<PAGE>
As filed with the Securities and Exchange Commission on January 27, 2000
Registration No.333-90729
-------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------
MEDCARE TECHNOLOGIES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 87-0429962B
-------- -----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
1515 West 22nd Street, Suite 1210
Oak Brook, Illinois 60523
(630) 472-5300
(Address, including zip code, and telephone number,
including area code, registrant's principal executive offices)
--------------------------
MedCare Technologies, Inc.
1515 West 22nd Avenue, Suite 1210
Oak Brook, Illinois 60523
(630) 472-5300
Attention: Alan P. Jagiello
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies of all communications to:
Krista A. Endres
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
(312) 984-3114
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement, as determined by
market conditions.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
<PAGE>
PROSPECTUS
MEDCARE TECHNOLOGIES, INC.
1515 West 22nd Street, Suite 1210
Oak Brook, Illinois 60523
(630) 472-5300
1,054,085 SHARES
COMMON STOCK
This prospectus relates to the resale by the selling stockholders
identified in this prospectus of common stock of Medcare Technologies. The
selling stockholders may offer the common stock at the prevailing market prices
at the time of the resales or at privately negotiated prices. We will not
receive any of the proceeds from the resale of common stock by the selling
stockholders.
For a discussion of how the selling stockholders may sell the common stock
covered by this prospectus, see the "PLAN OF DISTRIBUTION" section beginning on
page 13 of this prospectus.
Our common stock is currently listed on the Nasdaq SmallCap Market under
the symbol "MCAR." On January 25, 2000, the last reported sale price of the
common stock was $2.44 per share.
--------------------------
There are risk factors that you should consider before purchasing shares in
this offering. We urge you to carefully read the "RISK FACTORS" section
beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is January 27, 2000.
-1-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
----- ----
<S> <C>
PROSPECTUS SUMMARY............................ 3 Reimbursement and Related Matters............ 8
Medcare Technologies......................... 3 Government Regulation........................ 9
The Offering................................ 3 Potential Fluctuations in Quarterly Results.. 9
RISK FACTORS.................................. 5 RxSheets.com................................. 9
Lack of Operating History................... 5 Competition.................................. 10
Inability to Obtain Funding................. 5 MEDCARE TECHNOLOGIES........................... 10
Continued Control by Existing Management.... 5 USE OF PROCEEDS................................ 11
Dividends................................... 6 DETERMINATION OF OFFERING PRICE................ 11
Dependence on Executive Officers............ 6 SELLING STOCKHOLDERS........................... 11
Change in Control........................... 6 PLAN OF DISTRIBUTION........................... 13
Issuances at Less than Market Price......... 6 DESCRIPTION OF SECURITIES
Redemption of Series B Preferred Stock...... 6 Common Stock................................. 15
Nasdaq Eligibility and Maintenance.......... 7 Preferred Stock.............................. 15
Risk of Low Priced Stocks................... 8 Warrants..................................... 21
Adverse Effect of Shares Eligible for EXPERTS AND LEGAL MATTERS...................... 23
Future Sale................................. 8 INCORPORATION BY REFERENCE..................... 23
Protection of Proprietary Treatment AVAILABLE INFORMATION.......................... 24
Program..................................... 8 FORWARD-LOOKING STATEMENTS..................... 24
INDEMNIFICATION................................ 25
</TABLE>
--------------------------
We have not authorized any person to make a statement that differs from
what is in this prospectus. If any person makes a statement that differs from
what is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, securities in any jurisdiction
where the offer or sale is not permitted. The information contained in this
prospectus is complete and accurate as of its date, but the information may
change after that date.
-2-
<PAGE>
PROSPECTUS SUMMARY
We describe the items in the following summary in more detail later in this
prospectus. Therefore, for a complete understanding of this offering, we
encourage you to read the more detailed information set forth in this
prospectus, our financial statements and the other information that we
incorporate by reference in this prospectus. Information that is "incorporated
by reference" is information that we disclose to you by referring you to other
documents that we have previously filed with the SEC.
Medcare Technologies
We are a Delaware corporation engaged in the business of managing and/or
supporting urinary incontinence clinics throughout the United States. Our
principal business activity is the development and expansion of the MedCare
Program, which is a proprietary product of our company. The MedCare Program
consists of software and services which we have developed in order to assist
physicians in providing non-pharmaceutical, non-invasive treatment to
individuals suffering from urinary incontinence and other pelvic disorders.
Our executive offices are located at 1515 West 22nd Avenue, Suite 1210, Oak
Brook, Illinois 60523. Our telephone number is (630) 472-5300.
The Offering
Description and Amount of Securities to be Offered
Through this prospectus, the selling stockholders are offering 1,054,085
shares of our common stock which we will issue to them upon their conversion of
shares of Series B convertible preferred stock and their exercise of warrants to
purchase shares of common stock. This prospectus does not cover the initial
issuance of the shares of common stock to the selling stockholders upon
conversion of the Series B preferred stock and warrants. We issued the Series B
preferred stock and the warrants in a private placement on May 18, 1999,
pursuant to a securities purchase agreement between us and the selling
stockholders.
We previously registered 1,600,000 shares of common stock on Form S-3 (file
number 333-81219), filed with the Securities and Exchange Commission on June 21,
1999 and declared effective on July 9, 1999. Of the 1,600,000 shares previously
registered, 1,589,042 shares have already been sold. Due to a decrease in the
market price of the common stock, we are registering additional shares of common
stock. In accordance with Rule 429 of Regulation C of the Securities Act of
1933, we are presenting a combined prospectus. Through the two registration
statements of which this prospectus is a part, we are registering a total of
6,210,000 shares of common stock. For a further description of the terms of the
Series B preferred stock and the warrants, see "DESCRIPTION OF SECURITIES."
Because the conversion of the Series B preferred stock is based on a
formula that varies with the market price of our common stock, we may issue more
than 1,054,085 shares of common stock. If there is a material increase in the
number of shares offered by this prospectus, we will increase the number of
shares offered by this prospectus by filing a 424(c) supplement to this
prospectus.
-3-
<PAGE>
RISK FACTORS
An investment in our Common Stock is speculative and involves a high degree
of risk of loss of part or all of your investment. You should carefully consider
the following factors and other information in this prospectus before deciding
to invest in our common stock.
Lack of Operating History -- Because of our limited operating history and lack
of past profitability, you may lose your investment if we are unable to
successfully market the MedCare Program and implement our business plan.
Although we organized Medcare in 1986, we did not become active until 1995
and have been continually developing our MedCare Program since that time. As a
result, our business is subject to the risks inherent in the establishment of a
new business. Specifically, in formulating our business plan, we have relied on
the judgment of our officers, directors and consultants but have not conducted
any formal independent market studies concerning the demand for our services.
To achieve significant revenues and profitable operations in the future, we must
successfully develop and market the MedCare Program to physicians. In addition,
we have only limited experience in managing the clinics in the MedCare Program
and are currently expanding operations, which may or may not provide profits.
Further, the business model for RxSheets.com is evolving and relies
substantially upon the sale of products and advertising on the Internet, which
is a developing industry in which we have no prior experience. We had no
revenues in 1995 or 1996, and revenues of $91,802 in 1997. In 1998, we had
revenues of $786,586. We have not been profitable, experiencing an accumulated
loss of $2,721,918 in 1997, which increased to an accumulated loss of $6,491,871
in 1998. Even if we become profitable in the future, we cannot accurately
predict the level of, or our ability to sustain, profitability. Because we have
not yet been profitable and cannot predict any level of future profitability,
you bear the risk of a complete loss of your investment in the event our
business plan is unsuccessful.
Inability to Obtain Funding -- We may not be able to obtain additional funding
when needed, which could limit future expansion and marketing opportunities and
result in lower than anticipated revenues.
We may require additional financing to expand and market the MedCare
Program and RxSheets.com. The resale of the common stock offered by the selling
stockholders may cause difficulty in our ability to obtain financing. In total,
if the selling stockholders had converted or exercised all of the currently
outstanding options, warrants and preferred stock, we would have had 10,965,398
shares of common stock outstanding on January 25, 2000. These exercises and
conversions could cause a decrease in the market price of the common stock. If
the market price of the common stock declines, some potential financiers may
either refuse to offer us any financing or will offer financing at unacceptable
rates or unfavorable terms. If we are unable to obtain financing on favorable
terms, or at all, this unavailability could prevent us from expanding and
marketing the MedCare Program, which could result in lower than anticipated
revenues. See "DESCRIPTION OF SECURITIES."
Continued Control by Existing Management -- You may lack an effective vote on
corporate matters and management may be able to act contrary to your objectives.
