As filed with the Securities and Exchange Commission on August 4, 1999
Registration No. 333-81923
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------
COMPLETE WELLNESS CENTERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1910135
(State of Incorporation) (I.R.S. Employer Identification No.)
666 Eleventh Street, N.W.
Washington, D.C. 20001
(202) 639-9700
(Address and telephone number of principal executive offices)
Joseph Raymond Jr.
Chairman of the Board and Chief Executive Officer
Complete Wellness Centers, Inc.,
666 Eleventh Street, N.W.
Washington, D.C. 20001
(202) 639-9700
(Name, address, and telephone number of agent for service)
------------------
Copies to:
Hank Gracin, Esq.
Lehman & Eilen LLP
50 Charles Lindbergh Blvd., Suite 505
Uniondale, NY 11553
(516) 222-0888
Approximate date of commencement of proposed sale
to the public: As soon as practicable after this
Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, check the following box. |_|
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
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 delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered offering price per aggregate offering Registration Fee (2)
registered share (1) price (1)
<S> <C> <C> <C> <C>
Common stock, 587,000 $2.50 1,467,500 $407.97
$0.0001665
par value
=====================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee based on a per share price of $2.50, the closing price
per share of our common stock on July 29, 1999.
(2) The filing fee has been previously paid.
2
<PAGE>
COMPLETE WELLNESS CENTERS, INC.
587,000 Shares of Common Stock
This prospectus relates to the public offering of up to 587,000 shares of common
stock of Complete Wellness Centers, Inc. All of the shares were issued pursuant
to an exemption from the registration requirements of the Securities Act of
1933, as amended.
On August 3, 1999, the last reported sale price for our common stock was
$1.15/16 per share. Our common stock is currently quoted on Nasdaq SmallCap
Market under the symbol CMWL.
The common stock being offered in this prospectus involves a high degree of
risk. See risk factors beginning on page 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is August 4, 1999
3
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering. Any other information or representations must not be relied upon
as having been authorized by us. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any security other than the securities
identified in this prospectus, nor does it constitute an offer to sell or a
solicitation of any person any place where an offer or solicitation may not
legally be made.
AVAILABLE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act of
1934. As a result, we file reports, proxy and information statements with the
Securities and Exchange Commission. This data with the Securities and Exchange
Commission can be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the following
regional offices of the Securities and Exchange Commission: Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of prescribed fees. In addition, the Securities and Exchange Commission
maintains a Web site at http://www.sec.gov that contains our data in reports,
proxy and information statements that have been filed since we began to file
electronically with the Securities and Exchange Commission in February 1997. Our
common stock is quoted on the Nasdaq SmallCap Market, and such material may also
be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
This prospectus does not contain all the information set forth in the
registration statement on Form S-3 of which this prospectus is a part, including
attached exhibits or those incorporated by reference which have been filed
electronically with the Securities and Exchange Commission. Copies of the
registration statement and the attached exhibits and schedules may be obtained
upon payment of the required fee prescribed by the Securities and Exchange
Commission, or may be examined without charge at the office of the Securities
and Exchange Commission or at the Securities and Exchange Commission's web site.
4
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. It is not complete and may not contain all the information that is
important to you. To understand this offer fully, you should read the entire
prospectus carefully, including the risk factors and financial statements.
This prospectus and the documents incorporated in this prospectus by reference
may contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These forward-looking
statements are based on current expectations, estimates and projections about
the Company's industry, management's beliefs and assumptions made by management.
Words such as "anticipates," "expects," "intends," "plans," "beliefs," "seeks,"
"estimates," variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict.
Accordingly, actual results may differ materially from those expressed or
forecasted in any such forward-looking statements. Such risks and uncertainties
include those risk factors and such other uncertainties noted herein by
reference. Complete Wellness assumes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
COMPLETE WELLNESS
CENTERS, INC.
Offices: 666 11th Street, N.W., Suite 200
Washington, D.C. 20001
Telephone (202) 639-9700
Fax (202) 639-9750
THE OFFERING
Common Stock Offered by Selling
Stockholders........................................ 587,000 shares
Common Stock to be Offered by
the Company......................................... 0 shares
Common Stock Outstanding before
Offering (1)........................................ 3,536,755 shares
Common Stock Outstanding After
Offering ........................................... 3,536,755 shares
Use of Proceeds..................................... All of the shares offered
from time to time by this
prospectus are being
offered by the selling
stockholders. Complete
Wellness Centers, Inc.
shall not receive any
proceeds from these
sales of its stock.
