PROSPECTUS
10,000,000 Class "A" Equity Units
5,000,000 Class "B" Equity Units
Continental Wellness Casinos Trust
Equity Units Class "A"
And
Class "B" Equity Units
All of the shares of Equity Unit (the "Equity Unit") offered hereby
(the "Offering") are being offered by Continental Wellness Casinos Trust
(the "Company").
The Equity Unit will be traded on the NASDAQ SMALL CAPS BOARD Market
under the symbol
CWCT approval pending, the proposed sale price for the Common Stock on
the Stock
Market will be 11.00 per share in accordance with offering.
Of the 15,000,000 shares of Class "A" offered hereby, 5,000,000 shares
(the "Direct
Shares") will be sold directly by the Company. No underwriting discount or
commission
will be paid on the Direct Shares. The 10,000,000 (the "Public Shares")
will be offered
by the several underwriters.
See "Risk Factors" beginning on page 9 for a discussion of certain
information that
should be considered in connection with an investment in the Equity Units.
NEITHER THE NEVADA STATE GAMING CONTROL BOARD NOR THE
GAMING COMMISSION NOR ANY OTHER GAMING AUTHORITY HAS PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<S><C> <C> <C>
<C>
Price Underwriting Discount (1)
Proceeds to Company (2)
Per Public Share "A" $11.00 $1.10 $9.90
Per Public "B" $11.00 $11.00
Total (3) $110, 000, 000 $55,000,000
</TABLE>
[S]
(1) The Company has agreed to indemnify the several Underwriters
against certain
Liabilities, including liabilities under the Act of 1933, as amended. See
"Underwriting".
(2) Before deducting expenses payable by the Company estimated to be
$16,500,000
(3) The Company has granted the Underwriters a 30-day option to
purchase in the
aggregate up to 1,260,000 additional shares of Equity Units solely to
cover over-
allotments, if any. See "Underwriting". If the Underwriters exercise
such option in full,
full, the total Price, Underwriting Discount and Proceeds to Company will
be
$13,860,000 $1,386,000 $12,474,000
respectively.
The Public Shares are offered by the several Underwriters, subject to prior
sale, when, as
and if delivered to and accepted by the Underwriters, and subject to
approval of certain
legal matters by counsel. It is expected that delivery of the Public Share
subject to this
offering will be made on or about June 30, 1998 at the offices of
Continental Wellness
Casinos Trust, 2205 Purple Majesty Court, Las Vegas, Nevada 89117-2747
Continental Wellness
Casinos Trust
The date of this Prospectus is
April 1, 1998<PAGE>
3.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE EQUITY UNIT AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS AND SELLING
GROUP MEMBERS MAY ENGAGE IN PASSIVE MARKETING TRANSACTIONS
IN THE EQUITY UNIT ON NASDAQ IN ACCORDANCE WITH RULE 10-B 6A
UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING".
PROSPECTUS SUMMARY
The following summary is qualified detailed information and financial data,
included
notes thereto Appearing elsewhere in this Prospectus. The information in
this Prospectus
gives effect to the Company sale of securities but does not give effect to
the exercise of
any Class "B" Each prospective investor is urged to read this Prospectus
in its entirety.
THE COMPANY
The Company in engaged in the mining development industry<PAGE>
The Company
will operate
the casino Hotel and Casino upon receiving full approval from
Nevada Gaming Control and the Casino will produce great revenues for the
Company, if
the Company is successful with this offering.
The executive offices of the Company are located at 2205 Purple Majesty
Court, Las
Vegas, Nevada 89117-2747
telephone ( 702) 240-4408
4.
THE OFFERING
Securities Offered:
10,000, 000 Class "A" Stock are offered upon exercise of 5,000,000 Class
"B" Stock
Purchase "Class B" ("Class B"). The "Class B" will be distributed pro-rata
to all
shareholders of record as of the date of this Prospectus, on the basis of
one "B" for each
four shares held as of such date. See "Description of Securities" and
"Plan of Distribution."