As of January 25, 2000, our officers and board members own 20% of the
9,911,313 shares of our outstanding common stock and 1,710,000 options to
purchase our common stock at prices ranging from $2.75 to $9.00. If the selling
stockholders were to convert and sell all of the shares which they are able to
obtain as of January 25, 2000, this would reduce the directors and officers'
ownership percentage to 18%. If management votes together, it could influence
the outcome of corporate actions requiring shareholder approval, including the
election of directors, mergers and asset sales. As a result, new stockholders
may lack an effective vote with respect to the election of directors and other
corporate matters. Therefore, it is possible that management may take actions
with respect to its ownership interest which may not be consistent with your
objectives or desires.
-4-
<PAGE>
Dividends -- We have not paid and do not currently intend to pay dividends,
which may limit the current return you may receive on your investment in our
common stock.
Since inception, we have paid no dividends to our stockholders. Future
dividends on our common stock, if any, will depend on our future earnings,
capital requirements, financial condition and other factors. We currently
intend to retain earnings, if any, to increase our net worth and reserves.
Therefore, we do not anticipate that any holder of common stock will receive any
cash, stock or other dividends on his shares of common stock at any time in the
near future. You should not expect or rely on the potential payment of
dividends as a source of current income.
Dependence on Executive Officers and Technical Personnel -- The success of our
business plan depends on attracting qualified personnel, and failure to retain
the necessary personnel could adversely affect our business.
We are highly dependent on the services of our executive officers, Jeffrey
S. Aronin, Alan P. Jagiello and Gregory Wujek. Except for an employment
agreement with our President, Jeffrey Aronin, we do not have any employment
agreements with our executive officers. In addition, competition for qualified
technical personnel is intense, and we may need to pay premium wages to attract
and retain personnel. Attracting and retaining qualified personnel is critical
to our business plan. Inability to attract and retain the qualified personnel
necessary would limit our ability to implement our business plan
successfully.
Change of Control -- Conversions of shares of Series B preferred stock may
result in new majority stockholders, whose interests may be inconsistent with
yours.
If the market price of the common stock declines significantly, we may
issue a large number of shares of common stock. As a result, our current
stockholders may not have an effective vote in the election of directors and
other corporate matters. In the event of a change in control, it is possible
that the new majority stockholders may take actions which may not be consistent
with your objectives or desires.
Issuances at Less than Market Price -- Conversions of shares of Series B
preferred stock may drive down the price of our common stock.
The conversion of the Series B preferred stock is based on a formula that
varies with the market price of our common stock. This variable formula applies
the lesser of (a) the market price of our common stock at the time we issue the
Series B preferred stock, which was $7.80 when the outstanding shares of Series
B preferred stock were issued, and (b) the approximate market price of our
common stock at the time the holders convert their shares of Series B preferred
stock. As a result, if the market price of our common stock increases after we
issue the Series B preferred stock, it is possible that, upon conversion of the
Series B preferred stock, we will issue shares of common stock at a price that
is less than the then-current market price of the common stock.
In addition, the warrants are exercisable at a fixed price. This fixed
price is equal to 125% of the average closing bid prices of our common stock on
the five consecutive trading days preceding the applicable vesting date of the
warrants. If the market price of our common stock increases above the warrant
exercise price, we will have to issue shares of common stock upon exercise of
the warrants at a price that is less than the then-current market price.
Issuances at less than market price pose a risk to investors because these
issuances may drive down the market price of our common stock.
Redemption of Series B Preferred Stock -- If the selling stockholders redeem
their shares of Series B preferred stock, this could divert funds from our
operations and result in slower growth for our company.
The selling stockholders may elect to redeem their Series B preferred stock
at a premium upon the occurrence of the following events:
. our consolidation, merger or other business combination with another
entity;
-5-
<PAGE>
. the sale or transfer of all or substantially all of our assets;
. a purchase, tender or exchange offer made to and accepted by the holders
of more than 50% of the outstanding shares of our common stock;
. our failure to maintain the effectiveness of a registration statement;
. the delisting of our common stock for a period of five consecutive days;
or
. our material breach of any representations, warranties or covenants in
the securities purchase agreement or any related documents.
The premium payable to the selling stockholders is equal to 115% of (a)
$10,000, plus (b) any stock dividends that have accrued but have not been paid,
plus (c) default interest, payable at 15% per year, for dividends that we
elected to pay in cash but failed to pay on a timely basis. See "DESCRIPTION OF
SECURITIES." If we do not have sufficient funds to pay this premium, we may
need to borrow the funds on unfavorable terms, which would divert funds that
could be used elsewhere. This would result in slower growth of our company and
lower than expected earnings.
Nasdaq Eligibility and Maintenance -- If we do not maintain our Nasdaq SmallCap
Market listing, you may have difficulty selling your shares.
Our common stock is currently listed on the Nasdaq SmallCap Market. Under
the current rules for listing on that market, we must maintain at least
$2,000,000 in net tangible assets, a market capitalization of $35 million or
have net income of $500,000. In addition, we must maintain at least $1,000,000
in market value of public float and a minimum bid price of $1.00 per share. For
the reasons discussed below, it is possible that we may be unable to maintain
these Nasdaq eligibility requirements. In the event of a delisting, you would
be forced to trade our common stock in the over-the-counter market on an
electronic bulletin board established for securities that do not meet the
listing requirements or in what are commonly referred to as the "pink sheets."
As a result, you may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, our common stock. Following are specific ways in
which we may fail to maintain our current listing on the Nasdaq SmallCap Market:
Ineligibility Resulting from Losses from Operations. If we experience
losses from operations, we may be unable to maintain the standards for continued
listing and Nasdaq may delist our common stock from the SmallCap Market.
Ineligibility Resulting from Failure to Meet the Bid Price Requirement as a
Result of the Issuance and Conversion of the Series B Preferred Stock. Because
the conversion price of the Series B preferred stock is linked to the market
price of our common stock, the conversion of these securities may result in a
decrease in the bid price of our common stock. Specifically, if the market price
of our common stock falls, the conversion price will fall as well. As a result,
we will have to convert each share of Series B preferred stock into more shares
of common stock. Further, if the market price falls and the holders convert
their shares of Series B preferred stock into large amounts of common stock, the
market price may decline further as a result of dilution. In this event, it is
possible that the price may decline to such an extent that our minimum bid price
will be lower than the required $1.00.
Ineligibility Resulting from Failure to Meet Initial Inclusion Requirements
following a Change in Control. The Nasdaq rules require us to qualify under the
initial inclusion standards following a change in control resulting from a
merger or consolidation, if there is also a change in either our business or our
financial structure. If the conversion price is low enough, and if we issue
enough shares to a selling stockholder upon conversion, the conversion of the
Series B preferred stock could result in a change in control in a deemed merger
or consolidation. In addition, Nasdaq may view the large increase in the number
of shares of common stock outstanding following this conversion as a change in
financial structure. If these events occur and if we fail to meet Nasdaq's
initial inclusion requirements, Nasdaq may delist the common stock.
-6-
<PAGE>
Ineligibility Resulting from Public Policy Matters. In some cases, Nasdaq
may deny listing or apply more stringent listing criteria to particular
securities if, in its opinion, this treatment is necessary to protect investors
and the public interest. Variable convertible securities, like the Series B
preferred stock, may be subject to this strict treatment because of factors like
their potential impact on our existing capital structure and their dilutive
effect, as well as the other risk factors discussed in this prospectus.
Therefore, it is possible that Nasdaq may require us to delist our common stock
if it feels that this delisting would be necessary to protect investors.
Risk of Low Priced Stocks -- If our common stock is considered a "penny stock,"
transactions in the common stock will be subject to additional regulations,
decreasing the liquidity of the common stock.
If the Nasdaq SmallCap Market delists our common stock and the common stock
does not fit into any other exclusion from the definition of a "penny stock"
under applicable SEC regulations, our common stock would become subject to the
penny stock rules that impose additional sales practice requirements on broker-
dealers who sell this stock to persons other than established customers and
accredited investors, a group that generally is comprised of investors with net
worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with a spouse. For transactions covered by these rules, the broker-
dealer must make a special suitability determination for the purchase and must
have received the purchaser's written consent to the transaction prior to sale,
making the common stock more difficult to sell.
Adverse Effect of Shares Eligible for Future Sale -- Future sales of large
amounts of common stock could adversely effect the market price of our common
stock and our ability to raise capital.