Risk Factors........................................ The securities offered
by this Prospectus involve
a high degree of risk.
Investors should purchase
the securities offered
by this prospectus only if
they can afford to lose
their entire investment.
NASDAQ SmallCap Symbol............................ CMWL
- ------------------------
(1) Based on shares outstanding as of July 30, 1999
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<PAGE>
RISK FACTORS
An investment in the securities offered by this prospectus involves a high
degree of risk and should be made only by investors who can afford the loss of
their entire investment. You should carefully review and consider the following
risks as well as the other information set forth in this prospectus before
deciding to invest in shares of our common stock.
We do not have adequate cash reserves to meet our operating needs.
We are currently dependent on advances from investors to meet our day to
day cash needs. As a result, we must continue to identify other sources of cash
immediately in order to remain in business. Failure to immediately identify
other sources of cash could result in our insolvency.
We have a history of losses and may not continue to be profitable.
We recorded our first profitable quarter in the calander quarter ended
March 31, 1999. We commenced operations in January 1995 and began managing our
first integrated medical center in September 1995. We have a limited operating
history upon which you can judge our performance and we have experienced net
losses, negative cash flow, a deficit in working capital, and an accumulated
deficit each month until very recently .
Our rapid expansion may lead to financial losses.
We have expanded from managing one integrated medical center at December
31, 1995 to 87 integrated medical centers at December 31, 1998. We have ceased
operations in several of our centers since that time and now manage 73
integrated medical centers. Our future profitability will depend upon a number
of factors, including:
o Our ability to develop integrated medical centers where we have agreements
with chiropractors as of June 30, 1999
o Our ability in the future to identify and affiliate with a sufficient
number of suitable, well-located chiropractors and their existing
chiropractic practices
o Whether new integrated medical centers can be opened in conformance with
our plans and schedule.
o Our ability to adequately train sufficient numbers of affiliated
chiropractors and their office staff on the operation and administration of
integrated medical centers and our management information system
o Our ability to attract and retain medical doctors and other traditional
health care providers for employment at the integrated medical centers
o Our ability to support and manage the increased numbers of integrated
medical centers effectively
o Whether anticipated performance levels at integrated medical centers will
be achieved
Delays in the opening of new integrated medical centers could adversely affect
our future financial condition and operating results.
We are the subject of a pending federal investigation.
In November 1997, three of our facilities were searched by federal
authorities pursuant to search warrants, and the federal authorities removed
computer records and written documents. A few of our employees and certain of
our subsidiaries were served with subpoenas requesting records and documents
related to billing and claims coding, clinical relationships and corporate
records. We believe that we could be a target in this investigation. One
employee has received a target letter stating that the employee was a subject of
the investigation. The investigation appears to be focused on two clinics in
Virginia. No charges have yet been filed against Complete Wellness or any of our
employees. However, any such charges could have a material adverse effect on our
future financial position and results of operations.
We did not file on a timely basis our required notifications of sale with state
securities regulators.
We did not file on a timely basis the notifications of sale we were
required to file with the state securities regulators in the seven states where
we sold securities in our recent private placement. We have since filed the
required notifications in all seven states. As a result of our late filings,
some of our investors may have a right to rescind their purchase of our
securities. If any of such investors elect to rescind their investments, we
would be obligated to return to such investors the money they paid to us. If we
must return money to any investors it would have a material adverse effect on
our financial condition.
6
<PAGE>
The government may challenge our affiliation relationships with the
chiropractors.
We believe that our affiliated chiropractor relationship does not
violate applicable federal or state health care regulatory requirements. There
can be no assurance, however, that health care officials will not take a
contrary view and bring a claim against us under federal law. Prosecutions by
federal officials could have an adverse effect on us, even if our affiliated
chiropractor relationships were subsequently determined lawful.
We rely on affiliated chiropractors to generate our revenues.
Our revenue and cash flow are dependent on the generation and
collection of revenue by the integrated medical centers and the efficient
management by the affiliated chiropractor. In the past, we have experienced
negative results from poor management by certain chiropractors, which
consequently lessen the expected revenues and profits from that specific center.
If a significant number of affiliated chiropractors fail in their management
duties, our financial condition and operating results would be adversely
effected.
We are dependent on third party reimbursement.
Third party reimbursement is the payment of medical or chiropractic
services by anyone other than the patient, for example, the payment for services
by an insurance company. Substantial amounts of our revenue from the integrated
medical centers are derived from commercial health insurance, state workers'
compensation programs, and other third party payors. Insurance companies are not
yet totally familiar with reimbursing for traditional and alternative health
care services, such as chiropractic, performed within a medical practice.
