  also  face  competition  in  both the health food store and mass market
distribution  channels  from private label dietary supplements and multivitamins
offered  by  health  and  natural  food  store  chains,  drugstore  chains, mass
merchandisers  and  supermarket  chains.

OUR  BUSINESS  MAY  BE  ADVERSELY  AFFECTED  BY  UNFAVORABLE  PUBLICITY.

     We  believe that the VMS market is significantly affected by national media
attention  regarding  the  consumption  of  VMS  supplements.  Future scientific
research  or  publicity  may  not  be  favorable  to  the VMS industry or to any
particular product, and may not be consistent with earlier favorable research or
publicity.  Because  of  our  dependence  on  consumers'  perceptions,  adverse
publicity  associated  with  illness or other adverse effects resulting from the
consumption  of  our  products  or  any  similar  products  distributed by other
companies and future reports of research that are perceived as less favorable or
that  question  earlier  research  could  have  a material adverse effect on our
business,  financial  condition  and  results  of  operations.  We  are  highly
dependent  upon consumers' perceptions of the safety and quality of our products
as  well  as dietary supplements distributed by other companies.  Thus, the mere
publication  of  reports  asserting  that  such  products  may  be  harmful  or
questioning their efficacy could have a material adverse effect on our business,
financial  condition  and  results  of  operations,  regardless  of whether such
reports  are  scientifically  supported  or  whether the claimed harmful effects
would  be  present  at  the  dosages  recommended  for  such  products.

THERE  IS  A  SIGNIFICANT  COST  TO  OUR  RETAIL  RELATIONSHIPS.

                                       11
<PAGE>

     Many large retailers demand various forms of incentive payments in order to
conduct  business  with  them.  These  payments  include  slotting  fees,  co-op
advertising payments, rebate incentives, price off promotions and other forms of
monetary  and  non-monetary  support.  We  must  continually  evaluate  specific
demands  to  ascertain the profitability of potential business from the retailer
making  the demand.  Because of such demands, we may, depending upon the demands
being  made,  ascertain  that  we  cannot  profitably  do  business with certain
retailers.  This  may cause us to stop doing business with existing customers or
not  allow  us  to  enter  into  a  business  relationship  with a potential new
customer,  each  of  which  in  turn  could  dampen  future  revenue  growth.

AN ABSENCE OF CONCLUSIVE CLINICAL STUDIES TO SHOW THAT THERE ARE NO HARMFUL SIDE
EFFECTS  TO  OUR  PRODUCTS  COULD  HAVE  AN  ADVERSE  EFFECT  ON  OUR  BUSINESS.

     Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption,  some of our products contain ingredients for which no such history
exists.  In  addition,  although  we  believe  all of our products are safe when
taken  as  directed  by  us,  there  is  little  long-term experience with human
consumption  of  a  number  of  these  product ingredients in concentrated form.
Accordingly,  there  can  be  no  assurance that our products, even when used as
directed,  will have the effects intended or will not have harmful side effects.
Any such unintended effects may result in adverse publicity or product liability
claims,  which  could  have a material adverse effect on our business, financial
condition  and  results  of  operations.

WE  RELY  ON  OUR  INTELLECTUAL  PROPERTY  PROTECTION AS AN IMPORTANT ELEMENT OF
COMPETITION.

     Our  policy is to pursue registrations for all of the trademarks associated
with  its  key  products.  We rely on common law trademark rights to protect our
unregistered trademarks as well as our trade dress rights.  Common law trademark
rights  generally  are  limited to the geographic area in which the trademark is
actually used, while a United States federal registration of a trademark enables
the  registrant to stop the unauthorized use of the trademark by any third party
anywhere  in the United States.  We intend to register our trademarks in certain
foreign  jurisdictions  where  our  products  are  sold. However, the protection
available,  if  any,  in  such  jurisdictions  may  not  be  as extensive as the
protection  available  to  us  in  the  United  States.

     Currently,  we have few patents on our products and no material business is
derived from those items that are patented. To the extent we do not have patents
on  our  products,  another  company  may replicate one or more of our products.

     Although  we  seek  to  ensure  that  we  do  not infringe the intellectual
property rights of others, there can be no assurance that third parties will not
assert  intellectual  property  infringement  claims  against  us.

WE  ARE  DEPENDENT  ON  KEY  PERSONNEL.

     We  depend  on  our  executive  officers and key personnel to implement our
business  strategy  and  could  be  harmed  by  the  loss  of  their  services.

     We  believe  that  our  growth and future success will depend in large part
upon  the  skills  of  our  management  and technical team.  The competition for
qualified  personnel  in  our  industry  is  intense,  and  the  loss of our key
personnel  or  an  inability  to  continue  to  attract, retain and motivate key
personnel  could  adversely  affect  our business.  We cannot assure you that we
will  be  able  to  retain  our  existing key personnel or to attract additional
qualified  personnel.  We  do  not  have key-person life insurance on any of our
employees.  Our  success  depends  in  part  upon  the  continued  service  and
performance  of  Klee  Irwin,  President  and  Chief  Executive  Officer.

DIFFICULTY  OF  STRICT  COMPLIANCE  WITH  GOVERNMENT  REGULATIONS

     The  processing,  formulation,  packaging,  labeling and advertising of our
products  are  subject  to  governmental regulation. Congress has recognized the
potential  impact  of dietary supplements in promoting the health of US citizens
by  enacting  the  DSHEA.  Because  of the broad language of certain sections of
DSHEA  and  the  regulations  that implement it, it is difficult for any company
manufacturing  or  making  dietary  supplements  to remain in strict compliance.

                                       12
<PAGE>

OUR CHIEF EXECUTIVE OFFICER AND OUR CHAIRMAN OF THE BOARD VOTE A MAJORITY OF OUR
SHARES, WHICH COULD DISCOURAGE AN ACQUISITION OF US OR MAKE REMOVAL OF INCUMBENT
MANAGEMENT  MORE  DIFFICULT.

     Klee  Irwin,  our  Chief Executive Officer, beneficially owns approximately
36.4%  of  our  outstanding shares common stock as of June 25, 2001 and holds an
irrevocable  proxy to vote an aggregate of approximately 4.8% of the outstanding
common  stock  on  behalf  of  American  Equities,  LLC  and Corporate Financial
Enterprises,  Inc.  Andrew  Vollero,  Jr.,  Chairman  of  the Board of Directors
currently holds an irrevocable proxy to vote an aggregate of approximately 14.4%
of the outstanding common stock as of June 25, 2001.  Together, they are able to
control  all  matters  requiring  approval  by  our  stockholders, including the
election  of directors and the approval of mergers or other business combination
transactions.

OUR  ARTICLES  OF INCORPORATION AND UTAH LAW CONTAIN PROVISIONS THAT COULD DELAY
OR  PREVENT  AN  ACQUISITION  OF  THE  COMPANY.

     Our  articles  of  incorporation  and  by-laws  contain provisions that may
discourage  third  parties from seeking to acquire us. These provisions include:

-     a  classified  board  of  directors;
-     a  requirement that special meetings of shareholders be called only by our
      board  of directors, chairman of the board, president or 10% of the
      stockholders of  record  of  all  shares  entitled  to  vote;
-     limitations  on  the ability of shareholders to amend, alter or repeal our
      by-laws;  and
-     the  authority  of  the  board  of directors to issue, without shareholder
      approval,  preferred  stock  with  such  terms  as  the  board  of
      directors may determine.

     We  are  also  afforded  the  protections  of  the  Utah  Revised  Business
Corporation  Act.  This  statute contains provisions that impose restrictions on
shareholder  action  to  acquire  control  of  our  company.  The  effect of the
provisions  of  our  articles  of  incorporation  and  by-laws  and Utah law may
discourage  third  parties  from  acquiring  control  of  our  company.

THERE  IS  A  RISK  OF  OWNING  LOW  PRICED  STOCKS  AND  POSSIBLE DIFFICULTY IN
LIQUIDATING  SHARES  OF  SUCH  STOCK.

     Our  common  stock is currently quoted on the NASD Bulletin Board, which is
generally  considered  to be a less efficient market than markets such as NASDAQ
or other national exchanges, and which may cause difficulty in conducting trades
and  difficulty  in  obtaining  future  financing.  Further,  our securities are
subject  to  the  "penny  stock  rules" adopted pursuant to Section 15(g) of the
Securities  Exchange  Act  of  1934,  as amended, or the Exchange Act. The penny
stock rules apply to non-NASDAQ companies whose common stock trades at less than
$5.00  per  share  or  which  have  tangible  net  worth  less  than  $5,000,000
($2,000,000  if  the  company  had been operating for three or more years). Such
rules  require,  among  other  things,  that  brokers who trade "penny stock" to
persons  other than "established customers" complete certain documentation, make
suitability  inquiries  of investors and furnish quote information under certain
circumstances.  Many  brokers have decided not to trade "penny stock" because of
the  requirements  of  the  penny  stock  rules  and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. In
the  event that we remain subject to the "penny stock rules" for any significant
period,  there  may  develop  an  adverse  impact on the market, if any, for our
securities.  Because  our  securities  are  subject  to the "penny stock rules,"
investors  will  find it more difficult to dispose of these securities. Further,
for companies whose securities are quoted on the NASD Bulletin Board, it is more
difficult:

-     to  obtain  accurate  quotations,
-     to  obtain  coverage  for  significant  news  events  because  major  wire
      services,  such  as  the  Dow Jones News Service, generally do not publish
      press releases  about  such  companies,  and
-     to  obtain  capital.

                                       13
<PAGE>

POTENTIAL  FLUCTUATIONS  IN  OUR OPERATING RESULTS COULD LEAD TO FLUCTUATIONS IN
THE  MARKET  PRICE  FOR  OUR  COMMON  STOCK.

Our  results  of operations are expected to fluctuate significantly from quarter
to  quarter,  depending  upon  numerous  factors,  including:

-     demand  for  our  products;
-     changes  in  our  pricing  policies  or  those  of  our  competitors;
-     increases  in  our  manufacturing  costs;
-     the  number,  timing  and  significance  of  product  enhancements and new
      product  announcements  by  ourselves  and  our  competitors;
-     our  ability to develop, introduce and market new and enhanced versions of
      our  products  on  a  timely  basis  considering, among other things,
      regulatory approval  processes  and  the  timing  and  results  of
-     future  clinical  trials;  and
-     product  quality  problems, personnel changes, and changes in our business
      strategy.

THE  MARKET  PRICE  FOR OUR COMMON STOCK COULD FLUCTUATE DUE TO VARIOUS FACTORS.
THESE  FACTORS  INCLUDE:

-     acquisition-related  announcements;
-     announcements  by  us  or  our  competitors  of  new  products;
-     changes  in  government  regulations;
-     fluctuations  in  our  quarterly  and  annual  operating  results;  and
-     general  market  conditions.

     In  addition,  the  stock  markets  have,  in  recent  years,  experienced
significant price fluctuations.  These fluctuations often have been unrelated to
the  operating  performance  of  the  specific  companies whose stock is traded.
Market  fluctuations,  as  well as economic conditions, have adversely affected,
and  may continue to adversely affect, the market price of our common stock. Our
ability  to  pay  dividends  on  our  common  stock  may  be  limited.

     We  do  not  expect to pay any cash dividends in the foreseeable future. We
intend  to  retain  earnings,  if any, to provide funds for the expansion of our
business.

LIMITATIONS ON DIRECTOR LIABILITY MAY DISCOURAGE STOCKHOLDERS FROM BRINGING SUIT
AGAINST  A  DIRECTOR.

     Our  articles of incorporation provide, as permitted by governing Utah law,
that  a  director  shall  not be personally liable to us or our stockholders for
monetary  damages  for  breach  of  fiduciary  duty  as a director, with certain
exceptions.  These  provisions  may  discourage  stockholders from bringing suit
against a director for breach of fiduciary duty and may reduce the likelihood of
derivative  litigation brought by stockholders on our behalf against a director.
In  addition,  our  articles  of  incorporation and bylaws provide for mandatory
indemnification  of  directors  and  officers to the fullest extent permitted by
Utah  law.

                                       14
<PAGE>
                                 USE OF PROCEEDS

     We  will  not  receive  any  proceeds from the sale of the shares of common
stock  offered  hereunder.  However,  we  may  receive  gross  proceeds of up to
$2,531,250  if  warrants  to purchase up to 1,137,500 shares of our common stock
are  exercised.  The  net proceeds, if any, from such transactions have been and
will  be  used for working capital and general corporate purposes.  Pending full
utilization  of  the  proceeds,  which  may be obtained from the exercise of the
warrants  and  options, if at all, we may invest the net proceeds in short-term,
investment  grade,  and  interest  bearing  securities.

                                 DIVIDEND POLICY
     No  dividend  has been declared or paid by us since inception on our common
stock.  We  do not anticipate that any dividends will be declared or paid in the
future  on  our  common  stock.

                           PRICE RANGE OF COMMON STOCK

     As  of  June  25, 2001, we had 36,067,061 shares of common stock issued and
outstanding.  Further,  we  had  issued  and  outstanding  options  to  purchase
6,703,653  shares  of common stock, of which 4,963,894 are vested as of the date
of  this  prospectus,  and warrants to purchase up to 3,037,500 shares of common
stock.

     Our  common stock is currently listed on the NASD Bulletin Board, under the
symbol  "ZONE."  The  following table sets forth, for the periods indicated, the
high and low closing sale prices of our common stock, as reported by the NASDAQ,
for  periods  from January 1, 1998 through November 7, 2000, as published in the
"pink  sheets,"  for  the period from November 2000 through June 11, 2001 and as
published  on  the NASD Bulletin Board for the period from June 12, 2001 to June
30,  2001:
<TABLE>
<CAPTION>
<S>                            <C>    <C>
                               High   Low
Year Ended December 31, 1998
  First Quarter                $5.88  $4.50
  Second Quarter               $9.50  $4.88
  Third Quarter                $7.50  $2.75
  Fourth Quarter               $6.94  $3.00
Year Ended December 31, 1999
  First Quarter                $8.00  $3.43
  Second Quarter               $2.50  $1.50
  Third Quarter                $2.50  $1.50
  Fourth Quarter               $2.31  $1.13
Year Ended December 31, 2000
  First Quarter                $8.63  $1.38
  Second Quarter               $7.38  $3.75
  Third Quarter                $4.19  $1.38
  Fourth Quarter               $1.66  $0.13
Year Ending December 31, 2001
  First Quarter                $0.50  $0.18
  Second Quarter               $0.48  $0.20
</TABLE>

     The  last  reported  sale  price  of our common stock as quoted on the NASD
Bulletin  Board  on  June  25,  2001  was  $0.21.   At June 25, 2001, there were
36,067,061  shares  of  our  common  stock outstanding held by approximately 258
holders  of  record  of  our  common  stock.

     On  November  7,  2000,  the NASDAQ/NMS halted trading in our stock. NASDAQ
delisted the common stock from trading on November 17, 2000.  From November 2000
to  June  11,  2001, our common stock was quoted in the "Pink Sheets," which are
published  by  the National Quotation Bureau.  On June 12, 2001, our stock began
trading  on the NASD Bulletin Board.  We believe that the delisting by NASDAQ is
likely  to  have an adverse effect on the market for our common stock and on our
ability  to  raise  additional  capital.

                                       15
<PAGE>

                                 CAPITALIZATION

The  following  table  describes  our  capitalization  as  of  April  30,  2001:

<TABLE>
<CAPTION>
                                                            Omni Nutraceuticals, Inc.
                                                       Capitalization as of April 30, 2001

                                                                      Pro forma for exercise of
                                                       Actual              related warrants
<S>                                                     <C>                         <C>
Common stock, par value $0.01, 50,000,000
shares authorized, 34,494,379 issued and
outstanding                                       $    346,000            $      347,000

Series A Convertible Preferred stock, par
value $0.01, stated value $1.00, 3,000 shares
authorized, 3,000 shares issued and
outstanding

Additional paid in capital                          43,936,000                46,466,000

Treasury stock, at cost                                (50,000)                  (50,000)

Accumulated deficit                                (43,389,000)              (43,389,000)

 Total capitalization                             $    846,000            $    3,374,000
</TABLE>

The  above  table  excludes up to 6,629,153 shares of common stock issuable upon
the  exercise  of  stock  options  outstanding  as of March 31, 2001 at exercise
prices  ranging  from $0.25 to $6.00 per share.  The above table also assumes no
exercise  of  outstanding  warrants  exercisable  into up to 1,900,000 shares of
common  stock  at  exercise  prices  ranging  from  $0.96  to  $6.00  per share.

                                       16
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

     You  should  read  the  following  selected  consolidated financial data in
conjunction  with  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes  included  elsewhere in this prospectus.  The statement of operations data
for the years ended December 31, 1998, 1999 and 2000 and the quarter ended March
31,  2001,  and  the  balance  sheet  data at December 31, 1999 and 2000 and the
quarter ended March 31, 2001 are derived from our audited consolidated financial
statements  appearing  elsewhere  in this prospectus.  The balance sheet data at
December  31,  1997  and 1996, and the statement of operations data for the year
ended  December  31, 197 and the period from March 15, 1996 to December 31, 1996
are  derived  from our audited consolidated financial statements not included in
this prospectus. The statement of operations data for the period from January 1,
1996  to  March 14, 1996 represents data of a predecessor company and is derived
from  their  unaudited  consolidated  financial  statements not included in this
prospectus.
<TABLE>
<CAPTION>
STATEMENT  OF OPERATIONS DATA
                                       Three Months Ended
                           March 31,                       Year Ended December 31,
                                                               -----------------------------------------------
(in  thousands,
except  per share data)                2001         2000          2000      1999        1998     1997     1996
                                    (unaudited)   (unaudited)               (as
                                                                          previously
                                                                          restated)
<S>                              <C>           <C>           <C>         <C>        <C>       <C>       <C>
Net sales                           $     5,751   $     8,039  $  29,609   $ 30,922   $30,547   $29,353   $28,592
Gross Profit                              2,443         3,215     10,223     14,934    18,007    16,050    16,266
Operating (loss) income                    (867)       (6,090)   (13,472)    (9,867)    1,827    (4,638)   (1,298)
Other income (expense)                     (440)         (456)    (1,864)      (829)     (209)      (79)      101
Income (loss) before provision
for income taxes                         (1,307)       (6,546)   (15,336)   (10,696)    1,618    (4,717)   (1,197)
Provision for income taxes                    3                        1       (274)      600       ---       594
Income (loss) before
 discontinued operations                 (1,310)       (6,546)   (15,337)   (10,422)    1,018    (4,717)   (1,791)
Discontinued operations                    (246)         (230)    (1,155)      (633)
Net income (loss)                        (1,556)       (8,726)   (16,492)   (11,055)    1,018    (4,717)   (1,791)
Pro forma provision for
income taxes (unaudited)                    N/A           N/A        N/A        N/A     1,345       765       N/A
Pro forma net income
(loss) (unaudited)                          N/A           N/A        N/A        N/A       273    (5,482)      N/A
PER SHARE DATA:
Historical Earnings (loss)
per common share
-- Basic and diluted                $     (0.05)  $     (0.30) $   (0.71)  $  (0.39)  $  0.04   $ (0.17)  $ (0.07)
Pro Forma Earnings (loss)
per  common share
-- Basic and undiluted
(unaudited)                                 N/A           N/A         N/A        N/A  $  0.01   $ (0.20)       N/A
Historical Weighted
average number of shares
of common stock
outstanding - Basic                      34,257        27,765      30,640    28,177    27,747    27,365     25,647
Weighted average number
of shares of common stock
outstanding - Diluted                    34,257        27,765      30,640    28,177    28,221    27,365     25,647
Pro forma
Weighted average number
Of shares of common
stock - Basic (unaudited)                   N/A           N/A         N/A        N/A   27,747    27,365        N/A
Weighted average number
of shares of common stock
outstanding - Diluted
 (audited)                                  N/A           N/A         N/A        N/A   28,221    27,365        N/A
</TABLE>

                                       17
<PAGE>


<TABLE>
<CAPTION>

BALANCE SHEET DATA (AT PERIOD END):         March 31,                                  December 31,
----------------------------------------------------------
(in thousands)                                2001                       1999
                                           (unaudited)                as previously
                                                             2000       stated)          1998      1997     1996
<S>                        <C>               <C>             <C>       <C>      <C>      <C>
Working Capital
(Deficit)                            $         (12,549)  $   (11,141)    $(8,558)      $ 4,395   $ 3,588    $ 4,483
Total Assets                                    26,324        27,305      29,533        13,087    11,337     15,382
Long Term Debt, Net of Current Portion           6,852         7,440      10,187         1,423     1,298      1,275
Shareholders' Investment                         1,321         2,569        (316)        5,869     5,387     10,256
</TABLE>

     The  statement  of  operations  data for the years ended December 31, 1998,
1999  and  2000 and the quarter ended March 31, 2001, and the balance sheet data
at  December  31, 1999 and 2000 and the quarter ended March 31, 2001 are derived
from  our  audited consolidated financial statements appearing elsewhere in this
prospectus.  The  balance  sheet  data  at  December  31, 1997 and 1996, and the
statement of operations data for the year ended December 31, 1997 and the period
from  March  15,  1996  to  December  31,  1996  are  derived  from  our audited
consolidated financial statements not included in this prospectus. The statement
of  operations  data  for  the  period  from  January  1, 1996 to March 14, 1996
represents  data  of  a  predecessor  company  and is derived from its unaudited
consolidated  financial  statements  not  included  in  this  prospectus.

                                       18
<PAGE>

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

     The  following  discussion  and analysis should be read in conjunction with
the  consolidated  financial  statements and related notes included elsewhere or
incorporated  by  reference  in  this  prospectus.

OVERVIEW

     We  are  the survivor of a corporate reorganization, or the reorganization,
of  4Health, Inc, and Irwin Naturals, Inc., which was consummated June 30, 1998.

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the  general  public.  Our  products  are  produced  primarily  from  natural
ingredients and are formulated for the purposes of achieving specific dietary or
nutritional  goals.  We have historically and continue to sell these products to
health  food  stores, both directly and through distributors, mass merchandisers
and  distributors  who  sell  into  foreign  countries.

INTERNAL  DISPUTES  AND  CHANGE  IN  MANAGEMENT

     Upon  the consummation of the reorganization, Messrs. R. Lindsey Duncan and
Klee  Irwin,  our  controlling  shareholders, entered into substantially similar
three-year  employment  agreements with us.  In 1999, Mr. Duncan was employed as
Chairman of the Board and as a member of our Executive Committee with all duties
and  responsibilities  normally  associated  with  this position.  Mr. Irwin was
employed  as  the  Chief  Executive  Officer  and  as  a member of the Executive
Committee  with  all  duties  and responsibilities normally associated with this
position  until  April  20,  1999.

     On  April  20, 1999, Mr. Irwin resigned, as Chief Executive Officer and his
employment  agreement  was  terminated.  In  connection with his resignation the
Board  of  Directors appointed him as Chief Executive Officer of HealthZone.com,
our  then  wholly  owned  e-commence  subsidiary,  or  HealthZone.

     In  October of 1998, we entered into an agreement to hire Mr. Louis Mancini
as  President  and  Chief  Operating  Officer and, subsequently, Chief Executive
Officer.

     During  the  period  from June, 1998 until Mr. Irwin's resignation as Chief
Executive  Officer  disputes arose between Mr. Irwin and us. On October 8, 1999,
we  entered  into  a  settlement  agreement  with  Mr. Irwin in order to resolve
certain  mutual  claims  that  had  arisen.  Among  the  principal  terms of the
settlement,  Mr.  Irwin  made  a  capital contribution of $410,000, and returned
941,436 shares of our common stock to us. 363,363 of these shares were issued to
the  former owners of HVE and the remainder will be reflected as treasury stock.
Further,  Messrs.  Irwin and Duncan, who together owned approximately 74% of the
outstanding  shares  of  our voting capital stock, each entered into a five-year
voting  agreement  pursuant to which Mr. Irwin has agreed to certain stand-still
provisions  and he and Mr. Duncan have agreed to vote their respective shares of
our  common stock for their respective nominees for Class I and II directors and
the  candidate  for  Class III director nominated by the two Class II directors.
Upon  execution of the settlement agreement, day-to-day control of us was vested
in  Messrs.  Duncan  and  Mancini.

     Effective  on  March  12,  2000, Mr. Duncan and his spouse, Cheryl Wheeler,
entered  into  an  agreement,  or  the  Withdrawal  Agreement,  in  which:

-     Mr.  Duncan  agreed  to  resign  from  the  Board  of  Directors,
-     terminated  his  employment  agreement  with  us,  and
-     cease  all  further  involvement  with  us,

     Mr.  Duncan  and Ms. Wheeler both agreed to vote their respective shares of
our  common  stock,  or  give  their  written consent on all matters on the same
proportionate  basis  as  our  remaining shareholders vote their shares, or give
their  written  consent on such matters for a period of five years from the date
of  the  Withdrawal  Agreement,  and  appoint  Andrew  Vollero,  Jr.,  as
attorney-in-fact  for each of them to vote their shares of common stock, or give
their  written  consent.

                                       19
<PAGE>

Mr.  Duncan's  agreement  to  resign from the Board and terminate the Employment
Agreement  was  conditioned  on:

-     the  extension of the exercise and expiration dates of all of his existing
      stock  options  to  purchase 1,003,029 shares of the common stock to the
      seventh anniversary  of  the  Withdrawal  Agreement.
-     the  receipt  by  of $1,500,000 in net proceeds from the sale of shares of
      common  stock  owned  by Mr. Duncan at a price of $3.00 per share in one
      or more transactions.
-     the  execution  and  delivery  by  American  Equities  LLC  and  Corporate
      Financial Enterprises, Inc., or the investors, of a term sheet providing
      for the purchase  by  them  from us of our securities for an aggregate
      purchase price of $2,000,000.
-     the  execution  and delivery by Mr. Irwin and each of the investors to Mr.
      Duncan  of  a  general  release.
-     the  execution  and  delivery  by  us  of a Registration Rights Agreement.
-     the termination of a voting agreement dated October 8, 1999 by and between
      Mr.  Duncan  and  Mr.  and  Mrs.  Klee  Irwin.

On  March  12,  2000,  the  Board:

-     terminated Mr. Louis Mancini's employment as President and Chief Executive
      Officer,
-     Mr.  Irwin  was  appointed  to  fill  the  vacancy  created  thereby,  and
-     authorized  the  termination  of  a  settlement agreement dated October 8,
      1999,  by and among us and Mr. and Mrs. Klee Irwin, and the ancillary
      agreements executed  and  delivered  by  us  in  connection  therewith.

     As  a  result  of  the March 12, 2000 employment realignments, we forgave a
note  due  to  us  from  Louis  Mancini  in  the  amount  of  $175,000.

ADJUSTMENT  TO OUR FINANCIAL STATEMENTS FOR 1999 AND 2000 AND CUSTOMER RIGHTS OF
RETURN

     During  the  period  of  time  while  Messrs.  Duncan  and  Mancini were in
day-to-day  control  of  our sales and marketing efforts, they developed several
product offerings that were not successful. In order to protect our relationship
with  certain  of  our  customers,  as  well as to ensure a strong reputation to
secure  future  sales,  we exercised liberal flexibility with those customers in
authorizing  returns for certain products which did not sell.  At the end of the
first  quarter  of  2000,  management  again  changed.

     In  an  effort  to  build  customer confidence and satisfaction, we warrant
satisfaction and grant to our customers, at the retail consumer level, the right
of  return  for full credit if the end user is not satisfied with the quality of
our  product.  Historically,  this  policy  has  generated  insignificant  total
returns.  During  the period from 1999 through the third quarter of 2000, due to
product  introductions  in 1999 that proved unsuccessful, the percentage of such
returns  increased.  A  significant  amount  of such allowances were granted for
returns  during  1999  and  the first quarter of 2000.  These returns became the
subject  of financial statement restatements that were made to certain quarterly
reports  on  Form 10-Q during the two years ended December 31, 1999 and 2000 and
on  our  annual  report  Form  10-K  for  the  year  ended  December  31,  1999.

     Starting  in  July  2000,  one  of  our  large  customers started deducting
significant  amounts  from  cash remittances.  In addition, certain of our other
customers  began  taking deductions against cash remittances that were in excess
of  historical  amounts  we  had  experienced.  Beginning  in  August  2000,  we
conducted  an  investigation of our 1999 and 2000 sales practices and determined
that sales to certain customers were made with rights of return and "guarantees"
of  sell-through  to  consumers.  As  part  of  our  investigation,  we reviewed
substantially  all  of the customer deductions taken in 2000 and determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances and concessions granted by management in the fourth quarter
of  1999  and  the first quarter of 2000.  Substantially all of the arrangements
were  previously  unknown  to  the  current management team.  However, it became
necessary  following  the  conclusion  of  our  investigation  to continue for a
limited  period,  the  flexible  stance on returns initiated in 1999 in order to
further  support  and  protect  our  relationship  with  those  customers.

                                       20
<PAGE>

     We  determined  the  effect of these deductions and previously restated our
financial  statements  for  the  year ended December 31, 1999. Revenues from any
products  with  "guaranteed"  sales  were deferred until the sell through of the
product  at  the  customer  level  and  the  related product has been treated as
consigned  inventory.  In  situations  in  which  we  granted  allowances  and
concessions  in the fourth quarter of 1999 and early in 2000 related to sales in
1999,  we  have increased our reserves for such allowances and concessions as of
December  31,  1999,  at which time such allowances were known.  In addition, in
situations in which we subsequently granted additional allowances or concessions
relating  to  sales made in prior periods, but which were unknown in the earlier
periods,  we  have increased our reserves in the period such decisions were made
and  the  amounts  became  known.

     The  effect  of  the adjustments required as a result of this investigation
was to restate our financial statements for the third and fourth quarters of and
the  year  1999  and  the first and second quarters of 2000.  The cumulative net
impact  on  our  statements of operations from July 1, 1999 through December 31,
1999  included  the  deferral of approximately $1.9 million of gross profit from
previously  recorded sales, now treated as "guaranteed sales," and an additional
$0.3  million of reserves for allowances granted to customers for sales in prior
periods.  During  the  twelve  months  ended  December  31,  2000,  all  of such
guaranteed  sales  were  reversed  and  approximately $4.4 million of additional
charges  for  reserves  were  recorded.

RECENT  DEVELOPMENTS  IN  OUR  BUSINESS

     SALE TO VITACOST.COM, INC.  On February 2, 2001, we entered into a Purchase
Agreement  with Vitacost.com, Inc., or Vitacost, an on-line marketer of vitamins
and  nutritional  products,  whereby  Vitacost acquired substantially all of the
operating  assets  of our combined Internet operations in exchange for 6,800,000
shares  of Vitacost common stock.  The agreement contains an optional repurchase
right  giving  us,  at  any time after four years from the closing, the right to
demand that Vitacost repurchase the stock we acquired for $3,400,000 in cash or,
at  their  option,  a 60 month note requiring equal monthly payments of $56,667.
The  agreement  also  contains an optional redemption right, giving Vitacost the
right  to  redeem  the  stock we acquired, at any time up to four years from the
closing.  If  this  option  is  exercised  between  the  closing  and  the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up to $9,317,000 on the fourth anniversary of the closing.  The
stock  we  received  represents approximately 19.9% of the total Vitacost common
stock  outstanding.  As  long as we continue to hold at least a 10% interest, we
will  have  one  of the five available seats on the Vitacost Board of Directors.
Additionally,  we have certain anti-dilution rights in the event Vitacost raises
additional  equity.

     Further,  in  connection  with  the Purchase Agreement, the Company entered
into  a  non-competition agreement with Vitacost, whereby the Company agreed not
to  compete with Vitacost in the business of reselling other companies' vitamins
and supplements on a retail basis via the internet and mail order catalogues for
the  period beginning on the date of the non-competition agreement and ending on
the  last  to  occur  of:  (i)  the  one-year anniversary of the non-competition
agreement;  or (ii) the date that is six months after the Company's resignation,
removal  or  other  termination  from  Vitacost's  board  of  directors.  The
non-competition  agreement  does  not  preclude the Company from engaging in the
business of selling its own products including, but not limited to, vitamins and
supplements  manufactured  by  the Company through any means, including, without
limitation,  via  the  internet  and  mail  order  catalogues.

     ACQUISITION AND DISPOSITION OF VITAMIN DISCOUNT CONNECTION.  On October 27,
2000,  we  acquired Vitamin Discount Connection, an Internet "e-tailer" and mail
order  retailer  of  nutritional  and health-related products. We issued 190,000
restricted shares of our common stock in exchange for certain assets and assumed
the  seller's  liabilities of $115,000 Substantially all of the operating assets
of Vitamin Discount Connection were sold to Vitacost.com, Inc. in February 2001.

     ACQUISITION  AND  DISPOSITION  OF  HEALTHSHOP.COM.  On  May  22,  2000,  we
executed  an  asset  purchase  agreement  to  purchase  selected  assets  of
HealthShop.com,  or  Healthshop,  an  Internet  business retailer of nutritional
supplements  and  health  related  products  for a purchase price of $3,500,000,
payable  in 838,951 shares of our common stock.  We are obligated to issue up to
an  additional  250,000  shares  contingent  upon  the  sellers  meeting certain
performance  measures during the one year period from the closing date and up to
400,000 shares in the event the price of our common stock does not reach certain
levels  nine  months  after  closing.  Pursuant  to these provisions, during the
quarter  ended  March  31, 2001, we issued 400,000 shares of our common stock to
the  former  shareholders  of  Healthshop.  We  also  entered  into  consulting
agreements  with the former shareholders and executives of Healthshop and issued
options  to  purchase  an  aggregate  of  250,000  shares of our common stock in
connection  therewith.  Healthshop and the former shareholders and executives of
Healthshop were granted piggyback registration rights with respect to the shares
and  the  shares  underlying  the  options granted by us in connection with this
transaction.  We  are  registering  these  securities pursuant to a registration
statement  of  which  this  prospectus  forms  a  part. Substantially all of the
operating assets of Healthshop were sold to Vitacost.com, Inc. in February 2001.

                                       21
<PAGE>

     ACQUISITION  AND  DISPOSITION  OF  SMARTBASICS.COM.  On  May  25,  2000, we
executed  an  agreement  and plan of reorganization with Smart Basics, Inc., dba
SmartBasics.com,  an Internet and mail order retailer of nutritional supplements
and  health  related  products.  Under  the  terms  of  the agreement, we issued
170,000  shares  of  our  common stock in consideration for all of the equity of
SmartBasics.com.  Substantially  all  of the operating assets of SmartBasics.com
were  sold  to  Vitacost.com,  Inc.  in  February  2001.

     ACQUISITION  OF  INHOLTRA.  On  March  10,  1999,  we purchased certain net
assets  of  Inholtra  Investment Holdings and Trading, N.V., Inholtra, Inc., and
Inholtra  Natural,  Ltd.,  including the Inholtra-registered trademark- brand of
anti  joint  pain  product  and associated trademarks, patent and inventory, for
$13,250,000.  The  purchase price consisted of the payment of $3,250,000 in cash
at  closing,  and the issuance of a $10,000,000 promissory note.  The promissory
note  was  repaid on June 10, 1999 in connection with our agreement with our new
banking  facility.  In  connection  with  this  acquisition,  we  entered into a
consulting  agreement  with  a  former  employee  of  the sellers.  The two-year
agreement  required  annual  consulting  fees  of  $60,000.

     ACQUISITION  AND  DISPOSITION OF HEALTH & VITAMIN EXPRESS.  On February 15,
1999,  we  purchased for $2,880,000 the issued and outstanding shares of HVE, an
e-commerce  distribution  company.  The  purchase consideration consisted of the
issuance of 363,636 shares of our common stock valued at $2,273,000 or $6.25 per
share  and  the  assumption  of  $571,000  of  debt.  Substantially  all  of the
operating  assets  of  HVE were sold to Vitacost.com, Inc. in February 2001.  On
December 23, 1999, the former owners of HVE filed a lawsuit against us asserting
certain  claims  under  this agreement.  In settlement of these claims, on April
13, 2000, we entered into a Settlement, Termination and Mutual Release Agreement
pursuant  to which we issued an additional 363,636 shares of our common stock to
the  former  owners  of HVE and terminated all other rights and obligations that
existed  under  the  February  15,  1999  agreement.  Former  owners of HVE were
granted  certain  registration rights with respect to these additional shares of
our common stock. We are registering these securities pursuant to a registration
statement  of  which  this  prospectus  forms  a  part.

SELECTED  QUARTERLY  INFORMATION

     The following table sets forth certain unaudited financial data for each of
the  quarters within the twelve months ended December 31, 1999 and 2000, and the
quarter  ending  March  31,  2001.  This  information  has been derived from our
Consolidated  Financial  Statements,  and  in management's opinion, reflects all
adjustments  (consisting  only  of normal recurring adjustments) necessary for a
fair  presentation of the information for the quarters presented.  The operating
results for any quarter are not necessarily indicative of results for any future
period.
<TABLE>
<CAPTION>

                                                 (Unaudited)
                                    (in thousands except per share data)

1999 Quarter Ended                        March 31         June 30         September 30    December 30
------------------                        --------         -------         ------------    -------------
<S>                                 <C>                                    <C>             <C>            <C>
Net Sales                           $        6,991   $       7,989        $      8,506        $ 7,436
Gross Profit                                 3,584           4,039               4,040          3,271
Loss before loss from discontinued
operations                                    (405)         (2,786)             (1,487)        (5,744)
Loss from discontinued operations             (249)           (376)               (304)           296
Net Income (Loss) Available to
Common                                        (654)         (3,162)             (1,790)        (5,449)
Net Income (Loss) Per Common
 Share                              $        (0.02)  $       (0.11)        $     (0.06)       $ (0.20)
</TABLE>

<TABLE>
<CAPTION>

<S>                                        <C>       <C>      <C>           <C>            <C>       <C>       <C>
2000 Quarter Ended                         March 31         June 30         September 30    December 30
------------------                         --------         -------         ------------    -----------
Net Sales                                $     8,039        $10,846            $ 5,136        $ 5,561
Gross Profit                                   3,215          4,183              1,242          1,580
Loss before loss from discontinued operations (6,546)          (882)            (3,416)        (2,519)
Loss from discontinued operations               (230)          (264)              (614)           (70)
Net Income (Loss) Available to Common         (8,726)        (1,146)            (4,030)         (7708)
Net Income (Loss) Per Common Share       $      0.30        $ (0.04)           $ (0.12)       $ (0.25)
</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>

<S>                                            <C>
2001 Quarter Ended                             March 31
---------------------------------------------  ----------
Net Sales                                      $    5,751
Gross Profit                                        2,443
Loss before loss from discontinued operations      (1,310)
Loss from discontinued operations                    (246)
Net Income (Loss) Available to Common              (1,556)
Net Income (Loss) Per Common Share             $    (0.05)
</TABLE>

RESULTS  OF  OPERATIONS

THREE  MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

     Our  consolidated  net sales for the three months ended March 31, 2001 were
$5,751,000  with an operating loss before provision for income taxes and loss on
discontinued  operations  of  $1,307,000.  The  loss  on  operations  of  our
discontinued  e-commerce segment for the first quarter of 2001 was $246,000. Our
net  loss  for  the  first  quarter  of  2001  was  $1,556,000, and our net loss
available  to  our  common  shareholders  was  $1,556,000 or $0.05 per basic and
diluted  share. Our consolidated net sales for the same period in the prior year
were  $8,039,000  with  an  operating loss before provision for income taxes and
loss  on  discontinued  operations  of $6,546,000. The loss on operations of our
discontinued  e-commerce segment for the first quarter of 2000 was $230,000. Our
net  loss and our net loss available to common shareholders in the first quarter
of  2000  was  $6,776,000  and  $8,726,000  or $.30 per basic and diluted share,
respectively.  Our  total  selling,  general and administrative expenses for the
three months ended March 31, 2001 were $3,310,000 versus $9,305,000 for the same
period  in  2000.

SALES

     Our  net  sales  for  the  three  months ended March 31, 2001, decreased by
$2,288,000, or 28.4%, to $5,751,000 from $8,039,000 for the comparable period in
2000. The decrease in sales results from overall declines in consumer demand for
herbal  supplements,  which  was particularly acute in the mass market. Also the
first  quarter  of 2000 benefited from a national media advertising campaign for
our  Inholtra,  Colestaid  and Veromax products introduced in 1999. Sales in the
first  quarter  of  2001 also declined because substantially all advertising and
promotion  was curtailed for existing products due to limited resources. Also as
of March 31, 2001 we had not introduced any new products since the first quarter
of  2000.

     GROSS  PROFIT

     Gross  profit  for  the  three  months  ended  March  31, 2001 decreased by
$772,000,  or 24.0%, to $2,443,000, from $3,215,000 for the comparable period in
2000.  Gross  profits  as a percentage of sales for the three months ended March
31,  2001  increased  to  42.4% from 40.0% in the comparable period in 2000. The
increase  in  the gross margin was primarily due to a shift in the net sales mix
from  mass-market  sales, which had higher rates of returns in the first quarter
of 2000, to higher margin health food store sales in 2001, partially offset by a
greater  contribution  from  lower  margin  international  sales  in  2001.

                                       23
<PAGE>

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Sales  and  marketing  expenses  for  the three months ended March 31, 2001
decreased  by $3,728,000 or 81.8% to $829,000 from $4,557,000 for the comparable
period  in  2000.  This  decrease  was due primarily to lower advertising, media
expenses  and  co-op  advertising,  which  declined $3,354,000 to $71,000 in the
first quarter of 2001 from $3,425,000 in the comparable period in 2000. The main
products  promoted in the first quarter last year were Inholtra, Cholestaid, and
Veromax.  Other cost reductions came from reductions in the costs of repackaging
and  redesign  of our core product lines, $79,000; salaries and wages, $137,000;
trade  show  expense,  $46,000;  travel,  $32,000;  and  royalties,  principally
Inholtra,  $41,000.

     Distribution  expenses  declined  $116,000 or 19.9% to 466,000 in the three
months  ended  March  31,  2001  from $582,000 in the comparable period in 2000.
Reduction in freight, $79,000 and wages, $41,000 accounted for substantially all
of  the  decline.

     General  and  administrative  expenses  decreased  $2,151,000  or  51.6% to
$2,015,000  in  the  three  months  ended  March 31, 2001 from $4,166,000 in the
comparable  period  in 2000. A compensation charge of $1,720,000 recorded in the
first quarter of 2000 related to the transfer of personal shares from an officer
and  major shareholder to a departing board member accounted for the majority of
the decline. Also accounting for the decline were decreases in salary and wages,
$99,000;  accounting, legal and professional fees, $311,000; amortization of the
e-commerce  business  segment, sold February 2, 2001, $126,000; partially offset
by  increased  stock  compensation  expense  of  $161,000.

OTHER  INCOME  (EXPENSE)

     Interest  expense  for  the three months ending March 31, 2001 decreased by
$25,000  to  $440,000  from  $465,000  for  the  comparable period in 2000. This
decrease  is  the  result of lower term loan balances outstanding from period to
period.

     YEAR  ENDED  DECEMBER  31,  2000  COMPARED  TO YEAR ENDED DECEMBER 31, 1999

     Net  sales  for  the  year ended December 31, 2000 were $29,609,000 with an
operating loss of $13,472,000 and a net loss available to common shareholders of
$21,610,000,  or  $0.71 per basic and diluted share.  Consolidated net sales for
the  year  ended  December  31,  1999 were $30,922,000 with an operating loss of
$9,867,000  and  net  loss of $11,055,000, or $0.39 per basic and diluted share.
The  net  loss  available to common shareholders for the year ended December 31,
2000 was impacted by; (i) an increase in estimates for returns and allowances of
$4,429,000,  (ii)  a  $5,118,000  preferred  stock  dividend, (iii) a $1,720,000
one-time  non-cash  charge,  (iv)  $1,827,000  increase  in  stock  compensation
expense,  and (v) a $548,000 increase in interest expense.  Other income for the
year  ended  December  31, 1999 included a $481,000 one-time gain on the sale of
the former 4Health corporate headquarters building located in Boulder, Colorado.

     SALES

     Net sales for the year ended December 31, 2000, decreased by $1,313,000, or
4.2%,  to  $29,609,000  from $30,922,000 for the comparable period in 1999.  The
decrease  in  net  sales relates primarily to increases in estimates for returns
and  allowances which increased $4,429,000 or 130% to $7,836,000 from $3,407,000
for  the  comparable period in 1999.  Sales discounts declined $283,000 or 24.7%
to  $862,000  from  $1,146,000  for  the  comparable  period  in  1999.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 2000 decreased $4,711,000, or
31.5%, to $10,223,000 from $14,934,000 for the comparable period in 1999.  Gross
profits  as a percentage of sales for the year ended December 31, 2000 decreased
to 34.5% from 48.3% in the comparable period in 1999.  The decrease in the gross
margin  percentage  resulted  primarily  the  increase  in estimated returns and
allowances  as a result of higher rates of returns on products sold in the first
half  of  the  year.  Also  impacting  margins was a shift in the product-mix to
certain  items  that have lower margin, increased allowances given and discounts
offered  to  customers.

     SALES  AND  MARKETING

     Sales and marketing expenses for year ended December 31, 2000, decreased by
$1,188,000, or 12.5% to $$8,292,000 from $9,480,000 for the comparable period in
1999.  This  decrease  was  principally  due  to  sharp  reductions in marketing
salaries, marketing services purchased, travel and other related expenses in the
second,  third and principally in the fourth quarter.  These decreased more than
offset  media  and  co-op  advertising  campaigns  of approximately $1.9 million
initiated  by  the  former  management during the first quarter of 2000 to boost
sales  of  Inholtra,  Veromax  and  Cholestaid  for  fiscal  2000.

                                       24
<PAGE>
     GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 2000,
increased  by  $2,206,000,  or  20.0%  to  $13,252,000  from $11,045,000 for the
comparable  period  in  1999.  The  increase  primarily  came  from  increased
accounting  and  legal  expenses  of $905,000 related to the restatement of 1999
results and the results of the first, second and third quarters of 2000, charges
of  $187,000  related  to  waivers and restructuring a line of credit and a term
loan  with  the  our  principal bank and increased stock compensation expense of
$1,857,000.  In  addition,  2000  included  a  $1,720,000  non-cash compensation
charge.  This  $1,720,000 represents the fair market value of one million shares
of  personally  owned  common  stock  transferred by the current Chief Executive
Officer  to  the  former Chairman of the Board in connection with the Withdrawal
Agreement  between  the  Company  and  the  former Chairman of the Board.  These
increases  were  partially  offset by $489,000 in reductions in wages and taxes,
$257,000  reduced  travel expenses, $1,032,000 reduction in bad-debt expense and
other  overall  decreases  in  the  third  and  fourth quarters in various other
operating  and overhead costs. 1999 included a one-time charge of $287,000 for a
corporate  move.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 2000,
increased  by $1,257,000 to $3,149,000 from $1,892,000 for the comparable period
in  1999.  The  increase  relates  to  the amortization of e-commerce, goodwill,
Inholtra  trademark  and  deferred  financing costs resulting from the shortened
life  to  the  term  loan partially offset by the elimination of amortization on
intangibles  written  off  in  1999.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ended December 31, 2000 increased $548,000 to
$1,887,000  from $1,339,000 for the comparable period in 1999.  This increase is
consistent  with  the  increase in the utilization of our line of credit and the
term  loan  in  2000  that  was  incurred  originally  in  connection  with  the
acquisition  of  the  Inholtra  brand.  Other income for year ended December 31,
1999  included  a  $481,000  gain  on  the  sale of the former 4Health corporate
headquarters  building  located  in  Boulder,  Colorado.

     LOSS  FROM  DISCONTINUED  OPERATIONS

     In  the  fourth  quarter  of  2000  we  decided to divest of our e-commerce
operations  and  accordingly, the results of operations of this business segment
since  inception  have been classified on the Statement of Operations under Loss
From  Discontinued  Operations from inception. On February 2, 2001 substantially
all  of  the  operating assets were sold for shares of common stock in a private
company.

     YEAR  ENDED  DECEMBER  31,  1999  COMPARED  TO YEAR ENDED DECEMBER 31, 1998

     Consolidated  net  sales  for  the  year  ended  December  31,  1999  were
$30,922,000  with an operating loss of $9,867,000 and a net loss of $11,055,000,
or  $0.39  per  basic  and  diluted  share.  Consolidated net sales for the same
period  in  the  prior year were $30,547,000 with operating income of $1,827,000
and  net  income of $1,018,000 or $.04 per basic and per diluted share.  The net
loss  for  1999  was  impacted  by:  a  reduction in gross profit of $3,807,000,
primarily  resulting from the restatement described in Note 1, an increased SG&A
expenses  of  approximately  $7,747,000, including a $634,000 loss in operations
from  our  Internet  subsidiary  HealthZone.com,  or HealthZone, a $640,000 loss
incurred  with  the  write  off  of  intangibles,  non-cash  warrant  and option
compensation  costs  of  $832,000  and $288,000 related to the relocation of our
corporate  and  warehouse  facilities.

                                       25
<PAGE>

     NET  SALES

     Net  sales  for  the year ended December 31, 1999 increased by $375,000, or
1.2%  to  $30,922,000  from  $30,547,000 for the comparable period in 1998.  The
increase in sales related to the introduction of our new Inholtra pain relieving
product,  partially  offset  by  an increase of over $2 million in allowances to
customers  for returns and allowances and deferral of over $2.8 million of sales
with  explicit  right  of  return.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 1999 decreased $3,073,000, or
17.1%, to $14,934,000 from $18,007,000 for the comparable period in 1998.  Gross
profits  as a percentage of sales for the year ended December 31, 1999 decreased
to  48.3%  from  59.0%  in  the  comparable period in 1998.  The decrease in the
margin  relates to: (i) pricing concessions related to 1999 sales in conjunction
with  the  launch  and  early  stage  sales  of several new products, (ii) sales
adjustments  given  to  certain customers, and (iii) an overall shift in product
mix  to  certain  items  which  have  a  lower  margin.

     SELLING  AND  MARKETING

     Sales  and  marketing  expenses  for  the  year  ended  December  31, 1999,
increased  by  $2,838,000  or  41.8%,  to  $9,631,000  from  $6,793,000  for the
comparable period in 1998.  The increase primarily relates to wages, advertising
and  other  costs  incurred  on  marketing and media campaigns to (i) launch the
introduction  of Inholtra, (ii) launch our new products, Cholestaid and Veromax,
for  the  fourth  quarter  1999  and  fiscal  2000,  (iii) media and advertising
campaigns  to  support  certain  of  our  other  products,  and  (iv)  continual
repackaging  and  redesign  of  our  core  product  lines.

     GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 1999,
increased  by  $2,328,000,  or  31.5%  to  $9,720,000  from  $7,392,000  for the
comparable period in 1998.  Included in 1999 general and administrative expenses
were:  (i)  legal  and  professional  fees  of  $806,000, (ii) $717,000 in costs
incurred  on  our  HealthZone  operations,  (iii)  $415,000 for consulting costs
incurred  to  implement  our  acquisition  of  Inholtra and other products, (iv)
approximately  $1,136,000  in uncollectible receivables (v) $903,000 of non-cash
warrant  and  compensation  costs,  and  (vi)  a  $288,000 charge related to the
relocation  of  our corporate and warehouse facilities.  The prior year included
$1,021,000  of  costs  associated with the merger described above.  Distribution
costs  for  the  year  ended  December 31, 1999 increased $1,594,000 or 146%, to
$2,686,000  from  $1,092,000  from  the comparable period in 1998.  The increase
primarily  relates to higher expenditures for freight, compensation, fulfillment
and other distribution costs associated with efforts to promote new and existing
products  to  new  customers.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 1999,
increased  by  $987,000 to $1,890,000 from $903,000 for the comparable period in
1998.  The  increase  specifically relates to amortization costs relating to the
Inholtra  and  HVE  acquisitions.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ending December 31, 1999 increased $1,176,000
to $1,339,000 from $163,000 for the comparable period in 1998.  This increase is
consistent  with  the  increase  in  the  utilization of our line of credit, the
incurrence  of  the  Inholtra  acquisition  debt  and  the term loan incurred to
refinance  the  Inholtra  acquisition  debt  in  1999.  Other  income included a
$481,000  gain on the sale of the former 4Health corporate headquarters building
located  in  Boulder,  Colorado.

                                       26
<PAGE>

     LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  March  31,  2001, we had cash and cash equivalents of approximately
$229,000,  and approximately $715,000 of availability under our revolving credit
line.  As  of  December  31,  2000,  we  had  cash  and  cash  equivalents  of
approximately  $199,000,  and approximately $1,489,000 of availability under our
revolving  credit line.  The increase in cash and cash equivalents is solely the
result  of timing of receipt and disbursement of cash.  As of March 31, 2001, we
had  total  current liabilities of $18,151,000, $5,453,000 of which consisted of
accounts  payable  to  vendors.   As  of March 31, 2001 we had a working capital
deficit  of  $12,549,000, and an accumulated deficit of $42,914,000.  During the
three  months  ended  March  31,  2001,  we  experienced negative cash flow from
operations  of  approximately  $736,000.  During  the  second quarter of 2001 we
experienced  a  significant  decline  in revenues due principally to declines in
revenue from our international customers. We estimate that, based on the current
rate  of negative cash flow from operations, the cash and availability under the
revolving  credit line will be sufficient to provide a source of working capital
through approximately September 15, 2001. We may not be able to pay the required
interest  payment  on September 15, 2001 and we may need to seek relief from the
lender  from  that  payment  and/or  future payments. Our estimate does not give
effect to payments, which may be made to vendors to reduce outstanding payables.
Further,  there can be no assurances that the vendors will continue to supply us
with  goods  and services in the event that such payables are not reduced, which
may  have  an  adverse effect on our continued operations.  In addition, some of
our  largest  customers  have  in  the  past  taken  deductions  against  trade
receivables  and  although  we  believe we have identified and reserved for such
deductions,  such  practices  may  adversely  effect  our  future  cash  flow.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales velocity.  We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our  gross profit was negatively impacted in 1999 and 2000 for returns. Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed  or will be in line with past return percentages.  The risk of returns is
amplified  by  the  current industry trend, which shows negative growth. If this
trend  continues,  retailers  may  decide  to reduce inventory levels from their
suppliers,  by  returning  goods  from their warehouse distribution centers.  If
this  occurs,  Management  will  decide  whether  they will accept such returns.

     During  the year ended December 31, 2000, we experienced negative cash flow
from operations of  $4,129,000.  The sale of equity securities and issuance of a
minority  interest  in  our subsidiary, HealthZone.com in January, 2000, and the
sale  of  common  stock  provided  an  aggregate  of approximately $8,440,000 in
proceeds  to  us.  Approximately  $3,620,000 of these proceeds were used for the
repayment  of an existing line of credit and other long term borrowings, as well
as  for  costs  incurred  with  the  financings.

     Credit  Facility.

     On  June  10,  1999,  we secured a new loan from a lending institution that
provides  up  to  $20  million  dollars of financing.  The loan was subsequently
amended on January 21, 2000.  The credit facility consists of a $13 million term
loan,  or  Term Loan,  and up to a $7 million revolving loan, or Revolving Loan,
subject to borrowing base availability and compliance with certain financial and
other  covenants  and agreements, including the maintenance of certain financial
ratios,  limitations  on  capital  expenditures,  restrictions  on acquisitions,
limitations  on  incurrence of indebtedness, and restrictions on dividends paid.
$4,527,000  of  loan  proceeds  were  disbursed  to repay and close our previous
existing  credit facility, and $10,000,000 was disbursed to repay the promissory
note  issued  in  connection  with  the  acquisition  of  the assets of Inholtra
Naturals,  Ltd.  As  of  December  31,  2000,  $10,278,000  and  $5,511,000 were
outstanding  under  the  Term  Loan  and  the  Revolving  Loan,  respectively.

     The loans under the credit facility are secured by substantially all of our
assets.  Borrowings under the Term Loan bear interest at an annual rate of prime
plus  2.25  percent  and  are paid monthly.  Borrowings under the Revolving Loan
currently bear interest at an annual rate of either prime plus 1.75 percent, and
are  paid  monthly.  The rates are subject to decrease based upon our satisfying
certain  operating  performance  levels.  The credit facility agreement contains
certain financial and other covenants or restrictions, including the maintenance
of  certain  financial ratios, limitations on capital expenditures, restrictions
on  acquisitions, limitations on the incurrence of indebtedness and restrictions
on  dividends  paid  by  us.  The $13,000,000 Term Loan was payable in quarterly
installments of $583,333 that began October 15, 1999, and which were to increase
to  $750,000  on  October 15, 2002, until the Loan was paid in full on April 15,
2004.  In  addition,  we were to make a payment of principal on the Term Loan in
addition  to  the  quarterly  payments in an amount equal to 50% of "Excess Cash
Flow"  (as  defined) for each fiscal year.  Each Excess Cash Flow Payment was to
be applied to reduce the remaining regularly scheduled principal installments of
the Term Loan in inverse order of their maturity.  Additionally, upon receipt by
us  of any unapplied insurance or condemnation proceeds, the proceeds of key-man
life  insurance which has been assigned to an Agent, asset sale proceeds or debt
sale  proceeds,  we are required to make a mandatory prepayment of the Term Loan
in  the  amount  thereof.  Furthermore,  upon  receipt  by us of any equity sale
proceeds,  we  were was to make a mandatory prepayment of (i) the Revolving Loan
to  the limited extent necessary to fully prepay the Revolving Loan or, if less,
in such amount so that borrowing availability after giving effect thereto equals
$3,000,000  and  (ii)  to  the extent of any balance of any equity sale proceeds
after  the  application  to  the  Revolving  Loan  to the extent provided in the
preceding clause, the Term Loan; provided, however, if at the time of receipt of
such  equity  sale  proceeds, no event of default has occurred and is continuing
and  the  debt  to EBITDA ratio meets certain defined levels, then the amount of
such  mandatory  prepayment  on the Term Loan shall be 50% of the amount of such
equity  sale proceeds remaining after application to the Revolving Loan pursuant
to  the preceding clause, and, further, provided, however, if such ratio is less
than a defined amount, then no such prepayment on the Term Loan from equity sale
proceeds  need  be  made.

                                       27
<PAGE>

     As  a  condition  of  a  waiver  obtained  in  May  2000, the Term Loan and
Revolving  Loan  agreements  were amended to change the expiration dates of both
facilities to April 30, 2001.  Further, under the amendment, the lender required
us  to  meet  certain  revised  financial  ratios.

     On  October  23, 2000, the credit facility was amended with respect to both
its  term  debt  and  revolving  credit  agreements.  The amendments included an
increase  in  the  availability  of  the Revolving Loan up to the maximum credit
limit  of  $7  million,  an extension of the term of both the revolving and term
debt  agreements from April 30, 2001 to July 30, 2002 and an agreement to permit
us  to  use  the  proceeds  obtained from the October, 2000 equity financing for
working  capital purposes.  Additionally, the lender agreed to waive any and all
defaults then in existence and defer until June 15, 2001, all principal payments
due  under  the  loan  from  the period commencing October, 2000 and ending May,
2001. The lender also allowed us to use the proceeds from a private placement of
securities,  closed  on  October  27,  2000,  resulting  in  net  proceeds  of
approximately $2,720,000, for working capital purposes.  The lender charged us a
fee for the restructuring of the indebtedness of approximately $131,000, payable
in  six  equal  installments  commencing  April  15,  2001.

     On February 2, 2001, the credit facility was amended in connection with the
sale  of  our Internet operations to Vitacost.com.  Pursuant to the terms of the
amendment,  (i)  the  lender  consented  to  the  terms  of  the  Vitacost.com
transaction,  (ii) we pledged our 6,800,000 shares of Vitacost's common stock as
security  for our obligations under our credit facility, (iii) we agreed to make
certain  mandatory  prepayments  upon receipt of any proceeds resulting from the
exercise  of our redemption rights or those of Vitacost, and (iv) we transferred
to lender all of our rights and remedies with respect to, and title and interest
in,  arising  from this transaction, including our right of redemption and right
to  receive  payments  upon  the  exercise by Vitacost of its redemption rights;
provided  that  lender may not exercise these rights only upon the occurrence of
an  event  of  default  and  during  the  continuance  thereof.  This assignment
terminates  upon the full performance of our obligations under the loan facility
or other termination of the loan agreement other than a termination by reason of
our  breach,  whichever  occurs  later.

     On  June  15,  2001,  we  entered  into an amendment to the credit facility
which,  among  other  things,  extended  the  repayment  date  of  the aggregate
outstanding  principal  balance  of  the  term loan in the approximate amount of
$4,078,000  from  June  15,  2001, to July 30, 2002, and waived certain defaults
then  in  existence.  We  are also required to make monthly interest payments on
the  15th  of  each  month.  The  lender  charged us a fee for restructuring the
indebtedness, which fees superseded those charged in connection with the October
23,  2000 amendment.  The fees of approximately $881,000 are payable as follows:
(i)  approximately  131,000  is  payable  in  six  equal monthly installments of
approximately $22,000, commencing April 15, 2001; and (ii) $750,000 on the Final
Maturity  Date.

On  July  20, 2001, we entered into an amendment to the Credit Facility pursuant
to  which  our  lender:  (i)  waived  certain  defaults  then in existence; (ii)
increased  the  amount  of  our  permitted  overadvance  by  $200,000; and (iii)
required  us  to inform the lender of our financial condition on a weekly basis.
The  lender  charged us an additional restructuring fee of $50,000 which will be
payable  on  the Final Maturity Date. As of June 25, 2001, we have approximately
$10,278,000 outstanding under our Term Loan and $6,588,000 outstanding under our
revolving  credit  line.

                                       28
<PAGE>

     We  have  primarily  funded  our  operations  to  date  through  internally
generated  capital,  bank loans or private equity financing.  Our future capital
requirements  will  depend  on  many factors, including the nature and timing of
orders from customers, collection of trade accounts receivable, the expansion of
sales and marketing efforts, costs associated with entering into new channels of
distribution,  and  the  status of competing products.  Management believes that
additional investment capital will be required to permit us to meet our business
objectives  in  the  near  term. Such funds may be raised either through debt or
equity offerings, or some combination of the two. However, there is no assurance
that  we  will be able to secure such funds on commercially reasonable terms, if
at  all.  If  not  successful  in securing additional funds, we may be forced to
dispose  of our assets outside of its normal course of business and/or resort to
bankruptcy  protection.

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants included in this Annual Report on Form 10-K for
the  year ended December 31, 2000, to the effect that our losses from operations
for  the  year  ended December 31, 2000, and the working capital deficit and the
retained  deficit at December 31, 2000 raise substantial doubt about our ability
to  continue  as  a  going  concern.

RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

     In  December  1999,  the SEC staff released Staff Accounting Bulletin (SAB)
No.  101,  Revenue  Recognition,  to  provide  guidance  on  the  recognition,
presentation  and  disclosure  of  revenue  in financial statements.  Changes in
accounting to apply the guidance in SAB No. 101 may be accounted for as a change
in  accounting  principle  effective  January  1,  2000.  Management has not yet
determined  the  complete  impact  of  SAB No. 101, however, management does not
expect  that  application  of  SAB  No.  101  will have a material effect on our
revenue  recognition  and  results  of  operations.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK

     Our  primary  market  risk  exposure is interest rate risk.  As of March 1,
2001,  all  of  our  debt  obligations  were subject to variable interest rates.

CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND FINANCIAL
DISCLOSURE

     As  of  April  14, 2000, the engagement of Arthur Andersen LLP, Independent
Public  Accountants,  as  our  principal  independent  accountant  to  audit our
financial  statements  was terminated. We had elected to engage another national
certified public accounting firm to audit our financial statements on an ongoing
basis. As of April 12, 2000, the firm of Singer, Lewak Greenbaum & Goldstein LLP
was  engaged  as  our independent accountant to provide services after April 14,
2000,  the  date  of filing of our Annual Report on Form 10-K for the year ended
December  31,  2000.

     Except  as set forth below, the audit reports of Arthur Andersen LLP on our
financial  statements  as  of  and  for  the  years  ended  December 31, 1999 as
restated,  1998,  and  1997 did not contain any adverse opinion or disclaimer of
opinion,  nor  were  they  qualified or modified as to audit scope or accounting
principles.  The  audit  report of Arthur Anderson LLP included in our financial
statements  for  the  year  ended  December  31,  1999,  as  restated, contain a
statement  that losses from operations, a working capital deficit and a retained
deficit,  raise  substantial  doubt  about  our  ability  to continue as a going
concern.   The  notes  to the financial statements describe management's plan to
address  these  concerns,  which  include:

-     Our  raising  $3,000,000  through a private placement of our securities in
      January  2000,
-     Our  raising  $2,100,000  through a private placement of our securities in
      March  2000,
-     Our  receipt  of a commitment from the January 2000 investor to provide an
      additional  $2,000,000  in private placement funding contingent on our
      achieving certain  sales  benchmarks  for  the  first  two  quarters  of
      2000;
-     Our current negotiations to raise an additional  $15,000,000 via a private
      placement  with  a  plan  to  pay off the Company's term loan with the
      proceeds;
-     Our  receipt of a waiver from our credit facility lender for violations of
      certain  covenants  included  in  the  loan  agreement;
-     Our  reducing portions of our fixed overhead expenses, including executive
      salary  reductions  of  $1,300,000;
-     Our  management  having revised its marketing strategy and plans to reduce
      advertising  expenditures;  and
-     Our  management  intends to focus additional efforts toward developing its
      e-commerce  operations  to  generate  additional  revenues.

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<PAGE>

     The  notes  to  our  financial  statements  further state that there are no
assurances that the capital already raised by us in conjunction with the expense
reductions  will be sufficient to fund our operations through 2000; there are no
assurances  that  we  will  be able to successfully achieve the sales benchmarks
necessary  to  raise  the  additional  $2,000,000  or  successfully  raise other
additional  private  placement  funds; there is no assurance that our management
will  be  able to successfully enter the e-commerce marketplace; and our failure
to  successfully  achieve  one  or  all  of the above items will have a material
impact  on  our  financial  position  and  results  of  operations.

     In  connection  with their audits of our financial statements for the years
ended  December  31, 1998 and December 31, 1999 as restated, Arthur Andersen LLP
reported  to  our Board of Directors certain conditions that they believed to be
material weaknesses in our system of internal accounting and financial controls.
In  response,  management began to identify measures to improve these systems of
internal  controls,  including  implementing  more  rigorous internal accounting
policies,  procedures  and  controls.

     In  May  1999, we filed the March 31, 1999 Quarter Report on Form 10-Q with
the  Securities  and  Exchange  Commission without resolving the issue raised by
Arthur  Andersen  LLP regarding a potential adjustment.  We resolved this matter
when  we filed our report on Form 10-Q/A for the quarter ended March 31, 1999 on
June  9,  1999.

     Material  adjustments  to  our  books were identified during the 1999 audit
process  and such adjustments were recorded in our financial statements included
in  our Annual Report on Form 10-K for the year ended December 31, 1999.  Arthur
Andersen  LLP  recommended  that  our  management  review  the  effect  of  such
adjustments  on  interim  periods  within  the  year ended December 31, 1999 and
determine  whether  Quarterly  Reports on Form 10-Q filed during 1999 need to be
amended.

     Subsequently,  on July 14, 2000, we filed amendments to our Reports on Form
10-Q  for  the  quarters  ended  June 30, 1999, September 30, 1999 and March 31,
2000,  and  our Annual Report on Form 10-K for the year ended December 31, 1999.
The  purpose  of  such  amendments  was  to  restate our financial statements to
reallocate  reserves  for  allowances.

     The  decision  to change accountants was approved by our board of directors
on  April  12, 2000.   Other than as set forth above, during our two most recent
fiscal  years and any subsequent interim period preceding the change, there were
no  disagreements  with the former accountants on any   matter   of   accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure,  which  disagreements,  if  not  resolved  to the satisfaction of the
former  accountants,  would  have  caused  them to make reference to the subject
matter of the disagreements in connection with their report.  We have provided a
copy  of  this  disclosure to our former accountants, and we have requested that
our  former  accountants furnish us with letters addressed to the Securities and
Exchange  Commission  stating whether they agree with the statements made by us,
and,  if  not,  stating  the  respects  in  which  they  do  not  agree.

     As  of  April 12, 2000, we engaged Singer, Lewak, and Greenbaum & Goldstein
LLP,  as  our  independent public accountant to provide services after April 14,
2000.  Prior  to  engaging  Singer, Lewak, Greenbaum & Goldstein LLP, neither we
nor  anyone  on  our  behalf  consulted Singer, Lewak, Greenbaum & Goldstein LLP
regarding  the  application of accounting principles to a specified transaction,
either  completed  or  proposed,  or  the  type  of  audit opinion that might be
rendered  on  our  financial  statements.  Since  no disagreements were reported
between  us  and  our  former  independent  public  accountant,  Singer,  Lewak,
Greenbaum  &  Goldstein LLP has not been consulted on any matter that was either
the  subject  of  a  disagreement  or  a  reportable  event.

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<PAGE>

                                    BUSINESS

GENERAL

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the  general  public.  Our  products  are  produced  primarily  from  natural
ingredients and are formulated for the purposes of achieving specific dietary or
nutritional goals.  We develop and market natural remedies for weight loss, pain
relief,  cholesterol control and other specific health and nutrition needs.  All
of  our  products  are natural nutritional supplements are subject to regulation
under  the  Dietary  Health  Supplement  & Education Act of 1994, or DHSEA.  Our
products  are  widely  distributed  through  mass  market retailers such as GNC,
Wal-Mart,  Rite-Aid,  Costco,  Eckerd  and  Walgreens, in over 7,500 health food
stores  either  directly  or  through  distributors, and internationally through
distributors  in  over  20  countries.

     Our portfolio of branded products includes, but is not limited to, Nature's
Secret,  Diet  System  6, PhenSafe, Harmony Formulas, Dr. Linus Pauling Vitamins
and  Inholtra  Natural Pain Relief among others.  We own numerous trademarks and
have  pending  trademark applications domestically and worldwide relating to our
branded  products,  including  without  limitation,  Bar  Bites  ,  BurnMore  ,
Candistroy  , Cellulite Burner , Crave Less , Diet System 6 , Endurance Energy ,
Evening  Multi  ,  Fulfill  ,  Ginkgo  Smart , Ginza-Plus , Harmony Formulas and
Design  ,  Home  Nutrition , Inholtra , Liver Support , Marital Arts Nutrition ,
Memory  Sharp  ,  Mind  Energy  ,  Morning Multi , Nature's Secret , Parastroy ,
PhenSafe  , Redo , Rezyme , Super Cleanse , System-Six , The New Grapefruit Diet
,  Thinsolution  ,  Ultimate  Breakfast  ,  Ultimate  Cleanse  ,  Veroxin-7  and
Yohimbe-Plus  .  Omni  Nutraceuticals,  Inc.  and  our  logo are also registered
trademarks  of  Omni  Nutraceuticals,  Inc.

INDUSTRY  OVERVIEW

     The  nutrition  industry  is  primarily  comprised  of  companies  that
manufacture,  distribute  and/or  sell:

-     vitamins,  minerals  and  meal  supplements,  or  VMS;
-     herbals  and  botanicals;
-     sports  nutrition;
-     natural  personal  care  products;  and
-     natural  foods  including  organics.

     In  the  last  several  years,  public awareness of the positive effects of
vitamins  and  nutritional  supplements  on  good  health has been heightened by
widely  publicized  reports  of scientific findings supporting such claims.  The
rise and acceptance of alternative medicine has greatly contributed to increased
sales  of  nutritional  supplements.  Because  the  market  for  these  products
represents  a  rapidly  evolving  industry,  one  that  is  growing  at a nearly
double-digit  rate,  it  is  anticipated  that  sales  will  increase  for  the
foreseeable  future.

     INDUSTRY  TRENDS.  The  VMS,  herbals  and sports nutrition segments in the
U.S., has grown at an estimated compounded annual growth rate or CAGR, according
to  the Nutrition Business Journal, or NBJ, of over 12% between 1994 and 1998 to
$13.9  billion.  Market  competition  has  driven  down  pricing  for  commodity
supplements  such  as  vitamins  A,  C  and  E,  as  well  as  standard multiple
vitamin-mineral  formulations.  Pricing  for  clinically  viable  specialty
formulations, however, generally commands between 10% and 20% higher prices than
comparable  nonscience  based  formulations.  Our sales of bulk/commodity herbal
products  comprise  only  a  small  percentage  of our gross sales; we focus our
efforts  on  those  other segments, which continue to demonstrate growth such as
specific  solutions for joint care and weight loss.  These industry segments are
expected  to  grow  at  an  even  more favorable double-digit rate than the high
single  digit  per  annum  growth  expected  for  the  industry  as  a  whole.

     Clinical  verification  for  previously  unknown formulations has increased
consumer  usage  among  all  nutritional  supplement categories.  New scientific
research  from  widely  publicized  institutions,  such  as  the Cambridge Heart
Antioxidant  Study,  has  supported the positive health effects of using certain
vitamins  and  dietary  supplements.  The  increase  in VMS and sports nutrition
products  can  be attributed to increased education and exposure to the benefits
of  these  products.  Consumers  have  exhibited  a  trend  to  be more actively
involved  in their own health and well-being.  There has been increased consumer
interest in healthier lifestyles and a heightened awareness and understanding of
the  connection  between  diet  and  health.

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<PAGE>

     The  aging of the "baby boom" generation, combined with consumers' tendency
to  purchase  more dietary supplements as they age, has been an important source
of  growth  for  the  VMS  segment of the nutritional industry.  There will be a
significant expansion of the population segment of 40 years and over in the next
decade,  and  this  segment  displays  the  highest  usage of vitamins and other
supplements.

     The  nationwide  trend  toward  preventive  medicine  in response to rising
healthcare  costs  has  been  an underlying driver for this industry.  There has
been  a  heightened  awareness  and understanding of preventive medicine and the
connection  between  vitamins and health amongst the general public, health care
professionals,  employers,  government agencies, and managed care organizations.
Issues  regarding  preventive  care  and  the  benefits  of vitamins and dietary
supplements  have  received  widespread  media  coverage.

OUR  PRODUCTS

     As  a  supplier  and  formulator  of  nutritional  supplements  primarily
manufactured from natural herbs, botanicals and nutrients, we have diverse, high
quality  family of branded products.  We sell three broad categories of products
including:

-     cleansing  products  to  eradicate  the  toxins  from  the  body;
-     building  products  that  increase  the  body's energy and stamina through
      restoring  vital  nutrients  to  their  appropriate  levels;  and
-     specific  solutions  for selected organ and body systems to concentrate on
      an  individual's  problem  areas.

     All of these products are Nutraceutical, used by consumers in many cases as
alternatives  to  pharmaceuticals.  Our top brand families are: Nature's Secret,
which  represents 20.3% of 2000 net revenue, Inholtra, which represents 11.5% of
2000  net  revenue  and  weight loss products, which represent 13.1% of 2000 net
revenue.

     We are continually developing products that may not fall squarely under one
of  our  normal brand lines.  Because of our rapid time to market capability, we
are  able  to  take  advantage  of trends and marketing opportunities that other
companies  are  unable  to take advantage of.  A cornerstone of our business has
been  our  ability to understand industry trends and bring new and/or repackaged
products  to  market  quickly.  The  majority  of  these  products have involved
re-formulations  and/or  repackaging of existing products or fording new markets
or  applications for existing products.  As such, we do not anticipate requiring
significant  capital  to  develop  our  products.  In  instances  where  we have
followed  other  "first  movers,"  emphasis  has  been  on  careful  market  and
scientific  research,  leading  to  higher quality consumer driven products.  In
nearly  all  branded product families we have done extensive work to improve our
already strong brands with the introduction of many new and innovative products.

     To  maximize  our  overall  exposure, we often reformulate and/or repackage
many  of  our  existing  products  and  distribute  them  overseas.  One example
includes  Yodel,  a  foreign  version  of  our  popular Nature's Secret Ultimate
Cleanse  sold  expressly  in  Japan.  Another  product  found  only  overseas is
Yohimbe-Plus, our natural herbal alternative to Viagra sold primarily in Russia.

     NATURE'S  SECRET.  Nature's  Secret  is  a premium brand in the health food
store  distribution  channel.  The product family consists of internal cleansing
products,  which  are  those  used  for  detoxifying  and  cleansing  the body's
digestive  and  intestinal  systems, vitamins and minerals and specific solution
products  such  as  targeted  weight  loss  and energy products. Nature's Secret
Ultimate  Cleanse  is the number one selling cleansing line on the market today.

     INHOLTRA.  This  line  of  joint  care  products is based upon our patented
formula designed to repair, replenish and revitalize worn and damaged cartilage.
The  Inholtra  line  makes  use  of  nine natural nutritional ingredients, which
differentiates  it from most other glucosamine/chondroitin-based products on the
market.  Presently,  the  product  line  consists  of  three  distinct products:
Inholtra  Natural  Pain  Formula,  InholtraNow  Natural  Pain  Relief  Cream and
Inholtra  SulfaMAX  Natural  MSM  Formula.  Product  users  range from arthritis
sufferers  to  casual  athletes.  In  just one year sales for the Inholtra brand
have  grown  nearly  50%,  making  Inholtra  our  number two selling brand.  The
Inholtra  line  is  sold  in  both  the  health  food  and mass-market channels.