Future sales of our common stock by existing stockholders pursuant to Rule
144 under the Securities Act, or following the exercise of outstanding preferred
stock, options and warrants, including conversion of the Series B preferred
stock and exercise of the related warrants, could adversely affect the market
price of our common stock. On January 25, 2000, we had 9,911,313 shares of
common stock outstanding. If the selling stockholders had exercised or
converted all of the options, warrants and preferred stock, including those not
subject to this prospectus, we would have had 10,965,398 shares of common stock
outstanding as of January 25, 2000. Substantially all of the outstanding shares
of our common stock are freely tradable, without restriction or registration
under the Securities Act, other than the sales volume restrictions of Rule 144
applicable to shares held beneficially by persons who may be deemed to be
affiliates. Our directors and executive officers and their family members are
not under lockup letters or other forms of restriction on the sale of their
common stock. The issuance of any or all of these additional shares upon
exercise of options or warrants or conversion of preferred stock will dilute the
voting power of our current stockholders on corporate matters and, as a result,
may cause the market price of our common stock to decrease. Further, sales of a
large number of shares of common stock in the public market could adversely
affect the market price of the common stock and could materially impair our
future ability to generate funds through sales of common stock or other equity
securities.
Protection of Proprietary Treatment Program -- Our ability to effectively
compete depends on protection of our proprietary treatment protocol through
confidentiality and non-compete agreements.
Our ability to compete and expand effectively will depend, in part, on our
ability to develop and maintain the proprietary aspects of our unpatented
treatment protocol. We have developed this protocol through our experiences to
date in the clinical, billing and marketing areas of incontinence treatment.
Others may independently develop the same or a similar program or otherwise
obtain access to this protocol from former employees or former MedCare
physicians.
In addition, third parties have published clinical studies regarding the
benefits of biofeedback treatment of incontinence. Although this is only one
component of our treatment protocol, others may utilize these clinical studies
to begin their own incontinence programs.
We currently protect the treatment protocol from duplication only through
our confidentiality and non-compete agreements signed with our employees and
customers. We cannot ensure that these agreements will provide meaningful
protection for our treatment protocol in the event of their expiration or
unauthorized use or
-7-
<PAGE>
disclosure. If our treatment protocol became widely duplicated, larger, better-
capitalized companies could instantly compete with us in the incontinence
treatment market.
Reimbursement and Related Matters -- Market acceptance of the MedCare Program,
which is crucial to our success and your investment, depends in part on whether
governments and third-party insurers provide reimbursement.
Our ability to successfully market the MedCare Program will depend, in
part, on whether third parties such as government health administration
authorities and private health coverage insurers reimburse the physicians using
our program for the costs of the program. In the United States and in some
foreign countries, third-party reimbursement is currently generally available
for our products and services. However, third party reimbursement is currently
generally unavailable for patient management products such as diapers, pads and
urethral plugs. Governments and other third parties are increasingly attempting
to contain health care costs by limiting both coverage and the level of
reimbursement. We cannot ensure that adequate third-party coverage will remain
in effect in the future, and if this coverage is not maintained, market
acceptance of the MedCare Program could decline.
Government Regulation -- Unfavorable governmental regulation in the future could
threaten our viability.
Our business is heavily regulated. In particular, we are currently subject
to regulation under the Federal Anti-Kickback Statute and the Federal Self-
Referral Statute. In addition, legislators continually enact new legislation
relating to the manner in which patients receive treatment. The process of
obtaining regulatory approvals can be lengthy and expensive, and the issuance of
these approvals is uncertain. Currently, we believe that we are in compliance
with all currently existing regulations that apply to us. However, if the
federal or state government were to enact any new regulations, we may not be
able to obtain the necessary approvals on a timely basis, or at all. Should
legislators enact new legislation that is unfavorable to our business, this
could, among other things, result in fines, suspensions of regulatory approvals,
operating restrictions and criminal prosecution. We cannot predict whether any
health care reforms will be enacted, the types of approvals that will be
required, or the effect of any enacted reform on our business.
Potential Fluctuations in Quarterly Results -- Significant variations in our
quarterly operating results may adversely affect the market price of our common
stock.
Our operating results have varied on a quarterly basis during our limited
operating history, and we expect to experience significant fluctuations in
future quarterly operating results. These fluctuations have been and may in the
future be caused by numerous factors, many of which are outside of our control.
We believe that period-to-period comparisons of our results of operations will
not necessarily be meaningful and that you should not rely upon them as an
indication of future performance. Also, it is likely that our operating results
could be below the expectations of public market analysts and investors. This
could adversely affect the market price of our common stock.
RxSheets.com -- Because the Internet is a new and rapidly evolving market, we
may not be able to create a market for RxSheets.com's services, and may never
operate profitably.
In October 1999, we announced the launch of our new web site, RxSheets.com
(www.rxsheets.com) which we direct exclusively at the physician and
pharmaceutical marketplace. Many pharmaceutical companies offer physicians free
samples of their drugs as part of their marketing promotions to physicians.
Historically, companies carry out these marketing promotions by direct contact
with physicians and direct mail. RxSheets.com offers focused marketing services
to pharmaceutical companies through the internet in order to efficiently and
effectively manage the sampling of pharmaceutical drugs. Our services to the
pharmaceutical industry include advertising, forwarding sample requests from
physicians to suppliers and selling data accumulated from our service. While
RxSheets.com is in the developmental stage, we hope to generate revenues from
the fees we charge for those services. However, there are several risks related
to RxSheets.com that may hinder its ultimate profitability, as discussed below.
-8-
<PAGE>
RxSheets.com will operate in a new and rapidly evolving market. Continued
increases in the use of the Internet and other online services is crucial and
RxSheets.com's business. The Internet as a marketing medium has not been
available for enough time to gauge its effectiveness as compared with
traditional media. Therefore, the Internet is an unproven medium for marketing
services. As a result, our future operating results will depend substantially
upon the increased use of the Internet for information, publication,
distribution and commerce and the emergence of the Internet as an effective
marketing medium. Our ability to generate significant revenues will also depend
on, among other things, the development of a large base of physicians online,
our ability to accurately measure our user base and our ability develop or
acquire effective marketing systems. Many of our potential customers have only
limited experience with the Internet, have not yet devoted a significant portion
of their marketing to the Internet, and may not find the Internet to be
effective for promoting their products and services compared to traditional
methods. The adoption of Internet marketing requires the acceptance of a new
way of conducting business and exchanging information. The market for Internet
services may not continue to emerge. The failure of the market to develop could
materially and adversely affect our business. In addition, there is intense
competition in the sale of services on the Internet, resulting in a wide range
of rates and pricing. This makes it difficult to project future revenues and
rates. Because RxSheets.com recently began operations, it is difficult to
evaluate our business and prospects. Our revenue and income potential is
unproven and our business model is emerging. As a result of these risks, we may
not generate significant future revenues from Internet-based services and never
achieve favorable operating results or profitability.
In addition, our success will depend, in part, on our ability to generate a
high volume of physician traffic to our website. Therefore, the performance of
our website is critical to our reputation and our ability to achieve market
acceptance of RxSheets.com. Any system failure that causes interruptions in the
availability or that increases response time of our services could reduce user
satisfaction and traffic to the website, and if the interruption is lengthy or
repeated, would reduce our attractiveness to advertisers and pharmaceutical
companies.
Legislation relating to consumer privacy may affect our ability to collect
data. The enactment of legislation or industry regulations arising from public
concern over consumer privacy issues could have a material adverse impact on our
business. Legislators may place restrictions upon the collection and use of
information that is currently legally available, which could materially increase
our cost of collecting some kinds of data. It is also possible that legislation
may prohibit us from collecting or disseminating data, which could in turn
materially adversely affect our ability to meet our clients' requirements.
Data suppliers might withdraw data from us, leading to our inability to
provide products and services. We utilize physician identification data
provided to us by suppliers in order to verify the identity of physicians. This
data is important to our customers, as it ensures that samples and advertising
are provided only to the physicians whom our customers wish to target. If
owners of the data we use were to withdraw the data from us, we would not be
able to offer targeted marketing campaigns which could result in potential
customers utilizing competitors who offer these services. If our data providers
were to withdraw their data, our decreased ability to provide our services to
our clients could result in decreased revenues, net income and earnings per
share.
Competition -- In the evolving healthcare field, if we do not continually
develop the MedCare Program, it could become uncompetitive or obsolete.
Healthcare is a rapidly evolving field in which other companies may have
greater financial and research and development resources than we do. We compete
directly with a number of small incontinence clinics, offered by doctors,
hospitals or therapists, that use a combination of non-invasive alternative
treatment options to treat urinary incontinence. We expect that better financed
and more sophisticated competition will emerge in the future. In addition, we
compete with other alternative treatments to urinary incontinence, including
absorbent products and diapers, surgery, indwelling catheters, implanting
devices, injectable materials, electrical stimulation, mechanical devices and
drugs. Our ability to compete effectively will depend, in part, on our ability
to develop and maintain a treatment program that offers therapeutic or cost
advantages over competitive offerings. Developments by others could render the
MedCare Program uncompetitive or obsolete.