Persistent disagreements of this nature could have a materially adverse effect.
Managed care contracts limit our revenues.
We believe that our success, in part, will depend on our ability to
negotiate, on behalf of the integrated medical centers, favorable managed care
contracts with health maintenance organizations and other private third party
payor programs. Failure to negotiate favorable contracts for our integrated
medical centers will adversely affect the profitability of our integrated
medical centers. Such contracts often shift much of the financial risk of
providing care from the payor to the provider by requiring the provider to
furnish all or a portion of its services in exchange for a fixed fee per member
patient, per month, regardless of the level of use by the patient.
We are dependent on our key management personnel.
We are dependent upon the active participation of our executive
officers, particularly our Chairman and Chief Executive Officer, Joseph Raymond
Jr. and our President and Chief Operating Officer, Dr. Sergio Vallejo. The loss
of the services of Mr. Raymond and/or Dr. Vallejo could have a material adverse
effect on us. We do not have an employment contract with Mr. Raymond or Dr.
Vallejo and both are currently serving without compensation. We do not currently
hold a "key-man" life insurance policy on the life of Mr. Raymond or Dr.
Vallejo.
Claims for medical malpractice could adversely affect us.
Although we do not ourselves provide such services or control the
provision of health care services by the integrated medical centers'
practitioners, we could nevertheless be also accused of medical negligence. We
have obtained an insurance policy that provides both us and our integrated
medical centers medical malpractice insurance and managed care errors and
omissions insurance retroactive to the integration dates of the integrated
medical centers. The policy provides coverage for $1,000,000 per claim per
integrated medical center, subject to an aggregate limit of $3,000,000 per
integrated medical center per year. A successful claim against us in excess of
our insurance coverage could have a material adverse effect upon our business.
7
<PAGE>
We could suffer criminal and monetary penalties if our healthcare providers are
accused of fraud and healthcare abuse.
Federal and state laws extensively regulate the relationships among
providers of health care services. These laws include federal fraud and abuse
provisions which if violated by any of our health care providers could put us at
risk of severe criminal and monetary penalties. Federal fraud and abuse laws
also impose restrictions on physicians' referrals for designated health services
covered under Medicare or Medicaid to entities with which they have financial
relationships. There can be no assurance that the federal and state governments
will not consider additional prohibitions on physician ownership, directly or
indirectly, of facilities to which they refer patients, which could adversely
affect the company.
Federal and state governments may determine that our medical centers are part of
a franchise system.
Franchise laws require, among other things, that a disclosure document
be prepared and given to prospective franchisees. A review of our business by
regulatory authorities could result in a determination that our integrated
medical centers are part of a franchise system, which determination would
require us to prepare and distribute a franchise disclosure document and could
adversely affect our operations or require structural and organizational
modifications with the integrated medical centers. We have not prepared and
distributed a franchise disclosure document because we believe that integrated
medical centers formed as business corporations wholly owned by us are not
subject to such franchise laws. Integrated medical centers formed as
physician-owned professional corporations could be subject to the franchise
laws. If these laws are deemed to apply, we would be required to prepare and
deliver a disclosure document to the physician that owns the professional
corporation, and who might be our employee.
Our operations could be deemed to violate laws that prohibit the corporate
practice of medicine.
In states where general business corporations are permitted to own
medical practices, the integrated medical centers are formed as general business
corporations and are wholly-owned by us. In most states, the integrated medical
centers are formed as professional corporations owned by one or more medical
doctors licensed to practice medicine under applicable state law. Although we
believe our operations as currently conducted are in material compliance with
existing applicable laws, our structure could be challenged as constituting the
unlicensed practice of medicine and the enforceability of the legal agreements
underlying our structure could be limited. The inability to successfully
restructure our contractual arrangements could have a material adverse effect on
us.
We have instituted anti-takeover provisions and increased the authorized common
and preferred stock.
Our board of directors has the authority to issue up to 50,000,000
shares of common stock and up to 2,000,000 shares of preferred stock in one or
more series and to determine the number of shares in each series, as well as the
designations, preferences, rights and qualifications or restrictions of those
shares without any further vote or action by the common stockholders. The rights
of the holders of common stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that is currently issued or
which may be issued in the future.
8
<PAGE>
Our securities may be delisted from the Nasdaq SmallCap Market.
