DRKOOP COM INC, S-3/A, 2000-12-29

DRKOOP COM INC
S-3/A, 2000-12-29
MISC HEALTH & ALLIED SERVICES, NEC

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As filed with the Securities and Exchange Commission on December 29, 2000

Registration No. 333-50754
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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drkoop.com, Inc.
(Exact name of registrant as specified in its charter)

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<S> <C> <C>
Delaware 7375 74-2845054
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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7000 N. Mopac, Suite 400
Austin, Texas 78739
(512) 583-5667
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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Richard M. Rosenblatt
Chief Executive Officer
drkoop.com, Inc.
7000 N. Mopac, Suite 400
Austin, Texas 78739
(512) 583-5667
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copy to:
W. Alex Voxman, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071
(213) 485-1234

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend of 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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Maximum
Proposed Maximum Aggregate
Title of each class of Amount to be Offering Price Offering Amount of
Securities to be Registered Registered Per Share(1) Price(1) Registration Fee
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Common Stock ($0.001 par value).. 11,608,740 $0.69 $8,010,030 $2,114.65(2)
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(1) Estimated solely for the purpose of computing the amount of registration
fee, based on the average of the high and low prices for the common stock
for the registrant's common stock at $0.66 per share as reported on Nasdaq
National Market on November 21, 2000, in accordance with Rule 457(c)
promulgated under the Securities Act of 1933.

(2) Fee of $2,114.65 paid in connection with original registration statement
filed on November 27, 2000.

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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 Commission, acting pursuant to said
Section 8(a), may determine.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED DECEMBER 29, 2000

PROSPECTUS

11,608,740 Shares

drkoop.com, Inc.

Common Stock

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This prospectus relates to up to 11,608,740 shares of our common stock that
the selling stockholders named in this prospectus may offer for resale from
time to time. Of the 11,608,740 shares of our common stock that we are
registering:

. 2,483,562 shares are issuable upon the exercise of warrants to purchase
common stock granted to Infoseek Corporation; and

. 9,125,178 shares are shares of common stock owned by the investors listed
under the selling stockholders table on page 20 of this prospectus.

The registration of the shares does not necessarily mean that any of the
selling stockholders will offer or sell their shares.

We are not offering or selling any shares of our common stock pursuant to
this prospectus. We will not receive any of the proceeds from the sale by the
selling stockholders of the shares of common stock. We may receive proceeds
from the exercise of the warrants by investors. We will bear the expenses of
the offering of the common stock, except that the selling stockholders will pay
any applicable underwriting discounts, brokerage fees or commissions and
transfer taxes, as well as the fees and disbursements of their counsel and
advisors.

Our common stock is traded on the Nasdaq National Market under the symbol
"KOOP." On December 28, 2000, the last reported sale price of our common stock
on the Nasdaq National Market was $0.19 per share.

Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 6.

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

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The date of this prospectus is December , 2000
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TABLE OF CONTENTS

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Page
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THE COMPANY................................................................ 1

RISK FACTORS............................................................... 6

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.......................... 19

USE OF PROCEEDS............................................................ 20

SELLING STOCKHOLDERS....................................................... 21

MATERIAL RELATIONSHIPS WITH SELLING STOCKHOLDERS........................... 23

PLAN OF DISTRIBUTION....................................................... 25

LEGAL MATTERS.............................................................. 27

EXPERTS.................................................................... 27

WHERE YOU CAN FIND MORE INFORMATION........................................ 27

INCORPORATION BY REFERENCE................................................. 28
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Conventions Which Apply to this Prospectus

References in this prospectus to "drkoop.com," "we," "our" and "us" refer to
drkoop.com, Inc., a Delaware corporation. drkoop.com, Inc. was incorporated as
a Texas corporation in July 1997 under the name Personal Medical Records, Inc.,
changed its name to Empower Health Corporation in April 1998 and reincorporated
as drkoop.com, Inc., a Delaware corporation, in March 1999. "drkoop.com," "Dr.
Koop's Community" and "Dr. Koop's Personal Medical Records" are trademarks of
ours. Each trademark, trade name or service mark of any other company appearing
in this prospectus belongs to its holder.
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THE COMPANY

drkoop.com

The Company

drkoop.com, Inc. operates an Internet-based consumer health network. We
believe that health-concerned consumers are highly motivated in their need to
find accurate information and to act on it. We aim to establish the drkoop.com
network as the most trusted source of consumer health information and services
on the Internet. The network consists of two primary types of services:

. a consumer-focused interactive website, www.drkoop.com and
www.drdrew.com, which provides users with comprehensive health
information; and

. affiliate relationships with Internet portals, healthcare organizations
and traditional media outlets, in which the affiliate's customers are
provided easy access to the information and services offered on
www.drkoop.com.

