<PAGE>   1

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                ----------------
                                   FORM 10-KSB

(MARK ONE)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM ______ TO ______

                         COMMISSION FILE NUMBER 0-22115
                            ------------------------

                         COMPLETE WELLNESS CENTERS, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

     DELAWARE                                                  52-1910135
(State or other jurisdiction of                            (IRS employer number)
 incorporation or organization)

            1964 HOWELL BRANCH ROAD, SUITE 202, WINTER PARK, FL 32792
              (Address of principal executive offices and zip code)

                            www.completewellness.com
                           (Issuer's web site address)

                                 (407) 673-3073
                           (Issuer's telephone number)

SECURITIES REGISTERED UNDER SECTION 12(B) OF THE ACT:         none

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE ACT:
                                     Common Stock, $.0001665 par value per share
                                     Redeemable Common Stock Purchase Warrants

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                                                                  Yes [X] No [ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The issuer's revenues for the year ended December 31, 1999 were
$12,940,331.

     The aggregate market value of all of the voting stock held by
non-affiliates outstanding at April 10, 2000, was $5,318,836. The amount was
computed by reference to the average bid and asked prices of the Common Stock as
of April 10, 2000.

     As of April 10, 2000, 4,703,561 shares of Common Stock were outstanding,
and 1,036,776 Redeemable Common Stock Purchase Warrants were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE


         Not applicable.
         Transitional Small Business Disclosure Format (check one):
                                                                  Yes [ ] No [X]



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TABLE OF CONTENTS


PART I
Item 1        Business
Item 2        Properties
Item 3        Legal Proceedings
Item 4        Submission of Matters to a Vote of Security Holders

PART II
Item 5        Market for Common Equity and Related Stockholder Matters
Item 6        Management's Discussion and Analysis
Item 7        Financial Statements
Item 8        Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure

PART III
Item 9        Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act
Item 10       Executive Compensation
Item 11       Security Ownership of Certain Beneficial Owners and Management
Item 12       Certain Relationships and Related Party Transactions
Item 13       Exhibits and Reports on Form 8-K



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The Company operates through a series of wholly-owned and majority owned
subsidiaries as follows:

COMPLETE WELLNESS CENTERS, INC.
COMPLETE WELLNESS MEDICAL CENTERS, INC.(1)
COMPLETE WELLNESS WEIGHT MANAGEMENT, INC.(2)
COMPLETE WELLNESS SMOKING CESSATION, INC.(3)
COMPLETEWELLNESS.COM, INC.(4)
COMPLETE WELLNESS EDUCATION, INC.(4)
COMPLETE WELLNESS RESEARCH INSTITUTE, INC.(4)
COMPLETE BILLING, INC.(5)


(1)  Represents 42 incorporated Integrated Medical Centers of which 14 are
     wholly owned by the Company and 28 are owned by Medical Doctors who are
     nominee owners on behalf of the Company. These are fully operational,
     Integrated Medical Centers as of December 31, 1999. The Company also
     operated an additional 42 Integrated Medical Centers in 10 states during
     1999, which were closed or otherwise ceased operations prior to December
     31, 1999.

(2)  Represents weight management centers which were acquired on January 31,
     1998. Operations of all these centers ceased by December 31, 1998. Filed
     for Bankruptcy protection under Chapter 7 in July, 1999.

(3)  Returned to previous owners on July 1, 1999.

(4)  No operations in 1999.

(5)  Ceased operations in August 1998.

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

<TABLE>
<CAPTION>
OPERATIONAL

                              INTEGRATED MEDICAL
STATE                              CENTERS
-----                         ------------------
<S>                           <C>
Florida                              13
North Carolina                        5
Illinois                              6
California                            5
Texas                                 2
Oregon                                2
Tennessee                             1
South Carolina                        2
Iowa                                  2
Ohio                                  1
Georgia                               1
Arkansas                              2
                                    ------
Total                                42
</TABLE>



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PART I


ITEM 1. BUSINESS

     (a) GENERAL DEVELOPMENT OF BUSINESS

     We develop, manage and own multidisciplinary medical centers, providing
high quality, cost effective, integrative wellness medicine to our patients.
These integrated medical centers combine, at one location, traditional
healthcare providers, such as physicians and physical therapists, and
complementary and alternative healthcare professionals, such as chiropractors,
acupuncturists and massage therapists. Generally, we contract with a medical
practitioner who has proven ability to build a practice. We then form a new
medical entity, the new medical entity hires other healthcare professionals to
work with the practitioner and we provide the tools, training, administrative
systems and certain legal services for the new medical entity. As of December
31, 1999 we were managing 42 integrated multidisciplinary medical centers in 12
states.

     We believe the integration of traditional and complementary/alternative
medicine is becoming more popular in the United States. In 1992, Congress
required the National Institutes of Health to establish The Office of
Alternative Medicine, the purpose of which was and remains to facilitate the
evaluation of complementary medicine treatments to determine their effectiveness
and help integrate them into traditional medicine. The Trends Research Institute
of Rhinebeck, New York has identified the integration of traditional and
complementary medicine as one of the top ten trends of the coming decade.

     We were incorporated in the State of Delaware in November 1994. Our
principal executive offices are located at 1964 Howell Branch Road, Suite 202,
Winter Park, Florida 32792 and our telephone number is (407) 673-3073. Our web
site, which is constantly under improvement, is located at
www.completewellness.com. The information on our web site is intended to utilize
the internet as a distribution network to benefit our provider and patient base
through providing educational information, patient interaction and the ability
to purchase products for providers and patients.


OUR INDUSTRY

     We believe the integration of traditional and complementary/alternative
medicine is becoming more popular in the United States with more and more media
focus on the subject. In 1992, Congress required the National Institutes of
Health to establish The Office of Alternative Medicine, the purpose of which was
and remains to facilitate the evaluation of complementary medicine treatments to
determine their effectiveness and help integrate them into traditional medicine.
The Trends Research Institute of Rhinebeck, New York has identified the
integration of traditional and complementary medicine as one of the top ten
trends of the coming decade.

BUSINESS

         We develop, manage and own multi-disciplinary medical centers,
providing high quality, cost effective, ethical, integrated wellness medicine.
These integrated medical centers combine, at one location, traditional
healthcare providers, such as physicians and physical therapists, and
complementary and alternative healthcare professionals, such as chiropractors,
acupuncturists and massage therapists. Generally, we contract with a
practitioner who has proven the ability to build a practice and then we form a
new medical entity, hire on behalf of the new entity a medical doctor and other
healthcare professionals to work with the practitioner and provide the tools,
training, administrative systems and certain legal services for the new medical
entity. As of December 31, 1999, we were managing 42 operational Integrated
Medical Centers in 12 states.

         The closings, divestitures and spin-offs of non-profitable or unrelated
business units such as Complete Wellness Weight Management Inc., Complete
Wellness Smoking Cessation, Inc., Optimum Health Services, Inc. and Complete
Billing, Inc. are expected to allow management to focus on our core business
which is integrating traditional and alternative/complementary medical centers,
and significantly improving our operating results from prior periods. Brief
descriptions of these transactions were as follows:

         o        On July 7, 1998, we committed to a formal plan to exit the
                  operations of Complete Billing, Inc., a medical billing and
                  collections company. We ceased their operations on August 15,
                  1998 and converted all billing performed by them back to the
                  respective clients. We ceased their collection operations on
                  February 26, 1999 and converted their collection activities
                  back to the respective clients. We do not expect to incur any
                  further expenses as a result of this business closure.

         o        On November 3, 1998, our Board of Directors adopted a formal
                  plan to divest its interest in Optimum Health Services, Inc.,
                  a subsidiary developing managed care programs. Under the plan,
                  we converted our investment, approximately $1,000,000, into
                  266,736 ten-year warrants for their stock at an exercise price
                  of $0.01 per share. However, the warrants can not be exercised
                  prior to one year or in an amount at any time such that our
                  ownership of their common stock would represent greater than
                  49% of their total outstanding common stock. The current value
                  recorded by the Company in relation to the 266,736 OHS
                  warrants is zero. On March 31, 2000, the Company exercised its
                  warrants with a cash payment of $2,667 and now owns 266,736
                  shares of OHS, approximately 6.7% of their outstanding shares
                  at that time.



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         o        On November 13, 1998, our Board of Directors voted to sell
                  and/or otherwise divest of the operations of Complete Wellness
                  Weight Management, Inc. They closed all of their weight loss
                  centers at December 31, 1998 and transitioned their patients
                  to a direct sales program or to an integrated medical center.
                  As a result of its significant indebtedness, on April 21,
                  1999, our board of directors decided to enter and approved a
                  formal plan of filing for bankruptcy. On July 6, 1999, a
                  Chapter 7 bankruptcy filing for the Complete Wellness Weight
                  Management, Inc. took place in Trenton, NJ. We do not expect
                  to incur any material expenses as a result of this filing.

         o        On April 1, 1999, as a result of the failure to pay an annual
                  royalty of approximately $26,000, our subsidiary, Complete
                  Wellness Smoking Cessation, Inc., breached its licensing
                  agreement with the original founders of Smokenders. Under the
                  agreement, we forfeited the use of the licensing rights, and
                  on June 8, 1999, our Board of Directors voted to return all
                  rights, contracts, inventory, records and materials to the
                  original founders of Smokenders. We do not expect to incur any
                  material expenses as a result of exiting this business. During
                  1996, the losses incurred by the consolidated Complete
                  Wellness Centers, LLC allocable to the minority interest
                  owners of the Complete Wellness Centers, LLC, eliminated all
                  net equity of the minority interest owners. Accordingly, we
                  have reflected 100% of the operations of the Complete Wellness
                  Centers, LLC in our results of operations in 1997 and 1998,
                  without allocation to the minority interest owners. In
                  addition, our investments in Complete Wellness Smoking
                  Cessation, Inc. represent 100% of the equity funding of that
                  entity. We have reflected in our statements 100% of the
                  operations, assets, and liabilities of the Complete Wellness
                  Smoking Cessation, Inc. subsidiary due to the lack of minority
                  interest investment.

         o        In July 1998, the Company purchased Accident and Industrial
                  Injury Associates ("AIIA"), a chiropractic preferred provider
                  network of approximately 2,700 providers located throughout
                  the United States in exchange for warrants to purchase 20,000
                  shares of its common stock for $3.31 per share which expire in
                  5 years and contain certain piggyback registration rights. The
                  Company subsequently found that the acquisition was
                  misrepresented and terminated the Purchase Agreement.

POTENTIAL TRANSACTIONS AND RELATIONSHIPS

         On March 7, 2000, CWC and our wholly owned subsidiary,
Completewellness.com ("cwc.com") signed a Services Agreement with Dr. Alt.com
Corporation ("DrAlt") to provide alternative medicine information and products
to practitioners and consumers through our web site, www.completewellness.com.
CWC, cwc.com and DrAlt have certain duties and compensations in the relationship
based on their abilities and expertise. The agreement is for 5 years. DrAlt has
agreed to lend CWC $750,000 by May 1, 2000 and to consider lending an additional
$250,000 at their discretion. As of April 10, 2000 CWC has executed 6 month
promissory notes with DrAlt totaling $550,000 at the prime rate. CWC has granted
to DrAlt a total of 275,000 five year warrants to purchase 275,000 shares of CWC
Common Stock at $2 per share. These warrants constitute restricted securities
under federal and state securities laws. Upon execution of the additional note
for $200,000, anticipated on May 1, 2000, CWC will issue additional warrants for
the purchase of 100,000 shares of our Common Stock with the same terms.

         On March 7, 2000, CWC also signed a non-binding letter of intent to
complete a tax-free merger with DrAlt. The agreement provides for CWC to be the
surviving entity. CWC would issue to the shareholders of DrAlt, such number of
fully paid and non-assessable shares of CWC Common Stock as would result in the
shareholders of DrAlt collectively owning immediately after the closing of the
merger, fifty (50) percent of the common equity of CWC on a fully diluted basis
except for any outstanding warrants. DrAlt shareholders would surrender their
DrAlt shares to CWC at closing. There are significant contingencies involved in
the agreement, including but not limited to proper due diligence, conversion of
the preferred shareholders to common shareholders, additional funding of CWC
through a private placement and approval of the transaction by the shareholders
of each company. CWC is using its best efforts to effect the required actions to
bring the merger to completion, but there is no guarantee the transaction will
be completed as described.

ADVERTISING AND MARKETING

         In seeking to attract new patients to the integrated medical centers,
we advertise and market our services utilizing print advertising, our internet
presence, and internal marketing promotions such as patient appreciation days.
The management companies also advertise, with our assistance, the services of
the integrated medical centers locally at their expense. Although we tailor our
marketing efforts to the demands of a particular market, in appropriate
circumstances, we focus our advertising and marketing efforts at the national
and regional (county, metropolitan area or state) levels. Also, each of our
integrated medical centers operates under a name that includes the words
"Complete Wellness Medical Center" or "Complete Wellness Centers" and has signs
bearing these words. We believe that this creation of a nationwide "chain" of
multidisciplinary healthcare services, combined with our standardized
credential, training and management standards for healthcare practitioners, will
aid us in creating a reputation for high quality, uniform, dependable medical
care among patients throughout the country.

GOVERNMENT REGULATION

         Various federal, state and local laws regulate the relationship between
providers of healthcare services and physicians, and, as a business in the
healthcare industry, we are subject to these laws and regulations. We are also
subject to laws and regulations relating to business corporations in general.
Although many aspects of our business operations have not been the subject of
state or federal regulatory interpretation, we believe our operations are in
material compliance with applicable laws. There can be no assurance, however,
that a review of our business practices or our integrated medical centers by
courts or regulatory authorities would



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not result in a determination that could adversely affect our operations or the
integrated medical centers, or that the healthcare regulatory environment will
not change so as to restrict our operation or our ability to expand.

         The laws of many states prohibit business corporations from engaging in
the practice of medicine, such as through employment arrangements with
physicians. These laws vary from state to state and are enforced by the state
courts and regulatory authorities with broad discretion. Because the laws
governing the corporate practice of medicine vary from state to state, any
expansion of our operations to a state with strict corporate practice of
medicine laws may require us to modify our operations with respect to one or
more of such practices, which may result in increased financial risk to us.

COMPETITION

         The managed healthcare industry, including the provider practice
management industry, is highly competitive. We compete with other companies for
physicians and other practitioners of healthcare services as well as for
patients. We compete not only with national and regional provider practice
management companies, but also with local providers, many of which are trying to
combine their own services with those of other providers into integrated
delivery networks. Certain of the companies are significantly larger, provide a
wider variety of services, have greater financial and other resources, have
greater experience furnishing provider practice management services, and have
longer established relationships with buyers of these services, than us, and
provide at least some of the services provided by us. In addition, companies
with greater resources than ours that are not presently engaged in the provision
of integrated provider practice management services could decide to enter the
business and engage in activities similar to those in which we engage.

EMPLOYEES

         As of December 31, 1999, we had 11 employees and our 42 operating
integrated medical centers had a total of approximately 100 employees. Our 11
employees consisted of 5 in finance and administration and 6 in operations.
Neither our employees nor those of the integrated medical centers are
represented by any labor union. We believe that relations with our employees are
satisfactory.

FACILITIES

         We have relocated our principal executive offices to Winter Park,
Florida, where we lease an aggregate of approximately 1,760 square feet of
office space pursuant to two leases at an aggregate current monthly rent of
$2,281. The leases expire in May 2000 for 795 square feet and September 2001 for
965 square feet.

INSURANCE

         We believe that our insurance coverage is generally in accordance with
industry standards and is adequate in light of our business and the risks to
which we are now subject. We are dependent upon the active participation of our
executive officers, particularly our Chairman and Chief Executive Officer,
Joseph J. Raymond, Jr., and our President and Chief Operating Officer, Sergio R.
Vallejo. The loss of the services of Mr. Raymond and/or Mr. Vallejo could have a
material adverse effect on us. We have applied for "key-man" life insurance
policies on the lives of Mr. Raymond and Mr. Vallejo in the amount of $1 million
each, payable to us in the event of death.

         We have obtained directors' and officers' liability insurance.

     (b) NARRATIVE DESCRIPTION OF BUSINESS

         Our goal is to be the leading developer, manager and owner of
multidisciplinary medical centers. In order to achieve this goal, we intend to
implement the following strategies:

         -  Contract with practitioners who possess the management skills
            necessary to run and grow multidisciplinary practices and teach them
            how to integrate other medical disciplines into their practices;

         -  Develop a systematic approach to evaluate, to monitor and to provide
            developmental information to a medical practice;

         -  Continually review and modify, if necessary, the practice setting to
            correspond with the changes in the healthcare market and service the
            needs of today's healthcare consumer;

         -  Create a website to distribute our products, services and
            educational information to our patient base;

         -  Open four hyperbaric oxygen treatment (pressurized oxygen chambers)
            centers in year 2000 and six more in 2001; and

         -  Educate insurance companies and regulatory agencies on the benefits
            that multidisciplinary medicine brings to the insurance industry, so
            as to persuade such entities to expand their coverage of our
            wellness services to ultimately reduce health insurance claims.

OUR INTEGRATED MEDICAL CENTERS

         Since we commenced operations in January 1995, we have developed our
current business primarily by developing, managing and owning integrated medical
centers. We believe that today's patients benefit from and desire treatments
from a variety of medical and healthcare disciplines. We endeavor to provide
these services at one convenient location, with all services provided under the



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supervision of a medical doctor in order to assure patients of the medical
soundness of the services they receive and to increase our likelihood of
obtaining payment from third party payors such as insurance companies and HMOs.
We are not authorized or qualified to engage in any activity which may be
construed or be deemed to constitute the practice of medicine but are an
independent supplier of non-medical services only. The practitioners are
responsible for all aspects of the practice of medicine and chiropractic care
and the delivery of medical and chiropractic services (subject to certain
business guidelines determined in conjunction with us). Developing integrated
medical centers generally involves affiliating ourselves with a practitioner who
has an existing practice, incorporating a new entity to serve as the integrated
medical center, providing management and administrative services to the
integrated medical center, and assisting the integrated medical center to
employ, credential and train the practitioners, medical doctor and other
healthcare professionals. The following are our areas of concentration in our
business development with respect to the Integrated Medical Centers:

         Affiliating with practitioners. We endeavor to enter into agreements
with practitioners who have existing, thriving practices in locations convenient
to large patient bases, and who have demonstrated the entrepreneurial skills to
build a practice. We believe that these practitioners consider affiliation with
us to be attractive because they may have greater access to managed care
contracts in the future through us, will be relieved of certain managerial and
administrative burdens, and may have the opportunity to increase their practice
income through the expanded services that the integrated medical centers
provide. We attempt to affiliate with practitioners located in regional clusters
to maximize operational efficiency. For example, some of our medical doctors and
other healthcare professionals are able to work part-time for each of several
integrated medical centers due to their close proximity to each other. We
affiliate with practitioners by entering into a contract with the practitioner
in his individual capacity and with his existing practice (if a separate legal
entity). The contract obligates him to work for the integrated medical center,
once established, lease his office space and equipment to us for future sublease
to the integrated medical center, incorporate a management company for his
practice and cause that management company to enter into a management agreement
with us regarding day-to-day administrative services of the integrated medical
center. These contracts provide our integrated medical centers with immediate,
established patient bases.

         Incorporating Integrated Medical Centers. We form the integrated
medical centers as general business corporations wholly-owned by us in states in
which general business corporations are permitted to own medical practices. In
other states, we form the integrated medical centers as professional
corporations owned by a medical doctor licensed under applicable state law as
our nominee owner. In some cases, one of our medical corporate entities
encompasses two or more integrated medical center practices. Incorporating our
integrated medical center practices allows us to comply with varying state and
local laws regarding the practice of medicine, while maintaining a degree of
non-contractual control as beneficial shareholders.

         Providing management and administrative services. We enter into
contracts with the integrated medical centers, under which we provide the
following services to the integrated medical center: - consultation and seminars
related to the management of the integrated medical center; - advice on capital,
facilities and equipment; - computer software and training; - advertising and
marketing programs; - certain legal and accounting services; and - assistance
with the identification, recruiting and credentialing of medical doctors,
chiropractors and other professional employees. We enter into separate
management agreements with the practitioner's management company, under which it
provides day-to-day administration of the integrated medical center, such as
record keeping, billing and collection, supervision of personnel, facilities
management, purchasing, and scheduling, and we sublease the practitioner's
office space and equipment to the integrated medical center. We also provide a
billing and medical information system software system to the integrated medical
centers through an Intranet superimposed on the Internet. We receive management
fees from the integrated medical centers, a significant portion of which we pass
on to the practitioners' management companies.