-9-
<PAGE>
MEDCARE TECHNOLOGIES
We are a Delaware corporation engaged in the business of managing and/or
supporting urinary incontinence clinics throughout the United States. Our
principal business activity is the development and expansion of the MedCare
Program. The MedCare Program, a proprietary product of our company, is made up
of equipment, software and services which we have developed in order to assist
physicians in providing non-pharmaceutical, non-invasive treatment to
individuals suffering from urinary incontinence and other pelvic disorders.
We originally incorporated in Utah in 1986. We changed our domicile to
Delaware in 1996 through a migratory merger. In 1995, we acquired the MedCare
Program, which we began to offer to doctors in 1996. We launched the MedCare
Program nationally in 1998. During 1998, our sole business was the offering of
the MedCare Program.
Doctors in private offices, clinics and hospitals are the main users of the
MedCare Program. These physicians use the MedCare Program to support a
treatment plan based primarily on behavioral modification techniques and to help
their patients activate and strengthen the body's various sensory response
mechanisms that maintain bladder and bowel control. Recent technological
developments and studies indicate that these behavioral techniques are effective
methods in treating urinary incontinence. Our goals are to continue to promote
general awareness of incontinence and to show that an effective treatment
program is readily available. We believe that our company is the leading source
of conservative incontinence treatment support systems in the country. Our
continued ability to compete and expand effectively will depend, in part, on our
ability to develop and maintain our proprietary unpatented treatment protocol.
See "RISK FACTORS-Protection of Proprietary Treatment Program."
In October 1999, we announced the launch of our new web site, RxSheets.com
(www.rxsheets.com), which supersedes our previously planned Physician Virtual
Office and is directed exclusively at the physician and pharmaceutical
marketplace. Many pharmaceutical companies offer physicians free samples of
their drugs as part of their marketing promotions to physicians. RxSheets.com
offers a wide array of compelling and focused information and services that will
enable physicians and pharmaceutical companies to more efficiently and
effectively manage the sampling of pharmaceutical drugs. In addition, we changed
the name of our wholly-owned subsidiary from Medcareonline.com to RxSheets.com.
As of September 30, 1999, we have not generated any revenues from RxSheets.com.
On December 13, 1999, we announced that we had entered into an agreement
with Quorum Health Resources, LLC. We entered into this agreement as a marketing
tool to assist our sales force in promoting our products and services. The main
points of the agreement, which has a three year term, are as follows:
. Quorum will appoint an account manager, who will assist our sales
representatives in establishing, developing and maintaining service
relationships with hospitals that Quorum manages, has a consulting
relationship with, or is affiliated with, excluding any hospitals Quorum
owns directly.
. Quorum will make information about us available to these hospitals,
promote the use of the MedCare Program within these hospitals, and
periodically offer us an opportunity to make marketing presentations to
representatives of the hospital.
. We will pay Quorum a minimal administrative fee for each program
consulting agreement we sell to each of these hospitals. A program
consulting agreement is our contract with the hospital outlining the
services which we would provide to the hospital.
Because each of the hospitals subject to our agreement with Quorum is
independently owned, Quorum cannot control the hospital's decision to enter into
a contract with us. We will employ the same sales process with each hospital
under the agreement that we perform for all other sales prospects. Therefore,
while we anticipate that the agreement will result in additional sales, it is
possible that it may not.
SELLING STOCKHOLDERS
We will issue the shares to the selling stockholders (1) upon conversion of
the Series B preferred stock or (2) upon exercise of the warrants, both of which
we issued pursuant to the securities purchase agreement. We are registering the
shares in order to permit the selling stockholders to offer these shares for
resale from time to time. Except for the ownership of the Series B preferred
stock, the warrants and the common stock underlying the Series B preferred stock
and warrants, the selling stockholders have not had any material relationship
with us within the past three years.
-10-
<PAGE>
The table below lists the selling stockholders and other information
regarding the beneficial ownership of the common stock by each of the selling
stockholders.
The second column lists, for each selling stockholder, the number of shares
of common stock which would have been issuable to the selling stockholder on
January 25, 2000 upon conversion of all of the Series B preferred stock
outstanding on January 25, 2000 and exercise of the warrants which vest
within 60 days of January 25, 2000. This number includes shares of common stock
that were payable as dividends on the outstanding Series B preferred stock as of
January 25, 2000. This number does not include any unvested warrants. We
determined this number without regard to the 4.99% limit on beneficial
ownership, discussed below. Our calculations of the number of shares of common
stock into which the selling stockholders may convert the Series B preferred
stock or exercise the warrants in the second column assumes a conversion price
for the Series B preferred stock of $2.05313. Because the conversion of the
Series B preferred stock is based on a formula that is dependent upon the market
price of our common stock, the numbers listed in the second column may fluctuate
from time to time.
The third column lists each selling stockholder's pro rata portion, based
on its ownership of Series B preferred stock, of the 1,054,085 shares of common
stock we are offering through this prospectus. This number includes shares
issuable upon exercise of both the vested and unvested warrants. This number
does not include any shares of common stock which the selling stockholders have
previously converted and sold.
The fourth column assumes the sale of all of the shares offered by each
selling stockholder.
Under the Certificate of Designations for the Series B preferred stock, no
holder can convert its shares of Series B preferred stock in excess of that
number of shares which, upon giving effect to the conversion, would result in
that holder and its affiliates beneficially owning more than 4.99% of the
outstanding shares of our common stock. This determination excludes shares of
common stock issuable upon conversion of shares of Series B preferred stock
which the holder has not yet converted. We do not account for this limitation in
the table below. We obtained the information provided in the table below from
the selling stockholders. The selling stockholders may sell all, some or none of
their shares in this offering. See "Plan of Distribution."
We previously registered 1,600,000 shares of common stock on Form S-3 (file
number 333-81219), filed with the SEC on June 21, 1999 and declared effective on
July 9, 1999. As of January 25, 2000 the selling stockholders have sold
1,589,042 of the 1,600,000 shares registered. Due to a decrease in the market
price of the common stock, the registration rights agreement requires us to
register an additional 4,679,562 shares of common stock. In accordance with Rule
429 of Regulation C of the Securities Act of 1933, we are presenting a combined
prospectus.
-11-
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Shares of Common
Preferred Shares Stock Beneficially Stock Offered Common Shares
Owned Prior Owned on Pursuant to this Owned After
Name to Offering January 25, 2000 Prospectus Offering
---- ---------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C>
HFTP Investment L.L.C. (1) 88 503,970 521,570 0
Leonardo, L.P. (2) 49 280,347 290,147 0
GAM Arbitrage Investments, Inc. (2) 7 39,907 41,307 0
AG Super Fund International Partners
L.P. (2) 7 39,907 41,307 0
Raphael, L.P. (2) 9 51,451 53,251 0
Ramius Fund, Ltd.(3) 18 102,903 106,503 0
--- --------- --------- -
TOTAL 178 1,018,485 1,054,085 0
</TABLE>
(1) Promethean Investment Group, LLC, a New York limited liability
company, serves as investment advisor to HFTP Investment, L.L.C. and may be
deemed to share beneficial ownership of the shares beneficially owned by HFTP by
reason of shared power to vote and to dispose of the shares beneficially owned
by HFTP. Promethean disclaims beneficial ownership of the shares beneficially
owned by HFTP. Mr. James F. O'Brien, Jr. indirectly controls Promethean. Mr.
O'Brien disclaims beneficial ownership of the shares beneficially owned by
Promethean and HFTP. The shares of common stock shown as beneficially owned on
January 25, 2000 include 57,600 shares of Common Stock issuable upon exercise of
the warrants that were vested or will vest within 60 days as of January 25,
2000. The remaining 17,600 warrants do not vest within 60 days of January 25,
2000.
(2) Angelo, Gordon & Co., L.P. is a general partner of AG Super Fund
International Partners, L.P., Leonardo, L.P. and Raphael, L.P., and is the
investment advisor of GAM Arbitrage Investment, Inc. and consequently has voting
control and investment discretion over securities held by the entities
controlled by Angelo Gordon. The ownership information for each of the Angelo
Gordon entities does not include the ownership information for the other Angelo
Gordon entities. Angelo Gordon and each of the entities controlled by it
disclaim beneficial ownership of the shares held by the other Angelo Gordon
entities. Mr. John M. Angelo, the Chief Executive Officer of Angelo Gordon, and
Mr. Michael L. Gordon, the Chief Operating Officer of Angelo Gordon, are the
sole general partners of A.G. Partners, L.P., the sole general partner of Angelo
Gordon. As a result, Mr. Angelo and Mr. Gordon may be considered beneficial
owners of any shares deemed to be beneficially owned by Angelo Gordon. The
shares of common stock shown as beneficially owned on January 25, 2000 include
46,400 shares of common stock issuable upon exercise of the warrants that were
vested or will vest within 60 days as of January 25, 2000. The remaining 14,400
warrants do not vest within 60 days of January 25, 2000.