Our network provides consumers with a variety of health content, including
information on acute ailments, chronic illnesses, nutrition, fitness and
wellness, and access to medical databases, interactive tools, publications and
real-time medical news. In addition, we offer eleven online communities
consisting of 50 hosted chat support groups. Our support groups allow users to
share experiences with others who face, or have faced, similar health
conditions, allowing the collective community to benefit each member. We are
also developing additional features to expand the functionality of our website.

Principal Offices

Our principal executive offices are located at 7000 N. Mopac, Suite 400,
Austin, Texas 78739, and our telephone number is (512) 583-5667. We also have
offices located at 225 Arizona Avenue, Suite 2501, Santa Monica, CA 90401. Our
websites are www.drkoop.com and www.drdrew.com. Our websites shall not be
deemed incorporated by reference in this prospectus.

Recent Developments

Financing Transaction

In August 2000, we entered into a series of financing transactions which
permitted us to raise a significant amount of new capital for drkoop.com from
the issuance of preferred stock and warrants. An element of these transactions
included a change in control of our company, including the appointment of new
directors constituting a majority of our board of directors and a new executive
management team. The following summaries of our preferred stock and of
agreements that we have entered into are qualified by references to the
agreements and certificate of designation of our preferred stock which we filed
as exhibits to our Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 1, 2000 and to our Quarterly Report on Form
10-Q for the quarter ended September 30, 2000. We urge our investors to review
the full text of those documents which define the rights of the preferred stock
and warrant investors.

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General

The August financing consisted of a private placement of $27.5 million of
our preferred stock and warrants to accredited investors. We completed the
private placement in two parts. We issued $20.0 million of preferred stock on
August 22, 2000, and we issued $7.5 million of preferred stock on August 25,
2000. Only accredited investors participated in the offering which we made by
way of a private placement exempt from registration under the Securities Act.
Commonwealth Associates, L.P. acted as the placement agent in the private
placement. The 2,750,000 shares of preferred stock issued in the private
placement are initially convertible into 78,571,428 shares of our common stock
reflecting a conversion price of $0.35 per share. This conversion price is
subject to adjustments for dilutive issuances and other events.

In connection with the private placement, we hired a new management team,
which is headed by Richard M. Rosenblatt, our new Chief Executive Officer. Our
new management team, Prime Ventures, LLC (a venture capital firm specializing
in investments in Internet and technology companies that is also managed by
members of our new management team) and certain members and associates of Prime
Ventures, LLC (who we refer to as the Prime Investors) purchased approximately
$6.0 million of the preferred stock in this private placement.

In connection with the private placement and the hiring of the new
management team, we also issued:

. options to purchase 13,371,000 shares for $0.35 per share to members of
our new management team and certain other new employees,

. warrants to purchase 2,721,431 shares for $0.35 per share to the Prime
Investors (which we refer to as the Prime Investor Warrants), and

. warrants to purchase 3,629,000 shares for a purchase price of $0.35 per
share to Prime Ventures, LLC (which we refer to as the Prime Warrants).

The placement agent received warrants and other compensation for placing the
securities. Please see "Compensation to Placement Agent; Repayment of Bridge
Loan and Other Transaction Expenses," for more details.

Preferred Stock

The preferred stock, which we issued at a price of $10.00 per share, has a
liquidation preference of $15.00 per share, plus accrued and unpaid dividends,
and is payable upon:

. the liquidation or dissolution of drkoop.com,

. the merger of drkoop.com where the stockholders immediately prior to the
merger no longer retain more than 50% of the voting control, or

. the sale of all or substantially all of the assets of drkoop.com.

In the event of a merger or sale, we may, unilaterally and without action of
the holders of preferred stock, elect to pay the liquidation amount in shares
of our common stock instead of cash. The liquidation preference of $15.00 per
share of the preferred stock is payable to holders of record of the preferred
stock before any distribution to the holders of our common stock or any other
security that is junior to the preferred stock.