         Employing, training and credentialing chiropractors, medical doctors
and other healthcare professionals We assist the integrated medical centers with
the recruiting and hiring of the chiropractors, medical doctors and other
healthcare professionals, and credential them to verify such things as their
education and professional licenses. We require each practitioner and certain
other employees to attend two-day intensive integration seminars, at which they
are taught the basic principles behind managing a multi-disciplinary medical
clinic. We provide follow-up remote and, if necessary, on site training,
together with telephone support thereafter. We routinely schedule and offer
special topic seminars to the integrated medical centers' chiropractors,
doctors, and administrative staff. These training and credentialing standards
and protocols allow us to ensure high quality patient care through all of our
integrated medical centers, which we expect will increase our patient base as
our reputation grows. Our training routines also allow us to educate
practitioners throughout our network of integrated medical centers on new
medical and healthcare developments and provide a means to infuse new technology
into the integrated medical centers. Adding medical doctors and other healthcare
professionals to an existing chiropractic practice usually involves only minor
equipment and supply adjustments and additions. Integrated medical centers that
provide general medical practitioner services acquire certain medical equipment
such as electrocardiogram machines, blood drawing equipment, and other
specialized supplies. Integrated medical centers that employ the services of
physical therapists sometimes acquire additional equipment such as free weights,
hydrocolators (machines to heat hot packs), and other items. Although our
chiropractors, medical doctors and other healthcare professionals are hired
directly by the integrated medical centers and management companies, we have
adopted our 1996 Stock Option Plan for Healthcare Professionals to provide
incentive compensation to such healthcare professionals.

OUR EXPANSION STRATEGY

     Our goal is to become the leading developer, manager and owner of
multidisciplinary medical centers. We plan to acquire 10 Integrated Medical
Centers within 12 months and to develop an average of 4 consulting relationships
per month with practitioners to develop additional integrated medical centers.
Key elements of our expansion strategy include the following:



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     -Affiliate with new practitioners. We plan to use our existing network of
chiropractors, medical doctors and other healthcare professionals to sell the
integrated concept to the more than 50,000 chiropractors in the country not
currently offering fully integrated medical platforms. We believe that these
healthcare professionals, through school affiliations, professional associations
and informal relationships with their colleagues, will be able to assist us in
identifying and targeting chiropractic practices for integration. We are
augmenting the expansion efforts of our existing healthcare professionals and
management staff with consulting arrangements with entities whose clients
include numerous chiropractors and other healthcare professionals. The
consultants' clients form the core of the candidate affiliations for the
foreseeable future. In May 1999, we executed a one-year consulting agreement
with Kats Management, LLC, a company that provides management and consulting
services to over 1,100 chiropractic doctors. This agreement provides for Kats to
be responsible for day-to-day integrated medical centers operations, answering
questions and including consultations on a regular scheduled basis. This
agreement augments our billing support staff, all of whom report to the chief
operating officer. The agreement also provides for Kats to provide training
services to our professional and administrative integrated medical centers'
staff as well as interface with our sales division to integrate new integrated
medical centers, and assist in the development of products and new health
related services. An example of one such service is our recently implemented
hyperbaric oxygen treatment which places the patient in a pressure chamber and
administers pure oxygen in the treatment of anemia, ischemia, cerebral palsy,
stroke and some poisonings. We also seek to enter into practice development
agreements with practitioners who do not yet meet our requirements for
integration regarding practice size and experience. Once we help them achieve
our required standards, we proceed to integrate their practices under our
standard contractual arrangements.

     -Create a website to provide information about our services and products.
Our web site is intended to utilize the Internet as a distribution network to
benefit our provider and patient base through providing educational information,
patient interaction and the ability to purchase products for providers and
patients. We will also provide information to prospective and current patients
about our Integrated Medical Centers and wellness services. We plan to offer
wellness-oriented products, services and health information to patients and
others through our website. We expect that such products will include vitamins,
herbs and educational information relative to certain illnesses and diseases. We
also plan to use the website to facilitate communication with and management of
our Integrated Medical Centers.

     -Expand patient base by increasing insurance companies' coverage of our
services and the addition of managed care contracts. We plan to educate
insurance companies on the benefits our multidisciplinary medical services bring
to them by optimizing their clients' wellness and persuade such insurance
companies to expand their coverage of our services, thereby increasing our
patient base and rate of patient visits by making our services more affordable
for such patients. We believe that, as a reputable, national provider of these
services, we will have the credibility and leverage to persuade insurance
companies and HMOs to increase their coverage of our services. We expect that
such increased coverage will make regular visits more affordable for patients,
and thus aid us in our efforts to expand our patient base. The term "CAM" for
Complementary and Alternative Medicine has recently been coined and used by some
of the insurers and professionals within the industry. We plan to negotiate
managed care contracts with insurance companies, HMOs and other third party
payors on behalf of the integrated medical centers. As a reputable, national
provider of these services, we believe we have the credibility and leverage to
negotiate such contracts on behalf of our integrated medical centers. We also
believe that, as a single entity, we will enable managed care payors to more
efficiently contract for the provision of healthcare services than would be the
case if such payors had to contract on a case-by-case basis with each individual
healthcare practitioner.

ITEM 2. PROPERTIES

         The Company does not own any property. We relocated our principal
executive offices to Winter Park, Florida, where we lease an aggregate of
approximately 1,760 square feet of office space pursuant to two leases at an
aggregate current monthly rent of $2,281. The leases expire May 2000 for 795
square feet and in September 2001 for 965 square feet. The facility is in
satisfactory condition and is adequate for our use.

ITEM 3.  LEGAL PROCEEDINGS

     The Company or its subsidiaries currently have the following legal
proceedings in various stages of litigation:

     As of April 10, 2000, we or our affiliates currently have eight legal
proceedings in various stages of litigation. Five of these actions involve suits
brought by former employees or vendors of various integrated medical centers or
chiropractors' management companies, seeking recovery of monies allegedly owed
for goods or services rendered to the integrated medical center or management
company. We believe that three of these disputes with former employees, vendors
and integrated medical center doctors are not material. We are defending all
such actions and believe none is meritorious. The fourth case is with CWC, the
plaintiff having successfully penetrated the corporate boundary between the
integrated medical center and ourselves. The $147,292 judgment for wages and
damages and a subsequent judgment for related legal fees of $37,712 were
rendered against us. We have appealed the decisions and have obtained a bond in
the amount of $222,005 for satisfaction of the judgments, which is backed by an
irrevocable letter of credit for $111,002, against which we have pledged a
certificate of deposit of $111,002. The full amount of the judgment has been
accrued as of December 31, 1999.

     On November 12, 1999, C. Thomas McMillen, our former Chairman and Chief
Executive Officer filed suit in Superior Court for the District of Columbia
seeking damages resulting from the termination of his employment agreement with
us. Mr. McMillen alleges



                                       8
<PAGE>   9

that we breached our employment contract with him and that we breached a
covenant of good faith and fair dealing, which the suit alleges was implied in
the agreement. He seeks salary, vacation, bonus pool, stock options, office
space, secretarial support, cellular phone and benefits including health
insurance from the date of termination, February 18, 1999, through August 31,
2000. He seeks judgment in the amount of $500,000 plus pre-judgment interest,
the costs of his suit, attorney's fees and any further relief that the court
deems just and proper. We have attempted to arrive at a settlement agreement
with Mr. McMillen without success. We believe this action has no merit. In
addition to defending this action, we have filed a counterclaim seeking judgment
for damages and costs. No hearings or depositions are scheduled at this time.

     In July 1999, Complete Wellness Weight Management, our wholly owned
subsidiary, filed for Chapter 7 bankruptcy protection. An initial hearing of the
creditors was held and one creditor appeared to be heard on September 29, 1999.
There are two suits pending related to landlord claims under the bankruptcy,
both of which we are defending.

     The Company was named in a lawsuit filed in Washington, D.C. on December
15, 1999 by Crestar Bank, a landlord, for alleged failure to pay $108,981 of
rents and fees due under a sub-lease plus attorney's fees. The Company has
settled the claim and as of December 31, 1999, has accrued $109,000 for payment
of the settlement.

     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 in connection with an investigation of
alleged health care fraud. In June 1998, Complete Wellness Centers and several
of its employees, including its former Chief Executive Officer, 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 received a letter dated January 13,
1998 from the United States Attorney General's Office stating that the employee
was a subject of the investigation. The investigation appears to be focused on
two clinics in Virginia. No charges have been filed against us or any of our
employees to date. However, any such charges could have a material adverse
effect on our future financial position and results of operations.

     From time to time in the course of Complete Wellness Centers carrying out
its business, we encounter threatened litigation, none of which is presently
considered to be material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Annual Meeting held on November 29, 1999, the following items were
submitted to the security holders:

     1.  To elect a Board of five (5) Directors.

     2.  To consider and vote upon a proposal to add 50,000 shares of the
         Company's $.0001665 par value Common Stock to the 1998 Outside
         Directors Stock Option Plan for Outside Directors on the Company's
         Board of Directors;

     3.  To consider and vote upon a proposal to add 200,000 shares of the
         Company's $.0001665 par value Common Stock to the Company's 1996 Stock
         Option Plan.

     4.  To consider and vote upon a proposal to establish a 1999 Consultant's
         Stock Option Plan and to add 200,000 shares of the Company's $.0001665
         par value Common Stock to the Company's 1999 Consultant's Stock Option.

     5.  To consider and vote upon a proposal to increase the number of shares
         of par value $0.01 per share Preferred Stock from 2,000,000 to
         10,000,000 shares.

     6.  To ratify the selection of Amper, Politziner and Mattia, P.A. as
         independent accountants for the fiscal year ending December 31, 1999.



                                       9
<PAGE>   10

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (a) MARKET INFORMATION

     The Company's Common Stock and Redeemable Common Stock Purchase Warrants
are traded on the Nasdaq SmallCap Market (Nasdaq SCM).

     The following table states the high and low quotation information by
quarter for the Company's Common Stock and Common Stock Warrants based on actual
trading, as reported on Nasdaq SCM. The quotations reflect inter-dealer prices,
without retail mark-up, markdown, or commission and may not represent actual
transactions.

                  COMMON STOCK

<TABLE>
<CAPTION>
                                                       HIGH              LOW
                                                      -------          -------
<S>                                                   <C>             <C>
                  1st Quarter, 1999....               $4.063            $1.250
                  2nd Quarter, 1999...                $3.375            $1.750
                  3rd Quarter, 1999....               $3.750            $1.500
                  4th Quarter, 1999....               $2.625            $1.125
</TABLE>


                  WARRANTS

<TABLE>
<CAPTION>
                                                       HIGH              LOW
                                                      -------          -------
<S>                                                   <C>              <C>
                  1st Quarter, 1999 ....              $2.500            $1.000
                  2nd Quarter, 1999...                $1.875            $1.188
                  3rd Quarter, 1999....               $1.688            $0.813
                  4th Quarter, 1999....               $1.688            $0.750
</TABLE>


     (b) HOLDERS

     As of December 31, 1999, there were approximately 900 holders of record of
the Company's Common Stock and approximately 20 holders of record of its
Redeemable Common Stock Purchase Warrants.

     (c) DIVIDENDS

     Holders of the Company's Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. There has been no declaration of dividends to date, except
as required by the Senior and Junior Convertible Preferred Stock (See Note 9 -
Stockholders' Equity Deficit), and none is expected in the foreseeable future.
The Company anticipates that future earnings will be retained to finance future
operations and expansion. The payment of dividends is within the discretion of
the Board of Directors of the Company and will depend on the Company's earnings,
if any, capital requirements, financial condition, and such other factors as are
considered to be relevant by the Board of Directors from time to time.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

General

     Statements included in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" Section, and in other sections of
this Report and in prior and future filings by the Company with the Securities
and Exchange Commission, in the Company's prior and future press releases and in
oral statements made with the approval of an authorized executive which are not
historical or current facts are "forward looking statements" made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 and are subject to certain risks and uncertainties that could cause actual
results to differ materially from those presently anticipated or projected. The
Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. There are
important risk factors that in some cases have affected and in the future could
affect the Company's actual results and could cause the Company's actual
financial and operating performance to differ materially from that expressed in
any forward-looking statement. The following discussion and analysis should be
read in conjunction with the Financial Statements and notes appearing elsewhere
in this report.

     The Company was established in November 1994. From its inception until
March 1995, the Company raised funds privately and developed the corporate
infrastructure, protocols, policies and procedures required to commence its plan
to develop multi-disciplinary



                                       10
<PAGE>   11

medical clinics. In March 1995, the Company began implementing the initial
stages of its business plan. The Company formed Complete Wellness Centers,
L.L.C. ("CWC, LLC"), a Delaware limited liability company, as a vehicle for
raising capital needed to open Integrated Medical Centers. The Company is the
managing member of CWC, LLC and has a 1% equity interest. The Company has
obtained irrevocable and permanent voting proxies from the holders of a majority
of ownership interests in CWC, LLC. The Company consolidates the financial
statements of CWC, LLC in its financial statements.

     The Company began pursuing its primary development strategy in early 1996.
This strategy involves entering into an agreement with one or more chiropractors
and their existing chiropractic practices and the chiropractor's corporation.
The chiropractor or existing chiropractic practice leases the office space and
equipment utilized by the existing chiropractic practice to the Company. The
chiropractor then incorporates the "Admincorp", with which task the Company
assists, and causes the Admincorp to ratify the agreement. In general, the
Admincorp assumes responsibility for the daily management functions of the
Integrated Medical Centers. The Company agrees to furnish the Admincorp certain
services, such as assistance with advertising, other practice development
activities, and medical doctor recruitment, to help the Admincorp perform daily
management functions. The Company then forms the Integrated Medical Center and
enters into a long-term management agreement with the Integrated Medical Center
to provide certain administrative and management services. In addition, the
Company subleases the existing chiropractic practice's office space and
equipment to the Integrated Medical Center. The Integrated Medical Center
employs the Affiliated Chiropractor(s) and one or more medical doctors.
Depending on the needs of the patient base, the Integrated Medical Center may
also employ one or more other traditional or alternative health care providers.

     The Company charges the Integrated Medical Center management fees for the
goods and services it provides the Integrated Medical Center. Such fees are
generally based on a periodic determination of the fair market value of such
goods and services. The Company also subleases the office space and equipment to
the Integrated Medical Center for estimated fair market value. With respect to
Integrated Medical Centers that serve patients covered by any federal or state
funded health care program and certain other Integrated Medical Centers, the
management fees are pre-set for one year for flat dollar amounts that represent
the fair market value of the goods and services the Company directly furnishes
the Integrated Medical Center and of the services the Company indirectly
furnishes the Integrated Medical Center through its arrangement with the
Admincorp. The Admincorp charges the Company a monthly fee equal to the sum of
the management fees and lease and rental fees for office space and equipment
that the Company charges the Integrated Medical Center, less a specified fixed
amount. In general, the Company charges the Admincorp a monthly integration fee
that is, depending on various factors, 9% to 20% (if the initial term of the
agreement is five years) or 10% to 15% (if the initial term of the agreement is
ten years) equal to the sum of (i) the management fee and lease and rental fees
for office space and equipment that the Company charges the Integrated Medical
Center and (ii) the Integrated Medical Center's permissible expenses, until the
sum reaches $300,000 to $500,000 in any one year, and 10% of the sum for the
remainder of that year. With respect to Integrated Medical Centers that serve
patients covered by federal or state funded health care programs and certain
other Integrated Medical Centers, the integration fees are fixed dollar amounts
equal to estimated fair market value of services provided by the Company to the
Integrated Medical Centers, subject to a 15% cap. The Company also may charge
certain Admincorps an operations fee of $250 per month, subject in certain cases
to delayed or contingent effectiveness. Except for the operations fee, however,
the fees are simply accrued, and actual payment of them is not required, unless
and until, and then only to the extent, that the Integrated Medical Centers
collect on their accounts receivable in excess of certain permitted expenses,
such as payroll expenses. If the agreement with the Admincorp is terminated, the
Admincorp is generally entitled to receive from the Company a severance,
generally equal to 80% to 95% of the accounts receivable then due the Company
from the Integrated Medical Center, less the balance then due the Company from
the Admincorp, subject to the Integrated Medical Center collecting on its
accounts receivable. In the case of certain Integrated Medical Centers, however,
the Admincorp is entitled to a pro rata portion of the Integrated Medical
Center's accounts receivable as of the date of termination, if and when
collected.

     The Company's agreements with Affiliated Chiropractors and entities
controlled by them relating to the operation and management of the Integrated
Medical Centers are generally for initial terms of five or ten years. They may
be renewed in five year increments, up to four times, by mutual consent. An
Affiliated Chiropractor may terminate such an agreement if the Company
materially breaches it and, if the breach is correctable, the Company fails to
cure the breach within ten days after written notification. The start-up phase
is generally three months following the Integration Date. The loss of a
substantial number of such agreements, or the loss of a substantial number of
Affiliated Chiropractors, would have a material adverse effect on the Company.

     As of December 31, 1999, the Company was managing 42 operational Integrated
Medical Centers. The Company ceased operating 42 Integrated Medical Centers
during 1999 and plans to dissolve the related corporations after having
terminated its agreement with the Affiliated Chiropractors and Admincorps. The
Company anticipates no material adverse financial effect as a result of such
terminations.

     The Company integrated many of its existing Integrated Medical Centers
within a few weeks after the Affiliated Chiropractors entered into agreements
with the Company to develop such Integrated Medical Centers. The Company is now
taking up to six months to integrate clinics due to our methodology of
extensively evaluating the needs of each clinic in order to properly develop a
sound foundation for truly integrative healthcare.

     The cost to the Company to develop an Integrated Medical Center not
connected with a strategic alliance has averaged $15,000. This cost has
consisted of such things as computer software, legal fees, professional
credentialing, training, an administrative starter kit and travel.



                                       11
<PAGE>   12

     The Company has from time to time advanced additional funds to the
Integrated Medical Centers to fund working capital requirements. If the Company
does make such an advance, the advance will bear interest (the current rate
being 10% per annum), will be secured by such collateral as the Company deems
appropriate, and will be repayable before the expiration of the initial term of
the Company's agreement with the Affiliated Chiropractor and the Admincorp.

         In May 1999, we executed a one year consulting agreement with Kats
Management, LLC whereby Kats has agreed to provide day to day integrated medical
center operation services, provide training services to the integrated medical
centers, integrate new integrated medical centers and assist in the development
of products and new health related services. In consideration for such services,
we have agreed, in part, to pay Kats (i) $19,000 per month, (ii) $300 per month
for each new integrated medical center established by Kats, (iii) commissions
averaging 5% of revenues generated by 16 existing integrated medical centers and
(iv) an annual travel allowance of up to $5,000. In October 1999, the monthly
cash payment was reduced by mutual agreement to $12,000.


RESULTS OF OPERATIONS

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

         Revenue. During the year ended December 31, 1999 we had revenues of
$12,940,000 as compared to $24,162,000 for the year ended December 31, 1998, a
decrease of $11,222,000 or 46%, due primarily to the closing of Complete
Wellness Weight Management, Inc. ("CWWM") in December 1998. CWWM revenues for
the year ended December 31, 1998 were $6,574,000. Integrated Medical Center
revenues for the year ended December 31, 1999 were $12,940,000 as compared to
$17,132,000 for the year ended December 31, 1998, a decrease of $4,192,000 or
24% deemed attributable to the lack of growth of the number of Integrated
Medical Centers and a reduction from 84 integrated medical centers as of
December 31, 1998 to 42 integrated medical centers as of December 31, 1999. We
and certain Integrated Medical Centers have mutually agreed to discontinue
contractual obligations related to certain operations.

         Salary and Consulting Costs. During the year ended December 31, 1999,
we incurred salary and consulting costs of $3,358,000 as compared to $7,066,000
for the year ended December 31, 1998, a decrease of $3,708,000 or 52%, primarily
due to the closing of CWWM in December 1998 and the reduction of personnel at
the corporate headquarters.