(3) AG Ramius Partners, LLC is the investment advisor to Ramius Fund,
Ltd., and consequently has voting control and investment discretion over
securities held by Ramius Fund. AG Ramius disclaims beneficial ownership of the
shares held by Ramius Fund. Mr. John M. Angelo and Mr. Michael Gordon are sole
general partners of AG Partners, L.P., the sole general partner of Angelo Gordon
(which is the investment managing member of AG Ramius). As a result, Mr. Angelo
and Mr. Gordon may be considered beneficial owners of any shares deemed to be
beneficially owned by AG Ramius. The shares of common stock shown as
beneficially owned on January 25, 2000 include 11,600 shares of common stock
issuable upon exercise of the warrants that were vested or will vest within 60
days as of January 25, 2000. The remaining 3,600 warrants do not vest within 60
days of January 25, 2000.
-12-
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders, or, subject to applicable law, their pledgees,
donees, distributees, transferees or successors in interest, are offering shares
of common stock. We may issue these shares of common stock upon conversion of
the Series B preferred stock and exercise of warrants that we issued to the
selling stockholders in a private placement transaction.
This prospectus covers the selling stockholders' resale of up to 1,054,085
shares of common stock that we may issue to them upon conversion of the Series B
preferred stock and exercise of the warrants, as well as any additional shares
that we may issue upon conversion of the Series B preferred stock or exercise of
the warrants because of stock splits, stock dividends and other similar
transactions. This prospectus does not cover any additional shares of common
stock that we may issue to the selling stockholders as a result of fluctuations
in the market price of our common stock.
In connection with our issuance to the selling stockholders of the Series B
preferred stock, we provided to them registration rights and have subsequently
filed two registration statements on Form S-3 with the SEC. This prospectus
forms a part of those registration statements. The registration rights
agreement between us and the selling stockholders currently requires us to
register a total of 6,210,000 shares of common stock. We determined this number
by doubling the approximate number of shares of common stock that could be
issued upon conversion of the Series B preferred stock and exercise of warrants.
Because the conversion of the Series B preferred stock into common stock is
based on a formula that depends upon the market price of our common stock, we
may issue to the selling stockholders more than the 1,054,085 shares of common
stock offered by this prospectus. If there is a material increase in the number
of shares that may be issued, based on the conversion and exercise prices, we
will increase the number of shares offered by this prospectus by filing a 424(c)
supplement to this prospectus.
We have also agreed to prepare and file any amendments and supplements to
the registration statements that may be necessary to keep them effective until
this prospectus is no longer required for the selling stockholders to sell their
shares of common stock and to indemnify and hold the selling stockholders
harmless against liabilities for violations of the Securities Act that arise in
connection with the selling stockholders' sale of their shares. We have agreed
to pay all reasonable fees and expenses incident to the filing of the
registration statement, except that we have agreed to pay the fees and
disbursements of legal counsel to the selling stockholders only up to an
aggregate of $10,000.
Each selling stockholder has advised us that it purchased the Series B
preferred stock and warrants in the ordinary course of its business and that, at
the time it purchased these securities, it was not a party to any agreement to
distribute the securities. The selling stockholders may sell the shares of
common stock described in this prospectus directly or through underwriters,
broker-dealers or agents. The selling stockholders may also transfer, devise or
gift their shares through non-sale related transfers. As a result, pledgees,
donees, transferees or other successors in interest that receive their shares as
a gift, partnership distribution or other non-sale related transfer may offer
shares of common stock. In addition, if any shares covered by this prospectus
qualify for sale pursuant to Rule 144 under the Securities Act, the selling
stockholders may sell their shares under Rule 144 rather than pursuant to this
prospectus.
The selling stockholders may sell shares of common stock from time to time
in one or more transactions:
. at fixed prices that may be changed,
. at market prices prevailing at the time of sale, or
. at prices related to the prevailing market prices or at negotiated
prices.
The selling stockholders may offer their shares of common stock in one or
more of the following transactions:
-13-
<PAGE>
. on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including
the Nasdaq SmallCap Market,
. in the over-the-counter market,
. in privately negotiated transactions,
. through options,
. by pledge to secure debts and other obligations,
. to cover short sales made pursuant to this prospectus, or
. by a combination of the above methods of sale.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in the resales. The
selling stockholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling stockholders also may sell shares short and
deliver the shares to close out these short positions. The selling stockholders
also may enter into option or other transactions with broker-dealers that
require the delivery to the broker-dealer of the shares, which the broker-dealer
may resell pursuant this prospectus. The selling stockholders also may pledge
the shares to a broker, dealer, or financial institution and upon a default, the
broker, dealer or financial institution may effect sales of the pledged shares
pursuant to this prospectus.
In order to comply with state securities laws, the selling stockholders may
need to offer or sell the shares only through registered or licensed brokers or
dealers.
The SEC may deem the selling stockholders and any underwriters, broker-
dealers or agents that participate in the distribution of the shares of common
stock to be "underwriters" within the meaning of the Securities Act. The SEC
may deem any profits on the resale of the shares of common stock and any
compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commission under the Securities Act.
Under the Exchange Act, any person engaged in the distribution of the
shares of common stock may not simultaneously engage in market-making activities
with respect to the common stock for five business days prior to the start of
the distribution. In addition, each selling stockholder and any other person
participating in a distribution will be subject to the Exchange Act, which may
limit the timing of purchases and sales of common stock by the selling
stockholder or any other person.
DESCRIPTION OF SECURITIES
Common Stock
This prospectus relates to the issuance of up to 1,054,085 shares of our
common stock upon conversion of the Series B preferred stock and exercise of the
related warrants.
Our authorized capital stock includes 100,000,000 shares of common stock,
with a par value of $0.001. As of January 25, 2000, we had 9,911,313 shares of
common stock outstanding. The common stock currently outstanding is, and the
common stock offered pursuant to this registration statement will be when
issued, validly issued, fully paid and nonassessable.
Holders of the common stock are entitled to one vote for each share held by
them of record on all matters to be voted on by the stockholders.
Subject to the preferences that may be applicable to the holders of any
outstanding shares of preferred stock, as described below under "DESCRIPTION OF
SECURITIES--preferred stock," holders of common stock are entitled to receive,
out of legally available funds, dividends as our Board of Directors may declare
from time
-14-
<PAGE>
to time. Our decision to declare dividends depends upon a number of factors,
including our future earnings, capital requirements and financial condition. We
have not declared dividends on our common stock in the past, and we currently
anticipate that we will retain future earnings, if any, to increase our net
worth and reserves rather than to pay dividends.
The holders of common stock have no preemptive or conversion rights and are
not subject to further calls or assessments. There are no redemption or sinking
fund provisions applicable to the common stock.
Upon our liquidation, dissolution or winding up, all assets legally
available for distribution to stockholders are distributable ratably among the
holders of outstanding common stock, subject to the prior rights of our
creditors and the preferential rights of any of our preferred stockholders.
Preferred Stock
We are authorized to issue up to 1,000,000 shares of preferred stock, with
a par value of $0.25 per share. We may issue the preferred stock, without
further action by the stockholders, in one or more series. We may fix the
rights, preferences, privileges and restrictions granted to or imposed on any
wholly unissued shares of undesignated preferred stock, and we may fix the
number of shares constituting any series and the designation of the series. The
issuance of preferred stock, while providing flexibility in connection with the
expansion of our business, possible acquisitions and other corporate purposes,
could, among other things, have a detrimental effect on the rights of holders of
the common stock.
Of the 1,000,000 shares of preferred stock authorized, (1) we have
designated 1,000 shares as Series A preferred stock, of which no shares were
outstanding as of January 25, 2000 and (2) we have designated 800 shares
designated as Series B preferred stock, of which 178 shares were outstanding as
of January 25, 2000. We discuss the rights and preferences of each series
further below.
The Series A Preferred Stock
Pursuant to a Certificate of Designations filed with the State of Delaware
on July 7, 1997, we designated 1,000 shares of our authorized preferred stock as
Series A preferred stock, with an 8% annual interest rate.
The Series A preferred stock ranks senior to all common stock, senior to
any series or class of stock so designated in the future, junior to any series
or class of stock designated as senior to this stock in the future, and on
parity with any series or class of stock so designated in the future, including
the Series B preferred stock.
There are no dividends or dividend rights provided for the Series A
preferred stock. The holders of the Series A preferred stock also have no voting
rights, but must receive notice of all stockholders' meetings.
The liquidation ranking of the Series A preferred stock is after any senior
securities, prior to any junior securities and on a par with any other preferred
stock, including the Series B preferred stock. Upon liquidation, holders of the
Series A preferred stock will receive an amount per share equal to the original
issue price per outstanding share plus an amount equal to 8% of the original
Series A preferred stock issue price per year for the period that has passed
since we last paid dividends on the Series A preferred stock. If we do not
possess sufficient funds, assets and other holdings to provide for the complete
liquidation price, holders of the Series A preferred stock will receive funds
based upon the ranking of the stock.