Certain of our directors, executive officers, and beneficial holders of 5%
or more of our common stock or their affiliates purchased shares of preferred
stock in this private placement as follows: (1) Prime Ventures, LLC, of which
Mr. Rosenblatt and Edward Cespedes, our President, are Managing Directors,
purchased 100,000 shares, (2) Highview Ventures, LLC, of which Mr. Rosenblatt
is the sole Managing Member,

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purchased 50,000 shares, (3) Vandeman Holdings LLC of which George Vandeman,
one of our directors, is the Managing Member, purchased 25,000 shares, (4)
Marshall S. Geller, one of our directors, purchased 50,000 shares, (5) Joseph
P. Wynne, one of our directors, purchased 500 shares, (6) ComVest Venture
Partners LP, purchased 150,000 shares, (7) Michael S. Falk purchased 25,000
shares, (8) RMC Capital, LLC and Robert Priddy purchased 200,000 shares, (9)
Edwin Cooperman, one of our directors, purchased 5,000 shares, (10) Interfase
Capital Partners IV, L.P., an affiliate of Scott J. Hyten, one of our
directors, purchased 200,000 shares, (11) each of Flynn Corporation and
Gallagher Corporation purchased 100,000 shares, and (12) J.F. Shea Co., Inc.
purchased 300,000 shares.

Each of the preferred stockholders may, at his or her option, convert each
share of his or her preferred stock, into common stock. The number of shares of
common stock into which the preferred stock is convertible is equal to the face
value of the preferred stock (i.e., $10.00 per share) divided by the conversion
price, initially $0.35 per share. The preferred stock will automatically
convert into shares of common stock at the then applicable conversion price if
we complete either a public offering or private placement of our common stock
raising gross proceeds of more than $25.0 million, in each case at a price per
share greater than $1.50 (as adjusted for stock splits, recapitalizations and
other similar events). In addition, the preferred stock will also automatically
convert into shares of common stock at the then applicable conversion price if
the closing bid price for our common stock has traded at twice the conversion
price for a period of 20 consecutive trading days, so long as our common stock
is trading on a national securities exchange or the Nasdaq Small Cap or
National Market and the shares issuable upon conversion of the preferred stock
are registered for resale under the Securities Act. The initial $0.35
conversion price of the preferred stock is subject to adjustment for stock
splits, recapitalizations and other similar structural events or in the event
we issue securities at a price per share less than the then current market
price of our common stock or the conversion price, subject to certain
exceptions in the certificate of designation of the preferred stock. In
addition, if our average closing bid price for our common stock for the 20
trading days preceding August 21, 2002 is less than the then applicable
conversion price, the conversion price will automatically be reset to such
lower price.

In November 2000, the Emerging Issues Task Force (EITF) reached a consensus
on EITF Issue No. 00-27, Application of EITF Issue No. 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios," to certain convertible securities. As a result
of this consensus, we will remeasure the beneficial conversion feature charge
recognized in the third quarter of 2000. We estimate the revised charge will
reduce the previously recorded charge to net loss attributable to common stock
by approximately $3 million.

Warrants

In the private placement, we also issued warrants to purchase an aggregate
of 6,142,857 shares of common stock (which we refer to as Agency Warrants) to
Commonwealth and the Prime Investor Warrants to purchase an aggregate of
2,721,426 shares of common stock to the Prime Investors. We also issued to
Prime the Prime Warrants to purchase an aggregate of 3,629,000 shares of common
stock. The Agency Warrants, the Prime Investor Warrants and the Prime Warrants
have an exercise price of $0.35 per share, subject to adjustments under certain
circumstances, including stock splits, recapitalizations and other similar
structural events or in the event we issue securities at a price per share less
than the then current market price of our common stock or the conversion price.
Each of the warrants has a five-year term. All of the Agency Warrants and the
Prime Investor Warrants are currently exercisable. The Prime Warrants are
currently exercisable for up to 25% of the shares of common stock underlying
the Prime Warrants and for up to an additional 25% of the shares of common
stock underlying the Prime Warrants on the first, second and third
anniversaries of the completion of the private placement.

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We issued the Prime Investor Warrants to certain of our executive officers,
new directors and beneficial owners of 5% or more of our common stock or their
affiliates, as follows: (1) warrants to purchase 285,714 shares of common stock
to Prime Ventures, LLC, of which Mr. Rosenblatt and Mr. Cespedes are Managing
Directors, (2) warrants to purchase 142,857 shares of common stock to Highview
Ventures, LLC, of which Mr. Rosenblatt is the sole Managing Member, (3)
warrants to purchase 1,142,857 shares of common stock to Mr. Geller and (4)
warrants to purchase 71,429 shares of common stock to Vandeman Holdings LLC, of
which Mr. Vandeman is the Managing Member.