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<PAGE>

     We  believe  that  many  of  our  products, if supported by the appropriate
resources,  have  outstanding  growth  potential.  For example, we have recently
launched  a  hybrid pharmaceutical/nutraceutical extension of the Inholtra joint
care  line  that  is the first of its kind in the marketplace.  This new product
combines  various  pharmaceutical  pain  relievers  such  as  aspirin  with  a
nutraceutical  complex  of glucosamine and chondroitin.  We anticipate that this
new product will have a substantial effect on our earnings potential as a result
of  the  following:

-     over-the-counter,  or  OTC, analgesics is a multi-billion dollar category;
-     the  glucosamine/chondroitin  category  of products is at $400 million per
      annum  and  growing  rapidly;
-     80%  of  joint  pain  sufferers  use  OTC  products  regularly;  and
-     a growing number of consumers are using glucosamine/chondroitin due to its
      ability  to  restore  joints.

     This  type  of hybrid product allows the typical user of analgesics to take
one  convenient product in capsule form not only to relieve pain associated with
arthritis and other joint conditions, but to replenish and repair worn cartilage
at the same time.  The new Inholtra "Joint Pain" line is available in four forms
to  cover  the  spectrum  of choice of pain relief products: aspirin, ibuprofen,
acetaminophen  and  nap  oxen  sodium.  The  new  Inholtra  "Joint Pain" line is
currently  being  sold  in  Eckerd  Drug.

     WEIGHT LOSS PRODUCTS.  Weight loss is a large and enduring product category
across  all  levels of distribution.  There are numerous products competing with
our Diet System 6 line of products.  Other products in our weight loss portfolio
include PhenSafe, a safe all-natural alternative to prescriptions drugs, such as
Phen  Fen  and  Cellulite  Burner.

     Presently,  the  Diet System 6-product line is comprised of three programs,
the  Fat  Binding,  the  Super Energy and the Cellulite Reduction products along
with  a  Diet  System  6  for  Men  program and diet shakes, bars and teas.  The
Cellulite  Burner  Program  is  a  diet  and  exercise regimen designed around a
special  nutritional  formula  to  combat  cellulite.  Phen  Safe  is  a  safe,
all-natural  alternative to prescription drugs such as the appetite suppressant,
Phen-Fen.

     Diet  System 6 competes with brands like Slim Fast and Dexatrim and is sold
in  both  health  food  store  and  mass  merchandiser  channels.  Diet System 6
distinguishes  itself from the competition, because of its unique formulation of
the  six  most  effective  ingredients  for  dieting,  which  are typically sold
separately.

     LINUS  PAULING  VITAMINS.  We  have  the  exclusive marketing rights to the
Linus  Pauling  name  for  the next 47 years. Dr. Pauling was the only person to
have  won  two  Nobel  Prizes  and  is highly regarded for his popularization of
vitamin  usage  in  the  U.S.  This  largely  under-utilized  asset represents a
significant  opportunity  for expansion.  We have developed a unique value added
line  of  formulas  around  the  Linus  Pauling  Vitamins  brand.

     HARMONY  FORMULAS.  Harmony  Formulas  represents  our  only  line  sold
exclusively  through  the  professional  health  distribution  channel.  Harmony
Formulas  is  a  line  of  clinically  developed,  precisely blended nutritional
supplements,  and designed specifically for health care practitioners who employ
natural,  alternative  treatments.  We  use  different  packaging  with  a  more
clinical  look  for  many of these formulations to differentiate them from other
similar  product  offerings.  Harmony  products  address  alternative  medicine
practitioners,  giving  credence  to  the  use  of  naturopathic  medicines.

SALES,  MARKETING  AND  DISTRIBUTION

     Historically,  we  have distributed our products though three main channels
of  distribution:  mass  market  retailers,  such  as GNC, specialty health food
stores  and  distributors  and  international  distributors.

     As  of  March  31,  2001,  our sales and marketing organization includes 33
full-time employees of whom 10 are direct marketing representatives.  We pay our
direct  marketing  force  employees a salary plus commission, with a majority of
their  compensation  resulting  from their salary.  Our sales force for the mass
market  and  health  food  stores  is  a  combination  of in-house personnel and
independent  brokers.  Our  staff  for  the  mass  market includes four regional
managers  and  one  national  account  vice  president  who  also  manages  our
independent  brokers.

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<PAGE>

     Our  point  of  sale advertising is designed to convey the effectiveness of
our products.  We have established our reputation with retailers through quality
products,  timely  delivery  and  superior  packaging.  Through  our  ability to
position  products  in  the  marketplace and our strong reputation, we have been
able  to  secure favorable shelf spacing from many of our retail customers.  Our
sales,  marketing  and  distribution infrastructure is designed to integrate new
brands  with  minor  incremental  costs  and  synergistic  potential.  Recent
limitations in capital, however, have limited the amount of advertising to point
of  sale  displays.

     Historically,  we have distributed our products though three main segments:
mass-market  retailers,  which  accounted for 48.1% of 2000 shipments, specialty
health food stores and distributors, which accounted for 28.6% of 2000 shipments
and  international  distribution,  which  accounted for 23.3% of 2000 shipments.
With  increased  advertising  in  the  future,  we  should be able to convey the
effectiveness  of  our  products.  In  certain  instances,  we  enter into co-op
advertising  arrangements  with  our  customers.

     MASS  MARKET  RETAILERS.  We  market  several  of  our  product  lines  to
mass-market  retailers, which we define as large food and drug stores, warehouse
or  club  stores and other large convenience stores.  Customers in this category
include  Wal-Mart,  Walgreens,  Costco,  GNC  and  K-Mart.  This  category  also
includes  traditional  national and regional supermarket chains, such as Safeway
and  Kroger.  These categories offer attractive pricing on vitamins, nutritional
supplements  and  minerals  but  have limited selection and offer little product
information.  In  addition,  this category typically offers a moderate selection
of  vitamins,  nutritional  supplements  and  minerals,  focusing  instead  on
prescriptions  and over-the-counter drug products.  VMS offerings by mass-market
retailers are often not all-natural products.  This category generally offers an
extremely  limited  selection  of vitamins, nutritional supplements and minerals
and  infrequent  discounts.

     Our marketing focus for the mass market is targeted at impulse buying where
products  are purchased based on the appeal of the display scheme.  Displays for
the  mass  market  are  intended  to provide informative product descriptions in
plain  view so that they provide consumers with a quick summary of the product's
attributes.  Clear  "point  of  purchase"  information  is  necessary due to the
environment  typical  of  mass-market  retailers  where  sales personnel are not
available  to answer consumer questions.  We display our products in multi-panel
boxes  and  product displays to provide stronger shelf presence.  We are relying
primarily  on this cost effective form of "point of purchase" promotion to drive
sales.

     Advertising  to  the  mass  market  is  often  targeted  at price sensitive
consumers  who  normally  perform  price  comparisons  on similar products.  The
mass-market consumer tends to be more impulse driven and generally less educated
than the health food store consumer.  For this segment, we use print advertising
in  popular  health  and  fitness magazines, such as Shape, for promotion of our
products.

     SPECIALTY  HEALTH  FOOD  STORES.  A  substantial  portion  of  our sales is
achieved  through  specialty health food stores.  We service approximately 7,500
stores,  directly  and  through  distributors.  Many of the accounts are smaller
independent  health  food  shops  that  have  steady orders ranging from $500 to
$1,000.  This  category  is  highly fragmented and includes some local, regional
and national chains such as Whole Foods and Wild Oats.  The largest participants
in  this  sector  include  Vitamin  Shoppe and Vitamin World.  Despite continued
expansion  of  the national chains, this category still remains dominated by the
thousands  of  local  and  regional  "mom  and  pop"  stores  and  chains.

     Our  sales  effort  to  health  food  stores  is  handled  by  health  food
distributors,  telephone sales, through in-house staff, and independent brokers.
Independent  brokers handle the larger, major accounts while the telephone sales
staff  services  lower  volume  customers.  Due to the size of the orders in the
health food segment, products earn higher margins than mass-market products.  We
are  able  to  offer  volume discounts and other special offers to larger health
food  stores.

     Advertising  for  the  health  food product lines is concentrated in health
magazines  such  as  Let's Live and in fitness magazines such as Shape and Self.
We target the self-motivated consumer who will consistently refer to specialized
magazines  to  obtain  information  on  health  products.  There  is  a  strong
correlation  between the individual who reads these magazines and the patrons of
specialty  health  stores.  In  our advertising, we emphasize the quality of its
ingredients  and the innovative formulations that the products offer, as opposed
to  focusing  on  price.

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<PAGE>

     INTERNATIONAL SALES.  Our products are sold in over 20 countries, including
the  United  Kingdom,  Japan,  Russia,  China  and  Singapore,  through  various
in-country  distributors, that target both mass-market retailers and health food
stores.

     Our marketing staff applies the same methodology to its international brand
management  as  it  does  for  domestic  markets.  There  is a constant focus on
packaging and display configurations to obtain the most effective penetration in
each  market.  Our  staff  will  often  alter packaging or displays to appeal to
consumers  in  a  particular  foreign  market.  Advertising  schemes  are  also
customized  to adapt to foreign publications, cultures and different demographic
groups.

     Presently,  Asia  and  Europe  represent our largest international markets.
Sales  in  Russia  and  the  UK  are expected to increase while sales within the
European  Union,  or  EU,  will  expand upon registration of products within its
respective  countries.  Activity in Japan is expected to rapidly expand, both in
product  placement  and  revenue  growth.  Other  key  Asian  markets,  such  as
Singapore,  Malaysia  and  Hong  Kong,  continue  to exhibit steady growth, with
accelerated  growth  in  the future as more products are registered within those
markets.

SUPPLIER  RELATIONS,  MANUFACTURING  AND  PURCHASING

     All  of  our  products  are  manufactured by third party domestic suppliers
pursuant  to  our  specifications  and  proprietary recipes.  The suppliers that
manufacture for us are required to meet strict manufacturing standards set forth
by  the Food and Drug Administration, or FDA.  Prior to selecting a manufacturer
to  produce  our  products,  we  review the manufacturer's raw material sources,
quality  assurance  procedures  and  reliability  to  assure  that  the proposed
manufacturer  meets  our  criteria.  Currently,  we  utilize  eight  different
manufacturers  and believe that there are numerous other qualified manufacturers
that  would  meet  quality  assurance  requirements if alternative manufacturing
sources  were required.  All ingredients contained in our products are generally
available  from  a  number  of  alternative  sources.

COMPETITION

     The  industry in which we operate is highly competitive and fragmented.  It
is  estimated  that  nearly  900  companies are involved in the manufacturing or
wholesale  distribution  of supplements to the mass markets.  Of those 900, less
than  20  companies  comprise 25% of the market with the remaining 75% comprised
mostly of companies generating less than $20 million in total annual sales.  The
ten  largest  competitors  are  large  well-capitalized  companies that have the
ability  to change and shape the industry. In the health and natural food sector
these  include  product  lines  such as: Nature's Way, Rainbow Light Nutritional
Systems,  Solgar,  Nature's  Herbs  and Twinlabs.  In the mass market sector the
competitors  include:  Whitehall  Robins  Healthcare,  Bayer  AG,  Mead  Johnson
Nutritionals,  Johnson  &  Johnson,  Inc. and Leiner Health Products Group, Inc.

     While  the  nutrition  industry  has  a few large manufacturers, there is a
large  and  diverse  group  of  smaller manufacturers who sell primarily through
wholesale  distributors.  Generally,  larger companies sell multiple brands into
each  channel  of  distribution  and smaller companies generally target only one
channel  of  distribution.  The  proliferation  of  small  manufacturers  can be
attributed  to  the  low  barriers  to  entry  for  many  product  categories.
Historically,  less  stringent  regulations  from  the  FDA, as well as a steady
supply  of  innovative  formulations  have  allowed small companies to enter the
market  with  just  a  few  products.

     We  continue  to  be  a leader in internal cleansing products and intend to
leverage  this success to launch other products.  Our Nature's Secret-Registered
Trademark-  and  Harmony  Formula-Registered  Trademark-  brand lines have built
strong  brand  loyalty with retailers, practitioners and customers by delivering
quality  products,  excellent customer service and an emphasis on health through
education.

     In the food, drug and mass market, we face increased competition where many
of  our  competitors  are  significantly  larger  and  have  greater  financial
resources.  We  believe  we  will  be  able to compete successfully in this mass
market  in  the future because of our unique formulations and packaging, product
quality  and  good  relationships  with  distributors  and  store  buyers.

                                       35
<PAGE>

PATENTS  AND  INTELLECTUAL  PROPERTY

     We protect our proprietary rights from unauthorized use by third parties to
the  extent  that  our  proprietary  rights are covered by valid and enforceable
patents  or  are  effectively  maintained  as  trade secrets.  Patents and other
proprietary  rights  are an essential element of our business.  Our policy is to
file  patent applications and to protect technology, inventions and improvements
to  inventions  that  are  commercially  important  to  the  development  of our
business.  As of December 31, 2000, we were maintaining 2 U.S. patents and other
corresponding  foreign patents based on our discoveries that have been issued or
allowed.  Of our patents, 2 are issued in the United States, 1 is issued in each
of  Australia,  Canada  and  the European Community.  Each patent will expire in
year  2015.  The  patent  for this new Inholtra product is pending and we expect
this  to  create  a  barrier  to  competition.

     A  significant  part  of  our intellectual property consists principally of
registered trademarks.  We are engaged on a continuing basis in developing brand
names  for  our  new products, securing trademark protection for brand names and
copyright  protection for associated materials, policing our existing marks, and
enforcing  our legal rights in cases of potential infringement by third parties.
Prior  to  commencing  advertising and sales of products under a newly developed
brand  name,  we seek to minimize the risks of potentially infringing the rights
of  others  by conducting trade and service mark searches and other inquiries in
addition  to  filing  publicly  for  trademark  protection of the brand name and
copyright  protection  for  associated  advertising  materials  and  labeling.

     We  also  rely  on  trade  secret,  employee  and third-party nondisclosure
agreements  and  other  protective measures to protect our intellectual property
rights  pertaining  to  our  products  and  technology.

GOVERNMENT  REGULATION

     Our  products  and  research  and  development  activities are regulated by
numerous  governmental  authorities,  principally  the  FDA,  the  Federal Trade
Commission,  or  FTC,  the  Department  of  Agriculture  and  the  Environmental
Protection  Agency,  or  EPA  and  corresponding  state  and  foreign regulatory
agencies.

     The  FDA,  in  particular, regulates the formulation, manufacture, labeling
and  distribution  of  foods,  including  dietary  supplements,  cosmetics  and
over-the-counter  or  homeopathic  drugs.  FDA  regulations require that certain
informational  labeling be presented in a prescribed manner on all foods, drugs,
dietary  supplements  and cosmetics.  Specifically, the Food, Drug, and Cosmetic
Act,  or  the  FDC Act, requires that food, including dietary supplements, drugs
and  cosmetics, not be "misbranded."  A product may be deemed an unapproved drug
and  "misbranded"  if  it  bears  improper  claims  or  improper  labeling.  A
manufacturer  or  distributor of dietary supplements must notify the FDA when it
markets  a  product  with  labeling claims that the product has an effect on the
structure or function of the body.  Noncompliance with the FDC Act, and recently
enacted  amendments  to  the  FDC Act, could result in enforcement action by the
FDA.

     The  FDC  Act  has  been  amended  several  times  with  respect to dietary
supplements,  most  recently  by DSHEA.  DSHEA created a new statutory framework
governing  the definition, regulation and labeling of dietary supplements.  With
respect  to  definition,  DSHEA  created  a  new  class  of dietary supplements,
consisting  of  vitamins,  minerals,  herbs,  amino  acids  and  other  dietary
substances  for  human  use  to  supplement  the  diet, as well as concentrates,
metabolites,  extracts  or combinations of such dietary ingredients.  Generally,
under  DSHEA,  dietary  ingredients  that  were on the market before October 15,
1994,  may  be  sold without FDA pre-approval and without notifying the FDA.  In
contrast, a new dietary ingredient, such as one not on the market before October
15,  1994  requires  proof  that  it has been used as an article of food without
being  chemically  altered  or evidence of a history of use or other evidence of
safety  establishing  that  it is reasonably expected to be safe.  Retailers, in
addition  to dietary supplement manufacturers, are responsible for ensuring that
the  products  they  market  for  sale  comply  with  these  regulations.

     DSHEA  established  an  office  of  Dietary  Supplements  at  the  National
Institutes of Health in order to coordinate and conduct scientific research into
the health benefits of dietary supplements, as well as a Presidential commission
to  study  and  make  recommendations  on  the  regulation  of  label claims and
statements  for  dietary  supplements.  DSHEA  empowers  consumers  to make more
informed  choices about preventive health care programs based on scientific data
about  the  health  of  dietary  supplements.

                                       36
<PAGE>

     Although  DSHEA is generally viewed as a positive development for companies
that  sell  dietary  supplements  such as vitamins, minerals, herbs, and similar
substances,  the  legislation  imposed  new  labeling  requirements that must be
adhered  to in order for a product to qualify for the "safe harbors" established
by  DSHEA.

     With  respect  to  labeling,  DSHEA  amends,  for  dietary supplements, the
Nutrition  Labeling  and  Education  Act  by  providing  that  "statements  of
nutritional  support,"  also  referred to as "structure/function claims," may be
used  in  dietary supplement labeling without FDA pre-approval, provided certain
requirements  are  met.  These  statements  may  describe how particular dietary
ingredients  affect  the  structure or function of the body, or the mechanism of
action  by which a dietary ingredient may affect body structure or function, but
may  not  state  a  drug  claim,  such as a claim that a dietary supplement will
diagnose,  mitigate,  treat,  cure  or  prevent  a  disease.  A company making a
"statement  of nutritional support" must possess substantiating evidence for the
statement, disclose on the label that the FDA has not reviewed the statement and
that the product is not intended for use for a disease and notify the FDA of the
statement  within  30  days  after  its  initial  use.

     In  addition, DSHEA allows the dissemination of "third party literature" in
connection  with  the  sale of dietary supplements to consumers at retail if the
publication meets statutory requirements.  Under DSHEA, "third party literature"
may  be  distributed  if,  among other things, it is not false or misleading, no
particular  manufacturer  or brand of dietary supplement is promoted, a balanced
view  of available scientific information on the subject matter is presented and
there  is  physical  separation  from  dietary  supplements  in  stores.

     Given  the  fact  that  DSHEA  was  enacted  only  six years ago, the FDA's
regulatory  policy  and  enforcement positions on certain aspects of the new law
are  still  evolving.  Moreover,  ongoing  and future litigation between dietary
supplement  companies  and  the  FDA  will  likely  further  refine  the  legal
interpretations  of  DSHEA.  As a result, the regulatory status of certain types
of  dietary supplement products, as well as the nature and extent of permissible
claims,  will  remain  unclear  for  the  foreseeable  future.

     In addition to the regulatory scheme under the FDC Act, the advertising and
promotion  of  dietary supplements, foods, OTC drugs and cosmetics is subject to
scrutiny  by  the  FTC,  which  prohibits  "unfair  or deceptive" advertising or
marketing  practices.  The  FTC has pursued numerous food and dietary supplement
manufacturers and retailers for deceptive advertising or failure to substantiate
promotional  claims, including, in many instances, claims made via the Internet.
The  FTC  has  the power to seek administrative or judicial relief prohibiting a
wide  variety  of  claims,  to  enjoin  future  advertising,  to seek redress or
restitution payments and to seek a consent order and seek monetary penalties for
the  violation  of  a  consent  order.

     Although  the  regulation  of  dietary supplements is less restrictive than
that  of  drugs  and  food  additives,  we  cannot  be  assured that the current
statutory  scheme  and regulations applicable to dietary supplements will remain
less  restrictive.  Any laws, regulations, enforcement policies, interpretations
or  applications  applicable  to our business could require the reformulation of
certain  products to meet new standards, the recall or discontinuance of certain
products  not  capable  of  reformulation,  additional  record keeping, expanded
documentation  of  the  properties  of  certain  products, expanded or different
labeling  or  scientific  substantiation.

EMPLOYEES

     Currently,  we  have approximately 67 employees, including approximately 31
in  sales  and  marketing positions, 17 in distribution and 19 in administrative
positions.  None  of  our  employees  is  covered  by  a  collective  bargaining
agreement,  nor to our knowledge is there any current attempt to organize into a
collective  bargaining  unit.  We  have  not  experienced any slow downs or work
stoppages.

FACILITIES

     Our  principal  offices  are located at 5310 Beethoven Street, Los Angeles,
California,  90066  in  a  building  and  warehouse we lease at a monthly rental
charge  of  $42,000.  This  is  a  five-year  lease  subject  to  escalation.

                                       37
<PAGE>

     In  November  1999,  we  entered  into  a 5-year lease of office facilities
located at 350 Interlocken, Broomfield, Colorado.  The lease agreement calls for
escalating  lease payments over the term of the lease.  On February 15, 2001, we
assigned  this  lease  to  a  third  party.
On  May  23, 2001, we entered into a one-year lease of office facilities located
at  1655  Walnut Street, Bolder, Colorado, at an approximate monthly rental rate
of  $3,044.  We  have  a one-time option of renewing this lease for a three year
period  on  the  same  terms  and  conditions except that our rental rate may be
adjusted  to  the then prevailing market rate for comparable office space in the
City  of  Boulder.

LEGAL  PROCEEDINGS

     On  July  18, 2001, we entered into a stipulated judgement in the amount of
$436,635  in  connection  with  the  case  entitled Media Networks, Inc. v. Omni
Nutraceuticals,  Inc.,  in  Los Angeles County, California, Superior Court, Case
No.  BC  241503.

On  January  18,  2001,  a  lawsuit  was filed against us in Los Angeles County,
California,  Superior  Court  entitled  Unified  Western  Grocers,  Inc. v. Omni
Nutraceuticals,  Inc.,  Case  No.  01  000066.  The  complaint seeks recovery of
approximately $20,000, interest and costs.  A responsive pleading has been filed
denying  liability.  We  do not believe the outcome of this litigation is likely
to  materially  impact  us.

     On  January  23,  2001,  the  Labor Commissioner of the State of California
entered a judgment against us in the amount of approximately $42,000 in a matter
entitled  Richard  F.  Lynch  v.  Omni Nutraceuticals, Inc., Labor Commissioner,
State  of  California,  State Case No. 05-19487 1 CC.  We filed an appeal, which
required  posting  a  bond  in  the  amount  of the judgment, in the Los Angeles
County, California, Superior Court on February 14, 2001.  The appeal is entitled
In  the Matter of the Appeal of Omni Nutraceuticals, Inc, of the Order, Decision
or  Award  of  the Labor Commissioner, Richard F. Lynch, Real Party in Interest,
Case  No. BS067765.  The appeal involves a retrial of the matter in the Superior
Court.  We  deny that any sums are due to Lynch.  The final outcome of this case
is  uncertain,  but  appears unlikely that it will have a material impact on us.

     On  March  30, 2001, the former shareholders of Smart Basics, Inc., filed a
complaint  against  us  in  the  Second  Judicial District Court of the State of
Nebraska  in  and  for  Washoe  County, titled Robert Huff, Gus Boosalis, Brenda
Smith  and Mark Rennie v. Omni Nutraceuticals Corp. and Omni Smart Basics, Inc.,
Case No. CV01-01602.  The complaint alleges that we misrepresented our financial
condition  in connection with the merger with Smart Basics, Inc.  The plaintiffs
seek  rescission  and,  alternatively,  unspecified  damages, attorneys fees and
costs.  Based  on the information currently available, we are unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

     We have received an inquiry from the Los Angeles County and Alameda County,
California,  District  Attorney's  Offices  with respect to labeling of our "151
Bars"  and  "Diet System 6 Bars." Discussions and an exchange of information are
taking  place  with  respect  thereto.  We  are hopeful that a resolution can be
reached  without  litigation, although no assurance can be given.  If settlement
is  not  reached, an action for false advertising, unfair business practices and
other claims may be filed against us.  We are no longer selling the "Diet System
6  Bars"  that are a subject of the inquiry.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     On  March  28,  2001, we received a letter from the Securities and Exchange
Commission  advising  that  it  is  conducting  an informal inquiry into matters
concerning us and requesting that we voluntarily produce documents in connection
therewith.  We  are in the process of producing the requested documents.  We are
unable  to  predict  at  this  time  the  outcome  thereof.

     A  complaint  for  money was filed against us on May 25, 2000, in an action
entitled  Copelco  Capital,  Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles
County,  California,  Superior  Court,  Case No. BC230578.  It seeks recovery of
principal  of  approximately  $67,000,  interest,  taxes,  fees,  liens and late
charges  according  to  proof,  attorney's fees and costs in connection with our
alleged  lease of copier equipment.  We have filed a responsive pleading denying
liability  and raising affirmative defenses.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

                                       38
<PAGE>

     A  complaint  for breach of contract and common counts was filed against us
on  November  30,  2000,  in  a  case  entitled  Puretek  Corporation  vs.  Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case  No.  241059.  It  seeks recovery of $78,000, interest, attorney's fees and
costs.  We  have  filed  a  responsive  pleading  denying  liability and raising
affirmative  defenses.  On  December  28,  2000,  the  court  granted  Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,000.  Based  on  the  information  currently  available,  we  are  unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     We have been sued in the Circuit Court for Baltimore County, Maryland.  The
title  of  the  case  filed  on  October 6, 2000, is Gain, Inc., d/b/a/ American
Medtech  v.  Maryland  Urology  Group,  Inc.,  Veromax  International, LLC, Omni
Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett, M.D.,
Larry  L.  Parks  and Kyle P. Moore, Civil No. 030-00-010409.  The First Amended
Complaint  filed  November  6,  2000, alleges that other defendants granted Gain
exclusive  rights  to  market  and  sell Veromax  to all U.S. pharmacy and chain
stores  with  greater  than twenty stores and that these defendants subsequently
assigned  rights  to  us  to  market and sell Veromax  that were contrary to the
rights  previously  granted  Gain.  It claims that we tortiously interfered with
Gain's prospective economic advantage, and published false information to Gain's
customers  that  disparaged its rights to distribute Veromax , in our efforts to
market  and  sell  Veromax  and  seeks  $250,000,000  in  compensatory  damages,
$25,000,000  in  punitive  damages, interest and costs. It also seeks injunctive
relief  prohibiting us from interfering with Gain's marketing efforts by selling
or  offering  to  sell  Veromax  to  certain  identified  pharmacy chains and to
account  for  sales  made  to  said identified pharmacy chains.  We have filed a
responsive  pleading  denying  liability  and  raising  affirmative defenses and
intend  to  vigorously  defend  this action.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     We  have  received  correspondence  from  counsel  claiming that our former
subsidiary,  Smart  Basics,  Inc.,  sold  a  product which allegedly infringes a
patent held by Dr. Ann de Wees Allen.  The letter demands that the Company cease
and  desist  the  manufacturing,  distribution  and  selling  of the product and
provide  accounting  data  of  all  manufacturing, distribution and sales of the
product.  The  letter  threatens  an  action  for  infringement, seeking damages
(trebled)  and  injunctive  relief, if the demands are not met.  We have advised
the  claimant  that  we  have  stopped  selling  this  product.  Based  on  the
information  currently  available  to  us,  we  are  unable  to  evaluate  the
likelihood  of  an  unfavorable  outcome.

     We  have  received  a  letter  from counsel for Nutramax Laboratories, Inc.
("Nutramax")  regarding  litigation  in Baltimore, Maryland between Nutramax and
Inholtra, Inc. and Inholtra Natural, Inc. (collectively "Inholtra") with respect
to  alleged  patent  infringement and related claims.  The letter states that we
should  be substituted in the litigation in place of Inholtra since we purchased
all  rights  and  liabilities  associated with the Inholtra product which is the
subject  of  the  litigation.  The  letter  further  proposes that the matter be
settled  between  Nutramax and us.  Based on the information currently available
to  us,  we  are  unable  to  evaluate the likelihood of an unfavorable outcome.

     From  time  to  time  we  are a party to legal proceedings that we consider
routine  litigation  incidental  to  our  business.  We  believe that the likely
outcome  of  such  litigation  will  not  have  a material adverse effect on our
business  or  results  of  operations.

                                       39
<PAGE>

                                   MANAGEMENT

DIRECTORS  AND  EXECUTIVE  OFFICERS

The  following  table sets forth information regarding our current directors and
executive  officers:
<TABLE>
<CAPTION>
Name                     Age              Position
<S>                      <C>  <C>
Mr. Andrew Vollero, Jr    63  Chairman of the Board
Mr. Klee Irwin            35  Chief Executive Officer, Director
Mr. Thomas Aarts          42  Director
Ms. Rebecca Pearman       33  Director
Mr. Thomas Baker          59  Vice President Finance
</TABLE>

     MR.  ANDREW  VOLLERO, JR.  Mr. Vollero became Chairman of the Board of Omni
Nutraceuticals  on  March 12, 2000 and has served as a Director since 1999.  Mr.
Vollero  is  an  independent  general management consultant and private investor
specializing  in  the  small  business area since 1970.  During that period, Mr.
Vollero  has  worked  with  over  100  companies,  mostly  privately held and in
non-high  tech industries.  Since 1994, Mr. Vollero has served as a Board member
of  AC International, A.C. Vroman, Inc., Vroman Real Estate Ventures, Magnum Air
and  Rahn  Industries.  Mr.  Vollero  is a graduate of Yale and Harvard Business
School.

     MR.  KLEE  IRWIN.  Mr.  Irwin  served  as the President and Chief Executive
Officer  of  Omni Nutraceuticals from June 30, 1998 until April 20, 1999.  Prior
to  June 30, 1998, Mr. Irwin served as the President and Chief Executive Officer
of  Irwin Naturals, which he founded in 1995.  Prior to his involvement in Irwin
Naturals,  beginning  in 1989, Mr. Irwin served as a vice president of sales and
marketing and general manager of Helsneva Labs, a division of Pantron I Corp., a
privately  held  consumer  products  company.  Mr.  Irwin  served  as  the Chief
Executive  Officer  and  a  Director of HealthZone.com, the Company's e-commerce
subsidiary  in 1999 and rejoined us as the Chief Executive Officer and President
in  March  2000,  and  has  served  as  a  Director  since  1999.

     MR.  THOMAS  AARTS.  Mr.  Aarts  was  elected  to our board of directors on
November  15, 2000.  Mr. Aarts is Co-Founder and President of Nutrition Business
International  and  Executive  Editor  of  Nutrition  Business Journal. Prior to
starting  NBI,  he  was  Director  of  New  Ventures  and  a project manager for
Environmental  Business  International  .  Prior  to  coming  to EBI, Tom was an
assistant  to  the CEO of Browning-Ferris Industries.  Mr. Aarts also worked for
Mercer  Management  Consulting  and  for  Johnson  &  Johnson.

     MS.  REBECCA  PEARMAN.  Ms. Pearman has worked for Omni Nutraceuticals or a
predecessor  or  affiliated  business for at least the last five years.  She was
elected  to our board of directors on January 31, 2001 and appointed to serve as
President  of  our  Irwin  Naturals division on February 1, 2001.  She served as
General  Manager for Irwin Naturals from its inception in 1994 until leaving for
the UK in 1996 to start Applied Nutrition, UK LLC, a division of Irwin Naturals.
She returned to the US in 1997 to become Vice President of the Applied Nutrition
Division  of  Irwin  Naturals.  Ms.  Pearman  is  also  the  General  Manager/VP
operations  of  American  Brand  Labs,  a  company  owned  by  an  affiliate.

     MR.  THOMAS  BAKER.  Mr.  Baker  joined Omni Nutraceuticals on February 26,
2001  as  vice  president  of  finance.  Prior  to  joining Omni Mr. Baker was a
consultant to companies from January 2000.  From April 1997 to December 1999 Mr.
Baker was vice president and chief financial officer of Eos Corporation and from
October  1994  to  April  1997 was vice president and chief financial officer of
NetVantage,  Inc.

     The  Board  of  Directors  met  8  times  during  2000 for regular Board of
Directors  meetings.  All  directors  attended  100% of the aggregate of (i) the
total  number of meetings of the Board of Directors held while they were members
and  (ii)  the  total  number of meetings held by all Committees of the Board of
Directors  on  which  they  served as members.  The Board of Directors has three
standing  committees:  the  Audit Committee; the Compensation Committee; and the
Long  Term  Stock  Incentive  Plan  Administration  Committee,  or  the  LTSIP
Administration  Committee.  During  2000,  the  Audit  Committee  and  the LTSIP
Administration  Committee  were  composed of Messrs. Vollero, Aarts and Diamond,
and  the  Compensation  Committee  was  composed  of  Messrs. Vollero, Aarts and
Ballin.  The Audit and LTSIP Administration Committees did not meet during 2000,
the  functions of such committees being performed by the Board of Directors as a
whole.  The  Compensation  Committee  met  two  (2)  times in 2000.  The primary
responsibility  of  the  Compensation  Committee  is to establish and review our
compensation  policies, including those for executives.  During 2000, we did not
have  a  nominating committee, the functions of such a committee being performed
by  the  Board  of  Directors  as  a  whole.

                                       40
<PAGE>

                COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

     The  following table shows, for the years ended December 31, 2000, 1999 and
1998,  the cash compensation paid, as well as certain other compensation paid or
accrued for the year, to our four most highly compensated executive officers, or
the  Named  Individuals,  during  2000:
<TABLE>
<CAPTION>

SUMMARY  COMPENSATION  TABLE

     Annual                                           Long  Term
     Compensation                                     Compensation  Awards     Payouts
     ------------                                     --------------------     -------
                                                     Other                      Securities            All
                                                     Annual      Restricted     Underlying            Other
Name  and                  Salary        Bonus       Compen-     Stock          Options     LTSIP     Compen-
Position           Year    ($)           ($)         sation ($)  Awards         SARs  (#)   Payouts   sation
<S>                <C>    <C>       <C>         <C>       <C>  <C>         <C>         <C>  <C>
R. Lindsey
Duncan (1)         2000   $ 47,596                   $1,720,000    $0             $     0     $0        $0
                   1999    225,000  $   50,000                0     0                   0      0         0
                   1998    192,219           0                0     0              50,000      0         0

Klee Irwin (2)     2000    350,000           0                0     0                   0      0         0
                   1999    259,808           0                0     0                   0      0         0
                   1998    455,000           0                0     0              50,000      0         0

Louis Mancini (3)  1999    284,615           0          350,000     0           1,600,000      0         0

Rockwell
Schutjer (4)       1998    122,163           0                0     0                   0      0         0

Steven Beldner
 (5)               2000    136,421           0                0     0                   0      0         0

Christof Ballin
(6)                2000    105,769           0                0     0           1,075,000      0         0

Herm Rosenman
7)                 2000    101,346           0                0     0             500,000      0         0
</TABLE>


(1)     Mr.  Duncan's  other  compensation includes the value of shares received
        pursuant  to  the  Withdrawal  Agreement, dated March 12, 2000, by and
        among Mr. Duncan,  his  spouse,  Cheryl  Wheeler  and  the  Company.
(2)     Mr.  Irwin's  employment  ceased on April 20, 1999, and his options have
        expired  unexercised.  Mr.  Irwin  was  re-employed  on  March  12, 2000
        as our President  &  CEO.
(3)     Mr.  Mancini's  options  were  cancelled  pursuant  to  a  Termination
        Agreement.  Other  compensation  consists  of  a  car  allowance.
(4)     Mr.  Schutjer's  employment  with Omni Nutraceuticals ceased on July 15,
        1999.  Mr.  Schutjer's  options  have  expired  unexercised.
(5)     Mr.  Beldner's compensation shown includes sales commissions he receives
        as  our  International  Division  Manager.
(6)     Mr.  Ballin's  employment  ceased on January 19, 2001, at which time all
        stock  options  shown  were  cancelled.
(7)     Mr. Rosenman's employment ceased on March 22, 2001, and his options have
        been  cancelled.

                                       41
<PAGE>

DIRECTOR  COMPENSATION

     We  reimburse  our  non-employee  directors  for their expenses incurred in
connection  with  attending board and committee meetings but do not provide cash
compensation  for  their  services as board or committee members.  Directors are
eligible  to  participate  in  our  Long  Term  Stock  Incentive Plan, or LTSIP.
Subject to shareholder approval, each of our non-employee directors will receive
a  onetime  stock  grant  of 15,000 shares and a one-time option grant of 75,000
shares  vesting  annually over three years upon joining the board.  The exercise
price  for each of these option grants will be equal to the fair market value of
the  underlying  shares  of  our  common  stock  on  the  date  of  grant.

     In  1999,  the  LTSIP provided that upon assuming office, each non-employee
director  would  be  granted  a non-qualified option to acquire 10,000 shares of
Common  stock at an exercise price equal to 100% of the fair market value on the
date  of grant.  One-half of the grants shall become exercisable upon completion
of  one  year of service as a director and the remaining balance upon completion
of  two years of service as a director.  All options have a five-year expiration
term.

     In  December  1999, the LTSIP was amended to grant 75,000 options at market
price  at  the  time  of  grant  over  three  years  to  new  directors.

     During  the  year  ended  December  31, 2000, we issued 1,780,500 shares of
common  stock  at  a  weighted  average  exercise  price of $2.38 per share, and
options to purchase approximately 1,925,000 shares of common stock to certain of
our  directors,  executive  officers  and  consultants.

OPTION/SAR  GRANTS  TABLE

     The  following  table  presents  information  with  respect  to  the  Named
Individuals  concerning  the  exercise  of  options  during 2000 and unexercised
options  held  as  of  December  31,  2000.
<TABLE>
<CAPTION>
                                                                                 Potential Realizable
                                                                                 Value at Assumed
                                                                                 Annual Rate of Stock
                                                                                 Price Appreciation For
                     Individual Grants                                           Option Term (1)
<S>                  <C>                      <C>              <C>           <C>          <C>      <C>
------------------------------------------------------------------------------------------------------
(a)                  (b)              (c)             (d)            (e)          (f)      (g)
                     Number of        % of Total
                     Securities       Options/SARs
                     Underlying       Granted to       Exercise Or
                     Options/SARs     Employees In     Base Price     Expiration
                     Granted (#)      Fiscal Year      ($/Share) (*)  Date (*)     5% ($)  10% ($)
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Christof Ballin (1)  1,075,000          57.5             2.07           4-9/2010   (3)     (3)
Herm Rosenman (2)      500,000          26.6             4.12             5/2010   (3)     (3)
</TABLE>


*This  chart  assumes  a market price of $0.20 for the common stock, the closing
price  for  the  common  stock in the Over-The-Counter Market as of December 31,
2000,  as  the  assumed  market  price  for  the  common  stock  with respect to
determining  the  "potential  realizable  value"  of  the shares of common stock
underlying the options described in the chart, as reduced by any lesser exercise
price  for  such  options.  Further, the chart assumes the annual compounding of
such  assumed  market  price over the relevant periods, without giving effect to
commissions  or  other  costs  or  expenses  relating to potential sales of such
securities.  Our  common stock has a very limited trading history.  These values
are  not intended to forecast the possible future appreciation, if any, price or
value  of  the  common  stock.

(1)     These  options  have  been  cancelled.
(2)     These  options  were  cancelled  on  May  23,  2001.
(3)     The  exercise  price  of  the  options exceeded the assumed market price
        compounded  annually  over  the  relevant  periods,  and, therefore,
        there is no potential  realizable  value  for  the  options,  for
        purposes  of  this chart.

OPTION  EXERCISES  AND  YEAR-END  VALUES

     The  following  table  presents  information  with  respect  to  the  Named
Individuals  concerning  the  exercise  of  options  during 2000 and unexercised
options  held  as  of  December  31,  2000:

                                       42
<PAGE>

<TABLE>
<CAPTION>

                                              Number  of  Securities     Value  of  Unexercised  in  the
                                              Underlying  Unexercised    Money  Options  at
                                              Options  at                December  31,  2000  (2)
                                              December  31,  2000
Name            Shares         Value          Exercisable Unexercisable  Exercisable   Unexercisable
                Acquired On    Realized
                Exercise  (#)  (1)
---------------------------------------------------------------------------------------------------------
<S>               <C>  <C>  <C>        <C>     <C>  <C>
R. Lindsey
Duncan              0          0              984,584     16,667
Christof Ballin
(2)(3)              0          0                    0          0              0             0
Herm Rosenman (2)   0          0               65,000          0              0             0
Klee Irwin          0          0            2,200,000          0              0             0
Steven Beldner (2)  0          0                2,500     12,500              0             0
Louis Mancini (2)   0          0                    0          0
</TABLE>


(1)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common  stock  in the then existing market for the common stock on the date
     of  exercise  and  any  lesser  exercise  price.
(2)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common stock in the Over-The-Counter market on December 29, 2000 ($0.21 per
     share)  and  any  lesser  exercise  price.
(3)  On  April  30, 2001, options held by Mr. Ballin to purchase up to a maximum
     of  1,125,000  shares  of  our  common  stock  were  cancelled.


OMNI  NUTRACEUTICALS,  INC.  LONG  TERM  STOCK  INCENTIVE  PLAN

     The  following  is a description of the principal features of the Long Term
Stock Incentive Plan or LTSIP, as amended.  This description is qualified in its
entirety  by  reference to the LTSIP, which is incorporated herein by reference.
The  Board  of  Directors  will  be  recommending  revisions to the LTSIP to the
shareholders  at the next annual or special shareholders meeting.  The revisions
are  described  below.

     The  LTSIP authorizes the LTSIP Administration Committee to grant incentive
stock  options  or ISO and non-qualified stock options or NSOs, including reload
options  (i.e.,  the granting of additional options, where an employee exercises
an option with previously owned stock, covering the number of shares tendered as
part  of  the  exercise  price),  restricted  stock  awards or RSAs (i.e., stock
awarded to an employee that is subject to forfeiture in the event of a premature
termination  of  employment,  failure  of  Omni  Nutraceuticals  to meet certain
performance  objectives,  or  other conditions), performance units or PUs (i.e.,
share-denominated  units  credited  to  the  employee's  account for delivery or
cash-out at some future date based upon performance criteria to be determined by
the  LTSIP  Administration  Committee),  and  "tax withholding" (i.e., where the
employee  has the option of having us withhold shares on exercise of an award to
satisfy  tax  withholding  requirements).

     The  LTSIP  also  provides  for  one-time  grants  of NSO's to non-employee
directors,  upon  taking office, vesting one-half upon completion of one year of
service and one-half upon the completion of two years of service, exercisable at
100%  of  the  fair  market  value  of  the  Common  stock on the date of grant.

     The  LTSIP Administration Committee develops administration guidelines from
time  to  time,  which  define  eligibility  criteria,  the  types  of awards to
employees,  and  the  value  of  such  awards.  Specific  terms  of  each award,
including  minimum  performance  criteria, which must be met to receive payment,
will  be  provided  in individual award agreements granted each award recipient.
Key employees and other individuals who the LTSIP Administration Committee deems
may  provide  a  valuable  contribution  to  our  success  will  be  eligible to
participate  under  the  LTSIP.  Award  agreements  will  also  contain
change-in-control  provisions.

                                       43
<PAGE>

     Under  the  LTSIP,  the  LTSIP Administration Committee shall determine the
option  price  of all NSOs and ISOs; provided, however, in the case of ISOs, the
option price shall not be less than the fair market value of the Common stock on
the  date  of grant. Such "fair market value" is the average of the high and low
prices  of  a share of the Common stock traded on the relevant date, as reported
on  a  national  securities  exchange  or an automated quotation system on which
Common stock is then traded, or, in the event such Common stock is not listed on
an  exchange  or  quoted  on  an  automated quotation system, the average of the
highest  bid  and the lowest asked price quoted by a member firm of the National
Association  of  Securities  Dealers,  Inc.

LIMITATION  ON DIRECTORS' LIABILITIES; INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Our  Articles of Incorporation and Bylaws designate the relative duties and
responsibilities  of our officers, establish procedures for actions by directors
and stockholders and other items.  Our Articles of Incorporation and Bylaws also
contain  extensive indemnification provisions, which will permit us to indemnify
our  officers  and  directors  to  the  maximum  extent,  provided  by Utah law.
Pursuant  to our Articles of Incorporation and under Utah law, our directors are
not  liable  to  us  or  our  stockholders  for  monetary  damages for breach of
fiduciary  duty,  except  for  liability  in connection with a breach of duty of
loyalty,  for  acts  or omissions not in good faith or which involve intentional
misconduct  or  a  knowing  violation  of  law,  for  dividend payments or stock
repurchases  illegal  under  Utah law or any transaction in which a director has
derived  an  improper  personal  benefit.

     At  present,  there  is  no  pending  litigation or proceeding involving an
indemnitee  where  indemnification  would  be  required  or  permitted under our
Articles  of  Incorporation  and  Bylaws.

EMPLOYMENT  AGREEMENTS

     Other  than  the  employment  agreements  discussed  above  in  Executive
Management  and  Directors,  there  are  no  employment  agreements currently in
existence,  including  any  for  the  current  executive  management  group.

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

     R.  Lindsey  Duncan,  and Klee Irwin, the Company's current Chief Executive
Officer,  served  on the Compensation Committee of the Board of Directors during
2000.

BOARD  COMMITTEES

     AUDIT  COMMITTEE.  The  members  of the audit committee are responsible for
recommending  to  the  Board of Directors the engagement of our outside auditors
and  reviewing  our  accounting controls and the results and scope of audits and
other  services  provided  by  our  auditors.  Our  audit committee is currently
comprised  of  Messrs. Aarts and Vollero.  The audit committee has discussed the
audited  financial  statements  with  management  and  our auditors. It has also
discussed with the auditors the matters required to be discussed by SAS 61.  The
audit  committee  has  received  the  written disclosures and letter required by
Independence  Standards  Board  Standard  No.  1.  Based  on  the  review  and
discussions  referred  to above, the audit committee recommended to the Board of
Directors that the audited financial statements for the years ended December 31,
1998,  1999 and 2000, be included in our Annual Report on Form 10-K for the last
fiscal  year  for  filing  with  the  Commission.

     COMPENSATION  COMMITTEE.  The members of the compensation committee will be
responsible  for  approving or recommending to the board of directors the amount
and  type  of  consideration  to be paid to senior management, administering our
stock  option  plans and establishing and reviewing general policies relating to
compensation  and  benefits  of employees.  The compensation committee currently
consists  of  Messrs.  Irwin  and  Vollero.

     LTSIP COMMITTEE.  The LTSIP administration committee oversees the Long-Term
Stock  Incentive  Plan, or the LTSIP, including, subject to the express terms of
the  LTSIP, making awards, interpreting the LTSIP, amending and rescinding rules
and  other  duties related to the proper implementation of the LTSIP.  Our LTSIP
committee  currently  is  comprised  of  Messrs.  Vollero  and  Aarts.

     DIRECTORS'  AND OFFICERS' LIABILITY INSURANCE.  We have obtained directors'
and  officers'  liability  insurance  with a $3,000,000 limit of liability.  The
policy  period  expires on September 1, 2001.  We intend to renew such policy or
obtain  comparable coverage after the expiration of such policy.  However, there
can  be  no  assurances  to  this  effect.

                                       44
<PAGE>

              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

STOCK  REDEMPTIONS  AND  LOAN  REPAYMENTS  WITH  STOCKHOLDERS

     In  October  1999, our then Chief Executive Officer fully repaid an 8% loan
in the amount of $322,000.  In the first quarter of 2000, we forgave all amounts
owed  by  Mr.  Mancini,  our  then  current President, pursuant to a loan in the
original  principal  amount  of  $350,000,  bearing interest at 8% per annum, in
connection with the termination of his employment.  The amounts forgiven totaled
$175,000.

TRANSACTIONS  WITH  AFFILIATES

     American  Brand  Labs,  or ABL, is owned in the majority by Klee Irwin, our
Chief  Executive Officer, and 7.5% by Rebecca Pearman, a director of our company
and  General  Manager/Vice  President  of  operations  of ABL.  ABL is a current
customer of our company.  We are in the process of negotiating an agreement with
ABL  pursuant  to  which ABL will be entitled to occupy a portion of our offices
located  at  5310  Beethoven  Street and receive certain services, including the
management  services  of Ms. Pearman, upon payment to us of a monthly management
fee  and  a  portion  of ABL's profits and a grant of an option to purchase ABL.

     Ms.  Pearman  and  Klee Irwin are parties to a verbal agreement pursuant to
which  Ms.  Pearman  was  granted the option of purchasing, at any time, 100,000
shares  of  common stock of Omni from Mr. Irwin at a per share purchase price of
$1.21.  This  agreement  terminates  March  15,  2011.

     During the year ended December 31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

     On October 8, 1999, Mr. Klee Irwin entered into a settlement agreement with
us  in order to resolve certain mutual claims that had arisen between Mr. Irwin.
And  us.  Subsequent  to  December  31,  1999,  the Settlement Agreement and all
ancillary  agreements thereto, including the voting agreement between Mr. Duncan
and  Mr.  Irwin,  were terminated.  In connection with the settlement agreement,
Mr.  Irwin  made a capital contribution of $305,000, and returned 941,436 shares
of  our  common  stock.

     We believe that all such transactions with our affiliates have been entered
into  on  terms  no  less  favorable  to  us  than could have been obtained from
independent  third  parties.  We  intend  that  any  transactions and loans with
officers,  directors  and 5% or greater stockholders, following the date of this
prospectus, will be on terms no less favorable to us than could be obtained from
independent third parties and will be approved by a majority of our independent,
disinterested  directors.

                  VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

     The  following  table sets forth information regarding beneficial ownership
of  our  common  stock  as  of  June  25,  2001:

-    each  stockholder  who is known by us to own beneficially 5% or more of our
     common  stock;
-    each  of  our  directors  and  each  of  the officers named in "Management"
     section  of  this  prospectus;  and
-    all  of  our  directors  and  executive  officers  as  a  group.

The  number of shares beneficially owned by each stockholder is determined under
rules  issued  by  the Securities and Exchange Commission and includes voting or
investment  power  with  respect  to  securities.  Under these rules, beneficial
ownership  includes  any shares as to which the individual or entity has sole or
shared  voting power or investment power and includes any shares as to which the
individual  or  entity  has  the right to acquire beneficial ownership within 60
days  after  June 25, 2001, through the exercise of any warrant, stock option or
other  right.

                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                              Percentage of Shares
                                           Number of          Beneficially Owned (1)
                                            Shares         ----------------------------
                                         Beneficially       Before             After
Name and Address of Beneficial Owner (1)    Owned           Offering           Offering
---------------------------------------  ------------      ---------          ---------
<S>                                       <C>           <C>                     <C>
R. Lindsey Duncan (2)
1570 Chastain Parkway
Pacific Palisades, CA 90044               6,210,902         16.8%               14.8%

Klee and Margareth Irwin (3)             16,964,161         44.3%               39.8%

Andrew Vollero, Jr. (4)                     300,000          0.8%                0.7%

Thomas Aarts                                      *

Rebecca Pearman (5)                         225,000          0.6%                0.5%

American Equities LLC (6)
3172 Abington Drive
Beverly Hills, CA  90210                  1,740,575          4.8%                4.1%
All directors and officers as a group
(5 persons)
* Less than 1%                           17,489,161         48.5%               41.1%
</TABLE>

*    Less  than  1  %.
(1)  Beneficial  ownership  is  determined  in  accordance with the rules of the
     Commission. Shares of common stock subject to options or warrants currently
     exercisable  or  exercisable  within  60  days  of June 25, 2001 are deemed
     outstanding  for  computing  the  percentage  ownership  of the stockholder
     holding  the  options  or  warrants,  but  are  not  deemed outstanding for
     computing  the  percentage  ownership  of  any  other  stockholder.  Unless
     otherwise indicated in the footnotes to this table, we believe stockholders
     named  in the table have sole voting and sole investment power with respect
     to  the shares set forth opposite such stockholder's name. Unless otherwise
     indicated,  the  officers, directors and stockholders can be reached at our
     principal offices located at 5310 Beethoven Street, Los Angeles, California
     90066.  Percentage  of  ownership  is  based on 36,067,061 shares of common
     stock  outstanding  as  of June 25, 2001. All share numbers and percentages
     assume  no  exercise  of  the  underwriters'  over-allotment  option.
(2)  Includes  2,264,503  shares  held in the Duncan Family Trust and options to
     purchase  1,001,251 shares of our common stock at an average price of $2.86
     per  share.  Includes  594,148  shares  held by Mr. Duncan's spouse and two
     children  to  which  Mr.  Duncan  disclaims  beneficial  ownership.
(3)  Includes  options  to  purchase  2,200,000  shares  of our common stock and
     voting  power  over  the  1,740,575  shares owned or controlled by American
     Equities  LLC.
(4)  Includes  options to purchase 275,000 shares of common stock at an exercise
     price  of  $0.80  per  share.
(5)  Includes options to purchase 100,000 shares of common stock from Klee Irwin
     at  an  exercise  price  of $1.21 per share and options to purchase 125,000
     shares  of  common  stock  at  an  exercise  price  of  $0.25  per  share.
(6)  On  September  25,  2000,  American  Equities  LLC  granted to Mr. Irwin an
     irrevocable  proxy  to  vote  the  1,740,575 shares of common stock held or
     controlled  by it. The proxy will terminate upon the sale of such shares to
     any  unaffiliated  third  party.

                                       46
<PAGE>
                            DESCRIPTION OF SECURITIES

     Our authorized capital stock consists of 50,000,000 shares of common stock,
par  value  $0.01  per share, and 5,000,000 shares of preferred stock, par value
$0.01 per share.  No other class of capital stock is authorized.  As of June 25,
2001,  36,067,061  shares  of our common stock and 2,800 shares of our preferred
stock  were  outstanding.  On  June  25,  2001,  our  common  stock  was held by
approximately  258  stockholders  of  record.  The following information relates
only  to  our  Articles  of  Incorporation  and  by-laws.

COMMON  STOCK

     Voting  Rights  -  The holders of our common stock have one vote per share.
Holders  of  our common stock are, under certain circumstances, entitled to vote
cumulatively  for the election of directors.  Generally, all matters to be voted
on  by  stockholders must be approved by a majority, or, in the case of election
of  directors,  by a plurality, of the votes cast at a meeting at which a quorum
is  present,  voting  together  as  a single class, subject to any voting rights
granted  to  holders  of  any  then  outstanding  preferred  stock.

     Dividends  -  Holders  of  common stock will share ratably in any dividends
declared  by  our  board  of  directors,  subject  to  restrictions  in our debt
agreements  and the preferential rights of any preferred stock then outstanding.
Dividends  consisting of shares of common stock may be paid to holders of shares
of  common  or  preferred  stock.

     Other Rights - Upon our liquidation, dissolution or winding up, all holders
of  common  stock  are  entitled  to  share  ratably in any assets available for
distribution  to  holders  of shares of common stock.  No shares of common stock
are  subject  to  redemption  or  have  preemptive rights to purchase additional
shares  of  common  stock.

PREFERRED  STOCK

     Our  Articles  of Incorporation provides that 5,000,000 shares of preferred
stock  may  be  issued  from  time  to time in one or more series.  Our board of
directors  is authorized to fix the voting rights, if any, designations, powers,
preferences, qualifications, limitations and restrictions thereof, applicable to
the  shares  of  each  series.  Our  board of directors may, without stockholder
approval,  issue  preferred  stock  with  voting  and  other  rights  that could
adversely  affect the voting power and other rights of the holders of the common
stock  and could have anti-takeover effects, including preferred stock or rights
to  acquire preferred stock in connection with implementing a shareholder rights
plan.  Currently,  we  have  authorized  two  series  of preferred stock: (i) 5%
Convertible  Preferred  Stock, Series A; and (ii) Series A Convertible Preferred
Stock.

     5%  Convertible  Preferred  Stock,  Series A - On January 24, 2000, we sold
2,000,000  shares  of  our  5%  Convertible  Preferred  Stock,  Series  A,  for
$2,900,000.  On  March  24,  2000,  all outstanding shares of our 5% Convertible
Preferred  Stock,  Series  A,  plus $24,657 of accrued dividends, were converted
into  2,016,438 shares of our common stock at a weighed average conversion price
of  $1.49  per  share.  As  of  the date of this prospectus, no shares of our 5%
Convertible  Preferred  Stock,  Series  A,  remain  outstanding.

     Series A Convertible Preferred Stock - On October 27, 2000, we issued 3,000
shares of Series A Convertible Preferred stock.  We have authorized the issuance
of  3,000  shares  of  Series A Convertible Preferred Stock, par value $0.01 per
share.  Holders  of  this  series  of  preferred  stock  are not entitled to any
dividends  and  have  a  liquidation  preference  prior to holders of our common
stock.

     The  Series  A  Convertible Preferred Stock is convertible at the option of
its holders into share of common stock.  The number of shares of common stock to
be issued in connection with such conversion is equal to the stated value of the
number  of  shares of preferred stock being converted, together with any accrued
dividends,  or the Additional Amount thereon, divided by the "conversion price."
The  conversion  price  is  equal  to  the  lesser  of:

-     115%  of  the  average of the two lowest bid prices quoted on the exchange
      where  our  common stock is traded during the ten days preceding the
      closing or,
-     80% of the average of the two lowest bid prices of the common stock during
      the  five  days  preceding  conversion.

                                       47
<PAGE>

     We may redeem the preferred stock at any time after the date such preferred
shares are issued pursuant to the October 27, 2000 Securities Purchase Agreement
at  a  price  per  share  equal  to  the  greater  of:

-     $1,400,  plus  an  Additional  Amount per Share, defined as 6% of the face
      amount  of the preferred stock being redeemed, multiplied by the number of
      days since the  closing,  divided  by  365,  or  the  optional  redemption
      price or,
-     the  market price of the common stock into which the preferred stock being
      redeemed could be converted as of the date of the notice of optional
      redemption.

     On  the  fourth  anniversary  of  the  Issue  Date,  any existing shares of
preferred  stock,  together with the additional amount, must either be converted
into common stock pursuant to the conversion formula or redeemed for cash at the
optional  redemption  price.

     In the event any conversion of preferred stock would result in the issuance
of  more  than  19.9% of the number of shares of common stock outstanding on the
date  of  the  closing,  the  preferred  stock  representing such excess must be
redeemed,  in  cash  for  $1,400.00  per  share,  plus  the  additional  amount.
Notwithstanding  anything  to  the contrary, except on the fourth anniversary of
the Issue Date, neither we nor holders of the preferred stock may convert all or
any portion of the preferred stock if and to the extent that the issuance to the
holder of shares of common stock upon such conversion would result in the holder
being  deemed  the  "beneficial  owner"  of more than 5% of the then outstanding
shares  of  common  stock  within the meaning of Section 13(d) of the Securities
Exchange  Act  of  1934, as amended, and the rules promulgated thereunder.  If a
court  of  competent jurisdiction determines that this limitation is ineffective
to  prevent  a  holder from being deemed the beneficial owner of more than 5% of
the  then  outstanding shares of common stock, we will be obligated to redeem so
may  of  such  holder's  shares of the preferred stock as are necessary to cause
such  holder  to  be deemed the beneficial owner of not more than 5% of the then
outstanding  shares  of  common  stock.

     While we have no present plans to issue any additional shares of the Series
A  Convertible  Preferred Stock or the 5% Convertible Preferred Stock, Series A,
the  ability  of  our  board  of  directors  to  issue  preferred  stock without
stockholder  approval could have the effect of delaying, deferring or preventing
a  change  of  control  with  respect  to our company or the removal of existing
management.  In  addition,  issuance  of  preferred  stock  could also result in
significant  dilution  to our current stockholders, including a potential change
of  control,  due  to  the variable conversion price of the Series A Convertible
Preferred  stock.

     On  June  11,  2001, we have filed a registration statement with respect to
the  6,000,000  shares  of  common  stock  underlying  the  Series A Convertible
Preferred stock based on the assumed conversion price of $0.50 per share, and an
additional  650,000  shares  of  common  stock  underlying  warrants  issued  in
connection  with  the  sale of the Series A Convertible Preferred stock.  We may
have  to  file  additional  registration statements with respect to the Series A
Convertible  Preferred  stock  in  the event that the 6,000,000 shares of common
stock  are  not  sufficient  to  convert  all  of the related shares of Series A
Convertible  Preferred  stock.  On  June 21, 2001, we issued 1,572,682 shares of
our  common  stock  in  connection with the conversion of 200 shares of Series A
Convertible  Preferred  stock.

OPTIONS

     As  of  June  25,  2001, options to purchase 6,730,653 shares of our common
stock  were  outstanding.  At  some  time  following  the  effectiveness  of the
offering chosen by the board of directors in its discretion, we intend to file a
registration  statement  on Form S-8 under the Securities Act to register all of
the  shares  of our common stock reserved for issuance under our Long Term Stock
Incentive  Plan.  The  filing  of  this  registration statement will allow these
shares, other than those held by members of management and others who are deemed
to  be  affiliates,  to  be  eligible  for resale without restriction or further
registration  upon  issuance  to  participants.  After the effective date of the
registration  statement  on  Form S-8, shares purchased upon exercise of options
granted  pursuant  to  these plans generally will be available for resale in the
public  market  by  non-affiliates  without  restriction.

                                       48
<PAGE>

WARRANTS

     As  of  June  25,  2001,  we had outstanding warrants to purchase 3,037,500
shares  of common stock at exercise prices ranging from $0.96 to $6.00 per share
(including  1,137,500  shares of common stock underlying the warrants covered by
this  registration statement).  The warrants expire from April, 2004 to January,
2007.

REGISTRATION  RIGHTS

     In  addition  to  registration  rights  granted to holders of our preferred
stock,  we are filing this registration statement of which this prospectus forms
a part, to register 6,512,310 shares of common stock, including 1,137,500 shares
underlying  certain  warrants  held  by the selling shareholders with respect to
this  prospectus.

PROVISIONS  OF  OUR  ARTICLES  OF  INCORPORATION  AND  BY-LAWS  THAT  MAY  HAVE
ANTI-TAKEOVER  EFFECTS

     Certain  provisions  of our articles of incorporation and by-laws described
below,  as  well  as  the  ability  of our board of directors to issue shares of
preferred  stock  and  to  set  the  voting  rights, preferences and other terms
thereof,  may  be  deemed  to  have  an  anti-takeover effect and may discourage
takeover  attempts  not  first  approved  by  our  board of directors, including
takeovers  which particular stockholders may deem to be in their best interests.
These  provisions  also  could  have  the  effect  of  discouraging  open market
purchases  of our common stock because they may be considered disadvantageous by
a  stockholder  who  desires  subsequent  to  such purchases to participate in a
business  combination  transaction  with  us  or  to elect a new director to our
board.

Classified  Board

     Our  Articles of Incorporation and Bylaws provide that until after June 30,
2003, our board of directors shall be not less than 3 nor more than 5 directors,
unless  otherwise  determined  by  the  affirmative  vote  of  a majority of the
outstanding  shares  of  voting capital stock then entitled to vote generally in
the  election  of  directors,  voting  together as a single class.  The Board of
Directors  shall be divided into three classes, Class I, Class II and Class III.
There  are  currently  four  (4) members of the Board of Directors.  The initial
Class  I  directors will serve until the annual meeting of stockholders in 2001,
the Class II directors until the annual meeting of stockholders in 2000, and the
Class  III  directors  until  the  annual  meeting  of  stockholders  in  1999.
Thereafter,  all  directors  shall serve for three year terms.  Until after June
30,  2000,  directors  may  be  removed  with  or  without  cause  only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only the affirmative vote of a majority of such shareholders is required.  Until
after  June  30, 2003, these provisions may be amended or repealed only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only  the  affirmative vote of a majority of such shareholders is required.  The
effect  of  these  provisions  is  that not more than one-third of the Company's
directors  will  be  elected at any single annual meeting and a supermajority of
votes  will  be  required  to remove incumbent directors.  As a result, a person
seeking  control  of  the  Company  might  not  necessarily be able to acquire a
controlling block of stock and effect an entire change in management at a single
annual  meeting.

Special  Meetings  of  Stockholders

     Our  Bylaws provide that a special meeting of stockholders may be called by
the Chairman of the Board of Directors, the President, the Board of Directors or
10%  of  the  stockholders of record of all shares entitled to vote. Our by-laws
provide  that  only  those matters included in the notice of the special meeting
may  be  considered  or  acted  upon  at  that  special meeting unless otherwise
provided  by  law.

Corporate  Action  Without  a  Stockholder  Meeting

     Our Articles of Incorporation provide that any action required or permitted
to be taken by our stockholders must be effected at a duly called Annual Meeting
or  at  a  Special  Meeting  of  stockholders of the Company, unless such action
requiring  or  permitting  stockholder approval is approved by three quarters of
the incumbent directors, in which case such action may be authorized or taken by
the  written consent of the holders of outstanding shares of voting stock having
not  less  than the minimum voting power that would be necessary to authorize or
take  such  action  at a meeting of stockholders at which all shares entitled to
vote  thereon  were present and voting.  Except as specifically set forth above,
no  action may be taken by stockholders by written consent.  Prior to or on June
30,  2003,  any  amendment  or  repeal  of  this  provision  shall  require  the
affirmative  vote  of  the  holders of at least 80% of the outstanding shares of
voting  capital  stock  then  entitled  to  vote  generally  in  the election of
directors, voting as a single class.  Thereafter, only the affirmative vote of a
majority  of  such  outstanding  shares  is  required.

                                       49
<PAGE>

Limitation  of  Liability  of  Directors;  Indemnification

     Utah  law  limits  a  director's liability for monetary damages, except for
breach  of  a  director's  duties  under certain circumstances.  Our Articles of
Incorporation  contain  provisions  limiting a director's liability for monetary
damages  to  the  fullest  extent  permitted  by  Utah  law.  Our  Articles  of
Incorporation  also  require  us  to  indemnify  our directors, and permit us to
indemnify  our officers, employees' fiduciaries and other agents, to the fullest
extent  permitted  under  Utah  law.

ADVANCE  NOTICE  OF  DIRECTOR  NOMINATIONS  AND  STOCKHOLDER  PROPOSALS

     Our  by-laws include advance notice and informational requirements and time
limitations  on any director nomination or any new proposal, which a stockholder
wishes  to  make  at  an  annual  meeting  of  stockholders.

AMENDMENT  OF  THE  ARTICLES  OF  INCORPORATION

     As  required  by  Utah  law, any amendment to our Articles of Incorporation
must  first  be  approved by a majority or such other percentage as specified in
our  Articles  of  Incorporation and Bylaws and described herein of our board of
directors  and,  if  required  by  law, thereafter approved by a majority of the
outstanding  shares entitled to vote with respect to such amendment, except that
any  amendment  to  the  provisions  relating  to  stockholder action by written
consent, directors, limitation of liability and the amendment of our Articles of
Incorporation  must  be  approved  by not less than the number shares that would
otherwise  be  required  to  authorize  or  effect  such  amendment.

AMENDMENT  OF  BY-LAWS

     Our  Articles  of Incorporation and by-laws provide that our by-laws may be
amended  or  repealed  by  our  board of directors or by the stockholders.  Such
action  by  the  board  of  directors  requires  the  affirmative vote of  three
quarters  of  the  directors  then  in office.  Until after June 30, 2003, these
provisions may be amended or repealed only upon the affirmative vote of at least
80%  of  the  outstanding  shares  entitled to vote generally in the election of
directors, voting as a single class.  Thereafter, only the affirmative vote of a
majority  of  such  shareholders  is  required.  The  amendment or repeal of our
bylaws  by the stockholders requires the affirmative vote of at least the number
of  shares  otherwise  required  to  authorize  or  effect  such  action.

NO  PREEMPTIVE  RIGHTS

     No  holder  of  any class of our stock has any preemptive right to purchase
any  of  our  securities.

TRANSFER  AGENT  AND  REGISTRAR

     The  transfer  agent  and  registrar  for our common stock is ComputerShare
Investor  Services.

                                       50
<PAGE>

                  SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

     We  are  registering  6,512,310 shares of common stock on behalf of certain
selling  stockholders.  These  shares  include:

-    5,374,810  shares  of common stock registered in the name of certain of the
     selling  stockholders;  and
-    1,137,500  shares underlying certain warrants issued in the name of certain
     of  the  selling  stockholders.

     All  shares  were  originally  issued  in  connection  with various private
placements  under exemption from the registration requirements of the Securities
Act,  settlement  agreements, debt conversion agreements, prior acquisitions and
consulting  agreements.  We  will  receive  no  proceeds  from  this  offering.

     The  selling  stockholders  named  in  the  table below or pledges, donees,
transferees or other successors-in-interest, who may sell shares received from a
named  selling  stockholder  as  a  gift,  partnership  distribution  or  other
non-sale-related  transfer  after the date of this prospectus, collectively, the
selling  stockholders,  may  sell  the  shares  from  time to time.  The selling
stockholders  will  act  independently of us in making decisions with respect to
the  timing, manner and size of each sale.  The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current price, or in negotiated
transactions.  The  selling stockholders may effect such transactions by selling
the  shares to or through broker-dealers.  The shares may be sold by one or more
of,  or  a  combination  of,  the  following:

-     a  block  trade in which the broker-dealer so engaged will attempt to sell
      the  shares  as  agent  by  may  position  and  resell a portion of the
      block as principal  to  facilitate  the  transaction,
-     purchases by a broker-dealer as principal and resale by such broker-dealer
      for  its  account  pursuant  to  this  prospectus,
-     an  exchange  distribution  in accordance with the rules of such exchange,
-     ordinary  brokerage  transactions  and  transactions  in  which the broker
      solicits  purchasers,  and
-     in  privately  negotiated  transactions.

     To the extent required, this prospectus may be amended or supplemented from
time  to  time to describe a specific plan of distribution.  In effecting sales,
broker-dealers  engaged  by  the  selling  stockholders  may  arrange  for other
broker-dealers  to  participate  in  the  resales.

     The  selling  stockholders  may  enter  into  hedging  transactions  with
broker-dealers  in connection with distributions of the shares or otherwise.  In
such transactions, broker-dealers may engage in short sales of the shares in the
course  of  hedging  the  positions  they assume with selling stockholders.  The
selling  stockholders  also  may  sell  shares short and redeliver the shares to
close  out such short positions.  The selling stockholders may enter into option
or  other  transactions  with  broker-dealers, which require the delivery to the
broker-dealer  of  the  shares.  The  broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.  The selling stockholders also
may  loan  or  pledge the shares to a broker-dealer.  The broker-dealer may sell
the  shares so loaned, or upon a default, the broker-dealer may sell the pledged
shares  pursuant  to  this  prospectus.

     Broker-dealers  or  agents  may  receive  compensation  in  the  form  of
commissions,  discounts  or  concessions  from  the  selling  stockholders.
Broker-dealers  or  agents  may also receive compensation from the purchasers of
the  shares  for which they act as agents or to whom they sell as principals, or
both.  Compensation  as  to  a  particular  broker-dealer  might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the  sale.  Broker-dealers  or agents and any other participating broker-dealers
or  the  selling  stockholders  may  be  deemed  to be "underwriters" within the
meaning  of  Section 2(11) of the Securities Act in connection with sales of the
shares.  Accordingly,  any  such  commission, discount or concession received by
them  and any profit on the resale of the shares purchased by them may be deemed
to  be  underwriting discounts or commissions under the Securities Act.  Because
selling  stockholders  may  be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the  prospectus  delivery  requirements of the Securities Act.  In addition, any
securities  covered  by this prospectus, which qualify for sale pursuant to Rule
144 promulgated under the Securities Act, may be sold under Rule 144 rather than
pursuant  to  this  prospectus.  There  is no underwriter or coordinating broker
acting  in  connection  with  the  sale  of  shares  by  selling  stockholders.

                                       51
<PAGE>

     The  shares  will  be  sold  only through registered or licensed brokers or
dealers  if  required  under  applicable state securities laws.  In addition, in
certain  states,  the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or  qualification  requirement  is  available  and  is  complied  with.

     Under  applicable  rules and regulations under the Exchange Act, any person
engaged  in  the  distribution  of  the  shares may not simultaneously engage in
market  making  activities  with respect to our common stock for a period of two
business days prior to the commencement of such distribution.  In addition, each
selling stockholder will be subject to applicable provisions of the Exchange Act
and  the  associated  rules  and  regulations  under the Exchange Act, including
Regulation  M,  which  provisions may limit the timing of purchases and sales of
shares  of our common stock by the selling stockholders.  We will make copies of
this  prospectus available to the selling stockholders and have informed them of
the  need for delivery of copies of this prospectus to purchasers at or prior to
the  time  of  any  sale  of  the  shares.

     We will file a supplement to this prospectus, if required, pursuant to Rule
424(b)  under  the  Securities Act, upon being notified by a selling stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such supplement will
disclose:

-     the  name  of  each  such  selling  stockholder  and  of the participating
      broker-dealer(s),
-     the  number  of  shares  involved,
-     the  price  at  which  such  shares  were  sold,
-     the  commissions  paid  or  discounts  or  concessions  allowed  to  such
      broker-dealer(s),  where  applicable,
-     that such broker-dealer(s) did not conduct any investigation to verify the
      information  set  out  or  incorporated  by  reference  in  this
      prospectus, and
-     other  facts  material  to  the  transaction.

     We  will  bear  all  costs,  expenses  and  fees  in  connection  with  the
registration  of the shares.  The selling stockholders will bear all commissions
and  discounts,  if  any,  attributable to the sales of the shares.  The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in  transactions  involving  sales  of  the  shares against certain liabilities,
including  liabilities  arising  under  the  Securities  Act.  The  selling
stockholders  have agreed to indemnify certain persons, including broker-dealers
and  agents,  against  certain  liabilities  in connection with the offer of the
shares,  including liabilities arising under the Securities Act, including those
underlying  warrants  of  certain  selling  stockholder.

                                       52
<PAGE>

     The following table sets forth certain information related to the number of
shares  of  common stock, including those underlying warrants of certain selling
stockholders, which may be offered by the selling stockholders, pursuant to this
prospectus:
<TABLE>
<CAPTION>

Name of Selling Stockholder                  Number of Shares  Shares Underlying Warrants/Options  Total Shares
<S>                                          <C>               <C>                                 <C>
American Equities                                     821,575               405,000                 1,226,575
Corporate Financial Enterprises                       567,717               370,000                   937,717
Global Capital Partners                               218,447                75,000                   293,447
Integrated Communications                             453,699                     0                   453,699
Aramis Investments                                     30,000                     0                    30,000
Monfort Investissments Limited                        560,000                     0                   560,000
Nicholas Glancy                                        20,000                     0                    20,000
Kentuckian Farms                                       44,000                     0                    44,000
Bill McClanahan                                        10,000                     0                    10,000
Rick Avare                                             15,000                     0                    15,000
Robert Brady                                           15,000                     0                    15,000
Olin Bryant Jr.                                        33,000                     0                    33,000
Olin Bryant Sr.                                        20,000                     0                    20,000
Tom Crouch                                             30,000                     0                    30,000
Ralph Currie                                            7,000                     0                     7,000
Andrew Hils                                            10,000                     0                    10,000
Kenneth Jackson                                        33,000                     0                    33,000
MAP II LLC                                             13,000                     0                    13,000
Rick Pitino                                            15,000                     0                    15,000
John Sawyer                                            20,000                     0                    20,000
Robert Sortin                                           3,000                     0                     3,000
Charles Receski                                        10,000                     0                    10,000
Edward Receski                                          2,000                     0                     2,000
Anthony Altavilla                                      50,000                     0                    50,000
John Liviakis                                         315,000                     0                   315,000
Luciano Volpacchio                                     35,000                     0                    35,000
Healthshop                                            838,951                     0                   838,951
VantagePoint Communication Partners, LP                38,240                                          38,240
VantagePoint Venture Partners III (Q), L.P.            68,520                     0                    68,520
VantagePoint Venture Partners III, L.P.                 8,280                     0                     8,280
Delphi Ventures IV, L.P.                               50,120                     0                    50,120
Delphi BioInvests IV, L.P.                              1,040                     0                     1,040
Stipa Investments, L.P.                                64,920                     0                    64,920
Warner Lambert                                        127,880                     0                   127,880
Tom Bevilacqua                                            360                     0                       360
John Lewis                                                640                     0                       640
Glenn Zweig                                            20,000                     0                    20,000
Mary Titus                                             12,000                     0                    12,000
Brent Whitney                                           8,000                     0                     8,000
Chip Engelman                                         190,000                     0                   190,000
Joe Thiesman                                           15,000                     0                    15,000
Tom Aarts                                              15,000                     0                    15,000
Andrew Vollero, Jr.                                    25,000                     0                    25,000
Michael Driver                                         10,000                62,500                    72,500
Steep Gradient LTD.                                   266,072                     0                   266,072
Jeffrey Segal                                          88,690                     0                    88,690
Gordon Barker                                           8,874                     0                     8,874
Bud Clark                                                   0                46,710                    46,710
Steve Caruso                                                0                45,203                    45,203
Jonathon Siegel                                             0                79,380                    79,380
William Grundig                                             0                 4,500                     4,500
Stephen Schoffman                                           0                44,707                    44,707
Jason Bishara                                               0                 4,500                     4,500
Huff Family Trust                                       9,604                     0                     9,604
Ysabel Rennie                                          28,811                     0                    28,811
Mark Rennie                                             9,604                     0                     9,604
Gus/Kari Boosalis                                      38,130                     0                    38,130
Muehielsen Family Trust                                 1,921                     0                     1,921
Cook Family Trust                                       1,921                     0                     1,921
Robert Williscroft/Viviana Amzel                        2,712                     0                     2,712
Robert Williscroft IRA Account                          8,644                     0                     8,644
Peggy Bartlett                                          1,441                     0                     1,441
Shirley Broussard                                         481                     0                       481
Esther Stackell                                         3,842                     0                     3,842
Nancy Glenn                                             1,537                     0                     1,537
Joseph Whitney                                          1,153                     0                     1,153
Bernard Kegan                                             769                     0                       769
Chasha Kezecki                                          1,153                     0                     1,153
Michael Duffy                                             308                     0                       308
Donald Wilson                                             961                     0                       961
Steven Nesfund                                            385                     0                       385
Brenda Smith                                            9,220                     0                     9,220
Capital Resources Management                            1,537                     0                     1,537
Robert Huff                                            40,355                     0                    40,355
Denise Broussard                                          865                     0                       865
Sara Parker                                               431                     0                       431

Total                                               5,374,810             1,137,500                 6,512,310
</TABLE>

                                       53
<PAGE>


                         SHARES ELIGIBLE FOR FUTURE SALE

     As  of June 25, 2001, we had outstanding 36,067,061 shares of common stock,
in  each  case excluding shares underlying outstanding warrants and options.  Of
these  shares,  approximately  8,915,000 shares sold are freely tradable without
restriction  or  further  registration  under the Securities Act.  The remaining
outstanding  shares  include approximately 4,210,000 shares of common stock that
are  "restricted securities" as defined in Rule 144 and may not be resold in the
absence  of  registration  under  the Securities Act or pursuant to an exemption
from  such  registration,  including  exemptions  provided  by  Rule  144.