We describe the Series A preferred stock further in our Registration
Statement on Form SB-2 (Reg. No. 333-41611).
-15-
<PAGE>
The Series B Preferred Stock
Designation and Amount
Pursuant to a Certificate of Designations, Preferences and Rights of Series
B Convertible Preferred Stock, filed with the State of Delaware on May 17, 1999,
we designated 800 shares of our preferred stock as Series B preferred stock. We
issued 400 shares of the Series B preferred stock, along with warrants to
purchase common stock, as described below, under the securities purchase
agreement. The aggregate purchase price of each share of the Series B preferred
stock, along with the related warrants, is $10,000.
In addition, at any time from May 18, 2000 through June 7, 2000, the
selling stockholders will have the right to purchase up to an additional 178
shares of the Series B preferred stock and up to 106,800 additional warrants.
During this period, each selling stockholder will be entitled to purchase a
number of additional shares of Series B preferred stock equal to the sum of (1)
the number of shares of Series B preferred stock held by the stockholder on May
18, 2000 and (2) the number of shares of Series B preferred stock converted by
the stockholder before May 18, 2000 at the fixed conversion price as described
below. The terms of these as-yet issued shares and warrants would be identical
to the terms described in this prospectus.
Dividends
The holders of the Series B preferred stock are entitled to receive a 6%
annual dividend, which is cumulative and accrues daily from the date of
issuance. We will pay these dividends, at our option, either (1) in shares of
common stock upon conversion of the Series B preferred stock or (2) in cash on
the first day of each calendar quarter.
Voting Rights
Holders of the Series B preferred stock are not entitled to any voting
rights on any matter submitted to a vote of our stockholders, except as required
by law.
Rank
The Series B preferred stock ranks senior to the common stock, and on
parity with the Series A preferred stock, in respect to dividend preferences and
payments upon liquidation and dissolution.
Restrictions on Future Issuances
We have agreed not to issue any additional or other capital stock that is
senior to or on parity with the Series B preferred stock without the prior
written consent of the holders of at least two-thirds of the Series B preferred
stock.
In addition, until May 18, 2000, we may not issue any equity securities or
securities convertible or exchangeable into equity securities, other than in a
variable convertible offering, without the prior approval of at least two-thirds
of the holders of the Series B preferred stock, unless we first offer each
holder of the Series B preferred stock the option to purchase a stated
percentage of the shares to be issued in the future offering. A variable
convertible offering is one in which the offered shares have a conversion price
based on the trading price of our common stock.
-16-
<PAGE>
The above covenant does not apply to the following:
. a traditional commercial financing with no equity component;
. the issuance of stock in connection with business combinations, unless
the primary purpose of the transaction is to raise equity capital;
. the issuance of common stock in a firm commitment, underwritten public
offering with net proceeds of at least $15,000,000;
. the issuance of securities upon the conversion or exercise of options,
warrants or other convertible securities outstanding as of May 18,
1999; or
. the grant of options or warrants, or the issuance of additional
securities, under a stock option plan, restricted stock plan or stock
purchase plan for the benefit of our employees or directors.
Conversion by Holders
Subject to the limitations discussed below, holders of the Series B
preferred stock may convert their shares into shares of common stock at a
variable conversion rate equal to the conversion amount described below divided
by the applicable conversion price described below.
. The "conversion price" of the Series B preferred stock issued on May
18, 1999 is the lesser of the following:
(a) the fixed conversion price of $7.80;
(b) the closing bid price on the day the selling stockholder delivers
to us a conversion notice; and
(c) the average of the ten lowest closing bid prices in the 40
trading days immediately preceding the date the selling
stockholder delivers the conversion notice.
. The "conversion amount" is $10,000, plus any stock dividends that have
accrued but have not been paid, plus any default interest, equal to
15% per year, for dividends which we elected to pay in cash but have
failed to pay on a timely basis.
As of January 25, 2000, the lowest number of shares of common stock into
which each share of Series B preferred stock could convert was 5,072, based on a
conversion price of $2.05313 We calculated the conversion price of $2.05313
using the average of the ten lowest closing bid prices in the last 40 trading
days immediately preceding January 25, 2000.
If any shares of Series B preferred stock are issued to the selling
stockholders between May 18, 1999 and July 7, 2000, as described above under
"The Series B Preferred Stock--Designation and Amount," the fixed conversion
price for those securities would be equal to 125% of the average of the closing
bid prices for our common stock during the five consecutive trading days
immediately preceding the issuance date.
Limitations on Holders' Right to Convert
As of the date of this prospectus, the holders may convert all of their
shares of the Series B preferred stock. However, no holder may convert any
shares of the Series B preferred stock in excess of the number of shares which,
upon giving effect to the conversion, would result in that holder and its
affiliates beneficially owning more than 4.99% of the outstanding shares of our
common stock, excluding shares of Series B preferred stock which have not been
converted and warrants which have not been exercised.
-17-
<PAGE>
Adjustment of Conversion Price
We will adjust each of the variable and fixed conversion prices of the
Series B preferred stock in the event that we fail to obtain and/or maintain the
effectiveness of a registration statement covering the resale of all applicable
securities. This could have the effect of increasing the number of shares of
common stock issuable upon conversion.
In the event of a registration statement default, we will reduce the
variable conversion price by reducing the conversion rate by a number of
percentage points equal to the sum of:
. 1.25, if a registration statement has not been declared effective
within 90 days after the closing of an issuance of the Series B
preferred stock and warrants; plus
. the product of:
(a) .05 multiplied by
(b) the total number of days after the deadline that the relevant
registration statement has not been declared effective plus the
number of days during which the selling stockholders have been
unable to sell their shares because of a flaw in a registration
statement that the SEC previously declared effective.
We will reduce the fixed conversion price by an amount equal to the product
of:
. the original fixed conversion price of $7.80, multiplied by
. the sum of:
(a) .0125, if a registration statement has not been declared
effective within 90 days after the closing of an issuance of the
Series B preferred stock and warrants; plus
(b) the product of (1) .0005 multiplied by (2) the total number of
days after the deadline that the relevant registration statement
has not been declared effective plus the number of days during
which the selling stockholders have been unable to sell their
shares because of a flaw in a registration statement that the SEC
previously declared effective.
Because the adjustments in the conversion prices depend on the
circumstances of the failure to obtain or maintain the effectiveness of the
registration statements, we cannot quantify the impact of the potential increase
in the number of shares of common stock issuable.
In addition, the conversion price of the Series B preferred stock is
subject to customary anti-dilution provisions which take effect upon the
issuance of common stock, options or other convertible securities, the
subdivision or combination of outstanding shares of common stock, our
recapitalization, merger or other reorganization, or any other similar events.
However, we will not make these adjustments unless the adjustment would result
in a cumulative increase or decrease of at least 1% in the conversion price.
Maturity and Mandatory Conversion
The shares of Series B preferred stock issued on May 18, 1999 mature on May
18, 2004. Any shares outstanding as of that date will automatically convert
into shares of common stock.
If we issue any shares of Series B preferred stock to the selling
stockholders between May 18, 1999 and July 7, 2000, as described above under
"The Series B Preferred Stock--Designation and Amount," those shares would
mature five years after the issuance date.
-18-
<PAGE>
Redemption at the Option of Holders
The holders may redeem any outstanding share of the Series B preferred
stock in the event of any of the following major transactions:
. our consolidation, merger or other business combination with another
entity;
. the sale or transfer of all or substantially all of our assets; or
. a purchase, tender or exchange offer made to and accepted by the
holders of more than 50% of the outstanding shares of common stock.
Any of these transactions must have occurred or have been the subject of a
public announcement during the period beginning on May 18, 1999 and ending on
May 18, 2000.
In the event of a major transaction, the redemption price per share will be
the greater of the following:
. 115% of the liquidation amount, as described below; and
. the product of (a) the applicable conversion rate and (b) the closing
bid price on the date of the public announcement of the event.
The liquidation amount is the amount due to the holders of the Series B
preferred stock in the event of our liquidation, dissolution or winding up.
This amount is equal to:
. $10,000; plus
. any stock dividends that have accrued but have not been paid; plus
. any default interest, payable at 15% per year, for dividends which we
elected to pay in cash but failed to pay on a timely basis.