Finally, in connection with the completion of the private placement, we
restructured the warrants we had previously issued to Commonwealth and an
affiliate in connection with a bridge loan and line of credit extended to us by
Commonwealth and its affiliate. These warrants (which we refer to as Bridge
Warrants) are now exercisable to purchase 14,785,714 shares of common stock for
an exercise price of $0.35 per share. They have a seven year term and became
exercisable November 1, 2000.

Compensation to Placement Agent; Repayment of Bridge Loan; Other
Transaction Expenses

In connection with the private placement, we agreed to:

. pay Commonwealth a cash fee equal to 7% of the gross proceeds resulting
from the sale of the preferred stock ($1,925,000 in total);

. issue to Commonwealth the Agency Warrant to purchase 6,142,857 shares of
common stock at an exercise price of $0.35 per share, subject to
adjustment;

. reimburse Commonwealth for expenses incurred by it in connection with the
private placement in an amount equal to $350,000; and

. pay Commonwealth an advisory fee of $600,000.

Under these arrangements, we paid an aggregate of $2,875,000 from the proceeds
of the private placement to Commonwealth and its affiliates, excluding the
amounts described below that we used to repay the outstanding balance under
loans previously extended to us by Commonwealth and an affiliate.

Prior to the private placement, Commonwealth and an affiliate provided us
with a $1.5 million bridge loan and a $3.0 million standby line of credit, of
which we had drawn $400,000. In connection with these loans, we issued warrants
to Commonwealth and its affiliate which are now exercisable to purchase
14,785,714 shares of common stock for at an exercise price of $0.35 per share.
We used proceeds from the private placement to repay in full all amounts owed
under the bridge loan and our $400,000 balance outstanding under our
$3.0 million line of credit, plus interest to the date of repayment.

We also agreed to pay the legal fees and expenses incurred by our new
management team and Prime Ventures, LLC in connection with the private
placement, up to a maximum of $75,000.

We have also engaged Commonwealth as a non-exclusive financial advisor in
connection with merger and acquisition transactions and have agreed to pay to
Commonwealth between 0.5% and 1.0% of the total consideration paid or received
by us in any merger and acquisition transaction identified by Commonwealth.

Registration Rights

We have entered into an Amended and Restated Registration Rights Agreement
with Commonwealth and the investors that acquired our preferred stock and
warrants in connection with the private placement. These investors obtained
securities in the transactions described above. Under this agreement, we are
obligated to register for resale the common stock underlying the preferred
stock, the

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Bridge Warrants, the Agency Warrants, the Prime Investor Warrants and the Prime
Warrants. We have filed a registration statement with respect to these
securities. The rights under this agreement are subject to rights granted
previously to other investors for privately placed securities issued by us,
including the selling stockholders under this prospectus.

Capitalization Following Private Placement

As of December 28, 2000, we had outstanding 39,589,902 shares of common
stock and, on an as converted basis, the preferred stock represents
approximately 66% of our outstanding common stock assuming no adjustment in the
conversion price. In addition to the 78,571,428 shares of common stock
currently issuable upon conversion of the preferred stock, our presently
outstanding common stock excludes:

. the 6,142,857 shares of common stock issuable upon exercise of the Agency
Warrants issued to Commonwealth in connection with the private placement;

. the 2,721,431 shares of common stock issuable upon exercise of the Prime
Investor Warrants issued to certain investors in connection with the
private placement;

. the 3,629,000 shares of common stock issuable upon exercise of the Prime
Warrants issued to Prime in connection with the private placement;

. the 13,371,000 shares of common stock issuable upon exercise of the
options granted to our new management team and certain other new
employees;

. the 14,785,714 shares issuable, for an exercise price of $0.35 per share,
upon exercise of the Bridge Warrants;

. the 19,369,095 shares of common stock issuable upon the exercise of the
options outstanding pursuant to stock-based employee compensation plans
or to consultants, of which 4,089,248 have exercise prices of $2.00 per
share and above and 15,279,847 have exercise prices below $2.00 per
share, which include options that are subject to future vesting
requirements;

. the 33,482 shares issuable upon the exercise of warrants held by a
stockholder of the company with an exercise price of $4.78 per share; and

. approximately 2,483,562 shares issuable upon exercise of warrants held by
a former business partner of which an estimated 1,663,562 have an
exercise price of $8.60 per share and 820,000 have an exercise price of
$1.25 per share.