     In  addition,  certain  executive  officers,  directors,  shareholders  and
affiliates,  who  own  approximately  20,074,000  shares  of  our  common stock,
including  options  and warrants on 3,201,000 shares, outstanding as of the date
of  this report, have signed lock-up agreements in which they have agreed not to
offer,  sell,  contract  to sell or otherwise dispose of any common stock or any
securities convertible into or exchangeable for common stock until September 26,
2001,  without  the  prior  written  consent  of  Astor Capital, Inc.  While the
investors  have indicated no present intention to waive these restrictions, were
they to do so, up to approximately an additional 23,275,000 shares of our common
stock  could be available for registration and subsequent sale, which could harm
our stock price or make it more difficult to sell our shares.  To continue their
effectiveness, each of these lock-up agreements required that the parties either
deposit  their  respective  shares  with  an escrow agent or enter a restrictive
legend  on the share certificates evidencing their inability to sell or transfer
the shares pursuant to the restrictions contained in the lock-up agreements.  On
January  15,  2001,  we were advised by one of the parties that this requirement
had  not been met and that they considered the agreements void. After review, we
concluded  on  January  17,  2001  that  such  requirements  had  not  been met.

RULE  144

     Holders  of restricted securities must comply with the requirements of Rule
144  in  order  to sell their shares in the open market.  In general, under Rule
144,  beginning  90  days  after  the  date  of  this  report,  a person who has
beneficially  owned  restricted  shares for at least one year, including persons
who  are  affiliates,  would be entitled to sell within any three-month period a
number  of  shares  that  does  not  exceed  the  greater  of:
-     1%  of  the  then  outstanding  shares  of our common stock, approximately
      345,000  shares;  or
-     the  reported average weekly trading volume of our common stock during the
      four  calendar  weeks  preceding  a  sale  by  such  person.
-     Sales under Rule 144 are also subject to manner-of-sale provisions, notice
      requirements  and  the  availability  of  current  public  information.

     Under  Rule  144(k), a person who has not been one of our affiliates during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is free to sell such shares without regard to
the  volume,  manner-of-sale or certain other limitations contained in Rule 144.

     We can make no prediction as to the effect, if any, that sales of shares of
common  stock  or  the  availability  of shares for sale will have on the market
price  of  our  common stock.  Nevertheless, sales of significant amounts of our
common  stock  could  adversely affect the prevailing market price of the common
stock,  as  well  as impair our ability to raise capital through the issuance of
additional  equity  securities.

                                       54
<PAGE>

                            EXPERTS AND LEGAL MATTERS

     The  financial  statements,  as  previously  restated,  appearing  in  this
prospectus  and registration statement, beginning of page F-1, have been audited
by  Singer  Lewak  Greenbaum  &  Goldstein  LLP, independent accountants, to the
extent  and  for  the periods indicated in their report appearing on page F-2 of
the  prospectus (which includes an explanatory paragraph relating to our ability
to  continue  as a going concern), and are included in reliance upon such report
and  upon  the  authority  of  such  firm as experts in accounting and auditing.

     Luce,  Forward,  Hamilton  & Scripps LLP, Los Angeles, California will pass
upon  the  validity  of  the  shares  of  common  stock  offered  hereby for us.

                       WHERE YOU CAN FIND MORE INFORMATION

     We  have  filed  with  the  Securities  and  Exchange Commission, or SEC, a
registration  statement  on  Form  S-  I  (including  the exhibits and schedules
thereto) under the Securities Act and the rules and regulations there under, for
the registration of the common stock offered hereby.  This prospectus is part of
the  registration  statement.  This  prospectus  does  not  contain  all  the
information  included  in  the  registration  statement  because we have omitted
certain  parts  of  the registration statement as permitted by the SEC rules and
regulations.  For  further information about us and our common stock, you should
refer to the registration statement.  Statements contained in this prospectus as
to  any  contract,  agreement  or other document referred to are not necessarily
complete.  Where  the  contract  or  other  document  is  an  exhibit  to  the
registration  statement,  each  statement is qualified by the provisions of that
exhibit.

     You can inspect and copy the registration statement at the public reference
facility maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington,
D.C.  20549, and at the SEC's regional offices at Seven World Trade Center, 13th
Floor,  New  York,  New  York  10048  and  500  West Madison Street, Suite 1400,
Chicago,  Illinois  60661.  You  may  call the SEC at 1-800-732-0330 for further
information about the operation of the public reference rooms.  Copies of all or
any  portion  of  the  registration  statement  can  be obtained from the Public
Reference  Section  of the SEC, 450 Fifth Street, N. W., Washington, D.C. 20549,
at  prescribed  rates.  In  addition,  the  registration  statement  is publicly
available  through  the  SEC's site on the Internet's World Wide Web, located at
http://www.sec.gov.

     We  will  also file annual, quarterly and current reports, proxy statements
and  other  information  with  the  SEC.  You  can  also request copies of these
documents,  for  a  copying fee, by writing to the SEC.  We intend to furnish to
our stockholders annual reports containing audited financial statements for each
fiscal  year.

                                       55
<PAGE>

                        CONSOLIDATED FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

<S>                                                                        <C>
Report of Independent Certified Public Accountants                         F-2
Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998
and March 31, 2001 (unaudited)                                             F-3
Consolidated Statements of Operations for each of the three years in the
period ended December 31, 2000 and for the three months ended March
31, 2001 and 2000 (unaudited)                                              F-5
Consolidated Statements of Cash Flows for each of the three years in the
period ended December  31, 2000 and for the three months ended March
31, 2001 and 2000 (unaudited)                                              F-7
Consolidated Statements of Shareholders' Investment for each of the
three years in the period ended December 31, 2000 and for the three
months ended March 31, 2001 and 2000 (unaudited)                          F-10
Notes to Consolidated Financial Statements for the years ended
December 31, 1998, 1999 and 2000 and March 31, 2000 and 2001
(unaudited)                                                               F-12
</TABLE>

                                      F-1
<PAGE>

REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

To  the  Board  of  Directors
Omni  Nutraceuticals,  Inc.  and  subsidiary

     We  have  audited  the  accompanying  consolidated  balance  sheets of Omni
Nutraceuticals,  Inc.  as  of December 31, 2000 and 1999 as previously restated,
and the related consolidated statements of operations, shareholders' investment,
and  cash  flows  for  each  of the three years in the period ended December 31,
2000.  These  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audits.

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

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the  financial  position of Omni
Nutraceuticals,  Inc.  and  subsidiary  as  of  December  31,  2000  and 1999 as
previously  restated, and the consolidated results of their operations and their
cash  flows for each of the three years in the period ended December 31, 2000 in
conformity  with  generally  accepted  accounting  principles.

     The  accompanying  consolidated  financial  statements  have  been prepared
assuming  that  the  Company  will continue as a going concern.  As discussed in
Note  1  to  the  consolidated financial statements, the Company incurred a loss
from current operations of $13,472,000 for the year ended December 31, 2000, has
a  retained  deficit of $41,358,000 as of December 31, 2000, and it had negative
cash  flows  from operations of $4,129,000 for the year ended December 31, 2000.
Additionally, the Company has current debt service requirements in excess of its
historical  ability  to generate cash flows from operations.  The Company is the
subject  of  a  significant  number  of  lawsuits,  claims  and  an  informal
investigation  by  the  Securities  and  Exchange Commission .  In addition, the
Company  has  been  de-listed  from  the  NASDAQ  national  market system. These
factors,  among  others,  as  discussed  in Note 1 to the consolidated financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in  Note 1. The consolidated financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.

SINGER  LEWAK  GREENBAUM  &  GOLDSTEIN  LLP

Los  Angeles,  California
March  28,  2001,  except  the  tenth  paragraph  of
Note  11  as  to  which  the  date  is  July  25,  2001.

                                      F-2
<PAGE>

<TABLE>

<CAPTION>

OMNI  NUTRACEUTICALS  INC.
CONSOLIDATED  BALANCE  SHEETS
AS  OF  DECEMBER  31,  1998,  1999  AND  2000  AND  MARCH  31,  2001  UNAUDITED


                                                                     DECEMBER 31                      MARCH 31,
                                                      -----------------------------------------
                                                          2000           1999           1998          2001
                                                                   (as previously
                                                                      restated)                     (unaudited)
                                                      ------------  -------------   ------------  -------------
<S>                                                   <C>            <C>            <C>           <C>
ASSETS
CURRENT ASSETS
Cash                                                  $    199,000   $         --   $   426,000   $    229,000
Accounts receivable, net of reserves and
allowances of  $3,000,000, $3,829,000,
3,460,000 and $1,131,000, respectively                   2,566,000   $  2,685,000     6,023,000      2,112,000
Inventories, net of reserves of $796,000,
796,000, $540,000 and $451,000, respectively             2,871,000      7,869,000     2,855,000      2,643,000
Prepaid expenses and other                                 519,000        539,000       290,000        618,000
Current portion of note receivable and receivables
 from officers and shareholders                                 --         11,000       596,000             --
                                                                --             --            --             --
     Total Current Assets                                6,155,000     11,104,000    10,190,000      5,602,000
                                                      -------------  -------------  ------------  -------------

Property and equipment, net                              1,253,000      1,516,000       627,000      1,193,000
Trademarks, net of accumulated amortization of
1,853,000, $1,627,000, $726,000 and $13,000,
respectively                                            11,897,000     12,798,000        99,000     11,672,000
Goodwill and intangibles, net of accumulated
amortization of $484,000 and $307,000,
respectively                                                    --      2,422,000       420,000             --

Other assets, net of accumulated amortization of
831,000, $748,000, $110,000 and $-0-, respectively         872,000      1,693,000       230,000        857,000
Investment in Vitacost.com, Inc.                                --             --            --      7,000,000
Assets held for sale                                     7,128,000             --     1,521,000             --

Total Assets                                          $ 27,305,000   $ 29,533,000   $13,087,000   $ 26,324,000

LIABILITIES AND SHAREHOLDERS'
INVESTMENT
CURRENT LIABILITIES
Cash overdraft                                        $         --   $    165,000   $        --   $         --
Line of credit                                           5,511,000      6,436,000     1,000,000      6,285,000
Current portion of term loan                             2,917,000      2,332,000            --      3,500,000
Current portion of notes payable                            23,000        176,000       328,000         22,000
Accounts payable                                         6,003,000      7,176,000     2,637,000      5,453,000
Accrued liabilities                                      2,392,000      2,875,000       942,000      2,441,000
Income taxes payable                                            --         52,000       438,000
Customer deposits                                          450,000        450,000       450,000        450,000

Total current liabilities                               17,296,000     19,662,000     5,795,000     18,151,000
                                                      -------------  -------------  ------------  -------------

                                      F-3
<PAGE>

Term loan, net of current portion                        7,361,000     10,085,000            --      6,778,000
Notes payable, net of current portion                       79,000        102,000     1,423,000         74,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' INVESTMENT
Shares issuable under legal settlement                          --      1,200,000            --             --
Preferred stock; $1 par value; 5,000,000 shares
authorized; issued and outstanding, 3,000 at 2000,
 none at 1999                                                3,000             --            --          3,000
Common Stock; $.01 par value; 50,000,000
shares authorized; issued - 34,110,269 1t 2001,
34,110,269 at 2000 and 27,352,009 at 1999;
Outstanding - 34,019,379 19 2001, 34,019,379 at
2000 and 27,261,119 at 1999                                341,000        274,000       279,000        346,000
Additional paid-in capital                              43,633,000     18,008,000    14,333,000     43,936,000
Treasury stock, 90,890 shares at cost                      (50,000)       (50,000)      (50,000)       (50,000)
Retained deficit                                       (41,358,000)   (19,748,000)   (8,693,000)   (42,914,000)

TOTAL SHAREHOLDERS' INVESTMENT                           2,569,000       (316,000)    5,869,000      1,321,000

TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT                              $ 27,305,000   $ 29,533,000   $13,087,000   $ 26,324,000

The accompanying notes are an integral part of these financial statements
</TABLE>

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
OMNI  NUTRACEUTICALS  INC
CONSOLIDATED  STATEMENTS OF  OPERATIONS
For  The  Years  Ended  December
31,  1998,  1999  and  2000  and  The
Three  Months  Ended  March  31,
        2001 and 2001 (Unaudited)           Twelve months ended December 31,       Three months ended March 31,

                                            2000           1999           1998          2001          2000
                                        -------------  -------------  ------------  ------------  ------------
(as previously restated)                 (unaudited)    (unaudited)
<S>                                     <C>            <C>            <C>           <C>           <C>
Net Sales                               $ 29,609,000   $ 30,922,000   $30,547,000   $ 5,751,000   $ 8,039,000

Cost of Sales                             19,386,000     15,988,000    12,540,000     3,308,000     4,824,000
                                        ----------------------------------------------------------------------


Gross profit                              10,223,000     14,934,000    18,007,000     2,443,000     3,215,000

Costs and Expenses:
  Selling, general and administrative     23,695,000     23,211,000    16,180,000     3,310,000     9,305,000
  Loss on write-off of intangibles                          390,000
  Legal settlement                                        1,200,000
                                        ----------------------------------------------------------------------
Total costs and expenses                  23,695,000     24,801,000    16,180,000     3,310,000     9,305,000
                                        -------------  -------------  ------------  ------------  ------------


Income (loss) from operations            (13,472,000)    (9,867,000)    1,827,000      (867,000)   (6,090,000)

Other Income (Expense):
  Interest income                             23,000         32,000        10,000                       8,000

  Interest expense                        (1,887,000)    (1,339,000)     (163,000)     (440,000)     (465,000)
  Other                                      478,000       (56,000)                      1,000
                                        ----------------------------------------------------------------------

                                          (1,864,000)      (829,000)     (209,000)     (440,000)     (456,000)
                                        ----------------------------------------------------------------------
Income (loss) before provision
(benefit) for income taxes and loss
from discontinued operations             (15,336,000)   (10,696,000)    1,618,000    (1,307,000)   (6,546,000)

Provision (benefit) for income taxes           1,000       (274,000)      600,000         3,000
                                        ----------------------------------------------------------------------

Income (loss) before loss from
discontinued operations                  (15,337,000)   (10,422,000)    1,018,000    (1,310,000)   (6,546,000)
                                        -------------  -------------  ------------  ------------  ------------
Discontinued operations:
  Loss on operations of discontinued
 e-commerce division, net of taxes of
                                        $ (1,155,000)     (633,000)                    (246,000)     (230,000)
                                        -------------  -------------  ------------  ------------  ------------

Net income (loss)                        (16,492,000)   (11,055,000)    1,018,000    (1,556,000)   (6,776,000)
Preferred Stock Dividends                 (5,118,000)                                               1,950,000
                                        -------------  -------------  ------------  ------------  ------------

Net Income (Loss) Available to
Common Shareholders                     $(21,610,000)  $(11,055,000)  $ 1,018,000   $(1,556,000)  $(8,726,000)
                                        ======================================================================

                                      F-5
<PAGE>

Earnings (loss) per common share
  Basic - historical                    $      (0.71)  $      (0.39)  $      0.04   $     (0.04)  $     (0.30)
  Diluted - historical                  $      (0.71)  $      (0.39)  $      0.04   $     (0.04)  $     (0.30)

  Discontinued operations - Basic       $      (0.04)  $      (0.02)  $             $     (0.01)  $     (0.01)
  Discontinued operations - Diluted     $      (0.04)  $      (0.02)  $             $     (0.01)  $     (0.01)
Weighted Average Shares
Outstanding

  Basic - historical                      30,640,000     28,177,000    27,747,000    34,256,879    34,256,879

  Diluted - historical                    30,640,000     28,177,000    28,221,000    34,256,879    34,256,879

</TABLE>
The  accompanying  notes  are  an  integral  part  of these financial statements

                                      F-6
<PAGE>

OMNI  NUTRACEUTICALS,  INC.
CONSOLIDATED  STATEMENTS
OF  CASH  FLOWS
<TABLE>
<CAPTION>

For  the  years  ended  December  31,
1998,  1999  and  2000  and  the
three months ended March 31,                                     Twelve months ended                    Three months ended
2001 and 2000 (unaudited)                                             December 31,                         March 31,

                                                           2000           1999           1998          2001          2000
                                                       -------------  -------------  ------------  ------------  ------------
                                                                     (as previously
                                                                        restated)                   (unaudited)    (unaudited)
<S>                                                    <C>            <C>            <C>           <C>           <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) available to common
Shareholders                                           $(21,610,000)  $(11,055,000)  $ 1,018,000   $(1,556,000)  $(8,726,000)
Adjustments to reconcile net income (loss)
available to common shareholders to net
cash provided by (used in) operating
activities:
  Depreciation and amortization                           3,149,000      1,892,000       550,000       556,000       655,000
  Provision for reserves and
  Allowances                                                369,000      3,450,000     2,116,000      (829,000)
  (Gain) loss on disposal of building,
  property and equipment                                                  (478,000)       10,000
  Loss on write-off of intangibles                                         390,000
  Legal settlement in exchange for
  common stock                                                           1,200,000
  Issuance of warrants and options
  as compensation for services                            1,104,000        832,000       394,000                      97,000
  Common stock for services                               3,275,000        175,000                     136,000     1,770,000
  Common Stock issued for payables                        1,431,000
  Write-off of notes receivable                                            389,000
  Imputed Preferred Dividends                             5,118,000                                                1,950,000
  (Increase) decrease in:
    Accounts receivable                                    (250,000)      (112,000)   (3,239,000)    1,283,000    (1,357,000)
    Inventory                                             4,998,000     (5,014,000)     (693,000)      228,000       450,000
    Prepaid and other                                       160,000       (405,000)      119,000       (53,000)      124,000
   Increase (decrease) in:
    Cash overdraft                                         (165,000)       165,000                                  (165,000)
    Accounts payable                                     (1,173,000)     4,539,000       583,000      (550,000)    1,834,000
    Accrued liabilities                                    (483,000)     1,933,000      (375,000)       49,000     1,185,000
    Income taxes payable                                    (52,000)      (386,000)      377,000                     (52,000)
    Deferred income taxes                                                                184,000
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) operating
Activities                                               (4,129,000)    (2,485,000)    1,044,000      (736,000)   (2,235,000)
                                                       ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
 Purchases of property and
 Equipment                                                 (224,000)    (1,396,000)     (350,000)       (2,000)      (35,000)
 Net proceeds from disposition of
 building, property and equipment                                          494,000
 Net cash paid for purchase of
 Inholtra and HVE                                                      (13,493,000)
 Collections on note receivable                             450,000         68,000        14,000                       3,000
 Other assets                                                             (265,000)                                   22,000
 Receivables from officers and
 Shareholders                                                              322,000      (672,000)
 Investment in e-commerce
 Businesses                                                (718,000)
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) investing
Activities                                                 (492,000)   (14,270,000)   (1,008,000)       (2,000)      (10,000)

                                      F-7
<PAGE>

CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from exercise of options and
wrrants                                                    340,000         85,000       173,000                     100,000
Proceeds from issuance of common stock in
a private placement                                       2,100,000                                                2,376,000
Net proceeds from issuance of Preferred
Stock                                                     5,620,000                                                2,900,000
Net borrowings (repayments) under the line of credit.      (925,000)     5,436,000       259,000       774,000    (1,036,000)
Borrowings under term loan                                              13,000,000
Payments under term loan                                 (2,139,000)      (583,000)                     (6,000)     (665,000)
Borrowings under notes payable                                          10,000,000       592,000
Repayments of notes payable                                (176,000)   (10,870,000)     (168,000)
Capital contribution from shareholder                                      305,000
Costs incurred with debt financing                                      (1,044,000)                                 (100,000)
Distributions to shareholders                                                         (1,103,000)
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) financing
Activities                                                4,820,000     16,329,000      (247,000)      768,000     3,575,000
                                                       ----------------------------------------------------------------------
Net (decrease) in cash                                      199,000       (426,000)     (211,000)       30,000     1,330,000

Cash at beginning of year                                         -        426,000       637,000       199,000             -

Cash at end of year                                    $    199,000   $          -   $   426,000   $   229,000   $ 1,330,000

SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION
Cash paid during the year for:                                 2000           1999          1998          2001          2000
                                                       -------------  -------------  ------------  ------------  ------------
  Interest                                             $  2,189,000   $  1,326,000   $   148,000   $   446,000
  Income taxes                                         $          -   $     40,000   $    24,000   $         -
                                                       =============  =============  ============  ============
</TABLE>

The  accompanying  notes  are  an  integral  part of these financial statements.

                                      F-8
<PAGE>


SUPPLEMENTAL  DISCLOSURES  OF  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES

     During  the  year  ended  December 31, 2000, several of the Company's trade
creditors  agreed  to convert $1,431,000 of debt in exchange for common stock of
the  Company.

     During  the  year  ended December 31, 2000, the Company issued common stock
and  other  equity  instruments  valued  at $5,448,000 to acquire three separate
businesses.

     During  the  year ended December 31, 2000, the Company issued warrants with
an  aggregate  value  of  $1,104,000  to  vendors  for  services  rendered.

     During  the year ended December 31, 2000 the Company issued common stock to
directors  for  compensation.  The  value  of  the  shares  was  $72,000.

     During the year ended December 31, 2000, the Company issued common stock to
vendors,  consultants  and  employees valued at $1,563,000 for services rendered
during  the  year.

On  March  12,  2000 the Company forgave a note due from a former officer in the
amount  of  $175,000.

     During  the  year  ended December 31, 1999,  in connection with the sale of
the  Company's  facility  in  Boulder,  Colorado,  (i)  a  note  receivable  of
$450,000  was  received  from  the  buyer,  and  (ii)  $1,300,000  of  debt  was
assumed  by  the  buyer.

     During  the  year  ended  December  31,  1999,  in  connection  with  the
acquisition  of  Health  and  Vitamin  Express  Inc.,  the  Company  (i)  issued
363,636  shares  of  the  Company's  common stock valued at $2,273,000, and (ii)
assumed  $571,000  of  debt.

     During  the  year ended December 31,1999, the Company acquired property and
equipment  totaling  $126,000  under  capital  lease  obligations.

     The  accompanying  notes are an integral part of these financial statements

                                      F-9
<PAGE>

<TABLE>
<CAPTION>

Omni  Nutraceuticals,  Inc.
Consolidated  Statements  of  Shareholder's  Investment - PART I
For  Each  of  the  Three  Years  in  the  Period  Ended  December  31,  2000
and  the  Three  Months  Ended  March  31,  2001  (unaudited)

                                                       PREFERRED STOCK             COMMON STOCK
                                                   --------------------------     ------------------
                                     SHARES                                                             ADDITIONAL
                                 ISSUABLE UNDER                                                           PAID IN
                                LEGAL SETTLEMENT      SHARES         AMOUNT       SHARES      AMOUNT      CAPITAL
                               ------------------------------------------------------------------------------------
<S>                            <C>                 <C>            <C>           <C>          <C>        <C>
BALANCE, JANUARY 1,
1998                                          --             --            --   27,818,798   $278,000   $11,656,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       38,341      1,000       172,000
Compensation expense
incurred in connection with
issuance of options                           --             --            --           --         --         6,000
Compensation expense in
connection with issuance
of warrants for services                      --             --            --           --         --       388,000
Distributions
Effect of Irwin Naturals
termination of its "S"
Corporation election                          --             --            --           --         --     2,111,000
Net Income                                    --             --            --           --         --            --
BALANCE, DECEMBER 31,
 1998                                         --             --            --   27,857,139    279,000    14,333,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
Issuance of common stock
in connection with HVE
acquisition                                   --             --            --      363,636      4,000     2,269,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       19,670       ----        85,000
Issuance of common stock
for services                                  --             --            --       53,000      1,000       174,000
Compensation expense in
connection with issuance
warrants and options for
services                                      --             --            --           --         --       832,000
363,636 shares issuable
under legal settlement         $       1,200,000             --            --           --         --            --
Capital contribution and
return of shares                              --             --            --     (941,436)   (10,000)      315,000
Net loss
BALANCE, DECEMBER 31,
1999, AS PREVIOUSLY
RESTATED                               1,200,000              -             -   27,352,009    274,000    18,008,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
Preferred stock issuance,
net of expenses of
101,000 and warrants of
100,000                                      --      2,000,000     2,799,000           --         --       100,000
Shares issued to officer
and directors                                 --             --            --       55,000         --        72,000
Issuance of warrants for
services                                      --             --            --           --         --     1,104,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       98,830      1,000       339,000
Shares issued for services                    --             --            --      925,500      9,000     1,534,000
Shares issued in private
placement                                     --             --            --    1,500,000     15,000     2,085,000
Value of shares
transferred in connection
with termination
settlement                                    --             --            --           --         --     1,720,000
Shares of common stock
issued on conversion of
preferred stock                               --     (2,000,000)   (2,799,000)   2,016,438     20,000     4,729,000
Shares issued in
connection with legal
settlement                            (1,200,000)            --            --      363,636      4,000     1,196,000
Shares issued in
connection with
conversion of accounts
payable                                       --             --            --      599,905      6,000     1,425,000
Series A Preferred Stock
issued, net of costs of
280,000                                      --          3,000          3,000           --         --     2,717,000
Preferential dividend on
preferred stock                               --             --            --           --         --     3,168,000
Shares issued in
Acquisitions                                  --             --            --    1,198,951     12,000     5,436,000
Net loss

BALANCE, December
31, 2000                                      --          3,000         3,000   34,110,269    341,000    43,633,000
Shares issued in
connection with the
purchase of HealthShop                        --             --            --      400,000      4,000       115,000
Shares issued in
connection with an
amendment to preferred
stock issued in the first
quarter of 2000                               --             --            --       75,000      1,000       135,000
Adjustment to prepaid
promotion fees  paid with
stock options in a prior
period                                        --             --            --           --         --        53,000
Net Loss
BALANCE - MARCH 31,
2001 (UNAUDITED)               $               -          3,000   $     3,000   34,585,269   $346,000   $43,936,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
</TABLE>

                                      F-10
<PAGE>

<TABLE>
<CAPTION>

Omni  Nutraceuticals,  Inc.
Consolidated  Statements  of  Shareholder's  Investment  -  PART  II
For  Each  of  the  Three  Years  in  the  Period  Ended  December  31,  2000
and  the  Three  Months  Ended  March  31,  2001  (unaudited)


                                       TREASURY STOCK
                                       ---------------
                                                             RETAINED
                                   SHARES        AMOUNT       DEFICIT         TOTAL
<S>                            <C>              <C>        <C>            <C>            <C>
Issuance of common stock
in connection with
exercise of stock options                   --        --             --             --
Compensation expense
incurred in connection with
issuance of options                         --        --             --             --
Compensation expense in
connection with issuance
of warrants for services                90,890  $(50,000)  $ (6,497,000)  $  5,387,000
Distributions                               --        --             --        173,000
Effect of Irwin Naturals
termination of its "S"
Corporation election                        --        --             --          6,000
Net Income                                  --        --             --        388,000
BALANCE, DECEMBER 31,
1998                                        --        --     (1,103,000)    (1,103,000)
Issuance of common stock
in connection with HVE
acquisition                                 --        --     (2,111,000)            --
Issuance of common stock
in connection with
exercise of stock options                   --        --      1,018,000      1,018,000
Issuance of common stock
for services                            90,890   (50,000)    (8,693,000)     5,869,000
Compensation expense in
connection with issuance
warrants and options for
services                                    --        --             --      2,273,000
363,636 shares issuable
under legal settlement                      --        --             --         85,000
Capital contribution and
return of shares                            --        --             --        175,000
Net loss                                    --        --             --        832,000
BALANCE, DECEMBER 31,
1999, AS PREVIOUSLY
RESTATED                                    --        --             --      1,200,000
Preferred stock issuance,
net of expenses of
101,000 and warrants of
$100,000                                    --        --             --        305,000
Shares issued to officer
and directors                               --        --    (11,055,000)   (11,055,000)
Issuance of warrants for
services                                90,890   (50,000)   (19,748,000)      (316,000)
Issuance of common stock
in connection with
exercise of stock options                   --        --             --      2,899,000
Shares issued for services                  --        --             --         72,000
Shares issued in private
placement                                   --        --             --      1,104,000
Value of shares
transferred in connection
with termination
settlement                                  --        --             --        340,000
Shares of common stock
issued on conversion of
preferred stock                             --        --             --      1,543,000
Shares issued in
connection with legal
settlement                                  --        --             --      2,100,000
Shares issued in
connection with
conversion of accounts
payable                                     --        --             --      1,720,000
Series A Preferred Stock
issued, net of costs of
$280,000                                    --        --     (1,950,000)            --
Preferential dividend on
preferred stock                             --        --             --             --
Shares issued in
Acquisitions                                --        --             --      1,431,000
Net loss                                    --        --             --      2,720,000
                                            --        --     (3,168,000)            --
BALANCE, December
31, 2000                                   --         --             --      5,448,000
Shares issued in
connection with the
purchase of HealthShop                      --        --    (16,492,000)   (16,492,000)
Shares issued in
connection with an
amendment to preferred
stock issued in the first
quarter of 2000                             --        --             --             --
Adjustment to prepaid
promotion fees  paid with
stock options in a prior
period                                  90,890   (50,000)   (41,358,000)     2,569,000
Net Loss                                    --        --             --        119,000
BALANCE - MARCH 31,
2001 (UNAUDITED)                           --        --             --        136,000
                                            --        --             --         53,000
                                            --        --     (1,556,000)    (1,556,000)
                                        90,890  $(50,000)  $(42,914,000)  $  1,321,000

</TABLE>
The  accompanying  notes  are  an  integral  part  of these financial statements

                                      F-11
<PAGE>

                            OMNI NUTRACEUTICALS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                     AND MARCH 31, 2000 AND 2001 (UNAUDITED)


1.     BUSINESSES

BUSINESS  AND  ORGANIZATION

     Omni  Nutraceuticals, Inc.  (the "Company" or "Omni")  is  a formulator and
supplier  of branded natural health, herbal and nutritional supplement products.
The  Company's  products are sold through mass retail, specialty natural health,
nutrition  and  food  distributors  and retail  stores  and  via  the  Internet.

     Omni  is  a  Utah  corporation,  and  was  formerly  known  as  Irwin
Naturals/4Health  Inc,  which  was  formerly known as 4Health, Inc.  Omni is the
surviving  corporation  of  a  merger  (the  "Merger")  of 4Health, Inc., a Utah
corporation  ("4Health"),  with  Irwin  Naturals,  Inc.,  a  California
corporation  ("IN"), consummated  June  30,  1998. Pursuant to the Merger, which
was  accounted  for  as  a  pooling  of  interests,  4Health  issued  15,750,000
shares  of common stock in exchange  for  all  the  outstanding  shares of Irwin
Naturals.  The  accompanying  financial  statements  for  1998  have  been
restated  to  include  the financial position and results of operations for both
companies  as  if  the  Merger was  consummated  at the beginning of all periods
presented.  In  August  1999,  the  Company  changed  its  name  to  Omni
Nutraceuticals,  Inc.

     Net  sales  and net income individually and for the combining companies for
the  year  ended  December  31,  1998,  was  as  follows:

Net  Sales:
<TABLE>
<CAPTION>
<S>                                          <C>
4Health (Pre-merger, unaudited)              $ 6,373,000
Irwin Naturals (Pre-merger, unaudited)         9,291,000
Combined companies (Post-merger, unaudited)   14,883,000
   Total                                     $30,547,000
                                             -----------
</TABLE>

<TABLE>
<CAPTION>
Net (Loss) Income
<S>                                          <C>
4Health (Pre-merger, unaudited)              $ (900,000)
Irwin Naturals (Pre-merger, unaudited)        1,070,000
Combined companies (Post-merger, unaudited)     848,000
   Total                                     $1,018,000
                                            -----------
</TABLE>

LIQUIDITY/GOING  CONCERN

     The  accompanying  consolidated  financial  statements  have  been prepared
assuming that the Company will continue as a going concern. The Company incurred
a  loss  from  current operations of $13,472,000 for the year ended December 31,
2000,  has a retained deficit of $41,358,000 as of December 31, 2000, and it had
negative  cash  flows  from operations of $4,129,000 for the year ended December
31,  2000.  Additionally,  the  Company has current debt service requirements in
excess  of  its  historical ability to generate cash flows from operations.  The
Company  is  the  subject  of  a  significant  number of lawsuits, claims and an
informal  investigation by the Securities and Exchange Commission.  In addition,
the Company has been de-listed from the NASDAQ national market system.  Further,
the  Company's  secured  credit facility requires a payment of $1,750,000 due on
June 15, 2001 and requires subsequent payments of $195,000 monthly.  The Company
currently does not have the resources to make these payments.  Failure to secure
an  extension  of  the  obligation  may  have  a  material adverse impact on the
Company's ability to continue to operate.  At December 31, 2000, the Company had
borrowed  $5,511,000  out  of  a  maximum of $7,000,000 under its line of credit
facility,  which has been drawn on to fund on going cash requirements subsequent
to  December  31.  At  March  28,  2001,  the  available balance on the line was
$870,000.  These  factors raise substantial doubt about the Company's ability to
continue  as  a  going  concern.  The  consolidated  financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.

                                      F-12
<PAGE>

     Management's  plans  in  regard  to  these  items  include  the  following:

     The  Company  has  received  a  waiver  from its credit facility lender for
violations  of certain covenants included in the loan agreement and an amendment
to the credit facility with a deferral of the maturity dates including principal
payments  until  July  30,  2002 .  The company will continue to seek additional
extensions  and  waivers  of  its  credit  facility.

     The  Company  has  reduced  and  continues  to reduce portions of its fixed
overhead  expenses,  including  significant  executive  salary  reductions.

     Management  has  revised  its  marketing  strategy, has reduced advertising
expenditures  and  introduced  new  product  line  in  May  2001.

     There are no assurances that the amount available from the Company's credit
facility, in conjunction with the expense reductions, will be sufficient to fund
the  Company's  continuing  operations,  or  that  lawsuits,  claims  and  the
investigation  that  the company is involved with will be successfully resolved.
Furthermore,  there  is  no  assurance that the Company will be able to have its
common  stock  re-listed  by  NASDAQ,  limiting  the  Company's ability to raise
additional  equity  financing.  There are no assurances that the Company will be
able  to  successfully  raise  other additional debt or equity funds, or receive
extensions  or waivers on its current debt facility.  The failure of the Company
to  successfully  achieve  one  or  all  of the above items will have a material
impact  on  the  Company's  financial  position.  Additionally, in the event the
Company  is  unsuccessful  in  its  plans with its new product, it may adversely
affect  the  realizability  of  its  Inholtra  trademark asset and significantly
impact  its  results  of  operations.

PREVIOUS  RESTATEMENT  OF  1999  FINANCIAL  STATEMENTS

     Starting  in  July  2000,  one  of  the  Company's  large customers started
deducting significant amounts from cash remittances. In addition, certain of the
Company's  other customers began taking deductions against cash remittances that
were  in  excess  of historical amounts experienced. In August 2000, the Company
launched  an  investigation  of its 1999 and 2000 sales practices and determined
that sales to certain customers were made with rights of return and "guarantees"
of sell-through to consumers. As part of its investigation, substantially all of
the  customer  deductions taken in 2000 were reviewed and it was determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances  and  concessions  granted by prior management in the first
quarter  of  2000 prior to the original issuance of the Company's 1999 financial
statements.  Substantially  all of these arrangements were previously unknown to
the  current  management  team.

     The  Company  determined  the  effect of these deductions on its previously
issued financial statements and restated their financial statements for the year
ended  December 31, 1999. Under the restatement, revenues from any products with
"guaranteed"  sales  were  deferred until the sell through of the product at the
customer  level  and  the related product was treated as consigned inventory. In
situations  in  which  allowances  and  concessions  related  to 1999 sales were
granted  early  in  2000,  prior  to the original issuance of the Company's 1999
financial  statements,  the  reserves  for  such allowances and concessions were
increased  as  of  December  31,  1999.

     The  effect  of  the  previous  restatement  on the originally reported net
sales,  cost of sales, gross profit, net loss, basic and diluted loss per common
share, accounts receivable and inventories as of and for the year ended December
31,  1999,  net  of  the  effects  of  the  retroactive  restatement  related to
discontinued  operations,  as  discussed  in  Note  3,  is  as  follows:

                                      F-13
<PAGE>

<TABLE>
<CAPTION>

                         As Originally
<S>                     <C>              <C>            <C>
                        Reported         Restatement    As previously restated
                        --------------   -------------  ----------------------
Net Sales               $   35,013,000   $ (4,091,000)  $          30,922,000
Cost of Sales               17,885,000     (1,897,000)             15,988,000
Gross Profit                17,128,000     (2,194,000)             14,934,000
Net Loss                    (8,861,000)    (2,194,000)            (11,055,000)
Basic and diluted loss
per share                        (0.31)         (0.08)                  (0.39)
Accounts Receivable          2,446,171     (4,091,000)              2,685,000
Inventories                  5,972,000      1,897,000               7,869,000
</TABLE>

     In  addition,  in  the originally filed financial statements and footnotes,
the  Company  did  not  account  for  and  disclose  two  stock option grants to
employees.  The  first  grant  for 100,000 options was on February 15, 1999. The
second  grant,  also  for 100,000 options, was on January 10, 2000. These option
grants  did  not  impact  the  Company's  statement  of operations; however, the
footnote  disclosures  related  to  stock  options were revised to reflect these
grants.

2.      SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

INTERIM  FINANCIAL  INFORMATION

     The  unaudited  financial  information  furnished  herein  reflects  all
adjustments  consisting  only  of  normal  recurring  adjustments,  which in the
opinion  of  management,  are  necessary to fairly state the company's financial
position,  the  results  of  its  operations,  and  cash  flows  for the periods
presented.  The  results of operations for the three months ended March 31, 2001
are  not necessarily indicative of the results for the entire fiscal year ending
December  31,  2001.

REVENUE  RECOGNITION

     The  Company  recognizes  revenue  at  the time products are shipped unless
sales  are  made  under "guaranteed" sales arrangements.  Revenue for guaranteed
sales is deferred until the product has been sold at the retail level.  Based on
historical  experience,  reserves  are established for sales returns, allowances
and  discounts  for  sales  made  without  guarantees at the time such sales are
recorded.  During the years ended December 31, 2000, 1999 and 1998 and the three
months  ended  March  31,  2001  and  2000,  the  Company  provided  $7,720,000,
$3,702,000,  $2,116,000,  $994,000  (unaudited)  and  $962,000  (unaudited),
respectively,  for  returns  and  allowances,  including allowances for doubtful
accounts, and incurred related write-offs of $6,880,000, $1,121,000, $1,426,000,
$1,789,000 (unaudited) and $915,000 (unaudited), respectively.  During the years
ended December 31, 2000, 1999 and 1998 and the three months ended March 31, 2001
and  2000,  the Company provided provisions for doubtful accounts (bad debts) of
$100,000,  $202,000,  $268,000,  $34,000  (unaudited)  and  $46,000 (unaudited),
respectively.

 STRAIGHT-LINE  RENT

     One of the Company's operating leases includes scheduled increasing monthly
payments.  In  accordance  with  accounting principles generally accepted in the
United  States, the Company has accounted for the lease to provide straight-line
charges  to  operations  over  the  life  of  the  lease.

INVENTORIES

     Inventories  are  valued  at  the  lower of cost, determined on a first-in,
first-out basis, or market.  Inventories at December 31, 2000, 1999 and 1998 are
summarized  as  follows:
<TABLE>
<CAPTION>
<S>              <C>         <C>            <C>         <C>
                 March 31,                 December 31,
                             =====================================
                    2001           2000        1999        1998
                 ----------  -------------  ----------  ----------
                 (unaudited)
Raw Materials    $1,015,000  $   1,194,000  $2,135,000  $  803,000
Finished Goods    1,628,000      1,677,000   5,734,000   2,052,000
                 $2,643,000  $   2,871,000  $7,869,000  $2,855,000
                 ==========  =============  ==========  ==========
</TABLE>

PROPERTY  AND  EQUIPMENT

     Property  and  equipment  are stated at cost. Depreciation and amortization
are  provided  using the straight-line method over the estimated useful lives of
the  assets, which range from three to ten years.  Depreciation and amortization
expenses  are  included  in  selling, general and administrative expenses in the
accompanying  statements  of  operations.

                                      F-14
<PAGE>

     When  an  asset  is  sold  or  otherwise  disposed of, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain or
loss are included in results of operations.  Repairs and maintenance are charged
to  expense  as  incurred and major replacements or betterments are capitalized.

LONG-LIVED  ASSETS

     The Company follows Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed  of," which requires impairment losses to be recorded on long-lived
assets  used  in  operation  when  indicators  of  impairment  are  present.

FINANCING  FEES

     Financing  fees  incurred  with  the  acquisition of the Company's existing
credit  facility  and fees charged for related amendments have been deferred and
are  being  amortized  over  the  life  of  the  debt.

PATENTS  AND  TRADEMARKS

     Costs associated with the establishment and defense of trademarks have been
capitalized  and  are  being  amortized  over periods of fifteen years using the
straight-line  method.

RECLASSIFICATIONS

     Certain  amounts  in  prior  years have been reclassified to conform to the
current  year's  presentation.

ADVERTISING

     The  Company  expenses  advertising costs as incurred.  These costs include
promotional literature, direct mailing brochures, telemarketing and trade shows.
Costs incurred relating to the production of television commercials are deferred
until  the commercial has aired.  During the years ended December 31, 2000, 1999
and 1998and the three months ended March 31, 2001 and 2000, the Company incurred
$3,435,000,  $3,191,000,  $1,920,000,  $71,000  (unaudited)  and  $3,425,000
(unaudited)  for  advertising  expenses,  respectively.

STOCK-BASED  COMPENSATION

     The  Company  adopted  Statement  of  Financial Accounting Standards (SFAS)
No.123,  "Accounting  for  Stock  Based Compensation" (SFAS 123) in fiscal 1996.
As  allowed  by  SFAS  123,  the  Company  has  elected  to  continue to measure
compensation  cost under Accounting Principles Board Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees"  (APB  25)  and  comply  with  the  pro forma
disclosure  requirements  of  the  new  standard.

INCOME  TAXES

     The  Company accounts for income taxes under the provisions of Statement of
Financial  Accounting  Standards  (SFAS)  No.  109. Under SFAS No. 109, deferred
income  tax assets or liabilities are computed based on the temporary difference
between  the  financial statement and income tax bases of assets and liabilities
using  the  current  marginal  income  tax rate. Deferred income tax expenses or
credits  are  based  on  the  changes  in  the  deferred  income  tax  assets or
liabilities  from  period  to  period.

     Deferred  tax  assets may be recognized for temporary differences that will
result  in  deductible  amounts in future periods and for loss carry forwards. A
valuation allowance is recognized if, based on the weight of available evidence,
it  is  more  likely than not that some portion or all of the deferred tax asset
will  not  be  realized.

                                      F-15
<PAGE>

EARNINGS  PER  SHARE

     Earnings  per  share  calculations  are  in  accordance  with SFAS No. 128,
"Earnings  per  Share."  "Basic"  earnings per share is computed by dividing net
income  (loss)  by  the weighted average number of common shares outstanding for
the year. "Diluted" earnings (loss) per share is computed by dividing net income
(loss) by the total of weighted average number of common shares outstanding plus
the  dilutive  effect  of  outstanding  stock options and warrants (applying the
treasury  stock  method).  For  the  years ended December 31, 2000 and 1999, the
effect  of  stock options and warrants were not included as the results would be
antidilutive.

     A  reconciliation  of  the "basic" weighted average number of common shares
outstanding  to  the  "diluted"  weighted  average  number  of  common  shares
outstanding  for  each  of the three years in the period ended December 31, 2000
follows:
<TABLE>
<CAPTION>

<S>                            <C>                        <C>         <C>         <C>         <C>
                                             Years Ended December 31,                      March 31,
                               =========================================================================

                                                    2000        1999        1998        2001        2000
                                              ----------  ----------  ----------  ----------  ----------
                                                                                  (unaudited) (unaudited)
Weighted average number
 of common shares
 outstanding - Basic                          30,640,000  28,177,000  27,747,000  34,257,000  27,765,052
Dilutive effect of
outstanding stock options                                         --     474,000
                                ------------------------------------------------------------------------
Weighted average number
of common shares outstanding
- Dilutive                                    30,640,000  28,177,000  28,221,000  34,257,000  27,765,052
                               =========================================================================
</TABLE>


     For  the  year  ended December 31, 1998, 497,000 options have been excluded
from  the  calculation of dilutive shares applying the treasury stock method, as
the  option  exercise  prices  were  greater  than  average market price for the
period,  and  therefore  the  options  were  anti-dilutive.

USE  OF  ESTIMATES

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

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  AND  CONCENTRATION  OF  CREDIT  RISK

     The  Company's  financial  instruments  consist  of  cash, short-term trade
receivables  and payables and short-term and long-term debt. The carrying values
for  all  such  instruments,  considering  the  terms, approximate fair value at
December  31,  2000,  1999  and  1998  and  March  31,  2001  (unaudited).

     Financial  instruments  that  potentially  subject  the  Company  to
concentrations of credit risk consist primarily of cash and accounts receivable.
Accounts receivable are subject to credit limits, ongoing credit evaluations and
account  monitoring  procedures  to  minimize  the  risk  of  loss.  In  certain
instances,  customer  deposits  are obtained which would also reduce the risk of
loss.  Collateral  is  generally  not  required.

     The  Company  sells  the  majority  of its products and services to various
customers,  which  include  a  variety  of  large  companies  and  distributors
throughout  the  United  States, and to a limited extent, foreign customers.  In
the  years  ended  December  31,  2000, 1999 and 1998 and the three months ended
March  31,  2001 and 2000, shipments to the Company's largest customer accounted
for  18.4%, 11.6%, 13.3%, 27.2% (unaudited) and 29.4% (unaudited), respectively,
of the total.  At December 31, 2000, two customers represented 31.7% of accounts
receivable.  At  December  31,  1998  one customer represented 36.4% of accounts
receivable.  No  customers  represented  more than 10% of accounts receivable at
December  31, 1999. At March 31, 2001 one customer represented 13.3% (unaudited)
of  accounts receivable. In the years ended December 31, 2000, 1999 and 1998 and
the  three  months ended March 31, 2001 and 2000, net sales to foreign customers
accounted  for  23.2%,  8.5%,  10.0%,  33.5%  (unaudited)  and  9.6% (unaudited)
respectively,  of  net  sales.

                                      F-16
<PAGE>

     During  2000,  approximately 42% of the Company's total purchases were from
two  suppliers.  Management  believes  that  if  the Company were unable to make
further  purchases  from  these  suppliers, it would be able to find alternative
suppliers  with  terms  and  quality levels similar to those currently in place.

COMPREHENSIVE  INCOME

     For  the  year  ended  December 31, 2000, the Company adopted SFAS No. 130,
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting  comprehensive  income  and  its  components in a financial statement.
Comprehensive  income  as  defined  includes  all changes in equity (net assets)
during  a  period  from  non-owner sources.  Examples of items to be included in
comprehensive  income,  which  are  excluded  from  net  income, include foreign
currency  translation  adjustments  and  unrealized  gains  and  losses  on
available-for-sale  securities.  Comprehensive  income  is  not presented in the
Company's  financial  statements since the Company did not have any of the items
of  comprehensive  income  in  any  period  presented.

STATEMENTS  OF  CASH  FLOWS

     The Company prepares its statements of cash flows using the indirect method
as prescribed by Statement of Financial Accounting Standards (SFAS) No. 95.  The
Company  considers  all  highly  liquid investments with an original maturity of
three  months  or  less  to  be  cash  equivalents.

NEW  AUTHORITATIVE  PRONOUNCEMENTS

     In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  136,  "Transfer  of  Assets  to a Not-for-Profit Organization or Charitable
Trust  that  Raises  or  Holds Contributions for Others."  This statement is not
applicable  to  the  Company.

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

     In  December  1999,  the SEC staff released Staff Accounting Bulletin (SAB)
No.  101,  Revenue  Recognition,  to  provide  guidance  on  the  recognition,
presentation  and  disclosure  of  revenue  in financial statements.  Changes in
accounting to apply the guidance in SAB No. 101 may be accounted for as a change
in  accounting  principle effective January 1, 2000. SAB No.  101, has not had a
material  effect on the Company's revenue recognition and results of operations.

     In  March  2000,  the  Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation,"  (an Interpretation of Accounting Principles Bulletin Opinion No.
25  ("APB  25")) ("FIN 44").  FIN 44 provides guidance on the application of APB
25, particularly as it relates to options.  The effective date of FIN 44 is July
1,  2000,  and  the  Company  has  adopted  FIN  44  as  of  that  date.

     In  June  2000,  the  FASB  issued  SFAS  No.  138, "Accounting for Certain
Instruments  and  Certain Hedging Activities."  This statement is not applicable
to  the  Company.

     In  June  2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement
No. 53 and Amendments to Statements No. 63, 89, and 121."  This statement is not
applicable  to  the  Company.

     In  September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and  Servicing  of  Financial  Assets  and  Extinguishments  of  Liabilities,  a
replacement of FASB Statement No. 125."  This statement is not applicable to the
Company.

                                      F-17
<PAGE>

3.     ACQUISITIONS  AND  DIVESTITURE  OF  E-COMMERCE  OPERATIONS

ACQUISITIONS

Vitamin  Connection  Discount,  Inc.,  SmartBasics,  Inc.  and  Health  Shop.com

     On  October 27, 2000, the Company entered into an agreement to purchase the
assets  of  Vitamin Discount Connection for 190,000 shares of Omni common stock,
which  was valued at $277,000, the fair market value of the common stock on that
day  and  the  assumptions  of  approximately  $115,000  of  Vitamin  Discount's
liabilities.

     On  May  25,  2000  the  Company  acquired SmartBasics, Inc., pursuant to a
re-organization and merger agreement, for 170,000 shares of common stock, valued
at  $510,000.

     On  May  28,  2000,  the  Company acquired the assets of HealthShop.com, an
online  vitamin  retail  business.  The  Company issued 838,951 shares of common
stock for all the assets of the business.  The shares were valued at $3,500,000.
In  addition  to  the  shares issued, the agreement stated that the stockholders
were  entitled  to  purchase up to an additional $2,500,000 in common stock.  In
connection  to  this,  the  Company  recorded  an  additional  purchase price of
$289,000,  which was the fair market value of the option.  Also in connection to
the  Healthshop.com  acquisition,  the  Company  granted an aggregate of 250,000
options to purchase the Company's common stock to three of the previous officers
of HealthShop.com.  The options were valued at $872,000, under the Black Scholes
valuation  method.  The  aggregate  purchase  price  of  HealthShop.com  was
$4,661,000.

     All  of the acquisitions have been accounted for under the purchase method,
whereby  the excess of the purchase price over the fair market value at the date
of  the acquisition has been allocated to goodwill and is being amortized over 5
years.

Health  and  Vitamin  Express

     On February 15, 1999 in exchange for 363,636 shares of the Company's common
stock  valued  at $2,273,000 and the assumption of $571,000 of debt; the Company
acquired substantially all of the outstanding common stock of Health and Vitamin
Express,  Inc.  ("HVE"),  whose name was subsequently changed to HealthZone.com.
The  excess  of  the  purchase  price,  which aggregated to $2,906,000 including
costs,  over  the  fair  market  value  of  the  acquired assets is allocated to
goodwill  and  is  being  amortized  over  five  years.

     In  addition to the 363,636 shares issued upon acquisition, the Company may
contingently  issue  to  the  sellers  of  HVE  (i)  up to 272,727 shares of the
Company's  common  stock  based  upon  certain revenue thresholds and (ii) up to
90,909  shares  of  the  Company's  common  stock  based  upon  certain  profit
thresholds.  The  Company additionally had certain repurchase rights pursuant to
the  agreement.  The  Company  has  granted  to  the  Sellers  certain  "demand
registration  rights"  and  "piggyback  registration rights" on these shares, if
issued,  in  the  event  the  Company undertakes a sale of its securities to the
public.

     The  former  shareholders  of  HVE  filed  a  lawsuit  against  the Company
asserting  certain  claims under this agreement. The Company settled the lawsuit
and  has  recorded  certain settlement expenses related to this contingency (See
Note  11).

DIVESTITURE

     In the fourth quarter of 2000 the Company made the determination to dispose
of  its  E-commerce business segment. The results of operations of this business
segment  have  been  retroactively  reported  separately  on  the  accompanying
statement  of  operations  as  a  Loss  on operations of discontinued e-commerce
segment.  The  net  assets  of  the  e-commerce  segments  have been reported as
"Assets  held  for  sale" at December 31, 2000.  The Company expects to record a
gain  on  the  ultimate disposal of the business assets, and, in accordance with
generally accepted accounting principals, to the extent there are expected gains
on disposal, will defer the costs associated with the on-going operations during
the  phase  out  period,  until  the  gain  is  realized.

                                      F-18
<PAGE>

     The  assets  held  for  sale  consist  primarily  of  intangible assets and
goodwill  related  to  the  following  subsidiaries  and  acquisitions:  (1)
HealthZone.com, (2) HealthShop.com, (3) SmartBasics.com and (4) Vitamin Discount
Connection.  and  were  as  follows:

Net  book  value  of  assets  related  to:
<TABLE>
<CAPTION>
<S>                                   <C>
HealthZone.com                        $ 2,971,000
Vitamin Discount Connection               522,000
Smartbasics.com                           521,000
HealthShop.com                          4,783,000
Accumulated amortization on goodwill   (1,669,000)
                                      ------------
   Total                              $ 7,128,000
                                      ============
</TABLE>

     On  February  2, 2001, the Company entered into and simultaneously closed a
Purchase  Agreement with Vitacost.com, Inc. ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for 6,800,000 shares of Vitacost common stock.  The Vitacost stock has
been  valued  at  $7,000,000  (See  Note  15).

4.     SIGNIFICANT  FOURTH  QUARTER  ADJUSTMENTS

     During  the fourth quarter of the year ended December 31, 2000, the Company
recorded  the  following  significant  adjustments:

     An adjustment to reflect the issuance of 710,000 shares of its common stock
for  consulting fees. The amount of the adjustment was approximately $1,169,000,
which  was  charged  to  operations.

     An  adjustment  to  record professional fees incurred during the year.  The
amount  of  the  adjustment  was  approximately  $200,000.

5.     INHOLTRA  TRADEMARK

     On March 10, 1999, the Company purchased for $13,250,000 certain net assets
of  Inholtra  Investment  Holdings  and  Trading,  N.V.,  Inholtra,  Inc.,  and
Inholtra  Natural,  Ltd.  (collectively  the  Sellers).  The  purchase  price
consisted of the payment of $3,250,000 in cash at closing, and the issuance of a
$10,000,000  promissory note. The promissory note was repaid on June 10, 1999 in
connection with the Company's new banking facility (see Note 7). The Company has
accounted  for  the  acquisition  as  a  purchase.  The  purchase price has been
allocated  to  the  patents and trademarks associated with the Inholtra product,
and is being  amortized over a fifteen-year period.  Accumulated amortization on
the  trademark  at  December  31,  2000  and  1999  was $1,604,000 and $709,000,
respectively.

6.     PROPERTY  AND  EQUIPMENT  AND  SALE  OF  BUILDING

Property  and  equipment
------------------------
Property  and  equipment  consists  of  the  following:
<TABLE>
<CAPTION>

<S>                       <C>             <C>          <C>          <C>
                                            December 31,         March 31,
                          ----------------------------------------------------
                                2000         1999         1998         2001
                          --------------  -----------  -----------  ----------
                                                                   (unaudited)
Machinery and equipment.  $     205,000   $  303,000   $  355,000   $  205,000
Furniture and equipment.        719,000    1,438,000      758,000      727,000
Leasehold improvements .        796,000      910,000      303,000      796,000
                              1,720,000    2,651,000    1,416,000    1,728,000
                          --------------  -----------  -----------  ----------
Less - Accumulated
Depreciation and . . . .       (467,000)  (1,135,000)    (789,000)    (535,000)
amortization              $   1,253,000   $1,516,000   $  627,000   $1,193,000
                          ====================================================
</TABLE>

                                      F-19
<PAGE>
     During  the  year ended December 31, 2000, the company retired property and
equipment  with  an  original  cost basis of $1,040,000, these assets were fully
depreciated,  and  no  gain  or  loss on disposal was recorded. During the three
years  ended  December  31, 2000, 1999 and 1998 and the three months ended March
31,  2001  and  2000,  the  Company  recorded  depreciation expense of $406,000,
$349,000,  $697,000, $69,000 (unaudited) and $103,000 (unaudited), respectively.

Sale  of  Building

     On  March  25,  1999, the Company completed the sale of its former 4Health,
Inc.  corporate  facility  located  in  Boulder, Colorado (the "Property").  The
sales  price  for the property was $2,350,000, which consisted of $600,000 cash,
the  assumption  of  a  $1,300,000 existing mortgage and the receipt of $450,000
note  receivable secured by a deed on the property.  The Company recorded a gain
on  the  sale  of the property of $481,000, which is included in other income on
the  accompanying  consolidated  financial  statements.
The note was to be paid in monthly installments of $4,000, including interest at
a  rate of 7   % per annum, until March 1, 2002.  During the year ended December
31,  2000,  the  note  was  paid  off  in  full.

7.     CREDIT  FACILITY

     As  of  December  31,  1998,  the  Company  had  outstanding  borrowings of
$1,000,000  under  a revolving line of credit with a bank. In February 1999  the
Company obtained a new line of credit with a different bank which was amended to
provide  for  maximum  borrowings  up  to  $5,000,000 based on eligible accounts
receivable  and  inventories.

     On June 10, 1999, the Company secured a new loan from a lending institution
that  provide  up  to  $20 million dollars of financing. The credit facility, as
amended,  consists  of  a  $13  million  term loan  ("Term Loan") and up to a $7
million  revolving  loan  ("Revolving  Loan"),  subject  to  borrowing  base
availability  and  compliance  with  certain  financial  and other covenants and
agreements.  At  closing, $10,000,000 was disbursed to repay the promissory note
issued  in  connection  with  the  acquisition  of  the  assets  of  Inholtra
Naturals,  Ltd.  (see  Note  5).

     The  loans  under  the credit facility are secured by substantially all the
assets  of  the  Company.  Borrowings  under  the  Term Loan bear interest at an
annual  rate  of prime plus 2.25 percent are paid monthly.  Borrowings under the
Revolving  Loan  currently  bear  interest  at an annual rate of prime plus 1.75
percent,  and  are  paid  monthly.  The rates are subject to decrease based upon
the Company satisfying certain operating performance levels. The credit facility
agreement  contains  certain  financial  and  other  covenants  or restrictions,
including  the  maintenance  of certain financial ratios, limitations on capital
expenditures,  restrictions  on  acquisitions,  limitations on the incurrence of
indebtedness  and  restrictions  on  dividends  paid  by  the  Company.

     The  $13,000,000  Term  Loan,  as  amended  is  payable  in installments as
follows:  $1,750,000  due June 15, 2001, monthly payments of $194,000 commencing
July  15,  2001  and  ending July 15, 2002 and a final payment of $6,000,000 due
July  30,  2002.  Mandatory  prepayments  are  required in the event the Company
receives any net proceeds from insurance claims, assets sales and/or debt sales.
Under certain circumstances there are mandatory prepayments required from equity
sales.

     On  June 15, 2001, the Term Loan and Revolving Loan agreements were amended
to,  among  other  things, extend the repayment date of all the installments due
under  the Term Loan to July 30, 2002, to waive certain defaults that existed at
that  time  and  establish  new financial ratios that the Company must meet on a
quarterly  basis  beginning  June  30,  2001.

     On  July  20,  2001,  the  Company  entered into an amendment to the Credit
Facility  pursuant  to  which  the Company's lender: (i) waived certain defaults
then  in  existence;  (ii)  increased  the  amount  of  the  Company's permitted
overadvance  by $200,000; and (iii) required the Company to inform the lender of
its  financial  condition  on  a  weekly  basis.

                                      F-20
<PAGE>

     Selected  information  regarding borrowings under line of credit agreements
for  the years ended December 31, 2000, 1999 and 1998 and the three months ended
March  31,  2001  follows:
<TABLE>
<CAPTION>
<S>                                                <C>             <C>          <C>          <C>
                                                                      December 31,              March 31
                                                            2000         1999         1998         2001
                                                   --------------  -----------  -----------  -----------
        (unaudited)
Average amount outstanding                         $   5,341,000   $3,967,000   $  620,000   $6,009,000
Maximum amount outstanding                         $   6,353,000   $6,436,000   $1,500,000   $6,660,000

Weighted average interest rate during the Period.           10.9%         9.1%         8.4%        10.3%
</TABLE>


Future  annual  payments  under  the Term Loan, as revised, are as follows as of
December  31:
<TABLE>
<CAPTION>
Year ended December 31,      Amount
------------------------  ------------
<S>                       <C>
2001                      $ 2,917,000
2002                        7,361,000
                          ------------
                           10,278,000
Less - current portion     (2,917,000)
                          ------------
                            7,361,000
                          ============
</TABLE>


8.     NOTES  PAYABLE

Notes  payable  consists  of  the  following:
<TABLE>
<CAPTION>
<S>                                        <C>             <C>          <C>          <C>
                                                              December 31,             March 31
                                           ----------------------------------------------------
                                                    2000         1999         1998       2001
                                           --------------  -----------  -----------  ---------
                                                                                     (unaudited)
Note payable to a bank assumed
by the buyer of the Boulder building                                 $   1,300,000
Notes payable to three individuals,
unsecured, bearing interest at an annual
rate of 6.0 percent, payable
in monthly installments of principal and
interest of approximately $26,000, due
June 2000                                               $     155,000      451,000
Capital lease obligation (see Note 12)     $     102,000      123,000              $   96,000
                                           --------------  -----------  -----------  ---------
                                                 102,000      278,000    1,751,000     96,000
Less current portion                             (23,000)    (176,000)    (328,000)   (22,000)
                                           --------------  -----------  -----------  ---------
Long-term portion                          $      79,000   $  102,000   $1,423,000   $ 74,000
                                           ==============  ===========  ===========  =========
</TABLE>

                                      F-21
<PAGE>
Future annual payments under the notes payable and capital lease obligations are
as  follows  as  of  December  31,  2000:
<TABLE>
<CAPTION>

Year ended
December 31,     Amount
-------------    ------
<S>       <C>            <C>
2001      $      23,000
2002             26,000
2003             30,000
2004             23,000
                --------
                102,000
                ========
</TABLE>


9.     WRITE-OFF  OF  INTANGIBLES

     The  Company acquired ID Technology in connection with a merger in 1996. ID
Technology  is used in angioplasty procedures. In the third quarter of 1999, the
Company  determined  that  the  value  of  such  technology  was  impaired  and,
therefore, wrote-off the remaining unamortized balance of $390,000. In addition,
the  Company wrote-off $250,000 of inventories related to this technology. Total
charges  in  connection  with  this  impairment  were  $640,000.

10.      INCOME  TAXES

     The  components  of  the  deferred  income  tax assets (liabilities) are as
follows:
<TABLE>
<CAPTION>
<S>                               <C>             <C>           <C>           <C>
                                                      December 31,                 March 31,
                                           2000          1999          1998           2001
                                  --------------  ------------  ------------  -------------
        (unaudited)
Allowance for doubtful accounts   $   1,722,000   $ 1,384,000   $   369,000   $  1,480,000
Inventory tax adjustment                114,000       484,000        83,000        114,000
Inventory reserve                       318,000       216,000       186,000        318,000
Warrants                                943,000       373,000        52,000        943,000
Accrued liabilities                     176,000       588,000        33,000        416,000
NOL carry forwards                   10,553,000     4,618,000     2,817,000     12,109,000
Other                                                      --       288,000
                                  --------------  ------------  ------------  -------------
                                     13,826,000     7,663,000     3,828,000     15,380,000
Valuation Allowance                 (13,826,000)   (7,663,000)   (3,828,000)   (15,380,000)
                                  --------------  ------------  ------------  -------------
                                    $       ---   $       ---   $       ---   $        ---
                                  ==============  ============  ============  =============
</TABLE>


     At  December  31,  2000  and  March  31,  2001, the Company has federal net
operating  loss  carryforwards  of  approximately  $28,600,000  and  $30,000,000
(unaudited), respectively, expiring at various dates through 2019. Future use of
these  net  operating  loss  carry  forwards  may  be limited subject to certain
provisions  of  the  Internal  Revenue  Code.

     The  components  of  the provision (benefit) for income taxes for the years
ended  December  31,  2000,  1999 and 1998  and the three months ended March 31,
2001  (unaudited)  are  as  follows:
<TABLE>
<CAPTION>
                                                                             Three months
                                             Years ended December 31,        ended March 31,
                                       -----------------------------------------------------
                                              2000        1999        1998         2001
                                       --------------  -----------  --------    -----------
                                                                                (unaudited)
<S>                                    <C>               <C>          <C>       <C>
Current
  Federal                              $           --  $ (275,000)  $287,000       $   --
  State                                         1,000       1,000    131,000        3,000
                                                1,000    (274,000)   418,000           --
                                       --------------  -----------  --------       ------

Deferred                                           --          --    182,000           --

Provision (benefit) for income taxes   $        1,000  $ (274,000)  $600,000       $3,000
</TABLE>

                                      F-22
<PAGE>

     Differences  between the provision for income taxes and income taxes at the
statutory  federal  income  tax  rate  are  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                                                             December 31,                        March 31
                                            2000                 1999            1998             2001
                                                                                               (unaudited)
<S>                            <C>             <C>        <C>       <C>      <C>     <C>     <C>      <C>
Income tax at statutory
federal rate                   $      (5,266)    (34.0%)  $(3,852)  (34.0%)  $ 550    34.0%  $ (529)  (34.0%)
State income taxes                      (828)      (5.3)     (657)    (6.0)    131     8.1      (92)    (5.9)
S corporation income not
taxed at C corporation rates              --         --        --       --    (374)  (23.1)      --       --
Permanent differences                    442        2.8       407      3.6     156     9.6      136      8.7
Use of net operating loss
carryforwards                             --         --        --       --    (332)  (20.5)      --       --
Change in valuation
allowance                              6,027       38.9     3,835     34.0     469    29.0    1,554     63.7
Current losses not benefited.            405        2.6       690      6.1      --      --       --       --
Reversal of 1998 excess
 provision                                --         --      (274)    (2.4)     --      --       --       --
Other items, net                        (779)      (5.0)     (423)    (3.7)     --      --    (1068)   (68.6)
                               --------------  ---------  --------  -------  ------  ------  -------  -------
                               $          1,        0.0%  $  (274)   (2.4%)  $ 600    37.1%  $    3      0.0%
                               ==============  =========  ========  =======  ======  ======  =======  =======
</TABLE>





11.     COMMITMENTS  AND  CONTINGENCIES

CAPITAL  AND  OPERATING  LEASE  OBLIGATIONS  PAYABLE

     The  Company  leases  its facility and certain property and equipment under
long-term  operating  leases expiring at various dates through 2004. The Company
also  leases property and equipment under a capital lease.  Included in property
and  equipment  is  $132,000,  at  cost,  related  to  capital  leases.

     The  future  minimum  lease payments at December 31, 2000 under capital and
operating  leases  are  as  follows:
<TABLE>
<CAPTION>
                                                    Capital   Operating
                                                    Leases      Leases      Total
                                                   ---------  ----------  ----------
<S>                                                <C>        <C>         <C>
2001                                               $ 35,000   $  661,000  $  696,000
2002                                                 35,000      640,000     675,000
2003                                                 35,000      620,000     655,000
2004                                                 23,000      269,000     292,000

Total future minimum lease payments                 128,000   $2,190,000  $2,318,000

Less - amount representing interest at 12%          (26,000)
Present value of minimum capital lease payments     102,000
                                                   ---------
Less - current portion                              (23,000)
                                                     79,000
                                                   =========
</TABLE>

     Total  rental  expense for the years ended December 31, 2000, 1999 and 1998
and  the three months ended March 31, 2001 and 2000, was approximately $674,000,
$588,000, $557,000, $180,000 (unaudited) and $167,000 (unaudited), respectively.

                                      F-23
<PAGE>

EMPLOYMENT  CONTRACTS

     Upon  the  consummation  of  the Merger, both Mr. R. Lindsey Duncan and Mr.
Klee  Irwin  entered into substantially similar three-year employment agreements
with  the  Company.  Mr.  Duncan  was employed as Chairman of the Board and as a
member  of the Executive Committee with all duties and responsibilities normally
associated  with  this  position.  Mr. Irwin was employed as the Chief Executive
Officer  and  as  a  member  of  the  Executive  Committee  with  all duties and
responsibilities normally associated with this position until April 20, 1999. On
that date, Mr. Irwin resigned, as Chief Executive Officer of Omni Nutraceuticals
and  his  employment  agreement  was  terminated  effective  April  20, 1999. In
connection  with  his resignation, the Board of Directors appointed him as Chief
Executive  Officer  of  HealthZone.com,  the  Company's  wholly owned subsidiary
("HealthZone").  In  October  of  1998  (as  revised  in June 1999), the Company
entered  into  an  agreement  to  hire  Mr. Louis Mancini as President and Chief
Operating  Officer  and,  subsequently,  Chief  Executive  Officer.

     These  employment agreements provided for: (i) annual salaries of $225,000,
and  $300,000  for  Messrs. Duncan and Mancini, respectively; (ii) the right for
Mr.  Duncan  and  Mr.  Mancini  to  receive  an  annual  bonus  based on certain
performance  incentives.

     On  March 12, 2000, Mr. Duncan agreed to resign from the Board of Directors
of  the  Company and agreed to terminate his employment agreement. Also on March
12, 2000, the Board of Directors terminated Mr. Mancini's employment. Klee Irwin
replaced  Mr.  Mancini  as  President  and  Chief  Executive  Officer.

     As  a  result  of  the  March 12, 2000 employment realignments, the Company
agreed  to  extend  the exercise date of Lindsey Duncan's stock options to March
2007  and  to forgive a note due to the Company from Louis Mancini for $175,000.

LITIGATION  AND  SETTLEMENTS

     On March 28, 2001 the Company was notified that the Securities and Exchange
Commission  was  conducting  an  informal  inquiry  into  matters concerning the
Company for fiscal years ended  December 31, 1998 to 2000. The Company is unable
to  predict  at  this  time  the  outcome  of  this  informal  inquiry.

     On  January  23,  2001,  the  Labor Commissioner of the State of California
entered a judgment against the Company in the amount of approximately $42,000 in
a  matter  entitled  Richard  F.  Lynch  v.  Omni  Nutraceuticals,  Inc.,  Labor
Commissioner,  State  of  California, State Case No. 05-19487 1 CC.  The Company
filed an appeal, which required posting a bond in the amount of the judgment, in
the  Los  Angeles  County, California, Superior Court on February 14, 2001.  The
appeal  is  entitled In the Matter of the Appeal of Omni Nutraceuticals, Inc, of
the  Order,  Decision or Award of the Labor Commissioner, Richard F. Lynch, Real
Party  in  Interest,  Case  No.  BS067765.  The appeal involves a retrial of the
matter  in  the  Superior  Court.  The  Company  denies that any sums are due to
Lynch.  The  final  outcome of this case is uncertain, but appears unlikely that
it  will  have  a  material  impact  on  the  Company.

     On  December  8,  2000,  the  Company  was  sued  in  a case entitled Media
Networks,  Inc. v. Omni Nutraceuticals, Inc., in Los Angeles County, California,
Superior  Court,  Case  No.  BC  241503, for amounts due on an open account, and
services  rendered  pursuant  to agreement. On July 25, 2001 the complainant was
awarded  through  a  stipulated  judgment  a  total  of  approximately $437,000,
interest,  attorneys  fees,  and  collection and other costs. Media Networks has
filed  a  motion of assignment and appointment of a receiver, which is scheduled
for  hearing  on  August  23,  2001.

     The  Company received a demand letter dated February 20, 2001, from counsel
representing  the  majority  of  the  former  owners  of  Smart Basics, Inc., an
E-commerce  retailer  that  was  acquired on May 25, 2000, claiming, among other
things, misrepresentations in connection with the transaction in which the Smart
Basics'  shareholders exchanged their ownership interest in Smart Basics for the
Company's  common  stock.  The demand letter seeks unspecified relief or, in the
alternative,  rescission  of the transaction.  The letter threatens legal action
unless  the  matter  is  otherwise  resolved.  The  Company is investigating its
rights and obligations with respect thereto.  Based on the information currently
available,  the  Company is unable to determine the likelihood of an unfavorable
outcome  to  this  matter.  Smart  Basics,  together  with  the  Company's other
E-commerce  operations,  was  sold  to  Vitacost.com  on  February  2,  2001.

                                      F-24
<PAGE>

     The  Company  received  an  inquiry from the Los Angeles County and Alameda
County,  California, District Attorney's Offices with respect to labeling of our
"151 Bars" and "Diet System 6 Bars."  Discussions and an exchange of information
are taking place with respect thereto.  The Company is hopeful that a resolution
can  be  reached  without  litigation,  although  no assurance can be given.  If
settlement  is  not  reached,  an  action for false advertising, unfair business
practices  and other claims may be filed against the Company.  The Company is no
longer  selling  the  "Diet  System  6  Bars" that are a subject of the inquiry.
Based  on the information currently available, the Company is unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

     A  complaint  was  filed  against the Company on May 25, 2000, in an action
entitled  Copelco  Capital,  Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles
County,  California, Superior Court, Case No. BC230578.  The suit seeks recovery
of principal of $67,000, interest, taxes, fees, liens and late charges according
to  proof,  attorney's  fees  and costs in connection with the Company's alleged
lease  of copier equipment.  The Company has filed a responsive pleading denying
liability  and raising affirmative defenses.  Based on the information currently
available,  the  Company  is unable to evaluate the likelihood of an unfavorable
outcome.

     A  complaint for breach of contract and common counts was filed against the
Company  on  November  30, 2000, in a case entitled Puretek Corporation vs. Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case  No.  241059.  It  seeks recovery of $78,000, interest, attorney's fees and
costs.  The  Company  has  filed  a  responsive  pleading  denying liability and
raising affirmative defenses.  On December 28, 2000, the court granted Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,000.  Based on the information currently available, the Company is unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     The  Company  has  been  sued  in  the  Circuit Court for Baltimore County,
Maryland.  The title of the case filed on October 6, 2000, is Gain, Inc., d/b/a/
American  Medtech  v.  Maryland Urology Group, Inc., Veromax International, LLC,
Omni  Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett,
M.D.,  Larry  L.  Parks  and Kyle P. Moore, Civil No. 03-C-00-010409.  The First
Amended  Complaint  filed  November  6,  2000, alleges that the other defendants
granted  Gain  exclusive rights to market and sell Veromax  to all U.S. pharmacy
and  chain  stores  with  greater  than  twenty stores and that these defendants
subsequently  assigned  rights  to  the Company to market and sell Veromax  that
were contrary to the rights previously granted Gain.  It claims that the Company
tortiously  interfered with Gain's prospective economic advantage, and published
false  information  to Gain's customers that disparaged its rights to distribute
Veromax  ,  in  the  Company's  efforts  to  market  and sell Veromax  and seeks
$250,000,000  in compensatory damages, $25,000,000 in punitive damages, interest
and  costs.  It  also  seeks  injunctive  relief  prohibiting  the  Company from
interfering with Gain's marketing efforts by selling or offering to sell Veromax
to  certain  identified  pharmacy  chains  and to account for sales made to said
identified pharmacy chains.  The Company has filed a responsive pleading denying
liability and raising affirmative defenses and intends to vigorously defend this
action.  Based  on the information currently available, the Company is unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     Pursuant  to  a  Settlement, Termination and Mutual Release Agreement dated
April 13, 2000, 363,636 additional shares were issued in settlement of a lawsuit
filed  on December 23, 1999 by the former owners of HVE.  In connection with the
settlement, all other rights and obligations that existed under the February 15,
1999  Merger  Agreement  were  terminated.  The  fair  value of these additional
shares ($1,200,000 based on the fair value at the time of the shares issued) has
been  recorded as an expense in the accompanying statement of operations for the
year  ended December 31, 1999.  Due to the issuance of these shares in 2000, the
Company  then  reclassified the contingent shares to additional paid in capital.

     In  March 2000, pursuant to a termination and settlement agreement, the new
Chief  Executive  Officer  transferred  1,000,000  shares of his personally held
common  stock  to  an  ex-officer  of  the  Company.  The  shares were valued at
$1,720,000,  which was the fair value of the stock at the date of the agreement.

OTHER  LITIGATION

     From  time to time the Company may become a party to legal proceedings that
are  routine  litigation  incidental to its business.  The Company believes that
the likely outcome of such litigation will not have a material adverse effect on
its  business  or  results  of  operations.