Equity Unit Outstanding Before Offering.... 90,250,877
Common Stock Outstanding After Offering 105,250,877..
Use of Proceeds
The net proceeds of this offering, estimated to be 150,000,000 if all the
"Class B" are
exercised, will be used to retire working capital indebtedness, pay
marketing costs, and
for working capital purposes. See "Use of Proceeds".
Risk Factors
Investments in the securities offered hereby involves a high degree of risk
and immediate
substantial dilution. See "Use of Proceeds".
Electronic Bulletin Board Symbol CWCT (applied for) The company has never
operated
a Hotel and Casino Property.<PAGE>
likely give them a controlling interest
in the Company's
Equity Unit and the ability to
elect the entire Board of Trustee See "Principal Stockholders."
6. Investment by Current Stockholders. The Company's current stockholders
purchased
their 90,250,877 shares of Equity Unit for aggregate consideration of cash
and services or
$0.25 to $7.00 per Unit. These stockholders do not intend to contribute
additional
amounts of cash or other property to the Company in the future.
7. Limited Public Market. The market for the Company's Equity Unit has been
limited
and sporadic, and there can be no assurance that a trading market will
develop following
this offering, or if such a trading market develops, that it will be
sustained. No person has
agreed to make a market in the Equity Unit and market making activities
could be
discontinued at any time.
8. Dilution. Purchasers of the Shares of Accrued by this Prospectus will
experience
immediate and substantial dilution in that the net tangible value of the
Equity Unit
outstanding after the offering will be substantially less than the per
share public offering
price of the Shares offered hereby. See "Dilutions".
9. Shares Eligible for Future Sale. Upon sale of the 15,000,000 Shares
offered hereby, the
Company will have outstanding 100,250,877 Class "A" of Equity Unit.,
including
72,661,029 shares of Common Stock which are "Restricted Securities," as
defined under
Rule 144 promulgated under the Securities Act of 1933. Such shares will
be subject to
resale restrictions and will be ineligible for sale in the public market
until June 1955, after
which sales may be mode pursuit to Rule 144 under the Securities Act.
Sales of
substantial amounts of the Equity Unit of the Company in the public market
could
adversely affect prevailing market prices. See "Description of Securities
Shares Eligible
for Future Sale."
10. Foreign Operations. The Company does not conduct any foreign
operations or business outside of the United States.
11. Current Registration Statement and Blue Sky Qualification Required of
Warrants. In order for a holder of
7.
a Class "B" to exercise it there must be a current registration statement
on file with the
Securities and Exchange Commission and various state security regulatory
authorities to
continue registration of the Shares underlying the Class "B" The Company
has
undertaken to keep (and intends to keep) the registration statement filed
in connection
with this offering effective with respect to the
Class "B" with the Securities and Exchange Commission and state securities
authorities
for so long as the Class "B" remain exercisable. However, maintenance of
an effective
registration statement will subject the Company to substantial continuing
expenses for legal and accounting fees and there can be no assurance the
Company will be able to maintain a current registration statement until
July 31, 1998 when the Class "B" expire. Moreover, Blue Sky Qualification
of the Class "B" and the underlying shall be undertaken only in those
states in which the Company's shareholders reside as of the date
of this prospectus. if the Class "B" to register the Shares underlying the
Class "B" in all states Class "B" holders reside, unless the cost of such
registration, in relation to the number Class "B" potentially exercisable,
is clearly disproportionate. In addition, due to the Company's limited
history or operations, it is possible that one or more states where
Class "B" holders reside will not permit registration of the underlying
Shares until a favorable history of operations can be demonstrated or other
criteria complied with. The value of the Class "B" may be affected
adversely by the Company's inability to maintain an effective registration
statement with respect to the underlying Shares or by the - non-
qualification of the underlying Shares in the state of such holders or a
partial purchasers residence. Holders of Class "B" may contact the Company
in order to ascertain the states in which the Shares underlying the Class
"B" will be qualified for sale.