On November 20, 1998, we received notice from Nasdaq that we did not
meet the net asset requirements for continued Nasdaq SmallCap Market listing. We
formally responded to NASDAQ's questions with a written plan designed to meet
the minimum listing requirements. We received another query more recently and
again responded in writing to NASDAQ with an updated plan for continued listing
specifying the planned conversion of outstanding debt to equity, the private
placement of Common Stock for $775,000, and the reversal of reserves in a
Chapter 7 filing for a subsidiary. If our securities were to be delisted from
the Nasdaq SmallCap Market, it would materially adversely affect the prices of
our securities and the ability of shareholders to sell them. In addition, if our
securities are delisted from the NASDAQ SmallCap Market, our shares will be
subject to the NASDAQ penny stock rules. These rules and disclosure requirements
would have the effect of reducing the trading activity in our stock. If our
common stock becomes subject to the penny stock rules, it would be more
difficult to sell shares of our common stock.
9
<PAGE>
INDEMNIFICATION
Our bylaws require Complete Wellness, to the fullest extent permitted or
required by Delaware law, to (i) indemnify its directors and officers against
any and all liabilities and (ii) advance any and all reasonable expenses
incurred in any proceeding to which any such director or officer is a party or
in which such director or officer is deposed or called to testify as a witness
because he or she is or was a director or officer of Complete Wellness.
Generally, Delaware statutory law permits indemnification of a director or
officer upon a determination that he or she acted in good faith and in a manner
that he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal act or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The right to indemnification granted in our bylaws is not exclusive of any other
rights to indemnification against liabilities or advancement of expenses which a
director or officer may be entitled to under any written agreement, board
resolution, vote of stockholders, Delaware law or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, Complete Wellness
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
10
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them. This means that we can disclose important information to you by referring
to these documents. The information incorporated by reference is an important
part of this prospectus, and information that we file later with the SEC will
automatically update and supercede this information. We incorporate by reference
the documents listed below, which have already been filed with the SEC, and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until the selling shareholders sell all of
the securities offered by this prospectus.
1. Our annual report on Form 10-KSB for the fiscal year ended December
31, 1998;
2. Our quarterly report on Form 10-QSB for the quarter ended March 31,
1999;
3. Our annual report on Form 10-KSB for the fiscal year ended December
31, 1997 and as amended on Form 10-KSB/A filed April 14, 1998 and as
amended on Form 10-KSB/A filed on January 19, 1999;
4. Our quarterly report on Form 10-QSB for the quarter ended March 31,
1998 and for June 30, 1998 and as amended on Form 10-QSB/A filed
October 1, 1998 and as both individually amended on Form 10-QSB/A
filed on January 19, 1999;
5. Our quarterly report on Form 10-QSB/A for the quarter ended September
30, 1998 as amended on January 19, 1999;
6. Our current report on Form 8-K filed on January 16, 1998;
7. Our current report on Form 8-K filed on February 9, 1998;
8. Our current report on Form 8-K/A filed on March 12, 1998;
9. Our current report on Form 8-K filed on June 3, 1998;
10. Our current report on Form 8-K filed on July 10, 1998;
11. Our current report on Form 8-K filed on August 21, 1998;
12. Our current report on Form 8-K filed on September 21, 1998;
13. Our current report on Form 8-K filed on December 3, 1998;
14. The description of our common stock contained in our registration
statement on Form SB-2 filed with the Securities and Exchange
Commission on February 19, 1997;
15. Our proxy statement and notice of annual meeting filed on May 4, 1998;
16. Our proxy statement and notice of special meeting of stockholders
filed on July 22, 1998;
17. Our information statement pursuant to Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14f-1 thereunder;
18. Our current report on Form 8-K filed on December 30, 1998;
19. Our current report on Form 8-K filed on March 9, 1999;
11
<PAGE>
20. Our current report on Form 8-K filed on March 12, 1999;
21. Our current report on Form 8-K filed on March 15, 1999; and
22. Our Initial Public Offering Filing on Form SB-2/A filed on February
13, 1997 and made effective on February 19, 1997.
Any statement contained in a document incorporated by reference above shall be
considered modified or superseded for purposes of this prospectus and the
registration statement of which it is a part.
Upon written or oral request, we will send any documents incorporated by
reference, other than exhibits to the referenced documents. Requests should be
submitted in writing or by telephone at (202) 639-9700 to Michael Brigante,
senior vice president, chief financial officer and secretary, Complete Wellness
Centers, Inc., at the principal executive offices of the company, 666 Eleventh
Street, N.W., Suite 200, Washington, D.C. 20001.