                                      F-25
<PAGE>

12.     SHAREHOLDERS'  INVESTMENT

PREFERRED  STOCK

     The  Company  has authorized 5,000,000 shares of Preferred Stock. Under the
terms  of  the  Articles  of  Incorporation,  the  Board  of Directors may issue
Preferred Stock for any proper corporate purpose. In approving any issuance, the
Board  has  broad authority to determine the rights, privileges, and preferences
of  the  Preferred  Stock, which may be issued as one or more classes or series.
The rights, privileges and preferences may include voting, dividend, conversion,
redemption, participation and liquidation rights. As of December 31, 2000, 3,000
shares  of Series A Convertible Preferred Stock were outstanding; as of December
31,  1999  and  1998,  no  Preferred  Stock  was  issued  or  outstanding.

     On  October  27,  2000,  the  Company  entered  into  a Securities Purchase
Agreement  with  several  "accredited investors" ("Holders") whereby the Holders
purchased  3,000  shares  of  the  Company's  newly-issued  Series A Convertible
Preferred  Stock  resulting  in  gross proceeds of $3,000,000 to the Company. In
addition,  the  Buyers  received  warrants  to  purchase up to 600,000 shares of
common  stock at an exercise price of approximately $0.96 per share. The Company
received net proceeds from this transaction of $2,720,000, after fees, costs and
expenses  of  issuance.  An  additional  50,000  warrants  were  issued  to  an
intermediary  on  the  same  terms  as were granted to the Buyers. The Preferred
Stock  is  convertible  into  common stock on the following basis: The number of
shares  of  common stock to be issued is equal to the stated value of the number
of  shares  of  Preferred  Stock  being  converted,  together  with  any accrued
dividends  (the "Additional Amount") thereon, divided by the "Conversion Price".
The  Conversion  Price  is equal to the lesser of (i) 115% of the average of the
two lowest bid prices quoted on the exchange where the Company's common stock is
traded  during the ten days preceding the closing or, (ii) 80% of the average of
the  two lowest bid prices of the common stock.  Related to this issuance of the
Company's  preferred stock, the Company recorded an imputed, preferred dividend,
which  represented  the  difference  between  the trading price of the Company's
common  stock  and  the  conversion  rate most beneficial to the preferred stock
holder,  at  the  date the preferred stock was issued.  The dividend amounted to
$3,168,000,  which  is  reflected  as  an  increase in the net loss available to
common  shareholders  on  the  accompanying  statement  of  operations.

     The  preferred  stock  may  be  redeemed  by  the Company at any time after
closing,  at  a  price  per  share  equal  to  the greater of (a) $1,400 plus an
additional  amount defined as 6% of the face amount of the stock being redeemed,
multiplied  by  the  number  of  days  since closing, divided by 365; or (b) the
market  price  of  the  common  stock  into  which  the preferred stock could be
converted,  as  of the date of the redemption.  On the fourth anniversary of the
issue  date,  any  existing  preferred  stock must be redeemed or converted into
common  stock,  subject  to  certain  provisions.

     Pursuant  to the preferred stock securities purchase agreement, the Company
was  required  (a)  not to have any suspension of trading of its common stock on
the  NASDAQ,  and  (b) file, within 30 days of the closing of the transaction, a
registration  statement  to  cover  the  underlying shares and warrants and such
shares  issuable  pursuant  to the anti-dilution provisions of the agreement and
certain  other  requirements.  The Company is currently in default of several of
these  provisions.

     On  January  24,  2000, the Company completed an equity transaction whereby
the  Company  issued  2,000,000  shares  of a 5% Convertible Preferred Stock and
seven  year  warrants to purchase up to an aggregate of 775,000 shares of common
stock  at  an  exercise  price  of  $2.25  per share, subject to adjustment. The
aggregate  purchase  price for the Preferred Shares and warrants was $3,000,000,
including  $100,000 allocated to the purchase of the warrant. In connection with
this  financing,  HealthZone  also  issued  222,222  shares of its common stock,
representing  approximately  10% of the then outstanding number of shares, and a
seven-year  warrant  to  purchase  up  to  37,000 shares of its common stock for
$1,000,000.  On  March  24,  2000,  all  of  these  issued Preferred Shares were
converted  into  2,016,438  shares of common stock.  Related to the issuance and
conversion  of  the  Company's  preferred stock, the Company recorded an imputed
preferred  dividend,  which represented the difference between the trading price
of  the  Company's  common stock and the conversion rate of the preferred stock.
The  dividend  amounted  to $1,950,000, which is reflected as an increase in the
net  loss  available  to  common  shareholders  on the accompanying statement of
operations.

                                      F-26
<PAGE>

COMMON  STOCK

     During  the  quarter  ended  March 31, 2001, 400,000 shares of common stock
were  issued  pursuant  to  a price clause in the original agreement to purchase
HealthShop  and  a  related increase in Assets Held for Sales as recorded in the
amount  of  $119,000.

     During  the quarter ended March 31, 2001 75,000 shares of common stock were
issued  in  connection  with an amendment to preferred stock issued in the first
quarter  of  2000  and  a related charge was recorded in the amount of $136,000.

     On  October  30,  2000  the  Company  entered  into  an  agreement  with an
investment  banking  firm to serve as a financial consultant to the Company. The
agreement  calls  for  the consultant to provide certain services to the Company
related  to  the location and raising of up to $20,000,000 through the placement
of preferred stock. As compensation for entering into the agreement, the Company
issued 150,000 shares of its common stock and recorded a charge to operations of
$205,000. The agreement requires that the Company pay to the consultant a fee of
10%  of  the  gross  proceeds  of  any monies raised by the consultant, and a 2%
non-accountable  expense allowance to be paid in common stock. Additionally, the
consultant  is  to  receive  warrants equal to 10% of the securities sold in the
offering,  exercisable  at  100%  of  the  offering  price.

     During  the  year  ended  December  31,  2000, as compensation, the Company
issued  to  officers  and  directors  and  one former director a total of 55,000
shares  of  common stock. The accompanying financial statements include a charge
of  $72,000  to  reflect  this  issue  of  shares.

     On  March  12,  2000,  the  Company  entered into a two year agreement with
Liviakis  Financial  Communications,  Inc. ("LFC") and, in connection therewith,
authorized the issuance of 1,200,000 restricted shares of common stock to LFC in
consideration  of,  and  as  a  retainer  and prepayment for, the services to be
rendered  to  the Company.  Under the terms of the agreement, the Company issued
800,000  shares, the balance of 400,000 shares will be due and payable in fiscal
year 2001 depending on whether the Company continues to retain LFC. On March 27,
2000,  the  Company  completed  a  private  placement  of its securities through
investors  provided  by LFC whereby 700,000 shares of common stock were sold for
an  aggregate  purchase  price  of $2,100,000. The original shares issued to LFC
have  been considered issued in connection with this placement, and the proceeds
allocated  to  the  aggregate  shares  issued.

     During  the  year ended December 31, 2000, the Company issued an additional
215,500  shares  of  common stock to various vendors for services rendered.  The
aggregate  value  recorded  by  the  Company  was  approximately $378,000, which
represents either the fair market value of the shares, or the services rendered,
whichever  was  more  readily  determinable.  These  amounts  were recognized as
expenses  as  the  services  were  performed.

     In  separate agreements, several of the Company's trade creditors agreed to
convert  a portion of their debt in exchange for common stock of the Company and
to accept a substantially reduced cash payment for the balance of the obligation
of  the Company. During the year ended December 31, 2000, $1,431,000 of accounts
payable  was  converted  in  exchange for 599,905 shares of common stock.  These
conversions  were  performed  at a rate consistent with the trading price of the
Company's  common  stock  at  the  date  of  the  conversion.

     On  January  24,  2000  the  Company executed a consulting agreement with a
financial consulting firm to assist the Company in marketing its common stock in
Europe.  The  agreement was a one-year agreement that called for the issuance of
560,000  shares  of  common  stock.  The  fair value of the stock on the day the
agreement  was  executed  was  approximately  $960,000,  which  was  charged  to
operations  as  consulting  expense.

     In  August  1999,  the  Company entered into a three-year agreement with an
individual  to  be  the spokesperson for its Inholtra product line.  The Company
issued  15,000  shares  of  common stock and recorded compensation of $36,000 in
connection  with the issuance of these shares.  In addition, the Company granted
this  individual  an  option  to  purchase  75,000  shares  of  common  stock.

     In  October  1999,  the Company issued 13,000 shares of common stock to its
previous  facility  landlord  in  lieu  of  cash  for one month's rent due.  The
Company  recorded  expense  of  $19,000 in connection with the issuance of these
shares.

                                      F-27
<PAGE>

     In  October  1999, a former Chief  Executive Officer and shareholder of the
Company  returned  941,436  shares  to the Company as a contribution to capital.

WARRANTS

     On April 20, 2000, the Company entered into a one year consulting agreement
with  a  financial  advisor.  The agreement calls for the issuance of options to
purchase  30,000  shares  of  common  stock at $3.86 per share. The options vest
7,500  at  the  end  of  each three months after the initiation of the contract.
Related  to  the agreement, the Company has recorded $78,000 of consulting fees,
which  is  being  amortized as consulting expense over the term the services are
being  provided.

     On  June  28,  2000 the Company entered into a consulting agreement with an
investment  banking  firm  to perform certain financial consulting services. The
agreement  called  for the issuance of 300,000 options to purchase the Company's
common  stock  at $4.00 per share and covered a term of six months.  The options
were  valued  at $747,000 and were amortized as consulting expense over the term
of  the  agreement.

     In 1997, the Company entered into a three year consulting agreement with an
investment  banking  firm.  In  consideration  for  the consulting services, the
Company issued the investment banking firm warrants to purchase 1,000,000 shares
of  the  Company's  common  stock  at  an  exercise price of $6.00 per share and
additional  warrants  to  purchase 250,000 shares of common stock at an exercise
price  of  $4.00 per share. The warrants are exercisable for five years from the
date  of  issuance.  The  Company  recorded  professional  services  expense  of
$194,000,  $388,000  and  $275,000  the  years ended December 31, 2000, 1999 and
1998,  respectively,  in connection  with the fair value of these warrants based
upon  the  Black  Scholes  pricing model.  As of December 31, 2000, all warrants
were  still  outstanding.

     During  the  year  ended  December  31,  1999,  the  Company entered into a
consulting  agreement  with  an  advisor.  In  consideration  of  the consulting
services,  the Company issued to the advisor warrants to purchase 250,000 shares
of  the  Company's  common  stock  at  an exercise price of $4.75 per share. The
Company  recorded  professional services expense of $415,000 in the year 1999 in
connection  with  the  fair  value  of  these  warrants  based  upon  the  Black
Scholes  pricing  model.  These  warrants  were  cancelled  subsequent  to
year-end.

OPTIONS

     In  1996,  the  Company adopted the Long-Term Stock Incentive Plan (LTSIP).
This  plan  was amended on December 22, 1999.  Under the terms of the LTSIP, the
Company  is authorized to issue incentive and non-qualified stock options to its
directors,  officers,  key  employees  and  consultants totaling up to 4,500,000
shares  of  common stock. At December 31, 2000, 460,848 shares are available for
future  grant  under this plan. Options are generally granted at exercise prices
not  less than the fair market value on the date of grant and expire from two to
seven  years  after the date of grant. Options granted under this plan vest over
varying  terms  ranging  from  immediate  vesting  to  seven  years.

     In  November 1998, the Company's Board of Directors approved a stock option
pool  authorizing  management  of the Company to make discretionary grants up to
500,000  shares.
                                      F-28
<PAGE>

     A  summary  of  the  Company's  outstanding  options  and activity follows:

<TABLE>
<CAPTION>
                                                                  EXERCISABLE
                                                             ---------------------
                                       WEIGHTED    WEIGHTED
                                       AVERAGE      AVERAGE
                                      NUMBER OF    EXERCISE   NUMBER  OF  EXERCISE
                                       OPTIONS       PRICE     OPTIONS      PRICE
                                     ------------  ---------  ----------  ---------
<S>                                  <C>           <C>        <C>         <C>
Balance, January 1, 1998                 742,643   $    4.57     585,516  $    4.24

Granted                                1,853,860   $    5.22
Exercised                               ( 38,341)  $    4.51
Cancelled                               (111,991)  $    5.46
                                     ------------  ---------
Balance, December 31, 1998             2,446,171   $    5.01     675,253  $    4.49

Granted                                3,267,500   $    2.27
Exercised                                (19,670)  $    4.33
Cancelled                             (1,747,403)  $    5.03
                                     ------------  ---------
Balance, December 31, 1999             3,946,598   $    3.58   1,991,904  $    3.34

Granted                                3,542,499   $    2.20
Exercised                                (98,830)  $    2.92
Cancelled                             (3,351,115)  $    2.87
                                     ------------  ---------
Balance, December 31, 2000             4,039,152   $    3.01   1,923,394  $    3.19

Granted                                4,501,000   $    0.27
Exercised
Cancelled                               (137,000)  $    3.07
                                     ------------  ---------
Balance, March 31, 2001 (unaudited)    8,403,152   $    1.54   4,993,065  $    1.37
                                      ==========
</TABLE>

     Weighted  average  fair  value  of  all  options  granted  during the years
ended  December  31,  2000, 1999 and   1998 and the three months ended March 31,
2000  were  $2.90,  $1.23,  and  $1.99,  and  $0.25  (unaudited)  respectively.

The  following  table  summarizes  information  about the options outstanding at
December  31,  2000:

<TABLE>
<CAPTION>
                 Weighted     Weighted    Weighted
Range of          Number      Average     Average      Average
Exercise       Outstanding    Exercise   Remaining   Exercisable  Exercise
Prices         at 12/31/00     Price        Life     at 12/31/00    Price
-------------  ------------  ----------  ----------  -----------  ---------
<S>            <C>           <C>         <C>         <C>          <C>

1.00 - $1.99       100,000  $     1.53   9.1 years      100,000  $    1.53
2.00 - $2.99     2,027,999  $     2.07   9.4 years      830,200  $    2.11
3.00 - $3.99       871,688  $     3.43   8.8 years      539,646  $    3.68
4.00 -$4.99        783,109  $     4.27   9.3 years      265,192  $    4.56
5.00 -$7.25        256,356  $     5.75   8.3 years      186,356  $    5.55
               -----------  ------------             ----------  ----------
                 4,039,152  $     3.01                1,921,394  $    3.19
</TABLE>

     The  Company  has  elected  to  continue  to  measure  compensation  costs
associated  with  its  stock option plan under APB No. 25, "Accounting for Stock
Issued  to  Employees"  and comply with the pro forma disclosure requirements of
SFAS No. 123. Had the Company applied the fair value based method of accounting,
which  is  not required, to all grants of stock options, under SFAS No. 123, the
Company  would  have  recorded  additional  compensation  expense  and  computed
proforma  net  income  (loss)  and  pro  forma earnings (loss) per share amounts
as  follows  for  the  years  ended  December  31,  2000,  1999,  and  1998  as
follows:
                                      F-29
<PAGE>

<TABLE>
<CAPTION>
                                              Years ended December 31,
<S>                          <C>                      <C>            <C>
                                               2000           1999       1998
                                       -------------  -------------  --------
Additional compensation expense        $    143,000   $  3,128,000   $672,000
Pro forma net income (loss)             (21,753,000)   (14,183,000)   346,000
Pro forma earnings (loss) per share:
   Basic                               $      (0.71)  $      (0.50)  $   0.01
   Diluted                             $      (0.71)  $      (0.50)  $   0.01
</TABLE>

     These  pro  forma  amounts  were  determined by computing the fair value of
each  option  on  its  grant  date  using the Black-Scholes option-pricing model
with  the  following  assumptions:
<TABLE>
<CAPTION>
                                    Years Ended December 31,
<S>                      <C>              <C>       <C>
                                   2000      1999           1998
                         ---------------  --------  -------------
Risk free interest rate            6.00%     6.03%  4.34% - 5.55%
Expected life                  1-2 years   4 years      2-7 years
Volatility                       100.00%    90.00%         60.00%
Expected dividend yield            None       None           None
</TABLE>

13.     RELATED  PARTY  TRANSACTIONS

     American  Brand  Labs,  or  ABL,  is  owned  in  the  majority by the Chief
Executive  Officer,  and  7.5%  by a director of the Company whi is also General
Manager/Vice  President  of operations of ABL.  ABL is a current customer of the
Company.  The  Company  in  the  process  of  negotiating  an agreement with ABL
pursuant  to  which  ABL  will  be  entitled  to occupy a portion of the Company
offices  located  at 5310 Beethoven Street and receive certain services from the
Company for a payment of a monthly management fee. In addition, the Company will
receive and a portion of ABL's profits, if any, and will be granted of an option
to  purchase  ABL  under  certain  circumstances.

During  the  year  ended  December  31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

     On  October  8,  1999,  the  Company  and  Mr.  Klee  Irwin  entered into a
settlement  agreement  (the  'Settlement Agreement') in order to resolve certain
mutual  claims  that had arisen between the Company and Mr. Irwin. Subsequent to
December  31, 1999,  the  Settlement  Agreement  and  all  ancillary  agreements
were  terminated.

     On  or  about  October  8,  1999,  Mr. Irwin made a capital contribution of
$305,000, and returned 941,436 shares of Omni Nutraceuticals common stock to the
Company.

14.     SUBSEQUENT  EVENTS

Vitacost  purchase  agreement

     On  February  2, 2001, the Company entered into and simultaneously closed a
Purchase  Agreement  with Vitacost.com, Inc ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for  6,800,000 shares of Vitacost common stock. The agreement contains
an  optional  repurchase  right giving the Company, at any time after four years
from  the  closing,  the  right  to  demand  Vitacost repurchase their stock for
$3,400,000  in cash or, at their option, a 60 month note requiring equal monthly
payments  of  $57,000. The agreement also contains an optional redemption right,
giving  Vitacost  the  right to redeem their stock, at any time up to four years
from  the closing. If this option is exercised between the closing and the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up  to  $9,317,000 on the fourth anniversary of the closing. In
addition, the Purchase Agreement provides Vitacost with a right of first refusal
in  the event that the Company desires to transfer the shares of Vitacost common
stock,  other  than  to  an  affiliate,  or  in connection with a liquidation or
spin-off  distribution  to  our  stockholders,  or  an  initial public offering.

     Further,  in  connection  with  the Purchase Agreement, the Company entered
into  a  non-competition agreement with Vitacost, whereby the Company agreed not
to  compete with Vitacost in the business of reselling other companies' vitamins
and supplements on a retail basis via the internet and mail order catalogues for
the  period beginning on the date of the non-competition agreement and ending on
the  last  to  occur  of:  (i)  the  one-year anniversary of the non-competition
agreement;  or (ii) the date that is six months after the Company's resignation,
removal  or  other  termination  from  Vitacost's  board  of  directors.  The
non-competition  agreement  does  not  preclude the Company from engaging in the
business of selling its own products including, but not limited to, vitamins and
supplements  manufactured  by  the Company through any means, including, without
limitation,  via  the  internet  and  mail  order  catalogues.

     The  stock the Company received represents approximately 19.9% of the total
Vitacost  common  stock  outstanding  and,  accordingly,  the Company intends to
record  this  investment  on the cost basis. As long as the Company continues to
hold  at  least  a 10% interest, the Company will have one of the five available
seats on the Vitacost Board. Additionally, the Company has certain anti-dilution
rights  in  the  event  Vitacost  raises  additional  equity.

                                      F-30
<PAGE>

<TABLE>
<CAPTION>
<S>                                                               <C>                  <C>                        <C>

No person has been authorized to give any information or                        ---------------
to make any representations other than those contained in                          PROSPECTUS
this prospectus in connection with the offering made                            ---------------
hereby, and if given or made, such information or                               6,512,310 shares
representations must not be relied upon as having been
authorized by us, any stockholder or by any other person.
Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that information herein is correct as of any
time subsequent to the date hereof.  This prospectus does
not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities covered by this
prospectus, nor does it constitute an offer to or solicitation .
of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
TABLE OF CONTENTS                                                 PAGE                 OMNI NUTRACEUTICALS, INC.
INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS                                          5
PROSPECTUS SUMMARY                                                  5
SUMMARY OF CONSOLIDATED FINANCIAL DATA                              7
RISK FACTORS                                                        8
USE OF PROCEEDS                                                    15
DIVIDEND POLICY                                                    15
PRICE RANGE OF COMMON STOCK                                        15
CAPITALIZATION                                                     16
SELECTED CONSOIDATED FINANCIAL DATA                                17
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                                                         19
BUSINESS                                                           31
MANAGEMENT                                                         40
COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS                                                          41
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS                                                       44
VOTING SECURITIES AND PRINCIPAL
STOCKHOLDERS                                                       45
DESCRIPTION OF SECURITIES                                          47
SELLING STOCKHOLDERS AND PLAN OF
DISTRIBUTION                                                       51
SHARES ELIGIBLE FOR FUTURE SALE                                    54
EXPERTS AND LEGAL MATTERS                                          55
WHERE YOU CAN FIND MORE INFORMATION                                55
                                                                                         Common Stock
                                                                                         ------------
                                                                                          PROSPECTUS
                                                                                         ------------
                                                                                         ______, 2001
</TABLE>

                                        1
<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM  13.  OTHER  EXPENSES  OF  ISSUANCE  AND  DISTRIBUTION.

     The  registrant  estimates  that  expenses  in connection with the offering
described  in this Registration Statement, other than the underwriting discount,
will  be  as  follows:

Securities  and  Exchange  Commission  Registration  Fee
Legal  Fees  and  Expenses
Accounting  Fees  and  Expenses
Transfer  Agent  Fees  and  Expenses
Printing  Expenses
Miscellaneous
     Total


ITEM  14.  INDEMNIFICATION  OF  OFFICERS  AND  DIRECTORS.

     Our  Articles  of  Incorporation  generally  provides  for  the  maximum
indemnification of a corporation's officers and directors as permitted by law in
the  State of Utah.  Utah law empowers a corporation to indemnify any person who
was  or  is  a  party or who is threatened to be made a party to any threatened,
pending,  or  completed  action,  suit  or  proceeding, whether civil, criminal,
administrative  or  investigative,  except in the case of an action by or in the
right  of  the  corporation,  by  reason  of the fact that he or she 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  or  other  enterprise.  Depending  on the character of the
proceeding,  a  corporation may indemnify against expenses (including attorney's
fees),  judgments,  fines and amounts paid in settlement actually and reasonably
incurred  in  connection  with  such  action,  suit  or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably believed to
be  in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceedings, had no reasonable cause to believe his or
her  conduct  was  unlawful.

     A  corporation  may  indemnify  any  person  who  was  or  is a party or is
threatened  to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason  of  the  fact  that he or she 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 or other
enterprise,  against  expenses,  including  amounts  paid  in  settlement  and
attorney's  fees  actually  and  reasonably incurred by him or her in connection
with  the defense or settlement of the action or suit if he or she acted in good
faith  and  in  a  manner  which  he  or she reasonably believed to be in or not
opposed  to  the  best interests of the corporation.  Indemnification may not be
made  for any claim, issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals therefrom,
to  be  liable  to  the  corporation  or  for  amounts paid in settlement to the
corporation  unless and only to the extent that the court in which the action or
suit  was  brought  or  other  court  of  competent jurisdiction determines upon
application  that  in  view  of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.

     To  the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding  referred  to  above,  or  in  defense  of any claim, issue or matter
therein,  he  or  she  must  be indemnified by the corporation against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with  the  defense.  The  corporation,  unless  ordered  by  a court or advanced
pursuant to this section, must make any indemnification under this section, only
as  authorized in the specific case upon a determination that indemnification of
the  director,  officer,  employee or agent is proper in the circumstances.  The
determination  must  be  made:  (a)  by  the  stockholders;  (b) by the board of
directors  by  majority  vote  of  a quorum consisting of directors who were not
parties  to  the  action, suit or proceeding; (c) if a majority vote of a quorum
consisting  of  directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (d) if a quorum
consisting  of  directors who were not parties to the action, suit or proceeding
cannot  be  obtained,  by  independent  legal  counsel  in  a  written  opinion.

                                        2
<PAGE>

     The  Articles  of  Incorporation,  the  bylaws  or an agreement made by the
corporation  may provide that the expenses of officers and directors incurred in
defending  a  civil  or  criminal action, suit or proceeding must be paid by the
corporation  as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director  or  officer  to  repay  the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by  the corporation.  The provisions of this section do not affect any rights to
advancement  of  expenses  to  which corporate personnel other than directors or
officers  may  be  entitled  under  any  contract  or  otherwise  by  law.  The
indemnification  and advancement of expenses authorized in or ordered by a court
pursuant  to  this  section:  (a)  does  not exclude any other rights to which a
person  seeking indemnification or advancement of expenses may be entitled under
the  articles  of incorporation or any bylaw, agreement, vote of stockholders or
disinterested  directors  or  otherwise,  for  either  an  action  in his or her
official  capacity  or  an  action  in another capacity while holding his or her
office,  except that indemnification, unless ordered by a court pursuant to this
section  or  for  the  advancement  of  any  director  or  officer  if  a  final
adjudication  establishes that his or her acts or omissions involved intentional
misconduct,  fraud  or  a  knowing  violation of the law and was material to the
cause of action; and (b) continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators  of  such  a  person.  Further,  we  may enter into agreements of
indemnification  with  our directors and officers to provide for indemnification
to  the  fullest  extent  permitted  under  Utah  law.

ITEM  15.  RECENT  SALES  OF  UNREGISTERED  SECURITIES.

     For  each  of  the  three  years in the period ended December 31, 2000, and
subsequently,  we  completed  the  following  transactions:

SECURITIES  ISSUED  IN  CONNECTION  WITH  ACQUISITIONS.

     Vitamin Discount Connection.  In connection with the acquisition of Vitamin
Discount  Connection,  an  Internet  "e-tailer"  and  mail  order  retailer  of
nutritional  and health-related products, on October 27, 2000, we issued 190,000
restricted  shares  of our common stock.  If our common stock was not registered
by  March  1,  2001,  we  agreed  to  replace  the restricted shares with freely
tradable  shares  or  to repurchase such restricted shares at the market closing
price  on  March  1,  2001,  or a combination of both.  This transaction is more
fully  described  in  the  section  of  this  Registration  Statement  entitled
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations."  As  of the date of this prospectus, no freely tradable shares have
been  exchanged  for  restricted  shares.

     HealthShop.com.  We issued 838,951 shares of our common stock in connection
with  the  acquisition  of  certain  selected  assets of HealthShop, an Internet
business retailer of nutritional supplements and health related products, on May
22,  2000.  We  are  obligated  to  issue  up  to  an  additional 250,000 shares
contingent  upon the sellers meeting certain performance measures during the one
year  period  from  the  closing  date and up to 400,000 shares in the event the
price  of  our  common  stock  does  not  reach certain levels nine months after
closing.  Pursuant to these provisions, during the quarter ended March 31, 2001,
we  issued  400,000  shares  of  our  common stock to the former shareholders of
Healthshop.  We  also  entered  into  consulting  agreements  with  the  former
shareholders  and executives of Healthshop.com and issued options to purchase an
aggregate  of  250,000  shares  of  our  common  stock  in connection therewith.
HealthShop and the former shareholders and executives of HealthShop were granted
piggyback  registration  rights  with  respect  to  the  shares  and  the shares
underlying  the options granted by us in connection with this transaction.  This
transaction  is  more  fully  described  in  the  section  of  this Registration
Statement  entitled "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations."

     SmartBasics.com.  We  issued  170,000  shares  of  our  common  stock  in
connection  with  our acquisition of Smart Basics, Inc., dba SmartBasics.com, an
Internet  and  mail order retailer of nutritional supplements and health related
products,  on  May  25,  2000.  This  transaction is more fully described in the
sections  of  this  Registration Statement entitled "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations"  and  "Legal
Proceedings."

                                        3
<PAGE>

     Health  &  Vitamin Express.  In connection with our acquisition of Health &
Vitamin  Express,  we  issued  of  363,636  shares of our common stock valued at
$2,273,000  or  $6.25 per share on February 15, 1999.  Pursuant to a Settlement,
Termination  and  Mutual  Release  Agreement  dated  April  13,  2000,  363,636
additional  shares  to  the  former owners of HVE were issued in settlement of a
lawsuit  filed  on  December  23,  1999  by  the  former  owners  of  HVE.  This
transaction  is  more  fully  described  in  the  section  of  this Registration
Statement  entitled "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations."

SECURITIES  ISSUED  IN  CONNECTION  WITH  PRIVATE  OFFERINGS

     Sale of Series A Convertible Preferred Stock.  On January 24, 2000, we sold
2,000,000 shares of our newly created 5% $.01 par convertible referred stock for
$2,900,000  and  sold  seven  year warrants to purchase 500,000 shares of common
stock  at  $2.25 per share for $100,000.  In connection with the issuance of the
preferred stock, we issued common stock representing an approximate 10% interest
in  our  wholly  owned  subsidiary,  HealthZone.com, to the same investors.  The
securities  of  Healthzone.com  were  subsequently returned to HealthZone.com in
exchange  for  75,000 shares of our common stock.  We incurred issuance costs of
$100,000, which consisted of legal and placement agent fees.  On March 24, 2000,
all  shares of this preferred stock, plus accrued dividends, were converted into
2,016,438  shares  of  our  common  stock.  Since  the  conversion  rate  was
significantly below the trading price of our common stock when the preferred was
issued,  we recognized a preferred dividend of $1,950,000, which is reflected as
a  reduction  in  net  income  available  to  common  stockholders.

     In  connection  with this transaction, we agreed to register certain of our
common  stock  within  90  days  of  January  24,  2000,  and to ensure that the
registration  statement  is  declared  effective  within 150 days of January 24,
2000.  If  we  fail to timely achieve the foregoing, we will be obligated to pay
to holders of the warrants issued in connection with this transaction liquidated
damages  equal  to  0.067%  of  the  purchase price of the convertible preferred
stock,  or  approximately  $2,000, for each day following the required filing or
effective  date.  We are in breach of this provision and, as of the date hereof,
we  have paid $150,000 and we have accrued, but not paid, $60,000, of liquidated
damages.

     March  27,  2000  Private  Placement.  On  March  27, 2000, we sold 700,000
shares  of  common  stock  to  individual  investors  in a private placement for
aggregate proceeds of $2,100,000.  Investors were granted piggyback registration
rights  in  connection  with  this  transaction.

     October 27, 2000 Private Placement.  On October 27, 2000, we entered into a
Securities  Purchase  Agreement  with several "accredited investors," or holders
whereby  the  holders  purchased  3,000  shares  of  our  newly  issued Series A
Convertible preferred stock resulting in gross proceeds to us of $3,000,000.  In
addition,  the  buyers  received  warrants  to  purchase up to 600,000 shares of
common  stock  at  an  exercise  price  of  approximately  $0.96  per share.  An
additional  50,000  warrants were issued to an intermediary on the same terms as
were  granted  to  the  buyers.

     Pursuant to the Securities Purchase Agreement and related documents, we are
required  to file a registration statement, registering for resale the number of
common shares issuable assuming a market price of $.50 per share upon conversion
of  all  of  the  preferred stock, plus the exercise, at the contractual rate of
approximately  $0.96,  of all of the warrants issued in connection therewith.  A
registration  statement is required to be filed within 30 days of the closing to
cover  the  common  stock  underlying  the  conversion  of  the  preferred stock
("conversion  shares")  and the exercise of the warrants, and such indeterminate
number  of  shares  of  common  stock  issuable  pursuant  to  the anti-dilution
adjustment  provisions  of  the  preferred stock and warrants.  For registration
purposes  only,  the  number of conversion shares to be registered is calculated
based  upon  an  assumed conversion price per share of $0.50.  As of the date of
the  filing of this registration statement, which covers the shares and warrants
issued  in connection with this transaction, we are in default of this provision
of  the  preferred  stock  Agreements.

     The  Securities  Purchase  Agreement  includes  certain  provisions  for
liquidated  damages  against  us  if  a  registration  statement for the related
securities  is  not  filed  within  30 days or declared effective within 90 days
after  October  27, 2000.  These liquidated damages provisions require us to pay
an additional amount to the holders equal to: (a) in the event of a late filing,
1%  of  the  gross purchase price for such securities from the period commencing
October  27,  2000  through  the  30th day following such date and each 30th day
thereafter  (each  a  "Computation  Date"), if the registration statement is not
filed  by  such computation date, and (b) in the event of a late effective date,
1% of the gross purchase price for such securities from the period commencing on
the  previous Computation Date through the 30th day following such date and each
30th  day thereafter, if the registration statement is not declared effective by
the  relevant  computation  date.  We  may also be liable for certain liquidated
damages  in  the  event  we  fail  to  issue  timely shares of common stock upon
conversion of the preferred stock or exercise of the warrants.  These liquidated
damages  may be paid by us either in cash or in common stock, at our option.  As
of  the  date  of  this prospectus, we have paid $394,000 in liquidated damages.

                                        4
<PAGE>

     On  June  11,  2001, we have filed a registration statement with respect to
the  6,000,000  shares  of  common  stock  underlying  the  Series A Convertible
Preferred stock based on the assumed conversion price of $0.50 per share, and an
additional  650,000  shares  of  common  stock  underlying  warrants  issued  in
connection  with  the  sale of the Series A Convertible Preferred stock.  We may
have  to  file  additional  registration statements with respect to the Series A
Convertible  Preferred  stock  in  the event that the 6,000,000 shares of common
stock  are  not  sufficient  to  convert  all  of the related shares of Series A
Convertible  Preferred  stock.  On  June 21, 2001, we issued 1,572,682 shares of
our  common  stock  in  connection with the conversion of 200 shares of Series A
Convertible  Preferred  stock.

     OTHER  SECURITIES  ISSUANCES

COMMON  STOCK

     Directors,  Officers  and  Consultants.  During the year ended December 31,
2000,  we issued 1,780,500 shares of common stock at a weighted average exercise
price of $2.38 per share, and options to purchase approximately 1,925,000 shares
of common stock to certain of our directors, executive officers and consultants.
55,000  of  these  shares  of  our  common  stock were issued as compensation to
officers  and directors and one former director. In October 1999, a former Chief
Executive  Officer and shareholder of the Company returned 941,436 shares to the
Company  as  a  contribution  to  capital
 .

     Vendors  and  Trade  Creditors.  In  separate  agreements,  several  of the
Company's  trade creditors agreed to convert a portion of their debt in exchange
for  common  stock  of  the  Company  and to accept a substantially reduced cash
payment for the balance of the obligation of the Company.  During the year ended
December  31, 2000, $1,431,000 of accounts payable was converted in exchange for
599,905  shares  of common stock at a weighted average conversion price of $2.38
per  share.  These  conversions  were  performed  at  a rate consistent with the
trading  price  of  the  Company's  common  stock at the date of the conversion.

     During  the  year ended December 31, 2000, the Company issued an additional
215,500  shares  of  common stock to various vendors for services rendered.  The
aggregate  value  recorded  by  the  Company  was  approximately $378,000, which
represents either the fair market value of the shares, or the services rendered,
whichever  was  more  readily  determinable.  These  amounts  were recognized as
expenses  as  the  services  were  performed.

     In  October  1999,  we issued 13,000 shares of common stock to its previous
facility landlord in lieu of cash for one month's rent due.  We recorded expense
of  $19,000  in  connection  with  the  issuance  of  these  shares.

     Legal  Settlements.  During  the  year  ended  December 31, 2000, we issued
363,636 shares of common stock at a weighted average exercise price of $3.30 per
share  in  connection  with  a  legal  settlement.

     During  the  year  ended  December  31,  1999, we entered into a Settlement
Agreement  and  Mutual  Release  with  a former consultant pursuant to which the
parties  released  each other from their obligations set forth in his consulting
agreement.  In consideration for such release, we issued 10,000 shares of common
stock and warrants to purchase 62,500 shares at a per share price of $4.00.  The
consultant  was granted piggyback registration rights with respect to the shares
and  options  issued  to  him.  These  securities  are  being  registered  in  a
registration  statement  of  which  this  prospectus  forms  a  part.

     Institutional  Equity Corporation.  On October 30, 2000, we entered into an
agreement  with  Institutional  Equity  Corporation,  or  IEC,  to  serve as our
financial  consultant  for  the  purpose  of  determining investor interest in a
private  offering of our securities for gross proceeds of up to $20,000,000.  As
compensation  for entering into the agreement, the Company issued 150,000 shares
of  its  common  stock  and recorded a charge to operations of $205,000.  IEC is
entitled  to  a minimum fee of $25,000, which is payable in 16,667 shares of our
common  stock.  IEC  will  be  entitled  to a consulting fee equal to 10% of the
gross  proceeds  of  any  monies  it  raises  and  a  2% non-accountable expense
allowance  to  be  paid  in common stock.  Additionally, IEC will be entitled to
receive  warrants  equal  to  10%  of  the  securities  sold  in  the  offering,
exercisable  at  100%  of  the  offering  price.

                                        5
<PAGE>

     Liviakis  Financial  Communications,  Inc.  On  March 12, 2000, the Company
entered  into  a  two  year  Consulting  Agreement  with  Liviakis  Financial
Communications,  Inc.,  or  LFC  and,  in  connection  therewith, authorized the
issuance  of 1,200,000 restricted shares of Common stock to LFC in consideration
of, and as a retainer and prepayment for, the consulting services to be rendered
to the Company by LFC.   Pursuant to the provisions of the Consulting Agreement,
LFC  will be entitled to receive a 2.5% finder's fee in connection with any debt
or  equity  financing for the Company from a source introduced to the Company by
LFC  and a 2% finder's fee in connection with any acquisition by the Company, or
its  nominee,  of  a  candidate introduced to the Company or its nominee by LFC.
The  Company also agreed to reimburse LFC for extraordinary expenses incurred by
LFC  on  behalf  of  the  Company  with  its permission.  On March 27, 2000, the
Company  completed  a  private  placement  of  its  securities through investors
provided  by  LFC  whereby  700,000  shares  of  common  stock  were sold for an
aggregate  purchase  price of $2,100,000. The original shares issued to LFC have
been  considered  issued  in  connection  with  this placement, and the proceeds
allocated  to  the aggregate shares issued.  In accordance with the terms of the
Consulting  Agreement,  LFC  exercised  their  option not to continue beyond the
first  year and, accordingly, returned 400,000 of these shares to the Company in
2001.

     Consulting  Agreement.  On  January  24,  2000  the  Company  executed  a
consulting  agreement  with a financial consulting firm to assist the Company in
marketing  its  common  stock in Europe.  The agreement was a one-year agreement
that  called for the issuance of 560,000 shares of common stock.  The fair value
of  the  stock on the day the agreement was executed was approximately $960,000,
which  was  charged to operations as consulting expense.  These shares are being
registered  in  a  registration statement of which this prospectus forms a part.

     Spokesperson  Agreement.  In  August  1999,  we  entered  into a three-year
agreement  with  an  individual  to be the spokesperson for its Inholtra product
line.  We  issued  15,000  shares  of  common stock and recorded compensation of
$36,000  in  connection  with  the  issuance  of these shares.  In addition, the
Company  granted  this  individual an option to purchase 75,000 shares of common
stock.

     WARRANTS

     During  the  year  ended  December  31,  2000,  we  issued warrants with an
aggregate  value  of  $1,104,000  to consultants for services.  The transactions
pursuant  to  which  these  warrants  were  issued  are  described  below.

     On  or  about October 2, 2000, we entered into a one year agreement with an
investor  relation  services firm for the provision of certain investor relation
services.  As  compensation,  we  granted warrants to purchase 100,000 shares of
our  common  stock  at  an  exercise  price  of  $2.50.  The  value  recorded in
connection  with  this  transaction  amounts  to  $10,000.

     On June 28, 2000, we entered into a consulting agreement with an investment
banking  firm  to  perform certain financial consulting services.  The agreement
called  for  the  issuance  of  300,000 warrants to purchase our common stock at
$4.00  per  share and covered a term of six months.  The warrants were valued at
$747,000  and  were  amortized  as  consulting  expense  over  the  term  of the
agreement.

     On  June 28, 2000, we entered into an agreement with an investment bank for
the  provision  of certain investment banking services.  In connection with this
agreement, we issued seven year warrants to purchase 25,000 shares of our common
stock  at  $4.00  per  share.  The  agreement  is  for an indefinite term and is
terminable  upon  30  days  prior  written  notice.

     On  April  20, 2000, we entered into a one year consulting agreement with a
financial advisor.  The agreement calls for the issuance of warrants to purchase
30,000 shares of common stock at $3.86 per share.  The options vest 7,500 at the
end  of  each three months after the initiation of the contract.  Related to the
agreement,  we  recorded $78,000 of consulting fees, which is being amortized as
consulting  expense  over  the  term  the  services  are  being  provided.

                                        6
<PAGE>

     In  1997,  we  entered  into  a  three  year  consulting  agreement with an
investment banking firm. In consideration for the consulting services, we issued
the  investment banking firm warrants to purchase 1,000,000 shares of our common
stock  at  an  exercise  price  of  $6.00  per  share and additional warrants to
purchase 250,000 shares of common stock at an exercise price of $4.00 per share.
The  warrants  are  exercisable  for  five  years from the date of issuance.  We
recorded  professional  services  expense of $199,118, $388,000 and $275,000 the
years  ended  December 31, 2000, 1999 and 1998, respectively, in connection with
the fair value of these warrants based upon the Black Scholes pricing model.  As
of  December  31,  2000,  all  warrants  were  still  outstanding.

     During  the  year  ended  December  31,  1999, we entered into a consulting
agreement  with  a  consultant.  In consideration of the consulting services, we
issued to the consultant warrants to purchase 250,000 shares of our common stock
at  an  exercise  price  of  $4.75  per share. We recorded professional services
expense  of $415,000 in the year 1999 in connection with the fair value of these
warrants  based  upon  the  Black  Scholes  pricing model. During the year ended
December  31,  1999,  we  entered into a Settlement Agreement and Mutual Release
with  this  advisor pursuant to which the parties released each other from their
obligations  set  forth  in  the consulting agreement. In consideration for such
release,  we cancelled the warrants previously issued to him to purchase 250,000
shares of our common stock and issued 10,000 shares of common stock and warrants
to  purchase  62,500  shares  at  a per share price of $4.00. The consultant was
granted  piggyback  registration  rights  with respect to the shares and options
issued to him. These securities are being registered in a registration statement
of  which  this  prospectus  forms  a  part.

     OPTIONS

     In  1996,  we adopted the Long-Term Stock Incentive Plan (LTSIP). This plan
was  amended  on  December  22,  1999.  Under  the  terms  of  the LTSIP, we are
authorized  to issue incentive and non-qualified stock options to its directors,
officers,  key  employees  and  consultants  totaling  up to 4,500,000 shares of
common  stock.  At  December  31,  2000, 460,848 shares are available for future
grant under this plan. Options are generally granted at exercise prices not less
than  the  fair  market  value on the date of grant and expire from two to seven
years after the date of grant. Options granted under this plan vest over varying
terms  ranging  from  immediate  vesting  to  seven  years.


     In  November  1998,  our  Board  of  Directors approved a stock option pool
authorizing management of the Company to make discretionary grants up to 500,000
shares.

     During  the  year  ended  December 31, 1998, we granted options to purchase
1,853,860  shares  of  our  common stock at a weighted average exercise price of
$5.22  per  share.  Options  to  purchase 38,341 shares of our common stock at a
weighted average price of $4.51 per share were exercised and options to purchase
111,991  shares  of  our  common  stock  were  cancelled.

     During  the  year  ended  December 31, 1999, we granted options to purchase
3,267,500  shares  of  our  common stock at a weighted average exercise price of
$2.27  per  share.  Options  to  purchase 19,670 shares of our common stock at a
weighted average price of $5.03 per share were exercised and options to purchase
1,747,403  shares  of  our  common  stock  were  cancelled.

     During  the  year  ended  December 31, 2000, we granted options to purchase
3,542,499  shares  of  our  common stock at a weighted average exercise price of
$2.20  per  share.  Options  to  purchase 98,830 shares of our common stock at a
weighted average price of $2.92 per share were exercised and options to purchase
3,351,115  shares  of  our  common  stock  were  cancelled.

                                        7
<PAGE>

ITEM  16  EXHIBITS  AND  FINANCIAL  STATEMENT  SCHEDULES

ITEM  16(A)  EXHIBITS
     All  other  schedules  have been omitted because they are not required, not
applicable,  or  the  information  is  otherwise  set  forth  in  the  financial
statements  or  notes  thereto.

     EXHIBITS

2.01 Agreement  and Plan of Merger dated April 10, 1996, by and between 4Health,
     Inc.  and  Surgical  Technologies,  Inc.  as  amended  June  4,  1996.  (1)
2.04 Amended  and Restated Agreement and Plan of Merger dated December 24, 1997,
     signed  January 7, 1998, by and between 4Health, Inc. and Irwin Naturals as
     amended  April  2,  1998.  (2)
2.05 Agreement  to  Purchase  Asset  of  Inholtra  Naturals  Limited  (3)
2.06 Agreement  &  Plan of Merger with Health & Vitamin Express Inc. ("HVE") (3)
3.01 Articles of Incorporation of Surgical Subsidiary, Inc., a Utah Corporation,
     now  known  as Surgical Technologies, Inc. Irwin Naturals/4Health, Inc. (4)
3.02 Articles  of  Merger  and  related  Plan  of  Merger.  (4)
3.03 Bylaws  (4)
3.04 Articles  of  Merger  and  related  Plan  of  Merger  (1)
3.05 Form  of  Articles  of  Merger  and  related  Plan  of  Merger  (2)
3.06 Bylaws--Change  to  By-Laws  Eliminating  Executive  Committee  Approved by
     Shareholders  in  December  1999  to  Proxy  Statement.  (5)
3.07 Form of Articles of Merger and related Plan of Merger Amendment to Articles
     Changing  Name  and  Authorizing  the  Series  A  Preferred  Stock.  (6)
4.01 Form  of  Warrant Agreement between 4Health, Inc. and Zion's First National
     Bank  with  related  form  of  Warrant  (1)
4.02 Form of Sale Restriction Agreement respecting shareholders of both Surgical
     Technologies,  Inc.,  and  4Health,  Inc.  (1)
4.03 Form  of  Consent,  Approval,  and  Irrevocable  Proxy  respecting  certain
     Surgical  stockholders  with  related  schedule  (1)
4.04 Form of Consent, Approval, and Irrevocable Proxy respecting certain 4Health
     stockholders  with  related  schedule  (1)
4.05 Specimen  Common  Stock  Certificate  (1)
4.06 Specimen  Warrant  Certificate  (1)
4.07 Warrant certificates between 4Health and Allen & Company Incorporated dated
     April  15,  1997  (7)
4.08 Warrant  certificates  between  American  Equities  and Corporate Financial
     Enterprises  (7)
4.09 Registration  Rights  Agreements  with  American  Equities  and  Corporate
     Financial  Enterprises.  (1)
4.10 Lindsey  Duncan  Withdrawal  Agreement.  (1)
4.11 Voting  Agreement  Between  Lindsey  Duncan  and  Klee  Irwin.  (1)
5.01 Summary  of  Revolving Line of Credit Agreement between 4Health and Norwest
     Business  Credit,  Inc.  (8)
5.1  Opinion  of  Luce,  Forward,  Hamilton  &  Scripps  LLP  (*)
10.01  1996  Long-Term  Stock  Incentive  Plan  Incorporated  by  Reference  (1)
10.02  Form  of  Option  granted  to  Rockwell  D.  Schutjer.  (1)

                                        8
<PAGE>
10.03 Form of Proprietary Information, Inventions, and Non-Competition Agreement
     between  4  Health  and  R.  Lindsey  Duncan.  (1)
10.04  Form  of  Employment  Agreement  between  the  Surviving  Corporation and
     Rockwell  Schutjer.  (1)
10.05  Deed  of  Trust  Note  and  related  Deed  of Trust, Assignment of Rents,
     Security  Agreement,  and  Fixture  Filing, dated February 20, 1997, in the
     principal  amount  of  $1,350,000  due  Standard  Insurance  Company.  (9)
10.06  Form  of  Non-Negotiable  Promissory  Note.  (2)
10.07  Promissory  Note  issued  to  Inholtra  Naturals  Limited
10.10 Settlement Agreement; Indemnity Agreement with Lindsey Duncan; Lou Mancini
     Termination  Agreement;  Andrew  Vollero,  Jr. Stock Option Agreement. (10)
10.11  Indemnity  Agreement  with  Klee  Irwin  dated  April  19,  1999.  (11)
10.12  Secured  Credit  Agreement  by  and  among Irwin Naturals/4Health, Inc as
     Borrower,  and  First Source Financial LLP, as Agent and Lender dated as of
     June  10,  1999.  (12)
10.13  Settlement  Agreement  dated October 8, 1999 between Omni Nutraceuticals,
     Inc,  and  Klee  Irwin.  (13)
10.14 Tax Indemnification and Allocation Agreement dated October 8, 1999 between
     Omni  Nutraceuticals,  Inc  and  Klee  Irwin.  (13)
10.15  Voting  Agreement  dated  October  8,  1999  by  and among Klee Irwin and
     Margareth  Irwin  and  R.  Lindsey  Duncan.  (13)
10.16  Escrow  Agreement  dated  October  8, 1999 by and among Klee Irwin, Wells
     Fargo  Bank  as  the  Escrow  Agent  and  Omni  Nutraceuticals.  (13)
10.17 Amendment No. 1 to Settlement Agreement dated October 8, 1999 between Omni
     Nutraceuticals,  Inc.  and  Klee  Irwin.  (6)
10.18  Consulting  Agreement  by  and  between  Omni  Nutraceuticals,  Inc.  and
     corporate  financial  Enterprises,  Inc  dated  as of January 24, 2000. (6)
10.19 Consulting Agreement by and between Omni Nutraceuticals, Inc. and Montfort
     Investments  dated  as  of  January  24,  2000.  (6)
10.20  Lock  up  Agreement  by  Klee  Irwin  and  R.  Lindsey  Duncan.  (6)
10.21  Indemnity  Agreement between Omni Nutraceuticals, Inc. and Reid Breitman.
     (6)
10.22  Agreement  dated March 11, 20000 among the company, R. Lindsey Duncan and
     Cheryl  Wheeler.  (5)
10.23  Indemnity  Agreement  dated  March  11,  20000 between the Company and R.
     Lindsey  Duncan.  (5)
10.24  Term  Sheet  dated  March  11,  22000  between  the  Company and American
     Equities,  LLC.  (5)
10.25  Registration  Rights Agreement dated March 11, 2000 among the Company, R.
     Lindsey  Duncan  and  Cheryl  Wheeler.  (5)
10.26  Consulting  Agreement  between  the  Company  and  Liviakis  Financial
     Communications,  Inc.  (5)
10.27  Termination  Agreement  between  the  company  and  Louis  Mancini.  (5)
10.28  Form of Stock Purchase Agreement by and between Omni Nutraceuticals, Inc.
     and the purchasers of 3,000 shares of Series A Convertible Preferred Stock,
     dated  October  27,  2000.  (14)
10.29  Form of Registration Rights Agreement by and between Omni Nutraceuticals,
     Inc.  and  the purchasers of 3,000 shares of Series A Convertible Preferred
     Stock,  dated  October  27,  2000.  (14)
16.1 Letter  re:  Change  in  Certifying  Accountant.  (15)
20.1 Notice  of  change  of  transfer  and  warrant  agent.  (16)
22.1 List  of  subsidiaries  of  the  Company
23.1 Consent  of  Singer,  Lewak,  Greenbaum  &  Goldstein  LLP
23.2 Consent  of  Luce, Forward, Hamilton & Scripps LLP (included in Exhibit 5.1
     hereto)
24.1 Power  of  Attorney  (included  on  signature  page)

(*)  To  be  filed  by  amendment.
(1)  Incorporate by reference from Surgical's registration statement on Form S-4
     filed  with  the  Commission,  SEC  file  number  33-03243.
(2)  Proxy  Statement  of  4Health,  Inc.,  dated  June,  1998.
(3)  Incorporated  by  reference from the Company's report on Form 10-K/A, dated
     August  20,  1999,  for  the  year  ended  December  31,  1998.
(4)  Incorporated  by reference from Surgical's report on Form 10-K for the year
     ended  March  31,  1994.
(5)  Incorporated  by  reference  from the Company's report on Form 8-K filed on
     April  14,  2000.
(6)  Incorporated  by  reference  from the Company's report on Form 8-K filed on
     January  31,  2000.
(7)  Incorporated  by  reference  from Schedule 13D filed with the Commission by
     Allen  &  Company  Incorporated  on  April  18,  1997.
(8)  Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  September  30,  1997.
(9)  Incorporated  by  reference from 4Health's report on Form 10-K for the year
     ended  December  31,  1996.
(10) Incorporated  by  reference  from  the  Company's  report on Form 8-K dated
     August  25,  1999.
(11) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     June  7,  1999.
(12) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     July  22,  1999.
(13) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     October  28,  1999.
(14) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     November  3,  2000.
(15) Incorporated by reference from the Company's report on Form 8-K dated April
     20,  2000.
(16) Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  March  31,  1997.

                                        9
<PAGE>

ITEM  16(B)  FINANCIAL  STATEMENT  SCHEDULES

     No schedules have been included in this Registration Statement because they
are  not  required, not applicable, or the information is otherwise set forth in
the  financial  statements  or  notes  thereto.

ITEM  17.  UNDERTAKINGS.

The  undersigned  Registrant  hereby  undertakes:

     That, for purposes of determining any liability under the Securities Act of
1933,  as amended (the "Securities Act"), each filing of the Registrant's annual
report  pursuant  to  Section  13(a)  or 15(d) of the Securities Exchange Act of
1934,  as amended (the "Exchange Act") (and, where applicable, each filing of an
employee  benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act)  that  is  incorporated by reference in the registration statement shall be
deemed  to  be  a  new registration statement relating to the securities offered
therein,  and the offering of such securities at that time shall be deemed to be
the  initial  bona  fide  offering  thereof.

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

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

     (4)     To file, during any period in which offers or sales are being made,
a  post-effective  amendment  to  this  registration  statement:

               (i)  To  include  any prospectus required by section 10(a) (3) of
          the  Securities  Act;

               (ii)  To  reflect  in  the prospectus any facts or events arising
          after  the  effective date of this registration statement (or the most
          recent post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in  this  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 aggregate offering price set forth in the
          "Calculation  of Registration Fee" table in the effective registration
          statement;

               (iii)  To  include  any  material information with respect to the
          plan  of  distribution  not  previously disclosed in this registration
          statement  or  any  material  change  to  such  information  in  this
          registration  statement;

               provided,  however,  that  paragraphs (4) (i) and (4) (ii) do not
          apply  if  the information required to be included in a post-effective
          amendment  by  those paragraphs is contained in periodic reports filed
          by  the  Registrant  pursuant  to  Section  13 or Section 15(d) of the
          Exchange  Act  that are incorporated by reference in this registration
          statement.

     (5)     To  remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the  offering.

                                       10
<PAGE>

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

                                   SIGNATURES

     Pursuant  to 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  for  filing  on  Form  S-1  and  has duly caused this Registration
Statement  to  be  signed  on  its  behalf  by  the  undersigned, thereunto duly
authorized,  in  the  City  of  Los  Angeles,  California  on  July 27,  2001.

OMNI  NUTRACEUTICALS,  INC.


By:  /s/  KLEE  IRWIN
     -----------------------------------------
     Klee  Irwin,
     President  and  Chief  Executive  Officer


                                POWER OF ATTORNEY

     KNOW  ALL  PERSONS  BY  THESE  PRESENTS,  that  each person whose signature
appears below constitutes and appoints Klee Irwin, as his or her true and lawful
attorney-in-fact  and  agent, each acting alone, with full power of substitution
and  resubstitution,  for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this Registration Statement, and to file the same
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, and each of them, full power and authority to do and perform each and
every  act and thing requisite and necessary to be done in connection therewith,
as  fully  to all intents and purposes as he might or could do in person, hereby
ratifying  and  confirming  all  that said attorney-in-fact and agent, or any of
them  or their substitute or substitutes, may lawfully do or cause to be done by
virtue  hereof.

                                       11
<PAGE>

     Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities  and  on  the  dates  indicated.

Signature                    Capacity  in  Which  Signed            Date

/s/  ANDREW VOLLERO, JR.     Chairman of the Board of Directors    July 27, 2001
Andrew  Vollero,  Jr.

/s/  KLEE  KRWIN             President, Chief Executive Officer
Klee Irwin                   and Director                          July 27, 2001

/s/  THOMAS  BAKER           Vice President Finance
                             (Principal  Accounting Officer)       July 27, 2001
Thomas  Baker

/s/  REBECCA  PEARMAN        Director
Rebecca  Pearman                                                   July 27, 2001

/s/  THOMAS  AARTS           Director
Thomas  Aarts                                                      July 27, 2001


                                       12
<PAGE>
EXHIBITS

10.07     PROMISSORY  NOTE  ISSUED  TO  INHOLTRA  NATURALS  LIMITED

                          NON-RECOURSE PROMISSORY NOTE

$10,000,000.00                                        March  10,  1999

     FOR  VALUE  RECEIVED,  the undersigned Irwin Naturals/4Health, Inc., a Utah
corporation  (the  "Debtor"),  with  its  principal place of business located at
10549  W.  Jefferson Boulevard, Culver City, CA 90232, hereby promises to pay to
Inholtra  Natural,  Ltd.,  a Maine corporation (the "Creditor"), at 21 Oceanview
Road,  Kennebunk,  ME  04043,  or  at  such  other  place  as the Creditor shall
designate  to the Debtor in writing, the principal amount of Ten Million Dollars
($10,000,000.00)  lawful  money  of  the United States of America, with interest
thereon  at  the rate of eight percent (8%) per annum calculated on the basis of
365-day  year  and  the  number  of  days  elapsed.

     This Promissory Note evidences the obligation of the Debtor, subject to the
terms  and  conditions  set  forth below, to pay a portion of the balance of the
purchase price (the "Purchase Price") for certain assets purchase by it from the
Creditor  pursuant  to that certain Asset Purchase Agreement between the Debtor,
the  Creditor  and  certain  other  parties  dated  as  of  March, 10, 1999 (the
"Agreement").

     1.     The  principal amount hereof shall be payable on or before the close
of business on June 10, 1999 (the "Maturity Date") and shall be repaid by Debtor
as  follows:

               (i)  the  principal amount of One Million Dollars ($1,000,000.00)
          shall be paid to the Indemnity Escrow Agent (as defined in Section 1.5
          of  the  Agreement)  to  be  held  by its pursuant to the terms of the
          Indemnity  Escrow  Agreement  (as  also  defined in Section 1.5 of the
          Agreement);  and
               (ii)  the  remaining  principal balance hereof, together with all
          accrued  interest  as  herein  provided  shall  be  paid  to Creditor.

     2.  In  addition  to  its  other  rights hereunder and under the Agreement,
Debtor  shall  have  the right upon notice to Creditor specifying the reasonable
detail  the  basis  for  a  set-off  hereunder, to set-off and apply against its
obligations  to  Creditor  hereunder  any  and  all  amounts  to which it may be
entitled  from  Creditor under the Agreement and the other documents executed in
connection  with  the  transactions  contemplated  thereby. The exercise of such
right of set-off by Debtor in good faith shall not constitute default hereunder.

     3.     The  principal  amount  of  this Note may be prepaid, in whole or in
part,  along  with  accrued  interest  without  premium  or  penalty.

     4.     Upon  notice  to  the  Debtor  of  the  loss,  theft, destruction or
mutilation  of  this Note, and in the case of any such mutilation upon surrender
and  cancellation of the mutilated document, and in the case of such loss, theft
or  destruction,  upon  delivery  by  the  Creditor  of  an  indemnity agreement
satisfactory  to the Debtor, the Debtor will execute and deliver to the Creditor
a  new  Note  of like tenor in lieu of such lost, stolen, destroyed or mutilated
Note.

     5.     Except  as  otherwise  expressly  provided herein, the terms of this
Note  may be amended only by a written instrument executed by the Debtor and the
Creditor.  No  course  of dealing with the Debtor and the Creditor nor any delay
in  executing  any  rights hereof shall operate as a waiver of any rights of the
Creditor.

     6.     All  notices,  requests,  demands and other communications which are
required  to  be given hereunder shall be deemed to have been duly given only if
in  writing  and delivered by first class mail, return receipt requested, to the
other  party  at its address appearing on the first page hereof or to such other
address  as  such  party  shall have specified by notice in writing to the other
party.

                                       13
<PAGE>

     7.     The  rights  and  obligations  of  the  parties  hereunder  shall be
construed  and interpreted in accordance with the local laws of the State of New
York  without  regard  to  the  principles  of  conflicts  of  law  thereof.

     8.     If  (a) Debtor shall fail to pay any amount due under this Note when
due;  or  (b)  Debtor shall commit any other material breach or event of default
under  the  Agreement which shall continue uncured for a period of ten (10) days
after  notice  thereof  to  Debtor;  or  (c) Debtor shall be dissolved or become
insolvent,  or shall merge with or into another entity; or (d) there shall be an
assignment  for  the benefit of creditors of Debtor or appointment of a receiver
or  similar  official for Debtor to its assets, or Debtor shall apply for, or be
the  subject  of  any  voluntary  or  involuntary  application  or  petition for
protection or relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law; or (e) Debtor shall take any action for the purpose
of  effecting  any  of the foregoing; then and in any such event, all amounts of
unpaid  principal  and  all  other  amounts due to Creditor hereunder shall upon
demand  be  due  and  payable  in  full.

     9.     Except  as  otherwise  set  forth  herein,  the Debtor hereby waives
presentment,  demand  for  payment,  notice  of  dishonor, notice of protest and
protest,  and  all  other  notices  or  demands in connection with the delivery,
acceptance,  performance,  default, endorsement or guarantee of this instrument.

     10.     This  is  a  nonrecourse  note and, anything herein to the contrary
notwithstanding,  Creditor  agrees  for  itself, its representatives, successor,
endorsees,  and  assigns  that  (a)  neither  Debtor  nor  its  representatives,
successors  or  assignees  shall  be  personally  liable  on this Note, it being
intended  that  Debtor's  obligation  to  pay  the  principal  of this Note with
interest  thereon is included for the sole purpose of establishing the existence
of the indebtedness represented hereby and (b) in the event of default, Creditor
(and  any  such  representative,  successor, endorsee, or assign) shall look for
payment solely to the Reassignments (as defined in the Agreement) and the rights
and  remedies  set  forth  in  the  Security Escrow Agreement (as defined in the
Agreement)  and  will  not  make any claim or institute any action or proceeding
against  Debtor  (or  any  representative,  successor  or  assign of Debtor) for
payment  of  this Note (or for any deficiency remaining after application of the
property  which  is  the  subject of the Reassignments); provided, however, that
nothing  herein  contained  shall  be  construed  to  release  or  impair  the
indebtedness  evidence  by  this Note, or of the lien upon the property securing
it,  or  preclude  the  application  of  said  property to the payment hereof in
accordance  with  the  terms  of  the  Security  Escrow  Agreement.

     11.     All  disputes  arising  hereunder  shall  be  resolved  by  binding
arbitration  in  the  City  of  New York, New York before a single arbitrator in
accordance  with  the  rules  of  the  American  Arbitration  Association.

     IN  WITNESS  WHEREOF,  this  Note has been signed by the Debtor on the date
first  above  written.
IRWIN  NATURALS/4HEALTH,  INC.

BY:  /S/KLEE  IRWIN
     --------------
     KLEE  IRWIN
     CHIEF  EXECUTIVE  OFFICER

                                       14
<PAGE>

22.1     LIST  OF  SUBSIDIARIES

     Inactive  Subsidiaries

     Applied  Nutrition,  Inc.,  a  California  corporation
     Omni  Smart  Basics,  Inc.,  a  Nevada  corporation
     Irwin  Naturals  International,  Inc.,  a  Virginia  Islands  corporation
     Zone  Management,  Inc.,  a  California  corporation
     US  Employee  Corporation,  a  California  corporation

                                       15
<PAGE>

23.1     CONSENT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTS

                          INDEPENDENT AUDITOR'S CONSENT


     We  consent  to  the  use  in  this  Registration  Statement  of  Omni
Nutraceuticals,  Inc.  on  Form  S-1  of our report, dated March 28, 2001, which
includes  an  emphasis  paragraph relating to an uncertainty as to the Company's
ability  to  continue  as a going concern, appearing in the Prospectus, which is
part  of  this  Registration  Statement.

We  also consent to the reference to our Firm under the caption "Experts" in the
Prospectus.



SINGER  LEWAK  GREENBAUM  &  GOLDSTEIN  LLP

Los  Angeles,  California
July  26,  2001

                                       16
<PAGE>
[{"type": "S-1", "sequence": "1", "filename": "s1072501.txt", "secsgml_size_bytes": 415912}]
{"company-data": {"conformed-name": "OMNI NUTRACEUTICALS", "cik": "0000857353", "assigned-sic": "2834", "irs-number": "870468225", "state-of-incorporation": "UT", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-66040", "film-number": "1690802"}, "business-address": {"street1": "5310 BEETHOVEN STREET", "city": "LOS ANGELES", "state": "CA", "zip": "90066", "phone": "3102535305"}, "mail-address": {"street1": "5310 BEETHOVEN STREET", "city": "LOS ANGELES", "state": "CA", "zip": "90066"}, "former-company": [{"former-conformed-name": "IRWIN NATURALS 4 HEALTH", "date-changed": "19980903"}, {"former-conformed-name": "IRWIN NATURALS/4HEALTH INC", "date-changed": "19980715"}, {"former-conformed-name": "4HEALTH INC", "date-changed": "19970813"}]}
As filed with the Securities and Exchange Commission on July 27,2001

                    Registration Statement No. 333-_________

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C.  20549

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

                               --------------------
OMNI NUTRACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)

            UTAH                                               87-0468225
       (State of other                                      (I.R.S. Employer
       jurisdiction of                                       Identification
       incorporation or                                          Number)
        organization)

                              5310 BEETHOVEN STREET
                          LOS ANGELES, CALIFORNIA 90066
                                 (310) 306-3636
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)

                                   KLEE IRWIN
                            CHIEF EXECUTIVE OFFICER
                            OMNI NUTRACEUTICALS, INC.
                               5310 BEETHOVEN ST.
                              LOS ANGELES, CA 90066
                                 (310) 306-3636
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                              ---------------------
1
Copies to:
                              Jeffrey P. Berg, Esq.
                              Luce, Forward, Hamilton & Scripps LLP
                              11755 Wilshire Blvd., Suite 5200
                              Los Angeles, CA 90025
                              Phone: (310) 481-5218

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

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

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

     If  this  Form  is  filed to register additional securities for an offering
pursuant  to  Rule  462(b) under the Securities Act, 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,
please  check  the  following  box.
                              ---------------------
CALCULATION OF REGISTRATION FEE
-------------------------------
PROPOSED
                                 MAXIMUM
TITLE OF EACH CLASS OF. . . . .  PROPOSED        AGGREGATE        AMOUNT OF
 SECURITIES TO BE . . . . . . .  AMOUNT TO BE    MAXIMUM          OFFERING     REGISTRATION
REGISTERED. . . . . . . . . . .  REGISTERED (1)  OFFERING PRICE   PRICE (1)    FEE (1)
                                 PER SHARE (1)
                                 --------------
Common stock, par value $0.01 .       6,512,310  $    1,497,831  $ 1,497,831   $          375
-------------------------------  --------------  ---------------  -----------  --------------
(1)     Calculated in accordance with Rule 457(c) based on the high and low sale
prices  of  the common stock as reported on the NASD Bulletin Board published by
the  National  Quotation  Bureau,  Inc.  on  June  25,  2001.

     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,  AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL  BECOME  EFFECTIVE  ON  SUCH  DATE  AS  THE COMMISSION, ACTING PURSUANT TO
SECTION  8(A),  MAY  DETERMINE.

                                        2
OMNI NUTRACEUTICALS, INC.
                              CROSS REFERENCE SHEET
                    PURSUANT TO ITEM 501(B) OF REGULATION S-K
                SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
              REQUIRED BY ITEMS 1 THROUGH 12, PART I, OF FORM S-1
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION                 LOCATION IN PROSPECTUS

1.  Forepart of the Registration Statement and Outside Front   Outside Front Cover Page of Prospectus
    Cover Page of Prospectus.

2.  Inside Front and Outside Back Cover Pages of               Inside Front and Outside Back Cover Pages of Prospectus;
    Prospectus                                                 Additional Information

3.  Summary Information, Risk Factors and Ratio of             Prospectus Summary; Risk Factors; Selected Financial Data
    Earnings to Fixed Charges

4.  Use of Proceeds                                            Use of Proceeds; Selling Stockholders and Plan of
                                                         . . . Distribution

5.  Determination of Offering Price                            Plan of Distribution

6.  Dilution                                                   Not Applicable

7.  Selling Security Holders                                   Outside Front Cover Page of Prospectus; Selling Stockholders
                                                               and Plan of Distribution

8.  Plan of Distribution                                       Outside Front Cover Page of Prospectus; Selling Stockholders
                                                               and Plan of Distribution

9.  Description of Securities to Be Registered                 Outside Front Cover Page of Prospectus; Dividend Policy;
                                                               Shares Eligible for Future Sale; Principal Stockholders;
                                                               Selling Stockholders and Plan of Distribution; Description of
                                                               Securities

10.  Interests of Named Experts and Counsel                    Legal Matters

11.  Information of Named Experts and Counsel                  Outside Front Cover Page of Prospectus; Prospectus
                                                               Summary; Risk Factors; Dividend Policy; Capitalization;
                                                               Selected Financial Data; Management's Discussion and
                                                               Analysis of Financial Condition and Results of Operations;
                                                               Business; Management; Compensation of Executive Officers
                                                               and Directors; Certain Relationships and Related
                                                               Transactions; Shares Eligible for Future Sale; Financial
                                                               Statements

Disclosure of Commission Position on Indemnification       Not Applicable
for Securities Act Liabilities
3
THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE  CHANGED.  THESE  SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS
IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION  WHERE  THE  OFFER  OR  SALE  IS  NOT  PERMITTED.

                   SUBJECT TO COMPLETION, DATED JULY 27, 2001

                                   PROSPECTUS

                            OMNI NUTRACEUTICALS, INC.

                                6,512,310 SHARES
                                  COMMON STOCK
                         OFFERED BY SELLING STOCKHOLDERS
                                   ----------

     This  prospectus  relates  to  the  public  offering,  which  is  not being
underwritten,  of 6,512,310 shares of our common stock, which is held by some of
our  current  stockholders,  or  the  selling  shareholders.

     The  prices  at  which  such  selling  stockholders may sell shares will be
determined  by  the  prevailing  market  price  for  the shares or in negotiated
transactions.  We  will  not  receive  any  of the proceeds from the sale of the
shares.

     Our  common  stock  is  quoted  on the NASD Bulletin Board published by the
National  Quotation Bureau, Inc. under the symbol "ZONE."  On June 25, 2001, the
average  of  the  high  and  low  price  for  the  common  stock  was  $0.23.

     Investing  in  our  common stock involves risks.  See the sections entitled
"Risk  Factors" at page 4 in this prospectus for certain risks and uncertainties
that  you  should  consider.

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

                                   -----------

                  The date of this prospectus is July 27, 2001

                                        4
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations,"  "Business"  and  elsewhere in this prospectus are "forward-looking
statements."  These  forward-looking statements include, but are not limited to,
statements  about  our  plans, objectives, expectations and intentions and other
statements  contained  in  this  prospectus that are not historical facts.  When
used  in  this  prospectus,  the words "expect," "anticipate," "intend," "plan,"
"believe,"  "seek," "estimate" and similar expressions are generally intended to
identify  forward-looking  statements.  Because these forward-looking statements
involve  risks  and  uncertainties, there are important factors that could cause
actual  results  to  differ  materially from those expressed or implied by these
forward-looking  statements,  including  our plans, objectives, expectations and
intentions  and  other  factors  discussed  under  "Risk  Factors."

                               PROSPECTUS SUMMARY

     This  summary  highlights  selected information contained elsewhere in this
prospectus  and  may not contain all of the information that you should consider
before  investing  in  our  common stock.  You should read carefully this entire
prospectus,  including  "Risk Factors" and our consolidated financial statements
and  related  notes  included  elsewhere  in  this  prospectus  before making an
investment  decision.  In  addition,  we  incorporate  by  reference  important
business  and  financial  information  in  this  prospectus.

OUR  COMPANY

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the general public. Our products are produced primarily from natural ingredients
and are formulated for the purposes of achieving specific dietary or nutritional
goals.  We  develop  and  market  natural remedies for weight loss, pain relief,
cholesterol  control  and other specific health and nutrition needs.  All of our
products are natural nutritional supplements are subject to regulation under the
Dietary  Health  Supplement & Education Act of 1994, or DHSEA.  Our products are
widely  distributed  through  mass  market  retailers  such  as  GNC,  Wal-Mart,
Rite-Aid,  Costco, Eckerd and Walgreens, in over 7,500 health food stores either
directly  or  through  distributors, and internationally through distributors in
over  20  countries.

     Our portfolio of branded products includes, but is not limited to, Nature's
Secret,  Diet  System  6, PhenSafe, Harmony Formulas, Dr. Linus Pauling Vitamins
and  Inholtra  Natural  Pain  Relief  among others.  We have registered numerous
trademarks  and  have  pending trademark applications domestically and worldwide
relating  to  our  branded  products,  including without limitation, Bar Bites ,
BurnMore  ,  Candistroy  ,  Cellulite  Burner  ,  Crave  Less  , Diet System 6 ,
Endurance Energy , Evening Multi , Fulfill , Ginkgo Smart , Ginza-Plus , Harmony
Formulas  and  Design , Home Nutrition , Inholtra , Liver Support , Marital Arts
Nutrition  ,  Memory  Sharp  ,  Mind  Energy , Morning Multi , Nature's Secret ,
Parastroy  ,  PhenSafe  ,  Redo  , Rezyme , Super Cleanse , System-Six , The New
Grapefruit  Diet  ,  Thinsolution  ,  Ultimate  Breakfast  ,  Ultimate Cleanse ,
Veroxin-7  and  Yohimbe-Plus  .  Omni Nutraceuticals, Inc. and our logo are also
registered  trademarks  of  Omni  Nutraceuticals,  Inc.

     The  nutrition  industry  is  primarily  comprised  of  companies  that
manufacture,  distribute  and/or  sell:

-     vitamins,  minerals  and  meal  supplements,  or  VMS;
-     herbals  and  botanicals;
-     sports  nutrition;
-     natural  personal  care  products;  and
-     natural  foods  including  organics.

     In  the  last  several  years,  public awareness of the positive effects of
vitamins  and  nutritional  supplements  on  good  health has been heightened by
widely  publicized  reports  of  scientific findings supporting such claims. The
rise and acceptance of alternative medicine has greatly contributed to increased
sales  of  nutritional  supplements.  Because  the  market  for  these  products
represents  a  rapidly  evolving  industry,  one  that  is  growing  at a nearly
double-digit  rate,  it  is  anticipated  that  sales  will  increase  for  the
foreseeable  future.

                                        5
The  aging of the "baby boom" generation, combined with consumers' tendency
to  purchase  more dietary supplements as they age, has been an important source
of  growth  for  the  VMS  segment of the nutritional industry.  There will be a
significant expansion of the population segment of 40 years and over in the next
decade,  and  this  segment  displays  the  highest  usage of vitamins and other
supplements.

     The  nationwide  trend  toward  preventive  medicine  in response to rising
healthcare  costs  has  been  an underlying driver for this industry.  There has
been  a  heightened  awareness  and understanding of preventive medicine and the
connection  between  vitamins and health amongst the general public, health care
professionals,  employers,  government agencies, and managed care organizations.
Issues  regarding  preventive  care  and  the  benefits  of vitamins and dietary
supplements  have  received  widespread  media  coverage.

     Our  point  of  sale advertising is designed to convey the effectiveness of
our  products. We have established our reputation with retailers through quality
products,  timely  delivery  and  superior  packaging.  Through  our  ability to
position  products  in  the  marketplace and our strong reputation, we have been
able  to  secure  favorable shelf spacing from many of our retail customers. Our
sales,  marketing  and  distribution infrastructure is designed to integrate new
brands  with  minor  incremental  costs  and  synergistic  potential.  Recent
limitations in capital, however, have limited the amount of advertising to point
of  sale  displays.

     Historically,  we have distributed our products though three main segments:
mass-market  retailers,  which  accounted for 48.1% of 2000 shipments, specialty
health food stores and distributors, which accounted for 28.6% of 2000 shipments
and  international  distribution,  which  accounted for 23.3% of 2000 shipments.
With  increased  advertising  in  the  future,  we  should be able to convey the
effectiveness  of  our  products.  In  certain  instances,  we  enter into co-op
advertising  arrangements  with  our  customers.

     Our  principal  executive offices are located at 5310 Beethoven Street, Los
Angeles,  California  90066.  Our  telephone  number  is  (310)  306-3636.

THE  OFFERING

Common  stock  offered  by  the  selling  stockholders  6,512,310  shares

Common  stock  outstanding                             36,067,061  shares

Our  common stock is quoted on the NASD Bulletin Board published by the National
Quotation  Bureau,  Inc.  under  the  symbol  "ZONE."

The  above  information is based on 36,067,061 shares outstanding as of June 25,
2001  and  is  based  on:

- the  conversion  of  200  shares of Series A Convertible Preferred Stock into
  1,572,682  shares  of  common stock at an exercise price of $0.13 per share;
  and excludes

- 3,037,500 shares of common stock underlying warrants, at an exercise price per
  share  ranging  from  $0.96  to  $6.00;  and

- 6,730,653  shares of common stock underlying options, at an exercise price
  per  share  ranging  from  $0.25  to  $7.25.