12. Arbitrary Offering Price. The exercise price and other terms of the
Class "B" have been determined arbitrarily by the Company and do not bear
any relationship to the assets, results of operations, or book value of the
Company, or any other established criteria of value. Purchasers of the
Shares underlying the Class "B" will be exposed to a substantial risk of a
decline in the market price of the Equity Unit after this offering, if a
market develops. See "Plan of Distribution" The Company, is applying for
listing on NASDAQ Small Caps Market.
While many NASDAQ stocks are covered by the definition of Penny Stock,
transactions in NASDAQ stock are exempt from all but the sale market maker
provision for (1) issuers who have $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three
years), (ii) transactions in which the customer is an institutional
accredited investor and (iii) transactions that are not
recommended by the broker/dealer,. In addition, transactions in NASDAQ
security directly with the NASDAQ market maker for such securities, are
subject only to the sole market disclosure, and the disclosure with regard
to commissions to be paid to the broker/dealer and the registered
representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raises its requirements
for continued listings so that any issuer with less than $2,000,000 in net
tangible assets or stockholder's equity would be subject to delisting.
These criteria are more stringent than the recent increase in NASDAQ'S
maintenance requirements. For as long as Company's securities are subject
to the rules of Penny Stocks, the market liquidity for the Company's
securities will be severely affected by limiting the ability of
broker/dealers to sell the Company's securities and the ability of
purchasers in this offering to sell their securities in the secondary
market.
13. Risks Low priced Stocks. The Equity Unit is not eligible for quotation
on the Automated Quotation System of the National Association of Securities
Dealers, Inc. ("NASD").
In the absence of a security being quoted on NASDAQ, or the Company having
$2,000,000 in net tangible assets, trading in the Common<PAGE>
dividing the
net tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common Stock
At December 31, 1997 the Company's Equity Unit had a net tangible book
value of $2,172,649,000 or $24,073 share. After giving effect to the
receipt of the net proceeds from the sale of all Shares offered hereby, at
a public offering price of $11.00 per Share, the pro forma net tangible
book value of the Company at December 31, 1997 would have been
$ 2,022,649,000 or $22,411 per share, representing an immediate increase
in net tangible book value of $150,000,000 share to the present
stockholders, and immediate dilution of 1,662 public investors. The
following table illustrates diluting to public investors on a per share
basis, assuming all Class "B" are exercised. To the extent less than all
are exercised, net proceeds to the Company will be less and dilution to
investors in this offering will be proportionately greater. The actual
shares after dilution will be $1, 662 per share. The shares will be free
trading shares and not subject to Rule 144.
The procedure after the Dilution factor will be that the net asset value of
the shares will be reduced from $24,072 to $22,411 per Unit Public
offering price share....$11.00 Net tangible book value per share before
offering....$24,073 decrease per share attributable to public
investors....$2,005
12. Pro forma net tangible book value per share after
offering....$24,073 Dilution per share to public investors....$2,005
The following table sets forth with respect to the present stockholders
and public Investors a comparison of the number of shares of Equity Unit
owned by the present stock Holders, the number of shares of Equity Unit to
be purchased from the Company by the purchasers of the 15,000,000 Shares
offered hereby and the respective aggregate consideration paid to the
Company and the average price per share.
The present stockholders will not be considered under this offering
in accordance with Act of 1933.<PAGE>
<TABLE>
<S><C> <C> <C> <C> <C> <C>
13.
Stock
Holders Shares Percentage Total
Purchased of Total Consideration Percent Of
Total Consideration
Present Shares Average
Price Per Share
Stock
holders 10,000,000 Class "A" 100% $110,000,000 100%
5,000,000 Class "B" 100% $55,000,000 100%
$11.00
Public
Investors 10,000,000 Class "A" 100% $110,000,000 100%
5,000,000 Class "B" 100% $55,000,000 100%
$11.00
<S></TABLE>
Public Investors will be purchasing the shares and present stockholders
will be purchasing the Class "B".