Reverse Stock Split

On December 22, 2000, we filed a preliminary proxy statement with the SEC
with respect to a special meeting of our stockholders to vote on a ten for one
reverse stock split of our common stock. We are holding the special meeting
because our common stock has been trading at below $1.00 per share for more
than thirty consecutive days and we have received a letter from the Nasdaq
Market advising us that if we are unable to demonstrate compliance with the
Nasdaq Market's $1.00 minimum bid requirement for ten consecutive trading days
before February 22, 2001, our common stock would be de-listed at the close of
business on February 26, 2001. However, we may apply to Nasdaq for a hearing
and the de-listing will be stayed during the hearing period. Our Board of
Directors considered the potential harm to us of a delisting from Nasdaq, and
determined that a reverse stock split was the best way of achieving compliance
with Nasdaq's listing standards.

If the special meeting is held and the reverse stock split is approved, each
ten of our shares of common stock owned by a stockholder, including the selling
stockholders, would be exchanged for one new share. In addition, the conversion
price of our preferred stock would increase to $3.50 per share, and each share
of preferred stock would be convertible into 2.857 (instead of 28.57) shares of
our common stock. Similarly, the exercise price of our currently outstanding
warrants and options would increase by a factor of ten and the number of shares
issuable when the options and warrants are exercised would be reduced by a
factor of 10.

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RISK FACTORS

Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained or incorporated by reference in this
prospectus, before you decide to buy our common stock. If any of the following
risks actually occur, our business, results of operations or financial
condition could be materially adversely affected. In any such case, the market
price of our common stock could decline, and you may lose all or part of the
money you paid to buy our common stock.

Risks Related to Our Business

We have a limited operating history and have not attained profitability.

Since inception, we have incurred significant losses and negative cash flow,
and as of September 30, 2000 we had an accumulated deficit of $171.4 million.
We have not achieved profitability and expect to continue to incur operating
losses for the foreseeable future as we fund operating and capital expenditures
in the areas of expansion of our network, advertising, promotion of the
drkoop.com brand, development of the content of our website, sales and
marketing, and operating infrastructure. Our business model assumes that
consumers will be attracted to and use health information and related content
available on our online network which will, in turn, allow us the opportunity
to sell advertising and sponsorship designed to reach those consumers. Our
business model also assumes that those users will access important healthcare
needs through electronic commerce over the Internet and that local healthcare
participants and television stations will affiliate with us. This business
model is not yet proven and we cannot assure you that we will ever achieve or
sustain profitability or that our operating losses will not increase in the
future or be inconsistent with the expectations of the public market. We have
received a report from our independent auditors for our fiscal year ended
December 31, 1999 containing an explanatory paragraph that describes the
uncertainty as to our ability to continue as a going concern due to our
historical negative cash flow and because, as of the date they rendered their
opinion, we did not have access to sufficient committed capital to meet our
projected operating needs for at least the next twelve months.

Our business is difficult to evaluate because we have an extremely limited
operating history.

We were incorporated in July 1997 and launched our Internet operations in
July 1998. Accordingly, we have an extremely limited operating history. An
investor in our common stock must consider the risks, uncertainties, expenses
and difficulties frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving markets,
including the Internet market. These risks and difficulties include our ability
to:

. attract a larger audience of users to our Internet-based consumer health
network;

. increase awareness of our brand;

. strengthen user loyalty and increase the number of registered users;

. offer compelling online content, services and e-commerce opportunities;

. maintain our current, and develop new, affiliate relationships;

. attract a large number of advertisers who desire to reach our users;

. respond effectively to the offerings of competitive providers of health
information on the Internet;

. continue to develop and upgrade our technology;

. attract, retain and motivate qualified personnel; and

. develop new revenue streams in areas such as physician services, market
research, licensing of tools and other technology, and international
opportunities.

We also depend on the growing use of the Internet for advertising, commerce
and communication, and on general economic conditions. We cannot assure you
that our business strategy will be successful or that we will

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successfully address these risks or difficulties. If we fail to address
adequately any of these risks or difficulties our business would likely suffer.
Please see "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our financial statements, contained in the Form 10-K
and Form 10-Q incorporated by reference to this prospectus for detailed
information on our extremely limited operating history.

Our common stock may be delisted from the Nasdaq National Market.