RISK  FACTORS

     The  securities  offered  hereby  are highly speculative and involve a high
degree of risk.  These factors include, but are not limited to, risks related to
our historical lack of profitability, the government regulation of our products,
legislative  and  regulatory  restrictions impacting our business operations and
industry  and  the market for the securities offered hereby.  Only investors who
can  afford  the  loss  of  their entire investment should make an investment in
these  securities.

                                        6
SUMMARY OF CONSOLIDATED FINANCIAL DATA

     The  Summary  Consolidated Financial Data set forth below should be read in
conjunction  with  the  Consolidated Financial Statements and notes thereto, the
information  under  "Selected Consolidation Financial Data," and the information
under  "Management's  Discussion and Analysis of Financial Condition and Results
of  Organization"  included  elsewhere  in  this  prospectus.
STATEMENT  OF
OPERATIONS DATA (1)          Three Months Ended
                                  March 31,                Year Ended December 31,

(in thousands, except per    2001        2000       2000     1999     1998     1997     1996
share  data)              (unaudited) (unaudited)             as
                                                          previously
                                                           restated
Net sales                   $ 5,751   $ 8,039   $ 29,609   $ 30,922   $30,547  $29,353   $28,592
Income (loss) before
discontinued operations      (1,310)   (6,546)   (15,337)   (10,422)    1,018   (4,717)   (1,791)
Discontinued operations        (246)     (230)    (1,155)      (633)
Net income (loss)            (1,556)   (8,726)   (16,492)   (11,055)    1,018   (4,717)   (1,791)
Pro forma net income
(loss) (unaudited)              N/A       N/A        N/A        N/A       273   (5,482)       N/A
Historical Earnings (loss)
per common share
- Basic and diluted         $ (0.05)  $ (0.30)  $  (0.71)  $  (0.39)  $  0.04  $ (0.17)  $ (0.07)
Pro Forma Earnings (loss)
Per common share
- Basic and diluted
(unaudited)                     N/A       N/A       N/A        N/A    $  0.01  $ (0.20)      N/A
BALANCE SHEET DATA (AT PERIOD END):       March 31,                     December 31,
(in thousands)                                2001       2000        1999         1998     1997     1996
(unaudited)            as previously
                                                                   restated
Working Capital (Deficit)                 $ (12,549)  $  (11,141)  $(8,558)     $ 4,395  $ 3,588  $ 4,483
Total Assets                                 26,324       27,305    29,533       13,087   11,337   15,832
Long Term Debt, Net of Current Portion        6,852        7,440    10,187        1,423    1,298    1,276
Shareholders' Investment                      1,321        2,569     (316)        5,869    5,387   10,256
The  statement  of  operations  data for the years ended December 31, 1998,
1999  and  2000  and the three months ended March 31, 2001 (unaudited) and March
31,  2000  (unaudited)  and the balance sheet data at December 31, 1999 and 2000
and  the  quarter ended March 31, 2001 are derived from our audited consolidated
financial  statements  appearing elsewhere in this prospectus. The balance sheet
data at December 31, 1997 and 1996, and the statement of operations data for the
year  ended December 31, 1997 and the period from March 15, 1996 to December 31,
1996 are derived from our audited consolidated financial statements not included
in this prospectus. The statement of operations data for the period from January
1,  1996  to  March  14,  1996  represents  data of a predecessor company and is
derived  from  its  unaudited  consolidated financial statements not included in
this  prospectus.

                                        7
RISK FACTORS

     This  offering  involves  a  high  degree  of  risk.  You  should carefully
consider  the  following  information  about  these  risks,  as  well  as  other
information  contained  or  incorporated  by  reference  in  this prospectus, or
contained  elsewhere in our reports, proxy statements and other available public
information,  as filed with the Commission,  before you decide to buy any shares
of  our  common  stock.  Any  of  the following risks could materially adversely
affect  our business, operating results and financial condition and could result
in  a  complete loss of your investment.  Only investors who can afford the loss
of  their  entire  investment  should  make  an  investment in these securities.

WE  HAVE A HISTORY OF OPERATING LOSSES THAT ARE LIKELY TO CONTINUE IN THE FUTURE

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants  included  in our audited financial statements,
included  elsewhere  in  this  prospectus for the years ended December 31, 2000,
1999  as  previously  restated  and  1998,  respectively, to the effect that our
losses  from  operations  for  the year ended December 31, 2000, and the working
capital  deficit and the retained deficit at December 31, 2000 raise substantial
doubt  about  our  ability  to  continue  as  a going concern.  We have incurred
significant  losses  in  two  of  the  last  three  years.  We have historically
financed  our activities through working capital provided from operations, loans
and  the  private  placement of our debt and equity securities.  As of March 31,
2001,  our  retained deficit was $42.9 million. In the first quarter of the year
2000,  we  implemented an operating plan to improve the financial results of the
business, concentrating initially on major cost reductions.  In doing so, we are
also  focusing  on  product  margins,  which have gradually eroded as the mix of
products sold changes and the competition for retail shelf space erodes pricing.

     We  expect  to  incur  continuing losses because we plan to spend available
resources  on  marketing new and existing products. We cannot assure you that we
will market any products successfully, operate profitably in the future, or that
we  will not require significant additional financing in order to accomplish our
business  plan.

WE WILL NEED RELIEF FROM OUR OBLIGATIONS TO PAY OUR SECURED CREDITOR IN THE NEAR
TERM  AND  WE MAY NEED ADDITIONAL FINANCING TO MAINTAIN AND EXPAND OUR BUSINESS,
AND  SUCH  FINANCING  MAY  NOT  BE  AVAILABLE  ON  FAVORABLE  TERMS,  IF AT ALL.

     We  have  historically  financed  our  operations  through  working capital
provided  from  operations,  loans  and the private placement of equity and debt
securities.  In  2000,  we raised the gross amount of approximately $8.1 million
through  a  private  placement  of  our  securities.  The  net  proceeds of that
financing,  together with our existing financial resources and any revenues from
our  sales,  distribution,  licensing and manufacturing relationships, should be
sufficient to meet our operating and capital requirements through July 15, 2001.
On  June  15, 2001, we entered into an amendment to our Secured Credit Agreement
which,  among  other  things  extended  the  repayment  date  of  the  aggregate
outstanding  principal balance of the credit facility from June 15, 2001 to July
30,  2002.  On  July  20, 2001 our Secured Credit Agreement was amended so that,
among  other  things,  our  permitted  overadvance was increased by $200,000. On
September  30, 2001, our permitted overadvance will revert to current levels. As
of  June  25,  2001  the  borrowing  under  our  Secured  Credit  Agreement  was
approximately  $16.7  million.  Under  the  terms  of our amended Secured Credit
Agreement  we are required to make monthly interest payments on the 15th of each
month  that  are presently approximating $130,000 per month. We may not have the
resources  to  make  these  payments.  We  may  not  be able to pay the required
interest  payment  on September 15, 2001 and we may need to seek relief from the
lender  from  that  payment  and/or future payments. Our failure to receive such
relief  could  have a material adverse effect on our financial condition and our
ability  to  continue  to  operate.  If  we need additional financing, we cannot
assure  you  that it will be available on favorable terms, if at all. If we need
funds  and  cannot  raise  them  on  acceptable  terms,  we  may  not be able to

-     sustain  our  business  operations;
-     execute  our  growth  plan;
-     take  advantage  of  future  opportunities,  including  acquisitions,  as
      feasible;
-     respond  to  customers  and  competition.

THE  ISSUANCE  OF ADDITIONAL SHARES OF COMMON STOCK UPON CONVERSION OF PREFERRED
STOCK  MAY  CAUSE  SIGNIFICANT  DILUTION  OF  EXISTING  SHAREHOLDERS' INTERESTS.

                                        8
Significant  dilution  of  existing shareholders' interests may occur if we
issue  additional  shares  of  common stock underlying outstanding shares of our
preferred  stock  or  preferred  stock.  The  number  of  shares of common stock
issuable  upon  conversion of the preferred stock may constitute a significantly
greater  percentage  of  the  total  outstanding shares of common stock, as such
conversion  is  based on a formula tied to the market price of the common stock.

     The exact number of shares of common stock into which currently outstanding
preferred  stock may ultimately be convertible will vary over time as the result
of  ongoing  changes in the trading price of the common stock.  Decreases in the
trading  price  of  the  common  stock will result in increases in the number of
shares  of  common  stock  issuable upon conversion of the preferred stock.  The
conversion  of  the preferred stock would dilute the book value and earnings per
share  of  common  stock  held  by  existing  shareholders.

     The  Securities  Purchase  Agreement,  dated October 27, 2000, provides, in
part,  that  to  the  extent  that the number of shares required to be issued in
connection  with  conversions  of preferred stock exceeds 19.9% or approximately
6,520,700  shares of common stock outstanding at the closing, we are required to
redeem the preferred stock representing such excess common shares at 140% of its
face  amount,  plus  accrued  dividends.  If this were to occur, we may not have
adequate  cash to redeem such excess and would then be in breach of the terms of
the  securities  purchase  stock  agreements.

OUR  PRODUCTS  RETURN  POLICIES  MAY  HAVE  A  MATERIAL  ADVERSE EFFECT UPON OUR
OPERATIONS.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales velocity.  We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our gross profit was negatively impacted in 1999 and 2000 for returns.  Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed the high levels experienced in the year 2000 or will be in line with past
return  percentages.  The  risk  of returns is amplified by the current industry
trend,  which  shows  negative  growth.  If  this trend continues, retailers may
decide  to reduce inventory levels from their suppliers, by returning goods from
their  warehouse  distribution  centers.

WE  ARE  RELIANT  ON  A  LIMITED  NUMBER  OF  PRODUCTS  TO  GENERATE  REVENUES.

     We currently offer approximately 313 products and derive more than 31.8% of
our total shipments during 2000 from the sale of Ultimate Cleanse   and Inholtra
products. As a result of the limited number of products from which we derive our
revenue,  the  risks  associated  with  our business increase since a decline in
market demand for one or more products, for any reason, could have a significant
adverse  impact  on  the  results  of  our  operations.

     We  may  face costly product liability and other legal claims by consumers.

     The  products  we  carry  are particularly susceptible to product liability
claims.  Any  claim of product liability by a consumer against us, regardless of
merit,  could  be  costly  financially  and  could  divert  the attention of our
management.  It  could  also  create  negative  publicity,  which would harm our
business.  Although we maintain product liability insurance in the amount of $15
million,  it  may  not  be  sufficient  to  cover  a  claim  if  one  is  made.

     Like  other  retailers, distributors and manufacturers of products that are
ingested,  we  face  an inherent risk of exposure to product liability claims in
the event that the use of the products that we sell results in injury. We may be
subjected  to  various  product  liability  claims,  including  claims  that the
products  we  sell  contain  contaminants,  are  improperly  labeled  or include
inadequate instructions as to use or inadequate warnings concerning side effects
and  interactions  with  other  substances.  We  cannot  predict whether product
liability  claims  will be brought against us in the future or the effect of any
resulting  adverse publicity on our business. Moreover, we may not have adequate
resources  in  the event of a successful claim against us. We do not have formal
indemnification  arrangements  with the third-party vendors from which we source
our  products.  If  our  insurance  protection is inadequate and our third-party
vendors  do  not  indemnify  us,  the  successful assertion of product liability
claims  against  us  could  result  in potentially significant monetary damages.

                                        9
Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption, some of our products contain innovative ingredients or combinations
of  ingredients.  There is little long-term experience with human consumption of
some  of  these  innovative  product ingredients or combinations in concentrated
form.  In  addition, interactions of these products with other similar products,
prescription  medicines and over-the-counter drugs have not been fully explored.

     Because  we will be dealing with large numbers of end users, we will have a
significant  level  of  legal  exposure  due  to  this  volume  of  customer
relationships.  The most serious area of exposure will be in relation to product
advertising claims and the product quality. People may purchase products from us
expecting  certain  physical results, unique to nutritional products. If they do
not  perceive  the  results  to  be  in  accordance  with the claims made on the
packaging  or  on our Web site, certain individuals or groups of individuals may
seek  monetary  retribution.  However,  we  have no assurance that our insurance
company will comply with coverage in all instances or that such coverage will be
adequate  to  cover  all  potential  losses.

OUR  SUCCESS  IS  DEPENDENT UPON THE SUCCESSFUL INTRODUCTION OF OUR NEW PRODUCTS
AND  THE  SUCCESS  IN  EXPANDING  THE  DEMAND  FOR  EXISTING  BRANDS.

     We  believe the growth of our net sales is substantially dependent upon our
ability  to  introduce new products and to expand the demand for existing brands
such as Nature's Secret, Irwin Naturals and others.  At present, we have limited
resources  to  spend on advertising and therefore we will be relying, to a large
extent,  on  point  of  sale  displays  to generate interest in new products and
existing  brands.  We  introduced  Inholtra  Joint  Pain,  a new product, to the
mass-market  in  May  2001.  If we do not achieve velocity rates that our target
mass-market  customers  demand,  the  Joint Pain product may be removed from our
customers' shelves.  Our ability to meet future debt obligations is dependent in
large  measure  on  the  success  of  this product and the expansion of existing
brands.  We seek to introduce additional products each year.  The success of new
products is dependent upon a number of factors, including our ability to develop
products  that will appeal to consumers and respond to market trends in a timely
manner.  There can be no assurance that our efforts to develop new products will
be  successful  or  that  consumers  will accept our new products.  In addition,
products  currently  experiencing  strong  popularity  and  rapid growth may not
maintain  their  sales  volumes  over  time.

WE  DO  NOT  HAVE  LONG-TERM  CONTRACTS  WITH  MANUFACTURERS  OR  DISTRIBUTORS.

     We  purchase all of our products from third-party manufacturers pursuant to
purchase  orders,  but  without  any long term manufacturing agreements.  In the
event  that  a  current  manufacturer  is  unable  to meet our manufacturing and
delivery  requirements  at  some  time  in  the future, we may suffer short-term
interruptions  of delivery of certain products while we establish an alternative
source.  While  alternative sources are in most cases readily available, we have
also  established relationships with two third-party manufacturers for all large
volume  products to further limit our exposure to this type of interruption,  We
also  rely on third-party carriers for product shipments, including shipments to
and  from  our  distribution facilities.  We are therefore subject to the risks,
including  employee strikes and inclement weather, associated with our carrier's
ability to provide delivery services to meet our fulfillment and shipping needs.
Failure  to  deliver  products  to our customers in a timely and accurate manner
would  harm  our  reputation  and  our  business  and  results  of  operations.

WE  ARE  DEPENDENT  ON  OUR  BUSINESS  RELATIONSHIPS WITH OUR LARGEST CUSTOMERS.

     During  2000,  we  had two customers who accounted for more than 10% of our
business.  Our  top  10 customers account for approximately 60% of our business.
The  loss  of any one of or a significant number of these customers would have a
material  adverse effect on our growth.  We do not have long-term contracts with
any  of  our  customers.  There  is  no  assurance that our major customers will
continue  as  major  customers.  The loss of a significant number of other major
customers,  or  a  significant  reduction  in  purchase  volume  by or financial
difficulty  of  such  customers,  for  any reason, could have a material adverse
effect  on  our  business,  financial  condition  and  results  of  operations.

INDUSTRY  TRENDS  INDICATE  THAT  OUR  SALES  IN  OUR  INDUSTRY  ARE IN DECLINE.

                                       10
The  total  United  States  retail  market for nutritional supplements, the
vitamin,  mineral  and supplement market, or VMS is highly fragmented.  Industry
sources  report that the VMS sector grew substantially during most of the 1990s,
in  many  years at a double digit pace.  However, there is evidence, that during
the  year  2000,  the  industry  rate  of  growth  became  negative.

     Information  Resources,  Inc.,  or  IRI, tracks sales data within the food,
drug,  and  mass-market  channels  of  distribution.  In  the twelve weeks ended
February 4, 2001, vitamin and supplement sales in these channels of distribution
fell  9.3% when compared to the same period a year earlier.  Sales for the prior
52  weeks  fell  4.0%  when  compared to the same 52-week period a year earlier.
During  the  12-week  period,  sales  of  herbal  products fell 20.8% and in the
52-week  period  such  sales  fell  13.2%.

     In  addition  to  the  trends  in  our specific industry, the United States
economy  has  experienced  a  significant  downturn  in recent months, which may
contribute  significantly  to  downward  trends  in  our  industry.

     There  also  can  be  no  assurance that the industry growth rates of prior
years can be regained.  In addition, there can be no assurance that the industry
growth rate will not continue to decline in future operating periods or that the
growth  rate of the U.S. economy may not be negative.  Such a failure to achieve
and  sustain growth in the industry or in the U.S. economy as a whole may have a
material  adverse  effect  on  our ability to return its results to its historic
rates  of  growth  and  its  results  of  operations.

THE  VMS  INDUSTRY  IS  HIGHLY  COMPETITIVE.

     Numerous  companies,  many  of  which  have  greater  size  and  financial,
personnel,  distribution  and  other  resources  than us, compete with us in the
development,  manufacture  and  marketing  of  VMS  supplements.  Our  principal
competition  in  the health food store distribution channel comes from a limited
number of large nationally known manufacturers and many smaller manufacturers of
dietary  supplements.  In  the  mass-market  distribution channel, our principal
competition  comes  from  broad  line  manufacturers,  major  private  label
manufacturers  and  other  companies.

     In  addition,  large  pharmaceutical  companies  have begun to compete with
others  and  with  us  in  the  dietary  supplement  industry. Packaged food and
beverage  companies compete with us on a limited basis in the dietary supplement
market.  Increased competition from such companies could have a material adverse
effect  on  us because such companies have greater financial and other resources
available  to  them  and  possess  manufacturing,  distribution  and  marketing
capabilities  far  greater  than  ours.

     We  also  face  competition  in  both the health food store and mass market
distribution  channels  from private label dietary supplements and multivitamins
offered  by  health  and  natural  food  store  chains,  drugstore  chains, mass
merchandisers  and  supermarket  chains.

OUR  BUSINESS  MAY  BE  ADVERSELY  AFFECTED  BY  UNFAVORABLE  PUBLICITY.

     We  believe that the VMS market is significantly affected by national media
attention  regarding  the  consumption  of  VMS  supplements.  Future scientific
research  or  publicity  may  not  be  favorable  to  the VMS industry or to any
particular product, and may not be consistent with earlier favorable research or
publicity.  Because  of  our  dependence  on  consumers'  perceptions,  adverse
publicity  associated  with  illness or other adverse effects resulting from the
consumption  of  our  products  or  any  similar  products  distributed by other
companies and future reports of research that are perceived as less favorable or
that  question  earlier  research  could  have  a material adverse effect on our
business,  financial  condition  and  results  of  operations.  We  are  highly
dependent  upon consumers' perceptions of the safety and quality of our products
as  well  as dietary supplements distributed by other companies.  Thus, the mere
publication  of  reports  asserting  that  such  products  may  be  harmful  or
questioning their efficacy could have a material adverse effect on our business,
financial  condition  and  results  of  operations,  regardless  of whether such
reports  are  scientifically  supported  or  whether the claimed harmful effects
would  be  present  at  the  dosages  recommended  for  such  products.

THERE  IS  A  SIGNIFICANT  COST  TO  OUR  RETAIL  RELATIONSHIPS.

                                       11
Many large retailers demand various forms of incentive payments in order to
conduct  business  with  them.  These  payments  include  slotting  fees,  co-op
advertising payments, rebate incentives, price off promotions and other forms of
monetary  and  non-monetary  support.  We  must  continually  evaluate  specific
demands  to  ascertain the profitability of potential business from the retailer
making  the demand.  Because of such demands, we may, depending upon the demands
being  made,  ascertain  that  we  cannot  profitably  do  business with certain
retailers.  This  may cause us to stop doing business with existing customers or
not  allow  us  to  enter  into  a  business  relationship  with a potential new
customer,  each  of  which  in  turn  could  dampen  future  revenue  growth.

AN ABSENCE OF CONCLUSIVE CLINICAL STUDIES TO SHOW THAT THERE ARE NO HARMFUL SIDE
EFFECTS  TO  OUR  PRODUCTS  COULD  HAVE  AN  ADVERSE  EFFECT  ON  OUR  BUSINESS.

     Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption,  some of our products contain ingredients for which no such history
exists.  In  addition,  although  we  believe  all of our products are safe when
taken  as  directed  by  us,  there  is  little  long-term experience with human
consumption  of  a  number  of  these  product ingredients in concentrated form.
Accordingly,  there  can  be  no  assurance that our products, even when used as
directed,  will have the effects intended or will not have harmful side effects.
Any such unintended effects may result in adverse publicity or product liability
claims,  which  could  have a material adverse effect on our business, financial
condition  and  results  of  operations.

WE  RELY  ON  OUR  INTELLECTUAL  PROPERTY  PROTECTION AS AN IMPORTANT ELEMENT OF
COMPETITION.

     Our  policy is to pursue registrations for all of the trademarks associated
with  its  key  products.  We rely on common law trademark rights to protect our
unregistered trademarks as well as our trade dress rights.  Common law trademark
rights  generally  are  limited to the geographic area in which the trademark is
actually used, while a United States federal registration of a trademark enables
the  registrant to stop the unauthorized use of the trademark by any third party
anywhere  in the United States.  We intend to register our trademarks in certain
foreign  jurisdictions  where  our  products  are  sold. However, the protection
available,  if  any,  in  such  jurisdictions  may  not  be  as extensive as the
protection  available  to  us  in  the  United  States.

     Currently,  we have few patents on our products and no material business is
derived from those items that are patented. To the extent we do not have patents
on  our  products,  another  company  may replicate one or more of our products.

     Although  we  seek  to  ensure  that  we  do  not infringe the intellectual
property rights of others, there can be no assurance that third parties will not
assert  intellectual  property  infringement  claims  against  us.

WE  ARE  DEPENDENT  ON  KEY  PERSONNEL.

     We  depend  on  our  executive  officers and key personnel to implement our
business  strategy  and  could  be  harmed  by  the  loss  of  their  services.

     We  believe  that  our  growth and future success will depend in large part
upon  the  skills  of  our  management  and technical team.  The competition for
qualified  personnel  in  our  industry  is  intense,  and  the  loss of our key
personnel  or  an  inability  to  continue  to  attract, retain and motivate key
personnel  could  adversely  affect  our business.  We cannot assure you that we
will  be  able  to  retain  our  existing key personnel or to attract additional
qualified  personnel.  We  do  not  have key-person life insurance on any of our
employees.  Our  success  depends  in  part  upon  the  continued  service  and
performance  of  Klee  Irwin,  President  and  Chief  Executive  Officer.

DIFFICULTY  OF  STRICT  COMPLIANCE  WITH  GOVERNMENT  REGULATIONS

     The  processing,  formulation,  packaging,  labeling and advertising of our
products  are  subject  to  governmental regulation. Congress has recognized the
potential  impact  of dietary supplements in promoting the health of US citizens
by  enacting  the  DSHEA.  Because  of the broad language of certain sections of
DSHEA  and  the  regulations  that implement it, it is difficult for any company
manufacturing  or  making  dietary  supplements  to remain in strict compliance.

                                       12
OUR CHIEF EXECUTIVE OFFICER AND OUR CHAIRMAN OF THE BOARD VOTE A MAJORITY OF OUR
SHARES, WHICH COULD DISCOURAGE AN ACQUISITION OF US OR MAKE REMOVAL OF INCUMBENT
MANAGEMENT  MORE  DIFFICULT.

     Klee  Irwin,  our  Chief Executive Officer, beneficially owns approximately
36.4%  of  our  outstanding shares common stock as of June 25, 2001 and holds an
irrevocable  proxy to vote an aggregate of approximately 4.8% of the outstanding
common  stock  on  behalf  of  American  Equities,  LLC  and Corporate Financial
Enterprises,  Inc.  Andrew  Vollero,  Jr.,  Chairman  of  the Board of Directors
currently holds an irrevocable proxy to vote an aggregate of approximately 14.4%
of the outstanding common stock as of June 25, 2001.  Together, they are able to
control  all  matters  requiring  approval  by  our  stockholders, including the
election  of directors and the approval of mergers or other business combination
transactions.

OUR  ARTICLES  OF INCORPORATION AND UTAH LAW CONTAIN PROVISIONS THAT COULD DELAY
OR  PREVENT  AN  ACQUISITION  OF  THE  COMPANY.

     Our  articles  of  incorporation  and  by-laws  contain provisions that may
discourage  third  parties from seeking to acquire us. These provisions include:

-     a  classified  board  of  directors;
-     a  requirement that special meetings of shareholders be called only by our
      board  of directors, chairman of the board, president or 10% of the
      stockholders of  record  of  all  shares  entitled  to  vote;
-     limitations  on  the ability of shareholders to amend, alter or repeal our
      by-laws;  and
-     the  authority  of  the  board  of directors to issue, without shareholder
      approval,  preferred  stock  with  such  terms  as  the  board  of
      directors may determine.

     We  are  also  afforded  the  protections  of  the  Utah  Revised  Business
Corporation  Act.  This  statute contains provisions that impose restrictions on
shareholder  action  to  acquire  control  of  our  company.  The  effect of the
provisions  of  our  articles  of  incorporation  and  by-laws  and Utah law may
discourage  third  parties  from  acquiring  control  of  our  company.

THERE  IS  A  RISK  OF  OWNING  LOW  PRICED  STOCKS  AND  POSSIBLE DIFFICULTY IN
LIQUIDATING  SHARES  OF  SUCH  STOCK.

     Our  common  stock is currently quoted on the NASD Bulletin Board, which is
generally  considered  to be a less efficient market than markets such as NASDAQ
or other national exchanges, and which may cause difficulty in conducting trades
and  difficulty  in  obtaining  future  financing.  Further,  our securities are
subject  to  the  "penny  stock  rules" adopted pursuant to Section 15(g) of the
Securities  Exchange  Act  of  1934,  as amended, or the Exchange Act. The penny
stock rules apply to non-NASDAQ companies whose common stock trades at less than
$5.00  per  share  or  which  have  tangible  net  worth  less  than  $5,000,000
($2,000,000  if  the  company  had been operating for three or more years). Such
rules  require,  among  other  things,  that  brokers who trade "penny stock" to
persons  other than "established customers" complete certain documentation, make
suitability  inquiries  of investors and furnish quote information under certain
circumstances.  Many  brokers have decided not to trade "penny stock" because of
the  requirements  of  the  penny  stock  rules  and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. In
the  event that we remain subject to the "penny stock rules" for any significant
period,  there  may  develop  an  adverse  impact on the market, if any, for our
securities.  Because  our  securities  are  subject  to the "penny stock rules,"
investors  will  find it more difficult to dispose of these securities. Further,
for companies whose securities are quoted on the NASD Bulletin Board, it is more
difficult:

-     to  obtain  accurate  quotations,
-     to  obtain  coverage  for  significant  news  events  because  major  wire
      services,  such  as  the  Dow Jones News Service, generally do not publish
      press releases  about  such  companies,  and
-     to  obtain  capital.

                                       13
POTENTIAL  FLUCTUATIONS  IN  OUR OPERATING RESULTS COULD LEAD TO FLUCTUATIONS IN
THE  MARKET  PRICE  FOR  OUR  COMMON  STOCK.

Our  results  of operations are expected to fluctuate significantly from quarter
to  quarter,  depending  upon  numerous  factors,  including:

-     demand  for  our  products;
-     changes  in  our  pricing  policies  or  those  of  our  competitors;
-     increases  in  our  manufacturing  costs;
-     the  number,  timing  and  significance  of  product  enhancements and new
      product  announcements  by  ourselves  and  our  competitors;
-     our  ability to develop, introduce and market new and enhanced versions of
      our  products  on  a  timely  basis  considering, among other things,
      regulatory approval  processes  and  the  timing  and  results  of
-     future  clinical  trials;  and
-     product  quality  problems, personnel changes, and changes in our business
      strategy.

THE  MARKET  PRICE  FOR OUR COMMON STOCK COULD FLUCTUATE DUE TO VARIOUS FACTORS.
THESE  FACTORS  INCLUDE:

-     acquisition-related  announcements;
-     announcements  by  us  or  our  competitors  of  new  products;
-     changes  in  government  regulations;
-     fluctuations  in  our  quarterly  and  annual  operating  results;  and
-     general  market  conditions.

     In  addition,  the  stock  markets  have,  in  recent  years,  experienced
significant price fluctuations.  These fluctuations often have been unrelated to
the  operating  performance  of  the  specific  companies whose stock is traded.
Market  fluctuations,  as  well as economic conditions, have adversely affected,
and  may continue to adversely affect, the market price of our common stock. Our
ability  to  pay  dividends  on  our  common  stock  may  be  limited.

     We  do  not  expect to pay any cash dividends in the foreseeable future. We
intend  to  retain  earnings,  if any, to provide funds for the expansion of our
business.

LIMITATIONS ON DIRECTOR LIABILITY MAY DISCOURAGE STOCKHOLDERS FROM BRINGING SUIT
AGAINST  A  DIRECTOR.

     Our  articles of incorporation provide, as permitted by governing Utah law,
that  a  director  shall  not be personally liable to us or our stockholders for
monetary  damages  for  breach  of  fiduciary  duty  as a director, with certain
exceptions.  These  provisions  may  discourage  stockholders from bringing suit
against a director for breach of fiduciary duty and may reduce the likelihood of
derivative  litigation brought by stockholders on our behalf against a director.
In  addition,  our  articles  of  incorporation and bylaws provide for mandatory
indemnification  of  directors  and  officers to the fullest extent permitted by
Utah  law.

                                       14
USE OF PROCEEDS

     We  will  not  receive  any  proceeds from the sale of the shares of common
stock  offered  hereunder.  However,  we  may  receive  gross  proceeds of up to
$2,531,250  if  warrants  to purchase up to 1,137,500 shares of our common stock
are  exercised.  The  net proceeds, if any, from such transactions have been and
will  be  used for working capital and general corporate purposes.  Pending full
utilization  of  the  proceeds,  which  may be obtained from the exercise of the
warrants  and  options, if at all, we may invest the net proceeds in short-term,
investment  grade,  and  interest  bearing  securities.

                                 DIVIDEND POLICY
     No  dividend  has been declared or paid by us since inception on our common
stock.  We  do not anticipate that any dividends will be declared or paid in the
future  on  our  common  stock.

                           PRICE RANGE OF COMMON STOCK

     As  of  June  25, 2001, we had 36,067,061 shares of common stock issued and
outstanding.  Further,  we  had  issued  and  outstanding  options  to  purchase
6,703,653  shares  of common stock, of which 4,963,894 are vested as of the date
of  this  prospectus,  and warrants to purchase up to 3,037,500 shares of common
stock.

     Our  common stock is currently listed on the NASD Bulletin Board, under the
symbol  "ZONE."  The  following table sets forth, for the periods indicated, the
high and low closing sale prices of our common stock, as reported by the NASDAQ,
for  periods  from January 1, 1998 through November 7, 2000, as published in the
"pink  sheets,"  for  the period from November 2000 through June 11, 2001 and as
published  on  the NASD Bulletin Board for the period from June 12, 2001 to June
30,  2001:
High   Low
Year Ended December 31, 1998
  First Quarter                $5.88  $4.50
  Second Quarter               $9.50  $4.88
  Third Quarter                $7.50  $2.75
  Fourth Quarter               $6.94  $3.00
Year Ended December 31, 1999
  First Quarter                $8.00  $3.43
  Second Quarter               $2.50  $1.50
  Third Quarter                $2.50  $1.50
  Fourth Quarter               $2.31  $1.13
Year Ended December 31, 2000
  First Quarter                $8.63  $1.38
  Second Quarter               $7.38  $3.75
  Third Quarter                $4.19  $1.38
  Fourth Quarter               $1.66  $0.13
Year Ending December 31, 2001
  First Quarter                $0.50  $0.18
  Second Quarter               $0.48  $0.20
The  last  reported  sale  price  of our common stock as quoted on the NASD
Bulletin  Board  on  June  25,  2001  was  $0.21.   At June 25, 2001, there were
36,067,061  shares  of  our  common  stock outstanding held by approximately 258
holders  of  record  of  our  common  stock.

     On  November  7,  2000,  the NASDAQ/NMS halted trading in our stock. NASDAQ
delisted the common stock from trading on November 17, 2000.  From November 2000
to  June  11,  2001, our common stock was quoted in the "Pink Sheets," which are
published  by  the National Quotation Bureau.  On June 12, 2001, our stock began
trading  on the NASD Bulletin Board.  We believe that the delisting by NASDAQ is
likely  to  have an adverse effect on the market for our common stock and on our
ability  to  raise  additional  capital.

                                       15
CAPITALIZATION

The  following  table  describes  our  capitalization  as  of  April  30,  2001:
Omni Nutraceuticals, Inc.
                                                       Capitalization as of April 30, 2001

                                                                      Pro forma for exercise of
                                                       Actual              related warrants
Common stock, par value $0.01, 50,000,000
shares authorized, 34,494,379 issued and
outstanding                                       $    346,000            $      347,000

Series A Convertible Preferred stock, par
value $0.01, stated value $1.00, 3,000 shares
authorized, 3,000 shares issued and
outstanding

Additional paid in capital                          43,936,000                46,466,000

Treasury stock, at cost                                (50,000)                  (50,000)

Accumulated deficit                                (43,389,000)              (43,389,000)

 Total capitalization                             $    846,000            $    3,374,000
The  above  table  excludes up to 6,629,153 shares of common stock issuable upon
the  exercise  of  stock  options  outstanding  as of March 31, 2001 at exercise
prices  ranging  from $0.25 to $6.00 per share.  The above table also assumes no
exercise  of  outstanding  warrants  exercisable  into up to 1,900,000 shares of
common  stock  at  exercise  prices  ranging  from  $0.96  to  $6.00  per share.

                                       16
SELECTED CONSOLIDATED FINANCIAL DATA

     You  should  read  the  following  selected  consolidated financial data in
conjunction  with  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes  included  elsewhere in this prospectus.  The statement of operations data
for the years ended December 31, 1998, 1999 and 2000 and the quarter ended March
31,  2001,  and  the  balance  sheet  data at December 31, 1999 and 2000 and the
quarter ended March 31, 2001 are derived from our audited consolidated financial
statements  appearing  elsewhere  in this prospectus.  The balance sheet data at
December  31,  1997  and 1996, and the statement of operations data for the year
ended  December  31, 197 and the period from March 15, 1996 to December 31, 1996
are  derived  from our audited consolidated financial statements not included in
this prospectus. The statement of operations data for the period from January 1,
1996  to  March 14, 1996 represents data of a predecessor company and is derived
from  their  unaudited  consolidated  financial  statements not included in this
prospectus.
STATEMENT  OF OPERATIONS DATA
                                       Three Months Ended
                           March 31,                       Year Ended December 31,
                                                               -----------------------------------------------
(in  thousands,
except  per share data)                2001         2000          2000      1999        1998     1997     1996
                                    (unaudited)   (unaudited)               (as
                                                                          previously
                                                                          restated)
Net sales                           $     5,751   $     8,039  $  29,609   $ 30,922   $30,547   $29,353   $28,592
Gross Profit                              2,443         3,215     10,223     14,934    18,007    16,050    16,266
Operating (loss) income                    (867)       (6,090)   (13,472)    (9,867)    1,827    (4,638)   (1,298)
Other income (expense)                     (440)         (456)    (1,864)      (829)     (209)      (79)      101
Income (loss) before provision
for income taxes                         (1,307)       (6,546)   (15,336)   (10,696)    1,618    (4,717)   (1,197)
Provision for income taxes                    3                        1       (274)      600       ---       594
Income (loss) before
 discontinued operations                 (1,310)       (6,546)   (15,337)   (10,422)    1,018    (4,717)   (1,791)
Discontinued operations                    (246)         (230)    (1,155)      (633)
Net income (loss)                        (1,556)       (8,726)   (16,492)   (11,055)    1,018    (4,717)   (1,791)
Pro forma provision for
income taxes (unaudited)                    N/A           N/A        N/A        N/A     1,345       765       N/A
Pro forma net income
(loss) (unaudited)                          N/A           N/A        N/A        N/A       273    (5,482)      N/A
PER SHARE DATA:
Historical Earnings (loss)
per common share
-- Basic and diluted                $     (0.05)  $     (0.30) $   (0.71)  $  (0.39)  $  0.04   $ (0.17)  $ (0.07)
Pro Forma Earnings (loss)
per  common share
-- Basic and undiluted
(unaudited)                                 N/A           N/A         N/A        N/A  $  0.01   $ (0.20)       N/A
Historical Weighted
average number of shares
of common stock
outstanding - Basic                      34,257        27,765      30,640    28,177    27,747    27,365     25,647
Weighted average number
of shares of common stock
outstanding - Diluted                    34,257        27,765      30,640    28,177    28,221    27,365     25,647
Pro forma
Weighted average number
Of shares of common
stock - Basic (unaudited)                   N/A           N/A         N/A        N/A   27,747    27,365        N/A
Weighted average number
of shares of common stock
outstanding - Diluted
 (audited)                                  N/A           N/A         N/A        N/A   28,221    27,365        N/A
17
BALANCE SHEET DATA (AT PERIOD END):         March 31,                                  December 31,
----------------------------------------------------------
(in thousands)                                2001                       1999
                                           (unaudited)                as previously
                                                             2000       stated)          1998      1997     1996
Working Capital
(Deficit)                            $         (12,549)  $   (11,141)    $(8,558)      $ 4,395   $ 3,588    $ 4,483
Total Assets                                    26,324        27,305      29,533        13,087    11,337     15,382
Long Term Debt, Net of Current Portion           6,852         7,440      10,187         1,423     1,298      1,275
Shareholders' Investment                         1,321         2,569        (316)        5,869     5,387     10,256
The  statement  of  operations  data for the years ended December 31, 1998,
1999  and  2000 and the quarter ended March 31, 2001, and the balance sheet data
at  December  31, 1999 and 2000 and the quarter ended March 31, 2001 are derived
from  our  audited consolidated financial statements appearing elsewhere in this
prospectus.  The  balance  sheet  data  at  December  31, 1997 and 1996, and the
statement of operations data for the year ended December 31, 1997 and the period
from  March  15,  1996  to  December  31,  1996  are  derived  from  our audited
consolidated financial statements not included in this prospectus. The statement
of  operations  data  for  the  period  from  January  1, 1996 to March 14, 1996
represents  data  of  a  predecessor  company  and is derived from its unaudited
consolidated  financial  statements  not  included  in  this  prospectus.

                                       18
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION
AND  RESULTS  OF  OPERATIONS.

     The  following  discussion  and analysis should be read in conjunction with
the  consolidated  financial  statements and related notes included elsewhere or
incorporated  by  reference  in  this  prospectus.

OVERVIEW

     We  are  the survivor of a corporate reorganization, or the reorganization,
of  4Health, Inc, and Irwin Naturals, Inc., which was consummated June 30, 1998.

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the  general  public.  Our  products  are  produced  primarily  from  natural
ingredients and are formulated for the purposes of achieving specific dietary or
nutritional  goals.  We have historically and continue to sell these products to
health  food  stores, both directly and through distributors, mass merchandisers
and  distributors  who  sell  into  foreign  countries.

INTERNAL  DISPUTES  AND  CHANGE  IN  MANAGEMENT

     Upon  the consummation of the reorganization, Messrs. R. Lindsey Duncan and
Klee  Irwin,  our  controlling  shareholders, entered into substantially similar
three-year  employment  agreements with us.  In 1999, Mr. Duncan was employed as
Chairman of the Board and as a member of our Executive Committee with all duties
and  responsibilities  normally  associated  with  this position.  Mr. Irwin was
employed  as  the  Chief  Executive  Officer  and  as  a member of the Executive
Committee  with  all  duties  and responsibilities normally associated with this
position  until  April  20,  1999.

     On  April  20, 1999, Mr. Irwin resigned, as Chief Executive Officer and his
employment  agreement  was  terminated.  In  connection with his resignation the
Board  of  Directors appointed him as Chief Executive Officer of HealthZone.com,
our  then  wholly  owned  e-commence  subsidiary,  or  HealthZone.

     In  October of 1998, we entered into an agreement to hire Mr. Louis Mancini
as  President  and  Chief  Operating  Officer and, subsequently, Chief Executive
Officer.

     During  the  period  from June, 1998 until Mr. Irwin's resignation as Chief
Executive  Officer  disputes arose between Mr. Irwin and us. On October 8, 1999,
we  entered  into  a  settlement  agreement  with  Mr. Irwin in order to resolve
certain  mutual  claims  that  had  arisen.  Among  the  principal  terms of the
settlement,  Mr.  Irwin  made  a  capital contribution of $410,000, and returned
941,436 shares of our common stock to us. 363,363 of these shares were issued to
the  former owners of HVE and the remainder will be reflected as treasury stock.
Further,  Messrs.  Irwin and Duncan, who together owned approximately 74% of the
outstanding  shares  of  our voting capital stock, each entered into a five-year
voting  agreement  pursuant to which Mr. Irwin has agreed to certain stand-still
provisions  and he and Mr. Duncan have agreed to vote their respective shares of
our  common stock for their respective nominees for Class I and II directors and
the  candidate  for  Class III director nominated by the two Class II directors.
Upon  execution of the settlement agreement, day-to-day control of us was vested
in  Messrs.  Duncan  and  Mancini.

     Effective  on  March  12,  2000, Mr. Duncan and his spouse, Cheryl Wheeler,
entered  into  an  agreement,  or  the  Withdrawal  Agreement,  in  which:

-     Mr.  Duncan  agreed  to  resign  from  the  Board  of  Directors,
-     terminated  his  employment  agreement  with  us,  and
-     cease  all  further  involvement  with  us,

     Mr.  Duncan  and Ms. Wheeler both agreed to vote their respective shares of
our  common  stock,  or  give  their  written consent on all matters on the same
proportionate  basis  as  our  remaining shareholders vote their shares, or give
their  written  consent on such matters for a period of five years from the date
of  the  Withdrawal  Agreement,  and  appoint  Andrew  Vollero,  Jr.,  as
attorney-in-fact  for each of them to vote their shares of common stock, or give
their  written  consent.

                                       19
Mr.  Duncan's  agreement  to  resign from the Board and terminate the Employment
Agreement  was  conditioned  on:

-     the  extension of the exercise and expiration dates of all of his existing
      stock  options  to  purchase 1,003,029 shares of the common stock to the
      seventh anniversary  of  the  Withdrawal  Agreement.
-     the  receipt  by  of $1,500,000 in net proceeds from the sale of shares of
      common  stock  owned  by Mr. Duncan at a price of $3.00 per share in one
      or more transactions.
-     the  execution  and  delivery  by  American  Equities  LLC  and  Corporate
      Financial Enterprises, Inc., or the investors, of a term sheet providing
      for the purchase  by  them  from us of our securities for an aggregate
      purchase price of $2,000,000.
-     the  execution  and delivery by Mr. Irwin and each of the investors to Mr.
      Duncan  of  a  general  release.
-     the  execution  and  delivery  by  us  of a Registration Rights Agreement.
-     the termination of a voting agreement dated October 8, 1999 by and between
      Mr.  Duncan  and  Mr.  and  Mrs.  Klee  Irwin.

On  March  12,  2000,  the  Board:

-     terminated Mr. Louis Mancini's employment as President and Chief Executive
      Officer,
-     Mr.  Irwin  was  appointed  to  fill  the  vacancy  created  thereby,  and
-     authorized  the  termination  of  a  settlement agreement dated October 8,
      1999,  by and among us and Mr. and Mrs. Klee Irwin, and the ancillary
      agreements executed  and  delivered  by  us  in  connection  therewith.

     As  a  result  of  the March 12, 2000 employment realignments, we forgave a
note  due  to  us  from  Louis  Mancini  in  the  amount  of  $175,000.

ADJUSTMENT  TO OUR FINANCIAL STATEMENTS FOR 1999 AND 2000 AND CUSTOMER RIGHTS OF
RETURN

     During  the  period  of  time  while  Messrs.  Duncan  and  Mancini were in
day-to-day  control  of  our sales and marketing efforts, they developed several
product offerings that were not successful. In order to protect our relationship
with  certain  of  our  customers,  as  well as to ensure a strong reputation to
secure  future  sales,  we exercised liberal flexibility with those customers in
authorizing  returns for certain products which did not sell.  At the end of the
first  quarter  of  2000,  management  again  changed.

     In  an  effort  to  build  customer confidence and satisfaction, we warrant
satisfaction and grant to our customers, at the retail consumer level, the right
of  return  for full credit if the end user is not satisfied with the quality of
our  product.  Historically,  this  policy  has  generated  insignificant  total
returns.  During  the period from 1999 through the third quarter of 2000, due to
product  introductions  in 1999 that proved unsuccessful, the percentage of such
returns  increased.  A  significant  amount  of such allowances were granted for
returns  during  1999  and  the first quarter of 2000.  These returns became the
subject  of financial statement restatements that were made to certain quarterly
reports  on  Form 10-Q during the two years ended December 31, 1999 and 2000 and
on  our  annual  report  Form  10-K  for  the  year  ended  December  31,  1999.

     Starting  in  July  2000,  one  of  our  large  customers started deducting
significant  amounts  from  cash remittances.  In addition, certain of our other
customers  began  taking deductions against cash remittances that were in excess
of  historical  amounts  we  had  experienced.  Beginning  in  August  2000,  we
conducted  an  investigation of our 1999 and 2000 sales practices and determined
that sales to certain customers were made with rights of return and "guarantees"
of  sell-through  to  consumers.  As  part  of  our  investigation,  we reviewed
substantially  all  of the customer deductions taken in 2000 and determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances and concessions granted by management in the fourth quarter
of  1999  and  the first quarter of 2000.  Substantially all of the arrangements
were  previously  unknown  to  the  current management team.  However, it became
necessary  following  the  conclusion  of  our  investigation  to continue for a
limited  period,  the  flexible  stance on returns initiated in 1999 in order to
further  support  and  protect  our  relationship  with  those  customers.

                                       20
We  determined  the  effect of these deductions and previously restated our
financial  statements  for  the  year ended December 31, 1999. Revenues from any
products  with  "guaranteed"  sales  were deferred until the sell through of the
product  at  the  customer  level  and  the  related product has been treated as
consigned  inventory.  In  situations  in  which  we  granted  allowances  and
concessions  in the fourth quarter of 1999 and early in 2000 related to sales in
1999,  we  have increased our reserves for such allowances and concessions as of
December  31,  1999,  at which time such allowances were known.  In addition, in
situations in which we subsequently granted additional allowances or concessions
relating  to  sales made in prior periods, but which were unknown in the earlier
periods,  we  have increased our reserves in the period such decisions were made
and  the  amounts  became  known.

     The  effect  of  the adjustments required as a result of this investigation
was to restate our financial statements for the third and fourth quarters of and
the  year  1999  and  the first and second quarters of 2000.  The cumulative net
impact  on  our  statements of operations from July 1, 1999 through December 31,
1999  included  the  deferral of approximately $1.9 million of gross profit from
previously  recorded sales, now treated as "guaranteed sales," and an additional
$0.3  million of reserves for allowances granted to customers for sales in prior
periods.  During  the  twelve  months  ended  December  31,  2000,  all  of such
guaranteed  sales  were  reversed  and  approximately $4.4 million of additional
charges  for  reserves  were  recorded.

RECENT  DEVELOPMENTS  IN  OUR  BUSINESS

     SALE TO VITACOST.COM, INC.  On February 2, 2001, we entered into a Purchase
Agreement  with Vitacost.com, Inc., or Vitacost, an on-line marketer of vitamins
and  nutritional  products,  whereby  Vitacost acquired substantially all of the
operating  assets  of our combined Internet operations in exchange for 6,800,000
shares  of Vitacost common stock.  The agreement contains an optional repurchase
right  giving  us,  at  any time after four years from the closing, the right to
demand that Vitacost repurchase the stock we acquired for $3,400,000 in cash or,
at  their  option,  a 60 month note requiring equal monthly payments of $56,667.
The  agreement  also  contains an optional redemption right, giving Vitacost the
right  to  redeem  the  stock we acquired, at any time up to four years from the
closing.  If  this  option  is  exercised  between  the  closing  and  the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up to $9,317,000 on the fourth anniversary of the closing.  The
stock  we  received  represents approximately 19.9% of the total Vitacost common
stock  outstanding.  As  long as we continue to hold at least a 10% interest, we
will  have  one  of the five available seats on the Vitacost Board of Directors.
Additionally,  we have certain anti-dilution rights in the event Vitacost raises
additional  equity.

     Further,  in  connection  with  the Purchase Agreement, the Company entered
into  a  non-competition agreement with Vitacost, whereby the Company agreed not
to  compete with Vitacost in the business of reselling other companies' vitamins
and supplements on a retail basis via the internet and mail order catalogues for
the  period beginning on the date of the non-competition agreement and ending on
the  last  to  occur  of:  (i)  the  one-year anniversary of the non-competition
agreement;  or (ii) the date that is six months after the Company's resignation,
removal  or  other  termination  from  Vitacost's  board  of  directors.  The
non-competition  agreement  does  not  preclude the Company from engaging in the
business of selling its own products including, but not limited to, vitamins and
supplements  manufactured  by  the Company through any means, including, without
limitation,  via  the  internet  and  mail  order  catalogues.

     ACQUISITION AND DISPOSITION OF VITAMIN DISCOUNT CONNECTION.  On October 27,
2000,  we  acquired Vitamin Discount Connection, an Internet "e-tailer" and mail
order  retailer  of  nutritional  and health-related products. We issued 190,000
restricted shares of our common stock in exchange for certain assets and assumed
the  seller's  liabilities of $115,000 Substantially all of the operating assets
of Vitamin Discount Connection were sold to Vitacost.com, Inc. in February 2001.

     ACQUISITION  AND  DISPOSITION  OF  HEALTHSHOP.COM.  On  May  22,  2000,  we
executed  an  asset  purchase  agreement  to  purchase  selected  assets  of
HealthShop.com,  or  Healthshop,  an  Internet  business retailer of nutritional
supplements  and  health  related  products  for a purchase price of $3,500,000,
payable  in 838,951 shares of our common stock.  We are obligated to issue up to
an  additional  250,000  shares  contingent  upon  the  sellers  meeting certain
performance  measures during the one year period from the closing date and up to
400,000 shares in the event the price of our common stock does not reach certain
levels  nine  months  after  closing.  Pursuant  to these provisions, during the
quarter  ended  March  31, 2001, we issued 400,000 shares of our common stock to
the  former  shareholders  of  Healthshop.  We  also  entered  into  consulting
agreements  with the former shareholders and executives of Healthshop and issued
options  to  purchase  an  aggregate  of  250,000  shares of our common stock in
connection  therewith.  Healthshop and the former shareholders and executives of
Healthshop were granted piggyback registration rights with respect to the shares
and  the  shares  underlying  the  options granted by us in connection with this
transaction.  We  are  registering  these  securities pursuant to a registration
statement  of  which  this  prospectus  forms  a  part. Substantially all of the
operating assets of Healthshop were sold to Vitacost.com, Inc. in February 2001.

                                       21
ACQUISITION  AND  DISPOSITION  OF  SMARTBASICS.COM.  On  May  25,  2000, we
executed  an  agreement  and plan of reorganization with Smart Basics, Inc., dba
SmartBasics.com,  an Internet and mail order retailer of nutritional supplements
and  health  related  products.  Under  the  terms  of  the agreement, we issued
170,000  shares  of  our  common stock in consideration for all of the equity of
SmartBasics.com.  Substantially  all  of the operating assets of SmartBasics.com
were  sold  to  Vitacost.com,  Inc.  in  February  2001.

     ACQUISITION  OF  INHOLTRA.  On  March  10,  1999,  we purchased certain net
assets  of  Inholtra  Investment Holdings and Trading, N.V., Inholtra, Inc., and
Inholtra  Natural,  Ltd.,  including the Inholtra-registered trademark- brand of
anti  joint  pain  product  and associated trademarks, patent and inventory, for
$13,250,000.  The  purchase price consisted of the payment of $3,250,000 in cash
at  closing,  and the issuance of a $10,000,000 promissory note.  The promissory
note  was  repaid on June 10, 1999 in connection with our agreement with our new
banking  facility.  In  connection  with  this  acquisition,  we  entered into a
consulting  agreement  with  a  former  employee  of  the sellers.  The two-year
agreement  required  annual  consulting  fees  of  $60,000.

     ACQUISITION  AND  DISPOSITION OF HEALTH & VITAMIN EXPRESS.  On February 15,
1999,  we  purchased for $2,880,000 the issued and outstanding shares of HVE, an
e-commerce  distribution  company.  The  purchase consideration consisted of the
issuance of 363,636 shares of our common stock valued at $2,273,000 or $6.25 per
share  and  the  assumption  of  $571,000  of  debt.  Substantially  all  of the
operating  assets  of  HVE were sold to Vitacost.com, Inc. in February 2001.  On
December 23, 1999, the former owners of HVE filed a lawsuit against us asserting
certain  claims  under  this agreement.  In settlement of these claims, on April
13, 2000, we entered into a Settlement, Termination and Mutual Release Agreement
pursuant  to which we issued an additional 363,636 shares of our common stock to
the  former  owners  of HVE and terminated all other rights and obligations that
existed  under  the  February  15,  1999  agreement.  Former  owners of HVE were
granted  certain  registration rights with respect to these additional shares of
our common stock. We are registering these securities pursuant to a registration
statement  of  which  this  prospectus  forms  a  part.

SELECTED  QUARTERLY  INFORMATION

     The following table sets forth certain unaudited financial data for each of
the  quarters within the twelve months ended December 31, 1999 and 2000, and the
quarter  ending  March  31,  2001.  This  information  has been derived from our
Consolidated  Financial  Statements,  and  in management's opinion, reflects all
adjustments  (consisting  only  of normal recurring adjustments) necessary for a
fair  presentation of the information for the quarters presented.  The operating
results for any quarter are not necessarily indicative of results for any future
period.
(Unaudited)
                                    (in thousands except per share data)

1999 Quarter Ended                        March 31         June 30         September 30    December 30
------------------                        --------         -------         ------------    -------------
Net Sales                           $        6,991   $       7,989        $      8,506        $ 7,436
Gross Profit                                 3,584           4,039               4,040          3,271
Loss before loss from discontinued
operations                                    (405)         (2,786)             (1,487)        (5,744)
Loss from discontinued operations             (249)           (376)               (304)           296
Net Income (Loss) Available to
Common                                        (654)         (3,162)             (1,790)        (5,449)
Net Income (Loss) Per Common
 Share                              $        (0.02)  $       (0.11)        $     (0.06)       $ (0.20)
2000 Quarter Ended                         March 31         June 30         September 30    December 30
------------------                         --------         -------         ------------    -----------
Net Sales                                $     8,039        $10,846            $ 5,136        $ 5,561
Gross Profit                                   3,215          4,183              1,242          1,580
Loss before loss from discontinued operations (6,546)          (882)            (3,416)        (2,519)
Loss from discontinued operations               (230)          (264)              (614)           (70)
Net Income (Loss) Available to Common         (8,726)        (1,146)            (4,030)         (7708)
Net Income (Loss) Per Common Share       $      0.30        $ (0.04)           $ (0.12)       $ (0.25)
22
2001 Quarter Ended                             March 31
---------------------------------------------  ----------
Net Sales                                      $    5,751
Gross Profit                                        2,443
Loss before loss from discontinued operations      (1,310)
Loss from discontinued operations                    (246)
Net Income (Loss) Available to Common              (1,556)
Net Income (Loss) Per Common Share             $    (0.05)
RESULTS  OF  OPERATIONS

THREE  MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

     Our  consolidated  net sales for the three months ended March 31, 2001 were
$5,751,000  with an operating loss before provision for income taxes and loss on
discontinued  operations  of  $1,307,000.  The  loss  on  operations  of  our
discontinued  e-commerce segment for the first quarter of 2001 was $246,000. Our
net  loss  for  the  first  quarter  of  2001  was  $1,556,000, and our net loss
available  to  our  common  shareholders  was  $1,556,000 or $0.05 per basic and
diluted  share. Our consolidated net sales for the same period in the prior year
were  $8,039,000  with  an  operating loss before provision for income taxes and
loss  on  discontinued  operations  of $6,546,000. The loss on operations of our
discontinued  e-commerce segment for the first quarter of 2000 was $230,000. Our
net  loss and our net loss available to common shareholders in the first quarter
of  2000  was  $6,776,000  and  $8,726,000  or $.30 per basic and diluted share,
respectively.  Our  total  selling,  general and administrative expenses for the
three months ended March 31, 2001 were $3,310,000 versus $9,305,000 for the same
period  in  2000.

SALES

     Our  net  sales  for  the  three  months ended March 31, 2001, decreased by
$2,288,000, or 28.4%, to $5,751,000 from $8,039,000 for the comparable period in
2000. The decrease in sales results from overall declines in consumer demand for
herbal  supplements,  which  was particularly acute in the mass market. Also the
first  quarter  of 2000 benefited from a national media advertising campaign for
our  Inholtra,  Colestaid  and Veromax products introduced in 1999. Sales in the
first  quarter  of  2001 also declined because substantially all advertising and
promotion  was curtailed for existing products due to limited resources. Also as
of March 31, 2001 we had not introduced any new products since the first quarter
of  2000.

     GROSS  PROFIT

     Gross  profit  for  the  three  months  ended  March  31, 2001 decreased by
$772,000,  or 24.0%, to $2,443,000, from $3,215,000 for the comparable period in
2000.  Gross  profits  as a percentage of sales for the three months ended March
31,  2001  increased  to  42.4% from 40.0% in the comparable period in 2000. The
increase  in  the gross margin was primarily due to a shift in the net sales mix
from  mass-market  sales, which had higher rates of returns in the first quarter
of 2000, to higher margin health food store sales in 2001, partially offset by a
greater  contribution  from  lower  margin  international  sales  in  2001.

                                       23
SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Sales  and  marketing  expenses  for  the three months ended March 31, 2001
decreased  by $3,728,000 or 81.8% to $829,000 from $4,557,000 for the comparable
period  in  2000.  This  decrease  was due primarily to lower advertising, media
expenses  and  co-op  advertising,  which  declined $3,354,000 to $71,000 in the
first quarter of 2001 from $3,425,000 in the comparable period in 2000. The main
products  promoted in the first quarter last year were Inholtra, Cholestaid, and
Veromax.  Other cost reductions came from reductions in the costs of repackaging
and  redesign  of our core product lines, $79,000; salaries and wages, $137,000;
trade  show  expense,  $46,000;  travel,  $32,000;  and  royalties,  principally
Inholtra,  $41,000.

     Distribution  expenses  declined  $116,000 or 19.9% to 466,000 in the three
months  ended  March  31,  2001  from $582,000 in the comparable period in 2000.
Reduction in freight, $79,000 and wages, $41,000 accounted for substantially all
of  the  decline.

     General  and  administrative  expenses  decreased  $2,151,000  or  51.6% to
$2,015,000  in  the  three  months  ended  March 31, 2001 from $4,166,000 in the
comparable  period  in 2000. A compensation charge of $1,720,000 recorded in the
first quarter of 2000 related to the transfer of personal shares from an officer
and  major shareholder to a departing board member accounted for the majority of
the decline. Also accounting for the decline were decreases in salary and wages,
$99,000;  accounting, legal and professional fees, $311,000; amortization of the
e-commerce  business  segment, sold February 2, 2001, $126,000; partially offset
by  increased  stock  compensation  expense  of  $161,000.

OTHER  INCOME  (EXPENSE)

     Interest  expense  for  the three months ending March 31, 2001 decreased by
$25,000  to  $440,000  from  $465,000  for  the  comparable period in 2000. This
decrease  is  the  result of lower term loan balances outstanding from period to
period.

     YEAR  ENDED  DECEMBER  31,  2000  COMPARED  TO YEAR ENDED DECEMBER 31, 1999

     Net  sales  for  the  year ended December 31, 2000 were $29,609,000 with an
operating loss of $13,472,000 and a net loss available to common shareholders of
$21,610,000,  or  $0.71 per basic and diluted share.  Consolidated net sales for
the  year  ended  December  31,  1999 were $30,922,000 with an operating loss of
$9,867,000  and  net  loss of $11,055,000, or $0.39 per basic and diluted share.
The  net  loss  available to common shareholders for the year ended December 31,
2000 was impacted by; (i) an increase in estimates for returns and allowances of
$4,429,000,  (ii)  a  $5,118,000  preferred  stock  dividend, (iii) a $1,720,000
one-time  non-cash  charge,  (iv)  $1,827,000  increase  in  stock  compensation
expense,  and (v) a $548,000 increase in interest expense.  Other income for the
year  ended  December  31, 1999 included a $481,000 one-time gain on the sale of
the former 4Health corporate headquarters building located in Boulder, Colorado.

     SALES

     Net sales for the year ended December 31, 2000, decreased by $1,313,000, or
4.2%,  to  $29,609,000  from $30,922,000 for the comparable period in 1999.  The
decrease  in  net  sales relates primarily to increases in estimates for returns
and  allowances which increased $4,429,000 or 130% to $7,836,000 from $3,407,000
for  the  comparable period in 1999.  Sales discounts declined $283,000 or 24.7%
to  $862,000  from  $1,146,000  for  the  comparable  period  in  1999.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 2000 decreased $4,711,000, or
31.5%, to $10,223,000 from $14,934,000 for the comparable period in 1999.  Gross
profits  as a percentage of sales for the year ended December 31, 2000 decreased
to 34.5% from 48.3% in the comparable period in 1999.  The decrease in the gross
margin  percentage  resulted  primarily  the  increase  in estimated returns and
allowances  as a result of higher rates of returns on products sold in the first
half  of  the  year.  Also  impacting  margins was a shift in the product-mix to
certain  items  that have lower margin, increased allowances given and discounts
offered  to  customers.

     SALES  AND  MARKETING

     Sales and marketing expenses for year ended December 31, 2000, decreased by
$1,188,000, or 12.5% to $$8,292,000 from $9,480,000 for the comparable period in
1999.  This  decrease  was  principally  due  to  sharp  reductions in marketing
salaries, marketing services purchased, travel and other related expenses in the
second,  third and principally in the fourth quarter.  These decreased more than
offset  media  and  co-op  advertising  campaigns  of approximately $1.9 million
initiated  by  the  former  management during the first quarter of 2000 to boost
sales  of  Inholtra,  Veromax  and  Cholestaid  for  fiscal  2000.

                                       24
GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 2000,
increased  by  $2,206,000,  or  20.0%  to  $13,252,000  from $11,045,000 for the
comparable  period  in  1999.  The  increase  primarily  came  from  increased
accounting  and  legal  expenses  of $905,000 related to the restatement of 1999
results and the results of the first, second and third quarters of 2000, charges
of  $187,000  related  to  waivers and restructuring a line of credit and a term
loan  with  the  our  principal bank and increased stock compensation expense of
$1,857,000.  In  addition,  2000  included  a  $1,720,000  non-cash compensation
charge.  This  $1,720,000 represents the fair market value of one million shares
of  personally  owned  common  stock  transferred by the current Chief Executive
Officer  to  the  former Chairman of the Board in connection with the Withdrawal
Agreement  between  the  Company  and  the  former Chairman of the Board.  These
increases  were  partially  offset by $489,000 in reductions in wages and taxes,
$257,000  reduced  travel expenses, $1,032,000 reduction in bad-debt expense and
other  overall  decreases  in  the  third  and  fourth quarters in various other
operating  and overhead costs. 1999 included a one-time charge of $287,000 for a
corporate  move.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 2000,
increased  by $1,257,000 to $3,149,000 from $1,892,000 for the comparable period
in  1999.  The  increase  relates  to  the amortization of e-commerce, goodwill,
Inholtra  trademark  and  deferred  financing costs resulting from the shortened
life  to  the  term  loan partially offset by the elimination of amortization on
intangibles  written  off  in  1999.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ended December 31, 2000 increased $548,000 to
$1,887,000  from $1,339,000 for the comparable period in 1999.  This increase is
consistent  with  the  increase in the utilization of our line of credit and the
term  loan  in  2000  that  was  incurred  originally  in  connection  with  the
acquisition  of  the  Inholtra  brand.  Other income for year ended December 31,
1999  included  a  $481,000  gain  on  the  sale of the former 4Health corporate
headquarters  building  located  in  Boulder,  Colorado.

     LOSS  FROM  DISCONTINUED  OPERATIONS

     In  the  fourth  quarter  of  2000  we  decided to divest of our e-commerce
operations  and  accordingly, the results of operations of this business segment
since  inception  have been classified on the Statement of Operations under Loss
From  Discontinued  Operations from inception. On February 2, 2001 substantially
all  of  the  operating assets were sold for shares of common stock in a private
company.

     YEAR  ENDED  DECEMBER  31,  1999  COMPARED  TO YEAR ENDED DECEMBER 31, 1998

     Consolidated  net  sales  for  the  year  ended  December  31,  1999  were
$30,922,000  with an operating loss of $9,867,000 and a net loss of $11,055,000,
or  $0.39  per  basic  and  diluted  share.  Consolidated net sales for the same
period  in  the  prior year were $30,547,000 with operating income of $1,827,000
and  net  income of $1,018,000 or $.04 per basic and per diluted share.  The net
loss  for  1999  was  impacted  by:  a  reduction in gross profit of $3,807,000,
primarily  resulting from the restatement described in Note 1, an increased SG&A
expenses  of  approximately  $7,747,000, including a $634,000 loss in operations
from  our  Internet  subsidiary  HealthZone.com,  or HealthZone, a $640,000 loss
incurred  with  the  write  off  of  intangibles,  non-cash  warrant  and option
compensation  costs  of  $832,000  and $288,000 related to the relocation of our
corporate  and  warehouse  facilities.

                                       25
NET  SALES

     Net  sales  for  the year ended December 31, 1999 increased by $375,000, or
1.2%  to  $30,922,000  from  $30,547,000 for the comparable period in 1998.  The
increase in sales related to the introduction of our new Inholtra pain relieving
product,  partially  offset  by  an increase of over $2 million in allowances to
customers  for returns and allowances and deferral of over $2.8 million of sales
with  explicit  right  of  return.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 1999 decreased $3,073,000, or
17.1%, to $14,934,000 from $18,007,000 for the comparable period in 1998.  Gross
profits  as a percentage of sales for the year ended December 31, 1999 decreased
to  48.3%  from  59.0%  in  the  comparable period in 1998.  The decrease in the
margin  relates to: (i) pricing concessions related to 1999 sales in conjunction
with  the  launch  and  early  stage  sales  of several new products, (ii) sales
adjustments  given  to  certain customers, and (iii) an overall shift in product
mix  to  certain  items  which  have  a  lower  margin.

     SELLING  AND  MARKETING

     Sales  and  marketing  expenses  for  the  year  ended  December  31, 1999,
increased  by  $2,838,000  or  41.8%,  to  $9,631,000  from  $6,793,000  for the
comparable period in 1998.  The increase primarily relates to wages, advertising
and  other  costs  incurred  on  marketing and media campaigns to (i) launch the
introduction  of Inholtra, (ii) launch our new products, Cholestaid and Veromax,
for  the  fourth  quarter  1999  and  fiscal  2000,  (iii) media and advertising
campaigns  to  support  certain  of  our  other  products,  and  (iv)  continual
repackaging  and  redesign  of  our  core  product  lines.

     GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 1999,
increased  by  $2,328,000,  or  31.5%  to  $9,720,000  from  $7,392,000  for the
comparable period in 1998.  Included in 1999 general and administrative expenses
were:  (i)  legal  and  professional  fees  of  $806,000, (ii) $717,000 in costs
incurred  on  our  HealthZone  operations,  (iii)  $415,000 for consulting costs
incurred  to  implement  our  acquisition  of  Inholtra and other products, (iv)
approximately  $1,136,000  in uncollectible receivables (v) $903,000 of non-cash
warrant  and  compensation  costs,  and  (vi)  a  $288,000 charge related to the
relocation  of  our corporate and warehouse facilities.  The prior year included
$1,021,000  of  costs  associated with the merger described above.  Distribution
costs  for  the  year  ended  December 31, 1999 increased $1,594,000 or 146%, to
$2,686,000  from  $1,092,000  from  the comparable period in 1998.  The increase
primarily  relates to higher expenditures for freight, compensation, fulfillment
and other distribution costs associated with efforts to promote new and existing
products  to  new  customers.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 1999,
increased  by  $987,000 to $1,890,000 from $903,000 for the comparable period in
1998.  The  increase  specifically relates to amortization costs relating to the
Inholtra  and  HVE  acquisitions.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ending December 31, 1999 increased $1,176,000
to $1,339,000 from $163,000 for the comparable period in 1998.  This increase is
consistent  with  the  increase  in  the  utilization of our line of credit, the
incurrence  of  the  Inholtra  acquisition  debt  and  the term loan incurred to
refinance  the  Inholtra  acquisition  debt  in  1999.  Other  income included a
$481,000  gain on the sale of the former 4Health corporate headquarters building
located  in  Boulder,  Colorado.

                                       26
LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  March  31,  2001, we had cash and cash equivalents of approximately
$229,000,  and approximately $715,000 of availability under our revolving credit
line.  As  of  December  31,  2000,  we  had  cash  and  cash  equivalents  of
approximately  $199,000,  and approximately $1,489,000 of availability under our
revolving  credit line.  The increase in cash and cash equivalents is solely the
result  of timing of receipt and disbursement of cash.  As of March 31, 2001, we
had  total  current liabilities of $18,151,000, $5,453,000 of which consisted of
accounts  payable  to  vendors.   As  of March 31, 2001 we had a working capital
deficit  of  $12,549,000, and an accumulated deficit of $42,914,000.  During the
three  months  ended  March  31,  2001,  we  experienced negative cash flow from
operations  of  approximately  $736,000.  During  the  second quarter of 2001 we
experienced  a  significant  decline  in revenues due principally to declines in
revenue from our international customers. We estimate that, based on the current
rate  of negative cash flow from operations, the cash and availability under the
revolving  credit line will be sufficient to provide a source of working capital
through approximately September 15, 2001. We may not be able to pay the required
interest  payment  on September 15, 2001 and we may need to seek relief from the
lender  from  that  payment  and/or  future payments. Our estimate does not give
effect to payments, which may be made to vendors to reduce outstanding payables.
Further,  there can be no assurances that the vendors will continue to supply us
with  goods  and services in the event that such payables are not reduced, which
may  have  an  adverse effect on our continued operations.  In addition, some of
our  largest  customers  have  in  the  past  taken  deductions  against  trade
receivables  and  although  we  believe we have identified and reserved for such
deductions,  such  practices  may  adversely  effect  our  future  cash  flow.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales velocity.  We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our  gross profit was negatively impacted in 1999 and 2000 for returns. Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed  or will be in line with past return percentages.  The risk of returns is
amplified  by  the  current industry trend, which shows negative growth. If this
trend  continues,  retailers  may  decide  to reduce inventory levels from their
suppliers,  by  returning  goods  from their warehouse distribution centers.  If
this  occurs,  Management  will  decide  whether  they will accept such returns.

     During  the year ended December 31, 2000, we experienced negative cash flow
from operations of  $4,129,000.  The sale of equity securities and issuance of a
minority  interest  in  our subsidiary, HealthZone.com in January, 2000, and the
sale  of  common  stock  provided  an  aggregate  of approximately $8,440,000 in
proceeds  to  us.  Approximately  $3,620,000 of these proceeds were used for the
repayment  of an existing line of credit and other long term borrowings, as well
as  for  costs  incurred  with  the  financings.

     Credit  Facility.

     On  June  10,  1999,  we secured a new loan from a lending institution that
provides  up  to  $20  million  dollars of financing.  The loan was subsequently
amended on January 21, 2000.  The credit facility consists of a $13 million term
loan,  or  Term Loan,  and up to a $7 million revolving loan, or Revolving Loan,
subject to borrowing base availability and compliance with certain financial and
other  covenants  and agreements, including the maintenance of certain financial
ratios,  limitations  on  capital  expenditures,  restrictions  on acquisitions,
limitations  on  incurrence of indebtedness, and restrictions on dividends paid.
$4,527,000  of  loan  proceeds  were  disbursed  to repay and close our previous
existing  credit facility, and $10,000,000 was disbursed to repay the promissory
note  issued  in  connection  with  the  acquisition  of  the assets of Inholtra
Naturals,  Ltd.  As  of  December  31,  2000,  $10,278,000  and  $5,511,000 were
outstanding  under  the  Term  Loan  and  the  Revolving  Loan,  respectively.

     The loans under the credit facility are secured by substantially all of our
assets.  Borrowings under the Term Loan bear interest at an annual rate of prime
plus  2.25  percent  and  are paid monthly.  Borrowings under the Revolving Loan
currently bear interest at an annual rate of either prime plus 1.75 percent, and
are  paid  monthly.  The rates are subject to decrease based upon our satisfying
certain  operating  performance  levels.  The credit facility agreement contains
certain financial and other covenants or restrictions, including the maintenance
of  certain  financial ratios, limitations on capital expenditures, restrictions
on  acquisitions, limitations on the incurrence of indebtedness and restrictions
on  dividends  paid  by  us.  The $13,000,000 Term Loan was payable in quarterly
installments of $583,333 that began October 15, 1999, and which were to increase
to  $750,000  on  October 15, 2002, until the Loan was paid in full on April 15,
2004.  In  addition,  we were to make a payment of principal on the Term Loan in
addition  to  the  quarterly  payments in an amount equal to 50% of "Excess Cash
Flow"  (as  defined) for each fiscal year.  Each Excess Cash Flow Payment was to
be applied to reduce the remaining regularly scheduled principal installments of
the Term Loan in inverse order of their maturity.  Additionally, upon receipt by
us  of any unapplied insurance or condemnation proceeds, the proceeds of key-man
life  insurance which has been assigned to an Agent, asset sale proceeds or debt
sale  proceeds,  we are required to make a mandatory prepayment of the Term Loan
in  the  amount  thereof.  Furthermore,  upon  receipt  by us of any equity sale
proceeds,  we  were was to make a mandatory prepayment of (i) the Revolving Loan
to  the limited extent necessary to fully prepay the Revolving Loan or, if less,
in such amount so that borrowing availability after giving effect thereto equals
$3,000,000  and  (ii)  to  the extent of any balance of any equity sale proceeds
after  the  application  to  the  Revolving  Loan  to the extent provided in the
preceding clause, the Term Loan; provided, however, if at the time of receipt of
such  equity  sale  proceeds, no event of default has occurred and is continuing
and  the  debt  to EBITDA ratio meets certain defined levels, then the amount of
such  mandatory  prepayment  on the Term Loan shall be 50% of the amount of such
equity  sale proceeds remaining after application to the Revolving Loan pursuant
to  the preceding clause, and, further, provided, however, if such ratio is less
than a defined amount, then no such prepayment on the Term Loan from equity sale
proceeds  need  be  made.

                                       27
As  a  condition  of  a  waiver  obtained  in  May  2000, the Term Loan and
Revolving  Loan  agreements  were amended to change the expiration dates of both
facilities to April 30, 2001.  Further, under the amendment, the lender required
us  to  meet  certain  revised  financial  ratios.

     On  October  23, 2000, the credit facility was amended with respect to both
its  term  debt  and  revolving  credit  agreements.  The amendments included an
increase  in  the  availability  of  the Revolving Loan up to the maximum credit
limit  of  $7  million,  an extension of the term of both the revolving and term
debt  agreements from April 30, 2001 to July 30, 2002 and an agreement to permit
us  to  use  the  proceeds  obtained from the October, 2000 equity financing for
working  capital purposes.  Additionally, the lender agreed to waive any and all
defaults then in existence and defer until June 15, 2001, all principal payments
due  under  the  loan  from  the period commencing October, 2000 and ending May,
2001. The lender also allowed us to use the proceeds from a private placement of
securities,  closed  on  October  27,  2000,  resulting  in  net  proceeds  of
approximately $2,720,000, for working capital purposes.  The lender charged us a
fee for the restructuring of the indebtedness of approximately $131,000, payable
in  six  equal  installments  commencing  April  15,  2001.

     On February 2, 2001, the credit facility was amended in connection with the
sale  of  our Internet operations to Vitacost.com.  Pursuant to the terms of the
amendment,  (i)  the  lender  consented  to  the  terms  of  the  Vitacost.com
transaction,  (ii) we pledged our 6,800,000 shares of Vitacost's common stock as
security  for our obligations under our credit facility, (iii) we agreed to make
certain  mandatory  prepayments  upon receipt of any proceeds resulting from the
exercise  of our redemption rights or those of Vitacost, and (iv) we transferred
to lender all of our rights and remedies with respect to, and title and interest
in,  arising  from this transaction, including our right of redemption and right
to  receive  payments  upon  the  exercise by Vitacost of its redemption rights;
provided  that  lender may not exercise these rights only upon the occurrence of
an  event  of  default  and  during  the  continuance  thereof.  This assignment
terminates  upon the full performance of our obligations under the loan facility
or other termination of the loan agreement other than a termination by reason of
our  breach,  whichever  occurs  later.

     On  June  15,  2001,  we  entered  into an amendment to the credit facility
which,  among  other  things,  extended  the  repayment  date  of  the aggregate
outstanding  principal  balance  of  the  term loan in the approximate amount of
$4,078,000  from  June  15,  2001, to July 30, 2002, and waived certain defaults
then  in  existence.  We  are also required to make monthly interest payments on
the  15th  of  each  month.  The  lender  charged us a fee for restructuring the
indebtedness, which fees superseded those charged in connection with the October
23,  2000 amendment.  The fees of approximately $881,000 are payable as follows:
(i)  approximately  131,000  is  payable  in  six  equal monthly installments of
approximately $22,000, commencing April 15, 2001; and (ii) $750,000 on the Final
Maturity  Date.