MARKET PRICE OF EQUITY UNIT
The Equity Unit has traded on the "pink sheets" maintained by the National
Association of Securities Dealers (NASD) under The National Quotation
Bureau, Inc. since April 5, 1990. The following table gives the high and
low bid prices since April 5, 1990, as reported by the market makers of the
These prices are without retail mark up of markdowns and commissions,
and may not reflect actual transactions. The Company does not believe that
trading of its Equity Unit currently is reflective of an established
trading market.<PAGE>
The Equity Unit does not currently trade. As of
December 31, 1997, there were approximately 575 holders of Company common
stock. No trading or volume is available because the shares have not been
trading since 199
USE OF PROCEEDS
If all 15,000,000 Class "B" are exercised, of which there can be no
assurance, the net proceeds to the Company will be approximately
$148,500,000 after deducting offering expenses of approximately
$16,500,000. The Company intends to utilize the net proceeds during the
12-month period following the offering as follows. If less than all of
the Class "B" are exercised, the proceeds of this offering will be spent
first to purchase equipment, and for consolidation of assembly operations
and then pro rata for the other purposes set forth herein.<PAGE>
pay down its
note.
Pending use of all the proceeds, the Company will make temporary
investments of the proceeds, including but not limited to interest bearing
savings accounts, certificates of deposit, money market and other
liquid assets.
The foregoing list of expenditures is an estimate and will vary due to
changing circumstances such as variations in additional contracts which may
be acquired. Any change in the application of proceeds will occur solely in
the discretion of the Company's Board of Trustees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF
OPERATIONS
Summary of significant Nature of the Business Continental Wellness Casinos
Trust, a Colorado Real Estate Investment Trust was organized on
October 29, 1974. The company is engaged in the discovery and development
of precious metals mining properties located in Quincy, Plumas<PAGE>
No
material changes from period to period.
No seasonal aspects that will affect the financial condition or results of
operations.
20.
BUSINESS
The Basic Plan
A. Basic Strategy - Wellness-Resort and Casino, Las Vegas, Nevada is a
Wholly owned subsidiary of Continental Wellness Casino Trust, a publicly
traded Trust (CWCT) which operates a life Extension Club where the
members are rained in how to live a longer life and a<PAGE>
28.
PRINCIPAL STOCKHOLDERS
Grand American Bank Trust owns 60% of the Company's Class "A" Equity Unit
as of December 31, 1997.
<TABLE>
<S><C> <C> <C> <C>
Name and Address Number Percent Before Percent After
Of
Beneficial Owner of Shares Offering
Grand American Bank Trust 63,008,512 (1) 60% 54%
Estate Trust Organization Class "A" Equity Unit.
Geneva, Switzerland
Frank Coberly 10,806,960 (1) 12% 11%
950 N. Cascade Dr. Apt. 201 Class "A"
Woodburn, OR 97071-3152
V.G. Kelly & D. Kelly Trust 3,130.933(2) 3.5% 3.2%
936 West 21 st. Street Class "A"
Santa Ana, CA 92706
Joseph Witzman 3,266,960 (3) 3.6% 3.3%
5946 Soledad Mountain Road Class "A"
La Jolla, CA 92037
Forbes Family Trust 2,000,000 (2) 2.2% 2%
All the Officers and Trustees own no Equity Units.
Directors as a group
</TABLE>
[S]
29.
(1) Purchase for cash equivalent
(2) Purchase by surrendering debt of the company.
(3) Purchase with cash and part given as gift.
CERTAIN TRANSACTIONS
The Company is authorized to issue 50,000,000 shares of no par value Class
"B" shares. The Company gave authority to its Board of Directors to issue
such Class "B" stock in one or more series, and to fix the number of share"
in each series, and all designations, relative rights, preferences and
limitations of the stock issued in each series. As of April
13, 1994, the Board of Trustees have exercised the authority granted.
The Company issued to Joseph Witzman 3,266,960 Class "B" Equity Unit of no
par value in exchange for the cancellation of some of the Company debt and
said Class "B" Equity Unit were restricted shares that bear a ledger and
are subject to the provisions of Securities and Exchange Commission
Rule 144. The holder of said securities has promised to abide by the
restrictions of Securities and Exchange Commission Rule 144.