         Management Fees. These are fees that are paid to the affiliated
practitioners' management corporations for managing the day to day operations of
the Integrated Medical Centers. During the year ended December 31, 1999 we
incurred management fees of $7,908,000 as compared to $8,641,000 for the year
ended December 31, 1998, a decrease of $733,000 or 8%, due primarily to reduced
revenues in the inactive integrated medical centers, contractual restructuring
of some of the relationships with integrated medical centers and the reduction
of operational centers described above.

         Cost of Revenue. All cost of revenue amounts relates to the activities
of Smokenders. As a result of the cessation of operations of this subsidiary in
1998, we only incurred $7,000 in such related costs in 1999.

         Rent. Rent consists of amounts incurred for administrative, medical
office space and certain equipment leased by us at our corporate headquarters
and the Integrated Medical Centers. During the year ended December 31, 1999 we
incurred rent expenses of $209,000 as compared to $5,141,000, for the year ended
December 31, 1998, a decrease of $4,932,000 or 96%, due primarily to the closing
of CWWM in December 1998.

         Advertising and Marketing. During the year ended December 31, 1999, we
incurred advertising and marketing expenses of $20,000 as compared to $964,000
for the year ended December 31, 1998, a decrease of $944,000 or 98%,
attributable to the closing of CWWM in December 1998.

         Bad Debt Expense. During the year ended December 31, 1999, we had bad
debt expense of $1,599,000 as compared to $2,657,000 for the year ended December
31, 1998, a decrease of $1,058,000 or 40%, primarily due to the decrease in
revenue of the Integrated Medical Centers for these periods and a reduction in
the percentage used to calculate the bad debt reserve based on additional
historical experience.

         Network Development Costs. All network development costs relate to the
activities of Optimum Health Services. During the year ended December 31, 1998
our former subsidiary experienced network development costs of $701,000. As a
result of the spin-off of this subsidiary in November 1998 we have not incurred
any such related costs in 1999.

         General and Administrative. During the year ended December 31, 1999, we
incurred general and administrative expenses of $2,401,000 as compared to
$6,066,000 for the year ended December 31, 1998, a decrease of $3,665,000 or
60%, due primarily to the closure of CWWM in December 1998 and the reduction of
corporate overhead in such categories as insurance costs, legal and accounting
costs, travel and entertainment costs and various other corporate costs such as
automobile, telephone, postage and printing and reproduction, equipment rental,
supplies, professional development, recruiting and repairs.



                                       12
<PAGE>   13

         Depreciation and Amortization. During the year ended December 31, 1999,
we incurred depreciation and amortization expense of $137,000 as compared to
$210,000 for the year ended December 31, 1998, a decrease of $73,000 or 35%
attributable to the return of certain assets to divested businesses and the
write off of improvements in facilities no longer occupied by the Company.

         Operating Loss. Our operating loss was $2,699,000 for the year ended
December 31, 1999 as compared to an operating loss of $9,735,000 for the year
ended December 31, 1998. The reduction in the losses is due primarily to
improved operations at our remaining Integrated Medical Centers and the
discontinuance of the operations of CWWM, Complete Wellness Smoking Cessation,
Inc. (Smokenders), Optimum Health Services, Inc. and Complete Billing, Inc.
Additionally, we have significantly reduced corporate overhead but have
experienced certain non-recurring legal matters regarding the termination of
former employees and vendors that represent approximately $994,000 or 37% of the
operating loss for the year ended December 31, 1999.

         Interest Expense. During the year ended December 31, 1999 we had
interest expense of $111,000 as compared to negligible amounts for the year
ended December 31, 1998. We increased our interest-bearing borrowings during
1999 to $897,000 at December 31, 1999 from $392,000 at December 31, 1998.

         Interest Income. During the year ended December 31, 1999, we had
interest income of $5,000 as compared to $63,000 for the year ended December 31,
1998, a decrease of $58,000 or 92%, resulting from a lower amount of invested
funds in 1999 as compared to the same periods in 1998.

         The losses incurred by the consolidated CWC, LLC allocable to the
minority interest owners of the CWC, LLC, eliminated all net equity of the
minority interest owners. Accordingly, the Company has reflected 100% of the
operations of the CWC, LLC in its results of operations in 1998, without
allocation to the minority interest owners. In addition, the Company's
investments in Complete Wellness Smoking Cessation, Inc. represents 100% of the
equity funding of that entity. The Company has reflected 100% of the operations,
assets, and liabilities of the Smokenders subsidiary due to the lack of minority
interest investment into the Company. During 1998 the Company allocated
approximately $8,000 of the net losses incurred by Optimum Health Services, Inc.
to the minority interest owners investment in and percentage ownership of
Optimum Health Services, Inc. Accordingly, the Company has reflected the balance
of the results operations of Optimum Health Services, Inc. in its results of
operations in 1998, without further allocation to the minority interest owners.

         The Company has evaluated its tax position as of December 31, 1998 and
its expected tax position for the next three to five years and determined that,
based on assumptions and estimates utilized in its evaluation, it is more likely
than not that the Company will not be able to realize the economic benefits of
net operating losses incurred and certain other deferred items. Accordingly, the
Company has recorded a valuation allowance representing 100% of the net deferred
tax assets and has recognized a net tax provision of zero.

         At December 31, 1999, we and our wholly owned subsidiaries had combined
net operating loss carryforwards for income tax purposes of approximately
$8,713,000, which expire between 2010 and 2012. We file a consolidated federal
tax return with our wholly owned subsidiaries. Complete Wellness Centers, LLC
("CWC, LLC"), a limited partnership of which we serve as the general partner and
hold a 1% interest thereof, is not included in this tax return. CWC, LLC is
treated as a partnership for tax purposes and its gains and losses are reflected
at each member's level. Further, CWC, LLC does not file a consolidated tax
return with its subsidiaries. Accordingly, the use of substantially all of the
combined net operating loss carryforwards will be limited to use to offset
future taxable income of each separate subsidiary in proportion to its share of
the tax losses generated to date. In addition, these carryforwards may be
significantly limited under the Internal Revenue Code of 1986, as amended, as a
result of ownership changes resulting from equity offerings or changes in
ownership. A valuation allowance of approximately $5,415,000 has been
established at December 31, 1999 to offset any benefit from the net operating
loss carryforwards, as it cannot be determined when or if we will be able to
utilize the net operating losses. Utilization of the net operating loss
carryforwards may be significantly limited, based on changes in our ownership.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, we have experienced net losses, negative cash flow
from operations and an accumulated deficit. For the year ended December 31,
1999, we had net losses of $2,805,000 as compared to net losses of $9,668,000
for the year ended December 31, 1998. At December 31, 1999, we had working
capital of $32,000, compared to a working capital deficit of $4,389,000 at
December 31, 1998. We have an stockholders' deficiency of $56,000 at December
31, 1999. Our current ratio at December 31, 1999 was 1.01 compared to 0.59 at
December 31, 1998.

         Net cash used in operations for the year ended December 31, 1999 was
$2,204,000, as compared to $4,617,000 for the year ended December 31, 1998.
Negative cash flows are attributable primarily to net losses and increases in
accounts receivable in 1998. Negative cash flows for the year ended December 31,
1999 are attributable primarily to increases in accounts receivable and some
decreases in accounts payable and other current liabilities. We purchased a six
month $111,002 certificate of deposit that is pledged toward an irrevocable
letter of credit of $222,005 required by an appeal bond secured against a legal
judgment pending against us. We completed several significant non-cash
transactions during the year ended December 31, 1999, including the $3,852,000
reduction of liabilities related to the cessation of operations in December 1998
of Complete Wellness Weight Management, Inc. ("CWWM") and the related bankruptcy
filing, the reduction of liabilities due to conversions of debts totaling
$950,000 to equity, the exercise of stock options as compensatory payments for
$116,806, and the payment of all preferred stock dividends with shares of
preferred stock valued



                                       13
<PAGE>   14

at $575,000. The bankruptcy filing was in July 1999 with a hearing of the
creditors in November 1999. One creditor appeared at the hearing and there are
two lawsuits pending by former landlords.

         On April 21, 1999 our Board of Directors approved a plan to raise up to
$1,000,000 through a private placement of our common stock. The plan consisted
of the issuance of up to 1,000,000 shares of our common stock priced at $1.00
per share. Through June 30, 1999 we received $587,000 through the private
placement of which $152,000 was used to cover costs of the offering which was
terminated on July 15, 1999. We subsequently registered the 587,000 shares of
our common stock issued in that private placement offering. In October 1999, we
received $481,000 through a private placement of which $50,000 was used to cover
costs of the offering which was terminated on December 15, 1999.

         We are currently dependent on advances from investors to meet our day
to day cash needs. Our major investors, Wexford Spectrum Investors LLC and
Imprimis Investors LLC, have told us that it is their intention not to loan us
any additional cash. As a result, we have identified other sources of investment
in the Company to remain in business. Failure to received additional sources of
cash could result in our insolvency. Based on our current operating plan, we
anticipate that the net proceeds from borrowings and expected equity investments
will allow us to meet our cash requirements for at least the next 12 months. We
cannot be certain that additional financing will be available on commercially
reasonable terms, if at all. If we raise additional capital through the sale of
equity, including preferred stock or convertible debt securities, the percentage
ownership of our then existing stockholders will be diluted.

RESTATEMENT OF QUARTERLY INFORMATION

         As a result of the discontinuation of certain contractual relationships
with Integrated Medical Centers, accruals of liabilities and certain estimation
processes utilized by the Company, a restatement of the quarterly results for
the year ended December 31, 1999 is necessary. The restatement for the nine
months ended September 30, 1999 had the effect of increasing the net loss by
$1,747,000 and the loss per share by approximately $0.47 in the fourth quarter.
The Company will file amended quarterly reports on Form 10-QSB by May 15, 2000.
The restated quarterly results for 1999 are as follows (first table) and may be
compared to the previously reported quarterly results for 1999 (second table):

<TABLE>
<CAPTION>
RESTATED                                              Quarter           Quarter                                  Quarter
                                                       Ended             Ended          Quarter Ended             Ended
                                                      March 31          June 30          September 30          December 31
                                                     ----------        ----------       -------------          -----------
<S>                                                  <C>               <C>              <C>                    <C>
Net Revenues                                         $4,580,034        $2,560,780          $2,867,828           $2,931,689
Net Loss                                             $   50,696        $  708,633          $  747,477           $1,298,185
Net Loss Per Share                                   $     0.02        $     0.20          $     0.18           $     0.28
Weighted Avg Shares Outstanding - Basic               2,949,755         3,536,755           4,055,862            4,623,447
</TABLE>


<TABLE>
<CAPTION>
PREVIOUSLY REPORTED                                 Quarter           Quarter
                                                     Ended             Ended          Quarter Ended
                                                    March 31          June 30          September 30
                                                   ----------        ----------       -------------
<S>                                                <C>               <C>              <C>
Net Revenues                                       $4,588,085        $3,683,278          $3,479,720
Net Income                                         $   78,304        $   91,425          $   70,339
Net Income Per Share - Basic                       $     0.03        $     0.03          $     0.02
Weighted Avg Shares Outstanding - Basic             2,949,755         3,536,755           4,055,862
</TABLE>




SEASONALITY

     We believe that the patient volumes at our integrated medical centers are
not significantly affected by seasonality.

YEAR 2000 ISSUE

     Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These systems and
products will need to accept four digit entries to distinguish 21st century
dates from 20th century dates. As a result, computer systems and software used
by many companies and government agencies may need to be updated to comply with
the year 2000 requirements or risk system failure or miscalculations causing
disruptions to business activities. All of the Company's internal operating
systems were compliant as of December 31, 1999, however, Year 2000 problems may
not surface until after January 1, 2000. Management estimates that the costs
associated with any additional activities will not have a material effect on the
Company's operations.



                                       14
<PAGE>   15

ITEM 7. FINANCIAL STATEMENTS

Report of Independent Auditors

Consolidated Balance Sheets as of December 31, 1998 and 1999

Consolidated Statements of Operations for the Years Ended December 31, 1998 and
1999

Consolidated Statements of Stockholders' Equity (Deficiency) for the Years Ended
December 31, 1998 and 1999

Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and
1999

Notes to Consolidated Financial Statements



                                       15
<PAGE>   16

REPORT OF INDEPENDENT AUDITORS


The Board of Directors
Complete Wellness Centers, Inc.

     We have audited the accompanying consolidated balance sheets of Complete
Wellness Centers, Inc., as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' deficiency, and cash flows
for the years then ended. 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 audit 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 audit provides a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Complete Wellness Centers, Inc. at December 31, 1998 and 1999 and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.


                                       /s/  Amper, Politziner & Mattia P.A.

Edison, NJ
March 28, 2000



                                       16
<PAGE>   17

                         COMPLETE WELLNESS CENTERS, INC.

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                 DECEMBER 31, 1998    DECEMBER 31, 1999
                                                                                 -----------------    -----------------
<S>                                                                              <C>                  <C>
ASSETS

Current Assets:
  Cash and cash equivalents                                                      $         444,963    $         272,034
  Certificate of Deposit, restricted                                                             0              111,002
  Patient  accounts  receivables,  net  of  allowance  for  doubtful
accounts                                                                                 5,766,369            5,485,901
      of $6,255,238 and $5,270,361
  Inventory                                                                                 53,405                    0
  Prepaid expenses                                                                           9,661               46,667
  Other assets                                                                              49,774                1,555
                                                                                 -----------------    -----------------
Total current assets                                                                     6,324,172            5,917,159
Furniture and equipment, net                                                               369,583              225,978
Deposits                                                                                    31,983                1,400
                                                                                 -----------------    -----------------
Total assets                                                                     $       6,725,738    $       6,144,537
                                                                                 =================    =================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
  Accounts payable and accrued expenses                                          $       6,693,321    $       2,729,786
  Accrued management fees                                                                4,020,288            2,573,463
  Notes payable - current                                                                        0              582,525
                                                                                 -----------------    -----------------
Total current liabilities                                                               10,713,609            5,885,774

Notes payable                                                                              392,000              314,475

Stockholders' equity (deficiency):
  Common Stock, $.0001665 par value per share, 10,000,000 and 50,000,000
    shares authorized, 2,457,968 shares and 4,881,149
issued                                                                                         409                  813
    and outstanding at December 31, 1998 and 1999, respectively
  Senior Convertible Preferred Stock, $.01 par value per share, 2,000,000
    shares authorized, 8% cumulative, 109,686 shares and 121,107 shares issued
    and outstanding at December 31, 1998
    and 1999, respectively                                                                   1,097                1,211
  Junior Convertible Preferred Stock, $.01 par value per share, 2,071
    Shares authorized, 8% cumulative, 0 shares and 2,071 shares issued                           0                   21
    And outstanding at December 31, 1998 and 1999, respectively
  Additional paid in capital                                                            11,135,356           18,838,475
  Accumulated deficit                                                                  (15,516,733)         (18,896,232)
                                                                                 -----------------    -----------------
Total stockholders' equity (deficiency)                                                 (4,379,871)             (55,712)
                                                                                 -----------------    -----------------
Total liabilities and stockholders' deficiency                                   $       6,725,738    $       6,144,537
                                                                                 =================    =================
</TABLE>



See accompanying notes.



                                       17
<PAGE>   18

                         COMPLETE WELLNESS CENTERS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                            YEAR ENDED           YEAR ENDED
                                         DECEMBER 31, 1998    DECEMBER 31, 1999
                                         -----------------    -----------------
<S>                                      <C>                  <C>
Operating revenue:
  Patient revenue                        $      17,132,388    $      12,940,331
  Weight management centers                      6,573,931                    0
  Other income                                     455,500                    0
                                         -----------------    -----------------
Total operating revenue                         24,161,819           12,940,331
Direct expenses:
  Salary and consulting costs                    7,066,208            3,357,697
  Management fees                                8,641,067            7,907,969
  Cost of revenues                               2,450,577                7,178
  Rent                                           5,140,929              208,936
  Advertising and marketing                        963,918               20,453
  Bad debt expense                               2,656,597            1,598,635
                                         -----------------    -----------------
Total direct expenses                           26,919,296           13,100,868
Network development cost                           701,443                    0
General and administrative                       6,066,240            2,401,452
Depreciation and amortization                      209,882              137,446
                                         -----------------    -----------------
Operating loss                                  (9,735,042)          (2,699,435)
Interest expense                                    (2,771)            (110,818)
Interest income                                     62,616                5,262
Minority interest                                    7,179                    0
                                         -----------------    -----------------
Net loss before income taxes                    (9,668,018)          (2,804,991)
Income taxes                                             0                    0
                                         -----------------    -----------------
Net loss after income taxes              $      (9,668,018)   $      (2,804,991)
                                         =================    =================

Loss per share - basic                   $           (4.41)   $           (0.77)
                                         =================    =================

Weighted average common shares - basic           2,301,332            3,630,453
                                         =================    =================
</TABLE>






See accompanying notes.



                                       18
<PAGE>   19

                         COMPLETE WELLNESS CENTERS, INC.
          CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY)


<TABLE>
<CAPTION>
                                          JUNIOR           SENIOR
                                          ------           ------
                                        CONVERTIBLE      CONVERTIBLE
                                        -----------      -----------
                                      PREFERRED STOCK  PREFERRED STOCK      COMMON STOCK      ADDITIONAL ACCUMULATED
                                      ---------------  ---------------      ------------      ----------------------
                                      SHARES   AMOUNT  SHARES    AMOUNT    SHARES    AMOUNT    CAPITAL     DEFICIENCY      TOTAL
                                      ------   ------  ------    ------    ------    ------    -------     ----------      -----
<S>                                   <C>      <C>     <C>       <C>     <C>         <C>     <C>          <C>            <C>
Balance at January 1, 1998                                               2,183,598     $363  $ 5,044,365  $ (5,364,415)  $ (319,687)
   Issuance of common stock                                                 70,912       13      199,987                    200,000
   Issuance of redeemable preferred                    100,000   $1,000                        4,531,320                  4,532,320
     stock
   Exercise of stock options for shares
     of  Complete Wellness Centers,                                         68,792       11        2,379                      2,390
     Inc. Common stock
   Exercise of common stock warrants
     of Complete Wellness Centers,
     Inc. Common stock                                                      16,666        2           48                         50
   Exercise of representative warrants
      to Purchase Complete Wellness                                                                1,563                      1,563
     Centers, Inc. warrants
   Granted 100,000 shares of common
      stock, grant price $3.75                                             100,000       17      374,983                    375,000
   Granted 8,000 shares of common
     Stock, grant price $2.50                                                8,000        1       19,999                     20,000
   Granted 10,000 shares of common
     Stock, grant price $3.875                                              10,000        2       38,748                     38,750
   Recognition of the granting of below                                                           80,633                     80,633
     Market common stock options
   Recognition of the granting of below                                                          357,128                    357,128
     Market common stock warrants
   Dividends recorded on preferred
     stock                                               9,686       97                          484,203      (484,300)
   Net loss                                                                                                 (9,668,018)  (9,668,018)
                                                       -------   ------  ---------      ---   ----------   -----------   ----------
Balance at December 31, 1998                           109,686    1,097  2,457,968      409   11,135,356   (15,516,733)  (4,379,871)
   Exercise of stock options for
     compensation                                                           74,330       13      259,516                    259,529
   Exercise of stock options                                               643,601      108      899,039                    899,147
   Dividend paid in kind on
     preferred stock                      71    $ 1     11,421      114                          574,390      (574,508)
   Private placement of common stock                                       587,000       98      586,905                    587,000
   Issuance of common stock for
     compensation                                                           67,306       10       99,986                     99,996
   Conversion of debt to preferred
     stock                                                2000       20                           99,980                    200,000
   Conversion of debt to preferred
     stock                              2000    $20                                               99,980
   Private placement of common stock                                       481,000       80      480,920                    481,000
   Bankruptcy related adjustments for
     Complete Wellness Weight                                                                  3,852,478                  3,852,478
     Management
   Conversion of preferred to common
      stock                                             (2,000)     (20)    69,944       12            8
   Conversion of debt to common
      stock                                                                500,000       83      749,917                    750,000
   Net loss                                                                                                 (2,804,991)  (2,804,991)
                                        ----    ---    -------   ------  ---------     ----  -----------  ------------   ----------
   Balance at December 31, 1999         2071    $21    121,107   $1,211  4,881,149     $813  $18,838,475  $(18,896,232)  $  (55,712)
                                        ====    ===    =======   ======  =========     ====  ===========  ============   ==========
</TABLE>


See accompanying notes.