MARKET PRICE OF COMMON STOCK
The following table sets forth the high and low bid prices for the
common stock as reported on NASDAQ for each quarter since March 31, 1997 for
the periods indicated. Such information reflects inter dealer prices without
retail mark-up, mark down or commissions and may not represent actual
transactions.
QUARTER ENDED HIGH LOW
- ------------------ ----- -----
March 31, 1997 $5.06 $3.25
June 30, 1997 5.25 3.25
September 30, 1997 4.75 2.25
December 31, 1997 4.63 0.75
March 31, 1998 3.12 1.75
June 30, 1998 3.63 1.50
September 30, 1998 3.83 2.13
December 31, 1998 4.83 2.63
March 31, 1999 4.06 1.75
June 30, 1999 3.63 2.00
We have not paid any dividends on our common stock. We currently intend to
retain any earnings for use in our business, and do not anticipate paying cash
dividends in the foreseeable future.
As of June 30, 1999, there were approximately 738 record holders of our common
stock.
REGISTRATION RIGHTS
We are filing this registration statement because the purchasers of
587,000 shares of common stock, sold in a private placement, have exercised
their registration rights. Pursuant to such registration rights we are obligated
to use our best efforts to cause this registration statement to become effective
by August 15, 1999. We are further obligated to register and qualify the shares
of common stock under such state securities laws as the selling stockholders may
reasonably request. We will bear the reasonable expenses of the registration and
qualification of the shares under the Securities Act and state securities laws
other than any underwriting discounts and commissions and the expenses of
counsel for the selling stockholders.
12
<PAGE>
USE OF PROCEEDS FROM SALE OF COMMON STOCK
None of the proceeds from the sale of the common stock registered
hereunder will accrue to Complete Wellness. Through private placement, Complete
Wellness has obtained $587,000 of financing from the sale of 587,000 shares
of Common Stock at a price of $1.00 per share, exclusive of fees and other
expenses related to this sale. We intend to apply the net proceeds of this sale
of Common Stock for working capital purposes.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares of unregistered common stock
owned by each of the selling stockholders. None of the selling stockholders has
had any material relationship with us within the past three years other than as
a result of the ownership of the resale shares or other securities of ours.
Because the selling stockholders may offer all or some of the resale shares
which they hold pursuant to the offering contemplated by this prospectus and
because there are currently no agreements, arrangements or understandings with
respect to the sale of any of the resale shares, no estimate can be given as to
the amount of resale shares that will be held by the selling stockholders after
completion of this offering. The resale shares offered by this prospectus may be
offered from time to time by the selling stockholders named below.
The percentage of ownership after the offering is calculated by dividing the
number of shares owned by each individual stockholder prior to this offering by
3,536,755 total shares that will be outstanding after this offering. This
registration statement shall also cover any additional shares of common stock
which become issuable in connection with the shares registered for sale by
reason of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in an
increase in the number of the registrant's outstanding shares of common stock.
14
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Shares of Number of Shares of
Common Stock Shares of Common Stock Percentage
Beneficially Common Beneficially Ownership
Names and Addresses Owned Prior Stock Being Owned After After
Of Selling Stockholders to Offering Offered Offering Offering
- ------------------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Paul Welch (1)
51 Oxford Road 50,000 50,000 0 0.0%
Longmeadow, Mass 01106
William J Koopman (1)
327 McHone Road 25,000 25,000 0 0.0%
Spruce Pine, NC 28777
Timothy Miller (1)
10191 Ashbrooke Ct 15,000 15,000 0 0.0%
Suite D
Oakton, VA 22124
Jan O. Miller (1)
0525 Providence Way 10,000 10,000 0 0.0%
Fairfax, VA 22030
Maria L. Tafaro (1)
201 East 21st Street 10,000 10,000 0 0.0%
Apt. 8J
New York, NY 10010
Fredrick Johnson (1)
RT. 3 Box 158 E 25,000 25,000 0 0.0%
Marshfield, MO 65706-9435
Gary Anderson (1)
PO Box 7880 50,000 50,000 0 0.0%
San Francisco, CA 94120
Structure Management, Inc. (1)
500 Craig Road, Suite 201 125,000 125,000 0 0.0%
Manalapan, NJ 07726
Transworld Management Services,
Inc. (1) 125,000 125,000 0 0.0%
500 Craig Road, Suite 201
Manalapan, NJ 07726
Norman Goldstein (1) 152,000 152,000 0 0.0%
21 Nelson Avenue
Hicksville, NY 11801
TOTAL 587,000 587,000 0 0.0%
</TABLE>
15
<PAGE>
* Less than one percent
(1) Such shares of Common Stock were sold to such investor pursuant to a
private placement of the Common Stock of Complete Wellness.