The Company also issued to Joseph Witzman 3,266,960 Class "A" Equity
Unit shares of $.003 par value in exchange of the cancellation of the
balance of the Company debt and said Class "A" Equity Unit were restricted
shares that bear a ledger and are subject to the provisions of
Securities and Exchange Commission Rule.
CONTINENTAL WELLNESS CASINOS TRUST
FINANCIAL DATA:
Report of Luis R. Hidalgo, CPA
Audited Financial Statements
Report of Luis R. Hidalgo, CPA Audited Financial
Statements
Consolidated Balance Sheets as of December 31, 1997
and October 31, 1996 audited as of March 15, 1998.
Continental Wellness Casinos Trust
Financial Data:
Report of Luis R. Hidalgo, CPA
Audited Financial
Statements:
Consolidated Balance Sheets an of December 31, 1997 and October 31, 1996
audited as of March 15, 1998.
Statement of Stockholder's Equity:
Notes to the Consolidated Financial Statement:
(organization) (Code Number)
2205 Purple Majesty Court, Las Vegas, Nevada 89117-2747
Telephone Number (702) 240-4408 Fax Number (702) 240-4345
(Address and telephone number of principal executive offices)
Rick Eriksen , 2205 Purple Majesty Court, Las Vegas, Nevada 89117-2747
(Name, address and telephone number of Agent for services)
Fred Cruz, 2205 Purple Majesty Court, Las Vegas, Nevada 89117-2747,
Telephone Number: (702) 240-4408<PAGE>
offering Fee
offering Price security
<TABLE>
<S> <C> <C>
<C> <C>
Par Value Equity Unit Price
Equity Stock Class "A" 10,000,000 $0.003 $11.00
$110,000,000
Equity Stock Class "B" 5,000,000 No par $11.00
$55,000,000
Equity Stock, Class "A" Equity Stock Class "B"
$.003 par value No Par Value
$110,000,000 $55,000,000
Total..........
$165,000,000
(1) Estimated solely for the purpose of
calculating
the registration fee.
(2) Represents Equity Units of Stock Purchase Class "A"
Class "B"
The (Class "B") to be distributed pro-rata to the Buyer of Class "A"
Equity Units
or
Shareholders of the Company on the effective date of June 30, 1998
This Registration Statement, at the rate of one
Class "B" for each four shares of Equity Units Class "A" Stock
purchased.
(3) Represents Class "A" shares of Equity Units of Stock, par Value of
$0.003 per share, issuable upon exercise Of the Also registered
hereunder<PAGE>
10,000,000 Equity Units Class "A" 5,000,000 Equity Units
Class "B"
Continental Wellness Casinos Trust, a Colorado organization
(the "Company"), issuable upon exercise of 10,000,000 shares of its
class "A" stock, par value $0.003 per share (the "Equity Stock"),
issuable upon exercise of 10,000,00 Equity Stock Purchase
Class "A"("Units" ) being distributed to the purchasers of the Company
at the rate of one Class "B" for each four shares owned of Class "A"
on the date of this Prospectus. Each Class "A" entitles the holder
to receive one share of Class "B" Unit at a price of $11.00
per share of the Class "A" Equity Units Shares, commencing on the date
of this Prospectus, until July 31, 1998.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
DILUTION. THE COMPANY HAS ENGAGED IN NO OPERATIONS TO DATE. AN
INVESTMENT IN THE SECURITIES OF THE COMPANY IS HIGH SPECULATIVE
AND SHOULD BE MADE ONLY BY THOSE PERSONS WHO CAN AFFORD A
LOSS OF THEIR ENTIRE INVESTMENT. See "Risk Factors" and "Dilution".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 5
</TABLE>
<TABLE> 2
Price to Public Proceeds Underwriting
Proceeds
And Commissions
(1) to Company (2)
<S> <C> <C>
<C>
Per Share $11.00 $--
$11.00
Total $165,000,000
$--
$165,000,000
Only $55,000,000 will be regenerated from purchase of the Class "B" only.