On  July  20, 2001, we entered into an amendment to the Credit Facility pursuant
to  which  our  lender:  (i)  waived  certain  defaults  then in existence; (ii)
increased  the  amount  of  our  permitted  overadvance  by  $200,000; and (iii)
required  us  to inform the lender of our financial condition on a weekly basis.
The  lender  charged us an additional restructuring fee of $50,000 which will be
payable  on  the Final Maturity Date. As of June 25, 2001, we have approximately
$10,278,000 outstanding under our Term Loan and $6,588,000 outstanding under our
revolving  credit  line.

                                       28
We  have  primarily  funded  our  operations  to  date  through  internally
generated  capital,  bank loans or private equity financing.  Our future capital
requirements  will  depend  on  many factors, including the nature and timing of
orders from customers, collection of trade accounts receivable, the expansion of
sales and marketing efforts, costs associated with entering into new channels of
distribution,  and  the  status of competing products.  Management believes that
additional investment capital will be required to permit us to meet our business
objectives  in  the  near  term. Such funds may be raised either through debt or
equity offerings, or some combination of the two. However, there is no assurance
that  we  will be able to secure such funds on commercially reasonable terms, if
at  all.  If  not  successful  in securing additional funds, we may be forced to
dispose  of our assets outside of its normal course of business and/or resort to
bankruptcy  protection.

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants included in this Annual Report on Form 10-K for
the  year ended December 31, 2000, to the effect that our losses from operations
for  the  year  ended December 31, 2000, and the working capital deficit and the
retained  deficit at December 31, 2000 raise substantial doubt about our ability
to  continue  as  a  going  concern.

RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

     In  December  1999,  the SEC staff released Staff Accounting Bulletin (SAB)
No.  101,  Revenue  Recognition,  to  provide  guidance  on  the  recognition,
presentation  and  disclosure  of  revenue  in financial statements.  Changes in
accounting to apply the guidance in SAB No. 101 may be accounted for as a change
in  accounting  principle  effective  January  1,  2000.  Management has not yet
determined  the  complete  impact  of  SAB No. 101, however, management does not
expect  that  application  of  SAB  No.  101  will have a material effect on our
revenue  recognition  and  results  of  operations.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK

     Our  primary  market  risk  exposure is interest rate risk.  As of March 1,
2001,  all  of  our  debt  obligations  were subject to variable interest rates.

CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND FINANCIAL
DISCLOSURE

     As  of  April  14, 2000, the engagement of Arthur Andersen LLP, Independent
Public  Accountants,  as  our  principal  independent  accountant  to  audit our
financial  statements  was terminated. We had elected to engage another national
certified public accounting firm to audit our financial statements on an ongoing
basis. As of April 12, 2000, the firm of Singer, Lewak Greenbaum & Goldstein LLP
was  engaged  as  our independent accountant to provide services after April 14,
2000,  the  date  of filing of our Annual Report on Form 10-K for the year ended
December  31,  2000.

     Except  as set forth below, the audit reports of Arthur Andersen LLP on our
financial  statements  as  of  and  for  the  years  ended  December 31, 1999 as
restated,  1998,  and  1997 did not contain any adverse opinion or disclaimer of
opinion,  nor  were  they  qualified or modified as to audit scope or accounting
principles.  The  audit  report of Arthur Anderson LLP included in our financial
statements  for  the  year  ended  December  31,  1999,  as  restated, contain a
statement  that losses from operations, a working capital deficit and a retained
deficit,  raise  substantial  doubt  about  our  ability  to continue as a going
concern.   The  notes  to the financial statements describe management's plan to
address  these  concerns,  which  include:

-     Our  raising  $3,000,000  through a private placement of our securities in
      January  2000,
-     Our  raising  $2,100,000  through a private placement of our securities in
      March  2000,
-     Our  receipt  of a commitment from the January 2000 investor to provide an
      additional  $2,000,000  in private placement funding contingent on our
      achieving certain  sales  benchmarks  for  the  first  two  quarters  of
      2000;
-     Our current negotiations to raise an additional  $15,000,000 via a private
      placement  with  a  plan  to  pay off the Company's term loan with the
      proceeds;
-     Our  receipt of a waiver from our credit facility lender for violations of
      certain  covenants  included  in  the  loan  agreement;
-     Our  reducing portions of our fixed overhead expenses, including executive
      salary  reductions  of  $1,300,000;
-     Our  management  having revised its marketing strategy and plans to reduce
      advertising  expenditures;  and
-     Our  management  intends to focus additional efforts toward developing its
      e-commerce  operations  to  generate  additional  revenues.

                                       29
The  notes  to  our  financial  statements  further state that there are no
assurances that the capital already raised by us in conjunction with the expense
reductions  will be sufficient to fund our operations through 2000; there are no
assurances  that  we  will  be able to successfully achieve the sales benchmarks
necessary  to  raise  the  additional  $2,000,000  or  successfully  raise other
additional  private  placement  funds; there is no assurance that our management
will  be  able to successfully enter the e-commerce marketplace; and our failure
to  successfully  achieve  one  or  all  of the above items will have a material
impact  on  our  financial  position  and  results  of  operations.

     In  connection  with their audits of our financial statements for the years
ended  December  31, 1998 and December 31, 1999 as restated, Arthur Andersen LLP
reported  to  our Board of Directors certain conditions that they believed to be
material weaknesses in our system of internal accounting and financial controls.
In  response,  management began to identify measures to improve these systems of
internal  controls,  including  implementing  more  rigorous internal accounting
policies,  procedures  and  controls.

     In  May  1999, we filed the March 31, 1999 Quarter Report on Form 10-Q with
the  Securities  and  Exchange  Commission without resolving the issue raised by
Arthur  Andersen  LLP regarding a potential adjustment.  We resolved this matter
when  we filed our report on Form 10-Q/A for the quarter ended March 31, 1999 on
June  9,  1999.

     Material  adjustments  to  our  books were identified during the 1999 audit
process  and such adjustments were recorded in our financial statements included
in  our Annual Report on Form 10-K for the year ended December 31, 1999.  Arthur
Andersen  LLP  recommended  that  our  management  review  the  effect  of  such
adjustments  on  interim  periods  within  the  year ended December 31, 1999 and
determine  whether  Quarterly  Reports on Form 10-Q filed during 1999 need to be
amended.

     Subsequently,  on July 14, 2000, we filed amendments to our Reports on Form
10-Q  for  the  quarters  ended  June 30, 1999, September 30, 1999 and March 31,
2000,  and  our Annual Report on Form 10-K for the year ended December 31, 1999.
The  purpose  of  such  amendments  was  to  restate our financial statements to
reallocate  reserves  for  allowances.

     The  decision  to change accountants was approved by our board of directors
on  April  12, 2000.   Other than as set forth above, during our two most recent
fiscal  years and any subsequent interim period preceding the change, there were
no  disagreements  with the former accountants on any   matter   of   accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure,  which  disagreements,  if  not  resolved  to the satisfaction of the
former  accountants,  would  have  caused  them to make reference to the subject
matter of the disagreements in connection with their report.  We have provided a
copy  of  this  disclosure to our former accountants, and we have requested that
our  former  accountants furnish us with letters addressed to the Securities and
Exchange  Commission  stating whether they agree with the statements made by us,
and,  if  not,  stating  the  respects  in  which  they  do  not  agree.

     As  of  April 12, 2000, we engaged Singer, Lewak, and Greenbaum & Goldstein
LLP,  as  our  independent public accountant to provide services after April 14,
2000.  Prior  to  engaging  Singer, Lewak, Greenbaum & Goldstein LLP, neither we
nor  anyone  on  our  behalf  consulted Singer, Lewak, Greenbaum & Goldstein LLP
regarding  the  application of accounting principles to a specified transaction,
either  completed  or  proposed,  or  the  type  of  audit opinion that might be
rendered  on  our  financial  statements.  Since  no disagreements were reported
between  us  and  our  former  independent  public  accountant,  Singer,  Lewak,
Greenbaum  &  Goldstein LLP has not been consulted on any matter that was either
the  subject  of  a  disagreement  or  a  reportable  event.

                                       30
BUSINESS

GENERAL

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the  general  public.  Our  products  are  produced  primarily  from  natural
ingredients and are formulated for the purposes of achieving specific dietary or
nutritional goals.  We develop and market natural remedies for weight loss, pain
relief,  cholesterol control and other specific health and nutrition needs.  All
of  our  products  are natural nutritional supplements are subject to regulation
under  the  Dietary  Health  Supplement  & Education Act of 1994, or DHSEA.  Our
products  are  widely  distributed  through  mass  market retailers such as GNC,
Wal-Mart,  Rite-Aid,  Costco,  Eckerd  and  Walgreens, in over 7,500 health food
stores  either  directly  or  through  distributors, and internationally through
distributors  in  over  20  countries.

     Our portfolio of branded products includes, but is not limited to, Nature's
Secret,  Diet  System  6, PhenSafe, Harmony Formulas, Dr. Linus Pauling Vitamins
and  Inholtra  Natural Pain Relief among others.  We own numerous trademarks and
have  pending  trademark applications domestically and worldwide relating to our
branded  products,  including  without  limitation,  Bar  Bites  ,  BurnMore  ,
Candistroy  , Cellulite Burner , Crave Less , Diet System 6 , Endurance Energy ,
Evening  Multi  ,  Fulfill  ,  Ginkgo  Smart , Ginza-Plus , Harmony Formulas and
Design  ,  Home  Nutrition , Inholtra , Liver Support , Marital Arts Nutrition ,
Memory  Sharp  ,  Mind  Energy  ,  Morning Multi , Nature's Secret , Parastroy ,
PhenSafe  , Redo , Rezyme , Super Cleanse , System-Six , The New Grapefruit Diet
,  Thinsolution  ,  Ultimate  Breakfast  ,  Ultimate  Cleanse  ,  Veroxin-7  and
Yohimbe-Plus  .  Omni  Nutraceuticals,  Inc.  and  our  logo are also registered
trademarks  of  Omni  Nutraceuticals,  Inc.

INDUSTRY  OVERVIEW

     The  nutrition  industry  is  primarily  comprised  of  companies  that
manufacture,  distribute  and/or  sell:

-     vitamins,  minerals  and  meal  supplements,  or  VMS;
-     herbals  and  botanicals;
-     sports  nutrition;
-     natural  personal  care  products;  and
-     natural  foods  including  organics.

     In  the  last  several  years,  public awareness of the positive effects of
vitamins  and  nutritional  supplements  on  good  health has been heightened by
widely  publicized  reports  of scientific findings supporting such claims.  The
rise and acceptance of alternative medicine has greatly contributed to increased
sales  of  nutritional  supplements.  Because  the  market  for  these  products
represents  a  rapidly  evolving  industry,  one  that  is  growing  at a nearly
double-digit  rate,  it  is  anticipated  that  sales  will  increase  for  the
foreseeable  future.

     INDUSTRY  TRENDS.  The  VMS,  herbals  and sports nutrition segments in the
U.S., has grown at an estimated compounded annual growth rate or CAGR, according
to  the Nutrition Business Journal, or NBJ, of over 12% between 1994 and 1998 to
$13.9  billion.  Market  competition  has  driven  down  pricing  for  commodity
supplements  such  as  vitamins  A,  C  and  E,  as  well  as  standard multiple
vitamin-mineral  formulations.  Pricing  for  clinically  viable  specialty
formulations, however, generally commands between 10% and 20% higher prices than
comparable  nonscience  based  formulations.  Our sales of bulk/commodity herbal
products  comprise  only  a  small  percentage  of our gross sales; we focus our
efforts  on  those  other segments, which continue to demonstrate growth such as
specific  solutions for joint care and weight loss.  These industry segments are
expected  to  grow  at  an  even  more favorable double-digit rate than the high
single  digit  per  annum  growth  expected  for  the  industry  as  a  whole.

     Clinical  verification  for  previously  unknown formulations has increased
consumer  usage  among  all  nutritional  supplement categories.  New scientific
research  from  widely  publicized  institutions,  such  as  the Cambridge Heart
Antioxidant  Study,  has  supported the positive health effects of using certain
vitamins  and  dietary  supplements.  The  increase  in VMS and sports nutrition
products  can  be attributed to increased education and exposure to the benefits
of  these  products.  Consumers  have  exhibited  a  trend  to  be more actively
involved  in their own health and well-being.  There has been increased consumer
interest in healthier lifestyles and a heightened awareness and understanding of
the  connection  between  diet  and  health.

                                       31
The  aging of the "baby boom" generation, combined with consumers' tendency
to  purchase  more dietary supplements as they age, has been an important source
of  growth  for  the  VMS  segment of the nutritional industry.  There will be a
significant expansion of the population segment of 40 years and over in the next
decade,  and  this  segment  displays  the  highest  usage of vitamins and other
supplements.

     The  nationwide  trend  toward  preventive  medicine  in response to rising
healthcare  costs  has  been  an underlying driver for this industry.  There has
been  a  heightened  awareness  and understanding of preventive medicine and the
connection  between  vitamins and health amongst the general public, health care
professionals,  employers,  government agencies, and managed care organizations.
Issues  regarding  preventive  care  and  the  benefits  of vitamins and dietary
supplements  have  received  widespread  media  coverage.

OUR  PRODUCTS

     As  a  supplier  and  formulator  of  nutritional  supplements  primarily
manufactured from natural herbs, botanicals and nutrients, we have diverse, high
quality  family of branded products.  We sell three broad categories of products
including:

-     cleansing  products  to  eradicate  the  toxins  from  the  body;
-     building  products  that  increase  the  body's energy and stamina through
      restoring  vital  nutrients  to  their  appropriate  levels;  and
-     specific  solutions  for selected organ and body systems to concentrate on
      an  individual's  problem  areas.

     All of these products are Nutraceutical, used by consumers in many cases as
alternatives  to  pharmaceuticals.  Our top brand families are: Nature's Secret,
which  represents 20.3% of 2000 net revenue, Inholtra, which represents 11.5% of
2000  net  revenue  and  weight loss products, which represent 13.1% of 2000 net
revenue.

     We are continually developing products that may not fall squarely under one
of  our  normal brand lines.  Because of our rapid time to market capability, we
are  able  to  take  advantage  of trends and marketing opportunities that other
companies  are  unable  to take advantage of.  A cornerstone of our business has
been  our  ability to understand industry trends and bring new and/or repackaged
products  to  market  quickly.  The  majority  of  these  products have involved
re-formulations  and/or  repackaging of existing products or fording new markets
or  applications for existing products.  As such, we do not anticipate requiring
significant  capital  to  develop  our  products.  In  instances  where  we have
followed  other  "first  movers,"  emphasis  has  been  on  careful  market  and
scientific  research,  leading  to  higher quality consumer driven products.  In
nearly  all  branded product families we have done extensive work to improve our
already strong brands with the introduction of many new and innovative products.

     To  maximize  our  overall  exposure, we often reformulate and/or repackage
many  of  our  existing  products  and  distribute  them  overseas.  One example
includes  Yodel,  a  foreign  version  of  our  popular Nature's Secret Ultimate
Cleanse  sold  expressly  in  Japan.  Another  product  found  only  overseas is
Yohimbe-Plus, our natural herbal alternative to Viagra sold primarily in Russia.

     NATURE'S  SECRET.  Nature's  Secret  is  a premium brand in the health food
store  distribution  channel.  The product family consists of internal cleansing
products,  which  are  those  used  for  detoxifying  and  cleansing  the body's
digestive  and  intestinal  systems, vitamins and minerals and specific solution
products  such  as  targeted  weight  loss  and energy products. Nature's Secret
Ultimate  Cleanse  is the number one selling cleansing line on the market today.

     INHOLTRA.  This  line  of  joint  care  products is based upon our patented
formula designed to repair, replenish and revitalize worn and damaged cartilage.
The  Inholtra  line  makes  use  of  nine natural nutritional ingredients, which
differentiates  it from most other glucosamine/chondroitin-based products on the
market.  Presently,  the  product  line  consists  of  three  distinct products:
Inholtra  Natural  Pain  Formula,  InholtraNow  Natural  Pain  Relief  Cream and
Inholtra  SulfaMAX  Natural  MSM  Formula.  Product  users  range from arthritis
sufferers  to  casual  athletes.  In  just one year sales for the Inholtra brand
have  grown  nearly  50%,  making  Inholtra  our  number two selling brand.  The
Inholtra  line  is  sold  in  both  the  health  food  and mass-market channels.

                                       32
We  believe  that  many  of  our  products, if supported by the appropriate
resources,  have  outstanding  growth  potential.  For example, we have recently
launched  a  hybrid pharmaceutical/nutraceutical extension of the Inholtra joint
care  line  that  is the first of its kind in the marketplace.  This new product
combines  various  pharmaceutical  pain  relievers  such  as  aspirin  with  a
nutraceutical  complex  of glucosamine and chondroitin.  We anticipate that this
new product will have a substantial effect on our earnings potential as a result
of  the  following:

-     over-the-counter,  or  OTC, analgesics is a multi-billion dollar category;
-     the  glucosamine/chondroitin  category  of products is at $400 million per
      annum  and  growing  rapidly;
-     80%  of  joint  pain  sufferers  use  OTC  products  regularly;  and
-     a growing number of consumers are using glucosamine/chondroitin due to its
      ability  to  restore  joints.

     This  type  of hybrid product allows the typical user of analgesics to take
one  convenient product in capsule form not only to relieve pain associated with
arthritis and other joint conditions, but to replenish and repair worn cartilage
at the same time.  The new Inholtra "Joint Pain" line is available in four forms
to  cover  the  spectrum  of choice of pain relief products: aspirin, ibuprofen,
acetaminophen  and  nap  oxen  sodium.  The  new  Inholtra  "Joint Pain" line is
currently  being  sold  in  Eckerd  Drug.

     WEIGHT LOSS PRODUCTS.  Weight loss is a large and enduring product category
across  all  levels of distribution.  There are numerous products competing with
our Diet System 6 line of products.  Other products in our weight loss portfolio
include PhenSafe, a safe all-natural alternative to prescriptions drugs, such as
Phen  Fen  and  Cellulite  Burner.

     Presently,  the  Diet System 6-product line is comprised of three programs,
the  Fat  Binding,  the  Super Energy and the Cellulite Reduction products along
with  a  Diet  System  6  for  Men  program and diet shakes, bars and teas.  The
Cellulite  Burner  Program  is  a  diet  and  exercise regimen designed around a
special  nutritional  formula  to  combat  cellulite.  Phen  Safe  is  a  safe,
all-natural  alternative to prescription drugs such as the appetite suppressant,
Phen-Fen.

     Diet  System 6 competes with brands like Slim Fast and Dexatrim and is sold
in  both  health  food  store  and  mass  merchandiser  channels.  Diet System 6
distinguishes  itself from the competition, because of its unique formulation of
the  six  most  effective  ingredients  for  dieting,  which  are typically sold
separately.

     LINUS  PAULING  VITAMINS.  We  have  the  exclusive marketing rights to the
Linus  Pauling  name  for  the next 47 years. Dr. Pauling was the only person to
have  won  two  Nobel  Prizes  and  is highly regarded for his popularization of
vitamin  usage  in  the  U.S.  This  largely  under-utilized  asset represents a
significant  opportunity  for expansion.  We have developed a unique value added
line  of  formulas  around  the  Linus  Pauling  Vitamins  brand.

     HARMONY  FORMULAS.  Harmony  Formulas  represents  our  only  line  sold
exclusively  through  the  professional  health  distribution  channel.  Harmony
Formulas  is  a  line  of  clinically  developed,  precisely blended nutritional
supplements,  and designed specifically for health care practitioners who employ
natural,  alternative  treatments.  We  use  different  packaging  with  a  more
clinical  look  for  many of these formulations to differentiate them from other
similar  product  offerings.  Harmony  products  address  alternative  medicine
practitioners,  giving  credence  to  the  use  of  naturopathic  medicines.

SALES,  MARKETING  AND  DISTRIBUTION

     Historically,  we  have distributed our products though three main channels
of  distribution:  mass  market  retailers,  such  as GNC, specialty health food
stores  and  distributors  and  international  distributors.

     As  of  March  31,  2001,  our sales and marketing organization includes 33
full-time employees of whom 10 are direct marketing representatives.  We pay our
direct  marketing  force  employees a salary plus commission, with a majority of
their  compensation  resulting  from their salary.  Our sales force for the mass
market  and  health  food  stores  is  a  combination  of in-house personnel and
independent  brokers.  Our  staff  for  the  mass  market includes four regional
managers  and  one  national  account  vice  president  who  also  manages  our
independent  brokers.

                                       33
Our  point  of  sale advertising is designed to convey the effectiveness of
our products.  We have established our reputation with retailers through quality
products,  timely  delivery  and  superior  packaging.  Through  our  ability to
position  products  in  the  marketplace and our strong reputation, we have been
able  to  secure favorable shelf spacing from many of our retail customers.  Our
sales,  marketing  and  distribution infrastructure is designed to integrate new
brands  with  minor  incremental  costs  and  synergistic  potential.  Recent
limitations in capital, however, have limited the amount of advertising to point
of  sale  displays.

     Historically,  we have distributed our products though three main segments:
mass-market  retailers,  which  accounted for 48.1% of 2000 shipments, specialty
health food stores and distributors, which accounted for 28.6% of 2000 shipments
and  international  distribution,  which  accounted for 23.3% of 2000 shipments.
With  increased  advertising  in  the  future,  we  should be able to convey the
effectiveness  of  our  products.  In  certain  instances,  we  enter into co-op
advertising  arrangements  with  our  customers.

     MASS  MARKET  RETAILERS.  We  market  several  of  our  product  lines  to
mass-market  retailers, which we define as large food and drug stores, warehouse
or  club  stores and other large convenience stores.  Customers in this category
include  Wal-Mart,  Walgreens,  Costco,  GNC  and  K-Mart.  This  category  also
includes  traditional  national and regional supermarket chains, such as Safeway
and  Kroger.  These categories offer attractive pricing on vitamins, nutritional
supplements  and  minerals  but  have limited selection and offer little product
information.  In  addition,  this category typically offers a moderate selection
of  vitamins,  nutritional  supplements  and  minerals,  focusing  instead  on
prescriptions  and over-the-counter drug products.  VMS offerings by mass-market
retailers are often not all-natural products.  This category generally offers an
extremely  limited  selection  of vitamins, nutritional supplements and minerals
and  infrequent  discounts.

     Our marketing focus for the mass market is targeted at impulse buying where
products  are purchased based on the appeal of the display scheme.  Displays for
the  mass  market  are  intended  to provide informative product descriptions in
plain  view so that they provide consumers with a quick summary of the product's
attributes.  Clear  "point  of  purchase"  information  is  necessary due to the
environment  typical  of  mass-market  retailers  where  sales personnel are not
available  to answer consumer questions.  We display our products in multi-panel
boxes  and  product displays to provide stronger shelf presence.  We are relying
primarily  on this cost effective form of "point of purchase" promotion to drive
sales.

     Advertising  to  the  mass  market  is  often  targeted  at price sensitive
consumers  who  normally  perform  price  comparisons  on similar products.  The
mass-market consumer tends to be more impulse driven and generally less educated
than the health food store consumer.  For this segment, we use print advertising
in  popular  health  and  fitness magazines, such as Shape, for promotion of our
products.

     SPECIALTY  HEALTH  FOOD  STORES.  A  substantial  portion  of  our sales is
achieved  through  specialty health food stores.  We service approximately 7,500
stores,  directly  and  through  distributors.  Many of the accounts are smaller
independent  health  food  shops  that  have  steady orders ranging from $500 to
$1,000.  This  category  is  highly fragmented and includes some local, regional
and national chains such as Whole Foods and Wild Oats.  The largest participants
in  this  sector  include  Vitamin  Shoppe and Vitamin World.  Despite continued
expansion  of  the national chains, this category still remains dominated by the
thousands  of  local  and  regional  "mom  and  pop"  stores  and  chains.

     Our  sales  effort  to  health  food  stores  is  handled  by  health  food
distributors,  telephone sales, through in-house staff, and independent brokers.
Independent  brokers handle the larger, major accounts while the telephone sales
staff  services  lower  volume  customers.  Due to the size of the orders in the
health food segment, products earn higher margins than mass-market products.  We
are  able  to  offer  volume discounts and other special offers to larger health
food  stores.

     Advertising  for  the  health  food product lines is concentrated in health
magazines  such  as  Let's Live and in fitness magazines such as Shape and Self.
We target the self-motivated consumer who will consistently refer to specialized
magazines  to  obtain  information  on  health  products.  There  is  a  strong
correlation  between the individual who reads these magazines and the patrons of
specialty  health  stores.  In  our advertising, we emphasize the quality of its
ingredients  and the innovative formulations that the products offer, as opposed
to  focusing  on  price.

                                       34
INTERNATIONAL SALES.  Our products are sold in over 20 countries, including
the  United  Kingdom,  Japan,  Russia,  China  and  Singapore,  through  various
in-country  distributors, that target both mass-market retailers and health food
stores.

     Our marketing staff applies the same methodology to its international brand
management  as  it  does  for  domestic  markets.  There  is a constant focus on
packaging and display configurations to obtain the most effective penetration in
each  market.  Our  staff  will  often  alter packaging or displays to appeal to
consumers  in  a  particular  foreign  market.  Advertising  schemes  are  also
customized  to adapt to foreign publications, cultures and different demographic
groups.

     Presently,  Asia  and  Europe  represent our largest international markets.
Sales  in  Russia  and  the  UK  are expected to increase while sales within the
European  Union,  or  EU,  will  expand upon registration of products within its
respective  countries.  Activity in Japan is expected to rapidly expand, both in
product  placement  and  revenue  growth.  Other  key  Asian  markets,  such  as
Singapore,  Malaysia  and  Hong  Kong,  continue  to exhibit steady growth, with
accelerated  growth  in  the future as more products are registered within those
markets.

SUPPLIER  RELATIONS,  MANUFACTURING  AND  PURCHASING

     All  of  our  products  are  manufactured by third party domestic suppliers
pursuant  to  our  specifications  and  proprietary recipes.  The suppliers that
manufacture for us are required to meet strict manufacturing standards set forth
by  the Food and Drug Administration, or FDA.  Prior to selecting a manufacturer
to  produce  our  products,  we  review the manufacturer's raw material sources,
quality  assurance  procedures  and  reliability  to  assure  that  the proposed
manufacturer  meets  our  criteria.  Currently,  we  utilize  eight  different
manufacturers  and believe that there are numerous other qualified manufacturers
that  would  meet  quality  assurance  requirements if alternative manufacturing
sources  were required.  All ingredients contained in our products are generally
available  from  a  number  of  alternative  sources.

COMPETITION

     The  industry in which we operate is highly competitive and fragmented.  It
is  estimated  that  nearly  900  companies are involved in the manufacturing or
wholesale  distribution  of supplements to the mass markets.  Of those 900, less
than  20  companies  comprise 25% of the market with the remaining 75% comprised
mostly of companies generating less than $20 million in total annual sales.  The
ten  largest  competitors  are  large  well-capitalized  companies that have the
ability  to change and shape the industry. In the health and natural food sector
these  include  product  lines  such as: Nature's Way, Rainbow Light Nutritional
Systems,  Solgar,  Nature's  Herbs  and Twinlabs.  In the mass market sector the
competitors  include:  Whitehall  Robins  Healthcare,  Bayer  AG,  Mead  Johnson
Nutritionals,  Johnson  &  Johnson,  Inc. and Leiner Health Products Group, Inc.

     While  the  nutrition  industry  has  a few large manufacturers, there is a
large  and  diverse  group  of  smaller manufacturers who sell primarily through
wholesale  distributors.  Generally,  larger companies sell multiple brands into
each  channel  of  distribution  and smaller companies generally target only one
channel  of  distribution.  The  proliferation  of  small  manufacturers  can be
attributed  to  the  low  barriers  to  entry  for  many  product  categories.
Historically,  less  stringent  regulations  from  the  FDA, as well as a steady
supply  of  innovative  formulations  have  allowed small companies to enter the
market  with  just  a  few  products.

     We  continue  to  be  a leader in internal cleansing products and intend to
leverage  this success to launch other products.  Our Nature's Secret-Registered
Trademark-  and  Harmony  Formula-Registered  Trademark-  brand lines have built
strong  brand  loyalty with retailers, practitioners and customers by delivering
quality  products,  excellent customer service and an emphasis on health through
education.

     In the food, drug and mass market, we face increased competition where many
of  our  competitors  are  significantly  larger  and  have  greater  financial
resources.  We  believe  we  will  be  able to compete successfully in this mass
market  in  the future because of our unique formulations and packaging, product
quality  and  good  relationships  with  distributors  and  store  buyers.

                                       35
PATENTS  AND  INTELLECTUAL  PROPERTY

     We protect our proprietary rights from unauthorized use by third parties to
the  extent  that  our  proprietary  rights are covered by valid and enforceable
patents  or  are  effectively  maintained  as  trade secrets.  Patents and other
proprietary  rights  are an essential element of our business.  Our policy is to
file  patent applications and to protect technology, inventions and improvements
to  inventions  that  are  commercially  important  to  the  development  of our
business.  As of December 31, 2000, we were maintaining 2 U.S. patents and other
corresponding  foreign patents based on our discoveries that have been issued or
allowed.  Of our patents, 2 are issued in the United States, 1 is issued in each
of  Australia,  Canada  and  the European Community.  Each patent will expire in
year  2015.  The  patent  for this new Inholtra product is pending and we expect
this  to  create  a  barrier  to  competition.

     A  significant  part  of  our intellectual property consists principally of
registered trademarks.  We are engaged on a continuing basis in developing brand
names  for  our  new products, securing trademark protection for brand names and
copyright  protection for associated materials, policing our existing marks, and
enforcing  our legal rights in cases of potential infringement by third parties.
Prior  to  commencing  advertising and sales of products under a newly developed
brand  name,  we seek to minimize the risks of potentially infringing the rights
of  others  by conducting trade and service mark searches and other inquiries in
addition  to  filing  publicly  for  trademark  protection of the brand name and
copyright  protection  for  associated  advertising  materials  and  labeling.

     We  also  rely  on  trade  secret,  employee  and third-party nondisclosure
agreements  and  other  protective measures to protect our intellectual property
rights  pertaining  to  our  products  and  technology.

GOVERNMENT  REGULATION

     Our  products  and  research  and  development  activities are regulated by
numerous  governmental  authorities,  principally  the  FDA,  the  Federal Trade
Commission,  or  FTC,  the  Department  of  Agriculture  and  the  Environmental
Protection  Agency,  or  EPA  and  corresponding  state  and  foreign regulatory
agencies.

     The  FDA,  in  particular, regulates the formulation, manufacture, labeling
and  distribution  of  foods,  including  dietary  supplements,  cosmetics  and
over-the-counter  or  homeopathic  drugs.  FDA  regulations require that certain
informational  labeling be presented in a prescribed manner on all foods, drugs,
dietary  supplements  and cosmetics.  Specifically, the Food, Drug, and Cosmetic
Act,  or  the  FDC Act, requires that food, including dietary supplements, drugs
and  cosmetics, not be "misbranded."  A product may be deemed an unapproved drug
and  "misbranded"  if  it  bears  improper  claims  or  improper  labeling.  A
manufacturer  or  distributor of dietary supplements must notify the FDA when it
markets  a  product  with  labeling claims that the product has an effect on the
structure or function of the body.  Noncompliance with the FDC Act, and recently
enacted  amendments  to  the  FDC Act, could result in enforcement action by the
FDA.

     The  FDC  Act  has  been  amended  several  times  with  respect to dietary
supplements,  most  recently  by DSHEA.  DSHEA created a new statutory framework
governing  the definition, regulation and labeling of dietary supplements.  With
respect  to  definition,  DSHEA  created  a  new  class  of dietary supplements,
consisting  of  vitamins,  minerals,  herbs,  amino  acids  and  other  dietary
substances  for  human  use  to  supplement  the  diet, as well as concentrates,
metabolites,  extracts  or combinations of such dietary ingredients.  Generally,
under  DSHEA,  dietary  ingredients  that  were on the market before October 15,
1994,  may  be  sold without FDA pre-approval and without notifying the FDA.  In
contrast, a new dietary ingredient, such as one not on the market before October
15,  1994  requires  proof  that  it has been used as an article of food without
being  chemically  altered  or evidence of a history of use or other evidence of
safety  establishing  that  it is reasonably expected to be safe.  Retailers, in
addition  to dietary supplement manufacturers, are responsible for ensuring that
the  products  they  market  for  sale  comply  with  these  regulations.

     DSHEA  established  an  office  of  Dietary  Supplements  at  the  National
Institutes of Health in order to coordinate and conduct scientific research into
the health benefits of dietary supplements, as well as a Presidential commission
to  study  and  make  recommendations  on  the  regulation  of  label claims and
statements  for  dietary  supplements.  DSHEA  empowers  consumers  to make more
informed  choices about preventive health care programs based on scientific data
about  the  health  of  dietary  supplements.

                                       36
Although  DSHEA is generally viewed as a positive development for companies
that  sell  dietary  supplements  such as vitamins, minerals, herbs, and similar
substances,  the  legislation  imposed  new  labeling  requirements that must be
adhered  to in order for a product to qualify for the "safe harbors" established
by  DSHEA.

     With  respect  to  labeling,  DSHEA  amends,  for  dietary supplements, the
Nutrition  Labeling  and  Education  Act  by  providing  that  "statements  of
nutritional  support,"  also  referred to as "structure/function claims," may be
used  in  dietary supplement labeling without FDA pre-approval, provided certain
requirements  are  met.  These  statements  may  describe how particular dietary
ingredients  affect  the  structure or function of the body, or the mechanism of
action  by which a dietary ingredient may affect body structure or function, but
may  not  state  a  drug  claim,  such as a claim that a dietary supplement will
diagnose,  mitigate,  treat,  cure  or  prevent  a  disease.  A company making a
"statement  of nutritional support" must possess substantiating evidence for the
statement, disclose on the label that the FDA has not reviewed the statement and
that the product is not intended for use for a disease and notify the FDA of the
statement  within  30  days  after  its  initial  use.

     In  addition, DSHEA allows the dissemination of "third party literature" in
connection  with  the  sale of dietary supplements to consumers at retail if the
publication meets statutory requirements.  Under DSHEA, "third party literature"
may  be  distributed  if,  among other things, it is not false or misleading, no
particular  manufacturer  or brand of dietary supplement is promoted, a balanced
view  of available scientific information on the subject matter is presented and
there  is  physical  separation  from  dietary  supplements  in  stores.

     Given  the  fact  that  DSHEA  was  enacted  only  six years ago, the FDA's
regulatory  policy  and  enforcement positions on certain aspects of the new law
are  still  evolving.  Moreover,  ongoing  and future litigation between dietary
supplement  companies  and  the  FDA  will  likely  further  refine  the  legal
interpretations  of  DSHEA.  As a result, the regulatory status of certain types
of  dietary supplement products, as well as the nature and extent of permissible
claims,  will  remain  unclear  for  the  foreseeable  future.

     In addition to the regulatory scheme under the FDC Act, the advertising and
promotion  of  dietary supplements, foods, OTC drugs and cosmetics is subject to
scrutiny  by  the  FTC,  which  prohibits  "unfair  or deceptive" advertising or
marketing  practices.  The  FTC has pursued numerous food and dietary supplement
manufacturers and retailers for deceptive advertising or failure to substantiate
promotional  claims, including, in many instances, claims made via the Internet.
The  FTC  has  the power to seek administrative or judicial relief prohibiting a
wide  variety  of  claims,  to  enjoin  future  advertising,  to seek redress or
restitution payments and to seek a consent order and seek monetary penalties for
the  violation  of  a  consent  order.

     Although  the  regulation  of  dietary supplements is less restrictive than
that  of  drugs  and  food  additives,  we  cannot  be  assured that the current
statutory  scheme  and regulations applicable to dietary supplements will remain
less  restrictive.  Any laws, regulations, enforcement policies, interpretations
or  applications  applicable  to our business could require the reformulation of
certain  products to meet new standards, the recall or discontinuance of certain
products  not  capable  of  reformulation,  additional  record keeping, expanded
documentation  of  the  properties  of  certain  products, expanded or different
labeling  or  scientific  substantiation.

EMPLOYEES

     Currently,  we  have approximately 67 employees, including approximately 31
in  sales  and  marketing positions, 17 in distribution and 19 in administrative
positions.  None  of  our  employees  is  covered  by  a  collective  bargaining
agreement,  nor to our knowledge is there any current attempt to organize into a
collective  bargaining  unit.  We  have  not  experienced any slow downs or work
stoppages.

FACILITIES

     Our  principal  offices  are located at 5310 Beethoven Street, Los Angeles,
California,  90066  in  a  building  and  warehouse we lease at a monthly rental
charge  of  $42,000.  This  is  a  five-year  lease  subject  to  escalation.

                                       37
In  November  1999,  we  entered  into  a 5-year lease of office facilities
located at 350 Interlocken, Broomfield, Colorado.  The lease agreement calls for
escalating  lease payments over the term of the lease.  On February 15, 2001, we
assigned  this  lease  to  a  third  party.
On  May  23, 2001, we entered into a one-year lease of office facilities located
at  1655  Walnut Street, Bolder, Colorado, at an approximate monthly rental rate
of  $3,044.  We  have  a one-time option of renewing this lease for a three year
period  on  the  same  terms  and  conditions except that our rental rate may be
adjusted  to  the then prevailing market rate for comparable office space in the
City  of  Boulder.

LEGAL  PROCEEDINGS

     On  July  18, 2001, we entered into a stipulated judgement in the amount of
$436,635  in  connection  with  the  case  entitled Media Networks, Inc. v. Omni
Nutraceuticals,  Inc.,  in  Los Angeles County, California, Superior Court, Case
No.  BC  241503.

On  January  18,  2001,  a  lawsuit  was filed against us in Los Angeles County,
California,  Superior  Court  entitled  Unified  Western  Grocers,  Inc. v. Omni
Nutraceuticals,  Inc.,  Case  No.  01  000066.  The  complaint seeks recovery of
approximately $20,000, interest and costs.  A responsive pleading has been filed
denying  liability.  We  do not believe the outcome of this litigation is likely
to  materially  impact  us.

     On  January  23,  2001,  the  Labor Commissioner of the State of California
entered a judgment against us in the amount of approximately $42,000 in a matter
entitled  Richard  F.  Lynch  v.  Omni Nutraceuticals, Inc., Labor Commissioner,
State  of  California,  State Case No. 05-19487 1 CC.  We filed an appeal, which
required  posting  a  bond  in  the  amount  of the judgment, in the Los Angeles
County, California, Superior Court on February 14, 2001.  The appeal is entitled
In  the Matter of the Appeal of Omni Nutraceuticals, Inc, of the Order, Decision
or  Award  of  the Labor Commissioner, Richard F. Lynch, Real Party in Interest,
Case  No. BS067765.  The appeal involves a retrial of the matter in the Superior
Court.  We  deny that any sums are due to Lynch.  The final outcome of this case
is  uncertain,  but  appears unlikely that it will have a material impact on us.

     On  March  30, 2001, the former shareholders of Smart Basics, Inc., filed a
complaint  against  us  in  the  Second  Judicial District Court of the State of
Nebraska  in  and  for  Washoe  County, titled Robert Huff, Gus Boosalis, Brenda
Smith  and Mark Rennie v. Omni Nutraceuticals Corp. and Omni Smart Basics, Inc.,
Case No. CV01-01602.  The complaint alleges that we misrepresented our financial
condition  in connection with the merger with Smart Basics, Inc.  The plaintiffs
seek  rescission  and,  alternatively,  unspecified  damages, attorneys fees and
costs.  Based  on the information currently available, we are unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

     We have received an inquiry from the Los Angeles County and Alameda County,
California,  District  Attorney's  Offices  with respect to labeling of our "151
Bars"  and  "Diet System 6 Bars." Discussions and an exchange of information are
taking  place  with  respect  thereto.  We  are hopeful that a resolution can be
reached  without  litigation, although no assurance can be given.  If settlement
is  not  reached, an action for false advertising, unfair business practices and
other claims may be filed against us.  We are no longer selling the "Diet System
6  Bars"  that are a subject of the inquiry.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     On  March  28,  2001, we received a letter from the Securities and Exchange
Commission  advising  that  it  is  conducting  an informal inquiry into matters
concerning us and requesting that we voluntarily produce documents in connection
therewith.  We  are in the process of producing the requested documents.  We are
unable  to  predict  at  this  time  the  outcome  thereof.

     A  complaint  for  money was filed against us on May 25, 2000, in an action
entitled  Copelco  Capital,  Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles
County,  California,  Superior  Court,  Case No. BC230578.  It seeks recovery of
principal  of  approximately  $67,000,  interest,  taxes,  fees,  liens and late
charges  according  to  proof,  attorney's fees and costs in connection with our
alleged  lease of copier equipment.  We have filed a responsive pleading denying
liability  and raising affirmative defenses.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

                                       38
A  complaint  for breach of contract and common counts was filed against us
on  November  30,  2000,  in  a  case  entitled  Puretek  Corporation  vs.  Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case  No.  241059.  It  seeks recovery of $78,000, interest, attorney's fees and
costs.  We  have  filed  a  responsive  pleading  denying  liability and raising
affirmative  defenses.  On  December  28,  2000,  the  court  granted  Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,000.  Based  on  the  information  currently  available,  we  are  unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     We have been sued in the Circuit Court for Baltimore County, Maryland.  The
title  of  the  case  filed  on  October 6, 2000, is Gain, Inc., d/b/a/ American
Medtech  v.  Maryland  Urology  Group,  Inc.,  Veromax  International, LLC, Omni
Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett, M.D.,
Larry  L.  Parks  and Kyle P. Moore, Civil No. 030-00-010409.  The First Amended
Complaint  filed  November  6,  2000, alleges that other defendants granted Gain
exclusive  rights  to  market  and  sell Veromax  to all U.S. pharmacy and chain
stores  with  greater  than twenty stores and that these defendants subsequently
assigned  rights  to  us  to  market and sell Veromax  that were contrary to the
rights  previously  granted  Gain.  It claims that we tortiously interfered with
Gain's prospective economic advantage, and published false information to Gain's
customers  that  disparaged its rights to distribute Veromax , in our efforts to
market  and  sell  Veromax  and  seeks  $250,000,000  in  compensatory  damages,
$25,000,000  in  punitive  damages, interest and costs. It also seeks injunctive
relief  prohibiting us from interfering with Gain's marketing efforts by selling
or  offering  to  sell  Veromax  to  certain  identified  pharmacy chains and to
account  for  sales  made  to  said identified pharmacy chains.  We have filed a
responsive  pleading  denying  liability  and  raising  affirmative defenses and
intend  to  vigorously  defend  this action.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     We  have  received  correspondence  from  counsel  claiming that our former
subsidiary,  Smart  Basics,  Inc.,  sold  a  product which allegedly infringes a
patent held by Dr. Ann de Wees Allen.  The letter demands that the Company cease
and  desist  the  manufacturing,  distribution  and  selling  of the product and
provide  accounting  data  of  all  manufacturing, distribution and sales of the
product.  The  letter  threatens  an  action  for  infringement, seeking damages
(trebled)  and  injunctive  relief, if the demands are not met.  We have advised
the  claimant  that  we  have  stopped  selling  this  product.  Based  on  the
information  currently  available  to  us,  we  are  unable  to  evaluate  the
likelihood  of  an  unfavorable  outcome.

     We  have  received  a  letter  from counsel for Nutramax Laboratories, Inc.
("Nutramax")  regarding  litigation  in Baltimore, Maryland between Nutramax and
Inholtra, Inc. and Inholtra Natural, Inc. (collectively "Inholtra") with respect
to  alleged  patent  infringement and related claims.  The letter states that we
should  be substituted in the litigation in place of Inholtra since we purchased
all  rights  and  liabilities  associated with the Inholtra product which is the
subject  of  the  litigation.  The  letter  further  proposes that the matter be
settled  between  Nutramax and us.  Based on the information currently available
to  us,  we  are  unable  to  evaluate the likelihood of an unfavorable outcome.

     From  time  to  time  we  are a party to legal proceedings that we consider
routine  litigation  incidental  to  our  business.  We  believe that the likely
outcome  of  such  litigation  will  not  have  a material adverse effect on our
business  or  results  of  operations.

                                       39
MANAGEMENT

DIRECTORS  AND  EXECUTIVE  OFFICERS

The  following  table sets forth information regarding our current directors and
executive  officers:
Name                     Age              Position
Mr. Andrew Vollero, Jr    63  Chairman of the Board
Mr. Klee Irwin            35  Chief Executive Officer, Director
Mr. Thomas Aarts          42  Director
Ms. Rebecca Pearman       33  Director
Mr. Thomas Baker          59  Vice President Finance
MR.  ANDREW  VOLLERO, JR.  Mr. Vollero became Chairman of the Board of Omni
Nutraceuticals  on  March 12, 2000 and has served as a Director since 1999.  Mr.
Vollero  is  an  independent  general management consultant and private investor
specializing  in  the  small  business area since 1970.  During that period, Mr.
Vollero  has  worked  with  over  100  companies,  mostly  privately held and in
non-high  tech industries.  Since 1994, Mr. Vollero has served as a Board member
of  AC International, A.C. Vroman, Inc., Vroman Real Estate Ventures, Magnum Air
and  Rahn  Industries.  Mr.  Vollero  is a graduate of Yale and Harvard Business
School.

     MR.  KLEE  IRWIN.  Mr.  Irwin  served  as the President and Chief Executive
Officer  of  Omni Nutraceuticals from June 30, 1998 until April 20, 1999.  Prior
to  June 30, 1998, Mr. Irwin served as the President and Chief Executive Officer
of  Irwin Naturals, which he founded in 1995.  Prior to his involvement in Irwin
Naturals,  beginning  in 1989, Mr. Irwin served as a vice president of sales and
marketing and general manager of Helsneva Labs, a division of Pantron I Corp., a
privately  held  consumer  products  company.  Mr.  Irwin  served  as  the Chief
Executive  Officer  and  a  Director of HealthZone.com, the Company's e-commerce
subsidiary  in 1999 and rejoined us as the Chief Executive Officer and President
in  March  2000,  and  has  served  as  a  Director  since  1999.

     MR.  THOMAS  AARTS.  Mr.  Aarts  was  elected  to our board of directors on
November  15, 2000.  Mr. Aarts is Co-Founder and President of Nutrition Business
International  and  Executive  Editor  of  Nutrition  Business Journal. Prior to
starting  NBI,  he  was  Director  of  New  Ventures  and  a project manager for
Environmental  Business  International  .  Prior  to  coming  to EBI, Tom was an
assistant  to  the CEO of Browning-Ferris Industries.  Mr. Aarts also worked for
Mercer  Management  Consulting  and  for  Johnson  &  Johnson.

     MS.  REBECCA  PEARMAN.  Ms. Pearman has worked for Omni Nutraceuticals or a
predecessor  or  affiliated  business for at least the last five years.  She was
elected  to our board of directors on January 31, 2001 and appointed to serve as
President  of  our  Irwin  Naturals division on February 1, 2001.  She served as
General  Manager for Irwin Naturals from its inception in 1994 until leaving for
the UK in 1996 to start Applied Nutrition, UK LLC, a division of Irwin Naturals.
She returned to the US in 1997 to become Vice President of the Applied Nutrition
Division  of  Irwin  Naturals.  Ms.  Pearman  is  also  the  General  Manager/VP
operations  of  American  Brand  Labs,  a  company  owned  by  an  affiliate.

     MR.  THOMAS  BAKER.  Mr.  Baker  joined Omni Nutraceuticals on February 26,
2001  as  vice  president  of  finance.  Prior  to  joining Omni Mr. Baker was a
consultant to companies from January 2000.  From April 1997 to December 1999 Mr.
Baker was vice president and chief financial officer of Eos Corporation and from
October  1994  to  April  1997 was vice president and chief financial officer of
NetVantage,  Inc.

     The  Board  of  Directors  met  8  times  during  2000 for regular Board of
Directors  meetings.  All  directors  attended  100% of the aggregate of (i) the
total  number of meetings of the Board of Directors held while they were members
and  (ii)  the  total  number of meetings held by all Committees of the Board of
Directors  on  which  they  served as members.  The Board of Directors has three
standing  committees:  the  Audit Committee; the Compensation Committee; and the
Long  Term  Stock  Incentive  Plan  Administration  Committee,  or  the  LTSIP
Administration  Committee.  During  2000,  the  Audit  Committee  and  the LTSIP
Administration  Committee  were  composed of Messrs. Vollero, Aarts and Diamond,
and  the  Compensation  Committee  was  composed  of  Messrs. Vollero, Aarts and
Ballin.  The Audit and LTSIP Administration Committees did not meet during 2000,
the  functions of such committees being performed by the Board of Directors as a
whole.  The  Compensation  Committee  met  two  (2)  times in 2000.  The primary
responsibility  of  the  Compensation  Committee  is to establish and review our
compensation  policies, including those for executives.  During 2000, we did not
have  a  nominating committee, the functions of such a committee being performed
by  the  Board  of  Directors  as  a  whole.

                                       40
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

     The  following table shows, for the years ended December 31, 2000, 1999 and
1998,  the cash compensation paid, as well as certain other compensation paid or
accrued for the year, to our four most highly compensated executive officers, or
the  Named  Individuals,  during  2000:
SUMMARY  COMPENSATION  TABLE

     Annual                                           Long  Term
     Compensation                                     Compensation  Awards     Payouts
     ------------                                     --------------------     -------
                                                     Other                      Securities            All
                                                     Annual      Restricted     Underlying            Other
Name  and                  Salary        Bonus       Compen-     Stock          Options     LTSIP     Compen-
Position           Year    ($)           ($)         sation ($)  Awards         SARs  (#)   Payouts   sation
R. Lindsey
Duncan (1)         2000   $ 47,596                   $1,720,000    $0             $     0     $0        $0
                   1999    225,000  $   50,000                0     0                   0      0         0
                   1998    192,219           0                0     0              50,000      0         0

Klee Irwin (2)     2000    350,000           0                0     0                   0      0         0
                   1999    259,808           0                0     0                   0      0         0
                   1998    455,000           0                0     0              50,000      0         0

Louis Mancini (3)  1999    284,615           0          350,000     0           1,600,000      0         0

Rockwell
Schutjer (4)       1998    122,163           0                0     0                   0      0         0

Steven Beldner
 (5)               2000    136,421           0                0     0                   0      0         0

Christof Ballin
(6)                2000    105,769           0                0     0           1,075,000      0         0

Herm Rosenman
7)                 2000    101,346           0                0     0             500,000      0         0
(1)     Mr.  Duncan's  other  compensation includes the value of shares received
        pursuant  to  the  Withdrawal  Agreement, dated March 12, 2000, by and
        among Mr. Duncan,  his  spouse,  Cheryl  Wheeler  and  the  Company.
(2)     Mr.  Irwin's  employment  ceased on April 20, 1999, and his options have
        expired  unexercised.  Mr.  Irwin  was  re-employed  on  March  12, 2000
        as our President  &  CEO.
(3)     Mr.  Mancini's  options  were  cancelled  pursuant  to  a  Termination
        Agreement.  Other  compensation  consists  of  a  car  allowance.
(4)     Mr.  Schutjer's  employment  with Omni Nutraceuticals ceased on July 15,
        1999.  Mr.  Schutjer's  options  have  expired  unexercised.
(5)     Mr.  Beldner's compensation shown includes sales commissions he receives
        as  our  International  Division  Manager.
(6)     Mr.  Ballin's  employment  ceased on January 19, 2001, at which time all
        stock  options  shown  were  cancelled.
(7)     Mr. Rosenman's employment ceased on March 22, 2001, and his options have
        been  cancelled.

                                       41
DIRECTOR  COMPENSATION

     We  reimburse  our  non-employee  directors  for their expenses incurred in
connection  with  attending board and committee meetings but do not provide cash
compensation  for  their  services as board or committee members.  Directors are
eligible  to  participate  in  our  Long  Term  Stock  Incentive Plan, or LTSIP.
Subject to shareholder approval, each of our non-employee directors will receive
a  onetime  stock  grant  of 15,000 shares and a one-time option grant of 75,000
shares  vesting  annually over three years upon joining the board.  The exercise
price  for each of these option grants will be equal to the fair market value of
the  underlying  shares  of  our  common  stock  on  the  date  of  grant.

     In  1999,  the  LTSIP provided that upon assuming office, each non-employee
director  would  be  granted  a non-qualified option to acquire 10,000 shares of
Common  stock at an exercise price equal to 100% of the fair market value on the
date  of grant.  One-half of the grants shall become exercisable upon completion
of  one  year of service as a director and the remaining balance upon completion
of  two years of service as a director.  All options have a five-year expiration
term.

     In  December  1999, the LTSIP was amended to grant 75,000 options at market
price  at  the  time  of  grant  over  three  years  to  new  directors.

     During  the  year  ended  December  31, 2000, we issued 1,780,500 shares of
common  stock  at  a  weighted  average  exercise  price of $2.38 per share, and
options to purchase approximately 1,925,000 shares of common stock to certain of
our  directors,  executive  officers  and  consultants.

OPTION/SAR  GRANTS  TABLE

     The  following  table  presents  information  with  respect  to  the  Named
Individuals  concerning  the  exercise  of  options  during 2000 and unexercised
options  held  as  of  December  31,  2000.
Potential Realizable
                                                                                 Value at Assumed
                                                                                 Annual Rate of Stock
                                                                                 Price Appreciation For
                     Individual Grants                                           Option Term (1)
------------------------------------------------------------------------------------------------------
(a)                  (b)              (c)             (d)            (e)          (f)      (g)
                     Number of        % of Total
                     Securities       Options/SARs
                     Underlying       Granted to       Exercise Or
                     Options/SARs     Employees In     Base Price     Expiration
                     Granted (#)      Fiscal Year      ($/Share) (*)  Date (*)     5% ($)  10% ($)
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Christof Ballin (1)  1,075,000          57.5             2.07           4-9/2010   (3)     (3)
Herm Rosenman (2)      500,000          26.6             4.12             5/2010   (3)     (3)
*This  chart  assumes  a market price of $0.20 for the common stock, the closing
price  for  the  common  stock in the Over-The-Counter Market as of December 31,
2000,  as  the  assumed  market  price  for  the  common  stock  with respect to
determining  the  "potential  realizable  value"  of  the shares of common stock
underlying the options described in the chart, as reduced by any lesser exercise
price  for  such  options.  Further, the chart assumes the annual compounding of
such  assumed  market  price over the relevant periods, without giving effect to
commissions  or  other  costs  or  expenses  relating to potential sales of such
securities.  Our  common stock has a very limited trading history.  These values
are  not intended to forecast the possible future appreciation, if any, price or
value  of  the  common  stock.

(1)     These  options  have  been  cancelled.
(2)     These  options  were  cancelled  on  May  23,  2001.
(3)     The  exercise  price  of  the  options exceeded the assumed market price
        compounded  annually  over  the  relevant  periods,  and, therefore,
        there is no potential  realizable  value  for  the  options,  for
        purposes  of  this chart.

OPTION  EXERCISES  AND  YEAR-END  VALUES

     The  following  table  presents  information  with  respect  to  the  Named
Individuals  concerning  the  exercise  of  options  during 2000 and unexercised
options  held  as  of  December  31,  2000:

                                       42
Number  of  Securities     Value  of  Unexercised  in  the
                                              Underlying  Unexercised    Money  Options  at
                                              Options  at                December  31,  2000  (2)
                                              December  31,  2000
Name            Shares         Value          Exercisable Unexercisable  Exercisable   Unexercisable
                Acquired On    Realized
                Exercise  (#)  (1)
---------------------------------------------------------------------------------------------------------
R. Lindsey
Duncan              0          0              984,584     16,667
Christof Ballin
(2)(3)              0          0                    0          0              0             0
Herm Rosenman (2)   0          0               65,000          0              0             0
Klee Irwin          0          0            2,200,000          0              0             0
Steven Beldner (2)  0          0                2,500     12,500              0             0
Louis Mancini (2)   0          0                    0          0
(1)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common  stock  in the then existing market for the common stock on the date
     of  exercise  and  any  lesser  exercise  price.
(2)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common stock in the Over-The-Counter market on December 29, 2000 ($0.21 per
     share)  and  any  lesser  exercise  price.
(3)  On  April  30, 2001, options held by Mr. Ballin to purchase up to a maximum
     of  1,125,000  shares  of  our  common  stock  were  cancelled.

OMNI  NUTRACEUTICALS,  INC.  LONG  TERM  STOCK  INCENTIVE  PLAN

     The  following  is a description of the principal features of the Long Term
Stock Incentive Plan or LTSIP, as amended.  This description is qualified in its
entirety  by  reference to the LTSIP, which is incorporated herein by reference.
The  Board  of  Directors  will  be  recommending  revisions to the LTSIP to the
shareholders  at the next annual or special shareholders meeting.  The revisions
are  described  below.

     The  LTSIP authorizes the LTSIP Administration Committee to grant incentive
stock  options  or ISO and non-qualified stock options or NSOs, including reload
options  (i.e.,  the granting of additional options, where an employee exercises
an option with previously owned stock, covering the number of shares tendered as
part  of  the  exercise  price),  restricted  stock  awards or RSAs (i.e., stock
awarded to an employee that is subject to forfeiture in the event of a premature
termination  of  employment,  failure  of  Omni  Nutraceuticals  to meet certain
performance  objectives,  or  other conditions), performance units or PUs (i.e.,
share-denominated  units  credited  to  the  employee's  account for delivery or
cash-out at some future date based upon performance criteria to be determined by
the  LTSIP  Administration  Committee),  and  "tax withholding" (i.e., where the
employee  has the option of having us withhold shares on exercise of an award to
satisfy  tax  withholding  requirements).

     The  LTSIP  also  provides  for  one-time  grants  of NSO's to non-employee
directors,  upon  taking office, vesting one-half upon completion of one year of
service and one-half upon the completion of two years of service, exercisable at
100%  of  the  fair  market  value  of  the  Common  stock on the date of grant.

     The  LTSIP Administration Committee develops administration guidelines from
time  to  time,  which  define  eligibility  criteria,  the  types  of awards to
employees,  and  the  value  of  such  awards.  Specific  terms  of  each award,
including  minimum  performance  criteria, which must be met to receive payment,
will  be  provided  in individual award agreements granted each award recipient.
Key employees and other individuals who the LTSIP Administration Committee deems
may  provide  a  valuable  contribution  to  our  success  will  be  eligible to
participate  under  the  LTSIP.  Award  agreements  will  also  contain
change-in-control  provisions.

                                       43
Under  the  LTSIP,  the  LTSIP Administration Committee shall determine the
option  price  of all NSOs and ISOs; provided, however, in the case of ISOs, the
option price shall not be less than the fair market value of the Common stock on
the  date  of grant. Such "fair market value" is the average of the high and low
prices  of  a share of the Common stock traded on the relevant date, as reported
on  a  national  securities  exchange  or an automated quotation system on which
Common stock is then traded, or, in the event such Common stock is not listed on
an  exchange  or  quoted  on  an  automated quotation system, the average of the
highest  bid  and the lowest asked price quoted by a member firm of the National
Association  of  Securities  Dealers,  Inc.

LIMITATION  ON DIRECTORS' LIABILITIES; INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Our  Articles of Incorporation and Bylaws designate the relative duties and
responsibilities  of our officers, establish procedures for actions by directors
and stockholders and other items.  Our Articles of Incorporation and Bylaws also
contain  extensive indemnification provisions, which will permit us to indemnify
our  officers  and  directors  to  the  maximum  extent,  provided  by Utah law.
Pursuant  to our Articles of Incorporation and under Utah law, our directors are
not  liable  to  us  or  our  stockholders  for  monetary  damages for breach of
fiduciary  duty,  except  for  liability  in connection with a breach of duty of
loyalty,  for  acts  or omissions not in good faith or which involve intentional
misconduct  or  a  knowing  violation  of  law,  for  dividend payments or stock
repurchases  illegal  under  Utah law or any transaction in which a director has
derived  an  improper  personal  benefit.

     At  present,  there  is  no  pending  litigation or proceeding involving an
indemnitee  where  indemnification  would  be  required  or  permitted under our
Articles  of  Incorporation  and  Bylaws.

EMPLOYMENT  AGREEMENTS

     Other  than  the  employment  agreements  discussed  above  in  Executive
Management  and  Directors,  there  are  no  employment  agreements currently in
existence,  including  any  for  the  current  executive  management  group.

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

     R.  Lindsey  Duncan,  and Klee Irwin, the Company's current Chief Executive
Officer,  served  on the Compensation Committee of the Board of Directors during
2000.

BOARD  COMMITTEES

     AUDIT  COMMITTEE.  The  members  of the audit committee are responsible for
recommending  to  the  Board of Directors the engagement of our outside auditors
and  reviewing  our  accounting controls and the results and scope of audits and
other  services  provided  by  our  auditors.  Our  audit committee is currently
comprised  of  Messrs. Aarts and Vollero.  The audit committee has discussed the
audited  financial  statements  with  management  and  our auditors. It has also
discussed with the auditors the matters required to be discussed by SAS 61.  The
audit  committee  has  received  the  written disclosures and letter required by
Independence  Standards  Board  Standard  No.  1.  Based  on  the  review  and
discussions  referred  to above, the audit committee recommended to the Board of
Directors that the audited financial statements for the years ended December 31,
1998,  1999 and 2000, be included in our Annual Report on Form 10-K for the last
fiscal  year  for  filing  with  the  Commission.

     COMPENSATION  COMMITTEE.  The members of the compensation committee will be
responsible  for  approving or recommending to the board of directors the amount
and  type  of  consideration  to be paid to senior management, administering our
stock  option  plans and establishing and reviewing general policies relating to
compensation  and  benefits  of employees.  The compensation committee currently
consists  of  Messrs.  Irwin  and  Vollero.

     LTSIP COMMITTEE.  The LTSIP administration committee oversees the Long-Term
Stock  Incentive  Plan, or the LTSIP, including, subject to the express terms of
the  LTSIP, making awards, interpreting the LTSIP, amending and rescinding rules
and  other  duties related to the proper implementation of the LTSIP.  Our LTSIP
committee  currently  is  comprised  of  Messrs.  Vollero  and  Aarts.

     DIRECTORS'  AND OFFICERS' LIABILITY INSURANCE.  We have obtained directors'
and  officers'  liability  insurance  with a $3,000,000 limit of liability.  The
policy  period  expires on September 1, 2001.  We intend to renew such policy or
obtain  comparable coverage after the expiration of such policy.  However, there
can  be  no  assurances  to  this  effect.

                                       44
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

STOCK  REDEMPTIONS  AND  LOAN  REPAYMENTS  WITH  STOCKHOLDERS

     In  October  1999, our then Chief Executive Officer fully repaid an 8% loan
in the amount of $322,000.  In the first quarter of 2000, we forgave all amounts
owed  by  Mr.  Mancini,  our  then  current President, pursuant to a loan in the
original  principal  amount  of  $350,000,  bearing interest at 8% per annum, in
connection with the termination of his employment.  The amounts forgiven totaled
$175,000.

TRANSACTIONS  WITH  AFFILIATES

     American  Brand  Labs,  or ABL, is owned in the majority by Klee Irwin, our
Chief  Executive Officer, and 7.5% by Rebecca Pearman, a director of our company
and  General  Manager/Vice  President  of  operations  of ABL.  ABL is a current
customer of our company.  We are in the process of negotiating an agreement with
ABL  pursuant  to  which ABL will be entitled to occupy a portion of our offices
located  at  5310  Beethoven  Street and receive certain services, including the
management  services  of Ms. Pearman, upon payment to us of a monthly management
fee  and  a  portion  of ABL's profits and a grant of an option to purchase ABL.

     Ms.  Pearman  and  Klee Irwin are parties to a verbal agreement pursuant to
which  Ms.  Pearman  was  granted the option of purchasing, at any time, 100,000
shares  of  common stock of Omni from Mr. Irwin at a per share purchase price of
$1.21.  This  agreement  terminates  March  15,  2011.

     During the year ended December 31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

     On October 8, 1999, Mr. Klee Irwin entered into a settlement agreement with
us  in order to resolve certain mutual claims that had arisen between Mr. Irwin.
And  us.  Subsequent  to  December  31,  1999,  the Settlement Agreement and all
ancillary  agreements thereto, including the voting agreement between Mr. Duncan
and  Mr.  Irwin,  were terminated.  In connection with the settlement agreement,
Mr.  Irwin  made a capital contribution of $305,000, and returned 941,436 shares
of  our  common  stock.

     We believe that all such transactions with our affiliates have been entered
into  on  terms  no  less  favorable  to  us  than could have been obtained from
independent  third  parties.  We  intend  that  any  transactions and loans with
officers,  directors  and 5% or greater stockholders, following the date of this
prospectus, will be on terms no less favorable to us than could be obtained from
independent third parties and will be approved by a majority of our independent,
disinterested  directors.

                  VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

     The  following  table sets forth information regarding beneficial ownership
of  our  common  stock  as  of  June  25,  2001:

-    each  stockholder  who is known by us to own beneficially 5% or more of our
     common  stock;
-    each  of  our  directors  and  each  of  the officers named in "Management"
     section  of  this  prospectus;  and
-    all  of  our  directors  and  executive  officers  as  a  group.

The  number of shares beneficially owned by each stockholder is determined under
rules  issued  by  the Securities and Exchange Commission and includes voting or
investment  power  with  respect  to  securities.  Under these rules, beneficial
ownership  includes  any shares as to which the individual or entity has sole or
shared  voting power or investment power and includes any shares as to which the
individual  or  entity  has  the right to acquire beneficial ownership within 60
days  after  June 25, 2001, through the exercise of any warrant, stock option or
other  right.

                                       45
Percentage of Shares
                                           Number of          Beneficially Owned (1)
                                            Shares         ----------------------------
                                         Beneficially       Before             After
Name and Address of Beneficial Owner (1)    Owned           Offering           Offering
---------------------------------------  ------------      ---------          ---------
R. Lindsey Duncan (2)
1570 Chastain Parkway
Pacific Palisades, CA 90044               6,210,902         16.8%               14.8%

Klee and Margareth Irwin (3)             16,964,161         44.3%               39.8%

Andrew Vollero, Jr. (4)                     300,000          0.8%                0.7%

Thomas Aarts                                      *

Rebecca Pearman (5)                         225,000          0.6%                0.5%

American Equities LLC (6)
3172 Abington Drive
Beverly Hills, CA  90210                  1,740,575          4.8%                4.1%
All directors and officers as a group
(5 persons)
* Less than 1%                           17,489,161         48.5%               41.1%
*    Less  than  1  %.
(1)  Beneficial  ownership  is  determined  in  accordance with the rules of the
     Commission. Shares of common stock subject to options or warrants currently
     exercisable  or  exercisable  within  60  days  of June 25, 2001 are deemed
     outstanding  for  computing  the  percentage  ownership  of the stockholder
     holding  the  options  or  warrants,  but  are  not  deemed outstanding for
     computing  the  percentage  ownership  of  any  other  stockholder.  Unless
     otherwise indicated in the footnotes to this table, we believe stockholders
     named  in the table have sole voting and sole investment power with respect
     to  the shares set forth opposite such stockholder's name. Unless otherwise
     indicated,  the  officers, directors and stockholders can be reached at our
     principal offices located at 5310 Beethoven Street, Los Angeles, California
     90066.  Percentage  of  ownership  is  based on 36,067,061 shares of common
     stock  outstanding  as  of June 25, 2001. All share numbers and percentages
     assume  no  exercise  of  the  underwriters'  over-allotment  option.
(2)  Includes  2,264,503  shares  held in the Duncan Family Trust and options to
     purchase  1,001,251 shares of our common stock at an average price of $2.86
     per  share.  Includes  594,148  shares  held by Mr. Duncan's spouse and two
     children  to  which  Mr.  Duncan  disclaims  beneficial  ownership.
(3)  Includes  options  to  purchase  2,200,000  shares  of our common stock and
     voting  power  over  the  1,740,575  shares owned or controlled by American
     Equities  LLC.
(4)  Includes  options to purchase 275,000 shares of common stock at an exercise
     price  of  $0.80  per  share.
(5)  Includes options to purchase 100,000 shares of common stock from Klee Irwin
     at  an  exercise  price  of $1.21 per share and options to purchase 125,000
     shares  of  common  stock  at  an  exercise  price  of  $0.25  per  share.
(6)  On  September  25,  2000,  American  Equities  LLC  granted to Mr. Irwin an
     irrevocable  proxy  to  vote  the  1,740,575 shares of common stock held or
     controlled  by it. The proxy will terminate upon the sale of such shares to
     any  unaffiliated  third  party.

                                       46
DESCRIPTION OF SECURITIES

     Our authorized capital stock consists of 50,000,000 shares of common stock,
par  value  $0.01  per share, and 5,000,000 shares of preferred stock, par value
$0.01 per share.  No other class of capital stock is authorized.  As of June 25,
2001,  36,067,061  shares  of our common stock and 2,800 shares of our preferred
stock  were  outstanding.  On  June  25,  2001,  our  common  stock  was held by
approximately  258  stockholders  of  record.  The following information relates
only  to  our  Articles  of  Incorporation  and  by-laws.

COMMON  STOCK

     Voting  Rights  -  The holders of our common stock have one vote per share.
Holders  of  our common stock are, under certain circumstances, entitled to vote
cumulatively  for the election of directors.  Generally, all matters to be voted
on  by  stockholders must be approved by a majority, or, in the case of election
of  directors,  by a plurality, of the votes cast at a meeting at which a quorum
is  present,  voting  together  as  a single class, subject to any voting rights
granted  to  holders  of  any  then  outstanding  preferred  stock.

     Dividends  -  Holders  of  common stock will share ratably in any dividends
declared  by  our  board  of  directors,  subject  to  restrictions  in our debt
agreements  and the preferential rights of any preferred stock then outstanding.
Dividends  consisting of shares of common stock may be paid to holders of shares
of  common  or  preferred  stock.

     Other Rights - Upon our liquidation, dissolution or winding up, all holders
of  common  stock  are  entitled  to  share  ratably in any assets available for
distribution  to  holders  of shares of common stock.  No shares of common stock
are  subject  to  redemption  or  have  preemptive rights to purchase additional
shares  of  common  stock.

PREFERRED  STOCK

     Our  Articles  of Incorporation provides that 5,000,000 shares of preferred
stock  may  be  issued  from  time  to time in one or more series.  Our board of
directors  is authorized to fix the voting rights, if any, designations, powers,
preferences, qualifications, limitations and restrictions thereof, applicable to
the  shares  of  each  series.  Our  board of directors may, without stockholder
approval,  issue  preferred  stock  with  voting  and  other  rights  that could
adversely  affect the voting power and other rights of the holders of the common
stock  and could have anti-takeover effects, including preferred stock or rights
to  acquire preferred stock in connection with implementing a shareholder rights
plan.  Currently,  we  have  authorized  two  series  of preferred stock: (i) 5%
Convertible  Preferred  Stock, Series A; and (ii) Series A Convertible Preferred
Stock.

     5%  Convertible  Preferred  Stock,  Series A - On January 24, 2000, we sold
2,000,000  shares  of  our  5%  Convertible  Preferred  Stock,  Series  A,  for
$2,900,000.  On  March  24,  2000,  all outstanding shares of our 5% Convertible
Preferred  Stock,  Series  A,  plus $24,657 of accrued dividends, were converted
into  2,016,438 shares of our common stock at a weighed average conversion price
of  $1.49  per  share.  As  of  the date of this prospectus, no shares of our 5%
Convertible  Preferred  Stock,  Series  A,  remain  outstanding.

     Series A Convertible Preferred Stock - On October 27, 2000, we issued 3,000
shares of Series A Convertible Preferred stock.  We have authorized the issuance
of  3,000  shares  of  Series A Convertible Preferred Stock, par value $0.01 per
share.  Holders  of  this  series  of  preferred  stock  are not entitled to any
dividends  and  have  a  liquidation  preference  prior to holders of our common
stock.

     The  Series  A  Convertible Preferred Stock is convertible at the option of
its holders into share of common stock.  The number of shares of common stock to
be issued in connection with such conversion is equal to the stated value of the
number  of  shares of preferred stock being converted, together with any accrued
dividends,  or the Additional Amount thereon, divided by the "conversion price."
The  conversion  price  is  equal  to  the  lesser  of:

-     115%  of  the  average of the two lowest bid prices quoted on the exchange
      where  our  common stock is traded during the ten days preceding the
      closing or,
-     80% of the average of the two lowest bid prices of the common stock during
      the  five  days  preceding  conversion.

                                       47
We may redeem the preferred stock at any time after the date such preferred
shares are issued pursuant to the October 27, 2000 Securities Purchase Agreement
at  a  price  per  share  equal  to  the  greater  of:

-     $1,400,  plus  an  Additional  Amount per Share, defined as 6% of the face
      amount  of the preferred stock being redeemed, multiplied by the number of
      days since the  closing,  divided  by  365,  or  the  optional  redemption
      price or,
-     the  market price of the common stock into which the preferred stock being
      redeemed could be converted as of the date of the notice of optional
      redemption.

     On  the  fourth  anniversary  of  the  Issue  Date,  any existing shares of
preferred  stock,  together with the additional amount, must either be converted
into common stock pursuant to the conversion formula or redeemed for cash at the
optional  redemption  price.

     In the event any conversion of preferred stock would result in the issuance
of  more  than  19.9% of the number of shares of common stock outstanding on the
date  of  the  closing,  the  preferred  stock  representing such excess must be
redeemed,  in  cash  for  $1,400.00  per  share,  plus  the  additional  amount.
Notwithstanding  anything  to  the contrary, except on the fourth anniversary of
the Issue Date, neither we nor holders of the preferred stock may convert all or
any portion of the preferred stock if and to the extent that the issuance to the
holder of shares of common stock upon such conversion would result in the holder
being  deemed  the  "beneficial  owner"  of more than 5% of the then outstanding
shares  of  common  stock  within the meaning of Section 13(d) of the Securities
Exchange  Act  of  1934, as amended, and the rules promulgated thereunder.  If a
court  of  competent jurisdiction determines that this limitation is ineffective
to  prevent  a  holder from being deemed the beneficial owner of more than 5% of
the  then  outstanding shares of common stock, we will be obligated to redeem so
may  of  such  holder's  shares of the preferred stock as are necessary to cause
such  holder  to  be deemed the beneficial owner of not more than 5% of the then
outstanding  shares  of  common  stock.

     While we have no present plans to issue any additional shares of the Series
A  Convertible  Preferred Stock or the 5% Convertible Preferred Stock, Series A,
the  ability  of  our  board  of  directors  to  issue  preferred  stock without
stockholder  approval could have the effect of delaying, deferring or preventing
a  change  of  control  with  respect  to our company or the removal of existing
management.  In  addition,  issuance  of  preferred  stock  could also result in
significant  dilution  to our current stockholders, including a potential change
of  control,  due  to  the variable conversion price of the Series A Convertible
Preferred  stock.

     On  June  11,  2001, we have filed a registration statement with respect to
the  6,000,000  shares  of  common  stock  underlying  the  Series A Convertible
Preferred stock based on the assumed conversion price of $0.50 per share, and an
additional  650,000  shares  of  common  stock  underlying  warrants  issued  in
connection  with  the  sale of the Series A Convertible Preferred stock.  We may
have  to  file  additional  registration statements with respect to the Series A
Convertible  Preferred  stock  in  the event that the 6,000,000 shares of common
stock  are  not  sufficient  to  convert  all  of the related shares of Series A
Convertible  Preferred  stock.  On  June 21, 2001, we issued 1,572,682 shares of
our  common  stock  in  connection with the conversion of 200 shares of Series A
Convertible  Preferred  stock.

OPTIONS

     As  of  June  25,  2001, options to purchase 6,730,653 shares of our common
stock  were  outstanding.  At  some  time  following  the  effectiveness  of the
offering chosen by the board of directors in its discretion, we intend to file a
registration  statement  on Form S-8 under the Securities Act to register all of
the  shares  of our common stock reserved for issuance under our Long Term Stock
Incentive  Plan.  The  filing  of  this  registration statement will allow these
shares, other than those held by members of management and others who are deemed
to  be  affiliates,  to  be  eligible  for resale without restriction or further
registration  upon  issuance  to  participants.  After the effective date of the
registration  statement  on  Form S-8, shares purchased upon exercise of options
granted  pursuant  to  these plans generally will be available for resale in the
public  market  by  non-affiliates  without  restriction.

                                       48
WARRANTS

     As  of  June  25,  2001,  we had outstanding warrants to purchase 3,037,500
shares  of common stock at exercise prices ranging from $0.96 to $6.00 per share
(including  1,137,500  shares of common stock underlying the warrants covered by
this  registration statement).  The warrants expire from April, 2004 to January,
2007.

REGISTRATION  RIGHTS

     In  addition  to  registration  rights  granted to holders of our preferred
stock,  we are filing this registration statement of which this prospectus forms
a part, to register 6,512,310 shares of common stock, including 1,137,500 shares
underlying  certain  warrants  held  by the selling shareholders with respect to
this  prospectus.