Our Board of Directors considered the potential harm to us of a delisting
from Nasdaq, and determined that a reverse stock split was the best way of
achieving compliance with Nasdaq's listing standards. However, it is possible
that our stockholders may vote against the reverse stock split. In addition,
even if the reverse stock split is approved, we cannot predict the effect of
the reverse stock split on the market price for our common stock. The history
of similar stock split combinations for companies in like circumstances is
varied. It is possible that the market price per new share of our common stock
after the reverse stock split will not rise in proportion to the reduction in
the number of old shares of our common stock and may not remain in excess of
the $1.00 minimum bid price required by Nasdaq or otherwise meet the
requirements of Nasdaq for coninued inclusion for trading on the Nasdaq Market.
If a delisting were to occur, our common stock would trade on the OTC Bulletin
Board or in the "pink sheets" maintained by the National Quotation Bureau, Inc.
Such alternatives are generally considered to be less efficient markets, and
our stock price may be adversely impacted as a result.

We currently have litigation pending against us and cannot predict the outcome
of such litigation.

We are currently aware of several lawsuits filed against us. Eleven of these
lawsuits consisted of substantially-identical class action lawsuits alleging
violations of federal securities laws which were consolidated into a single
action which is pending in federal court in Austin, TX. We believe that the
claims alleged in these lawsuits are without merit and intend to defend the
lawsuits vigorously. In relation to the class action lawsuits, our counsel has
received a letter from a representative of a regional office of the SEC stating
that the SEC is investigating the events and circumstances surrounding the
allegations raised in the lawsuits and asking that we voluntarily provide the
SEC with information regarding such events and circumstances. The SEC letter
also states that the investigation should not be construed as an indication
that any violations have occurred. In addition, we have received a letter
demanding that we initiate a derivative action asserting various claims that
the letter alleges that we have against certain of our present and former
officers and directors for alleged breaches of fiduciary duty and other alleged
wrongdoing. As required under applicable law, our board of directors is
currently evaluating the alleged claims identified in the letter. In addition,
our counsel has received a letter from an attorney representing one of the
purchasers of a convertible promissory note issued by us asserts a claim for
$208,000 based on the allegation that the purchaser was misinformed as to the
length of the holding period upon conversion of the note into our common stock.

We cannot predict the outcome of the litigation or extent to which the costs
of defense and any settlement or award will be covered by our insurance
policies. For more information, please see Part II, Item 1 of our quarterly
report on Form 10-Q for the period ended September 30, 2000 incorporated by
reference to this prospectus.

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Our business is changing rapidly, which could cause our quarterly operating
results to vary and our stock price to fluctuate.

Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. If we
have a shortfall in revenues in relation to our expenses, or if our expenses
precede increased revenues, then our business would suffer and we may not be
able to finance our growth plans for our business or to pay our expenses in a
timely manner. This would likely affect the market price of our common stock in
a manner which may be unrelated to our long-term operating performance. These
conditions have existed in the quarter ended September 30, 2000.

Important factors which could cause our results to fluctuate materially
include:

. our ability to attract and retain users;

. our ability to attract and retain advertisers and sponsors and maintain
advertiser and sponsor satisfaction;

. the availability of sufficient capital to fund our business plan;

. traffic levels on our Internet site;

. our ability to attract and retain customers and maintain customer
satisfaction for our existing and future e-commerce offerings;

. new Internet sites, services or products introduced by us or our
competitors;

. the level of Internet and other online services usage;

. our ability to upgrade and develop our systems and infrastructure and
attract new personnel in a timely and effective manner;

. our ability to develop new revenue streams;

. our ability to successfully integrate operations and technologies from
any acquisitions, joint ventures or other business combinations or
investments;

. technical difficulties or system unavailability affecting the operation
of our website; and

. our ability to attract new business partners, many of whom have become
unsure of the company's long term viability based on recent adverse press
coverage.

Our revenues for the foreseeable future will remain principally dependent on
user traffic levels, and advertising and sponsorship activity. To a lesser
extent we will also be dependent on the further development of revenue streams
related to e-commerce activities, physician services, market research, sales of
interactive tools and similar technology products and the level of affiliate
subscriptions in our domestic and international content partner programs. Such
future revenues are difficult to forecast due to, among other things, the
involvement of third parties and the time lag in receiving sales data and
simply because these are all new, developing businesses. In addition, we plan
to increase our sales and marketing operations, obtain broader distribution for
our service, expand and develop content and upgrade and enhance our technology
and infrastructure development in order to support our growth.

