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Prospectus Supplement filed under Rule 424(b)3
in connection with Registration No. 333-90729
PROSPECTUS SUPPLEMENT NO. 2 DATED August 31, 2000
(To Prospectus Dated January 27, 2000)
MedCare Technologies, Inc.
2,358,103 shares of common stock, par value $.001 per share (Supplement
to the 1,054,085 shares originally set forth in the Prospectus and 1,507,975
shares set forth in Prospectus Supplement No. 1), of which 1,321,650 shares
already have been sold under the Prospectus, as supplemented, and are not
included in the 2,358,103 shares shown as being offered by this Prospectus
Supplement)
This Prospectus Supplement supplements and supersedes the information
contained in the Prospectus, dated January 27, 2000 (the "Prospectus") relating
to the offer and sale by certain selling security holders of up to 1,054,085
shares of common stock of MedCare Technologies, Inc., which Prospectus was
supplemented and superseded by the information contained in Prospectus
Supplement No. 1, dated April 20, 2000 (the "Prospectus Supplement No. 1")
relating to the offer and sale by certain selling security holders of up to
1,507,975 shares of common stock of MedCare Technologies, Inc., which does not
include 250,255 shares sold by the selling security holders under the initial
Prospectus prior to April 20, 2000. Of the 1,507,975 shares set forth in the
Prospectus Supplement No. 1, 1,071,395 shares already have been sold and are not
included in the 2,358,103 shares listed as being offered by this Prospectus
Supplement. The 2,358,103 shares shown as being offered by this Prospectus
Supplement includes 436,580 shares which were included in the original
Prospectus and Prospectus Supplement No. 1 but which have not yet been sold
under the Prospectus and Prospectus Supplement No. 1. This Prospectus
Supplement is not complete without, and may not be delivered or utilized except
in connection with, the Prospectus, including any amendments or supplements
thereto. The information set forth in this Prospectus Supplement amends,
supplements and supersedes the relevant information on the cover page and the
Selling Stockholders section of the Prospectus as supplemented.
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.
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
August 31, 2000 upon conversion of all of the Series B preferred stock
outstanding on August 31, 2000 and exercise of the warrants which vest within 60
days of August 31, 2000. This number includes shares of common stock that were
payable as dividends on the outstanding Series B preferred stock as of August
31, 2000. 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 $.425. 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 2,358,103 shares of common
stock we are offering through this prospectus. This
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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 sold pursuant to the prospectus.
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 of which, as of August
31, 2000, 1,321,650 shares had been sold pursuant to the prospectus as
supplemented. In accordance with Rule 429 of Regulation C of the Securities Act
of 1933, we are presenting a combined prospectus.
<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 August 31, 2000 Prospectus Offering
---- ----------- --------------- ---------- --------
<S> <C> <C> <C> <C>
HFTP Investment L.L.C. (1) 43 1,150,300 1,150,300 0
Leonardo, L.P. (2) 24 645,028 645,028 0
GAM Arbitrage Investments, Inc. (2) 3.5 93,829 93,829 0
AG Super Fund International Partners
L.P. (2) 3.5 93,829 93,829 0
Raphael, L.P. (2) 5 133,556 133,556 0
Ramius Fund, Ltd.(3) 9 241,561 241,561 0
--- --------- --------- -
TOTAL 88 2,358,103 2,358,103 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 August 31,
2000 include 60,200 shares of Common Stock issuable upon exercise of the
warrants that were vested as of August 31, 2000 or will vest within 60 days as
of August 31, 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
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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 August 31, 2000 include 53,600 shares of common stock
issuable upon exercise of the warrants that were vested as of August 31, 2000 or
will vest within 60 days as of August 31, 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 August 31, 2000 include 13,400 shares of common stock
issuable upon exercise of the warrants that were vested as of August 31, 2000 or
will vest within 60 days as of August 31, 2000.
This Prospectus Supplement is dated August 31, 2000