PROVISIONS  OF  OUR  ARTICLES  OF  INCORPORATION  AND  BY-LAWS  THAT  MAY  HAVE
ANTI-TAKEOVER  EFFECTS

     Certain  provisions  of our articles of incorporation and by-laws described
below,  as  well  as  the  ability  of our board of directors to issue shares of
preferred  stock  and  to  set  the  voting  rights, preferences and other terms
thereof,  may  be  deemed  to  have  an  anti-takeover effect and may discourage
takeover  attempts  not  first  approved  by  our  board of directors, including
takeovers  which particular stockholders may deem to be in their best interests.
These  provisions  also  could  have  the  effect  of  discouraging  open market
purchases  of our common stock because they may be considered disadvantageous by
a  stockholder  who  desires  subsequent  to  such purchases to participate in a
business  combination  transaction  with  us  or  to elect a new director to our
board.

Classified  Board

     Our  Articles of Incorporation and Bylaws provide that until after June 30,
2003, our board of directors shall be not less than 3 nor more than 5 directors,
unless  otherwise  determined  by  the  affirmative  vote  of  a majority of the
outstanding  shares  of  voting capital stock then entitled to vote generally in
the  election  of  directors,  voting  together as a single class.  The Board of
Directors  shall be divided into three classes, Class I, Class II and Class III.
There  are  currently  four  (4) members of the Board of Directors.  The initial
Class  I  directors will serve until the annual meeting of stockholders in 2001,
the Class II directors until the annual meeting of stockholders in 2000, and the
Class  III  directors  until  the  annual  meeting  of  stockholders  in  1999.
Thereafter,  all  directors  shall serve for three year terms.  Until after June
30,  2000,  directors  may  be  removed  with  or  without  cause  only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only the affirmative vote of a majority of such shareholders is required.  Until
after  June  30, 2003, these provisions may be amended or repealed only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only  the  affirmative vote of a majority of such shareholders is required.  The
effect  of  these  provisions  is  that not more than one-third of the Company's
directors  will  be  elected at any single annual meeting and a supermajority of
votes  will  be  required  to remove incumbent directors.  As a result, a person
seeking  control  of  the  Company  might  not  necessarily be able to acquire a
controlling block of stock and effect an entire change in management at a single
annual  meeting.

Special  Meetings  of  Stockholders

     Our  Bylaws provide that a special meeting of stockholders may be called by
the Chairman of the Board of Directors, the President, the Board of Directors or
10%  of  the  stockholders of record of all shares entitled to vote. Our by-laws
provide  that  only  those matters included in the notice of the special meeting
may  be  considered  or  acted  upon  at  that  special meeting unless otherwise
provided  by  law.

Corporate  Action  Without  a  Stockholder  Meeting

     Our Articles of Incorporation provide that any action required or permitted
to be taken by our stockholders must be effected at a duly called Annual Meeting
or  at  a  Special  Meeting  of  stockholders of the Company, unless such action
requiring  or  permitting  stockholder approval is approved by three quarters of
the incumbent directors, in which case such action may be authorized or taken by
the  written consent of the holders of outstanding shares of voting stock having
not  less  than the minimum voting power that would be necessary to authorize or
take  such  action  at a meeting of stockholders at which all shares entitled to
vote  thereon  were present and voting.  Except as specifically set forth above,
no  action may be taken by stockholders by written consent.  Prior to or on June
30,  2003,  any  amendment  or  repeal  of  this  provision  shall  require  the
affirmative  vote  of  the  holders of at least 80% of the outstanding shares of
voting  capital  stock  then  entitled  to  vote  generally  in  the election of
directors, voting as a single class.  Thereafter, only the affirmative vote of a
majority  of  such  outstanding  shares  is  required.

                                       49
Limitation  of  Liability  of  Directors;  Indemnification

     Utah  law  limits  a  director's liability for monetary damages, except for
breach  of  a  director's  duties  under certain circumstances.  Our Articles of
Incorporation  contain  provisions  limiting a director's liability for monetary
damages  to  the  fullest  extent  permitted  by  Utah  law.  Our  Articles  of
Incorporation  also  require  us  to  indemnify  our directors, and permit us to
indemnify  our officers, employees' fiduciaries and other agents, to the fullest
extent  permitted  under  Utah  law.

ADVANCE  NOTICE  OF  DIRECTOR  NOMINATIONS  AND  STOCKHOLDER  PROPOSALS

     Our  by-laws include advance notice and informational requirements and time
limitations  on any director nomination or any new proposal, which a stockholder
wishes  to  make  at  an  annual  meeting  of  stockholders.

AMENDMENT  OF  THE  ARTICLES  OF  INCORPORATION

     As  required  by  Utah  law, any amendment to our Articles of Incorporation
must  first  be  approved by a majority or such other percentage as specified in
our  Articles  of  Incorporation and Bylaws and described herein of our board of
directors  and,  if  required  by  law, thereafter approved by a majority of the
outstanding  shares entitled to vote with respect to such amendment, except that
any  amendment  to  the  provisions  relating  to  stockholder action by written
consent, directors, limitation of liability and the amendment of our Articles of
Incorporation  must  be  approved  by not less than the number shares that would
otherwise  be  required  to  authorize  or  effect  such  amendment.

AMENDMENT  OF  BY-LAWS

     Our  Articles  of Incorporation and by-laws provide that our by-laws may be
amended  or  repealed  by  our  board of directors or by the stockholders.  Such
action  by  the  board  of  directors  requires  the  affirmative vote of  three
quarters  of  the  directors  then  in office.  Until after June 30, 2003, these
provisions may be amended or repealed only upon the affirmative vote of at least
80%  of  the  outstanding  shares  entitled to vote generally in the election of
directors, voting as a single class.  Thereafter, only the affirmative vote of a
majority  of  such  shareholders  is  required.  The  amendment or repeal of our
bylaws  by the stockholders requires the affirmative vote of at least the number
of  shares  otherwise  required  to  authorize  or  effect  such  action.

NO  PREEMPTIVE  RIGHTS

     No  holder  of  any class of our stock has any preemptive right to purchase
any  of  our  securities.

TRANSFER  AGENT  AND  REGISTRAR

     The  transfer  agent  and  registrar  for our common stock is ComputerShare
Investor  Services.

                                       50
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

     We  are  registering  6,512,310 shares of common stock on behalf of certain
selling  stockholders.  These  shares  include:

-    5,374,810  shares  of common stock registered in the name of certain of the
     selling  stockholders;  and
-    1,137,500  shares underlying certain warrants issued in the name of certain
     of  the  selling  stockholders.

     All  shares  were  originally  issued  in  connection  with various private
placements  under exemption from the registration requirements of the Securities
Act,  settlement  agreements, debt conversion agreements, prior acquisitions and
consulting  agreements.  We  will  receive  no  proceeds  from  this  offering.

     The  selling  stockholders  named  in  the  table below or pledges, donees,
transferees or other successors-in-interest, who may sell shares received from a
named  selling  stockholder  as  a  gift,  partnership  distribution  or  other
non-sale-related  transfer  after the date of this prospectus, collectively, the
selling  stockholders,  may  sell  the  shares  from  time to time.  The selling
stockholders  will  act  independently of us in making decisions with respect to
the  timing, manner and size of each sale.  The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current price, or in negotiated
transactions.  The  selling stockholders may effect such transactions by selling
the  shares to or through broker-dealers.  The shares may be sold by one or more
of,  or  a  combination  of,  the  following:

-     a  block  trade in which the broker-dealer so engaged will attempt to sell
      the  shares  as  agent  by  may  position  and  resell a portion of the
      block as principal  to  facilitate  the  transaction,
-     purchases by a broker-dealer as principal and resale by such broker-dealer
      for  its  account  pursuant  to  this  prospectus,
-     an  exchange  distribution  in accordance with the rules of such exchange,
-     ordinary  brokerage  transactions  and  transactions  in  which the broker
      solicits  purchasers,  and
-     in  privately  negotiated  transactions.

     To the extent required, this prospectus may be amended or supplemented from
time  to  time to describe a specific plan of distribution.  In effecting sales,
broker-dealers  engaged  by  the  selling  stockholders  may  arrange  for other
broker-dealers  to  participate  in  the  resales.

     The  selling  stockholders  may  enter  into  hedging  transactions  with
broker-dealers  in connection with distributions of the shares or otherwise.  In
such transactions, broker-dealers may engage in short sales of the shares in the
course  of  hedging  the  positions  they assume with selling stockholders.  The
selling  stockholders  also  may  sell  shares short and redeliver the shares to
close  out such short positions.  The selling stockholders may enter into option
or  other  transactions  with  broker-dealers, which require the delivery to the
broker-dealer  of  the  shares.  The  broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.  The selling stockholders also
may  loan  or  pledge the shares to a broker-dealer.  The broker-dealer may sell
the  shares so loaned, or upon a default, the broker-dealer may sell the pledged
shares  pursuant  to  this  prospectus.

     Broker-dealers  or  agents  may  receive  compensation  in  the  form  of
commissions,  discounts  or  concessions  from  the  selling  stockholders.
Broker-dealers  or  agents  may also receive compensation from the purchasers of
the  shares  for which they act as agents or to whom they sell as principals, or
both.  Compensation  as  to  a  particular  broker-dealer  might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the  sale.  Broker-dealers  or agents and any other participating broker-dealers
or  the  selling  stockholders  may  be  deemed  to be "underwriters" within the
meaning  of  Section 2(11) of the Securities Act in connection with sales of the
shares.  Accordingly,  any  such  commission, discount or concession received by
them  and any profit on the resale of the shares purchased by them may be deemed
to  be  underwriting discounts or commissions under the Securities Act.  Because
selling  stockholders  may  be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the  prospectus  delivery  requirements of the Securities Act.  In addition, any
securities  covered  by this prospectus, which qualify for sale pursuant to Rule
144 promulgated under the Securities Act, may be sold under Rule 144 rather than
pursuant  to  this  prospectus.  There  is no underwriter or coordinating broker
acting  in  connection  with  the  sale  of  shares  by  selling  stockholders.

                                       51
The  shares  will  be  sold  only through registered or licensed brokers or
dealers  if  required  under  applicable state securities laws.  In addition, in
certain  states,  the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or  qualification  requirement  is  available  and  is  complied  with.

     Under  applicable  rules and regulations under the Exchange Act, any person
engaged  in  the  distribution  of  the  shares may not simultaneously engage in
market  making  activities  with respect to our common stock for a period of two
business days prior to the commencement of such distribution.  In addition, each
selling stockholder will be subject to applicable provisions of the Exchange Act
and  the  associated  rules  and  regulations  under the Exchange Act, including
Regulation  M,  which  provisions may limit the timing of purchases and sales of
shares  of our common stock by the selling stockholders.  We will make copies of
this  prospectus available to the selling stockholders and have informed them of
the  need for delivery of copies of this prospectus to purchasers at or prior to
the  time  of  any  sale  of  the  shares.

     We will file a supplement to this prospectus, if required, pursuant to Rule
424(b)  under  the  Securities Act, upon being notified by a selling stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such supplement will
disclose:

-     the  name  of  each  such  selling  stockholder  and  of the participating
      broker-dealer(s),
-     the  number  of  shares  involved,
-     the  price  at  which  such  shares  were  sold,
-     the  commissions  paid  or  discounts  or  concessions  allowed  to  such
      broker-dealer(s),  where  applicable,
-     that such broker-dealer(s) did not conduct any investigation to verify the
      information  set  out  or  incorporated  by  reference  in  this
      prospectus, and
-     other  facts  material  to  the  transaction.

     We  will  bear  all  costs,  expenses  and  fees  in  connection  with  the
registration  of the shares.  The selling stockholders will bear all commissions
and  discounts,  if  any,  attributable to the sales of the shares.  The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in  transactions  involving  sales  of  the  shares against certain liabilities,
including  liabilities  arising  under  the  Securities  Act.  The  selling
stockholders  have agreed to indemnify certain persons, including broker-dealers
and  agents,  against  certain  liabilities  in connection with the offer of the
shares,  including liabilities arising under the Securities Act, including those
underlying  warrants  of  certain  selling  stockholder.

                                       52
The following table sets forth certain information related to the number of
shares  of  common stock, including those underlying warrants of certain selling
stockholders, which may be offered by the selling stockholders, pursuant to this
prospectus:
Name of Selling Stockholder                  Number of Shares  Shares Underlying Warrants/Options  Total Shares
American Equities                                     821,575               405,000                 1,226,575
Corporate Financial Enterprises                       567,717               370,000                   937,717
Global Capital Partners                               218,447                75,000                   293,447
Integrated Communications                             453,699                     0                   453,699
Aramis Investments                                     30,000                     0                    30,000
Monfort Investissments Limited                        560,000                     0                   560,000
Nicholas Glancy                                        20,000                     0                    20,000
Kentuckian Farms                                       44,000                     0                    44,000
Bill McClanahan                                        10,000                     0                    10,000
Rick Avare                                             15,000                     0                    15,000
Robert Brady                                           15,000                     0                    15,000
Olin Bryant Jr.                                        33,000                     0                    33,000
Olin Bryant Sr.                                        20,000                     0                    20,000
Tom Crouch                                             30,000                     0                    30,000
Ralph Currie                                            7,000                     0                     7,000
Andrew Hils                                            10,000                     0                    10,000
Kenneth Jackson                                        33,000                     0                    33,000
MAP II LLC                                             13,000                     0                    13,000
Rick Pitino                                            15,000                     0                    15,000
John Sawyer                                            20,000                     0                    20,000
Robert Sortin                                           3,000                     0                     3,000
Charles Receski                                        10,000                     0                    10,000
Edward Receski                                          2,000                     0                     2,000
Anthony Altavilla                                      50,000                     0                    50,000
John Liviakis                                         315,000                     0                   315,000
Luciano Volpacchio                                     35,000                     0                    35,000
Healthshop                                            838,951                     0                   838,951
VantagePoint Communication Partners, LP                38,240                                          38,240
VantagePoint Venture Partners III (Q), L.P.            68,520                     0                    68,520
VantagePoint Venture Partners III, L.P.                 8,280                     0                     8,280
Delphi Ventures IV, L.P.                               50,120                     0                    50,120
Delphi BioInvests IV, L.P.                              1,040                     0                     1,040
Stipa Investments, L.P.                                64,920                     0                    64,920
Warner Lambert                                        127,880                     0                   127,880
Tom Bevilacqua                                            360                     0                       360
John Lewis                                                640                     0                       640
Glenn Zweig                                            20,000                     0                    20,000
Mary Titus                                             12,000                     0                    12,000
Brent Whitney                                           8,000                     0                     8,000
Chip Engelman                                         190,000                     0                   190,000
Joe Thiesman                                           15,000                     0                    15,000
Tom Aarts                                              15,000                     0                    15,000
Andrew Vollero, Jr.                                    25,000                     0                    25,000
Michael Driver                                         10,000                62,500                    72,500
Steep Gradient LTD.                                   266,072                     0                   266,072
Jeffrey Segal                                          88,690                     0                    88,690
Gordon Barker                                           8,874                     0                     8,874
Bud Clark                                                   0                46,710                    46,710
Steve Caruso                                                0                45,203                    45,203
Jonathon Siegel                                             0                79,380                    79,380
William Grundig                                             0                 4,500                     4,500
Stephen Schoffman                                           0                44,707                    44,707
Jason Bishara                                               0                 4,500                     4,500
Huff Family Trust                                       9,604                     0                     9,604
Ysabel Rennie                                          28,811                     0                    28,811
Mark Rennie                                             9,604                     0                     9,604
Gus/Kari Boosalis                                      38,130                     0                    38,130
Muehielsen Family Trust                                 1,921                     0                     1,921
Cook Family Trust                                       1,921                     0                     1,921
Robert Williscroft/Viviana Amzel                        2,712                     0                     2,712
Robert Williscroft IRA Account                          8,644                     0                     8,644
Peggy Bartlett                                          1,441                     0                     1,441
Shirley Broussard                                         481                     0                       481
Esther Stackell                                         3,842                     0                     3,842
Nancy Glenn                                             1,537                     0                     1,537
Joseph Whitney                                          1,153                     0                     1,153
Bernard Kegan                                             769                     0                       769
Chasha Kezecki                                          1,153                     0                     1,153
Michael Duffy                                             308                     0                       308
Donald Wilson                                             961                     0                       961
Steven Nesfund                                            385                     0                       385
Brenda Smith                                            9,220                     0                     9,220
Capital Resources Management                            1,537                     0                     1,537
Robert Huff                                            40,355                     0                    40,355
Denise Broussard                                          865                     0                       865
Sara Parker                                               431                     0                       431

Total                                               5,374,810             1,137,500                 6,512,310
53
SHARES ELIGIBLE FOR FUTURE SALE

     As  of June 25, 2001, we had outstanding 36,067,061 shares of common stock,
in  each  case excluding shares underlying outstanding warrants and options.  Of
these  shares,  approximately  8,915,000 shares sold are freely tradable without
restriction  or  further  registration  under the Securities Act.  The remaining
outstanding  shares  include approximately 4,210,000 shares of common stock that
are  "restricted securities" as defined in Rule 144 and may not be resold in the
absence  of  registration  under  the Securities Act or pursuant to an exemption
from  such  registration,  including  exemptions  provided  by  Rule  144.

     In  addition,  certain  executive  officers,  directors,  shareholders  and
affiliates,  who  own  approximately  20,074,000  shares  of  our  common stock,
including  options  and warrants on 3,201,000 shares, outstanding as of the date
of  this report, have signed lock-up agreements in which they have agreed not to
offer,  sell,  contract  to sell or otherwise dispose of any common stock or any
securities convertible into or exchangeable for common stock until September 26,
2001,  without  the  prior  written  consent  of  Astor Capital, Inc.  While the
investors  have indicated no present intention to waive these restrictions, were
they to do so, up to approximately an additional 23,275,000 shares of our common
stock  could be available for registration and subsequent sale, which could harm
our stock price or make it more difficult to sell our shares.  To continue their
effectiveness, each of these lock-up agreements required that the parties either
deposit  their  respective  shares  with  an escrow agent or enter a restrictive
legend  on the share certificates evidencing their inability to sell or transfer
the shares pursuant to the restrictions contained in the lock-up agreements.  On
January  15,  2001,  we were advised by one of the parties that this requirement
had  not been met and that they considered the agreements void. After review, we
concluded  on  January  17,  2001  that  such  requirements  had  not  been met.

RULE  144

     Holders  of restricted securities must comply with the requirements of Rule
144  in  order  to sell their shares in the open market.  In general, under Rule
144,  beginning  90  days  after  the  date  of  this  report,  a person who has
beneficially  owned  restricted  shares for at least one year, including persons
who  are  affiliates,  would be entitled to sell within any three-month period a
number  of  shares  that  does  not  exceed  the  greater  of:
-     1%  of  the  then  outstanding  shares  of our common stock, approximately
      345,000  shares;  or
-     the  reported average weekly trading volume of our common stock during the
      four  calendar  weeks  preceding  a  sale  by  such  person.
-     Sales under Rule 144 are also subject to manner-of-sale provisions, notice
      requirements  and  the  availability  of  current  public  information.

     Under  Rule  144(k), a person who has not been one of our affiliates during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is free to sell such shares without regard to
the  volume,  manner-of-sale or certain other limitations contained in Rule 144.

     We can make no prediction as to the effect, if any, that sales of shares of
common  stock  or  the  availability  of shares for sale will have on the market
price  of  our  common stock.  Nevertheless, sales of significant amounts of our
common  stock  could  adversely affect the prevailing market price of the common
stock,  as  well  as impair our ability to raise capital through the issuance of
additional  equity  securities.

                                       54
EXPERTS AND LEGAL MATTERS

     The  financial  statements,  as  previously  restated,  appearing  in  this
prospectus  and registration statement, beginning of page F-1, have been audited
by  Singer  Lewak  Greenbaum  &  Goldstein  LLP, independent accountants, to the
extent  and  for  the periods indicated in their report appearing on page F-2 of
the  prospectus (which includes an explanatory paragraph relating to our ability
to  continue  as a going concern), and are included in reliance upon such report
and  upon  the  authority  of  such  firm as experts in accounting and auditing.

     Luce,  Forward,  Hamilton  & Scripps LLP, Los Angeles, California will pass
upon  the  validity  of  the  shares  of  common  stock  offered  hereby for us.

                       WHERE YOU CAN FIND MORE INFORMATION

     We  have  filed  with  the  Securities  and  Exchange Commission, or SEC, a
registration  statement  on  Form  S-  I  (including  the exhibits and schedules
thereto) under the Securities Act and the rules and regulations there under, for
the registration of the common stock offered hereby.  This prospectus is part of
the  registration  statement.  This  prospectus  does  not  contain  all  the
information  included  in  the  registration  statement  because we have omitted
certain  parts  of  the registration statement as permitted by the SEC rules and
regulations.  For  further information about us and our common stock, you should
refer to the registration statement.  Statements contained in this prospectus as
to  any  contract,  agreement  or other document referred to are not necessarily
complete.  Where  the  contract  or  other  document  is  an  exhibit  to  the
registration  statement,  each  statement is qualified by the provisions of that
exhibit.

     You can inspect and copy the registration statement at the public reference
facility maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington,
D.C.  20549, and at the SEC's regional offices at Seven World Trade Center, 13th
Floor,  New  York,  New  York  10048  and  500  West Madison Street, Suite 1400,
Chicago,  Illinois  60661.  You  may  call the SEC at 1-800-732-0330 for further
information about the operation of the public reference rooms.  Copies of all or
any  portion  of  the  registration  statement  can  be obtained from the Public
Reference  Section  of the SEC, 450 Fifth Street, N. W., Washington, D.C. 20549,
at  prescribed  rates.  In  addition,  the  registration  statement  is publicly
available  through  the  SEC's site on the Internet's World Wide Web, located at
http://www.sec.gov.

     We  will  also file annual, quarterly and current reports, proxy statements
and  other  information  with  the  SEC.  You  can  also request copies of these
documents,  for  a  copying fee, by writing to the SEC.  We intend to furnish to
our stockholders annual reports containing audited financial statements for each
fiscal  year.

                                       55
CONSOLIDATED FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants                         F-2
Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998
and March 31, 2001 (unaudited)                                             F-3
Consolidated Statements of Operations for each of the three years in the
period ended December 31, 2000 and for the three months ended March
31, 2001 and 2000 (unaudited)                                              F-5
Consolidated Statements of Cash Flows for each of the three years in the
period ended December  31, 2000 and for the three months ended March
31, 2001 and 2000 (unaudited)                                              F-7
Consolidated Statements of Shareholders' Investment for each of the
three years in the period ended December 31, 2000 and for the three
months ended March 31, 2001 and 2000 (unaudited)                          F-10
Notes to Consolidated Financial Statements for the years ended
December 31, 1998, 1999 and 2000 and March 31, 2000 and 2001
(unaudited)                                                               F-12
F-1
REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

To  the  Board  of  Directors
Omni  Nutraceuticals,  Inc.  and  subsidiary

     We  have  audited  the  accompanying  consolidated  balance  sheets of Omni
Nutraceuticals,  Inc.  as  of December 31, 2000 and 1999 as previously restated,
and the related consolidated statements of operations, shareholders' investment,
and  cash  flows  for  each  of the three years in the period ended December 31,
2000.  These  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audits.

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

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the  financial  position of Omni
Nutraceuticals,  Inc.  and  subsidiary  as  of  December  31,  2000  and 1999 as
previously  restated, and the consolidated results of their operations and their
cash  flows for each of the three years in the period ended December 31, 2000 in
conformity  with  generally  accepted  accounting  principles.

     The  accompanying  consolidated  financial  statements  have  been prepared
assuming  that  the  Company  will continue as a going concern.  As discussed in
Note  1  to  the  consolidated financial statements, the Company incurred a loss
from current operations of $13,472,000 for the year ended December 31, 2000, has
a  retained  deficit of $41,358,000 as of December 31, 2000, and it had negative
cash  flows  from operations of $4,129,000 for the year ended December 31, 2000.
Additionally, the Company has current debt service requirements in excess of its
historical  ability  to generate cash flows from operations.  The Company is the
subject  of  a  significant  number  of  lawsuits,  claims  and  an  informal
investigation  by  the  Securities  and  Exchange Commission .  In addition, the
Company  has  been  de-listed  from  the  NASDAQ  national  market system. These
factors,  among  others,  as  discussed  in Note 1 to the consolidated financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in  Note 1. The consolidated financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.

SINGER  LEWAK  GREENBAUM  &  GOLDSTEIN  LLP

Los  Angeles,  California
March  28,  2001,  except  the  tenth  paragraph  of
Note  11  as  to  which  the  date  is  July  25,  2001.

                                      F-2
OMNI  NUTRACEUTICALS  INC.
CONSOLIDATED  BALANCE  SHEETS
AS  OF  DECEMBER  31,  1998,  1999  AND  2000  AND  MARCH  31,  2001  UNAUDITED

                                                                     DECEMBER 31                      MARCH 31,
                                                      -----------------------------------------
                                                          2000           1999           1998          2001
                                                                   (as previously
                                                                      restated)                     (unaudited)
                                                      ------------  -------------   ------------  -------------
ASSETS
CURRENT ASSETS
Cash                                                  $    199,000   $         --   $   426,000   $    229,000
Accounts receivable, net of reserves and
allowances of  $3,000,000, $3,829,000,
3,460,000 and $1,131,000, respectively                   2,566,000   $  2,685,000     6,023,000      2,112,000
Inventories, net of reserves of $796,000,
796,000, $540,000 and $451,000, respectively             2,871,000      7,869,000     2,855,000      2,643,000
Prepaid expenses and other                                 519,000        539,000       290,000        618,000
Current portion of note receivable and receivables
 from officers and shareholders                                 --         11,000       596,000             --
                                                                --             --            --             --
     Total Current Assets                                6,155,000     11,104,000    10,190,000      5,602,000
                                                      -------------  -------------  ------------  -------------

Property and equipment, net                              1,253,000      1,516,000       627,000      1,193,000
Trademarks, net of accumulated amortization of
1,853,000, $1,627,000, $726,000 and $13,000,
respectively                                            11,897,000     12,798,000        99,000     11,672,000
Goodwill and intangibles, net of accumulated
amortization of $484,000 and $307,000,
respectively                                                    --      2,422,000       420,000             --

Other assets, net of accumulated amortization of
831,000, $748,000, $110,000 and $-0-, respectively         872,000      1,693,000       230,000        857,000
Investment in Vitacost.com, Inc.                                --             --            --      7,000,000
Assets held for sale                                     7,128,000             --     1,521,000             --

Total Assets                                          $ 27,305,000   $ 29,533,000   $13,087,000   $ 26,324,000

LIABILITIES AND SHAREHOLDERS'
INVESTMENT
CURRENT LIABILITIES
Cash overdraft                                        $         --   $    165,000   $        --   $         --
Line of credit                                           5,511,000      6,436,000     1,000,000      6,285,000
Current portion of term loan                             2,917,000      2,332,000            --      3,500,000
Current portion of notes payable                            23,000        176,000       328,000         22,000
Accounts payable                                         6,003,000      7,176,000     2,637,000      5,453,000
Accrued liabilities                                      2,392,000      2,875,000       942,000      2,441,000
Income taxes payable                                            --         52,000       438,000
Customer deposits                                          450,000        450,000       450,000        450,000

Total current liabilities                               17,296,000     19,662,000     5,795,000     18,151,000
                                                      -------------  -------------  ------------  -------------

                                      F-3
Term loan, net of current portion                        7,361,000     10,085,000            --      6,778,000
Notes payable, net of current portion                       79,000        102,000     1,423,000         74,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' INVESTMENT
Shares issuable under legal settlement                          --      1,200,000            --             --
Preferred stock; $1 par value; 5,000,000 shares
authorized; issued and outstanding, 3,000 at 2000,
 none at 1999                                                3,000             --            --          3,000
Common Stock; $.01 par value; 50,000,000
shares authorized; issued - 34,110,269 1t 2001,
34,110,269 at 2000 and 27,352,009 at 1999;
Outstanding - 34,019,379 19 2001, 34,019,379 at
2000 and 27,261,119 at 1999                                341,000        274,000       279,000        346,000
Additional paid-in capital                              43,633,000     18,008,000    14,333,000     43,936,000
Treasury stock, 90,890 shares at cost                      (50,000)       (50,000)      (50,000)       (50,000)
Retained deficit                                       (41,358,000)   (19,748,000)   (8,693,000)   (42,914,000)

TOTAL SHAREHOLDERS' INVESTMENT                           2,569,000       (316,000)    5,869,000      1,321,000

TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT                              $ 27,305,000   $ 29,533,000   $13,087,000   $ 26,324,000

The accompanying notes are an integral part of these financial statements
F-4
OMNI  NUTRACEUTICALS  INC
CONSOLIDATED  STATEMENTS OF  OPERATIONS
For  The  Years  Ended  December
31,  1998,  1999  and  2000  and  The
Three  Months  Ended  March  31,
        2001 and 2001 (Unaudited)           Twelve months ended December 31,       Three months ended March 31,

                                            2000           1999           1998          2001          2000
                                        -------------  -------------  ------------  ------------  ------------
(as previously restated)                 (unaudited)    (unaudited)
Net Sales                               $ 29,609,000   $ 30,922,000   $30,547,000   $ 5,751,000   $ 8,039,000

Cost of Sales                             19,386,000     15,988,000    12,540,000     3,308,000     4,824,000
                                        ----------------------------------------------------------------------

Gross profit                              10,223,000     14,934,000    18,007,000     2,443,000     3,215,000

Costs and Expenses:
  Selling, general and administrative     23,695,000     23,211,000    16,180,000     3,310,000     9,305,000
  Loss on write-off of intangibles                          390,000
  Legal settlement                                        1,200,000
                                        ----------------------------------------------------------------------
Total costs and expenses                  23,695,000     24,801,000    16,180,000     3,310,000     9,305,000
                                        -------------  -------------  ------------  ------------  ------------

Income (loss) from operations            (13,472,000)    (9,867,000)    1,827,000      (867,000)   (6,090,000)

Other Income (Expense):
  Interest income                             23,000         32,000        10,000                       8,000

  Interest expense                        (1,887,000)    (1,339,000)     (163,000)     (440,000)     (465,000)
  Other                                      478,000       (56,000)                      1,000
                                        ----------------------------------------------------------------------

                                          (1,864,000)      (829,000)     (209,000)     (440,000)     (456,000)
                                        ----------------------------------------------------------------------
Income (loss) before provision
(benefit) for income taxes and loss
from discontinued operations             (15,336,000)   (10,696,000)    1,618,000    (1,307,000)   (6,546,000)

Provision (benefit) for income taxes           1,000       (274,000)      600,000         3,000
                                        ----------------------------------------------------------------------

Income (loss) before loss from
discontinued operations                  (15,337,000)   (10,422,000)    1,018,000    (1,310,000)   (6,546,000)
                                        -------------  -------------  ------------  ------------  ------------
Discontinued operations:
  Loss on operations of discontinued
 e-commerce division, net of taxes of
                                        $ (1,155,000)     (633,000)                    (246,000)     (230,000)
                                        -------------  -------------  ------------  ------------  ------------

Net income (loss)                        (16,492,000)   (11,055,000)    1,018,000    (1,556,000)   (6,776,000)
Preferred Stock Dividends                 (5,118,000)                                               1,950,000
                                        -------------  -------------  ------------  ------------  ------------

Net Income (Loss) Available to
Common Shareholders                     $(21,610,000)  $(11,055,000)  $ 1,018,000   $(1,556,000)  $(8,726,000)
                                        ======================================================================

                                      F-5
Earnings (loss) per common share
  Basic - historical                    $      (0.71)  $      (0.39)  $      0.04   $     (0.04)  $     (0.30)
  Diluted - historical                  $      (0.71)  $      (0.39)  $      0.04   $     (0.04)  $     (0.30)

  Discontinued operations - Basic       $      (0.04)  $      (0.02)  $             $     (0.01)  $     (0.01)
  Discontinued operations - Diluted     $      (0.04)  $      (0.02)  $             $     (0.01)  $     (0.01)
Weighted Average Shares
Outstanding

  Basic - historical                      30,640,000     28,177,000    27,747,000    34,256,879    34,256,879

  Diluted - historical                    30,640,000     28,177,000    28,221,000    34,256,879    34,256,879
The  accompanying  notes  are  an  integral  part  of these financial statements

                                      F-6
OMNI  NUTRACEUTICALS,  INC.
CONSOLIDATED  STATEMENTS
OF  CASH  FLOWS
For  the  years  ended  December  31,
1998,  1999  and  2000  and  the
three months ended March 31,                                     Twelve months ended                    Three months ended
2001 and 2000 (unaudited)                                             December 31,                         March 31,

                                                           2000           1999           1998          2001          2000
                                                       -------------  -------------  ------------  ------------  ------------
                                                                     (as previously
                                                                        restated)                   (unaudited)    (unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) available to common
Shareholders                                           $(21,610,000)  $(11,055,000)  $ 1,018,000   $(1,556,000)  $(8,726,000)
Adjustments to reconcile net income (loss)
available to common shareholders to net
cash provided by (used in) operating
activities:
  Depreciation and amortization                           3,149,000      1,892,000       550,000       556,000       655,000
  Provision for reserves and
  Allowances                                                369,000      3,450,000     2,116,000      (829,000)
  (Gain) loss on disposal of building,
  property and equipment                                                  (478,000)       10,000
  Loss on write-off of intangibles                                         390,000
  Legal settlement in exchange for
  common stock                                                           1,200,000
  Issuance of warrants and options
  as compensation for services                            1,104,000        832,000       394,000                      97,000
  Common stock for services                               3,275,000        175,000                     136,000     1,770,000
  Common Stock issued for payables                        1,431,000
  Write-off of notes receivable                                            389,000
  Imputed Preferred Dividends                             5,118,000                                                1,950,000
  (Increase) decrease in:
    Accounts receivable                                    (250,000)      (112,000)   (3,239,000)    1,283,000    (1,357,000)
    Inventory                                             4,998,000     (5,014,000)     (693,000)      228,000       450,000
    Prepaid and other                                       160,000       (405,000)      119,000       (53,000)      124,000
   Increase (decrease) in:
    Cash overdraft                                         (165,000)       165,000                                  (165,000)
    Accounts payable                                     (1,173,000)     4,539,000       583,000      (550,000)    1,834,000
    Accrued liabilities                                    (483,000)     1,933,000      (375,000)       49,000     1,185,000
    Income taxes payable                                    (52,000)      (386,000)      377,000                     (52,000)
    Deferred income taxes                                                                184,000
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) operating
Activities                                               (4,129,000)    (2,485,000)    1,044,000      (736,000)   (2,235,000)
                                                       ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
 Purchases of property and
 Equipment                                                 (224,000)    (1,396,000)     (350,000)       (2,000)      (35,000)
 Net proceeds from disposition of
 building, property and equipment                                          494,000
 Net cash paid for purchase of
 Inholtra and HVE                                                      (13,493,000)
 Collections on note receivable                             450,000         68,000        14,000                       3,000
 Other assets                                                             (265,000)                                   22,000
 Receivables from officers and
 Shareholders                                                              322,000      (672,000)
 Investment in e-commerce
 Businesses                                                (718,000)
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) investing
Activities                                                 (492,000)   (14,270,000)   (1,008,000)       (2,000)      (10,000)

                                      F-7
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from exercise of options and
wrrants                                                    340,000         85,000       173,000                     100,000
Proceeds from issuance of common stock in
a private placement                                       2,100,000                                                2,376,000
Net proceeds from issuance of Preferred
Stock                                                     5,620,000                                                2,900,000
Net borrowings (repayments) under the line of credit.      (925,000)     5,436,000       259,000       774,000    (1,036,000)
Borrowings under term loan                                              13,000,000
Payments under term loan                                 (2,139,000)      (583,000)                     (6,000)     (665,000)
Borrowings under notes payable                                          10,000,000       592,000
Repayments of notes payable                                (176,000)   (10,870,000)     (168,000)
Capital contribution from shareholder                                      305,000
Costs incurred with debt financing                                      (1,044,000)                                 (100,000)
Distributions to shareholders                                                         (1,103,000)
                                                       ----------------------------------------------------------------------
Net cash provided by (used in) financing
Activities                                                4,820,000     16,329,000      (247,000)      768,000     3,575,000
                                                       ----------------------------------------------------------------------
Net (decrease) in cash                                      199,000       (426,000)     (211,000)       30,000     1,330,000

Cash at beginning of year                                         -        426,000       637,000       199,000             -

Cash at end of year                                    $    199,000   $          -   $   426,000   $   229,000   $ 1,330,000

SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION
Cash paid during the year for:                                 2000           1999          1998          2001          2000
                                                       -------------  -------------  ------------  ------------  ------------
  Interest                                             $  2,189,000   $  1,326,000   $   148,000   $   446,000
  Income taxes                                         $          -   $     40,000   $    24,000   $         -
                                                       =============  =============  ============  ============
The  accompanying  notes  are  an  integral  part of these financial statements.

                                      F-8
SUPPLEMENTAL  DISCLOSURES  OF  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES

     During  the  year  ended  December 31, 2000, several of the Company's trade
creditors  agreed  to convert $1,431,000 of debt in exchange for common stock of
the  Company.

     During  the  year  ended December 31, 2000, the Company issued common stock
and  other  equity  instruments  valued  at $5,448,000 to acquire three separate
businesses.

     During  the  year ended December 31, 2000, the Company issued warrants with
an  aggregate  value  of  $1,104,000  to  vendors  for  services  rendered.

     During  the year ended December 31, 2000 the Company issued common stock to
directors  for  compensation.  The  value  of  the  shares  was  $72,000.

     During the year ended December 31, 2000, the Company issued common stock to
vendors,  consultants  and  employees valued at $1,563,000 for services rendered
during  the  year.

On  March  12,  2000 the Company forgave a note due from a former officer in the
amount  of  $175,000.

     During  the  year  ended December 31, 1999,  in connection with the sale of
the  Company's  facility  in  Boulder,  Colorado,  (i)  a  note  receivable  of
$450,000  was  received  from  the  buyer,  and  (ii)  $1,300,000  of  debt  was
assumed  by  the  buyer.

     During  the  year  ended  December  31,  1999,  in  connection  with  the
acquisition  of  Health  and  Vitamin  Express  Inc.,  the  Company  (i)  issued
363,636  shares  of  the  Company's  common stock valued at $2,273,000, and (ii)
assumed  $571,000  of  debt.

     During  the  year ended December 31,1999, the Company acquired property and
equipment  totaling  $126,000  under  capital  lease  obligations.

     The  accompanying  notes are an integral part of these financial statements

                                      F-9
Omni  Nutraceuticals,  Inc.
Consolidated  Statements  of  Shareholder's  Investment - PART I
For  Each  of  the  Three  Years  in  the  Period  Ended  December  31,  2000
and  the  Three  Months  Ended  March  31,  2001  (unaudited)

                                                       PREFERRED STOCK             COMMON STOCK
                                                   --------------------------     ------------------
                                     SHARES                                                             ADDITIONAL
                                 ISSUABLE UNDER                                                           PAID IN
                                LEGAL SETTLEMENT      SHARES         AMOUNT       SHARES      AMOUNT      CAPITAL
                               ------------------------------------------------------------------------------------
BALANCE, JANUARY 1,
1998                                          --             --            --   27,818,798   $278,000   $11,656,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       38,341      1,000       172,000
Compensation expense
incurred in connection with
issuance of options                           --             --            --           --         --         6,000
Compensation expense in
connection with issuance
of warrants for services                      --             --            --           --         --       388,000
Distributions
Effect of Irwin Naturals
termination of its "S"
Corporation election                          --             --            --           --         --     2,111,000
Net Income                                    --             --            --           --         --            --
BALANCE, DECEMBER 31,
 1998                                         --             --            --   27,857,139    279,000    14,333,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
Issuance of common stock
in connection with HVE
acquisition                                   --             --            --      363,636      4,000     2,269,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       19,670       ----        85,000
Issuance of common stock
for services                                  --             --            --       53,000      1,000       174,000
Compensation expense in
connection with issuance
warrants and options for
services                                      --             --            --           --         --       832,000
363,636 shares issuable
under legal settlement         $       1,200,000             --            --           --         --            --
Capital contribution and
return of shares                              --             --            --     (941,436)   (10,000)      315,000
Net loss
BALANCE, DECEMBER 31,
1999, AS PREVIOUSLY
RESTATED                               1,200,000              -             -   27,352,009    274,000    18,008,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
Preferred stock issuance,
net of expenses of
101,000 and warrants of
100,000                                      --      2,000,000     2,799,000           --         --       100,000
Shares issued to officer
and directors                                 --             --            --       55,000         --        72,000
Issuance of warrants for
services                                      --             --            --           --         --     1,104,000
Issuance of common stock
in connection with
exercise of stock options                     --             --            --       98,830      1,000       339,000
Shares issued for services                    --             --            --      925,500      9,000     1,534,000
Shares issued in private
placement                                     --             --            --    1,500,000     15,000     2,085,000
Value of shares
transferred in connection
with termination
settlement                                    --             --            --           --         --     1,720,000
Shares of common stock
issued on conversion of
preferred stock                               --     (2,000,000)   (2,799,000)   2,016,438     20,000     4,729,000
Shares issued in
connection with legal
settlement                            (1,200,000)            --            --      363,636      4,000     1,196,000
Shares issued in
connection with
conversion of accounts
payable                                       --             --            --      599,905      6,000     1,425,000
Series A Preferred Stock
issued, net of costs of
280,000                                      --          3,000          3,000           --         --     2,717,000
Preferential dividend on
preferred stock                               --             --            --           --         --     3,168,000
Shares issued in
Acquisitions                                  --             --            --    1,198,951     12,000     5,436,000
Net loss

BALANCE, December
31, 2000                                      --          3,000         3,000   34,110,269    341,000    43,633,000
Shares issued in
connection with the
purchase of HealthShop                        --             --            --      400,000      4,000       115,000
Shares issued in
connection with an
amendment to preferred
stock issued in the first
quarter of 2000                               --             --            --       75,000      1,000       135,000
Adjustment to prepaid
promotion fees  paid with
stock options in a prior
period                                        --             --            --           --         --        53,000
Net Loss
BALANCE - MARCH 31,
2001 (UNAUDITED)               $               -          3,000   $     3,000   34,585,269   $346,000   $43,936,000
                               ------------------  -------------  ------------  -----------  ---------  -----------
F-10
Omni  Nutraceuticals,  Inc.
Consolidated  Statements  of  Shareholder's  Investment  -  PART  II
For  Each  of  the  Three  Years  in  the  Period  Ended  December  31,  2000
and  the  Three  Months  Ended  March  31,  2001  (unaudited)

                                       TREASURY STOCK
                                       ---------------
                                                             RETAINED
                                   SHARES        AMOUNT       DEFICIT         TOTAL
Issuance of common stock
in connection with
exercise of stock options                   --        --             --             --
Compensation expense
incurred in connection with
issuance of options                         --        --             --             --
Compensation expense in
connection with issuance
of warrants for services                90,890  $(50,000)  $ (6,497,000)  $  5,387,000
Distributions                               --        --             --        173,000
Effect of Irwin Naturals
termination of its "S"
Corporation election                        --        --             --          6,000
Net Income                                  --        --             --        388,000
BALANCE, DECEMBER 31,
1998                                        --        --     (1,103,000)    (1,103,000)
Issuance of common stock
in connection with HVE
acquisition                                 --        --     (2,111,000)            --
Issuance of common stock
in connection with
exercise of stock options                   --        --      1,018,000      1,018,000
Issuance of common stock
for services                            90,890   (50,000)    (8,693,000)     5,869,000
Compensation expense in
connection with issuance
warrants and options for
services                                    --        --             --      2,273,000
363,636 shares issuable
under legal settlement                      --        --             --         85,000
Capital contribution and
return of shares                            --        --             --        175,000
Net loss                                    --        --             --        832,000
BALANCE, DECEMBER 31,
1999, AS PREVIOUSLY
RESTATED                                    --        --             --      1,200,000
Preferred stock issuance,
net of expenses of
101,000 and warrants of
$100,000                                    --        --             --        305,000
Shares issued to officer
and directors                               --        --    (11,055,000)   (11,055,000)
Issuance of warrants for
services                                90,890   (50,000)   (19,748,000)      (316,000)
Issuance of common stock
in connection with
exercise of stock options                   --        --             --      2,899,000
Shares issued for services                  --        --             --         72,000
Shares issued in private
placement                                   --        --             --      1,104,000
Value of shares
transferred in connection
with termination
settlement                                  --        --             --        340,000
Shares of common stock
issued on conversion of
preferred stock                             --        --             --      1,543,000
Shares issued in
connection with legal
settlement                                  --        --             --      2,100,000
Shares issued in
connection with
conversion of accounts
payable                                     --        --             --      1,720,000
Series A Preferred Stock
issued, net of costs of
$280,000                                    --        --     (1,950,000)            --
Preferential dividend on
preferred stock                             --        --             --             --
Shares issued in
Acquisitions                                --        --             --      1,431,000
Net loss                                    --        --             --      2,720,000
                                            --        --     (3,168,000)            --
BALANCE, December
31, 2000                                   --         --             --      5,448,000
Shares issued in
connection with the
purchase of HealthShop                      --        --    (16,492,000)   (16,492,000)
Shares issued in
connection with an
amendment to preferred
stock issued in the first
quarter of 2000                             --        --             --             --
Adjustment to prepaid
promotion fees  paid with
stock options in a prior
period                                  90,890   (50,000)   (41,358,000)     2,569,000
Net Loss                                    --        --             --        119,000
BALANCE - MARCH 31,
2001 (UNAUDITED)                           --        --             --        136,000
                                            --        --             --         53,000
                                            --        --     (1,556,000)    (1,556,000)
                                        90,890  $(50,000)  $(42,914,000)  $  1,321,000
The  accompanying  notes  are  an  integral  part  of these financial statements

                                      F-11
OMNI NUTRACEUTICALS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                     AND MARCH 31, 2000 AND 2001 (UNAUDITED)

1.     BUSINESSES

BUSINESS  AND  ORGANIZATION

     Omni  Nutraceuticals, Inc.  (the "Company" or "Omni")  is  a formulator and
supplier  of branded natural health, herbal and nutritional supplement products.
The  Company's  products are sold through mass retail, specialty natural health,
nutrition  and  food  distributors  and retail  stores  and  via  the  Internet.

     Omni  is  a  Utah  corporation,  and  was  formerly  known  as  Irwin
Naturals/4Health  Inc,  which  was  formerly known as 4Health, Inc.  Omni is the
surviving  corporation  of  a  merger  (the  "Merger")  of 4Health, Inc., a Utah
corporation  ("4Health"),  with  Irwin  Naturals,  Inc.,  a  California
corporation  ("IN"), consummated  June  30,  1998. Pursuant to the Merger, which
was  accounted  for  as  a  pooling  of  interests,  4Health  issued  15,750,000
shares  of common stock in exchange  for  all  the  outstanding  shares of Irwin
Naturals.  The  accompanying  financial  statements  for  1998  have  been
restated  to  include  the financial position and results of operations for both
companies  as  if  the  Merger was  consummated  at the beginning of all periods
presented.  In  August  1999,  the  Company  changed  its  name  to  Omni
Nutraceuticals,  Inc.

     Net  sales  and net income individually and for the combining companies for
the  year  ended  December  31,  1998,  was  as  follows:

Net  Sales:
4Health (Pre-merger, unaudited)              $ 6,373,000
Irwin Naturals (Pre-merger, unaudited)         9,291,000
Combined companies (Post-merger, unaudited)   14,883,000
   Total                                     $30,547,000
                                             -----------
Net (Loss) Income
4Health (Pre-merger, unaudited)              $ (900,000)
Irwin Naturals (Pre-merger, unaudited)        1,070,000
Combined companies (Post-merger, unaudited)     848,000
   Total                                     $1,018,000
                                            -----------
LIQUIDITY/GOING  CONCERN

     The  accompanying  consolidated  financial  statements  have  been prepared
assuming that the Company will continue as a going concern. The Company incurred
a  loss  from  current operations of $13,472,000 for the year ended December 31,
2000,  has a retained deficit of $41,358,000 as of December 31, 2000, and it had
negative  cash  flows  from operations of $4,129,000 for the year ended December
31,  2000.  Additionally,  the  Company has current debt service requirements in
excess  of  its  historical ability to generate cash flows from operations.  The
Company  is  the  subject  of  a  significant  number of lawsuits, claims and an
informal  investigation by the Securities and Exchange Commission.  In addition,
the Company has been de-listed from the NASDAQ national market system.  Further,
the  Company's  secured  credit facility requires a payment of $1,750,000 due on
June 15, 2001 and requires subsequent payments of $195,000 monthly.  The Company
currently does not have the resources to make these payments.  Failure to secure
an  extension  of  the  obligation  may  have  a  material adverse impact on the
Company's ability to continue to operate.  At December 31, 2000, the Company had
borrowed  $5,511,000  out  of  a  maximum of $7,000,000 under its line of credit
facility,  which has been drawn on to fund on going cash requirements subsequent
to  December  31.  At  March  28,  2001,  the  available balance on the line was
$870,000.  These  factors raise substantial doubt about the Company's ability to
continue  as  a  going  concern.  The  consolidated  financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.

                                      F-12
Management's  plans  in  regard  to  these  items  include  the  following:

     The  Company  has  received  a  waiver  from its credit facility lender for
violations  of certain covenants included in the loan agreement and an amendment
to the credit facility with a deferral of the maturity dates including principal
payments  until  July  30,  2002 .  The company will continue to seek additional
extensions  and  waivers  of  its  credit  facility.

     The  Company  has  reduced  and  continues  to reduce portions of its fixed
overhead  expenses,  including  significant  executive  salary  reductions.

     Management  has  revised  its  marketing  strategy, has reduced advertising
expenditures  and  introduced  new  product  line  in  May  2001.

     There are no assurances that the amount available from the Company's credit
facility, in conjunction with the expense reductions, will be sufficient to fund
the  Company's  continuing  operations,  or  that  lawsuits,  claims  and  the
investigation  that  the company is involved with will be successfully resolved.
Furthermore,  there  is  no  assurance that the Company will be able to have its
common  stock  re-listed  by  NASDAQ,  limiting  the  Company's ability to raise
additional  equity  financing.  There are no assurances that the Company will be
able  to  successfully  raise  other additional debt or equity funds, or receive
extensions  or waivers on its current debt facility.  The failure of the Company
to  successfully  achieve  one  or  all  of the above items will have a material
impact  on  the  Company's  financial  position.  Additionally, in the event the
Company  is  unsuccessful  in  its  plans with its new product, it may adversely
affect  the  realizability  of  its  Inholtra  trademark asset and significantly
impact  its  results  of  operations.

PREVIOUS  RESTATEMENT  OF  1999  FINANCIAL  STATEMENTS

     Starting  in  July  2000,  one  of  the  Company's  large customers started
deducting significant amounts from cash remittances. In addition, certain of the
Company's  other customers began taking deductions against cash remittances that
were  in  excess  of historical amounts experienced. In August 2000, the Company
launched  an  investigation  of its 1999 and 2000 sales practices and determined
that sales to certain customers were made with rights of return and "guarantees"
of sell-through to consumers. As part of its investigation, substantially all of
the  customer  deductions taken in 2000 were reviewed and it was determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances  and  concessions  granted by prior management in the first
quarter  of  2000 prior to the original issuance of the Company's 1999 financial
statements.  Substantially  all of these arrangements were previously unknown to
the  current  management  team.

     The  Company  determined  the  effect of these deductions on its previously
issued financial statements and restated their financial statements for the year
ended  December 31, 1999. Under the restatement, revenues from any products with
"guaranteed"  sales  were  deferred until the sell through of the product at the
customer  level  and  the related product was treated as consigned inventory. In
situations  in  which  allowances  and  concessions  related  to 1999 sales were
granted  early  in  2000,  prior  to the original issuance of the Company's 1999
financial  statements,  the  reserves  for  such allowances and concessions were
increased  as  of  December  31,  1999.

     The  effect  of  the  previous  restatement  on the originally reported net
sales,  cost of sales, gross profit, net loss, basic and diluted loss per common
share, accounts receivable and inventories as of and for the year ended December
31,  1999,  net  of  the  effects  of  the  retroactive  restatement  related to
discontinued  operations,  as  discussed  in  Note  3,  is  as  follows:

                                      F-13
As Originally
Reported         Restatement    As previously restated
                        --------------   -------------  ----------------------
Net Sales               $   35,013,000   $ (4,091,000)  $          30,922,000
Cost of Sales               17,885,000     (1,897,000)             15,988,000
Gross Profit                17,128,000     (2,194,000)             14,934,000
Net Loss                    (8,861,000)    (2,194,000)            (11,055,000)
Basic and diluted loss
per share                        (0.31)         (0.08)                  (0.39)
Accounts Receivable          2,446,171     (4,091,000)              2,685,000
Inventories                  5,972,000      1,897,000               7,869,000
In  addition,  in  the originally filed financial statements and footnotes,
the  Company  did  not  account  for  and  disclose  two  stock option grants to
employees.  The  first  grant  for 100,000 options was on February 15, 1999. The
second  grant,  also  for 100,000 options, was on January 10, 2000. These option
grants  did  not  impact  the  Company's  statement  of operations; however, the
footnote  disclosures  related  to  stock  options were revised to reflect these
grants.

2.      SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

INTERIM  FINANCIAL  INFORMATION

     The  unaudited  financial  information  furnished  herein  reflects  all
adjustments  consisting  only  of  normal  recurring  adjustments,  which in the
opinion  of  management,  are  necessary to fairly state the company's financial
position,  the  results  of  its  operations,  and  cash  flows  for the periods
presented.  The  results of operations for the three months ended March 31, 2001
are  not necessarily indicative of the results for the entire fiscal year ending
December  31,  2001.

REVENUE  RECOGNITION

     The  Company  recognizes  revenue  at  the time products are shipped unless
sales  are  made  under "guaranteed" sales arrangements.  Revenue for guaranteed
sales is deferred until the product has been sold at the retail level.  Based on
historical  experience,  reserves  are established for sales returns, allowances
and  discounts  for  sales  made  without  guarantees at the time such sales are
recorded.  During the years ended December 31, 2000, 1999 and 1998 and the three
months  ended  March  31,  2001  and  2000,  the  Company  provided  $7,720,000,
$3,702,000,  $2,116,000,  $994,000  (unaudited)  and  $962,000  (unaudited),
respectively,  for  returns  and  allowances,  including allowances for doubtful
accounts, and incurred related write-offs of $6,880,000, $1,121,000, $1,426,000,
$1,789,000 (unaudited) and $915,000 (unaudited), respectively.  During the years
ended December 31, 2000, 1999 and 1998 and the three months ended March 31, 2001
and  2000,  the Company provided provisions for doubtful accounts (bad debts) of
$100,000,  $202,000,  $268,000,  $34,000  (unaudited)  and  $46,000 (unaudited),
respectively.

 STRAIGHT-LINE  RENT

     One of the Company's operating leases includes scheduled increasing monthly
payments.  In  accordance  with  accounting principles generally accepted in the
United  States, the Company has accounted for the lease to provide straight-line
charges  to  operations  over  the  life  of  the  lease.

INVENTORIES

     Inventories  are  valued  at  the  lower of cost, determined on a first-in,
first-out basis, or market.  Inventories at December 31, 2000, 1999 and 1998 are
summarized  as  follows:
March 31,                 December 31,
                             =====================================
                    2001           2000        1999        1998
                 ----------  -------------  ----------  ----------
                 (unaudited)
Raw Materials    $1,015,000  $   1,194,000  $2,135,000  $  803,000
Finished Goods    1,628,000      1,677,000   5,734,000   2,052,000
                 $2,643,000  $   2,871,000  $7,869,000  $2,855,000
                 ==========  =============  ==========  ==========
PROPERTY  AND  EQUIPMENT

     Property  and  equipment  are stated at cost. Depreciation and amortization
are  provided  using the straight-line method over the estimated useful lives of
the  assets, which range from three to ten years.  Depreciation and amortization
expenses  are  included  in  selling, general and administrative expenses in the
accompanying  statements  of  operations.

                                      F-14
When  an  asset  is  sold  or  otherwise  disposed of, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain or
loss are included in results of operations.  Repairs and maintenance are charged
to  expense  as  incurred and major replacements or betterments are capitalized.

LONG-LIVED  ASSETS

     The Company follows Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed  of," which requires impairment losses to be recorded on long-lived
assets  used  in  operation  when  indicators  of  impairment  are  present.

FINANCING  FEES

     Financing  fees  incurred  with  the  acquisition of the Company's existing
credit  facility  and fees charged for related amendments have been deferred and
are  being  amortized  over  the  life  of  the  debt.

PATENTS  AND  TRADEMARKS

     Costs associated with the establishment and defense of trademarks have been
capitalized  and  are  being  amortized  over periods of fifteen years using the
straight-line  method.

RECLASSIFICATIONS

     Certain  amounts  in  prior  years have been reclassified to conform to the
current  year's  presentation.

ADVERTISING

     The  Company  expenses  advertising costs as incurred.  These costs include
promotional literature, direct mailing brochures, telemarketing and trade shows.
Costs incurred relating to the production of television commercials are deferred
until  the commercial has aired.  During the years ended December 31, 2000, 1999
and 1998and the three months ended March 31, 2001 and 2000, the Company incurred
$3,435,000,  $3,191,000,  $1,920,000,  $71,000  (unaudited)  and  $3,425,000
(unaudited)  for  advertising  expenses,  respectively.

STOCK-BASED  COMPENSATION

     The  Company  adopted  Statement  of  Financial Accounting Standards (SFAS)
No.123,  "Accounting  for  Stock  Based Compensation" (SFAS 123) in fiscal 1996.
As  allowed  by  SFAS  123,  the  Company  has  elected  to  continue to measure
compensation  cost under Accounting Principles Board Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees"  (APB  25)  and  comply  with  the  pro forma
disclosure  requirements  of  the  new  standard.

INCOME  TAXES

     The  Company accounts for income taxes under the provisions of Statement of
Financial  Accounting  Standards  (SFAS)  No.  109. Under SFAS No. 109, deferred
income  tax assets or liabilities are computed based on the temporary difference
between  the  financial statement and income tax bases of assets and liabilities
using  the  current  marginal  income  tax rate. Deferred income tax expenses or
credits  are  based  on  the  changes  in  the  deferred  income  tax  assets or
liabilities  from  period  to  period.

     Deferred  tax  assets may be recognized for temporary differences that will
result  in  deductible  amounts in future periods and for loss carry forwards. A
valuation allowance is recognized if, based on the weight of available evidence,
it  is  more  likely than not that some portion or all of the deferred tax asset
will  not  be  realized.

                                      F-15
EARNINGS  PER  SHARE

     Earnings  per  share  calculations  are  in  accordance  with SFAS No. 128,
"Earnings  per  Share."  "Basic"  earnings per share is computed by dividing net
income  (loss)  by  the weighted average number of common shares outstanding for
the year. "Diluted" earnings (loss) per share is computed by dividing net income
(loss) by the total of weighted average number of common shares outstanding plus
the  dilutive  effect  of  outstanding  stock options and warrants (applying the
treasury  stock  method).  For  the  years ended December 31, 2000 and 1999, the
effect  of  stock options and warrants were not included as the results would be
antidilutive.

     A  reconciliation  of  the "basic" weighted average number of common shares
outstanding  to  the  "diluted"  weighted  average  number  of  common  shares
outstanding  for  each  of the three years in the period ended December 31, 2000
follows:
Years Ended December 31,                      March 31,
                               =========================================================================

                                                    2000        1999        1998        2001        2000
                                              ----------  ----------  ----------  ----------  ----------
                                                                                  (unaudited) (unaudited)
Weighted average number
 of common shares
 outstanding - Basic                          30,640,000  28,177,000  27,747,000  34,257,000  27,765,052
Dilutive effect of
outstanding stock options                                         --     474,000
                                ------------------------------------------------------------------------
Weighted average number
of common shares outstanding
- Dilutive                                    30,640,000  28,177,000  28,221,000  34,257,000  27,765,052
                               =========================================================================
For  the  year  ended December 31, 1998, 497,000 options have been excluded
from  the  calculation of dilutive shares applying the treasury stock method, as
the  option  exercise  prices  were  greater  than  average market price for the
period,  and  therefore  the  options  were  anti-dilutive.

USE  OF  ESTIMATES

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

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  AND  CONCENTRATION  OF  CREDIT  RISK

     The  Company's  financial  instruments  consist  of  cash, short-term trade
receivables  and payables and short-term and long-term debt. The carrying values
for  all  such  instruments,  considering  the  terms, approximate fair value at
December  31,  2000,  1999  and  1998  and  March  31,  2001  (unaudited).

     Financial  instruments  that  potentially  subject  the  Company  to
concentrations of credit risk consist primarily of cash and accounts receivable.
Accounts receivable are subject to credit limits, ongoing credit evaluations and
account  monitoring  procedures  to  minimize  the  risk  of  loss.  In  certain
instances,  customer  deposits  are obtained which would also reduce the risk of
loss.  Collateral  is  generally  not  required.

     The  Company  sells  the  majority  of its products and services to various
customers,  which  include  a  variety  of  large  companies  and  distributors
throughout  the  United  States, and to a limited extent, foreign customers.  In
the  years  ended  December  31,  2000, 1999 and 1998 and the three months ended
March  31,  2001 and 2000, shipments to the Company's largest customer accounted
for  18.4%, 11.6%, 13.3%, 27.2% (unaudited) and 29.4% (unaudited), respectively,
of the total.  At December 31, 2000, two customers represented 31.7% of accounts
receivable.  At  December  31,  1998  one customer represented 36.4% of accounts
receivable.  No  customers  represented  more than 10% of accounts receivable at
December  31, 1999. At March 31, 2001 one customer represented 13.3% (unaudited)
of  accounts receivable. In the years ended December 31, 2000, 1999 and 1998 and
the  three  months ended March 31, 2001 and 2000, net sales to foreign customers
accounted  for  23.2%,  8.5%,  10.0%,  33.5%  (unaudited)  and  9.6% (unaudited)
respectively,  of  net  sales.

                                      F-16
During  2000,  approximately 42% of the Company's total purchases were from
two  suppliers.  Management  believes  that  if  the Company were unable to make
further  purchases  from  these  suppliers, it would be able to find alternative
suppliers  with  terms  and  quality levels similar to those currently in place.

COMPREHENSIVE  INCOME

     For  the  year  ended  December 31, 2000, the Company adopted SFAS No. 130,
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting  comprehensive  income  and  its  components in a financial statement.
Comprehensive  income  as  defined  includes  all changes in equity (net assets)
during  a  period  from  non-owner sources.  Examples of items to be included in
comprehensive  income,  which  are  excluded  from  net  income, include foreign
currency  translation  adjustments  and  unrealized  gains  and  losses  on
available-for-sale  securities.  Comprehensive  income  is  not presented in the
Company's  financial  statements since the Company did not have any of the items
of  comprehensive  income  in  any  period  presented.

STATEMENTS  OF  CASH  FLOWS

     The Company prepares its statements of cash flows using the indirect method
as prescribed by Statement of Financial Accounting Standards (SFAS) No. 95.  The
Company  considers  all  highly  liquid investments with an original maturity of
three  months  or  less  to  be  cash  equivalents.

NEW  AUTHORITATIVE  PRONOUNCEMENTS

     In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  136,  "Transfer  of  Assets  to a Not-for-Profit Organization or Charitable
Trust  that  Raises  or  Holds Contributions for Others."  This statement is not
applicable  to  the  Company.

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

     In  December  1999,  the SEC staff released Staff Accounting Bulletin (SAB)
No.  101,  Revenue  Recognition,  to  provide  guidance  on  the  recognition,
presentation  and  disclosure  of  revenue  in financial statements.  Changes in
accounting to apply the guidance in SAB No. 101 may be accounted for as a change
in  accounting  principle effective January 1, 2000. SAB No.  101, has not had a
material  effect on the Company's revenue recognition and results of operations.

     In  March  2000,  the  Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation,"  (an Interpretation of Accounting Principles Bulletin Opinion No.
25  ("APB  25")) ("FIN 44").  FIN 44 provides guidance on the application of APB
25, particularly as it relates to options.  The effective date of FIN 44 is July
1,  2000,  and  the  Company  has  adopted  FIN  44  as  of  that  date.

     In  June  2000,  the  FASB  issued  SFAS  No.  138, "Accounting for Certain
Instruments  and  Certain Hedging Activities."  This statement is not applicable
to  the  Company.

     In  June  2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement
No. 53 and Amendments to Statements No. 63, 89, and 121."  This statement is not
applicable  to  the  Company.

     In  September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and  Servicing  of  Financial  Assets  and  Extinguishments  of  Liabilities,  a
replacement of FASB Statement No. 125."  This statement is not applicable to the
Company.

                                      F-17
3.     ACQUISITIONS  AND  DIVESTITURE  OF  E-COMMERCE  OPERATIONS

ACQUISITIONS

Vitamin  Connection  Discount,  Inc.,  SmartBasics,  Inc.  and  Health  Shop.com

     On  October 27, 2000, the Company entered into an agreement to purchase the
assets  of  Vitamin Discount Connection for 190,000 shares of Omni common stock,
which  was valued at $277,000, the fair market value of the common stock on that
day  and  the  assumptions  of  approximately  $115,000  of  Vitamin  Discount's
liabilities.

     On  May  25,  2000  the  Company  acquired SmartBasics, Inc., pursuant to a
re-organization and merger agreement, for 170,000 shares of common stock, valued
at  $510,000.

     On  May  28,  2000,  the  Company acquired the assets of HealthShop.com, an
online  vitamin  retail  business.  The  Company issued 838,951 shares of common
stock for all the assets of the business.  The shares were valued at $3,500,000.
In  addition  to  the  shares issued, the agreement stated that the stockholders
were  entitled  to  purchase up to an additional $2,500,000 in common stock.  In
connection  to  this,  the  Company  recorded  an  additional  purchase price of
$289,000,  which was the fair market value of the option.  Also in connection to
the  Healthshop.com  acquisition,  the  Company  granted an aggregate of 250,000
options to purchase the Company's common stock to three of the previous officers
of HealthShop.com.  The options were valued at $872,000, under the Black Scholes
valuation  method.  The  aggregate  purchase  price  of  HealthShop.com  was
$4,661,000.

     All  of the acquisitions have been accounted for under the purchase method,
whereby  the excess of the purchase price over the fair market value at the date
of  the acquisition has been allocated to goodwill and is being amortized over 5
years.

Health  and  Vitamin  Express

     On February 15, 1999 in exchange for 363,636 shares of the Company's common
stock  valued  at $2,273,000 and the assumption of $571,000 of debt; the Company
acquired substantially all of the outstanding common stock of Health and Vitamin
Express,  Inc.  ("HVE"),  whose name was subsequently changed to HealthZone.com.
The  excess  of  the  purchase  price,  which aggregated to $2,906,000 including
costs,  over  the  fair  market  value  of  the  acquired assets is allocated to
goodwill  and  is  being  amortized  over  five  years.

     In  addition to the 363,636 shares issued upon acquisition, the Company may
contingently  issue  to  the  sellers  of  HVE  (i)  up to 272,727 shares of the
Company's  common  stock  based  upon  certain revenue thresholds and (ii) up to
90,909  shares  of  the  Company's  common  stock  based  upon  certain  profit
thresholds.  The  Company additionally had certain repurchase rights pursuant to
the  agreement.  The  Company  has  granted  to  the  Sellers  certain  "demand
registration  rights"  and  "piggyback  registration rights" on these shares, if
issued,  in  the  event  the  Company undertakes a sale of its securities to the
public.

     The  former  shareholders  of  HVE  filed  a  lawsuit  against  the Company
asserting  certain  claims under this agreement. The Company settled the lawsuit
and  has  recorded  certain settlement expenses related to this contingency (See
Note  11).

DIVESTITURE

     In the fourth quarter of 2000 the Company made the determination to dispose
of  its  E-commerce business segment. The results of operations of this business
segment  have  been  retroactively  reported  separately  on  the  accompanying
statement  of  operations  as  a  Loss  on operations of discontinued e-commerce
segment.  The  net  assets  of  the  e-commerce  segments  have been reported as
"Assets  held  for  sale" at December 31, 2000.  The Company expects to record a
gain  on  the  ultimate disposal of the business assets, and, in accordance with
generally accepted accounting principals, to the extent there are expected gains
on disposal, will defer the costs associated with the on-going operations during
the  phase  out  period,  until  the  gain  is  realized.

                                      F-18
The  assets  held  for  sale  consist  primarily  of  intangible assets and
goodwill  related  to  the  following  subsidiaries  and  acquisitions:  (1)
HealthZone.com, (2) HealthShop.com, (3) SmartBasics.com and (4) Vitamin Discount
Connection.  and  were  as  follows:

Net  book  value  of  assets  related  to:
HealthZone.com                        $ 2,971,000
Vitamin Discount Connection               522,000
Smartbasics.com                           521,000
HealthShop.com                          4,783,000
Accumulated amortization on goodwill   (1,669,000)
                                      ------------
   Total                              $ 7,128,000
                                      ============
On  February  2, 2001, the Company entered into and simultaneously closed a
Purchase  Agreement with Vitacost.com, Inc. ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for 6,800,000 shares of Vitacost common stock.  The Vitacost stock has
been  valued  at  $7,000,000  (See  Note  15).

4.     SIGNIFICANT  FOURTH  QUARTER  ADJUSTMENTS

     During  the fourth quarter of the year ended December 31, 2000, the Company
recorded  the  following  significant  adjustments:

     An adjustment to reflect the issuance of 710,000 shares of its common stock
for  consulting fees. The amount of the adjustment was approximately $1,169,000,
which  was  charged  to  operations.

     An  adjustment  to  record professional fees incurred during the year.  The
amount  of  the  adjustment  was  approximately  $200,000.

5.     INHOLTRA  TRADEMARK

     On March 10, 1999, the Company purchased for $13,250,000 certain net assets
of  Inholtra  Investment  Holdings  and  Trading,  N.V.,  Inholtra,  Inc.,  and
Inholtra  Natural,  Ltd.  (collectively  the  Sellers).  The  purchase  price
consisted of the payment of $3,250,000 in cash at closing, and the issuance of a
$10,000,000  promissory note. The promissory note was repaid on June 10, 1999 in
connection with the Company's new banking facility (see Note 7). The Company has
accounted  for  the  acquisition  as  a  purchase.  The  purchase price has been
allocated  to  the  patents and trademarks associated with the Inholtra product,
and is being  amortized over a fifteen-year period.  Accumulated amortization on
the  trademark  at  December  31,  2000  and  1999  was $1,604,000 and $709,000,
respectively.

6.     PROPERTY  AND  EQUIPMENT  AND  SALE  OF  BUILDING

Property  and  equipment
------------------------
Property  and  equipment  consists  of  the  following:
December 31,         March 31,
                          ----------------------------------------------------
                                2000         1999         1998         2001
                          --------------  -----------  -----------  ----------
                                                                   (unaudited)
Machinery and equipment.  $     205,000   $  303,000   $  355,000   $  205,000
Furniture and equipment.        719,000    1,438,000      758,000      727,000
Leasehold improvements .        796,000      910,000      303,000      796,000
                              1,720,000    2,651,000    1,416,000    1,728,000
                          --------------  -----------  -----------  ----------
Less - Accumulated
Depreciation and . . . .       (467,000)  (1,135,000)    (789,000)    (535,000)
amortization              $   1,253,000   $1,516,000   $  627,000   $1,193,000
                          ====================================================
F-19
During  the  year ended December 31, 2000, the company retired property and
equipment  with  an  original  cost basis of $1,040,000, these assets were fully
depreciated,  and  no  gain  or  loss on disposal was recorded. During the three
years  ended  December  31, 2000, 1999 and 1998 and the three months ended March
31,  2001  and  2000,  the  Company  recorded  depreciation expense of $406,000,
$349,000,  $697,000, $69,000 (unaudited) and $103,000 (unaudited), respectively.

Sale  of  Building

     On  March  25,  1999, the Company completed the sale of its former 4Health,
Inc.  corporate  facility  located  in  Boulder, Colorado (the "Property").  The
sales  price  for the property was $2,350,000, which consisted of $600,000 cash,
the  assumption  of  a  $1,300,000 existing mortgage and the receipt of $450,000
note  receivable secured by a deed on the property.  The Company recorded a gain
on  the  sale  of the property of $481,000, which is included in other income on
the  accompanying  consolidated  financial  statements.
The note was to be paid in monthly installments of $4,000, including interest at
a  rate of 7   % per annum, until March 1, 2002.  During the year ended December
31,  2000,  the  note  was  paid  off  in  full.

7.     CREDIT  FACILITY

     As  of  December  31,  1998,  the  Company  had  outstanding  borrowings of
$1,000,000  under  a revolving line of credit with a bank. In February 1999  the
Company obtained a new line of credit with a different bank which was amended to
provide  for  maximum  borrowings  up  to  $5,000,000 based on eligible accounts
receivable  and  inventories.

     On June 10, 1999, the Company secured a new loan from a lending institution
that  provide  up  to  $20 million dollars of financing. The credit facility, as
amended,  consists  of  a  $13  million  term loan  ("Term Loan") and up to a $7
million  revolving  loan  ("Revolving  Loan"),  subject  to  borrowing  base
availability  and  compliance  with  certain  financial  and other covenants and
agreements.  At  closing, $10,000,000 was disbursed to repay the promissory note
issued  in  connection  with  the  acquisition  of  the  assets  of  Inholtra
Naturals,  Ltd.  (see  Note  5).

     The  loans  under  the credit facility are secured by substantially all the
assets  of  the  Company.  Borrowings  under  the  Term Loan bear interest at an
annual  rate  of prime plus 2.25 percent are paid monthly.  Borrowings under the
Revolving  Loan  currently  bear  interest  at an annual rate of prime plus 1.75
percent,  and  are  paid  monthly.  The rates are subject to decrease based upon
the Company satisfying certain operating performance levels. The credit facility
agreement  contains  certain  financial  and  other  covenants  or restrictions,
including  the  maintenance  of certain financial ratios, limitations on capital
expenditures,  restrictions  on  acquisitions,  limitations on the incurrence of
indebtedness  and  restrictions  on  dividends  paid  by  the  Company.

     The  $13,000,000  Term  Loan,  as  amended  is  payable  in installments as
follows:  $1,750,000  due June 15, 2001, monthly payments of $194,000 commencing
July  15,  2001  and  ending July 15, 2002 and a final payment of $6,000,000 due
July  30,  2002.  Mandatory  prepayments  are  required in the event the Company
receives any net proceeds from insurance claims, assets sales and/or debt sales.
Under certain circumstances there are mandatory prepayments required from equity
sales.

     On  June 15, 2001, the Term Loan and Revolving Loan agreements were amended
to,  among  other  things, extend the repayment date of all the installments due
under  the Term Loan to July 30, 2002, to waive certain defaults that existed at
that  time  and  establish  new financial ratios that the Company must meet on a
quarterly  basis  beginning  June  30,  2001.

     On  July  20,  2001,  the  Company  entered into an amendment to the Credit
Facility  pursuant  to  which  the Company's lender: (i) waived certain defaults
then  in  existence;  (ii)  increased  the  amount  of  the  Company's permitted
overadvance  by $200,000; and (iii) required the Company to inform the lender of
its  financial  condition  on  a  weekly  basis.

                                      F-20
Selected  information  regarding borrowings under line of credit agreements
for  the years ended December 31, 2000, 1999 and 1998 and the three months ended
March  31,  2001  follows:
December 31,              March 31
                                                            2000         1999         1998         2001
                                                   --------------  -----------  -----------  -----------
        (unaudited)
Average amount outstanding                         $   5,341,000   $3,967,000   $  620,000   $6,009,000
Maximum amount outstanding                         $   6,353,000   $6,436,000   $1,500,000   $6,660,000

Weighted average interest rate during the Period.           10.9%         9.1%         8.4%        10.3%
Future  annual  payments  under  the Term Loan, as revised, are as follows as of
December  31:
Year ended December 31,      Amount
------------------------  ------------
2001                      $ 2,917,000
2002                        7,361,000
                          ------------
                           10,278,000
Less - current portion     (2,917,000)
                          ------------
                            7,361,000
                          ============
8.     NOTES  PAYABLE

Notes  payable  consists  of  the  following:
December 31,             March 31
                                           ----------------------------------------------------
                                                    2000         1999         1998       2001
                                           --------------  -----------  -----------  ---------
                                                                                     (unaudited)
Note payable to a bank assumed
by the buyer of the Boulder building                                 $   1,300,000
Notes payable to three individuals,
unsecured, bearing interest at an annual
rate of 6.0 percent, payable
in monthly installments of principal and
interest of approximately $26,000, due
June 2000                                               $     155,000      451,000
Capital lease obligation (see Note 12)     $     102,000      123,000              $   96,000
                                           --------------  -----------  -----------  ---------
                                                 102,000      278,000    1,751,000     96,000
Less current portion                             (23,000)    (176,000)    (328,000)   (22,000)
                                           --------------  -----------  -----------  ---------
Long-term portion                          $      79,000   $  102,000   $1,423,000   $ 74,000
                                           ==============  ===========  ===========  =========
F-21
Future annual payments under the notes payable and capital lease obligations are
as  follows  as  of  December  31,  2000:
Year ended
December 31,     Amount
-------------    ------
2001      $      23,000
2002             26,000
2003             30,000
2004             23,000
                --------
                102,000
                ========
9.     WRITE-OFF  OF  INTANGIBLES

     The  Company acquired ID Technology in connection with a merger in 1996. ID
Technology  is used in angioplasty procedures. In the third quarter of 1999, the
Company  determined  that  the  value  of  such  technology  was  impaired  and,
therefore, wrote-off the remaining unamortized balance of $390,000. In addition,
the  Company wrote-off $250,000 of inventories related to this technology. Total
charges  in  connection  with  this  impairment  were  $640,000.