Many of the expenses associated with these activities--for example,
personnel costs, and technology and infrastructure costs--are relatively fixed
in the short-term. We have endeavored over the past several months to reduce
the cost of operating our business. However, we may be unable to adjust
spending quickly enough to offset any unexpected revenue or capital shortfall,
in which case our results of operations and liquidity would suffer materially.

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We must establish, maintain and strengthen our brand in order to attract users
to our network and generate revenue from existing and new businesses.

In order to expand our audience of users and increase our online traffic, we
must establish, maintain and strengthen our brand. For us to be successful in
establishing our brand, healthcare consumers must perceive us as a trusted
source of health information, and advertisers, merchants and manufacturers must
perceive us as an effective marketing and sales channel for their products and
services. In addition, this community must also view us as financially stable.
If our marketing efforts are not productive or if we cannot strengthen our
brand, our website would receive a lower level of user traffic and we may
experience a decline in the number of advertisers, content providers and
sponsors who support our website as a result. In addition, a key element of our
strategy to establish, maintain and strengthen our brand is to encourage
consumers to associate us with Dr. C. Everett Koop. We believe that consumers
consider Dr. C. Everett Koop to be a trustworthy and credible leader in the
healthcare field, although at times he has been at the center of controversy on
various healthcare- related issues. We cannot assure you, however, that Dr. C.
Everett Koop will maintain this reputation, and any damage to his reputation
may reduce the commercial viability of our brand. In addition, if our
relationship with Dr. C. Everett Koop terminates for any reason, we would need
to change the name of our website and our business, and devote substantial
resources towards building a new marketing and brand strategy.

Key elements of our marketing and brand building strategies are dependent on
our relationship with Dr. C. Everett Koop.

A key element of our strategy is to associate our company with former U.S.
Surgeon General C. Everett Koop, Chairman of the Board of our company and a
person who we believe is viewed by consumers as a trustworthy and credible
leader in the healthcare field. We are a party to a Second Amended and Restated
Name and Likeness Agreement, dated June 22, 2000, with Dr. C. Everett Koop
which permits us to use his image, name and likeness in connection with health-
related services and products. Under this agreement, our use of Dr. C. Everett
Koop's name, image or likeness is subject to his prior written approval of the
resulting products, although he may not unreasonably withhold his approval. As
consideration for this extension of the Dr. Koop agreement and the previous
amendment completed in August 1999, we granted Dr. C. Everett Koop options to
purchase 214,400 shares of our common stock for an exercise price of $17.88 per
share and options to purchase 1,000 shares of our common stock at an exercise
price of $1.50 per share. The Dr. Koop agreement is exclusive and for a term of
seven years, subject to automatic renewal for additional five-year terms unless
it is terminated by either party not more than 270 and not less than 180 days
before the end of each term. If the Dr. Koop agreement is terminated other than
due to a breach or default by us, we have the right to use the name, image or
likeness of Dr. C. Everett Koop on a non-exclusive basis, potentially with
other users of his name and likeness. Additionally, we would have the right to
use the name, image or likeness of Dr. C. Everett Koop on an exclusive basis,
without competition from any other users of his name and likeness, with respect
to any products or services involving or related to Internet-based health
information, healthcare related software services and products, or electronic
commerce for a period of five (5) years after the termination of the Dr. Koop
agreement. Furthermore, Dr. C. Everett Koop's name, image or likeness may not
be licensed or otherwise conveyed to any direct competitor. If we default in
our obligations and do not promptly cure the default, Dr. C. Everett Koop may
terminate the Dr. Koop agreement, no rebranding period will apply and we would
lose all rights to use Dr. C. Everett Koop's name, image and likeness on the
90th day after such termination. Dr. C. Everett Koop may also terminate the Dr.
Koop agreement under certain circumstances upon a change in control of our
company to which Dr. Koop does not give his prior consent, in which event the
agreement automatically terminates and all rights in the Koop name granted
under the agreement immediately revert to Dr. Koop.