In addition, in the event of the occurrence of one of the triggering events
listed below, the holders have the right to require us to redeem all or a
portion of their Series B preferred stock. The redemption price per share is the
same as the redemption price per share in the event of a major transaction. The
triggering events include:
. the failure to maintain the effectiveness of the registration
statement;
. the delisting of the common stock for a period of five consecutive
days; and
. our breach of any representations, warranties or covenants in the
securities purchase agreement or any related documents,
Conversion at Our Election
We have the right to require conversion, at the applicable conversion rate,
of any or all of the outstanding shares of the Series B preferred stock on any
day immediately following an event where the closing bid price of our common
stock on each trading day during the 30 consecutive trading day period is at
least $15.60. Among the conditions to our ability to convert the shares are the
following:
. we have maintained effectiveness of a registration statement covering
the resale of all of the shares issued and issuable upon conversion of
the Series B preferred stock and exercise of the related warrants for
at least 90 days;
-19-
<PAGE>
. we have listed the common stock on a national market or exchange for
at least the 30 trading days prior to this conversion; and
. we have, from the date of issuance through the date we deliver the
notice of our election to convert, timely delivered the shares of
common stock upon conversion of the Series B preferred stock.
Redemption in Lieu of Conversion
We may elect to redeem shares of Series B preferred stock submitted for
conversion, provided that we have given an appropriate notice to the holders of
the shares and provided that the conversion price for the shares is less than
the market price on the issuance date. The redemption price per share in this
case will be equal to the product of the applicable conversion rate and the
closing bid price on the conversion date.
We may only elect to redeem in lieu of conversion if we have given proper
notice to the holders of the Series B preferred stock, specifying the maximum
number of shares to be redeemed and confirming the time period during which we
may redeem the shares. If we fail to redeem the shares in accordance with this
provision, we may not submit another notice of our election to redeem in lieu of
conversion without the prior written consent of the holders of at least two-
thirds of the shares of Series B preferred stock then outstanding.
Redemption at Our Election
We have the right, from the third anniversary of the effective date of the
registration statement for the applicable shares of Series B preferred stock
through May 18, 2004, to require the redemption of all outstanding shares of the
Series B preferred stock at a redemption price of 115% of the liquidation
amount. The conditions to our right to redeem the shares include, among others:
. we have maintained the effectiveness of a registration statement
covering the resale of all of the shares issued or issuable upon
conversion of the Series B preferred stock and exercise of the related
warrants for at least 30 trading days;
. we have listed the common stock on a national market or exchange for
at least the 30 trading days prior to the conversion; and
. we have, from the date of issuance through the date we deliver the
notice of our intention to redeem, timely delivered the shares of
common stock upon conversion of the Series B preferred stock by the
holders of the Series B preferred stock.
Reservation of Shares
To ensure that the Series B preferred stock and the warrants can at all
times be properly converted, while shares of the Series B preferred stock are
outstanding, we are required to reserve a number of shares of common stock equal
to the sum of
. at least 200% of the number of shares of common stock for which the
Series B preferred stock is convertible; plus
. at least 100% of the number of shares of common stock for which the
warrants may be exercised.
Liquidation, Dissolution or Winding Up
In the event of our liquidation, dissolution or winding up, whether
voluntary or involuntary, the holders of Series B preferred stock are entitled
to receive, out of our assets, a liquidation amount per share equal to the total
of:
. $10,000; plus
-20-
<PAGE>
. any stock dividends that have accrued but have not been paid; plus
. any default interest, equal to 15% per year, for dividends which we
elected to pay in cash but failed to pay on a timely basis.
Amendment to the Certificate of Designations
We may not change the Certificate of Designations relating to the Series B
preferred stock without the affirmative vote of at least two-thirds of the
holders of the outstanding shares of Series B preferred stock.
Restrictions on Transfer
There will be no more than seven holders of the Series B preferred stock at
any one time. Therefore, with one limited exception described below, the selling
stockholders may not transfer their shares of the Series B preferred stock,
except to (1) an existing holder of the Series B preferred stock, or (2) to any
transferee who obtains all the shares of the transferor. As an exception to the
restriction on transfer, HFTP Investment, L.L.C., one of the initial recipients
of the Series B preferred stock, has the right to transfer all or any portion of
its shares to one transferee, which must be either (a) one of its affiliates,
(b) a holder of the Series B preferred stock, or (c) an affiliate of a
holder.
Warrants
Previously Issued Options and Warrants
In connection with the issuance of the Series A preferred stock, we issued
warrants for the purchase of our common stock. As of January 25, 2000, warrants
to purchase 208,251 shares of common stock were outstanding. In addition, as of
January 25, 2000, there were options to purchase 2,783,000 shares of our common
stock outstanding, which were issued in connection with our employee stock
option plans. We describe these options and warrants further in our Registration
Statement on Form SB-2 (Reg. No. 333-41611).
Warrants Issued with the Series B Preferred Stock
Under the securities purchase agreement, along with the Series B preferred
stock, we issued warrants to the selling stockholders. The warrants issued on
May 18, 2000 in connection with the Series B preferred stock expire on May 18,
2004. Any warrants which we may issue in the future in connection with the
Series B preferred stock will expire five years after their issuance.
Vesting Schedule
The warrants entitle the holders to 200 shares of common stock for (1) each
issued share of the Series B preferred stock they hold on the applicable vesting
date and (2) each share of the Series B preferred stock they have converted
prior to the applicable vesting date at the Fixed Conversion Price. The vesting
dates of the warrants are:
. September 15, 1999
. March 13, 2000
. September 9, 2000.
Exercise Price
The exercise price of each warrant is 125% of the average of the closing
bid prices of our common stock for the five consecutive trading days immediately
preceding the applicable vesting date. The warrants that vested
-21-
<PAGE>
on September 15, 1999 have an exercise price of $3.65625 per share, and would
result in the issuance of an additional 80,000 shares of common stock upon
exercise.
The exercise price of the warrants is subject to customary anti-dilution
adjustments upon the issuance of common stock for a per-share price less than
the exercise price in effect immediately prior to issuance, the subdivision or
combination of the common stock, our distribution of assets to holders of common
stock, and other similar events.
Cashless Exercise Option
If we do not properly register the common stock to be issued in exchange
for the warrants for resale, or if a triggering event has occurred, the warrant
holders are entitled to a "cashless exercise" option. This option entitles the
warrant holders to elect to receive fewer shares of common stock without paying
the cash exercise price. The number of shares to be issued under this option is
to be determined by the following formula:
. The product of (a) the total number of shares to which the warrant
holder is entitled and (b) the last reported sale price of our common
stock on the date preceding the date of the exercise notice, minus
. the product of (a) the total number of shares to which the warrant
holder is entitled and (b) the exercise price of the warrant, divided
by
. the last reported sale price of our common stock on the date preceding
the date of the exercise notice.
Covenants
We made customary covenants with respect to the warrants. These covenants
include, among others:
. the warrants, and any common stock to be issued upon exercise of the
warrants, are and will be duly authorized and validly issued;
. we will reserve at least 100% of the number of shares of common stock
issuable upon exercise of the warrants;
. we will list the common stock issuable upon exercise of the warrants
on each national securities exchange or automated quotation system on
which our common stock is then issued; and
. we will act in good faith in carrying out the provisions of the
warrants.
Amendment
We may amend the provisions of the warrants only after we obtain the
written consent of warrant holders representing a majority of the shares of
common stock issuable upon exercise of the warrants then outstanding. However,
we may not increase the exercise price of the warrants or decrease the amount of
common stock issuable upon exercise of any warrant without the written consent
of the holder of the warrant.
EXPERTS AND LEGAL MATTERS
Our financial statements for the years ended December 31, 1998 and December
31, 1997, which are incorporated into this prospectus by reference, were audited
by Clancy & Co., P.L.L.C., independent auditors, as set forth in their report
within the financial statements and incorporated into this prospectus by
reference. The financial statements are incorporated into this prospectus by
reference in reliance upon the reports given upon the authority of the auditors
as experts in accounting and auditing.
-22-
<PAGE>
Legal matters will be passed upon by Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, 333 W. Wacker Drive, Suite 2700, Chicago, Illinois 60606.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information which we incorporated by reference
is considered to be a part of this prospectus, and later information that we
file with the SEC will automatically update and supersede this information. The
following documents, which we have filed with the SEC, are incorporated into
this prospectus by reference:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
4. Our Quarterly Report on Form 10-Q for the quarter ended September 30,
1999;
5. Our Current Report on Form 8-K filed on February 9, 1999 regarding the
formation of Medcareonline.com, Inc.;
6. Our Current Report on Form 8-K, as amended, originally filed on May
17, 1999 regarding the change in our certifying accountants;
7. Our Current Report on Form 8-K, as amended, originally filed June 2,
1999 regarding the issuance of the Series B preferred stock and the
warrants;
8. Our Proxy Statement dated June 4, 1999 regarding our 1999 Annual
Meeting of Stockholders; and
9. All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since December 31, 1998.
In addition, all documents we file pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, after the date of this
prospectus and before the termination of this offering will be deemed to be
incorporated by reference into this prospectus and to be a part of this
prospectus from the date of filing these documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or any
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or replaces that statement.