10.      INCOME  TAXES

     The  components  of  the  deferred  income  tax assets (liabilities) are as
follows:
December 31,                 March 31,
                                           2000          1999          1998           2001
                                  --------------  ------------  ------------  -------------
        (unaudited)
Allowance for doubtful accounts   $   1,722,000   $ 1,384,000   $   369,000   $  1,480,000
Inventory tax adjustment                114,000       484,000        83,000        114,000
Inventory reserve                       318,000       216,000       186,000        318,000
Warrants                                943,000       373,000        52,000        943,000
Accrued liabilities                     176,000       588,000        33,000        416,000
NOL carry forwards                   10,553,000     4,618,000     2,817,000     12,109,000
Other                                                      --       288,000
                                  --------------  ------------  ------------  -------------
                                     13,826,000     7,663,000     3,828,000     15,380,000
Valuation Allowance                 (13,826,000)   (7,663,000)   (3,828,000)   (15,380,000)
                                  --------------  ------------  ------------  -------------
                                    $       ---   $       ---   $       ---   $        ---
                                  ==============  ============  ============  =============
At  December  31,  2000  and  March  31,  2001, the Company has federal net
operating  loss  carryforwards  of  approximately  $28,600,000  and  $30,000,000
(unaudited), respectively, expiring at various dates through 2019. Future use of
these  net  operating  loss  carry  forwards  may  be limited subject to certain
provisions  of  the  Internal  Revenue  Code.

     The  components  of  the provision (benefit) for income taxes for the years
ended  December  31,  2000,  1999 and 1998  and the three months ended March 31,
2001  (unaudited)  are  as  follows:
Three months
                                             Years ended December 31,        ended March 31,
                                       -----------------------------------------------------
                                              2000        1999        1998         2001
                                       --------------  -----------  --------    -----------
                                                                                (unaudited)
Current
  Federal                              $           --  $ (275,000)  $287,000       $   --
  State                                         1,000       1,000    131,000        3,000
                                                1,000    (274,000)   418,000           --
                                       --------------  -----------  --------       ------

Deferred                                           --          --    182,000           --

Provision (benefit) for income taxes   $        1,000  $ (274,000)  $600,000       $3,000
F-22
Differences  between the provision for income taxes and income taxes at the
statutory  federal  income  tax  rate  are  as  follows  (in  thousands):
December 31,                        March 31
                                            2000                 1999            1998             2001
                                                                                               (unaudited)
Income tax at statutory
federal rate                   $      (5,266)    (34.0%)  $(3,852)  (34.0%)  $ 550    34.0%  $ (529)  (34.0%)
State income taxes                      (828)      (5.3)     (657)    (6.0)    131     8.1      (92)    (5.9)
S corporation income not
taxed at C corporation rates              --         --        --       --    (374)  (23.1)      --       --
Permanent differences                    442        2.8       407      3.6     156     9.6      136      8.7
Use of net operating loss
carryforwards                             --         --        --       --    (332)  (20.5)      --       --
Change in valuation
allowance                              6,027       38.9     3,835     34.0     469    29.0    1,554     63.7
Current losses not benefited.            405        2.6       690      6.1      --      --       --       --
Reversal of 1998 excess
 provision                                --         --      (274)    (2.4)     --      --       --       --
Other items, net                        (779)      (5.0)     (423)    (3.7)     --      --    (1068)   (68.6)
                               --------------  ---------  --------  -------  ------  ------  -------  -------
                               $          1,        0.0%  $  (274)   (2.4%)  $ 600    37.1%  $    3      0.0%
                               ==============  =========  ========  =======  ======  ======  =======  =======
11.     COMMITMENTS  AND  CONTINGENCIES

CAPITAL  AND  OPERATING  LEASE  OBLIGATIONS  PAYABLE

     The  Company  leases  its facility and certain property and equipment under
long-term  operating  leases expiring at various dates through 2004. The Company
also  leases property and equipment under a capital lease.  Included in property
and  equipment  is  $132,000,  at  cost,  related  to  capital  leases.

     The  future  minimum  lease payments at December 31, 2000 under capital and
operating  leases  are  as  follows:
Capital   Operating
                                                    Leases      Leases      Total
                                                   ---------  ----------  ----------
2001                                               $ 35,000   $  661,000  $  696,000
2002                                                 35,000      640,000     675,000
2003                                                 35,000      620,000     655,000
2004                                                 23,000      269,000     292,000

Total future minimum lease payments                 128,000   $2,190,000  $2,318,000

Less - amount representing interest at 12%          (26,000)
Present value of minimum capital lease payments     102,000
                                                   ---------
Less - current portion                              (23,000)
                                                     79,000
                                                   =========
Total  rental  expense for the years ended December 31, 2000, 1999 and 1998
and  the three months ended March 31, 2001 and 2000, was approximately $674,000,
$588,000, $557,000, $180,000 (unaudited) and $167,000 (unaudited), respectively.

                                      F-23
EMPLOYMENT  CONTRACTS

     Upon  the  consummation  of  the Merger, both Mr. R. Lindsey Duncan and Mr.
Klee  Irwin  entered into substantially similar three-year employment agreements
with  the  Company.  Mr.  Duncan  was employed as Chairman of the Board and as a
member  of the Executive Committee with all duties and responsibilities normally
associated  with  this  position.  Mr. Irwin was employed as the Chief Executive
Officer  and  as  a  member  of  the  Executive  Committee  with  all duties and
responsibilities normally associated with this position until April 20, 1999. On
that date, Mr. Irwin resigned, as Chief Executive Officer of Omni Nutraceuticals
and  his  employment  agreement  was  terminated  effective  April  20, 1999. In
connection  with  his resignation, the Board of Directors appointed him as Chief
Executive  Officer  of  HealthZone.com,  the  Company's  wholly owned subsidiary
("HealthZone").  In  October  of  1998  (as  revised  in June 1999), the Company
entered  into  an  agreement  to  hire  Mr. Louis Mancini as President and Chief
Operating  Officer  and,  subsequently,  Chief  Executive  Officer.

     These  employment agreements provided for: (i) annual salaries of $225,000,
and  $300,000  for  Messrs. Duncan and Mancini, respectively; (ii) the right for
Mr.  Duncan  and  Mr.  Mancini  to  receive  an  annual  bonus  based on certain
performance  incentives.

     On  March 12, 2000, Mr. Duncan agreed to resign from the Board of Directors
of  the  Company and agreed to terminate his employment agreement. Also on March
12, 2000, the Board of Directors terminated Mr. Mancini's employment. Klee Irwin
replaced  Mr.  Mancini  as  President  and  Chief  Executive  Officer.

     As  a  result  of  the  March 12, 2000 employment realignments, the Company
agreed  to  extend  the exercise date of Lindsey Duncan's stock options to March
2007  and  to forgive a note due to the Company from Louis Mancini for $175,000.

LITIGATION  AND  SETTLEMENTS

     On March 28, 2001 the Company was notified that the Securities and Exchange
Commission  was  conducting  an  informal  inquiry  into  matters concerning the
Company for fiscal years ended  December 31, 1998 to 2000. The Company is unable
to  predict  at  this  time  the  outcome  of  this  informal  inquiry.

     On  January  23,  2001,  the  Labor Commissioner of the State of California
entered a judgment against the Company in the amount of approximately $42,000 in
a  matter  entitled  Richard  F.  Lynch  v.  Omni  Nutraceuticals,  Inc.,  Labor
Commissioner,  State  of  California, State Case No. 05-19487 1 CC.  The Company
filed an appeal, which required posting a bond in the amount of the judgment, in
the  Los  Angeles  County, California, Superior Court on February 14, 2001.  The
appeal  is  entitled In the Matter of the Appeal of Omni Nutraceuticals, Inc, of
the  Order,  Decision or Award of the Labor Commissioner, Richard F. Lynch, Real
Party  in  Interest,  Case  No.  BS067765.  The appeal involves a retrial of the
matter  in  the  Superior  Court.  The  Company  denies that any sums are due to
Lynch.  The  final  outcome of this case is uncertain, but appears unlikely that
it  will  have  a  material  impact  on  the  Company.

     On  December  8,  2000,  the  Company  was  sued  in  a case entitled Media
Networks,  Inc. v. Omni Nutraceuticals, Inc., in Los Angeles County, California,
Superior  Court,  Case  No.  BC  241503, for amounts due on an open account, and
services  rendered  pursuant  to agreement. On July 25, 2001 the complainant was
awarded  through  a  stipulated  judgment  a  total  of  approximately $437,000,
interest,  attorneys  fees,  and  collection and other costs. Media Networks has
filed  a  motion of assignment and appointment of a receiver, which is scheduled
for  hearing  on  August  23,  2001.

     The  Company received a demand letter dated February 20, 2001, from counsel
representing  the  majority  of  the  former  owners  of  Smart Basics, Inc., an
E-commerce  retailer  that  was  acquired on May 25, 2000, claiming, among other
things, misrepresentations in connection with the transaction in which the Smart
Basics'  shareholders exchanged their ownership interest in Smart Basics for the
Company's  common  stock.  The demand letter seeks unspecified relief or, in the
alternative,  rescission  of the transaction.  The letter threatens legal action
unless  the  matter  is  otherwise  resolved.  The  Company is investigating its
rights and obligations with respect thereto.  Based on the information currently
available,  the  Company is unable to determine the likelihood of an unfavorable
outcome  to  this  matter.  Smart  Basics,  together  with  the  Company's other
E-commerce  operations,  was  sold  to  Vitacost.com  on  February  2,  2001.

                                      F-24
The  Company  received  an  inquiry from the Los Angeles County and Alameda
County,  California, District Attorney's Offices with respect to labeling of our
"151 Bars" and "Diet System 6 Bars."  Discussions and an exchange of information
are taking place with respect thereto.  The Company is hopeful that a resolution
can  be  reached  without  litigation,  although  no assurance can be given.  If
settlement  is  not  reached,  an  action for false advertising, unfair business
practices  and other claims may be filed against the Company.  The Company is no
longer  selling  the  "Diet  System  6  Bars" that are a subject of the inquiry.
Based  on the information currently available, the Company is unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

     A  complaint  was  filed  against the Company on May 25, 2000, in an action
entitled  Copelco  Capital,  Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles
County,  California, Superior Court, Case No. BC230578.  The suit seeks recovery
of principal of $67,000, interest, taxes, fees, liens and late charges according
to  proof,  attorney's  fees  and costs in connection with the Company's alleged
lease  of copier equipment.  The Company has filed a responsive pleading denying
liability  and raising affirmative defenses.  Based on the information currently
available,  the  Company  is unable to evaluate the likelihood of an unfavorable
outcome.

     A  complaint for breach of contract and common counts was filed against the
Company  on  November  30, 2000, in a case entitled Puretek Corporation vs. Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case  No.  241059.  It  seeks recovery of $78,000, interest, attorney's fees and
costs.  The  Company  has  filed  a  responsive  pleading  denying liability and
raising affirmative defenses.  On December 28, 2000, the court granted Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,000.  Based on the information currently available, the Company is unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     The  Company  has  been  sued  in  the  Circuit Court for Baltimore County,
Maryland.  The title of the case filed on October 6, 2000, is Gain, Inc., d/b/a/
American  Medtech  v.  Maryland Urology Group, Inc., Veromax International, LLC,
Omni  Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett,
M.D.,  Larry  L.  Parks  and Kyle P. Moore, Civil No. 03-C-00-010409.  The First
Amended  Complaint  filed  November  6,  2000, alleges that the other defendants
granted  Gain  exclusive rights to market and sell Veromax  to all U.S. pharmacy
and  chain  stores  with  greater  than  twenty stores and that these defendants
subsequently  assigned  rights  to  the Company to market and sell Veromax  that
were contrary to the rights previously granted Gain.  It claims that the Company
tortiously  interfered with Gain's prospective economic advantage, and published
false  information  to Gain's customers that disparaged its rights to distribute
Veromax  ,  in  the  Company's  efforts  to  market  and sell Veromax  and seeks
$250,000,000  in compensatory damages, $25,000,000 in punitive damages, interest
and  costs.  It  also  seeks  injunctive  relief  prohibiting  the  Company from
interfering with Gain's marketing efforts by selling or offering to sell Veromax
to  certain  identified  pharmacy  chains  and to account for sales made to said
identified pharmacy chains.  The Company has filed a responsive pleading denying
liability and raising affirmative defenses and intends to vigorously defend this
action.  Based  on the information currently available, the Company is unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     Pursuant  to  a  Settlement, Termination and Mutual Release Agreement dated
April 13, 2000, 363,636 additional shares were issued in settlement of a lawsuit
filed  on December 23, 1999 by the former owners of HVE.  In connection with the
settlement, all other rights and obligations that existed under the February 15,
1999  Merger  Agreement  were  terminated.  The  fair  value of these additional
shares ($1,200,000 based on the fair value at the time of the shares issued) has
been  recorded as an expense in the accompanying statement of operations for the
year  ended December 31, 1999.  Due to the issuance of these shares in 2000, the
Company  then  reclassified the contingent shares to additional paid in capital.

     In  March 2000, pursuant to a termination and settlement agreement, the new
Chief  Executive  Officer  transferred  1,000,000  shares of his personally held
common  stock  to  an  ex-officer  of  the  Company.  The  shares were valued at
$1,720,000,  which was the fair value of the stock at the date of the agreement.

OTHER  LITIGATION

     From  time to time the Company may become a party to legal proceedings that
are  routine  litigation  incidental to its business.  The Company believes that
the likely outcome of such litigation will not have a material adverse effect on
its  business  or  results  of  operations.

                                      F-25
12.     SHAREHOLDERS'  INVESTMENT

PREFERRED  STOCK

     The  Company  has authorized 5,000,000 shares of Preferred Stock. Under the
terms  of  the  Articles  of  Incorporation,  the  Board  of Directors may issue
Preferred Stock for any proper corporate purpose. In approving any issuance, the
Board  has  broad authority to determine the rights, privileges, and preferences
of  the  Preferred  Stock, which may be issued as one or more classes or series.
The rights, privileges and preferences may include voting, dividend, conversion,
redemption, participation and liquidation rights. As of December 31, 2000, 3,000
shares  of Series A Convertible Preferred Stock were outstanding; as of December
31,  1999  and  1998,  no  Preferred  Stock  was  issued  or  outstanding.

     On  October  27,  2000,  the  Company  entered  into  a Securities Purchase
Agreement  with  several  "accredited investors" ("Holders") whereby the Holders
purchased  3,000  shares  of  the  Company's  newly-issued  Series A Convertible
Preferred  Stock  resulting  in  gross proceeds of $3,000,000 to the Company. In
addition,  the  Buyers  received  warrants  to  purchase up to 600,000 shares of
common  stock at an exercise price of approximately $0.96 per share. The Company
received net proceeds from this transaction of $2,720,000, after fees, costs and
expenses  of  issuance.  An  additional  50,000  warrants  were  issued  to  an
intermediary  on  the  same  terms  as were granted to the Buyers. The Preferred
Stock  is  convertible  into  common stock on the following basis: The number of
shares  of  common stock to be issued is equal to the stated value of the number
of  shares  of  Preferred  Stock  being  converted,  together  with  any accrued
dividends  (the "Additional Amount") thereon, divided by the "Conversion Price".
The  Conversion  Price  is equal to the lesser of (i) 115% of the average of the
two lowest bid prices quoted on the exchange where the Company's common stock is
traded  during the ten days preceding the closing or, (ii) 80% of the average of
the  two lowest bid prices of the common stock.  Related to this issuance of the
Company's  preferred stock, the Company recorded an imputed, preferred dividend,
which  represented  the  difference  between  the trading price of the Company's
common  stock  and  the  conversion  rate most beneficial to the preferred stock
holder,  at  the  date the preferred stock was issued.  The dividend amounted to
$3,168,000,  which  is  reflected  as  an  increase in the net loss available to
common  shareholders  on  the  accompanying  statement  of  operations.

     The  preferred  stock  may  be  redeemed  by  the Company at any time after
closing,  at  a  price  per  share  equal  to  the greater of (a) $1,400 plus an
additional  amount defined as 6% of the face amount of the stock being redeemed,
multiplied  by  the  number  of  days  since closing, divided by 365; or (b) the
market  price  of  the  common  stock  into  which  the preferred stock could be
converted,  as  of the date of the redemption.  On the fourth anniversary of the
issue  date,  any  existing  preferred  stock must be redeemed or converted into
common  stock,  subject  to  certain  provisions.

     Pursuant  to the preferred stock securities purchase agreement, the Company
was  required  (a)  not to have any suspension of trading of its common stock on
the  NASDAQ,  and  (b) file, within 30 days of the closing of the transaction, a
registration  statement  to  cover  the  underlying shares and warrants and such
shares  issuable  pursuant  to the anti-dilution provisions of the agreement and
certain  other  requirements.  The Company is currently in default of several of
these  provisions.

     On  January  24,  2000, the Company completed an equity transaction whereby
the  Company  issued  2,000,000  shares  of a 5% Convertible Preferred Stock and
seven  year  warrants to purchase up to an aggregate of 775,000 shares of common
stock  at  an  exercise  price  of  $2.25  per share, subject to adjustment. The
aggregate  purchase  price for the Preferred Shares and warrants was $3,000,000,
including  $100,000 allocated to the purchase of the warrant. In connection with
this  financing,  HealthZone  also  issued  222,222  shares of its common stock,
representing  approximately  10% of the then outstanding number of shares, and a
seven-year  warrant  to  purchase  up  to  37,000 shares of its common stock for
$1,000,000.  On  March  24,  2000,  all  of  these  issued Preferred Shares were
converted  into  2,016,438  shares of common stock.  Related to the issuance and
conversion  of  the  Company's  preferred stock, the Company recorded an imputed
preferred  dividend,  which represented the difference between the trading price
of  the  Company's  common stock and the conversion rate of the preferred stock.
The  dividend  amounted  to $1,950,000, which is reflected as an increase in the
net  loss  available  to  common  shareholders  on the accompanying statement of
operations.

                                      F-26
COMMON  STOCK

     During  the  quarter  ended  March 31, 2001, 400,000 shares of common stock
were  issued  pursuant  to  a price clause in the original agreement to purchase
HealthShop  and  a  related increase in Assets Held for Sales as recorded in the
amount  of  $119,000.

     During  the quarter ended March 31, 2001 75,000 shares of common stock were
issued  in  connection  with an amendment to preferred stock issued in the first
quarter  of  2000  and  a related charge was recorded in the amount of $136,000.

     On  October  30,  2000  the  Company  entered  into  an  agreement  with an
investment  banking  firm to serve as a financial consultant to the Company. The
agreement  calls  for  the consultant to provide certain services to the Company
related  to  the location and raising of up to $20,000,000 through the placement
of preferred stock. As compensation for entering into the agreement, the Company
issued 150,000 shares of its common stock and recorded a charge to operations of
$205,000. The agreement requires that the Company pay to the consultant a fee of
10%  of  the  gross  proceeds  of  any monies raised by the consultant, and a 2%
non-accountable  expense allowance to be paid in common stock. Additionally, the
consultant  is  to  receive  warrants equal to 10% of the securities sold in the
offering,  exercisable  at  100%  of  the  offering  price.

     During  the  year  ended  December  31,  2000, as compensation, the Company
issued  to  officers  and  directors  and  one former director a total of 55,000
shares  of  common stock. The accompanying financial statements include a charge
of  $72,000  to  reflect  this  issue  of  shares.

     On  March  12,  2000,  the  Company  entered into a two year agreement with
Liviakis  Financial  Communications,  Inc. ("LFC") and, in connection therewith,
authorized the issuance of 1,200,000 restricted shares of common stock to LFC in
consideration  of,  and  as  a  retainer  and prepayment for, the services to be
rendered  to  the Company.  Under the terms of the agreement, the Company issued
800,000  shares, the balance of 400,000 shares will be due and payable in fiscal
year 2001 depending on whether the Company continues to retain LFC. On March 27,
2000,  the  Company  completed  a  private  placement  of its securities through
investors  provided  by LFC whereby 700,000 shares of common stock were sold for
an  aggregate  purchase  price  of $2,100,000. The original shares issued to LFC
have  been considered issued in connection with this placement, and the proceeds
allocated  to  the  aggregate  shares  issued.

     During  the  year ended December 31, 2000, the Company issued an additional
215,500  shares  of  common stock to various vendors for services rendered.  The
aggregate  value  recorded  by  the  Company  was  approximately $378,000, which
represents either the fair market value of the shares, or the services rendered,
whichever  was  more  readily  determinable.  These  amounts  were recognized as
expenses  as  the  services  were  performed.

     In  separate agreements, several of the Company's trade creditors agreed to
convert  a portion of their debt in exchange for common stock of the Company and
to accept a substantially reduced cash payment for the balance of the obligation
of  the Company. During the year ended December 31, 2000, $1,431,000 of accounts
payable  was  converted  in  exchange for 599,905 shares of common stock.  These
conversions  were  performed  at a rate consistent with the trading price of the
Company's  common  stock  at  the  date  of  the  conversion.

     On  January  24,  2000  the  Company executed a consulting agreement with a
financial consulting firm to assist the Company in marketing its common stock in
Europe.  The  agreement was a one-year agreement that called for the issuance of
560,000  shares  of  common  stock.  The  fair value of the stock on the day the
agreement  was  executed  was  approximately  $960,000,  which  was  charged  to
operations  as  consulting  expense.

     In  August  1999,  the  Company entered into a three-year agreement with an
individual  to  be  the spokesperson for its Inholtra product line.  The Company
issued  15,000  shares  of  common stock and recorded compensation of $36,000 in
connection  with the issuance of these shares.  In addition, the Company granted
this  individual  an  option  to  purchase  75,000  shares  of  common  stock.

     In  October  1999,  the Company issued 13,000 shares of common stock to its
previous  facility  landlord  in  lieu  of  cash  for one month's rent due.  The
Company  recorded  expense  of  $19,000 in connection with the issuance of these
shares.

                                      F-27
In  October  1999, a former Chief  Executive Officer and shareholder of the
Company  returned  941,436  shares  to the Company as a contribution to capital.

WARRANTS

     On April 20, 2000, the Company entered into a one year consulting agreement
with  a  financial  advisor.  The agreement calls for the issuance of options to
purchase  30,000  shares  of  common  stock at $3.86 per share. The options vest
7,500  at  the  end  of  each three months after the initiation of the contract.
Related  to  the agreement, the Company has recorded $78,000 of consulting fees,
which  is  being  amortized as consulting expense over the term the services are
being  provided.

     On  June  28,  2000 the Company entered into a consulting agreement with an
investment  banking  firm  to perform certain financial consulting services. The
agreement  called  for the issuance of 300,000 options to purchase the Company's
common  stock  at $4.00 per share and covered a term of six months.  The options
were  valued  at $747,000 and were amortized as consulting expense over the term
of  the  agreement.

     In 1997, the Company entered into a three year consulting agreement with an
investment  banking  firm.  In  consideration  for  the consulting services, the
Company issued the investment banking firm warrants to purchase 1,000,000 shares
of  the  Company's  common  stock  at  an  exercise price of $6.00 per share and
additional  warrants  to  purchase 250,000 shares of common stock at an exercise
price  of  $4.00 per share. The warrants are exercisable for five years from the
date  of  issuance.  The  Company  recorded  professional  services  expense  of
$194,000,  $388,000  and  $275,000  the  years ended December 31, 2000, 1999 and
1998,  respectively,  in connection  with the fair value of these warrants based
upon  the  Black  Scholes  pricing model.  As of December 31, 2000, all warrants
were  still  outstanding.

     During  the  year  ended  December  31,  1999,  the  Company entered into a
consulting  agreement  with  an  advisor.  In  consideration  of  the consulting
services,  the Company issued to the advisor warrants to purchase 250,000 shares
of  the  Company's  common  stock  at  an exercise price of $4.75 per share. The
Company  recorded  professional services expense of $415,000 in the year 1999 in
connection  with  the  fair  value  of  these  warrants  based  upon  the  Black
Scholes  pricing  model.  These  warrants  were  cancelled  subsequent  to
year-end.

OPTIONS

     In  1996,  the  Company adopted the Long-Term Stock Incentive Plan (LTSIP).
This  plan  was amended on December 22, 1999.  Under the terms of the LTSIP, the
Company  is authorized to issue incentive and non-qualified stock options to its
directors,  officers,  key  employees  and  consultants totaling up to 4,500,000
shares  of  common stock. At December 31, 2000, 460,848 shares are available for
future  grant  under this plan. Options are generally granted at exercise prices
not  less than the fair market value on the date of grant and expire from two to
seven  years  after the date of grant. Options granted under this plan vest over
varying  terms  ranging  from  immediate  vesting  to  seven  years.

     In  November 1998, the Company's Board of Directors approved a stock option
pool  authorizing  management  of the Company to make discretionary grants up to
500,000  shares.
                                      F-28
A  summary  of  the  Company's  outstanding  options  and activity follows:
EXERCISABLE
                                                             ---------------------
                                       WEIGHTED    WEIGHTED
                                       AVERAGE      AVERAGE
                                      NUMBER OF    EXERCISE   NUMBER  OF  EXERCISE
                                       OPTIONS       PRICE     OPTIONS      PRICE
                                     ------------  ---------  ----------  ---------
Balance, January 1, 1998                 742,643   $    4.57     585,516  $    4.24

Granted                                1,853,860   $    5.22
Exercised                               ( 38,341)  $    4.51
Cancelled                               (111,991)  $    5.46
                                     ------------  ---------
Balance, December 31, 1998             2,446,171   $    5.01     675,253  $    4.49

Granted                                3,267,500   $    2.27
Exercised                                (19,670)  $    4.33
Cancelled                             (1,747,403)  $    5.03
                                     ------------  ---------
Balance, December 31, 1999             3,946,598   $    3.58   1,991,904  $    3.34

Granted                                3,542,499   $    2.20
Exercised                                (98,830)  $    2.92
Cancelled                             (3,351,115)  $    2.87
                                     ------------  ---------
Balance, December 31, 2000             4,039,152   $    3.01   1,923,394  $    3.19

Granted                                4,501,000   $    0.27
Exercised
Cancelled                               (137,000)  $    3.07
                                     ------------  ---------
Balance, March 31, 2001 (unaudited)    8,403,152   $    1.54   4,993,065  $    1.37
                                      ==========
Weighted  average  fair  value  of  all  options  granted  during the years
ended  December  31,  2000, 1999 and   1998 and the three months ended March 31,
2000  were  $2.90,  $1.23,  and  $1.99,  and  $0.25  (unaudited)  respectively.

The  following  table  summarizes  information  about the options outstanding at
December  31,  2000:
Weighted     Weighted    Weighted
Range of          Number      Average     Average      Average
Exercise       Outstanding    Exercise   Remaining   Exercisable  Exercise
Prices         at 12/31/00     Price        Life     at 12/31/00    Price
-------------  ------------  ----------  ----------  -----------  ---------
1.00 - $1.99       100,000  $     1.53   9.1 years      100,000  $    1.53
2.00 - $2.99     2,027,999  $     2.07   9.4 years      830,200  $    2.11
3.00 - $3.99       871,688  $     3.43   8.8 years      539,646  $    3.68
4.00 -$4.99        783,109  $     4.27   9.3 years      265,192  $    4.56
5.00 -$7.25        256,356  $     5.75   8.3 years      186,356  $    5.55
               -----------  ------------             ----------  ----------
                 4,039,152  $     3.01                1,921,394  $    3.19
The  Company  has  elected  to  continue  to  measure  compensation  costs
associated  with  its  stock option plan under APB No. 25, "Accounting for Stock
Issued  to  Employees"  and comply with the pro forma disclosure requirements of
SFAS No. 123. Had the Company applied the fair value based method of accounting,
which  is  not required, to all grants of stock options, under SFAS No. 123, the
Company  would  have  recorded  additional  compensation  expense  and  computed
proforma  net  income  (loss)  and  pro  forma earnings (loss) per share amounts
as  follows  for  the  years  ended  December  31,  2000,  1999,  and  1998  as
follows:
                                      F-29
Years ended December 31,
2000           1999       1998
                                       -------------  -------------  --------
Additional compensation expense        $    143,000   $  3,128,000   $672,000
Pro forma net income (loss)             (21,753,000)   (14,183,000)   346,000
Pro forma earnings (loss) per share:
   Basic                               $      (0.71)  $      (0.50)  $   0.01
   Diluted                             $      (0.71)  $      (0.50)  $   0.01
These  pro  forma  amounts  were  determined by computing the fair value of
each  option  on  its  grant  date  using the Black-Scholes option-pricing model
with  the  following  assumptions:
Years Ended December 31,
2000      1999           1998
                         ---------------  --------  -------------
Risk free interest rate            6.00%     6.03%  4.34% - 5.55%
Expected life                  1-2 years   4 years      2-7 years
Volatility                       100.00%    90.00%         60.00%
Expected dividend yield            None       None           None
13.     RELATED  PARTY  TRANSACTIONS

     American  Brand  Labs,  or  ABL,  is  owned  in  the  majority by the Chief
Executive  Officer,  and  7.5%  by a director of the Company whi is also General
Manager/Vice  President  of operations of ABL.  ABL is a current customer of the
Company.  The  Company  in  the  process  of  negotiating  an agreement with ABL
pursuant  to  which  ABL  will  be  entitled  to occupy a portion of the Company
offices  located  at 5310 Beethoven Street and receive certain services from the
Company for a payment of a monthly management fee. In addition, the Company will
receive and a portion of ABL's profits, if any, and will be granted of an option
to  purchase  ABL  under  certain  circumstances.

During  the  year  ended  December  31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

     On  October  8,  1999,  the  Company  and  Mr.  Klee  Irwin  entered into a
settlement  agreement  (the  'Settlement Agreement') in order to resolve certain
mutual  claims  that had arisen between the Company and Mr. Irwin. Subsequent to
December  31, 1999,  the  Settlement  Agreement  and  all  ancillary  agreements
were  terminated.

     On  or  about  October  8,  1999,  Mr. Irwin made a capital contribution of
$305,000, and returned 941,436 shares of Omni Nutraceuticals common stock to the
Company.

14.     SUBSEQUENT  EVENTS

Vitacost  purchase  agreement

     On  February  2, 2001, the Company entered into and simultaneously closed a
Purchase  Agreement  with Vitacost.com, Inc ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for  6,800,000 shares of Vitacost common stock. The agreement contains
an  optional  repurchase  right giving the Company, at any time after four years
from  the  closing,  the  right  to  demand  Vitacost repurchase their stock for
$3,400,000  in cash or, at their option, a 60 month note requiring equal monthly
payments  of  $57,000. The agreement also contains an optional redemption right,
giving  Vitacost  the  right to redeem their stock, at any time up to four years
from  the closing. If this option is exercised between the closing and the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up  to  $9,317,000 on the fourth anniversary of the closing. In
addition, the Purchase Agreement provides Vitacost with a right of first refusal
in  the event that the Company desires to transfer the shares of Vitacost common
stock,  other  than  to  an  affiliate,  or  in connection with a liquidation or
spin-off  distribution  to  our  stockholders,  or  an  initial public offering.

     Further,  in  connection  with  the Purchase Agreement, the Company entered
into  a  non-competition agreement with Vitacost, whereby the Company agreed not
to  compete with Vitacost in the business of reselling other companies' vitamins
and supplements on a retail basis via the internet and mail order catalogues for
the  period beginning on the date of the non-competition agreement and ending on
the  last  to  occur  of:  (i)  the  one-year anniversary of the non-competition
agreement;  or (ii) the date that is six months after the Company's resignation,
removal  or  other  termination  from  Vitacost's  board  of  directors.  The
non-competition  agreement  does  not  preclude the Company from engaging in the
business of selling its own products including, but not limited to, vitamins and
supplements  manufactured  by  the Company through any means, including, without
limitation,  via  the  internet  and  mail  order  catalogues.

     The  stock the Company received represents approximately 19.9% of the total
Vitacost  common  stock  outstanding  and,  accordingly,  the Company intends to
record  this  investment  on the cost basis. As long as the Company continues to
hold  at  least  a 10% interest, the Company will have one of the five available
seats on the Vitacost Board. Additionally, the Company has certain anti-dilution
rights  in  the  event  Vitacost  raises  additional  equity.

                                      F-30
No person has been authorized to give any information or                        ---------------
to make any representations other than those contained in                          PROSPECTUS
this prospectus in connection with the offering made                            ---------------
hereby, and if given or made, such information or                               6,512,310 shares
representations must not be relied upon as having been
authorized by us, any stockholder or by any other person.
Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that information herein is correct as of any
time subsequent to the date hereof.  This prospectus does
not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities covered by this
prospectus, nor does it constitute an offer to or solicitation .
of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
TABLE OF CONTENTS                                                 PAGE                 OMNI NUTRACEUTICALS, INC.
INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS                                          5
PROSPECTUS SUMMARY                                                  5
SUMMARY OF CONSOLIDATED FINANCIAL DATA                              7
RISK FACTORS                                                        8
USE OF PROCEEDS                                                    15
DIVIDEND POLICY                                                    15
PRICE RANGE OF COMMON STOCK                                        15
CAPITALIZATION                                                     16
SELECTED CONSOIDATED FINANCIAL DATA                                17
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                                                         19
BUSINESS                                                           31
MANAGEMENT                                                         40
COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS                                                          41
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS                                                       44
VOTING SECURITIES AND PRINCIPAL
STOCKHOLDERS                                                       45
DESCRIPTION OF SECURITIES                                          47
SELLING STOCKHOLDERS AND PLAN OF
DISTRIBUTION                                                       51
SHARES ELIGIBLE FOR FUTURE SALE                                    54
EXPERTS AND LEGAL MATTERS                                          55
WHERE YOU CAN FIND MORE INFORMATION                                55
                                                                                         Common Stock
                                                                                         ------------
                                                                                          PROSPECTUS
                                                                                         ------------
                                                                                         ______, 2001
1
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM  13.  OTHER  EXPENSES  OF  ISSUANCE  AND  DISTRIBUTION.

     The  registrant  estimates  that  expenses  in connection with the offering
described  in this Registration Statement, other than the underwriting discount,
will  be  as  follows:

Securities  and  Exchange  Commission  Registration  Fee
Legal  Fees  and  Expenses
Accounting  Fees  and  Expenses
Transfer  Agent  Fees  and  Expenses
Printing  Expenses
Miscellaneous
     Total

ITEM  14.  INDEMNIFICATION  OF  OFFICERS  AND  DIRECTORS.

     Our  Articles  of  Incorporation  generally  provides  for  the  maximum
indemnification of a corporation's officers and directors as permitted by law in
the  State of Utah.  Utah law empowers a corporation to indemnify any person who
was  or  is  a  party or who is threatened to be made a party to any threatened,
pending,  or  completed  action,  suit  or  proceeding, whether civil, criminal,
administrative  or  investigative,  except in the case of an action by or in the
right  of  the  corporation,  by  reason  of the fact that he or she 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  or  other  enterprise.  Depending  on the character of the
proceeding,  a  corporation may indemnify against expenses (including attorney's
fees),  judgments,  fines and amounts paid in settlement actually and reasonably
incurred  in  connection  with  such  action,  suit  or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably believed to
be  in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceedings, had no reasonable cause to believe his or
her  conduct  was  unlawful.

     A  corporation  may  indemnify  any  person  who  was  or  is a party or is
threatened  to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason  of  the  fact  that he or she 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 or other
enterprise,  against  expenses,  including  amounts  paid  in  settlement  and
attorney's  fees  actually  and  reasonably incurred by him or her in connection
with  the defense or settlement of the action or suit if he or she acted in good
faith  and  in  a  manner  which  he  or she reasonably believed to be in or not
opposed  to  the  best interests of the corporation.  Indemnification may not be
made  for any claim, issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals therefrom,
to  be  liable  to  the  corporation  or  for  amounts paid in settlement to the
corporation  unless and only to the extent that the court in which the action or
suit  was  brought  or  other  court  of  competent jurisdiction determines upon
application  that  in  view  of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.

     To  the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding  referred  to  above,  or  in  defense  of any claim, issue or matter
therein,  he  or  she  must  be indemnified by the corporation against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with  the  defense.  The  corporation,  unless  ordered  by  a court or advanced
pursuant to this section, must make any indemnification under this section, only
as  authorized in the specific case upon a determination that indemnification of
the  director,  officer,  employee or agent is proper in the circumstances.  The
determination  must  be  made:  (a)  by  the  stockholders;  (b) by the board of
directors  by  majority  vote  of  a quorum consisting of directors who were not
parties  to  the  action, suit or proceeding; (c) if a majority vote of a quorum
consisting  of  directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (d) if a quorum
consisting  of  directors who were not parties to the action, suit or proceeding
cannot  be  obtained,  by  independent  legal  counsel  in  a  written  opinion.

                                        2
The  Articles  of  Incorporation,  the  bylaws  or an agreement made by the
corporation  may provide that the expenses of officers and directors incurred in
defending  a  civil  or  criminal action, suit or proceeding must be paid by the
corporation  as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director  or  officer  to  repay  the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by  the corporation.  The provisions of this section do not affect any rights to
advancement  of  expenses  to  which corporate personnel other than directors or
officers  may  be  entitled  under  any  contract  or  otherwise  by  law.  The
indemnification  and advancement of expenses authorized in or ordered by a court
pursuant  to  this  section:  (a)  does  not exclude any other rights to which a
person  seeking indemnification or advancement of expenses may be entitled under
the  articles  of incorporation or any bylaw, agreement, vote of stockholders or
disinterested  directors  or  otherwise,  for  either  an  action  in his or her
official  capacity  or  an  action  in another capacity while holding his or her
office,  except that indemnification, unless ordered by a court pursuant to this
section  or  for  the  advancement  of  any  director  or  officer  if  a  final
adjudication  establishes that his or her acts or omissions involved intentional
misconduct,  fraud  or  a  knowing  violation of the law and was material to the
cause of action; and (b) continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators  of  such  a  person.  Further,  we  may enter into agreements of
indemnification  with  our directors and officers to provide for indemnification
to  the  fullest  extent  permitted  under  Utah  law.

ITEM  15.  RECENT  SALES  OF  UNREGISTERED  SECURITIES.

     For  each  of  the  three  years in the period ended December 31, 2000, and
subsequently,  we  completed  the  following  transactions:

SECURITIES  ISSUED  IN  CONNECTION  WITH  ACQUISITIONS.

     Vitamin Discount Connection.  In connection with the acquisition of Vitamin
Discount  Connection,  an  Internet  "e-tailer"  and  mail  order  retailer  of
nutritional  and health-related products, on October 27, 2000, we issued 190,000
restricted  shares  of our common stock.  If our common stock was not registered
by  March  1,  2001,  we  agreed  to  replace  the restricted shares with freely
tradable  shares  or  to repurchase such restricted shares at the market closing
price  on  March  1,  2001,  or a combination of both.  This transaction is more
fully  described  in  the  section  of  this  Registration  Statement  entitled
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations."  As  of the date of this prospectus, no freely tradable shares have
been  exchanged  for  restricted  shares.

     HealthShop.com.  We issued 838,951 shares of our common stock in connection
with  the  acquisition  of  certain  selected  assets of HealthShop, an Internet
business retailer of nutritional supplements and health related products, on May
22,  2000.  We  are  obligated  to  issue  up  to  an  additional 250,000 shares
contingent  upon the sellers meeting certain performance measures during the one
year  period  from  the  closing  date and up to 400,000 shares in the event the
price  of  our  common  stock  does  not  reach certain levels nine months after
closing.  Pursuant to these provisions, during the quarter ended March 31, 2001,
we  issued  400,000  shares  of  our  common stock to the former shareholders of
Healthshop.  We  also  entered  into  consulting  agreements  with  the  former
shareholders  and executives of Healthshop.com and issued options to purchase an
aggregate  of  250,000  shares  of  our  common  stock  in connection therewith.
HealthShop and the former shareholders and executives of HealthShop were granted
piggyback  registration  rights  with  respect  to  the  shares  and  the shares
underlying  the options granted by us in connection with this transaction.  This
transaction  is  more  fully  described  in  the  section  of  this Registration
Statement  entitled "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations."

     SmartBasics.com.  We  issued  170,000  shares  of  our  common  stock  in
connection  with  our acquisition of Smart Basics, Inc., dba SmartBasics.com, an
Internet  and  mail order retailer of nutritional supplements and health related
products,  on  May  25,  2000.  This  transaction is more fully described in the
sections  of  this  Registration Statement entitled "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations"  and  "Legal
Proceedings."

                                        3
Health  &  Vitamin Express.  In connection with our acquisition of Health &
Vitamin  Express,  we  issued  of  363,636  shares of our common stock valued at
$2,273,000  or  $6.25 per share on February 15, 1999.  Pursuant to a Settlement,
Termination  and  Mutual  Release  Agreement  dated  April  13,  2000,  363,636
additional  shares  to  the  former owners of HVE were issued in settlement of a
lawsuit  filed  on  December  23,  1999  by  the  former  owners  of  HVE.  This
transaction  is  more  fully  described  in  the  section  of  this Registration
Statement  entitled "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations."

SECURITIES  ISSUED  IN  CONNECTION  WITH  PRIVATE  OFFERINGS

     Sale of Series A Convertible Preferred Stock.  On January 24, 2000, we sold
2,000,000 shares of our newly created 5% $.01 par convertible referred stock for
$2,900,000  and  sold  seven  year warrants to purchase 500,000 shares of common
stock  at  $2.25 per share for $100,000.  In connection with the issuance of the
preferred stock, we issued common stock representing an approximate 10% interest
in  our  wholly  owned  subsidiary,  HealthZone.com, to the same investors.  The
securities  of  Healthzone.com  were  subsequently returned to HealthZone.com in
exchange  for  75,000 shares of our common stock.  We incurred issuance costs of
$100,000, which consisted of legal and placement agent fees.  On March 24, 2000,
all  shares of this preferred stock, plus accrued dividends, were converted into
2,016,438  shares  of  our  common  stock.  Since  the  conversion  rate  was
significantly below the trading price of our common stock when the preferred was
issued,  we recognized a preferred dividend of $1,950,000, which is reflected as
a  reduction  in  net  income  available  to  common  stockholders.

     In  connection  with this transaction, we agreed to register certain of our
common  stock  within  90  days  of  January  24,  2000,  and to ensure that the
registration  statement  is  declared  effective  within 150 days of January 24,
2000.  If  we  fail to timely achieve the foregoing, we will be obligated to pay
to holders of the warrants issued in connection with this transaction liquidated
damages  equal  to  0.067%  of  the  purchase price of the convertible preferred
stock,  or  approximately  $2,000, for each day following the required filing or
effective  date.  We are in breach of this provision and, as of the date hereof,
we  have paid $150,000 and we have accrued, but not paid, $60,000, of liquidated
damages.

     March  27,  2000  Private  Placement.  On  March  27, 2000, we sold 700,000
shares  of  common  stock  to  individual  investors  in a private placement for
aggregate proceeds of $2,100,000.  Investors were granted piggyback registration
rights  in  connection  with  this  transaction.

     October 27, 2000 Private Placement.  On October 27, 2000, we entered into a
Securities  Purchase  Agreement  with several "accredited investors," or holders
whereby  the  holders  purchased  3,000  shares  of  our  newly  issued Series A
Convertible preferred stock resulting in gross proceeds to us of $3,000,000.  In
addition,  the  buyers  received  warrants  to  purchase up to 600,000 shares of
common  stock  at  an  exercise  price  of  approximately  $0.96  per share.  An
additional  50,000  warrants were issued to an intermediary on the same terms as
were  granted  to  the  buyers.

     Pursuant to the Securities Purchase Agreement and related documents, we are
required  to file a registration statement, registering for resale the number of
common shares issuable assuming a market price of $.50 per share upon conversion
of  all  of  the  preferred stock, plus the exercise, at the contractual rate of
approximately  $0.96,  of all of the warrants issued in connection therewith.  A
registration  statement is required to be filed within 30 days of the closing to
cover  the  common  stock  underlying  the  conversion  of  the  preferred stock
("conversion  shares")  and the exercise of the warrants, and such indeterminate
number  of  shares  of  common  stock  issuable  pursuant  to  the anti-dilution
adjustment  provisions  of  the  preferred stock and warrants.  For registration
purposes  only,  the  number of conversion shares to be registered is calculated
based  upon  an  assumed conversion price per share of $0.50.  As of the date of
the  filing of this registration statement, which covers the shares and warrants
issued  in connection with this transaction, we are in default of this provision
of  the  preferred  stock  Agreements.

     The  Securities  Purchase  Agreement  includes  certain  provisions  for
liquidated  damages  against  us  if  a  registration  statement for the related
securities  is  not  filed  within  30 days or declared effective within 90 days
after  October  27, 2000.  These liquidated damages provisions require us to pay
an additional amount to the holders equal to: (a) in the event of a late filing,
1%  of  the  gross purchase price for such securities from the period commencing
October  27,  2000  through  the  30th day following such date and each 30th day
thereafter  (each  a  "Computation  Date"), if the registration statement is not
filed  by  such computation date, and (b) in the event of a late effective date,
1% of the gross purchase price for such securities from the period commencing on
the  previous Computation Date through the 30th day following such date and each
30th  day thereafter, if the registration statement is not declared effective by
the  relevant  computation  date.  We  may also be liable for certain liquidated
damages  in  the  event  we  fail  to  issue  timely shares of common stock upon
conversion of the preferred stock or exercise of the warrants.  These liquidated
damages  may be paid by us either in cash or in common stock, at our option.  As
of  the  date  of  this prospectus, we have paid $394,000 in liquidated damages.

                                        4
On  June  11,  2001, we have filed a registration statement with respect to
the  6,000,000  shares  of  common  stock  underlying  the  Series A Convertible
Preferred stock based on the assumed conversion price of $0.50 per share, and an
additional  650,000  shares  of  common  stock  underlying  warrants  issued  in
connection  with  the  sale of the Series A Convertible Preferred stock.  We may
have  to  file  additional  registration statements with respect to the Series A
Convertible  Preferred  stock  in  the event that the 6,000,000 shares of common
stock  are  not  sufficient  to  convert  all  of the related shares of Series A
Convertible  Preferred  stock.  On  June 21, 2001, we issued 1,572,682 shares of
our  common  stock  in  connection with the conversion of 200 shares of Series A
Convertible  Preferred  stock.

     OTHER  SECURITIES  ISSUANCES

COMMON  STOCK

     Directors,  Officers  and  Consultants.  During the year ended December 31,
2000,  we issued 1,780,500 shares of common stock at a weighted average exercise
price of $2.38 per share, and options to purchase approximately 1,925,000 shares
of common stock to certain of our directors, executive officers and consultants.
55,000  of  these  shares  of  our  common  stock were issued as compensation to
officers  and directors and one former director. In October 1999, a former Chief
Executive  Officer and shareholder of the Company returned 941,436 shares to the
Company  as  a  contribution  to  capital
 .

     Vendors  and  Trade  Creditors.  In  separate  agreements,  several  of the
Company's  trade creditors agreed to convert a portion of their debt in exchange
for  common  stock  of  the  Company  and to accept a substantially reduced cash
payment for the balance of the obligation of the Company.  During the year ended
December  31, 2000, $1,431,000 of accounts payable was converted in exchange for
599,905  shares  of common stock at a weighted average conversion price of $2.38
per  share.  These  conversions  were  performed  at  a rate consistent with the
trading  price  of  the  Company's  common  stock at the date of the conversion.

     During  the  year ended December 31, 2000, the Company issued an additional
215,500  shares  of  common stock to various vendors for services rendered.  The
aggregate  value  recorded  by  the  Company  was  approximately $378,000, which
represents either the fair market value of the shares, or the services rendered,
whichever  was  more  readily  determinable.  These  amounts  were recognized as
expenses  as  the  services  were  performed.

     In  October  1999,  we issued 13,000 shares of common stock to its previous
facility landlord in lieu of cash for one month's rent due.  We recorded expense
of  $19,000  in  connection  with  the  issuance  of  these  shares.

     Legal  Settlements.  During  the  year  ended  December 31, 2000, we issued
363,636 shares of common stock at a weighted average exercise price of $3.30 per
share  in  connection  with  a  legal  settlement.

     During  the  year  ended  December  31,  1999, we entered into a Settlement
Agreement  and  Mutual  Release  with  a former consultant pursuant to which the
parties  released  each other from their obligations set forth in his consulting
agreement.  In consideration for such release, we issued 10,000 shares of common
stock and warrants to purchase 62,500 shares at a per share price of $4.00.  The
consultant  was granted piggyback registration rights with respect to the shares
and  options  issued  to  him.  These  securities  are  being  registered  in  a
registration  statement  of  which  this  prospectus  forms  a  part.

     Institutional  Equity Corporation.  On October 30, 2000, we entered into an
agreement  with  Institutional  Equity  Corporation,  or  IEC,  to  serve as our
financial  consultant  for  the  purpose  of  determining investor interest in a
private  offering of our securities for gross proceeds of up to $20,000,000.  As
compensation  for entering into the agreement, the Company issued 150,000 shares
of  its  common  stock  and recorded a charge to operations of $205,000.  IEC is
entitled  to  a minimum fee of $25,000, which is payable in 16,667 shares of our
common  stock.  IEC  will  be  entitled  to a consulting fee equal to 10% of the
gross  proceeds  of  any  monies  it  raises  and  a  2% non-accountable expense
allowance  to  be  paid  in common stock.  Additionally, IEC will be entitled to
receive  warrants  equal  to  10%  of  the  securities  sold  in  the  offering,
exercisable  at  100%  of  the  offering  price.

                                        5
Liviakis  Financial  Communications,  Inc.  On  March 12, 2000, the Company
entered  into  a  two  year  Consulting  Agreement  with  Liviakis  Financial
Communications,  Inc.,  or  LFC  and,  in  connection  therewith, authorized the
issuance  of 1,200,000 restricted shares of Common stock to LFC in consideration
of, and as a retainer and prepayment for, the consulting services to be rendered
to the Company by LFC.   Pursuant to the provisions of the Consulting Agreement,
LFC  will be entitled to receive a 2.5% finder's fee in connection with any debt
or  equity  financing for the Company from a source introduced to the Company by
LFC  and a 2% finder's fee in connection with any acquisition by the Company, or
its  nominee,  of  a  candidate introduced to the Company or its nominee by LFC.
The  Company also agreed to reimburse LFC for extraordinary expenses incurred by
LFC  on  behalf  of  the  Company  with  its permission.  On March 27, 2000, the
Company  completed  a  private  placement  of  its  securities through investors
provided  by  LFC  whereby  700,000  shares  of  common  stock  were sold for an
aggregate  purchase  price of $2,100,000. The original shares issued to LFC have
been  considered  issued  in  connection  with  this placement, and the proceeds
allocated  to  the aggregate shares issued.  In accordance with the terms of the
Consulting  Agreement,  LFC  exercised  their  option not to continue beyond the
first  year and, accordingly, returned 400,000 of these shares to the Company in
2001.

     Consulting  Agreement.  On  January  24,  2000  the  Company  executed  a
consulting  agreement  with a financial consulting firm to assist the Company in
marketing  its  common  stock in Europe.  The agreement was a one-year agreement
that  called for the issuance of 560,000 shares of common stock.  The fair value
of  the  stock on the day the agreement was executed was approximately $960,000,
which  was  charged to operations as consulting expense.  These shares are being
registered  in  a  registration statement of which this prospectus forms a part.

     Spokesperson  Agreement.  In  August  1999,  we  entered  into a three-year
agreement  with  an  individual  to be the spokesperson for its Inholtra product
line.  We  issued  15,000  shares  of  common stock and recorded compensation of
$36,000  in  connection  with  the  issuance  of these shares.  In addition, the
Company  granted  this  individual an option to purchase 75,000 shares of common
stock.

     WARRANTS

     During  the  year  ended  December  31,  2000,  we  issued warrants with an
aggregate  value  of  $1,104,000  to consultants for services.  The transactions
pursuant  to  which  these  warrants  were  issued  are  described  below.

     On  or  about October 2, 2000, we entered into a one year agreement with an
investor  relation  services firm for the provision of certain investor relation
services.  As  compensation,  we  granted warrants to purchase 100,000 shares of
our  common  stock  at  an  exercise  price  of  $2.50.  The  value  recorded in
connection  with  this  transaction  amounts  to  $10,000.

     On June 28, 2000, we entered into a consulting agreement with an investment
banking  firm  to  perform certain financial consulting services.  The agreement
called  for  the  issuance  of  300,000 warrants to purchase our common stock at
$4.00  per  share and covered a term of six months.  The warrants were valued at
$747,000  and  were  amortized  as  consulting  expense  over  the  term  of the
agreement.

     On  June 28, 2000, we entered into an agreement with an investment bank for
the  provision  of certain investment banking services.  In connection with this
agreement, we issued seven year warrants to purchase 25,000 shares of our common
stock  at  $4.00  per  share.  The  agreement  is  for an indefinite term and is
terminable  upon  30  days  prior  written  notice.

     On  April  20, 2000, we entered into a one year consulting agreement with a
financial advisor.  The agreement calls for the issuance of warrants to purchase
30,000 shares of common stock at $3.86 per share.  The options vest 7,500 at the
end  of  each three months after the initiation of the contract.  Related to the
agreement,  we  recorded $78,000 of consulting fees, which is being amortized as
consulting  expense  over  the  term  the  services  are  being  provided.

                                        6
In  1997,  we  entered  into  a  three  year  consulting  agreement with an
investment banking firm. In consideration for the consulting services, we issued
the  investment banking firm warrants to purchase 1,000,000 shares of our common
stock  at  an  exercise  price  of  $6.00  per  share and additional warrants to
purchase 250,000 shares of common stock at an exercise price of $4.00 per share.
The  warrants  are  exercisable  for  five  years from the date of issuance.  We
recorded  professional  services  expense of $199,118, $388,000 and $275,000 the
years  ended  December 31, 2000, 1999 and 1998, respectively, in connection with
the fair value of these warrants based upon the Black Scholes pricing model.  As
of  December  31,  2000,  all  warrants  were  still  outstanding.

     During  the  year  ended  December  31,  1999, we entered into a consulting
agreement  with  a  consultant.  In consideration of the consulting services, we
issued to the consultant warrants to purchase 250,000 shares of our common stock
at  an  exercise  price  of  $4.75  per share. We recorded professional services
expense  of $415,000 in the year 1999 in connection with the fair value of these
warrants  based  upon  the  Black  Scholes  pricing model. During the year ended
December  31,  1999,  we  entered into a Settlement Agreement and Mutual Release
with  this  advisor pursuant to which the parties released each other from their
obligations  set  forth  in  the consulting agreement. In consideration for such
release,  we cancelled the warrants previously issued to him to purchase 250,000
shares of our common stock and issued 10,000 shares of common stock and warrants
to  purchase  62,500  shares  at  a per share price of $4.00. The consultant was
granted  piggyback  registration  rights  with respect to the shares and options
issued to him. These securities are being registered in a registration statement
of  which  this  prospectus  forms  a  part.

     OPTIONS

     In  1996,  we adopted the Long-Term Stock Incentive Plan (LTSIP). This plan
was  amended  on  December  22,  1999.  Under  the  terms  of  the LTSIP, we are
authorized  to issue incentive and non-qualified stock options to its directors,
officers,  key  employees  and  consultants  totaling  up to 4,500,000 shares of
common  stock.  At  December  31,  2000, 460,848 shares are available for future
grant under this plan. Options are generally granted at exercise prices not less
than  the  fair  market  value on the date of grant and expire from two to seven
years after the date of grant. Options granted under this plan vest over varying
terms  ranging  from  immediate  vesting  to  seven  years.

     In  November  1998,  our  Board  of  Directors approved a stock option pool
authorizing management of the Company to make discretionary grants up to 500,000
shares.

     During  the  year  ended  December 31, 1998, we granted options to purchase
1,853,860  shares  of  our  common stock at a weighted average exercise price of
$5.22  per  share.  Options  to  purchase 38,341 shares of our common stock at a
weighted average price of $4.51 per share were exercised and options to purchase
111,991  shares  of  our  common  stock  were  cancelled.

     During  the  year  ended  December 31, 1999, we granted options to purchase
3,267,500  shares  of  our  common stock at a weighted average exercise price of
$2.27  per  share.  Options  to  purchase 19,670 shares of our common stock at a
weighted average price of $5.03 per share were exercised and options to purchase
1,747,403  shares  of  our  common  stock  were  cancelled.

     During  the  year  ended  December 31, 2000, we granted options to purchase
3,542,499  shares  of  our  common stock at a weighted average exercise price of
$2.20  per  share.  Options  to  purchase 98,830 shares of our common stock at a
weighted average price of $2.92 per share were exercised and options to purchase
3,351,115  shares  of  our  common  stock  were  cancelled.

                                        7
ITEM  16  EXHIBITS  AND  FINANCIAL  STATEMENT  SCHEDULES

ITEM  16(A)  EXHIBITS
     All  other  schedules  have been omitted because they are not required, not
applicable,  or  the  information  is  otherwise  set  forth  in  the  financial
statements  or  notes  thereto.

     EXHIBITS

2.01 Agreement  and Plan of Merger dated April 10, 1996, by and between 4Health,
     Inc.  and  Surgical  Technologies,  Inc.  as  amended  June  4,  1996.  (1)
2.04 Amended  and Restated Agreement and Plan of Merger dated December 24, 1997,
     signed  January 7, 1998, by and between 4Health, Inc. and Irwin Naturals as
     amended  April  2,  1998.  (2)
2.05 Agreement  to  Purchase  Asset  of  Inholtra  Naturals  Limited  (3)
2.06 Agreement  &  Plan of Merger with Health & Vitamin Express Inc. ("HVE") (3)
3.01 Articles of Incorporation of Surgical Subsidiary, Inc., a Utah Corporation,
     now  known  as Surgical Technologies, Inc. Irwin Naturals/4Health, Inc. (4)
3.02 Articles  of  Merger  and  related  Plan  of  Merger.  (4)
3.03 Bylaws  (4)
3.04 Articles  of  Merger  and  related  Plan  of  Merger  (1)
3.05 Form  of  Articles  of  Merger  and  related  Plan  of  Merger  (2)
3.06 Bylaws--Change  to  By-Laws  Eliminating  Executive  Committee  Approved by
     Shareholders  in  December  1999  to  Proxy  Statement.  (5)
3.07 Form of Articles of Merger and related Plan of Merger Amendment to Articles
     Changing  Name  and  Authorizing  the  Series  A  Preferred  Stock.  (6)
4.01 Form  of  Warrant Agreement between 4Health, Inc. and Zion's First National
     Bank  with  related  form  of  Warrant  (1)
4.02 Form of Sale Restriction Agreement respecting shareholders of both Surgical
     Technologies,  Inc.,  and  4Health,  Inc.  (1)
4.03 Form  of  Consent,  Approval,  and  Irrevocable  Proxy  respecting  certain
     Surgical  stockholders  with  related  schedule  (1)
4.04 Form of Consent, Approval, and Irrevocable Proxy respecting certain 4Health
     stockholders  with  related  schedule  (1)
4.05 Specimen  Common  Stock  Certificate  (1)
4.06 Specimen  Warrant  Certificate  (1)
4.07 Warrant certificates between 4Health and Allen & Company Incorporated dated
     April  15,  1997  (7)
4.08 Warrant  certificates  between  American  Equities  and Corporate Financial
     Enterprises  (7)
4.09 Registration  Rights  Agreements  with  American  Equities  and  Corporate
     Financial  Enterprises.  (1)
4.10 Lindsey  Duncan  Withdrawal  Agreement.  (1)
4.11 Voting  Agreement  Between  Lindsey  Duncan  and  Klee  Irwin.  (1)
5.01 Summary  of  Revolving Line of Credit Agreement between 4Health and Norwest
     Business  Credit,  Inc.  (8)
5.1  Opinion  of  Luce,  Forward,  Hamilton  &  Scripps  LLP  (*)
10.01  1996  Long-Term  Stock  Incentive  Plan  Incorporated  by  Reference  (1)
10.02  Form  of  Option  granted  to  Rockwell  D.  Schutjer.  (1)

                                        8
10.03 Form of Proprietary Information, Inventions, and Non-Competition Agreement
     between  4  Health  and  R.  Lindsey  Duncan.  (1)
10.04  Form  of  Employment  Agreement  between  the  Surviving  Corporation and
     Rockwell  Schutjer.  (1)
10.05  Deed  of  Trust  Note  and  related  Deed  of Trust, Assignment of Rents,
     Security  Agreement,  and  Fixture  Filing, dated February 20, 1997, in the
     principal  amount  of  $1,350,000  due  Standard  Insurance  Company.  (9)
10.06  Form  of  Non-Negotiable  Promissory  Note.  (2)
10.07  Promissory  Note  issued  to  Inholtra  Naturals  Limited
10.10 Settlement Agreement; Indemnity Agreement with Lindsey Duncan; Lou Mancini
     Termination  Agreement;  Andrew  Vollero,  Jr. Stock Option Agreement. (10)
10.11  Indemnity  Agreement  with  Klee  Irwin  dated  April  19,  1999.  (11)
10.12  Secured  Credit  Agreement  by  and  among Irwin Naturals/4Health, Inc as
     Borrower,  and  First Source Financial LLP, as Agent and Lender dated as of
     June  10,  1999.  (12)
10.13  Settlement  Agreement  dated October 8, 1999 between Omni Nutraceuticals,
     Inc,  and  Klee  Irwin.  (13)
10.14 Tax Indemnification and Allocation Agreement dated October 8, 1999 between
     Omni  Nutraceuticals,  Inc  and  Klee  Irwin.  (13)
10.15  Voting  Agreement  dated  October  8,  1999  by  and among Klee Irwin and
     Margareth  Irwin  and  R.  Lindsey  Duncan.  (13)
10.16  Escrow  Agreement  dated  October  8, 1999 by and among Klee Irwin, Wells
     Fargo  Bank  as  the  Escrow  Agent  and  Omni  Nutraceuticals.  (13)
10.17 Amendment No. 1 to Settlement Agreement dated October 8, 1999 between Omni
     Nutraceuticals,  Inc.  and  Klee  Irwin.  (6)
10.18  Consulting  Agreement  by  and  between  Omni  Nutraceuticals,  Inc.  and
     corporate  financial  Enterprises,  Inc  dated  as of January 24, 2000. (6)
10.19 Consulting Agreement by and between Omni Nutraceuticals, Inc. and Montfort
     Investments  dated  as  of  January  24,  2000.  (6)
10.20  Lock  up  Agreement  by  Klee  Irwin  and  R.  Lindsey  Duncan.  (6)
10.21  Indemnity  Agreement between Omni Nutraceuticals, Inc. and Reid Breitman.
     (6)
10.22  Agreement  dated March 11, 20000 among the company, R. Lindsey Duncan and
     Cheryl  Wheeler.  (5)
10.23  Indemnity  Agreement  dated  March  11,  20000 between the Company and R.
     Lindsey  Duncan.  (5)
10.24  Term  Sheet  dated  March  11,  22000  between  the  Company and American
     Equities,  LLC.  (5)
10.25  Registration  Rights Agreement dated March 11, 2000 among the Company, R.
     Lindsey  Duncan  and  Cheryl  Wheeler.  (5)
10.26  Consulting  Agreement  between  the  Company  and  Liviakis  Financial
     Communications,  Inc.  (5)
10.27  Termination  Agreement  between  the  company  and  Louis  Mancini.  (5)
10.28  Form of Stock Purchase Agreement by and between Omni Nutraceuticals, Inc.
     and the purchasers of 3,000 shares of Series A Convertible Preferred Stock,
     dated  October  27,  2000.  (14)
10.29  Form of Registration Rights Agreement by and between Omni Nutraceuticals,
     Inc.  and  the purchasers of 3,000 shares of Series A Convertible Preferred
     Stock,  dated  October  27,  2000.  (14)
16.1 Letter  re:  Change  in  Certifying  Accountant.  (15)
20.1 Notice  of  change  of  transfer  and  warrant  agent.  (16)
22.1 List  of  subsidiaries  of  the  Company
23.1 Consent  of  Singer,  Lewak,  Greenbaum  &  Goldstein  LLP
23.2 Consent  of  Luce, Forward, Hamilton & Scripps LLP (included in Exhibit 5.1
     hereto)
24.1 Power  of  Attorney  (included  on  signature  page)

(*)  To  be  filed  by  amendment.
(1)  Incorporate by reference from Surgical's registration statement on Form S-4
     filed  with  the  Commission,  SEC  file  number  33-03243.
(2)  Proxy  Statement  of  4Health,  Inc.,  dated  June,  1998.
(3)  Incorporated  by  reference from the Company's report on Form 10-K/A, dated
     August  20,  1999,  for  the  year  ended  December  31,  1998.
(4)  Incorporated  by reference from Surgical's report on Form 10-K for the year
     ended  March  31,  1994.
(5)  Incorporated  by  reference  from the Company's report on Form 8-K filed on
     April  14,  2000.
(6)  Incorporated  by  reference  from the Company's report on Form 8-K filed on
     January  31,  2000.
(7)  Incorporated  by  reference  from Schedule 13D filed with the Commission by
     Allen  &  Company  Incorporated  on  April  18,  1997.
(8)  Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  September  30,  1997.
(9)  Incorporated  by  reference from 4Health's report on Form 10-K for the year
     ended  December  31,  1996.
(10) Incorporated  by  reference  from  the  Company's  report on Form 8-K dated
     August  25,  1999.
(11) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     June  7,  1999.
(12) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     July  22,  1999.
(13) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     October  28,  1999.
(14) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     November  3,  2000.
(15) Incorporated by reference from the Company's report on Form 8-K dated April
     20,  2000.
(16) Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  March  31,  1997.

                                        9
ITEM  16(B)  FINANCIAL  STATEMENT  SCHEDULES

     No schedules have been included in this Registration Statement because they
are  not  required, not applicable, or the information is otherwise set forth in
the  financial  statements  or  notes  thereto.

ITEM  17.  UNDERTAKINGS.

The  undersigned  Registrant  hereby  undertakes:

     That, for purposes of determining any liability under the Securities Act of
1933,  as amended (the "Securities Act"), each filing of the Registrant's annual
report  pursuant  to  Section  13(a)  or 15(d) of the Securities Exchange Act of
1934,  as amended (the "Exchange Act") (and, where applicable, each filing of an
employee  benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act)  that  is  incorporated by reference in the registration statement shall be
deemed  to  be  a  new registration statement relating to the securities offered
therein,  and the offering of such securities at that time shall be deemed to be
the  initial  bona  fide  offering  thereof.

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

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

     (4)     To file, during any period in which offers or sales are being made,
a  post-effective  amendment  to  this  registration  statement:

               (i)  To  include  any prospectus required by section 10(a) (3) of
          the  Securities  Act;

               (ii)  To  reflect  in  the prospectus any facts or events arising
          after  the  effective date of this registration statement (or the most
          recent post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in  this  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 aggregate offering price set forth in the
          "Calculation  of Registration Fee" table in the effective registration
          statement;

               (iii)  To  include  any  material information with respect to the
          plan  of  distribution  not  previously disclosed in this registration
          statement  or  any  material  change  to  such  information  in  this
          registration  statement;

               provided,  however,  that  paragraphs (4) (i) and (4) (ii) do not
          apply  if  the information required to be included in a post-effective
          amendment  by  those paragraphs is contained in periodic reports filed
          by  the  Registrant  pursuant  to  Section  13 or Section 15(d) of the
          Exchange  Act  that are incorporated by reference in this registration
          statement.

     (5)     To  remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the  offering.

                                       10
Insofar as indemnification for liabilities arising under the Securities Act
may  be  permitted  to  directors,  officers  and  controlling  persons  of  the
Registrant  pursuant  to  the foregoing provisions, or otherwise, the Registrant
has  been  advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.  In the event that a claim for indemnification
against  such  liabilities (other than the payment by the Registrant of expenses
incurred  or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has  been  settled  by  controlling  precedent, submit to a court of appropriate
jurisdiction  the  question whether such indemnification by it is against public
policy  as  expressed  in  the  Securities Act and will be governed by the final
adjudication  of  such  issue.

                                   SIGNATURES

     Pursuant  to 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  for  filing  on  Form  S-1  and  has duly caused this Registration
Statement  to  be  signed  on  its  behalf  by  the  undersigned, thereunto duly
authorized,  in  the  City  of  Los  Angeles,  California  on  July 27,  2001.

OMNI  NUTRACEUTICALS,  INC.

By:  /s/  KLEE  IRWIN
     -----------------------------------------
     Klee  Irwin,
     President  and  Chief  Executive  Officer

                                POWER OF ATTORNEY

     KNOW  ALL  PERSONS  BY  THESE  PRESENTS,  that  each person whose signature
appears below constitutes and appoints Klee Irwin, as his or her true and lawful
attorney-in-fact  and  agent, each acting alone, with full power of substitution
and  resubstitution,  for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this Registration Statement, and to file the same
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, and each of them, full power and authority to do and perform each and
every  act and thing requisite and necessary to be done in connection therewith,
as  fully  to all intents and purposes as he might or could do in person, hereby
ratifying  and  confirming  all  that said attorney-in-fact and agent, or any of
them  or their substitute or substitutes, may lawfully do or cause to be done by
virtue  hereof.

                                       11
Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities  and  on  the  dates  indicated.

Signature                    Capacity  in  Which  Signed            Date

/s/  ANDREW VOLLERO, JR.     Chairman of the Board of Directors    July 27, 2001
Andrew  Vollero,  Jr.

/s/  KLEE  KRWIN             President, Chief Executive Officer
Klee Irwin                   and Director                          July 27, 2001

/s/  THOMAS  BAKER           Vice President Finance
                             (Principal  Accounting Officer)       July 27, 2001
Thomas  Baker

/s/  REBECCA  PEARMAN        Director
Rebecca  Pearman                                                   July 27, 2001

/s/  THOMAS  AARTS           Director
Thomas  Aarts                                                      July 27, 2001

                                       12
EXHIBITS

10.07     PROMISSORY  NOTE  ISSUED  TO  INHOLTRA  NATURALS  LIMITED

                          NON-RECOURSE PROMISSORY NOTE

$10,000,000.00                                        March  10,  1999

     FOR  VALUE  RECEIVED,  the undersigned Irwin Naturals/4Health, Inc., a Utah
corporation  (the  "Debtor"),  with  its  principal place of business located at
10549  W.  Jefferson Boulevard, Culver City, CA 90232, hereby promises to pay to
Inholtra  Natural,  Ltd.,  a Maine corporation (the "Creditor"), at 21 Oceanview
Road,  Kennebunk,  ME  04043,  or  at  such  other  place  as the Creditor shall
designate  to the Debtor in writing, the principal amount of Ten Million Dollars
($10,000,000.00)  lawful  money  of  the United States of America, with interest
thereon  at  the rate of eight percent (8%) per annum calculated on the basis of
365-day  year  and  the  number  of  days  elapsed.

     This Promissory Note evidences the obligation of the Debtor, subject to the
terms  and  conditions  set  forth below, to pay a portion of the balance of the
purchase price (the "Purchase Price") for certain assets purchase by it from the
Creditor  pursuant  to that certain Asset Purchase Agreement between the Debtor,
the  Creditor  and  certain  other  parties  dated  as  of  March, 10, 1999 (the
"Agreement").

     1.     The  principal amount hereof shall be payable on or before the close
of business on June 10, 1999 (the "Maturity Date") and shall be repaid by Debtor
as  follows:

               (i)  the  principal amount of One Million Dollars ($1,000,000.00)
          shall be paid to the Indemnity Escrow Agent (as defined in Section 1.5
          of  the  Agreement)  to  be  held  by its pursuant to the terms of the
          Indemnity  Escrow  Agreement  (as  also  defined in Section 1.5 of the
          Agreement);  and
               (ii)  the  remaining  principal balance hereof, together with all
          accrued  interest  as  herein  provided  shall  be  paid  to Creditor.

     2.  In  addition  to  its  other  rights hereunder and under the Agreement,
Debtor  shall  have  the right upon notice to Creditor specifying the reasonable
detail  the  basis  for  a  set-off  hereunder, to set-off and apply against its
obligations  to  Creditor  hereunder  any  and  all  amounts  to which it may be
entitled  from  Creditor under the Agreement and the other documents executed in
connection  with  the  transactions  contemplated  thereby. The exercise of such
right of set-off by Debtor in good faith shall not constitute default hereunder.

     3.     The  principal  amount  of  this Note may be prepaid, in whole or in
part,  along  with  accrued  interest  without  premium  or  penalty.

     4.     Upon  notice  to  the  Debtor  of  the  loss,  theft, destruction or
mutilation  of  this Note, and in the case of any such mutilation upon surrender
and  cancellation of the mutilated document, and in the case of such loss, theft
or  destruction,  upon  delivery  by  the  Creditor  of  an  indemnity agreement
satisfactory  to the Debtor, the Debtor will execute and deliver to the Creditor
a  new  Note  of like tenor in lieu of such lost, stolen, destroyed or mutilated
Note.

     5.     Except  as  otherwise  expressly  provided herein, the terms of this
Note  may be amended only by a written instrument executed by the Debtor and the
Creditor.  No  course  of dealing with the Debtor and the Creditor nor any delay
in  executing  any  rights hereof shall operate as a waiver of any rights of the
Creditor.

     6.     All  notices,  requests,  demands and other communications which are
required  to  be given hereunder shall be deemed to have been duly given only if
in  writing  and delivered by first class mail, return receipt requested, to the
other  party  at its address appearing on the first page hereof or to such other
address  as  such  party  shall have specified by notice in writing to the other
party.

                                       13
7.     The  rights  and  obligations  of  the  parties  hereunder  shall be
construed  and interpreted in accordance with the local laws of the State of New
York  without  regard  to  the  principles  of  conflicts  of  law  thereof.

     8.     If  (a) Debtor shall fail to pay any amount due under this Note when
due;  or  (b)  Debtor shall commit any other material breach or event of default
under  the  Agreement which shall continue uncured for a period of ten (10) days
after  notice  thereof  to  Debtor;  or  (c) Debtor shall be dissolved or become
insolvent,  or shall merge with or into another entity; or (d) there shall be an
assignment  for  the benefit of creditors of Debtor or appointment of a receiver
or  similar  official for Debtor to its assets, or Debtor shall apply for, or be
the  subject  of  any  voluntary  or  involuntary  application  or  petition for
protection or relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law; or (e) Debtor shall take any action for the purpose
of  effecting  any  of the foregoing; then and in any such event, all amounts of
unpaid  principal  and  all  other  amounts due to Creditor hereunder shall upon
demand  be  due  and  payable  in  full.

     9.     Except  as  otherwise  set  forth  herein,  the Debtor hereby waives
presentment,  demand  for  payment,  notice  of  dishonor, notice of protest and
protest,  and  all  other  notices  or  demands in connection with the delivery,
acceptance,  performance,  default, endorsement or guarantee of this instrument.

     10.     This  is  a  nonrecourse  note and, anything herein to the contrary
notwithstanding,  Creditor  agrees  for  itself, its representatives, successor,
endorsees,  and  assigns  that  (a)  neither  Debtor  nor  its  representatives,
successors  or  assignees  shall  be  personally  liable  on this Note, it being
intended  that  Debtor's  obligation  to  pay  the  principal  of this Note with
interest  thereon is included for the sole purpose of establishing the existence
of the indebtedness represented hereby and (b) in the event of default, Creditor
(and  any  such  representative,  successor, endorsee, or assign) shall look for
payment solely to the Reassignments (as defined in the Agreement) and the rights
and  remedies  set  forth  in  the  Security Escrow Agreement (as defined in the
Agreement)  and  will  not  make any claim or institute any action or proceeding
against  Debtor  (or  any  representative,  successor  or  assign of Debtor) for
payment  of  this Note (or for any deficiency remaining after application of the
property  which  is  the  subject of the Reassignments); provided, however, that
nothing  herein  contained  shall  be  construed  to  release  or  impair  the
indebtedness  evidence  by  this Note, or of the lien upon the property securing
it,  or  preclude  the  application  of  said  property to the payment hereof in
accordance  with  the  terms  of  the  Security  Escrow  Agreement.

     11.     All  disputes  arising  hereunder  shall  be  resolved  by  binding
arbitration  in  the  City  of  New York, New York before a single arbitrator in
accordance  with  the  rules  of  the  American  Arbitration  Association.

     IN  WITNESS  WHEREOF,  this  Note has been signed by the Debtor on the date
first  above  written.
IRWIN  NATURALS/4HEALTH,  INC.

BY:  /S/KLEE  IRWIN
     --------------
     KLEE  IRWIN
     CHIEF  EXECUTIVE  OFFICER

                                       14
22.1     LIST  OF  SUBSIDIARIES

     Inactive  Subsidiaries

     Applied  Nutrition,  Inc.,  a  California  corporation
     Omni  Smart  Basics,  Inc.,  a  Nevada  corporation
     Irwin  Naturals  International,  Inc.,  a  Virginia  Islands  corporation
     Zone  Management,  Inc.,  a  California  corporation
     US  Employee  Corporation,  a  California  corporation

                                       15
23.1     CONSENT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTS

                          INDEPENDENT AUDITOR'S CONSENT

     We  consent  to  the  use  in  this  Registration  Statement  of  Omni
Nutraceuticals,  Inc.  on  Form  S-1  of our report, dated March 28, 2001, which
includes  an  emphasis  paragraph relating to an uncertainty as to the Company's
ability  to  continue  as a going concern, appearing in the Prospectus, which is
part  of  this  Registration  Statement.

We  also consent to the reference to our Firm under the caption "Experts" in the
Prospectus.

SINGER  LEWAK  GREENBAUM  &  GOLDSTEIN  LLP

Los  Angeles,  California
July  26,  2001

                                       16