                                       19
<PAGE>   20

                                 COMPLETE WELLNESS CENTERS, INC

                              CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                   YEAR ENDED           YEAR ENDED
                                                DECEMBER 31, 1998    DECEMBER 31, 1999
                                                -----------------    -----------------
<S>                                             <C>                  <C>
OPERATING ACTIVITIES
Net loss                                        $      (9,668,018)   $      (2,804,991)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Minority interest                                       (7,179)                   0
   Depreciation and amortization                          216,197              137,446
   Provision for bad debt                               2,656,597            1,598,635
   Provision for loss on long lived assets                 18,066                    0
   Recognition of the granting of common stock
      warrants and options                                873,074              358,772
   Issuance of stock for LLC units                        200,000                    0
   Changes in operating assets and liabilities:
      Accounts receivable                              (5,664,125)          (1,318,167)
      Advances to officers and other current
       assets                                             327,420               20,488
      Inventory                                                 0               53,405
      Deposits                                                  0               30,583
      Accounts payable and other current
      liabilities                                       6,431,211            1,166,943
      Accrued management fees                                   0           (1,446,825)
                                                -----------------    -----------------
Net cash used in operating activities                  (4,616,757)          (2,203,711)
INVESTING ACTIVITIES
Investment in Certificate of Deposit                            0             (111,002)
(Purchase)/disposal of equipment                          (99,631)              (3,116)
                                                -----------------    -----------------
Net cash used in investing activities                     (99,631)            (114,118)
FINANCING ACTIVITIES
Repayment of notes                                       (178,333)                   0
Stock issuance costs incurred                            (467,680)                   0
Proceeds from sale of preferred stock                   5,000,000                    0
Proceeds from sale of common stock                              0            1,068,131
Proceeds from notes payable                                     0              177,000
Exercise of warrants                                           50                    0
Exercise of stock options                                   2,390              899,769
                                                -----------------    -----------------
Net cash provided by financing activities               4,356,427            2,144,900
                                                -----------------    -----------------
Net increase in cash and cash equivalents                (359,961)            (172,929)
Cash and cash equivalents at beginning
     of year                                              804,924              444,963
                                                -----------------    -----------------
Cash and cash equivalents at end of year        $         444,963    $         272,034
                                                =================    =================
</TABLE>


SUMMARY OF SUPPLEMENTARY CASH FLOWS DISCLOSURES:
<TABLE>
<S>                                                           <C>                       <C>
Interest paid                                                 0                         $44,710
Income taxes paid                                             0                               0
</TABLE>

Significant non-cash transactions completed by the Company during the year ended
December 31, 1999 include the following:
<TABLE>
<S>                                                                            <C>
Reduction of liabilities related to bankruptcy filing                          $3,852,478
Reduction of liabilities due to conversions to equity                             950,000
Payment of preferred stock dividends with shares of preferred stock               574,507
Exercise of stock option through conversion of liability                          269,123
Conversion of preferred stock to common stock                                     100,000
</TABLE>

See accompanying notes.



                                       20
<PAGE>   21

COMPLETE WELLNESS CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1999

1. LIQUIDITY

     The consolidated financial statements of Complete Wellness Centers, Inc.,
(the "Company") have been presented on the basis that the Company is a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. For the year ended December 31,
1999, the Company had recurring loss from operations of $2,804,991, and total
stockholders' deficiency of $55,712. The current ratio at December 31, 1999 was
1.01. During March 2000, the Company obtained financing of $750,000, see note
16.

     It is the Company's intention to seek additional equity funding through a
private placement, which is expected to start in June 2000, and to seek a firm
underwriting commitment for a secondary offering in the second half of 2000. The
Company believes that through continued cost cutting efforts currently underway,
profitability could improve.

2. ORGANIZATION AND PRESENTATION

     The Company was incorporated in Delaware in November 1994. The Company
develops and operates integrated medical delivery systems with a goal of
providing consumers with a comprehensive integrated wellness model of care. The
current primary operations are integrated medical centers.

Integrated Medical Center Model

     The Company's integrated medical centers are generally developed and
operate under agreements whereby the Company will open new Integrated Medical
Centers in the same location as chiropractors' existing chiropractic practices
(the "Affiliated Practices"). The Integrated Medical Centers will employ a
physician (the "MD") on a salaried basis to supervise the provision of health
care services. Where permitted by state law, the Integrated Medical Centers will
be wholly owned by the Company. In other jurisdictions, the Integrated Medical
Centers will be wholly owned by a nominee MD and managed by the Company. The
chiropractor may continue to operate his or her existing Affiliated Practice
separately from the Integrated Medical Center. The Company will not acquire the
Affiliated Practice, its patient base, or its tangible assets. In addition, no
consideration will be paid to the chiropractor at inception of the arrangements.
As of December 31, 1999, the Company had 42 operational Integrated Medical
Centers.

3. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The consolidated financial statements reflect the accounts of Complete
Wellness Centers, Inc., which includes 6 wholly owned subsidiaries, and 42
managed Integrated Medical Centers, CWC, LLC, Complete Wellness Weight
Management, Inc. ("CWWM"), Complete Wellness Research Institute, Inc., Complete
Wellness Education, Inc., Complete Billing, Inc., and its majority owned
subsidiaries, Complete Wellness Smoking Cessation, Inc. d/b/a Smokenders
(88.23%), and Optimum Health Services, Inc. (86.67%). CWWM ceased operations in
December 1998, Optimum Health Services ("OHS") was sold to the management of OHS
in November 1998, Complete Billing ceased operations in August 1998 and
Smokenders was returned to its previous owners in July 1999. Operational
activities through these dates are consolidated in the Company's applicable
financial statements. Significant intercompany transactions have been
eliminated. The financial statements of the Integrated Medical Centers that are
controlled but not directly owned by the Company are consolidated in the
Company's financial statements in accordance with the FASB's Emerging Issues
Task Force consensus 97-2 "Application of APB Opinion No, 16 and FASB Statement
No. 94 to Medical Entities."

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The more significant areas, requiring the use of management
estimates, relate to allowance for doubtful patient accounts receivable and
accrued management fees. Actual results could differ from those estimates.

Cash and Equivalents

     The Company considers cash and cash equivalents to include currency on
hand, demand deposits, and all highly liquid investments with a maturity of
three months or less at the date of purchase.

Inventory

     Inventory was recorded at the lower of cost, using the average cost method
or net realized value.
Furniture and Equipment



                                       21
<PAGE>   22

     Furniture and equipment are recorded at cost. Maintenance and repairs are
charged to expense as incurred. Depreciation is computed using the straight-line
method at rates intended to amortize the cost of the related assets over their
estimated useful lives.

     Furniture and equipment of the Company are reviewed for impairment whenever
events or circumstances indicate that the asset's undiscounted expected cash
flows are not sufficient to recover its carrying amount. The Company measures an
impairment loss by comparing the fair value of the asset to its carrying amount.
Fair value of an asset is calculated as the present value of expected future
cash flows.

Revenue

     Patient revenue from services is reported at the estimated realizable
amounts from patients and third party payors for services rendered.
Substantially all of the patient service revenue of the Integrated Medical
Centers is paid by the patients and traditional commercial insurers. Certain
managed care arrangements have been made by individual Integrated Medical
Centers.

     The Company's Integrated Medical Centers provide certain patient services
at discounted rates based on the patients' demonstration of financial hardship
and need for the services rendered. The amount of discount is based on the level
of demonstrable hardship on a case by case basis. The Company and its Integrated
Medical Centers are under no obligation to provide such services but do so as a
community service. Patient revenues related to such services are recognized net
of discounts allowed in the accompanying financial statements. The Company does
not measure the level of such services provided.

Income Taxes

     Income taxes are provided using the liability method. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases (i.e., temporary differences).

Stock-Based Compensation

     The Company grants stock options for a fixed number of shares to employees
and certain consultants. The Company has elected to continue to account for
stock-based compensation arrangements under APB Opinion No. 25 "Accounting for
Stock Issued to Employees," and accordingly recognizes compensation expense for
the stock option grants as the difference between the fair value and the
exercise price at the grant date. The pro forma information required by FASB
Statement No. 123, "Accounting for Stock-Based Compensation," which provides a
fair-value-based method of accounting alternative to account for stock-based
compensation issued to employees and consultants has been disclosed in Note 9.

Fair Value of Financial Instruments

     Management has determined the estimated fair value of financial instruments
using available market information and valuation methodologies. Cash
equivalents, accounts receivable, accounts payable, notes payable and accrued
liabilities and other current assets and liabilities are carried at amounts
which reasonably approximate their fair values. Considerable judgment is
necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize on disposition of the financial
instruments. The use of different market assumptions or estimation methodologies
may have an effect on the estimated fair value amounts.

Concentration of Cash Balances

     Periodically, the Company maintains cash balances in excess of the $100,000
insured by the Federal Deposit Insurance Corporation (FDIC).

Net Income Per Share

     Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share, replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes the dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. In addition, the SEC staff
issued Staff Accounting Bulletin No. 98 ("SAB 98"), in February 1998. SAB 98
requires that registrants consider all potentially dilutive securities issued
for nominal consideration outstanding for all periods. Under the previous SEC
regulations in SAB 83, the Company considered all potentially dilutive
securities issued within a twelve month period prior to the initial public
offering date at a price below the initial public offering price as outstanding
for all periods. The effect on weighted average shares outstanding of securities
that could potentially dilute basic earnings per share in the future were not
included in the computation of diluted earnings per share because to do so would
have been antidilutive for the periods presented.



                                       22
<PAGE>   23

New Accounting Pronouncements

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivative as either assets or liabilities
and measure them at fair value. Under certain circumstances, the gains or losses
from derivatives may be offset against those from the items the derivatives
hedge against. This statement is required to be adopted for fiscal quarters of
fiscal years beginning after June 15, 2000. The Company expects to adopt SFAS
No. 133 effective January 1, 2001.

Reclassifications

     Certain reclassifications have been made to conform prior year amounts to
the current year presentation.

4. ACQUISITIONS/DISPOSALS

Smokenders

     On July 31, 1997, a subsidiary of the Company acquired substantially all of
the assets of a smoking cessation program owned by the Oxford Health Plan
(Smokenders) for $50,000. This acquisition was subject to two royalty
arrangements, a 5% royalty on gross revenues for a 10 year period to Oxford
Health Plan and 12.4% of revenues with a minimum of $26,000 to the founders of
Smokenders. At the same time, the CEO of Smokenders, who was also a Director of
the Company, acquired an 11.77% minority interest in Smokenders from the Company
in return for a $22,000 promissory note bearing interest at 8%, due September
30, 2000. The transaction was accounted for as a purchase. The net purchase
price was allocated for accounting purposes to the assets acquired, primarily
the inventory of printed materials.

     On June 1, 1998, the Company amended certain agreements with its Complete
Wellness Smoking Cessation, Inc. ("Smokenders") subsidiary. During September
1998, the Company contributed to Smokenders $23,000 as additional capital and
$75,000 in return for a secured note bearing interest at 12%, payable on or
before September 30, 1999. Additionally, the Company eliminated $22,000 of
promissory notes due from the CEO of Smokenders, as part of the original
shareholder agreement. On September 15, 1998, the CEO resigned his position
however, he remained a Board Member of the Company. The Company also agreed to
grant the managers of Smokenders up to an additional 3,000 options to purchase
Smokenders stock, 1,500 of which vested at the grant date and 1,500 of which are
subject to time vesting schedules through August 1, 1999. All options are
exercisable for 5 year periods, contain anti-dilution provisions, and are not
exercisable until January 1, 2000, except under certain circumstances. The
exercise of these options will result in the managers owning 35% of the
outstanding shares of Common Stock and the Company owning 65% of the outstanding
shares of Common Stock of Smokenders. All shares are non-public restricted
securities exempt from regulation requirements of the Securities Act of 1933 as
amended. The shareholders of Smokenders have certain put and call options as
well as non-mandatory repurchase options and liquidation requirements in the
event selling shareholders are not able to obtain buyers for their stock.

     On May 1, 1999, as a result of the failure to pay the minimum royalty fee
of approximately $26,000 to the founding shareholders of Smokenders, the Company
reached an agreement with those shareholders to transfer all licenses, patents,
copyrights, trademarks, inventory and other assets back to them as of July 1,
1999 for no further consideration and a release of debt on the royalty fee due
as well as the assumption of certain liabilities. The Company has included the
results of operations of Smokenders through June 30, 1999 in its consolidated
results from operations.

Nutri/Systems

     On January 31, 1998, CWWM completed the acquisition of 56 weight loss
treatment centers from Nutri/System, L.P. The retail centers marketed food,
medically supervised weight loss programs and nutritional supplements. The
purchase price of the centers included $150,000 in cash and the assumption of
certain lease liabilities and other acquisition costs of approximately $700,000.
The transaction was accounted for as a purchase. The purchase price, including
acquisition costs, was allocated for accounting purposes to the assets acquired,
primarily food inventory.

     On November 13, 1998, the Company's Board of Directors voted to sell, close
and/or otherwise divest the operations of CWWM. CWWM commenced operations on
February 1, 1998 and realized losses from operations of approximately $5,974,000
on revenues of approximately $6,573,000 for the period ended December 31, 1998.
The costs to exit this activity were estimated to be approximately $3,355,000.
On April 21, 1999 the Company's Board of Directors approved a formal plan for
CWWM to file for Chapter 7 bankruptcy proceedings. The Company filed the formal
Chapter 7 documents on July 6, 1999 in Trenton, New Jersey. As of July 6, 1999,
this subsidiary is no longer included in the Company's consolidated financial
results. The Company's investment in this subsidiary was adjusted to reflect
those liabilities that are guaranteed by the Company. The remaining liabilities
of the subsidiary, approximately $3,852,000, were adjusted through changes to
additional paid in capital of the Company in July 1999.

Complete Wellness Centers, LLC

     On May 29, 1998 the Company, by unanimous consent of the Board of
Directors, agreed to purchase all of the outstanding units of Complete Wellness
Centers, LLC ("CWC,LLC"), a Delaware limited liability company, of which the
Company has a 1% equity interest and irrevocable proxies from a majority of
interest holders in the LLC. The acquisition was accomplished by the issuance of



                                       23
<PAGE>   24

77,821 shares of Common Stock valued at $200,000, based upon the average closing
bid price of the Company's Common Stock for the thirty (30) trading days prior
to June 1, 1998. Such shares are subject to SEC Rule 144, but shall have
piggyback registration rights. Former and current employees, directors, and
immediate relatives of management, owning 37.6% of the LLC's equity received a
discount to 26.32% of the $200,000 valuation of the LLC; the remaining investors
received the balance of the valuation on a pro rata basis in accordance with
their respective investments. This amount was expensed during 1998.

Accident and Industrial Injury Associates

     In July 1998, the Company purchased Accident and Industrial Injury
Associates ("AIIA"), a chiropractic preferred provider network of approximately
2,700 providers located throughout the United States in exchange for warrants to
purchase 20,000 shares of its common stock for $3.31 per share which expire in 5
years and contain certain piggyback registration rights. The Company accounted
for this transaction under the purchase method. The primary assets acquired were
members of the network and databases related to the operations thereof. The
Company contemporaneously sold 30% of its interest in AIIA to its 86.67% owned
subsidiary, Optimum Health Services, Inc. ("OHS") in exchange for a $12,000 note
bearing interest at 6.1% per annum, due January 31, 2000. OHS will manage the
network on behalf of the Company and receive an additional 20% interest in AIIA
over three years as compensation for such services. The Company has committed to
fund the initial working capital requirements of AIIA, up to approximately
$10,000, after which, the Company and OHS will fund all future working capital
requirements equally.

     As a result of a revised spin off plan with OHS, as amended on November
3,1998, the Company agreed to sell OHS an additional 25% of AIIA for an
additional $6,000 note bearing interest at 6.1% pre annum. The amended agreement
established the new company, Optimum Preferred Provider Organization ("OPPO"),
with is owned initially as to 55% OHS and 45% to the Company. OHS was to manage
the network and will receive an additional 20% interest in OPPO over three years
as compensation for such services at which time OHS will own 75% of OPPO.

     On January 3, 1999, the Board passed a resolution to nullify the Company's
acquisition of AIIA Managed Care, Inc. (AIIA).

Complete Billing, Inc.

     On July 7, 1998, the Company committed to a formal plan to exit the
operations of Complete Billing, Inc. ("CBI") one of its wholly owned
subsidiaries. The Company ceased CBI's operations on August 15, 1998 and
converted all billing performed by CBI back to the respective medical clinics
that were CBI's clients. The Company does not expect to incur any further
expenses as a result of closing CBI. For the period ended December 31, 1998, CBI
had losses from operations of approximately $75,000 on revenues of approximately
$91,000.

Optimum Health Services, Inc.

     The Company's formal plan to divest its 86.67% interest in OHS, as amended
on November 3, 1998 was to spin-off the Company's interest in OHS to the
management of OHS. For the eleven months ended November 30, 1998, OHS had losses
from operations of approximately $701,000 with approximately $19,000 in
revenues. Under the plan, the Company converted its investment in OHS into
266,736 OHS ten-year warrants at an exercise price of $0.01 per share. The
warrants can not be exercised prior to one year and not in an amount at any time
such that the Company's ownership of OHS's common stock would be greater than
49% of the total OHS common stock outstanding. The current value recorded by the
Company in relation to the 266,736 OHS warrants is zero. On March 31, 2000, the
Company exercised its warrants with a cash payment of $2,667 and now owns
266,736 shares of OHS, approximately 6.7% of their outstanding shares at that
time.



5. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Details of the allowance for doubtful accounts receivable are as follows:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                             1998                1999
                                                        ---------------    ----------------
<S>                                                     <C>                <C>
Beginning Balance                                       $     3,825,708    $      6,255,238
Bad debt expense                                              2,656,597           1,598,635
Recoveries/Write-offs                                          (227,067)         (2,583,512)
                                                        ---------------    ----------------
Ending Balance                                          $     6,255,238    $      5,270,361
                                                        ===============    ================
</TABLE>



                                       24
<PAGE>   25

6. FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                             1998                1999
                                                       ----------------    ----------------
<S>                                                    <C>                 <C>
Furniture and Equipment (5 year life)                  $        706,208    $        440,003
Less Accumulated Depreciation and Amortization                 (336,625)           (214,025)
                                                       ----------------    ----------------
                                                       $        369,583    $        225,978
                                                       ================    ================
</TABLE>

7. DEBT

Notes Payable

     On December 19, 1997, we entered into an Investment Agreement with Wexford
Spectrum Investors LLC and Imprimis Investors LLC pursuant to which, as
supplemented by a First Supplement dated January 12, 1998, a Second Supplement
dated July 2, 1998 and a Third Supplement dated October 19, 1998, we issued
$475,000 in aggregate principal amount of Senior Secured Floating Rate Bridge
Notes due February 1, 1999, secured by various assets of Complete Wellness
Centers, $375,000 of which evidenced term loans and $125,000 of which evidenced
revolving loans made by Wexford and Imprimis to us. On August 31, 1999, we
executed a Fourth Supplement to the Investment Agreement with Wexford and
Imprimis, whereby we (i) converted $100,000 of the outstanding principal of the
bridge notes to 2,000 newly issued shares of Senior Convertible Preferred Stock,
and (ii) agreed to repay the remaining principal and accrued and unpaid interest
by equal quarterly payments to Wexford and Imprimis during the period from
January 1, 2000 to December 31, 2001 based on a four year amortization schedule.
The note accrues interest at 12% per annum.

1997 Bridge Note

     The Company received $500,000 as a Bridge Loan on December 19, 1997. This
note bears interest at 12% and was converted into Senior Convertible Preferred
Stock on January 23, 1998. The note, along with an additional investment of
$4,500,000 was converted into 100,000 shares of 12% convertible Preferred Stock.

Other Notes Payable

     On February 19, 1999 we signed a loan agreement with RVR Consulting Group,
Inc. ("RVR"), a related party, for $100,000 and on August 31, 1999 we signed a
First Supplement to the Loan Agreement with RVR, pursuant to which we and RVR
agreed to convert the $100,000 loan in full into 2,000 shares of 8% Junior
Convertible Preferred Stock.