This Registration Statement shall also cover any additional shares of Common
Stock which become issuable in connection with the shares registered for sale
hereby by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which results
in an increase in the number of outstanding shares of Common Stock of Complete
Wellness.
16
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock offered in this prospectus may be sold by the selling
stockholders from time to time in transactions in the Nasdaq SmallCap Market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to prevailing market prices or at negotiated prices. The selling
stockholders may effect such transactions by selling shares of common stock to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of the shares of common stock for whom such broker-dealers
may act as agents or to whom they sell as principals, or both.
In order to comply with the securities laws of certain states, if applicable,
the shares of common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares of common stock 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.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the distribution of the resale shares may be deemed
to be underwriters within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the shares of common stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
We have advised the selling stockholders that, during such time as they may be
engaged in a distribution of the shares of common stock included in this
prospectus, they must comply with the applicable provisions of Regulation M
under the Securities Exchange Act of 1934 and in connection therewith, the
selling stockholders may not engage in any stabilization activity in connection
with any securities of ours, that they must furnish copies of this prospectus to
each broker-dealer through which the shares of common stock included in this
prospectus may be offered, and that they may not bid for or purchase any
securities of ours or attempt to induce any person to purchase any securities of
ours except as permitted under Regulation M. The selling stockholders have also
agreed to inform us and broker-dealers through whom sales may be made hereunder
when the distribution of the shares is completed.
We have agreed to pay all fees and expenses incident to the filing of this
registration statement other than underwriting discounts, commissions and fees
and disbursements of counsel for the selling stockholders.
DESCRIPTION OF SECURITIES
As of the date of this Prospectus, there are approximately 738 holders
of record of Complete Wellness' common stock. We are currently authorized to
issue 50,000,000 shares of our common stock, par value $.0001665 per share, and
2,000,000 shares of our preferred stock, par value $0.01 per share. As of the
date of this Prospectus, Complete Wellness has 3,536,755 shares of its common
stock, and 115,239 shares of its preferred stock, issued and outstanding. There
are also warrants to purchase an additional 218,000 shares of our common stock
issued and outstanding.
COMMON STOCK
Each holder of shares of common stock is entitled to one vote per share
on all matters to be voted on by shareholders. The holders of common stock are
entitled to receive dividends, if any, as may be declared from time to time by
the board of directors out of funds legally available therefor and, in the event
of liquidation, dissolution or winding-up of Complete Wellness, to share ratably
in all assets available for distribution, subject to the rights of the holders
of any preferred stock as described below.
Upon the liquidation, dissolution or winding up of Complete Wellness,
the holders of shares of common stock would be entitled to share pro rata in the
distribution of all of Complete Wellness's assets remaining available for
distribution after satisfaction of all its liabilities and the payment of the
liquidation preference of any outstanding preferred stock. The holders of common
stock have no preemptive or conversion rights. All shares of common stock
outstanding as of the date of this prospectus
17
<PAGE>
are fully paid and are not subject to further calls or assessments by the
company. There are no redemption or sinking fund provisions applicable to the
common stock.
PREFERRED STOCK
Our Certificate of Incorporation, as amended, authorize the issuance of
up to 2,000,000 shares of preferred stock. The board of directors is authorized,
without further shareholder action, to issue such shares in one or more series,
and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, amounts payable upon liquidation and the number of shares
constituting any series or the designation of such series. If such preferred
stock is issued, it will rank senior to our common stock in respect of rights to
receive dividends and to participate in distributions or payments in the event
of an liquidation, dissolution or winding up of Complete Wellness. The issuance
of preferred stock may have the effect of delaying, deferring, discouraging or
preventing a third party from acquiring a majority of the outstanding voting
stock of Complete Wellness or other change in control of Complete Wellness
without further action by the shareholders, and may adversely affect the voting
and other rights of the holders of the common stock, including the loss of
voting control to others. The board of directors does not at present intend to
seek shareholder approval prior to issuing any such preferred stock, unless
required to do so by law.
In December, 1997 and January, 1998, we issued to Wexford Spectrum Investors LLC
and Imprimis Investors LLC a total of 100,000 shares of our Senior Convertible
Preferred Stock in receipt of a $5,000,000 investment in Complete Wellness. The
terms, provisions, rights and preferences of the Senior Convertible Preferred
Stock are more fully described in our Annual Report on From 10-KSB filed April
14, 1998 for the fiscal year ended December 31, 1997 as amended on Form 10-KSB/A
filed on January 19, 1999.