(1) The Shares are being offered on a straight best efforts, no premium
basis by the Company upon exercise of the Class "B" No person has agreed to
exercise any Class "B" to purchase or to take down any of the Shares.
There can be no assurance that any or all of the Class "B" will be
exercised. The Company has the right to reduce the exercise price of
the Class "B" at any time. The Company may extend the Class "B" exercise
period until one year from the date of this Prospectus, and may vary the
terms off the Class "B" in any extension period.
(2) Before deducting approximately $16,500,000 legal, accounting and other
expenses of the offering.
The date of this Prospectus is March 31, 1998.
ADDITIONAL INFORMATION<PAGE>
Gaming Control and the Casino will produce great
revenues for the Company, if the Company is successful with this offering.
The executive offices of the Company are located at 2205 Purple Majesty
Court, Las Vegas, Nevada 89117-2747, Telephone: (702) 240-4408.
THE OFFERING
Securities Offered:
10,000,000 shares of Class "A" are offered upon exercise of 5,000,000
Equity Units shares of stock (Class "B"). The-Class "B" will be
distributed pro-rata to all shareholders of record as of the date of
this Prospectus, on the basis of one Unit for each four shares held as
of such date. See "Description of Securities 11 and "Plan of Distribution."
Equity Units Outstanding Before Offering.... 90,250,877 Class "A" Equity
Units.
Equity Units Outstanding Before Offering.... 5,266,960 Class "B" Equity
Units
Equity Units Outstanding After Offering 100,250,877 Class "A" Equity Units
Equity Units Outstanding After Offering...10,266,960 Class "B" Equity Units
Use of Proceeds
The net proceeds of this offering, estimated to be $150,000,000 if all the
Class "B" are exercised, will be used to retire working capital
indebtedness, pay marketing costs, and for working capital purposes. See
"Use of Proceeds".
Risk Factors
Investment in the securities offered hereby involves a high degree of risk
and immediate substantial dilution. See "Use of Proceeds".<PAGE>
5. Control by Insiders. At the completion of this offering, directors and
officers of the Company and other principal stockholders and their families
will own 60% of the shares of the Company's outstanding Equity Units, or
approximately 54,050,000 of the outstanding voting stock, which will likely
give
<PAGE> 1 0
them a controlling interest in the Company's Equity Units and the ability
to elect the entire Board of Directors. See "Principal Stockholders. "
6. Investment by Current Stockholders. The Company's current stockholders
purchased their 90,250,877 shares of Common Stock for aggregate
consideration of cash and services or $.25 to $7.00 Unit. These
stockholders do not intend to contribute additional amounts of cash
or other property to the Company in the future.
7. Limited Public Market. The market for the Company's Equity Units has
been limited and sporadic, and there can be no assurance that a trading
market will develop following this offering, or if such a trading market
develops, that it will be sustained. No person has agreed to make a market
in the Equity Units and market making activities could be
discontinued at any time.
<PAGE> 11
8. Dilution. Purchasers of the Shares offered by this Prospectus will
experience immediate and substantial dilution in that the net tangible
value of the Equity Units outstanding after the offering will be
substantially less than the per share public offering price of the
Shares offered hereby. See 11 Dilutions".
9. Shares Eligible for Future Sale. Upon sale of the 10,000,000 Equity
Units Shares offered hereby, the Company will have outstanding 100,250,877
Class "A" shares of Equity Units including 72,661,029 shares of Class "A"
Equity Units which are "Restricted Securities," as defined under
Rule 144 promulgated under the Securities Act of 1933. Such shares
will be subject to resale restrictions and will be ineligible for sale in
the public market until September 1, 1997, after which sales may be made
pursuant to Rule 144 under the Securities Act. Sales of substantial
amounts of the Equity Units of the Company in the public market could
adversely affect prevailing market prices. See "Description of
Securities--Shares Eligible for Future Sale."