     The Company entered into loan agreements with two vendors totalling
$428,000. Interest is 9% and 12% respectively and the loans are due December
2000 and April 2002. We are in default of one these loans and have classified
this note as current..

     On December 27, 1999 we received a $100,000 loan from Joseph J. Raymond,
Jr., Chairman and Chief Executive Officer of the Company for a term of six
months. The note accrues interest at 12% per annum.

     The aggregate amount of all maturities for the year ended December 31, 1999
are as follows:

<TABLE>
<S>                      <C>
     2000                $582,525
     2001                 314,475
                         --------
                         $897,000
                         ========
</TABLE>

8. INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. The tax effects of
temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities recognized as of December 31, 1998 and 1999
are presented below:



                                       25
<PAGE>   26

<TABLE>
<CAPTION>
                                                December 31,
                                            1998           1999
                                        -----------    -----------
<S>                                     <C>            <C>
Deferred tax assets:
         Start-up costs                 $    21,000    $        --
         Nonqualified stock options         314,000        392,000
         Bad debt expense                 2,252,000      1,897,000
         Operating loss carryforward      1,090,000      3,137,000
         Accrued exit of activity           880,000             --
         costs
                                        -----------    -----------
            Total deferred tax assets     4,557,000      5,426,000
Less valuation allowance                 (4,546,000)    (5,415,000)
                                        -----------    -----------
Net Deferred tax assets                      11,000         11,000
                                        -----------    -----------
Deferred tax liabilities:
         Depreciation                       (11,000)       (11,000)
                                        -----------    -----------
Total deferred tax liabilities              (11,000)       (11,000)
                                        -----------    -----------
Net deferred tax amount                 $         0    $         0
</TABLE>


     The Company files a consolidated federal tax return with its wholly owned
subsidiaries. At December 31, 1999, the Company had net operating loss
carryforwards for income tax purposes of approximately $8,713,000 which expire
between 2010 and 2012. Utilization of net operating loss carryforwards may be
significantly limited, based on changes in the Company's ownership. The use of
substantially all of the combined net operating loss carryforwards of CWC, LLC
will be limited to offset future taxable income of each separate subsidiary in
proportion to their share of the tax losses generated to date. In addition,
these carryforwards may be significantly limited under the Internal Revenue Code
as a result of ownership changes resulting from the Company's Senior and Junior
Convertible Preferred Stock financing and other equity offerings.

     The Company has a cumulative pretax loss for financial reporting purposes.
Recognition of deferred tax assets will require generation of future taxable
income. There can be no assurance that the Company will generate earnings in
future years. Therefore, the Company established a valuation allowance on
deferred tax assets of approximately $4,546,000 and $5,415,000 as of December
31, 1998 and 1999, respectively.

     Significant components of the provision for income taxes are as follows for
the years ended:

<TABLE>
<CAPTION>
                                                December 31,
                                            1998           1999
                                         -----------    -----------
<S>                                      <C>            <C>
Current:
       Federal                           $         0    $         0
       State                                       0              0
                                         -----------    -----------
Total Current                                      0              0

Deferred:
       Federal                            (2,453,000)      (765,000)
       State                                (513,000)      (104,000)
       Increase in valuation allowance     2,966,000        869,000
                                         -----------    -----------
Total deferred                                     0              0
                                         -----------    -----------
Total provision for income taxes         $         0    $         0
                                         ===========    ===========
</TABLE>

     The effective tax rate on income before income taxes varies from the
statutory federal income tax rate for the years ended December 31, 1998 and 1999
as follows:

<TABLE>
<CAPTION>
                          December 31,
                         1998     1999
                         ----     ----
<S>                      <C>      <C>
Statutory rate            (34%)    (34%)
State taxes, net           (3%)     (3%)
Other differences, net      1%       1%
Valuation allowance        36%      36%
                         ----     ----
                            0%       0%
                         ====     ====
</TABLE>



                                       26
<PAGE>   27

9. STOCKHOLDERS' EQUITY

Warrants

         The Company issued one warrant for each common share sold in connection
with its initial public offering. The warrants are exercisable at any time
commencing August 19, 1997 until February 18, 2002 at $7.20 per share. The
warrants are subject to adjustment in accordance with the certain anti-dilution
commitments and other provisions.

Sale of Senior Redeemable Preferred Stock / Conversion to Senior Convertible
Preferred Stock

         The Senior Redeemable Preferred Stock was issued to two investment
groups (the "investors") pursuant to the terms of the investment agreement dated
January 23, 1998 and amended July 2, 1998. The offering consisted of a $500,000
12% Bridge Loan (the "Bridge Loan") received by the Company on December 16,
1997, a $1,000,000 Senior Redeemable Preferred Stock purchase by the Investors
on January 17, 1998, of which $500,000 was used to retire the Bridge Loan and a
$4,000,000 Senior Redeemable Preferred Stock purchase by the Investors on
January 23, 1998. On July 2, 1998, the Senior Redeemable Preferred Stock was
exchanged for Senior Convertible Preferred Stock.

         The cost of the offering to the Company, approximately $468,000, was
paid out of the proceeds of the Senior Redeemable Preferred Stock offering.

     The significant provisions of the for Senior Convertible Preferred Stock
are as follows:

(I)  The Senior Convertible Preferred Stock accrues dividends at 8% per annum if
     paid in cash and 10% per annum if paid in the form of additional shares of
     Senior Convertible Preferred Stock. Dividends are payable quarterly.
     Dividends in the form of additional shares of Senior Convertible Preferred
     Stock were paid at the end of each calendar quarter in 1998 and 1999.

(II) The Senior Convertible Preferred Stock's liquidation preference is
     calculated as $50 per share plus an amount equal to all dividends (whether
     or not earned or declared) accumulated and unpaid to the date of final
     distribution.

(III)Conversion of the Senior Convertible Preferred Stock is based on the
     liquidation preference divided by the lower of $1.75 or 75% of the current
     market price per share of the Company's Common Stock on the trading day
     immediately prior to the conversion date, subject to certain anti-dilution
     provisions. Conversion of the Senior Convertible Preferred Stock, at the
     option of the Investors, can occur at any time on or after January 3, 1999.

(IV) The Senior Convertible Preferred Stock is redeemable, at the Company's
     option, in whole but not in part, from July 2, 1998 through January 3, 1999
     at the liquidation preference, except that the dividend rate shall be 12%
     per annum.

(V)  Warrants issued to the Investors in connection with the Senior Redeemable
     Preferred Stock were returned to the Company and canceled.

(VI) The Company issued 100,000 fully paid for and non-assessable shares of the
     Company's Common Stock to the Investors. All common stock issued or
     issuable to the Investors upon conversion of the Senior Convertible
     Preferred Stock contain certain demand registration rights, the Company
     will bear the costs associated with the registrations if any.

     On November 17, 1999, a request to convert 2,000 shares of Senior
Convertible Preferred Stock to 69,944 shares of Common Stock was completed.

         Our board of directors has the authority to issue up to 10,000,000
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 and
the preferred stock offered in this offering 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.

         On August 19, 1998, we entered into a consulting agreement with RVR
Consulting Group, Inc. for a term of August 1, 1998 through July 31, 1999. We
agreed to pay RVR $7,000 per month plus expenses to help us identify problem
areas in our operations and provide subsequent solutions. Joseph J. Raymond Jr.,
our chairman of our board of directors and chief executive officer, is the
president of RVR, and Sergio R. Vallejo, our president and chief operating
officer, is the vice president of RVR. We subsequently amended the consulting
agreement to agree to issue RVR warrants to purchase 150,000 shares of our
common stock. On March 4, 1999, we terminated the consulting agreement and
converted the warrants granted to RVR to options granted under our 1999
Consultants Stock Option Plan to purchase 150,000 shares of our common stock at
an exercise price of $1.25 per share, 75,000 to Joseph J. Raymond, Jr. and
Sergio R. Vallejo individually. On December 1, 1999, the Board of Directors
agreed to convert each of their 75,000 options to 16,666 shares of common stock
at the closing price on December 1, 1999.

         On September 17, 1998, we entered into a consulting agreement with
Structure Management, Inc., pursuant to which Structure Management agreed to
provide consulting services related to our operations and financing, and
pursuant to which we agreed to issue warrants to purchase 120,000 shares of our
common stock at $2.00 per share to Structure Management. On March 4, 1999, we
converted the warrants to options, granted under our 1999 Consultant's Stock
Option Plan, to purchase 120,000 shares of our common stock at $2.00 per share.
Structure Management subsequently exercised the options. Structure Management is
controlled by Jeffrey J. Raymond, the brother of Joseph J. Raymond, Jr.,
Chairman and Chief Executive Officer of CWC.



                                       27
<PAGE>   28

         On February 19, 1999 we signed a loan agreement with RVR Consulting
Group, Inc. for $100,000 and on August 31, 1999 we signed a First Supplement to
the Loan Agreement with RVR, pursuant to which we and RVR agreed to convert the
$100,000 loan in full into 2,000 shares of Junior Convertible Preferred Stock.
This class of Preferred Stock has the same rights and terms as the Senior
Convertible Preferred Stock, except it is junior in its liquidation preference
to the Senior Convertible Preferred Stock.

         On February 26, 1999, Imprimis Investors LLC, Wexford Spectrum
Investors LLC and RVR entered into a Stock Purchase Agreement whereby Imprimis
and Wexford agreed to sell RVR an aggregate of 10,969 shares of our Senior
Convertible Preferred Stock for $500,000. Joseph J. Raymond, Jr., Sergio Vallego
and Joseph Raymond, Sr., father of Joseph J. Raymond, Jr., guaranteed RVR's
payment of the purchase price to Imprimis and Wexford. Imprimis and Wexford each
beneficially own greater than 5% of our outstanding Common Stock, and Frederick
Simon, a Senior Vice President of Wexford, is a former director of ours who
resigned from our board of directors on July 27, 1999.

         On March 8, 1999, we entered into another consulting agreement with
Structure Management, Inc. for the period ending on March 4, 2000. The agreement
calls for Structure Management to support our corporate planning process by: (i)
identifying and bringing to us opportunities which help meet our corporate
objectives and our business plans; (ii) assessing our competitive position,
whether financial, technology or operational; (iii) identifying suitable merger
or acquisition candidates, perform appropriate due diligence and assist us in
negotiations with those identified candidates; (iv) supporting our financial
public relations efforts by reviewing and commenting on our financial reports
and plans and identifying examples of outstanding financial reporting
presentation in other industries; and (v) supporting our shareholder relations
activity by reviewing and responding to shareholder communications and advise us
as to selection of public relations counsel. As compensation, we have issued
Jeffrey J. Raymond, as a principal of Structure Management, Inc. options under
our 1999 Consultants Stock Option Plan to purchase 117,500 shares of common
stock at $1.25 per share. Mr. Jeffrey J. Raymond subsequently exercised the
options.

         On April 1, 1999, the Company reached a settlement with Haim Zitman.
Mr. Zitman had sued the Company for breach of his employment agreement with
CWWM, a subsidiary of the Company. Mr. Zitman was granted options to purchase
40,000 shares of the Company's Common Stock for $0.01 per share, valued at
$80,000 in compensation expense, vested upon issuance, in full satisfaction of
his claim. Mr. Zitman exercised options to purchase 27,625 shares and 12,375
shares in September 1999 and October 1999, respectively.

         On April 21, 1999 the Company's Board of Directors approved a plan to
raise up to $1,000,000 through a private placement of the Company's Common
Stock. The plan consisted of the issuance of up to 1,000,000 shares of the
Company's Common Stock priced at $1.00 per share. Through June 30, 1999 the
Company received $587,000 through the private placement of which $152,000 was
used to cover costs of the offering. The offering was terminated on July 15,
1999. On June 30, 1999, the Company filed a registration statement on Form S-3
with the SEC to register 587,000 shares of its Common Stock issued in the
private placement offering discussed above.

         On August 24, 1999, as consideration for services provided by Structure
Management in connection with a private placement of our common stock, we issued
Structure Management options under our 1999 Consultants Stock Option Plan for an
additional 125,000 shares of our common stock at $1.50 per share and paid
Structure Management $50,000. Structure Management subsequently exercised the
125,000 options.

         On August 24, 1999 the Company's Board of Directors approved a plan to
raise up to $750,000 through a private placement of the Company's Common Stock.
The plan consisted of the issuance of up to 750,000 shares of the Company's
Common Stock priced at $1.00 per share. All such shares were sold and issued.
These shares were subsequently registered with the Securities and Exchange
Commission.

         Through December 15, 1999, the Company received $481,000 through
another private placement of which $50,000 was used to cover costs of the
offering. CWC sold 481,000 shares of its Common Stock at $1 per share. These
shares are considered restricted securities subject to Rule 144 of the
Securities Act of 1933, as amended.

         On August 24, 1999 the Company's Board of Directors approved the
conversion of $950,000 of debt into the Company's securities. On September 23,
1999,Stratus Services Group converted their entire debt to the Company, which
consisted of $750,000, into 500,000 shares of the Company's Common Stock. Joseph
J. Raymond, Sr., a principal of Stratus Services Group, is the father of Mr.
Joseph J. Raymond, Jr., the Chairman and Chief Executive Officer of the Company.
Imprimis Investors, LLC and Wexford Spectrum Investors, LLC converted $80,000
and $20,000 respectively, of their Senior Secured Debt into 1,600 and 400 shares
respectively, of Senior Convertible Preferred Stock. RVR Consulting Group, Inc.
converted $100,000 of unsecured term notes into 2,000 shares of the Company's
Junior Convertible Preferred Stock. Mr. Joseph J. Raymond, Jr., the Chairman and
Chief Executive Officer of the Company and Mr. Sergio R. Vallejo, the President
and Chief Operating Officer of the Company are both principles of RVR Consulting
Group. All the aforementioned conversions were completed by August 31, 1999. The
shares of Junior Convertible Preferred Stock have the same rights as shares of
the Senior Secured Cumulative Convertible Preferred Stock, except that they are
junior, or subordinate, to the Senior Convertible Preferred Stock.

         As of December 31, 1999, total options outstanding for shares to be
issued under all plans were 652,083 of which 531,337 were exercisable. The
underlying shares of Common Stock have been reserved for issuance under the
respective plans.



                                       28
<PAGE>   29

         On January 5, 2000, we issued options for 100,000 shares of our common
stock under our 1996 Stock Option Plan to Joan Raymond, a principal of Structure
Management, Inc., at $1.25 per share. Mrs. Raymond, a sister-in-law to Mr.
Joseph J. Raymond, Jr., the Chairman and Chief Executive Officer of the Company,
subsequently exercised the options in full.

         On March 13, 2000, we reached an agreement with our preferred
shareholders to restructure the capitalization of our company. The restructuring
will only take place upon completion of the merger with Dr.Alt.com Corporation
(See Note 16 - Potential Transactions and Relationships). In an attempt to
simplify the capital structure and to remove the liquidation preferences of the
Senior Convertible Preferred Stock ("Senior") and of the Junior Convertible
Preferred Stock ("Junior") the following transactions will take place upon the
effective date of the merger:

-    Conversion of all outstanding shares of Senior to shares of Common Stock of
     the Company based on their current conversion factor;

-    Conversion of all outstanding shares of Junior to shares of Common Stock of
     the Company based on their current conversion factor;

-    The shares of Common Stock will be restricted subject to Rule 144 of
     Securities Act 1933, yet will be granted piggyback registration rights in
     the next Common Stock offering. CWC has agreed to register such shares no
     later than December 31, 2000.

-    The principle of the secured note payable to Wexford Spectrum Investors LLC
     will continue and the related accrued interest will be brought current.

         During 1999, the Company changed its presentation of convertible
preferred stock to reflect par value. Prior year amounts have been reclassified
to reflect this reclassification.

10. STOCK OPTION PLANS

     The Company has stock option plans providing for the grant of incentive and
non-qualified stock options to employees, directors, consultants and advisors.
Pursuant to the Plans, 1,071,704 shares of Common Stock have been reserved for
issuance. At December 31, 1999 the following options have been granted and are
outstanding:

1994 Stock Option Plan

<TABLE>
<CAPTION>
                        Number of          Exercisable
 Date of Grant       Options Granted       at 12/31/99       Exercise Price        Fair Value
-----------------    -----------------    ---------------    ----------------     -------------
<S>                  <C>                  <C>                <C>                  <C>
        12/31/96           30,333             30,333          $.03 - 4.50             47,396
        12/31/97           11,000             11,000              4.50                17,188
        12/31/98           17,334              8,000              3.03                12,504
         8/31/99           20,000             20,000               .01                31,250
         12/1/99           75,000             25,000              1.25                39,063
                          -------             ------
Total                     153,667             94,335
</TABLE>


1996 Stock Option Plan

<TABLE>
<CAPTION>
                        Number of          Exercisable
 Date of Grant       Options Granted       at 12/31/99       Exercise Price        Fair Value
-----------------    -----------------    ---------------    ----------------     -------------
<S>                  <C>                  <C>                <C>                  <C>
        12/31/97         104,166             102,499                $3.615           $160,154
        12/31/98          26,000              19,864           2.56 - 4.38             45,313
          7/1/99          30,000                   0                   .01             46,875
         8/31/99          40,000              40,000                   .01             62,500
          9/1/99          10,000               5,000                  1.75             15,625
         12/1/99         200,000             200,000                  1.50            312,500
                         -------             -------
Total                    410,166             367,333
</TABLE>


1996 Restricted Stock Option Plan

<TABLE>
<CAPTION>
                        Number of          Exercisable
 Date of Grant       Options Granted       at 12/31/99       Exercise Price        Fair Value
-----------------    -----------------    ---------------    ----------------     -------------
<S>                  <C>                  <C>                <C>                  <C>
1998                      29,500              16,169          $2.25 - 3.03           $25,264
                          ------              ------
Total                     29,500              16,169
</TABLE>


                                       29
<PAGE>   30


1998 Outside Directors Stock Option Plan

<TABLE>
<CAPTION>
                        Number of          Exercisable
 Date of Grant       Options Granted       at 12/31/99        Exercise Price       Fair Value
-----------------    -----------------    ---------------    ----------------     -------------
<S>                  <C>                  <C>                <C>                  <C>
   1998                   18,750              18,750         $2.8125 - 3.0625          $29,297
3/29/99                    7,500               3,750                     2.25            5,860
 4/1/99                    7,500               3,750                     2.50            5,860
9/16/99                    7,500               3,750                   2.6875            5,860
                          ------              ------
Total                     41,250              30,000
</TABLE>

<TABLE>
<CAPTION>
                        Number of
                     Options Granted       Exercisable
                     and Outstanding       at 12/31/99
                     ---------------       -----------
<S>                 <C>                    <C>
GRAND
TOTAL                    634,583             507,837
                         =======             =======
</TABLE>


<TABLE>
<CAPTION>
                                                           Year of Grant
                                     -----------------------------------------------------------
                                        1996           1997            1998            1999
                                     -----------   -------------    -----------    -------------
<S>                                  <C>             <C>            <C>                   <C>
1998
Forfeited Incentive Options              74,980          20,000         25,000                0
Forfeited Non-Qualified Options               0          17,000              0                0

1999
Forfeited Incentive Options                   0         161,975         94,916            5,000
Forfeited Non-Qualified                       0          39,544         17,166                0
Options
</TABLE>


     Options generally vest 33 1/3% each year beginning on the anniversary of
the grant date. The weighted average remaining contractual life of the options
outstanding at December 31, 1999 is 3.15 years. The weighted average price of
exercisable options at December 31, 1999 was $1.98.

     On August 16, 1999, the Company filed a Form S-8 with the SEC to register
the following numbers of shares under its respective stock option plans:

<TABLE>
<S>                                                                                        <C>
1994 Stock Option Plan.................................................................    400,000 shares
1996 Stock Option Plan.................................................................    600,000 shares
1996 Restricted Stock Option Plan for Health Care Professionals........................    100,000 shares
1998 Outside Directors Stock Option Plan...............................................    100,000 shares
</TABLE>

         The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related
Interpretations in accounting for its employee stock option because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock Based Compensation," requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25's intrinsic value method, compensation expense is
determined on the measurement date, that is the first date on which both the
number of shares the employee is entitled to receive and the exercise price, if
any, are known. Compensation expense is measured based on the award's intrinsic
value of the excess of the market price of the stock over the exercise price on
the measurement date. The Company recorded $80,633 and $147,719 of compensation
expense and $0 and $211,806 of consulting expense related to stock options
granted below market value as of December 31, 1998 and 1999, respectively.
Additionally, the Company has recorded consulting expense of $357,128 and $0 as
of December 31, 1998 and 1999, respectively as a result of the granting of
Common Stock warrants during the years then ended.