DIVIDEND POLICY
We have not paid any cash or other dividends on our common stock since our
inception and do not anticipate paying any such dividends in the foreseeable
future. We intend to retain any earnings for use in our operations and to
finance the expansion of its business.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Lehman & Eilen LLP.
EXPERTS
Our consolidated financial statements appearing in our Annual Report on Form
10-KSB for the year ended December 31, 1998 were audited by Amper, Politziner &
Mattia P.A., as set forth in its report and included with that filing and
incorporated in this prospectus by reference. Such financial statements have
been incorporated in this prospectus by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements included in our Annual Report on Form 10-KSB/A for the year ended
December 31, 1997, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
1997 financial statements are incorporated by reference in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
18
<PAGE>
Table of Contents
1. AVAILABLE INFORMATION 4
2. PROSPECTUS SUMMARY 5
3. THE OFFERING 5
4. RISK FACTORS 6
5. INDEMNIFICATION 10
6. INFORMATION INCORPORATED BY REFERENCE 11
7. MARKET PRICE OF COMMON STOCK 12
8. REGISTRATION RIGHTS 12
9. USE OF PROCEEDS 13
10. SELLING STOCKHOLDERS 14
12. PLAN OF DISTRIBUTION 18
13. DESCRIPTION OF SECURITIES 18
14. DIVIDEND POLICY 19
15. LEGAL MATTERS 19
16. EXPERTS 19
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other expenses of issuance and distribution.
The following table sets forth an itemized statement of all estimated
expenses in connection with the issuance and distribution of the securities
being registered:
SEC registration fee .................................... $ 1,286.00
Legal expenses ........................................ 5,000.00
Accounting fees and expenses .......................... 7,500.00
Miscellaneous ......................................... 1,214.00
Total ................................................... $ 15,000.00
Item 15. Indemnification of directors and officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities, including
reimbursement for expenses incurred, arising under the Securities Act of 1933.
Article VII of our bylaws provides for mandatory indemnification of its
directors and permissible indemnification of its officers, employees and other
agents to the maximum extent permitted by the Delaware General Corporation Law.
We have entered into indemnification agreements with our officers and directors
which are intended to provide the our officers and directors with further
indemnification to the maximum extent permitted by the Delaware General
Corporation Law. Reference is also made to Section XII B of the investor rights
agreement contained in Exhibit 4.3 incorporated by reference in this prospectus,
which contains provisions indemnifying officers and directors of ours against
certain liabilities. Reference is also made to the underwriting agreements
entered into in connection with our initial public offering indemnifying
officers and directors of ours and other persons against certain liabilities,
including those arising under the Securities Act of 1933.
Item 16. Exhibits and financial statement schedules
Exhibit Number Description
- -------------- -------------
4.1 Form of common stock certificate (1)
II-1
<PAGE>
5.1 Opinion of Lehman & Eilen LLP (2)
23.1 Consent of Ernst & Young LLP, Independent Accountants. (2)
23.2 Consent of Amper, Politziner & Mattia P.A., Independent Accountants (2)
23.3 Consent of Lehman & Eilen LLP (included in Exhibit 5.1). (2)
24.1 Power of Attorney (see page II-5).
- ---------------------
(1) Incorporated by reference to identically numbered exhibits included in our
registration statement on Form SB-2 (File No. 333-18291) declared effective
with the Securities and Exchange Commission on February 19, 1997.
(2) Filed herewith.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of ours pursuant
to the Delaware General Corporation Law, the certificate of incorporation or the
bylaws of ours, indemnification agreements entered into between us and our
officers and directors, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities, other than the payment by us of expenses incurred or paid by a
director, officer, or controlling person of ours 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 hereunder,
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 of 1933 and will be governed by the final
adjudication of such issue.
We hereby undertake:
(1) 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 of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
II-2
<PAGE>
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the
form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent 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 the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered in this
prospectus, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) 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.
(4) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934, 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Winter Park, State of Florida on this 3rd day of
August, 1999.
COMPLETE WELLNESS CENTERS, INC.
By: /s/ Joseph Raymond Jr.
----------------------------
(Joseph Raymond Jr.)