10. Foreign Operations. The Company does not conduct any foreign
operations or business outside of the United States.
II. Current Registration Statement and Blue Sky Qualification
Required of Equity Units. In order for a holder of a Unit to exercise it,
there must be a current registration statement on file with the Securities
and Exchange Commission and various state securities regulatory authorities
to continue registration of the Shares underlying the Equity Unit The
Company has undertaken to keep (and intends to keep) the registration
statement filed in connection with this offering effective with respect to
the Units with the Securities and Exchange Commission and state securities
authorities for so long as the Units remain execrable. However,
maintenance of an effective registration statement will subject the Company
to substantial continuing expenses for legal and accounting fees and there
can be no assurance that the Company will be able to maintain a current
registration statement until July 31, 1998.
when the Class "B" expire. Moreover, Blue Sky Qualification of the Class
"B" and the underlying Shall be undertaken only in those states in which
the Company's shareholders reside as of the date of this prospectus. if
the Class "B" are acquired in over the counter purchases or otherwise
by residents of jurisdictions where the Shares underlying the Units
were not registered or otherwise qualified for sale, such persons would
not be able to exercise their Class "B" unless the Shares issuable
thereunder were registered in the applicable jurisdiction or an
exemption from such registration were available, of which there can be
no assurance. The Company will use its best efforts to register the
Shares underlying the Class "B" in all states where Class "B'' holders
reside, unless the cost of such registration, in relation to the
number of Class "B" potentially execrable, is clearly disproportionate.
In addition, due to the Company's limited history or operations, it is
possible that one or more states where Class "B" holders reside will
not permit registration of the underlying Shares until a favorable
history of operations can be demonstrated or other criteria complied with,
The value of The Class "B" may be affected adversely by the Company's
inability to maintain an effective registration statement with respect
to the underlying Shares or by the nonqualification of the underlying
Shares in the state of such holder's, or a partial purchaser's residence.
Holders of Class "B" may contact the Company in order to ascertain the
states in which the Shares underlying the Class "B" will be
qualified for sale.
12. Arbitrary Offering Price. The exercise price and other terms of the
Class "B" have been determined arbitrarily by the Company and do not bear
any relationship to the assets, results of operations, or book value of the
Company, or any other established criteria of value. Purchasers of the
Shares underlying The Class "B" will be exposed to a substantial risk of a
decline in the market price of the Equity Units after this offering, if a
market develops. See "Plan of Distribution" The Company is applying for
listing.
<PAGE> 13
13. Risks of low priced Stocks. the Common Stock is eligible for quotation
on the Automated Quotation System of the National Association of Securities
Dealers, Inc. (NASDAQ)
In the absence of a security being quoted on NASDAQ, or the Company having
$2,000,000 in net tangible assets, trading in the Common Stock is covered
by Rule 15c2- 6 promulgated under the Securities Exchange Act of 1934 for
non NASDAQ and non-exchange listed securities. Under such rule,
broker/dealers who recommended such securities to persons other than
established customers and accredited investors generally institutions
with assets in excess of $5,000,000 or individuals with an Ct worth in
excess of $1,000,000 or an annul income exceeding $200,000 or $300,000
jointly with their spouse) must make a special written suitability
determination for the purchaser and receive the purchaser's written
agreement to a transaction prior to sale. Securities are also exempt
this rule if the market price is at least $11.00 per share, or for Class
"B" if the Unit have an exercise price of at least $11.00 per share.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosures related to the market for penny stocks and for
trades in any stock defined as penny stock. The Commission has adopted
regulations under such Act which would define a penny stock to be any
NASDAQ or non-NASDAQ equity security that has a market price or exercise
price of less than $5.00 per share and allow for the enforcement
against violators of the proposed rules. In addition, unless except,
the rules require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule prepared by the Commission explaining
important concepts involving the penny stock market, the nature of
such market, terms used in such market, the broker/dealer's duties to
the customer, a toll free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customary rights and remedies
in case of fraud<PAGE>
<PAGE> 15
intends 95% dividends to Equity Holders and 57 for the Company 's business
operations. Since the Company may be required to obtain additional
financing, it is likely that there are no restrictions on the Company's
ability to declare any dividends. See "Market Price of Common Stock"
and "Description of Securities."