         Had compensation costs for the Company's stock option plan been
determined based on the fair value at the date of grant for the awards in 1998
and 1999 and consistent with the provisions of SFAS 123, the Company's net loss
and loss per share-diluted would have been as indicated below:

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                                1998                1999
                                          ------------------   ----------------
<S>                                       <C>                  <C>
Net loss - as reported                         $(9,668,018)       $(2,804,991)
Net loss - pro forma                           $(9,698,389)       $(2,815,991)
Loss per share - as reported                   $     (4.41)       $     (0.77)
Loss per share - pro forma                     $     (4.43)       $     (0.78)
</TABLE>

         For the purposes of the pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting period.

         The fair value of each option grant is estimated on the date of grant
using the "Black Scholes" option-pricing model with the following
weighted-average assumptions for 1998 and 1999: risk free interest of 5.75%;
expected life of the option of 5 years; and a


                                       30
<PAGE>   31

zero dividend yield; volatility .55. The weighted average fair value of options
granted during 1998 and 1999 was $1.60 and $2.00, respectively.

         Option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

11. WARRANTS

         The Company has contractual agreements granting warrants to purchase
shares of its $.0001665 par value Common Stock and warrants to purchase
warrants. Such warrants and the underlying shares of Common Stock are restricted
in accordance with Rule 144 of the Securities Act of 1933. Pursuant to these
agreements, 418,000 shares of Common Stock have been reserved for issuance. At
December 31, 1999, the following warrants have been granted:

<TABLE>
<CAPTION>
                         Number of
  Date of Grant        Warrants Granted          Exercise Price       Fair Value
-----------------    --------------------       ----------------     ------------
<S>                  <C>                        <C>                  <C>
1997                 65,000 for shares           $   2.00 - 750        $101,563
1997                 20,000 for warrants                  0.125          15,000
1998                 233,000 for shares           1.6875 - 7.50         364,063
1998                 80,000 for warrants                  0.125          60,000
</TABLE>

100,000 warrants to purchase warrants were in the money on December 31, 1999 due
to the closing price of CMWLW of $.75 exceeding the exercise price of $0.125.
All warrants are exercisable at December 31, 1999.

12. LEASE ARRANGEMENTS

         During 1998 and through June 1999, the Company leased its corporate
office space in Washington, D.C. for use as its corporate offices for a seven
year term. The space consisted of approximately 9,000 square feet at a cost of
$10,000 per month. In January 1999, the Company sublet, for the balance of the
seven year lease term, approximately 2,500 square feet for $2,750 per month. The
Company was named in a lawsuit in Washington, D.C. on December 15, 1999 by the
landlord for alleged failure to pay $108,981 of rents and fees due under a
sub-lease plus attorney's fees. The Company has settled the claim and as of
December 31, 1999, has accrued $109,000 for payment of the settlement.

         In July 1999, we relocated our principal executive offices to Winter
Park, Florida, where we lease an aggregate of approximately 1,760 square feet of
office space pursuant to two leases at an aggregate current monthly rent of
$2,281. The leases expire May 2000 for 795 square feet and in September 2001 for
965 square feet.

         The Company leases substantially all its equipment including furniture,
fixtures and computers under various operating leases at a cost of approximately
$8,000 per month. The following table sets forth the Company's lease obligations
for each of the next five years and a lump sum balance for the remainder of all
the leases as of December 31, 1998:

<TABLE>
<S>                                   <C>
2000.............................     $   119,600
2001.............................     $   111,780
2002.............................     $    18,561
2003.............................     $     3,702
                                      -----------
Total Minimum Obligations........     $   253,643
                                      ===========
</TABLE>


         CWWM, which filed for Chapter 7 bankruptcy protection in July 1999, had
lease arrangements with landlords at each of its clinic locations. At December
31, 1998 and 1999 the majority of the leases were either in default or the
subsidiary had judgments rendered against it for delinquent lease payments. All
weight loss center leases have been surrendered to the respective landlords.
There are two suits pending related to landlord claims under the bankruptcy,
both of which we are defending.

13. NET LOSS PER COMMON SHARE

         The Company's net loss per share calculations are based upon the
weighted average number of shares of Common Stock outstanding. Pursuant to the
requirements of the Securities and Exchange Commission (SEC) Staff Accounting
Bulletin No. 98, the Company considers all potentially dilutive securities
issued for nominal consideration prior to the Company's initial public offering
as outstanding for all periods presented. Other shares issuable upon the
exercise of stock options or conversion of the shares of Senior and Junior
Convertible Preferred Stock have been excluded from the computation for the
period ended September 30, 1998 as they would have an anti-dilutive effect.


                                       31
<PAGE>   32


         The following table sets forth the computation of basic loss per share:

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                     1998             1999
                                                 -------------    -------------
<S>                                              <C>              <C>
Weighted average common shares outstanding          1,892,045        3,221,166
Shares issued for nominal consideration
         Prior to the Initial Public Offering         409,287          409,287
                                                 ------------      -----------
                                                    2,301,332        3,630,453
Loss allocable to common shareholders            $ (9,668,018)     $(2,804,991)
Basic loss per share                             $      (4.41)     $     (0.77)
</TABLE>

14. RELATED PARTY TRANSACTIONS

         In August 1996, the Company entered into a consulting agreement with
J.E.M, Inc. (JEM), the sole stockholders of which are Dr. Kaplan, the Company's
President and Chief Operating Officer, and his wife. Under the terms of the
consulting agreement, JEM agreed to provide advice and assistance to the Company
in connection with identifying and affiliating with chiropractors and their
existing chiropractic practices and identifying, acquiring, and/or managing
businesses engaged in providing services ancillary to those provided by
Integrated Medical Centers. The Company agreed to pay JEM $6,000 per month for
its services. The consulting agreement expired in August 1999 and was not
renewed.

         On December 19, 1997, we entered into an Investment Agreement with
Wexford Spectrum Investors LLC and Imprimis Investors LLC pursuant to which, as
supplemented by a First Supplement dated January 12, 1998, a Second Supplement
dated July 2, 1998 and a Third Supplement dated October 19, 1998, we issued
$475,000 in aggregate principal amount of Senior Secured Floating Rate Bridge
Notes due February 1, 1999, secured by various assets of Complete Wellness
Centers, $375,000 of which evidenced term loans and $125,000 of which evidenced
revolving loans made by Wexford and Imprimis to us. On August 31, 1999, we
executed a Fourth Supplement to the Investment Agreement with Wexford and
Imprimis, whereby we (i) converted $100,000 of the outstanding principal of the
bridge notes to 2,000 newly issued shares of 8% Series B Senior Secured
Cumulative Convertible Preferred Stock, and (ii) agreed to repay the remaining
principal and accrued and unpaid interest by equal quarterly payments to Wexford
and Imprimis during the period from January 1, 2000 to December 31, 2001 based
on a four year amortization schedule. The note payable accrues interest at 12%
per annum.

         In January 1998, the Company entered in an agreement with Stratus
Services Group, Inc ("Stratus"), an employee leasing and payroll company for the
term of one year, which is annually renewable. Under the terms of the agreement,
Stratus will provide the Company with leased employees and payroll services at
all the Company's locations, both at the parent and subsidiary levels. Mr.
Joseph J. Raymond, Sr. is a principal in Stratus and is the father of Joseph J.
Raymond, Jr., Chief Executive Officer of the Company. The Company believes that
the services provided by Stratus are at least as favorably priced as any other
company providing such services which the Company may contract with.

         In August 1998 the Company entered into a consulting agreement with RVR
Consulting, Inc. ("RVR") for the term of August 1, 1998 through July 31, 1999.
The Company agreed to pay RVR $7,000 per month plus expenses to help the Company
identify problem areas in its operations and provide subsequent solutions. The
principles of RVR are Joseph J. Raymond, Jr. and Sergio R. Vallejo, who are
officers of the Company and members of the Company's Board of Directors. RVR was
not paid in 1999 under this arrangement, except for out of pocket expenses. On
December 1, 1999, the board of directors approved the employment contracts for
Joseph J. Raymond, Jr. and Sergio Vallejo and the issuance of 16,666 shares of
common stock to each Joseph J. Raymond, Jr. and Sergio R. Vallejo in lieu of
options held by each for 75,000 shares of common stock in satisfaction of all
amounts due through that date. These securities are restricted subject to Rule
144 of the Securities Act of 1933, as amended.

         In May 1999 we executed a one year consulting agreement with Kats
Management, LLC whereby Kats has agreed to provide day to day integrated medical
center operation services, provide training services to the integrated medical
centers, integrate new integrated medical centers and assist in the development
of products and new health related services. In consideration for such services,
we have agreed, in part, to pay Kats (i) $19,000 per month, (ii) $300 per month
for each new integrated medical center established by Kats, (iii) commissions
averaging 5% of revenues generated by 16 existing integrated medical centers and
(iv) an annual travel allowance of up to $5,000. In October 1999, the monthly
cash payment was reduced by mutual agreement to $12,000.

         On July 1, 1999, we entered into a one year consulting agreement with
The WorkSource, Inc., to provide daily accounting, consulting and administrative
services to us, in consideration for which we agreed to pay The WorkSource
$7,500 bi-weekly. On November 30, 1999, we amended the consulting agreement
whereby we agreed to pay The WorkSource an additional $50,000 in consideration
for additional services provided by The WorkSource related to raising additional
capital for CWC. Ms. Rebecca Irish, Chief Financial Officer, Vice President and
Treasurer of CWC, is the principal of The WorkSource, Inc. The WorkSource, Inc.
is a financial services and consulting firm and serves as an independent
contractor to perform accounting, cash management and certain administrative
functions for CWC and was paid $85,813 in 1999.

         On July 14, 1999 we entered into a Separation and Release Agreement
with Eric S. Kaplan, D.C., our former president and director, made effective as
of July 21, 1999. In return and as consideration of Mr. Kaplan's resignation and
release of Complete


                                       32
<PAGE>   33

Wellness Centers from all employment claims or actions, we agreed to: (i)
indemnify him for actions taken by Complete Wellness Centers or by him as an
officer or director of Complete Wellness Centers; (ii) continue liability
coverage for as long as the applicable statute of limitations of claims shall
run; (iii) transfer $200,000 in market value of our common stock at a 5,000
shares per month rate to him through stock issuances or stock option grants;
(iv) pay him attorney fees in the amount of $6,000; and (v) pay him the sum of
$10,000 in cash. We accelerated the vesting of various options in 1999 and 2000.
Dr. Kaplan has exercised 30,000 of these options during 1999, the value of which
was recorded as compensation expense. Dr. Kaplan also exercised other unrelated
previously vested options to purchase 16,660 shares at $0.60 per share of the
Company's Common Stock in September 1999. The remaining $145,000 owed to Dr.
Kaplan is accrued at December 31, 1999.

         On July 27, 1999, Mr. Frederick Simon resigned from the Company's Board
of Directors. Mr. Simon is a Senior Vice President of Wexford Spectrum
Investors, LLC, an owner of 20% of the Company's Senior Convertible Preferred
Stock and to which the Company has a secured note payable in the amount of
$375,000 as of December 31, 1999.

         On November 30, 1999, we entered into a termination of employment
agreement with Michael T. Brigante, our former Sr. Vice President and Chief
Financial Officer, to pay $73,704 for monies owed for back wages, vacation,
allowances and severance compensation pursuant to the provisions in Mr.
Brigante's employment agreement. The monies are to be paid over a twelve month
period ending December 2000.

         Mr. Eugene Sharer, former President of CWC and current director of CWC,
is the principal of Sharer and Associates. Sharer Associates serves as an
independent contractor to assist CWC in various projects and management services
and was paid approximately $7,500 in 1999 for services rendered. CWC owed Sharer
Associates $40,785 as of December 31, 1999.

         Mr. L. Mark Michel became a director of CWC in January 2000. Mr. Michel
serves as an independent contractor to assist CWC with managed care contracting
and advisory services and was paid $4,495 in 1999.

15. CONTINGENCIES

Federal Investigation

         Revenues from all Federal programs accounted for approximately 5% and
4%, respectively, of the Company's net patient service revenues for the year
ended December 31, 1998 and 1999. Laws and regulations governing the Medicare
and Medicaid programs are complex and subject to interpretation. In November
1997, federal agents served search warrants and subpoenas on the Company and
four of its subsidiaries and affiliates. Company records and files were seized.
If the government review finds wrongdoing, the Company would be subject to
significant regulatory action including fines, penalties, and possible exclusion
from the Medicare and Medicaid programs. One employee received a letter dated
January 13, 1998 from the United States Attorney General's Office stating that
the employee was a subject of the investigation. The investigation appears to be
focused on two clinics in Virginia. No charges have been filed against us or any
of our employees to date. Any such action would be material to the financial
position of the Company and could have a materially adverse effect on the
results of operations and cash flows of the Company. The Company is not
currently aware of any pending or threatened allegations of potential wrongdoing
as a result of the investigation. Further, the Company believes that it is
substantially in compliance with all applicable laws and regulations.

Legal Proceedings

         The Company was named in a lawsuit filed in Sarasota, Florida in July
1997 by Jeffrey Friedlander, a medical doctor, for alleged back wages owed him
by the Company for work he performed at an Integrated Medical Center in Florida.
The case was tried by a jury in March 1999, and two judgments were entered
against the Company for $147,292 in March, which includes $100,000 in punitive
damages, followed by a subsequent judgment for related legal fees of $37,712.
The Company has a bond for $222,005 in place for the satisfaction of the
judgments, which is backed by an irrevocable letter of credit for $111,002,
against which the Company has pledged a certificate of deposit of $111,002. Even
though the Company contests the jury finding and is in the process of appealing
the decision, the full amount of the judgments has been accrued at December 31,
1999.

         The Certificate of Deposit of $111,002 is pledged as collateral for a
letter of credit obtained by the Company.

Government Regulation

         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 us.



                                       33
<PAGE>   34

Professional Liability

         Although we do not provide medical services or control the provision of
health care services by the integrated medical centers' practitioners, we could
nevertheless also be accused of medical negligence. We have obtained an
insurance policy that provides medical malpractice insurance and managed care
errors and omissions insurance retroactive to the integration dates of the
integrated medical centers for both our integrated medical centers and Complete
Wellness 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.

         The foregoing policy is a "claims made" policy. Thus, it provides
coverage for covered claims made during the policy's term but not for losses
occurring during the policy's term for which a claim is made subsequent to the
expiration of the term. Based on experience to date of the medical professionals
employed, it is believed that potential losses on any claims incurred but not
reported would not be material to the Company's financial position. There is no
deductible under the policy.

New Integrated Medical Centers

         During the first quarter of 2000, the Company did not add any new
affiliates but did contract with one new clinic on a consulting only basis.

Continued Listing on the Nasdaq SmallCap Market

         The Company's Shares and Warrants are listed on the Nasdaq SmallCap
Market and the Company must meet certain requirements in order to maintain this
listing. The requirements for continued listing include satisfying one of the
following conditions: (a) net tangible assets of at least $2,000,000 (b) market
capitalization of at least $35,000,000 or (c) net income of at least $500,000 in
the most recent fiscal year or in two of the last three fiscal years. The
Company does not meet any of the criteria as of December 31, 1999. The Company
did not meet any of the criteria at December 31, 1998 and provided the Nasdaq
with details of its plan to increase its net tangible assets to the threshold
level and accomplished that goal by September 30, 1999. Additional losses in the
Company have mitigated the improvements. The Company has had no communications
with Nasdaq since this deficiency became apparent. There can be no assurance
that Nasdaq will allow the Company's shares to remain listed while it works to
regain compliance. Consequently, the Company's shares could be delisted from the
Nasdaq SmallCap Market at any time. In the event that the Company's shares are
delisted from the Nasdaq SmallCap Market, they could continue to trade on the
Nasdaq "Bulletin Board".

Employment Agreements

         The Company has entered into employment agreements with three
executives for two-year terms. The agreements stipulate annual salaries,
aggregating $425,000 plus bonus and stock options aggregating 275,000 shares
granted and vesting immediately (for 225,000 shares) and over two years (for
50,000 shares).

Year 2000 Issue

         All of the Company's internal operating systems were compliant as of
December 31, 1999, however, Year 2000 problems may not surface until after
January 1, 2000. Management estimates that the costs associated with any
additional activities will not have a material effect on the Company's
operations.

16. POTENTIAL TRANSACTIONS AND RELATIONSHIPS

         On March 7, 2000, CWC and our wholly owned subsidiary,
Completewellness.com ("cwc.com") signed a Services Agreement with Dr. Alt.com
Corporation ("DrAlt") to provide alternative medicine information and products
to practitioners and consumers through our web site, www.completewellness.com.
CWC, cwc.com and DrAlt have certain duties and compensations in the relationship
based on their abilities and expertise. The agreement is for 5 years. DrAlt has
agreed to lend CWC $750,000 by May 1, 2000 and to consider lending an additional
$250,000 at their discretion. As of April 10, 2000 CWC has executed 6 month
promissory notes with DrAlt totaling $550,000 at the prime rate. CWC has granted
to DrAlt a total of 275,000 five year warrants to purchase 275,000 shares of CWC
Common Stock at $2 per share. These warrants constitute restricted securities
under federal and state securities laws. Upon execution of the additional note
for $200,000, anticipated on May 1, 2000, CWC will issue additional warrants for
the purchase of 100,000 shares of our Common Stock.

         On March 7,2000, CWC also signed a non-binding letter of intent to
complete a tax-free merger with DrAlt. The agreement provides for CWC to be the
surviving entity. CWC would issue to the shareholders of DrAlt, such number of
fully paid and non-assessable shares of CWC Common Stock as would result in the
shareholders of DrAlt collectively owning immediately after the closing of the
merger, fifty (50) percent of the common equity of CWC on a fully diluted basis
except for any outstanding warrants. DrAlt shareholders would surrender their
DrAlt shares to CWC at closing. There are significant contingencies involved in
the agreement, including but not limited to proper due diligence, conversion of
the preferred shareholders to common shareholders, additional funding of CWC
through a private placement and approval of the transaction by the shareholders
of each company. CWC is


                                       34
<PAGE>   35

using its best efforts to effect the required actions to bring the merger to
completion, but there is no guarantee the transaction will be completed as
described.

17. RESTATEMENT OF QUARTERLY INFORMATION (UNAUDITED)

         As a result of the discontinuation of certain contractual relationships
with Integrated Medical Centers, accruals of liabilities and certain estimation
processes utilized by the Company, a restatement of the quarterly results for
the year ended December 31, 1999 is necessary. The restatement for the nine
months ended September 30, 1999 had the effect of increasing the net loss by
$1,747,000 and the net loss per share by approximately $0.47 in the fourth
quarter. The Company will file amended quarterly reports on Form 10-QSB by May
15, 2000. The restated quarterly results for 1999 are as follows (first table)
and may be compared to the previously reported quarterly results for 1999
(second table):


<TABLE>
<CAPTION>
RESTATED                                          Quarter         Quarter         Quarter          Quarter
                                                   Ended           Ended           Ended            Ended
                                                  March 31        June 30       September 30     December 31
                                                ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>
Net Revenues                                    $  4,580,034    $  2,560,780    $  2,867,828    $  2,931,690
Net Loss                                        $    (50,696)   $   (708,633)   $   (747,477)   $ (1,298,185)

Net Loss Per Share                              $      (0.02)   $      (0.20)   $      (0.18)   $      (0.28)
Weighted Avg Shares Outstanding - Basic            2,949,755       3,536,755       4,055,862       4,623,447
</TABLE>


<TABLE>
<CAPTION>
PREVIOUSLY REPORTED                                  Quarter        Quarter Ended      Quarter Ended
                                                   Ended March 31       June 30         September 30
                                                   -------------    --------------    ----------------
<S>                                                <C>              <C>               <C>
Net Revenues                                        $ 4,588,085       $ 3,683,278         $ 3,479,720
Net Income                                          $    78,304       $    91,425         $    70,339
Net Income Per Share - Basic                        $      0.03       $      0.03         $      0.02
Weighted Avg Shares Outstanding - Basic               2,949,755         3,536,755           4,055,862
</TABLE>


18. SUBSEQUENT EVENTS

         In January 2000, the Board made a grant of 40,000 options, from the
1996 Stock Option Plan, to purchase Common Stock in the Company at $0.01 per
share to Nico Pronk and Wayne Horne, principal owners of Noble Financial Group,
Inc. Following the grant of such options, both exercised their options and
shares were issued. The Company received $400 for the exercise of these options.