Chairman of the Board and
Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joseph Raymond Jr. and Sergio Vallejo,
and each of them singly, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the registration statement filed
herewith and any or all amendments to said registration statement, including
post-effective amendments and registration statements filed pursuant to Rule 462
and otherwise, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents the full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as full to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his substitute, may lawfully do
or cause to be done by virtue hereof.
Witness our hands on the date set forth below.
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:
<TABLE>
<CAPTION>
Signature Title Date
- --------- -------- -------
<S> <C> <C>
/s/ Joseph J. Raymond Jr. Chairman of the Board August 3, 1999
- ---------------------------- and Chief Executive Officer
(Joseph J. Raymond Jr.) (Principal Executive Officer)
/s/ Sergio Vallejo President and Chief Operating August 3, 1999
- ---------------------------- Officer, Director
(Sergio Vallejo)
/s/ E. Eugene Sharer Director August 3, 1999
- ----------------------------
(E. Eugene Sharer)
/s/ Michael Brigante Chief Financial Officer August 3, 1999
- ---------------------------- (Principal Accounting and
(Michael Brigante) Financial Officer)
/s/ Jack Pawlowski Director August 3, 1999
- ----------------------------
(Jack Pawlowski)
/s/ Dr. Eric Kaplan Director August 3, 1999
- ----------------------------
(Dr. Eric Kaplan)
</TABLE>
II-5
<PAGE>
COMPLETE WELLNESS CENTERS, INC.
Index to Exhibits
Exhibit Description
4.1 Form of common stock certificate (1)
5.1 Opinion of Lehman & Eilen LLP (2)
23.1 Consent of Ernst & Young, L.L.P., Independent Accountants. (2)
23.2 Consent of Amper, Politziner & Mattia P.A., Independent Accountants. (2)
23.3 Consent of Lehman & Eilen LLP (included in Exhibit 5.1). (2)
24.1 Power of Attorney (see page II-5).
- ---------------------
(1) Incorporated by reference to identically numbered exhibits included in our
registration statement on Form SB-2 (File No. 333-18291) declared effective
with the Securities and Exchange Commission on February 19, 1997.
(2) Filed herewith.
II-6
Exhibit 5.1
LEHMAN & EILEN LLP
50 Charles Lindbergh Boulevard
Suite 505
Uniondale, New York 11553
August 4, 1999
Board of Directors
Complete Wellness Centers, Inc.
666 Eleventh Street, N.W.
Washington, D.C. 20001
Re: Amendment No. 1 to Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, this letter relates to Amendment No. 1 to the
Registration Statement on Form S-3 filed by Complete Wellness Centers, Inc. (the
"Company") with the Securities and Exchange Commission on August 4, 1999 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 587,000 shares of common stock of the
Company (collectively herein, the "Shares"). Capitalized terms utilized herein
and not defined herein shall have the respective meanings ascribed to such terms
in the Registration Statement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the proceedings taken by the
Company in connection with the issuance of the Shares, the Registration
Statement and such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as we have deemed relevant or necessary as
a basis for the opinions hereinafter set forth.
In such examination, we have assumed without independent verification,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of documents submitted
to us as certified or photostatic copies and the authenticity of the originals
of such latter documents. As to all questions of fact material to this opinion
that have not been independently established, we have relied upon
representations of the Company in the Registration Statement, certificates or
comparable documents of officers of the Company and of public officials.
<PAGE>
Board of Directors
Complete Wellness Centers, Inc.
August 3, 1999
Page 2
Based on the foregoing, and subject to the qualifications stated
herein, as of the date hereof, it is our opinion that upon the issuance and sale
in the manner described in the Registration Statement, such Shares will be
validly issued, fully paid and non-assessable. This opinion relates only to the
number of Shares set forth above.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
Lehman & Eilen LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
registration statement (Form S-3 No. 333-81923) and related prospectus of
Complete Wellness Centers, Inc. for the registration of 587,000 shares of its
common stock and to the incorporation by reference therein of our report dated
March 31, 1998, with respect to the consolidated financial statements of
Complete Wellness Centers, Inc. included in its Annual Report (Form 10-KSB/A)
for the year ended December 31, 1997, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
---------------------
Washington, DC
August 3, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
registration statement (Form S-3 No. 333-81923) and related prospectus of
Complete Wellness Centers, Inc. for the registration of 587,000 shares of its
common stock and to the incorporation by reference therein of our report dated
March 31, 1999, with respect to the consolidated financial statements of
Complete Wellness Centers, Inc. included in its Annual Report for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.
AMPER, POLITZINER & MATTIA P.A.
Edison, New Jersey
August 4, 1999