16. There is a risk factor because of the lack of experience in running a
hotel or a wellness center. However the Company have a great number of
highly experience hotel and casinos operators to accomplish all phases of
these operations.
DILUTION
The difference between the public offering price per share of Equity Units
and the pro form net tangible book value per share of Equity Units after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common Stock.
At December 31, l997 the Company's Equity Units had a net tangible book
value of $2,172,649,000 or $24,073 a share. After giving effect to the
receipt of the net proceeds from the sale of all Shares offered hereby, at
a public offering price of $11.00 per Share, the pro forma net
tangible book $22,411 of the Company at December 31, 1997 would
have been $2,022,649,000 or $22,411 a share, representing an immediate
increase in net tangible book value of $1,662 per share to the present
stockholders, and immediate dilution of $1,662 per share to public
investors. The following table illustrates dilution to public
investors on a per share basis, assuming all Class "B" are exercised. To
the extent less than all Equity are exercised, net proceeds to the
Company will be less and dilution to investors in this offering will be
proportionately greater. The actual shares after dilution will be
$20,710 per share. The shares will be free trading shares and not
subject to Rule 144.
The procedure after the Dilution factor will be that the net asset value of
the shares will be reduced from $24,073 to $22,411 per share Equity
Unit.<PAGE>
of shares of Equity Units are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of Equity
Units have no cumulative voting rights. Holders of shares of Equity Units
are entitled to share ratably in dividends, if any, as may
he declared from time to time by the Board of Directors in its discretion,
from funds legally available therefor. . In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of
common stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. holders of Equity Units have no
preemptive rights to purchase the Company's Equity Units There are no
conversion rights or redemption or sinking fund provisions with respect to
the Equity Units All of the outstanding shares of Equity Units are,
and the shares offered by this Prospectus will be, fully paid and
non-assessable.
Class "B" Equity Units
The Equity Units Purchase Class "B" (the "Class "B") are to be issued
in fully registered form. Class "B" will be distributed to each shareholder
of record on the effective date of this Prospectus at the rate of one
Class "B" for each four shares owned. The following discussion of the
Warrants does not purport to be complete and is qualified in its
entirety by references to the form of Class "B" copy of which is filed as
an exhibit to the Registration Statement. See "Additional Information."
The holder of each Class "A" is entitled to purchase one share of Class "B"
at an exercise price of $11.00, at any time until July 31, 1998 provided
that at such time a current prospectus relating to the Equity Units is in
effect and the is qualified for sale or exempt from qualifications
under applicable state securities laws. The Class "B" are immediately
transferable upon issuance. The Company may in its sole discretion reduce
the exercise price or extend the exercise period for the Class " B" Equity
Units.
<PAGE> 39
The Class "B" may be exercised upon surrender of the certificate therefor
on or prior to the expiration date at the offices of the Company with the
form of "Election to Purchase" on the reverse side of the certificate
filled out and executed as indicated, accompanied by payment (in the
form of a certified or cashier's check payable to the order of the
Company) of the full exercise price for the number of being exercised.
No Class "B" have been issued as of the date of this offering.
The Class "B" contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price in certain events, such as
stock dividends, stock splits, mergers, sale of substantially all of
the Company's assets at less than market value, sale of stock at below
market price, and for other unusual events (other than employee benefit
and stock option plans for employees or consultants to the company.)
The holders of a Class "B" will not posses any rights as a stockholder of
the Company unless and until he exercises a Equity Unit Class "B".
Other than as set forth, above, there are no options or Class "B" presently
outstanding for shares of the Equity Units.
<PAGE> 40
The transfer agent for the common stock and the warrant agent is American
Securities Transfer, Inc., P.O. Box 1596, Denver, Colorado 80201.
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