         See Note 9 - Stockholders' Equity for the discussion of other
transactions in 2000 to date.

         See Note 14 - Related Party Transactions for the discussion of other
transactions in 2000 to date.

         See Note 16 - Potential Transactions and Relationships for the
discussion about DrAlt.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.


                                       35
<PAGE>   36



PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

     (a) Identification of Directors

<TABLE>
<CAPTION>
                                                            YEAR FIRST              YEAR OF
                NAME                         AGE              ELECTED              EXPIRATION
--------------------------------------    -----------    -------------------    -----------------
<S>                                       <C>            <C>                     <C>
E. Eugene Sharer                              67                1996                  2000
Donald S. Radcliffe                           54                1999                  2000
John K. Pawlowski                             63                1999                  2000
L. Mark Michel                                62                2000                  2000
Sergio R. Vallejo, DMD                        37                1998                  2000
Joseph J. Raymond, Jr.                        38                1998                  2000
</TABLE>

     (b) Identification of Executive Officers

<TABLE>
<CAPTION>
                                                                                         YEAR FIRST SERVED
                        NAME                                       AGE                       AS OFFICER
------------------------------------------------------    -----------------------     -------------------------
<S>                                                       <C>                          <C>
Joseph J. Raymond, Jr.                                              38                          1999
Chairman of the Board/Chief Executive Officer
Sergio Vallejo                                                      37                          1999
President/Chief Operating Officer and Secretary
Rebecca R. Irish                                                    38                          1999
Vice President/Chief Financial Officer and Treasurer
</TABLE>

     Joseph J. Raymond, Jr. has been chairman of our board of directors and
chief executive officer of the Company since February 1999 and a director since
September 1998. From 1997 to current, he has been the President of RVR
Consulting Group, Inc., a financial consultant company. From 1988 to 1997, he
served as chairman of the board of directors and chief executive officer of
Transworld Services Group, an employee staffing company. In 1997, Transworld
merged with Corestaff Services, a staffing company, where Mr. Raymond served as
the Vice President of Operations through December 1997.

     Sergio R. Vallejo has been a director of the Company since May 1998, the
Chief Operating Officer since February 1999 and President of the Company since
July 1999. From 1997 to current, he has been the Vice President of RVR
Consulting Group, Inc. Mr. Vallejo is also a Doctor of Dental Medicine. Mr.
Vallejo has been a director of pharmacy operations in Florida for Subscript
Pharmacy Corporation, an international company, since 1996. In 1989, Mr. Vallejo
formed Jones Wilson Vallejo Associates, P.A., a dental management company. In
1985, Mr. Vallejo founded PVM Prescription Center, an institutional pharmacy
that provided medications and supplies to the residents of long-term care
facilities throughout central Florida.

     Rebecca R. Irish became Vice President of Finance, Chief Financial Officer,
Treasurer and Assistant Secretary of the Company on December 1, 1999. Ms. Irish
is also the president of The WorkSource, Inc., a financial consulting and
services firm. From 1991 through 1997, Ms. Irish served as chief financial
officer of RoTech Medical Corporation, a publicly-traded home healthcare
company, until it merged with Integrated Health Services, Inc. in 1997. Ms.
Irish is a certified public accountant and was a senior manager with Ernst &
Young prior to joining RoTech Medical Corporation.


                                       36
<PAGE>   37


ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

     The following table sets forth information concerning the annual
compensation of the Company's Chief Executive Officer for services in all
capacities to the Company during the Company's last fiscal year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                        Restricted     Securities
    Name and Principal                       Annual                     Other Annual      Stock        Underlying     All Other
         Position               Year      Compensation      Bonus       Compensation      Awards         Options     Compensation
---------------------------    -------    -------------     ------     -------------    ----------     -----------   -------------
<S>                           <C>         <C>               <C>        <C>              <C>            <C>           <C>
Joseph J. Raymond, Jr.          1999        $ 22,115                                      $25,000        100,000
Chairman of the                                                                                            7,500
Board/Chief Executive
Officer

C. Thomas McMillen (a)          1999        $  8,981
Former Chairman of the          1998        $155,719                                                                    $ 2,008
Board/Chief Executive           1997        $135,000                                                                    $ 1,338
Officer

Sergio Vallejo                  1999        $ 22,115                                      $25,000        100,000
President/Chief Operating
Officer and Secretary

Rebecca R. Irish                1999        $      0                                                      75,000
Vice President/Chief
Financial Officer and
Treasurer

Michael T. Brigante (b)         1999        $ 89,214                                                      10,000
Former Senior Vice              1998        $102,931                                                                    $21,194
President and Chief             1997        $ 90,000                                                                    $18,796
Financial Officer

Eric S. Kaplan, D.C. (c)        1999        $ 13,212                      $55,000                         60,000
Former President/Chief          1998        $ 76,517                                                                    $71,901
Operating Officer               1997        $120,000
</TABLE>


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


(a)  Terminated February 1999
(b)  Resigned November 1999
(c)  Resigned June 1999 and January 1999, respectively

     No other executive officer received compensation in excess of $100,000
during the Company's 1998 fiscal year.

<TABLE>
<CAPTION>
                                  Number of
                                  Securities              % of Total
          Name                Underlying Options       Options Granted        Exercise Price         Expiration
                                 Granted (#)           To All Employees          ($/Share)              Date
-------------------------    ---------------------    -------------------    ------------------    ---------------
<S>                          <C>                      <C>                    <C>                   <C>
Joseph J. Raymond, Jr.                    100,000                  27.5%           $1.50              11/30/04
                                            7,500                     2%          $2.875              09/01/03

Sergio R. Vallejo                         100,000                  27.5%           $1.50              11/30/04

Rebecca R. Irish                           75,000                  20.5%           $1.50              11/30/04

Michael T. Brigante                        10,000                     3%           $1.75               8/31/04

Eric S. Kaplan, D.C.                       25,000                    17%           1.75                5/31/04
                                            5,000                                  1.50
                                            5,000                                  1.81
                                           10,000                                  1.25
</TABLE>



                                       37
<PAGE>   38

         The following table presents the value of unexercised options held at
December 31, 1999 by the individuals named in the Summary Compensation Table:

<TABLE>
<CAPTION>
                                 Number of Unexercised        Value of Unexercised In the
                                Options at Year End (#)       Money Options at Year End (#)
                              ---------------------------    ------------------------------
                                   Exercisable (E)                  Exercisable (E)
          Name                    Unexercisable (U)                Unexercisable (U)
--------------------------    ---------------------------    ------------------------------
<S>                          <C>                              <C>
Joseph J. Raymond, Jr.               103,750 (E)                      $6,250 (E)

Sergio R. Vallejo                    107,500 (E)                      $6,250 (E)

Rebecca R. Irish                      25,000 (E)                      $1,563 (E)
                                      50,000 (U)                      $3,125 (U)

Michael T. Brigante                   20,334 (E)                       $ 313 (E)
</TABLE>


*Values are calculated by subtracting the exercise price from the fair market
value of the Common Stock at year-end ($1.5625 per share).

     The following table presents the value of exercised options held at
December 31, 1999 by the individuals named in the Summary Compensation Table:


<TABLE>
<CAPTION>
                                                                                                  Value of Unexercised
                                                                 Number of Unexercised         In the Money Options/SARs
                               Shares                         Options/SARs at Year End (#)          at Year End (#)
                              Acquired           Value              Exercisable (E)                 Exercisable (E)
          Name               on Exercise       Realized            Unexercisable (U)               Unexercisable (U)
-------------------------    ------------     ------------    -----------------------------    ---------------------------
<S>                          <C>              <C>             <C>                              <C>
Joseph J. Raymond, Jr.                                                103,750 (E)                      $6,250 (E)

Sergio R. Vallejo                                                     107,500 (E)                      $6,250 (E)

Rebecca R. Irish                                                       25,000 (E)                      $1,563 (E)
                                                                       50,000 (U)                      $3,125 (U)

Michael T. Brigante               13,333          $27,937              20,334 (E)                      $  313 (E)

Eric Kaplan                       16,660          $19,159
                                  30,000                0
</TABLE>

DIRECTOR COMPENSATION

     The Company does not currently compensate, and does not anticipate
compensating its directors for their services as directors, except that each of
the Company's non-employee directors may receive a director's fee of $500 per
meeting for attendance at Board of Directors or committee meetings held after
December 1997. Additionally, they are granted 7,500 common stock options for
each year served which vest 50% in each of two years. In addition, each of the
Company's directors receives reimbursement of all ordinary and necessary
expenses incurred in attending any meeting or any committee meeting of the Board
of Directors. Currently, all directors hold office until the next annual meeting
of stockholders and until their successors have been duly elected and qualified.
The Company's executive officers are appointed annually and serve at the
direction of the Board of Directors, subject to the terms of existing employment
agreements.

EMPLOYMENT AGREEMENTS

     We have employment agreements with Mr. Raymond, Mr. Vallejo and Ms. Irish.
Each of the employment agreements requires the full-time services of the
employees, are for specified periods of time and specify the compensation and
termination terms. The agreements also contain covenants restricting the
employees from engaging in any activities competitive with our business during
the term of the agreement and for a period of one year thereafter, and
prohibiting the employee from disclosing confidential information regarding our
business.

     In February 1999, Joseph J. Raymond, Jr. was appointed our Chairman of the
Board of Directors and Chief Executive Officer. On December 1, 1999, we entered
into an employment agreement with Mr. Raymond providing for his employment as
Chief Executive Officer for a two year term. The agreement provides for an
annual base salary of $150,000, 100,000 options under our stock option plans,
all of which vested immediately and are exercisable at $1.50 per share and
participation in all executive or employee profit sharing bonus or stock option
plans established by us. In addition, Mr. Raymond is to be paid a performance
bonus of 3% of the pretax profit earned in each fiscal year not to exceed 50% of
the base salary and paid within 90 days of the end of each respective business
year (2000 and 2001). Mr. Raymond was awarded 16,666 shares of the Company's
Common Stock valued at $25,000 in lieu of cash as


                                       38
<PAGE>   39

payment for services rendered to the Company prior to the December 1, 1999
employment agreement. As of December 31, 1999, Mr. Raymond held 16,666 shares of
the Company's restricted stock subject to Rule 144 of the Securities Act of
1933.

     In February 1999, Sergio R. Vallejo was appointed our Chief Operating
Officer. In July of 1999, he was appointed our President and Chief Operating
Officer. On December 1, 1999, we entered into an employment agreement with Mr.
Vallejo providing for his employment as President and Chief Operating Officer
for a two year term. The agreement provides for an annual base salary of
$150,000, 100,000 options under our stock option plans all of which vested
immediately and are exercisable at $1.50 per share and participation in all
executive or employee profit sharing bonus or stock option plans established by
us. In addition, Mr. Vallejo is to be paid a performance bonus of 3% of the
pretax profit earned in the fiscal year, not to exceed 50% of the base salary
and paid within 90 days of the end of each respective business year (2000 and
2001). Mr. Vallejo was awarded 16,666 shares of the Company's Common Stock
valued at $25,000 in lieu of cash as payment for services rendered to the
Company prior to the December 1, 1999 employment agreement. As of December 31,
1999, Mr. Vallejo held 16,666 shares of the Company's restricted stock subject
to Rule 144 of the Securities Act of 1933.

     On December 1, 1999, Rebecca R. Irish was appointed Vice President of
Finance, Chief Financial Officer, Treasurer and Assistant Secretary. At that
time, we entered into an employment agreement with Ms. Irish providing for her
employment as described for a two year term. The agreement provides for an
annual base salary of $125,000, 75,000 options under our stock option plans
exercisable at $1.50 per share, of which 25,000 vested immediately, 25,000 of
which vest on November 30, 2000 and 25,000 of which vest on November 30, 2001,
and participation in all executive or employee profit sharing plans established
by us. In addition, Ms. Irish is to be paid a performance bonus of 3% of the
pretax profit earned in each fiscal year, not to exceed 50% of the base salary
and paid within 90 days of the end of each respective business year (2000 and
2001).

STOCK OPTION PLANS

     1994 Stock Option Plan. The Company's 1994 Stock Option Plan (the "1994
Plan") was adopted by the Company's Board of Directors and approved by the
shareholders of the Company in December 1994. The purpose of the 1994 Plan is to
attract and retain qualified personnel, to provide additional incentives to
employees, officers, directors, consultants and advisors of the Company, and to
promote the Company's business. As of April 10, 2000, options to purchase
153,667 shares of Common Stock at a weighted average per share exercise price of
1.63 were outstanding. A total of 10,479 option to purchase shares of Common
Stock were available for grant under the 1994 Plan at that date. The 1994 Plan
will terminate in April 2004, unless sooner terminated by the Board of
Directors.

     The 1994 Plan provides for the grant of both incentive stock options,
intended to qualify as such under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and nonqualified stock options. The Board may
delegate administration of the 1994 Plan to the Compensation Committee. Subject
to the limitations set forth in the 1994 Plan, the Board of Directors (or the
Compensation Committee) has the authority to select the persons to whom grants
are to be made, to designate the number of shares to be covered by each option,
to determine whether an option is to be an incentive stock option or a
nonqualified stock option, to establish vesting schedules, and, subject to
certain restrictions, to specify the type of consideration to be paid to the
Company upon exercise and to specify other terms of the options. The maximum
term of options granted under the 1994 Plan is ten years. Options granted under
the 1994 Plan are nontransferable and generally expire 90 days after the
termination of an optionee's service to the Company.

     Although no specific vesting schedule is required under the 1994 Plan,
options previously granted under the 1994 Plan have generally provided for
vesting in three equal annual installments. The exercise price of incentive
stock options must equal at least the fair market value of the Common Stock on
the date of grant, except that the exercise price of incentive stock options
granted to any person who at the time of grant owns stock possessing more than
10% of the total combined voting power of all classes of stock must be at least
110% of the fair market value of such stock on the date of grant.

     1996 Stock Option Plan. In October 1996, the Board of Directors of the
Company, with shareholder approval, adopted its 1996 Stock Option Plan (the
"1996 Plan") covering up to 200,000 shares of the Common Stock, pursuant to
which officers, directors, employees, advisors and consultants to the Company
are eligible to receive incentive and/or nonqualified stock options. The 1996
Plan was modified as approved by the shareholders to 400,000 shares in June,
1997, and increased to 600,000 in November 1999. The 1996 Plan, which expires in
September 2006, is administered by the Compensation Committee of the Board of
Directors. The selection of participants, allotment of shares, determination of
price, and other conditions relating to the grant of options will be determined
by the Compensation Committee in its sole discretion. Incentive stock options
granted under the 1996 Plan are exercisable for a period of up to 10 years from
the date of grant at an exercise price which is not less than the fair market
value of the Common Stock on the date of the grant, except that the term of an
incentive stock option granted under the 1996 Plan to a shareholder owning more
than 10% of the outstanding Common Stock may not exceed five years and its
exercise price may not be less than 110% of the fair market value of the Common
Stock on the date of the grant. As of April 10, 2000, options to purchase an
aggregate of 395,166 shares of Common Stock at a weighted average per share
exercise price of $1.93 were outstanding. A total of 2,334 options to purchase
shares of Common Stock were available for grant under the 1996 Plan at that
date.

     1996 Restricted Stock Option Plan for Health Care Professionals. In October
1996, the Board of Directors adopted, and the stockholders of the Company
approved, the 1996 Restricted Stock Option Plan for Health Care Professionals
(the "1996 Professionals Plan"), which expires in October 2006. The 1996
Professionals Plan permits the Company to grant nonqualified stock options to
licensed health care professionals affiliated with the Company and in most cases
employed by a Integrated Medical Center. The


                                       39
<PAGE>   40

aggregate amount of Common Stock with respect to which options may be granted
may not exceed 100,000 shares. The Board of Directors has delegated to the
Compensation Committee the authority to grant options under such a plan, to
construct and interpret such plan, and to make all other determinations and take
all actions necessary or advisable for the administration of such plan. The
exercise price for options granted under the 1996 Professionals Plan may be no
less than 85% of the fair market value of the Common Stock on the date of grant.
Options granted under the 1996 Professionals Plan will expire no later than the
tenth anniversary of the date of grant. As of April 10, 2000, 29,500 shares of
Common Stock at an approximate weighted average per share exercise price of 2.70
were outstanding. A total of 60,558 options to purchase shares of Common Stock
were available for grant under the 1996 Restricted Plan at that date.

     Outside Directors Stock Option Plan. On March 30, 1998, our board of
directors approved and in November 1999 our shareholders subsequently approved
the establishment of a stock option plan for non-employee outside directors on
our board of directors or on the boards of directors of any of our subsidiaries.
The Outside Directors Stock Option Plan provides for the grant of stock options,
provided that the maximum number of shares of common stock of the company that
may be issued upon the exercise of options granted pursuant to the Outside
Directors Stock Option Plan is 50,000. Under the Outside Directors Stock Option
Plan, each outside director may receive options for shares of common stock for
each year of service on the company's board of directors, as granted by a
committee of the board of directors. Our shareholders approved the addition of
the 50,000 shares on November 29, 1999 shares bringing the total authorized
under the outside directors option plan to 100,000 shares. We currently have
three outside directors eligible to participate in the Outside Directors Stock
Option Plan. The Outside Directors Stock Option Plan is administered by our
board of directors or a duly appointed committee of our board of directors; the
exercise price of options granted pursuant to the Outside Directors Stock Option
Plan is determined by the plan administrators of our board of directors. As of
April 10, 2000, options to purchase 48,750 shares of common stock at an
approximate weighted average per share exercise price of $2.46 were outstanding.
A total of 51,250 shares of common stock are available for grant under the
Outside Directors Stock Option Plan.

     Consultant's Stock Option Plan. On March 8, 1999, our board of directors
approved the establishment of the 1999 Consultant's Stock Option Plan. The
consultant's option plan as approved by the board provides for the grant of
stock options, provided that the maximum number of shares of common stock of the
company that may be issued upon the exercise of options granted pursuant to the
consultant's option plan is 475,000. Under the consultant's option plan,
companies providing services to us and individuals similarly employed may be
granted options to purchase common stock at an exercise price established by our
board of directors and which vests at a time and interval established by our
board of directors. Subsequently, on September 29, 1999 our board adopted a
resolution to increase the number of shares authorized in the consultant's
option plan by 200,000 shares bringing the total authorized under the
consultant's option plan to 675,000 shares. As of April 10, 2000, options to
purchase 400,000 shares of common stock at a weighted average per share exercise
price of $1.32 were granted and exercised. A total of 195,000 shares of common
stock are available for grant under the consultant's option plan. On November
29, 1999, our shareholders approved the establishment of this plan and approved
the increase in the number of shares in the consultant's option plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of the Company's voting securities as of April 10, 2000, by (i) each
shareholder known by the Company to be the beneficial owner of more than 5% of
any class of the Company's voting securities, (ii) each director of the Company
and (iii) all officers and directors of the Company as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
securities listed below have sole investment and voting power with respect to
such securities, subject to community property laws where applicable. The number
of shares of common stock outstanding used in calculating the percentage
ownership for each person listed below includes common stock underlying options
held by the person that are exercisable within 60 days April 10, 2000. All
calculations are based on 5,088,292 shares outstanding as of April 10, 2000.