We will provide to each person, including any beneficial owner, to whom
this prospectus is delivered a copy of any document incorporated by reference,
other than exhibits to documents not specifically incorporated by reference, at
no cost, upon the oral or written request of any person. In addition, we will
furnish you with a copy of our most recent annual report, at no cost, on oral or
written request. You may direct any requests for these documents to us at
Medcare Technologies, Inc., 1515 West 22nd Avenue, Suite 1210, Oak Brook,
Illinois 60521, (630) 472-5300, Attention: Jeffrey S. Aronin.
AVAILABLE INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 we filed
with the SEC under the Securities Act.
-23-
<PAGE>
We are subject to the informational requirements of the Exchange Act. In
accordance with the Exchange Act, we file reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the Public Reference Room of the SEC at:
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
and at the following regional offices of the SEC:
Midwest Regional Office
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511
Northwest Regional Office
7 World Trade Center
Suite 1300
New York, New York 10048
Copies of our filings under the Exchange Act can also be obtained at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-
0330 for further information. Reports, proxy statements and other information
filed with the SEC is also available at the SEC's site on the World Wide Web at
http://www.sec.gov.
FORWARD-LOOKING STATEMENTS
We have made statements in this prospectus and the documents we incorporate
by reference that are considered "forward-looking statements" within the meaning
of the Exchange Act. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," variations of these words and similar
expressions are intended to identify forward looking statements. These
statements are based on our current expectations, assumptions and projections
about the healthcare industry and are not guarantees of future performance.
Therefore, actual events and results are subject to risks, uncertainties and
other important factors that could cause our actual performance to differ
materially from that expressed or forecasted in the forward looking statements.
These risks, uncertainties and factors include:
. the effect of changing economic conditions;
. conditions in the overall healthcare market;
. the impact of new healthcare legislation;
. risks associated with product demand and market acceptance risks;
. the impact of competitive products and pricing;
. delays in new product development and technological risks; and
. other risk factors identified in this prospectus.
-24-
<PAGE>
INDEMNIFICATION
We have indemnified all of our officers, directors and controlling persons
against all liabilities from the sale of securities which might arise under the
Securities Act other than as stated under Delaware law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to these persons pursuant to the foregoing provisions, we have been
informed that, in the opinion of the SEC, this indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
-25-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses relating to this registration, other than underwriting
discounts and commissions, if any, will be borne by the registrant. The
following table shows the amount of these expenses in connection with this
registration.
<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Securities and Exchange Commission Registration Fee $1,951
Estimated Legal Fees and Expenses 500
Printing and Engraving Expenses 500
Miscellaneous Expenses 2,500
------
Total $5,451
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The officers and directors of the registrant are indemnified as provided
under the Delaware General Corporation Law. No additional indemnification has
been authorized.
ITEM 16. EXHIBITS
Exhibit Description
- ------- -----------
3. Articles of Incorporation and Bylaws
3a. Articles of Incorporation and Amendments **
3b. Bylaws **
4. Series B Preferred Stock Agreements*
4a. Certificate of Designation*
4b. Securities Purchase Agreement*
4c. Registration Rights Agreement*
4d. Form of Warrant*
4e. Escrow Agreement*
5. Opinion re Legality
5a. Opinion of Counsel regarding Registration****
10. Material Contracts
10a. Certificate of Designation*
10b. Subscription Agreement*
10c. Nine-Month Warrant*
10d. Twelve-Month Warrant*
10e. Fifteen-Month Warrant*
10f. Preferred Warrants*
10g. Registration Rights*
10h. Instructions to Transfer Agent*
10i. Agreement and Amendment*
10j. Agreement and Amendment for Queensway Financial Holdings
Limited*
10k. Three-Month Warrant*
10l. Swartz Warrant*
10m. Program Management Agreement with Amendment*
<PAGE>
10n. Employment and Stock Agreement, dated as of December 9, 1998
between Medcare Technologies, Inc. and Jeffrey S. Aronin***
10o. Sublease dated as of December 31, 1997 between Medcare
Technologies, Inc. and Delta Dental Association***
10p. Stock Option Plan 1995*
10q. Stock Option Plan 1996*
10r. Stock Option Plan 1997 -- $4.50 options*
10s. Stock Option Plan 1997 -- $6.50 options*
10t. Stock Option Plan 1998***
10u. Stock Option Plan 1999***
16. Letter from the Former Accountant*
23. Consent of Experts and Counsel
23a. Consent of Independent Auditor
23b. Consent of Counsel (included in Exhibit 5a)****
27. Financial Data Schedule**
* Incorporated by reference to Form SB-2, File number 333-41611
** Incorporated by reference to Form 10-KSB for the year ended December 31, 1997
***Incorporated by reference to Form 10-KSB for the year ended December 31, 1998
**** Previously filed with this registration statement
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
this indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
these liabilities, other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding, is asserted by a director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether the indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
this issue.
The registrant will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to include
any additional or changed material information on the plan of distribution.
For the purposes of determining liability under the Securities Act, the
registrant will treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
The registrant will file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Oak Brook, State of
Illinois on January 25, 2000.
MEDCARE TECHNOLOGIES, INC.
/s/ Jeffrey S. Aronin
---------------------
Jeffrey S. Aronin
CEO, President and Director (principal executive
officer)
/s/ Alan Jagiello
-----------------
Alan Jagiello
CFO, Treasurer, Secretary and Director (principal
financial and accounting officer)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jeffrey S. Aronin and Alan Jagiello and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him, and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including post-effective
amendments, to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the SEC,
granting unto said attorneys-in-fact and agents, and each of them full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on January 25, 2000, by the following
persons in the capacities indicated:
<TABLE>
<CAPTION>
Signatures Capacity
------------------ --------------
<S> <C>
/s/ Jeffrey S. Aronin President, Chief Executive Officer and Director
- -------------------------------------------- (principal executive officer)
Jeffrey S. Aronin
/s/ Alan P. Jagiello Chief Financial Officer, Secretary, Treasurer and
- -------------------------------------------- Director (principal financial and accounting officer)
Alan P. Jagiello
/s/ Gregory Wujek Vice President of Managed Care and Director
- --------------------------------------------
Gregory Wujek
- -------------------------------------------- Director
Dr. Michael M. Blue
- -------------------------------------------- Director
Harmel S. Rayat
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
3. Articles of Incorporation and Bylaws
3a. Articles of Incorporation and Amendments**
3b. Bylaws**
4. Series B Preferred Stock Agreements*
4a. Certificate of Designation*
4b. Securities Purchase Agreement*
4c. Registration Rights Agreement*
4d. Form of Warrant*
4e. Escrow Agreement*
5. Opinion re Legality
5a. Opinion of Counsel regarding Registration****
10. Material Contracts
10a. Certificate of Designation*
10b. Subscription Agreement*
10c. Nine-Month Warrant*
10d. Twelve-Month Warrant*
10e. Fifteen-Month Warrant*
10f. Preferred Warrants*
10g. Registration Rights*
10h. Instructions to Transfer Agent*
10i. Agreement and Amendment*
10j. Agreement and Amendment for Queensway Financial Holdings Limited*
10k. Three-Month Warrant*
10l. Swartz Warrant*
10m. Program Management Agreement with Amendment*
10n. Employment and Stock Agreement, dated as of December 9, 1998
between Medcare Technologies, Inc. and Jeffrey S. Aronin***
10o. Sublease dated as of December 31, 1997 between Medcare
Technologies, Inc. and Delta Dental Association***
10p. Stock Option Plan 1995*
10q. Stock Option Plan 1996*
10r. Stock Option Plan 1997 -- $4.50 options*
10s. Stock Option Plan 1997 -- $6.50 options*
10t. Stock Option Plan 1998***
10u. Stock Option Plan 1999***
16. Letter from the Former Accountant*
23. Consent of Experts and Counsel
23a. Consent of Independent Auditor
23b. Consent of Counsel (included in Exhibit 5a)****
27. Financial Data Schedule**
* Incorporated by reference to Form SB-2, File number 333-41611
** Incorporated by reference to Form 10-KSB for the year ended December 31, 1997
***Incorporated by reference to Form 10-KSB for the year ended December 31, 1998
**** Previously filed with this registration statement
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
As independent auditors, we hereby consent to the inclusion in this Form
S-3 our reports, relating to the consolidated financial statements of Medcare
Technologies, Inc. for the years ended December 31, 1998 and 1997 and any
amendments thereto. We also consent to the reference to this firm under the
heading "Experts" in this Registration Statement.
/s/ Clancy and Co.
------------------
CLANCY AND CO., P.L.L.C.
Certified Public Accountants
January 25, 2000