                                       40
<PAGE>   41


<TABLE>
<CAPTION>
                NAME AND ADDRESS                     NUMBER OF SHARES OF CLASS       PERCENTAGE OF CLASS
               OF BENEFICIAL OWNER                       BENEFICIALLY OWNED          BENEFICIALLY OWNED
               -------------------                       ------------------          ------------------
<S>                                                       <C>                <C>
  Rebecca R. Irish...........................                25,000(1)                           *
  1835 Edgewater Drive
  Orlando, Fl 32804

  L. Mark Michel.............................                 3,750(2)                            *
  7808 Creekridge Circle, Suite 220
  Minneapolis, MN 55439

  John K. Pawlowski..........................                 3,750(2)                            *
  2 Daniel Drive
  Ocean, NJ 07712

  Donald Radcliffe...........................                60,978(3)                          1.2%
  575 Madison Avenue, Suite 1006
  New York, NY 10022

  Joseph J. Raymond, Jr......................               244,086(4)                          4.8%
  4074 Scarlet Iris Place
  Winter Park, FL 32792

  E. Eugene Sharer...........................               155,417(5)                          3.1%
  12404 Beall Spring Road
  Potomac, MD 20854

  Sergio R. Vallejo..........................               143,616(6)                          2.8%
  875 Hanover Way
  Lakeland, FL 33813

  Wexford Spectrum Investors LLC.............               634,200(7)                         12.5%
  411 West Putnam Avenue
  Greenwich, CT 06830

  Imprimis Investors LLC.....................             2,536,772(7)                         49.9%
  411 West Putnam Avenue
  Greenwich, CT 06830

  Stratus Services Group, Inc................               500,000                             9.8%
  500 Craig Road, Suite 201
  Manalapan, NJ 07726

  RVR Consulting Group, Inc..................               400,629(7)                          7.9%
  P.O. Box 2148
  Goldenrod, FL 32733

  Structure Management, Inc..................               127,000                             2.5%
  500 Craig Road, Suite 201
  Manalapan, NJ 07726

  All directors and executive officers as a               1,037,226                            20.4%
  group (6 persons)..........................
</TABLE>


(1)  Includes 25,000 shares of common stock issuable upon exercise of stock
     options.

(2)  Includes 3,750 shares of common stock issuable upon exercise of stock
     options.

(3)  Includes 3,750 shares of common stock issuable upon exercise of stock
     options.

(4)  Includes 103,750 shares of common stock issuable upon exercise of stock
     options. Mr. Joseph J. Raymond, Jr. disclaims any beneficial ownership or
     interest in any other shares of common stock except that of RVR Consulting
     Group, Inc. of which he is the President.

(5)  Includes 28,750 shares of common stock issuable upon exercise of stock
     options. Does not include 8,193 shares held in trust by Wilma I. Sharer,
     the wife of Mr. Sharer, of which he disavows any beneficial ownership.

(6)  Includes 103,750 shares of common stock issuable upon exercise of stock
     options. Mr. Vallejo disclaims any beneficial ownership or interest in any
     other shares of common stock except that of RVR Consulting Group, Inc. of
     which he is the Vice President.

(7)  Includes shares of common stock issuable upon conversion of 8% Series B
     Senior Secured Cumulative Convertible Preferred Stock and 8% Series D
     Junior Secured Cumulative Convertible Preferred Stock.



                                       41
<PAGE>   42

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Six of the Company's seven original Integrated Medical Centers under
management at January 31, 1997 were owned by Complete Wellness Centers, L.L.C.
("CWC, LLC"), a Delaware limited liability company. The Company was the managing
member of CWC LLC and owns 1% of its membership interests. The Company, as
managing member, had the authority and responsibility to make substantially all
management decisions for CWC, LLC. In addition, the holders at the time, of more
than 50% of the CWC, LLC membership interests granted the Company an irrevocable
proxy to vote their membership interests as the Company saw fit. The proxy was
valid for the life of CWC, LLC. As a result of these irrevocable proxies, the
financial statements of the Company and CWC, LLC are consolidated for financial
reporting purposes.

         CWC, LLC had outstanding 13.3 Class A Units (membership interests other
than that of the managing member). The following officers and directors of the
Company or members of their immediate family held the following interests in CWC
LLC: a trust for the benefit of Wilma Sharer, the spouse of the Company's
President and Chief Operating Officer, held two Class A Units; a trust for the
benefit of Virginia Brigante held 1/5 of one Class A Unit; a trust for the
benefit of Jacqueline Brigante held 11/50 of one Class A Unit. Virginia Brigante
and Jacqueline Brigante are the minor children of Michael T. Brigante, the
Company's Vice President of Finance and Chief Financial Officer. Each such
person or trust granted to the Company an irrevocable proxy to vote such
person's respective ownership interest in CWC LLC.

         On May 29, 1998 the Company, by unanimous consent of the Board of
Directors, agreed to purchase all of the outstanding units of Complete Wellness
Centers, LLC ("CWC,LLC"), a Delaware limited liability company, of which the
Company has a 1% equity interest and irrevocable proxies from a majority of
interest holders in the LLC. The acquisition was be accomplished by the issuance
of 77,821 shares of Common Stock valued at $200,000, based upon the average
closing bid price of the Company's Common Stock for the thirty (30) trading days
prior to June 1, 1998. Such shares are subject to SEC Rule 144, but have
piggyback registration rights. Former and current employees, directors, and
immediate relatives of management, owning 37.6% of the LLC's equity received a
discount to 26.32% of the $200,000 valuation of the LLC; the remaining investors
received the balance of the valuation on a pro rata basis in accordance with
their respective investments.

         In August 1996, the Company entered into a consulting agreement with
J.E.M., Inc. ("JEM"), the sole stockholders of which are Dr. Kaplan, the
Company's Senior Vice President and a director, and his wife. Under the terms of
the consulting agreement, JEM agreed to provide advice and assistance to the
Company in connection with identifying and affiliating with chiropractors and
their existing chiropractic practices and identifying, acquiring, and/ or
managing businesses engaged in providing services ancillary to those provided by
Integrated Medical Centers. The Company agreed to pay JEM $6,000 per month for
its services. The term of the consulting agreement expires in August 1999 and
may be terminated sooner by mutual agreement of the parties, by the Company for
"cause," defined as a violation by JEM of any material provision of the
consulting agreement not remedied within 30 days after notification or JEM's
conviction of a felony, upon termination of the employment agreement between Dr.
Kaplan and the Company, or JEM's failure to meet certain performance goals.

         On December 19, 1997, we entered into an Investment Agreement with
Wexford and Imprimis pursuant to which, as supplemented by a First Supplement
dated January 12, 1998, a Second Supplement dated July 2, 1998 and a Third
Supplement dated October 19, 1998, we issued $475,000 in aggregate principal
amount of Senior Secured Floating Rate Bridge Notes due February 1, 1999,
secured by various assets of Complete Wellness Centers, $375,000 of which
evidenced term loans and $125,000 of which evidenced revolving loans made by
Wexford and Imprimis to us. On August 31, 1999, we executed a Fourth Supplement
to the Investment Agreement with Wexford and Imprimis, whereby we (i) converted
$100,000 of the outstanding principal of the bridge notes to 2,000 newly issued
shares of 8% Senior Convertible Preferred Stock, and (ii) agreed to repay the
remaining principal and accrued and unpaid interest by equal quarterly payments
to Wexford and Imprimis during the period from January 1, 2000 to December 31,
2001 based on a four year amortization schedule. The note payable accrues
interest at 12% per annum

         At December 31, 1997, Dr. Milano, the former Vice President for Medical
Affairs, who resigned in January 1998, served as an officer, director, and the
sole stockholder of selected Complete Wellness Medical Centers. In all cases,
Dr. Milano, the Integrated Medical Center, and the Company entered into a Stock
Transfer Agreement (the "Stock Transfer Agreement") pursuant to which (i) Dr.
Milano agreed not to sell, encumber, or otherwise transfer the shares of stock
in the Integrated Medical Centers owned by her without the written consent of
the Integrated Medical Centers and the Company and (ii) the Company has the
right, following the provision of notice, to direct the transfer of all or part
of such shares to such transferee as it may designate for the sum of ten
dollars, provided that the transferee is licensed to practice medicine in the
appropriate State. In order to facilitate the transfer, the Stock Transfer
Agreement required the contemporaneous execution by Dr. Milano of a stock
transfer assignment, a resignation as an officer and director of the Integrated
Medical Center, and an Agreement for Sale of Business by Transfer of Capital
Stock under which Dr. Milano agreed to transfer her shares in Integrated Medical
Centers for the sum of ten dollars to a transferee to be designated by the
Company for this purpose. In accordance with the Stock Transfer Agreement, the
Company holds the stock transfer assignment, the resignation, and the Agreement
for Sale of Business by Transfer of Capital Stock in escrow. Additionally, the
Stock Transfer Agreement prohibits Dr. Milano, without prior written consent of
the Integrated Medical Center and the Company, from amending the charter or
bylaws of the Integrated Medical Center, agreeing to the merger or consolidation
of the Integrated Medical Centers with or into another corporation, dissolving
or liquidating the Integrated Medical Centers, authorizing the issuance of any
additional shares of stock of the Integrated


                                       42
<PAGE>   43

Medical Centers, or approving any contract with Dr. Milano herself, members of
her family, or related parties. The Company and Dr. Milano also entered into an
indemnification agreement pursuant to which the Company agreed to indemnify her
from and against claims made against her in her capacity as an officer or
director of the Integrated Medical Centers.

         In January 1998, the Company entered in an agreement with Stratus
Services, Inc ("Stratus"), an employee leasing and payroll company for the term
of one year, which is annually renewable. Under the terms of the agreement,
Stratus will provide the Company with leased employees and payroll services at
all the Company's locations, both at the parent and subsidiary levels. Joseph J.
Raymond, Sr. is the principal of Stratus and the father of Joseph Raymond, Jr.
The Company believes that the services provided by Stratus are at least as
favorably priced as any other company providing such services which the Company
may contract with.

         On August 19, 1998, we entered into a consulting agreement with RVR
Consulting Group, Inc. for a term of August 1, 1998 through July 31, 1999. We
agreed to pay RVR $7,000 per month plus expenses to help us identify problem
areas in our operations and provide subsequent solutions. Joseph J. Raymond Jr.,
our chairman of our board of directors and chief executive officer, is the
president of RVR, and Sergio R. Vallejo, our president and chief operating
officer, is the vice president of RVR. We subsequently amended the consulting
agreement to agree to issue RVR warrants to purchase 150,000 shares of our
common stock. On March 4, 1999, we terminated the consulting agreement and
converted the warrants granted to RVR to options granted under our 1999
Consultants Stock Option Plan to purchase 150,000 shares of our common stock at
an exercise price of $1.25 per share, 75,000 to Joseph J. Raymond, Jr. and
Sergio R. Vallejo individually. On December 1, 1999, the Board of Directors
agreed to convert each of their 75,000 options to 16,666 shares of common stock
at the closing price on December 1, 1999. These shares are restricted subject to
Rule 144 of the Securities Act of 1933.

         On February 19, 1999 we signed a loan agreement with RVR Consulting
Group, Inc. for $100,000 and on August 31, 1999 we signed a First Supplement to
the Loan Agreement with RVR, pursuant to which we and RVR agreed to convert the
$100,000 loan in full into 2,000 shares of 8% Junior Convertible Preferred
Stock.

         On February 26, 1999, Imprimis Investors LLC, Wexford Spectrum
Investors LLC and RVR entered into a Stock Purchase Agreement whereby Imprimis
and Wexford agreed to sell RVR an aggregate of 10,969 shares of our 8% Senior
Convertible Preferred Stock for $500,000. Joseph J. Raymond, Jr., Sergio Vallego
and Joseph Raymond, Sr., father of Joseph J. Raymond, Jr., guaranteed RVR's
payment of the purchase price to Imprimis and Wexford. Imprimis and Wexford each
beneficially own greater than 5% of our outstanding common stock, and Frederick
Simon, a Senior Vice President of Wexford, is a former director of ours who
resigned from our board of directors on July 27, 1999.

         On September 17, 1998, we entered into a consulting agreement with
Structure Management, Inc., pursuant to which Structure Management agreed to
provide consulting services related to our operations and financing, and
pursuant to which we agreed to issue warrants to purchase 120,000 shares of our
common stock at $2.00 per share to Structure Management. On March 4, 1999,
we converted the warrants to options, granted under our 1999 Consultant's Stock
Option Plan, to purchase 120,000 shares of our common stock at $2.00 per share.
Structure Management subsequently exercised the options. Structure Management is
controlled by Jeffrey J. Raymond, the brother of Joseph J. Raymond, Jr.,
Chairman and Chief Executive Officer of CWC.

         On March 8, 1999, we entered into another consulting agreement with
Structure Management, Inc. for the period ending on March 4, 2000. The agreement
calls for Structure Management to support our corporate planning process by: (i)
identifying and bringing to us opportunities which help meet our corporate
objectives and our business plans; (ii) assessing our competitive position,
whether financial, technology or operational; (iii) identifying suitable merger
or acquisition candidates, perform appropriate due diligence and assist us in
negotiations with those identified candidates; (iv) supporting our financial
public relations efforts by reviewing and commenting on our financial reports
and plans and identifying examples of outstanding financial reporting
presentation in other industries; and (v) supporting our shareholder relations
activity by reviewing and responding to shareholder communications and advise us
as to selection of public relations counsel. As compensation, we have issued
Jeffrey J. Raymond, as the controlling principal of Structure Management,
options under our 1999 Consultants Stock Option Plan to purchase 117,500 shares
of common stock at $1.25 per share. Mr. Jeffrey J. Raymond subsequently
exercised the options.

         On April 1, 1999, we entered into a settlement agreement with Haim
Zitman, the former chief executive officer of Complete Wellness Weight
Management, Inc., a subsidiary company which is now in Chapter 7 liquidation
proceedings. We executed a Stipulation and Order Dismissing Action with Mr.
Zitman with the execution of the settlement agreement. We issued options to Mr.
Zitman to purchase an aggregate of 40,000 shares of our common stock at $0.01
per share, valued at $80,000 in compensation expense, vested upon issuance, in
satisfaction of the settlement agreement terms. Mr. Zitman subsequently
exercised the options.

         On July 1, 1999, we entered into a one year consulting agreement with
The WorkSource, Inc., to provide daily accounting, consulting and administrative
services to us, in consideration for which we agreed to pay The WorkSource
$7,500 bi-weekly. On November 30, 1999, we and The WorkSource amended the
consulting agreement whereby we agreed to pay The WorkSource an additional
$50,000 from the proceeds of any offering that raises $750,000 in consideration
for additional services provided by The WorkSource in connection with such
effort. Rebecca R. Irish, our Vice President of Finance and Chief Financial
Officer, is the President of The WorkSource.


                                       43
<PAGE>   44

         On July 14, 1999, we entered into a Separation and Release Agreement
with Eric S. Kaplan, our former president and director, made effective as of
July 21, 1999. In return and as consideration of Mr. Kaplan's resignation and
release of Complete Wellness Centers from all employment claims or actions, we
agreed to: (i) indemnify him for actions taken by Complete Wellness Centers or
by him as an officer or director of Complete Wellness Centers; (ii) continue
liability coverage for as long as the applicable statute of limitations of
claims shall run; (iii) transfer $200,000 in market value of our common stock at
a 5,000 shares per month rate to him through stock issuances or stock option
grants; (iv) pay him attorney fees in the amount of $6,000; and (v) pay him the
sum of $10,000 in cash. We accelerated the vesting of 10,000 options in
September 1999. Subsequently, Dr. Kaplan exercised an aggregate of 30,000 these
options, the value of which was recorded as compensation expense.


         On August 24, 1999, as consideration for services provided by Structure
Management in connection with a private placement of our common stock, we issued
Structure Management options under our 1999 Consultants Stock Option Plan for an
additional 125,000 shares of our common stock at $1.50 per share and paid
Structure Management $50,000. Structure Management subsequently exercised the
125,000 options.

         On September 23, 1999, we entered into an agreement with Stratus
Services Group, Inc. to convert $750,000 in loans from Stratus into 500,000
shares of our common stock. Stratus is controlled by Joseph J. Raymond, Sr.

         On November 30, 1999, we entered into a termination of employment
agreement with Michael T. Brigante, our former Sr. Vice President and Chief
Financial Officer, to pay $73,704 for monies owed for back wages, vacation,
allowances and severance compensation pursuant to the provisions in Mr.
Brigante's employment agreement. The monies are to be paid over a twelve month
period ending December 2000.

         On December 1, 1999, the board of directors approved the issuance of
16,666 shares of common stock to each Joseph J. Raymond, Jr. and to Sergio R.
Vallejo in lieu of options held by each for 75,000 shares of common stock.

         On January 5, 2000, we issued options for 100,000 shares of our common
stock under our 1996 Stock Option Plan to Joan Raymond, a principal of Structure
Management, Inc., at $1.25 per share. Mrs. Raymond, a sister-in-law to Mr.
Joseph J. Raymond, Jr., the Chairman and Chief Executive Officer of the Company,
subsequently exercised the options in full.

         On March 13, 2000, we reached an agreement with our preferred
shareholders to restructure the capitalization of our company. The restructuring
will only take place upon completion of the merger with Dr.Alt.com Corporation
(See Note 16 - Potential Transactions and Relationships). In an attempt to
simplify the capital structure and to remove the liquidation preferences of the
Senior Convertible Preferred Stock ("Senior") and of the Junior Convertible
Preferred Stock ("Junior") the following transactions will take place upon the
effective date of the merger:

-    Conversion of all outstanding shares of Senior to shares of Common Stock of
     the Company based on their current conversion factor;

-    Conversion of all outstanding shares of Junior to shares of Common Stock of
     the Company based on their current conversion factor;

-    The shares of Common Stock will be restricted subject to Rule 144 of
     Securities Act 1933, yet will be granted piggyback registration rights in
     the next Common Stock offering. CWC has agreed to register such shares no
     later than December 31, 2000.

-    The principle of the secured note payable to Wexford Spectrum Investors LLC
     will continue and the related accrued interest will be brought current.

     The Company believes that all prior transactions between the Company, its
officers, directors or other affiliates of the Company have been on terms no
less favorable than could have been obtained from unaffiliated third parties.
Any future transactions with officers, directors, 5% stockholders or affiliates
must be for valid business reasons, be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties, and be approved by a
majority of the independent outside members of the Company's Board of Directors
who do not have an interest in the transaction.

         Mr. Eugene Sharer, former President of CWC and current director of CWC,
is the principal of Sharer and Associates. Sharer Associates serves as an
independent contractor to assist CWC in various projects and management services
and was paid approximately $7,500 in 1999 for services rendered.

         Mr. L. Mark Michel became a director of CWC in January 2000. Mr. Michel
serves as an independent contractor to assist CWC with managed care contracting
and advisory services and was paid $4,495 in 1999. For 2000, Mr. Michel has been
paid $1,154 through April 10, 2000.


                                       44
<PAGE>   45


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) All reports and exhibits contained therein as previous filing with the
         Commission are incorporated by reference.

     (b) Reports on Form 8-K.

<TABLE>
<S>                    <C>          <C>
March 15, 1999         Item 4       Changes in Registrants Certifying Accounts
                       Item 7       Exhibits
March 9, 1999          Item 1       Changes in Control of Registrant
                       Item 7       Exhibits
</TABLE>




SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                                         COMPLETE WELLNESS CENTERS, INC.
                                                 (Registrant)

                                         By: /s/ Rebecca R. Irish
                                        ---------------------------------
                                        Rebecca R. Irish
                                        CHIEF FINANCIAL OFFICER
April 14, 2000
IN ACCORDANCE WITH THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN
SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<S>                                              <C>                                    <C>
/s/ JOSEPH J. RAYMOND, JR                        Chairman of the Board,                 April 14, 2000
--------------------------------------           Chief Executive Officer,
JOSEPH J. RAYMOND, JR                            and Director

/s/ SERGIO R. VALLEJO                            Chief Operating Officer/President      April 14, 2000
-------------------------------------            and Director
SERGIO R. VALLEJO

/s/ REBECCA R. IRISH                             VP Finance/Treasurer                   April 14, 2000
-------------------------------------            Chief Financial Officer
REBECCA R. IRISH

/s/ E. EUGENE SHARER                             Director                               April 14, 2000
-------------------------------------
E. EUGENE SHARER

/s/ DONALD S. RADCLIFFE                          Director                               April 14, 2000
-------------------------------------
DONALD S. RADCLIFFE

/s/ L. MARK MICHEL                               Director                               April 14, 2000
-------------------------------------
L. MARK MICHEL

/s/ JOHN K. PAWLOWSKI                            Director                               April 14, 2000
-------------------------------------
JOHN K. PAWLOWSKI
</TABLE>


                                       45
<PAGE>   46


EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT
NUMBER              DESCRIPTION
-------             -----------
<S>                 <C>
1                   Non-Binding Letter of Intent to Merge..............
2                   Services Agreement with DrAlt.com..................
</TABLE>