If our agreement with Dr. C. Everett Koop were terminated prior to the end
of its current term or not renewed at the end of its current term, we would
need to change the name of our website and devote substantial resources towards
building a new marketing and brand strategy. Without our ability to use
Dr. C. Everett Koop's name and likeness or Dr. C. Everett Koop's participation
in our business, we may not be able to continue to attract a significant amount
of user traffic and advertisers to our website. If Dr. C. Everett

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Koop ends his affiliation with our company, we could suffer a significant loss
of credibility and trust with health consumers as a result. Any development
that would cause Dr. C. Everett Koop to exercise his right to terminate his
relationship with our company or which otherwise would cause us to lose the
benefits of our affiliation with him would cause our business, results of
operation and financial condition to suffer. We do not maintain "key person"
life insurance for Dr. C. Everett Koop or any of our personnel.

We have recently materially amended our major contracts which may result in
reduced traffic to our website.

On April 9, 1999 we entered into agreements with Infoseek Corporation and
the Buena Vista Internet Group, a unit of The Walt Disney Company, under which
we became the exclusive provider of health and related content on three
websites of the GO Network. Under the Infoseek agreement, drkoop.com was also
the premier health content provider for ABCNews.com. The term of these
agreements was for three years and they called for the payment of an aggregate
of $57.9 million in cash over three years. We also issued warrants to acquire
775,000 shares of our common stock at an exercise price of $8.60 per share.
Additionally, on July 1, 1999 we entered into agreements with America Online,
Inc. under which we became the premier health content provider across five AOL
brands: America Online, CompuServe, AOL.com, Netscape Netcenter and Digital
City. The term of the agreement was for four years for cash payments of $89
million, plus fully vested and performance-based warrants to purchase shares of
our common stock. These transactions were premised on the assumption that the
traffic to our website we would obtain from these arrangements would permit us
to earn revenues greater than the payments made to them. These assumptions
proved to be untrue, and since we were unsuccessful in generating sufficient
revenues to offset these expenditures, we renegotiated these agreements. Both
of these agreements were renegotiated in April 2000. The terms of these
renegotiations are described generally in our Form 8-K dated April 25, 2000 and
our Form 10-Q for the quarter ended March 31, 2000 which are incorporated by
reference to this prospectus.

Due to our renegotiation, the carriage of our service on the GO.com sites
has ended. Our relationship with AOL, as renegotiated, no longer entitles us to
premier status and runs through April 2001. Traffic from AOL varies widely, but
can be significant particularly when AOL elects to promote or give prominent
placement to one of our interactive tools or to a news story or feature on our
website. We and AOL also remain party to a separate contract for which we were
paid $8.0 million in advance which imposes obligations on us relating to the
development of a personal medical record tool and which could be terminated if
our carriage agreement is terminated, resulting in potential financial
penalties.

In order to attract and retain our audience of users, we must provide health
content, tools and other features, which meet the changing demands of those
users.

One of our fundamental business objectives is for drkoop.com to be a trusted
source for health information and services. As with any form of media that
depends on consumer usage and interest, we have to provide editorial content
and other features such as interactive tools between a user and our website
that users demand in order to continue to attract and retain our audience of
users. We expect that competitive factors will create a continuing need for us
to retain, improve and add to our editorial content, interactive tools and
other features. We will not only have to expend significant funds and other
resources to continue to improve our network, but we must also properly
anticipate and respond to consumer preferences and demands. Competition for
content has increased the fees charged by high quality content providers and we
expect this trend to continue. The addition of new features will also require
that we continue to improve the technology underlying our website. These
requirements are significant, and we may fail to execute on them quickly and
efficiently. If we fail to expand the breadth of our offerings quickly, or
these offerings fail to achieve market acceptance, our business will suffer
significantly as a result of decreased consumer interest in our website and a
reduction in advertising and sponsorship revenues.

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Our business model relies on Internet advertising and sponsorship activities,
which may not be an effective or profitable marketing media and may create a
perceived conflict of interest issue.

Our future highly depends on increased use of the Internet as an advertising
medium. We expect to derive a substantial portion of our revenues from
advertising and sponsorships. The Internet advertising market is new and
rapidly evolving, and we cannot yet predict its effectiveness as compared to
traditional media advertising. As a result, demand and market acceptance for
Internet advertising solutions is uncertain. Most of our current or potential
advertising customers have little or no experience advertising over the
Internet and have allocated only a limited portion of their advertising budgets
to Internet advertising. The adoption of Internet advertising, particularly by
those entities that have historically relied upon traditional media for
advertising, requires the acceptance of a new way of conducting business,
exchanging information and advertising products and services. Such customers
may find Internet advertising to be less effective for promoting their products
and services relative to traditional advertising media. We cannot assure you
that the market for Internet advertising will continue to emerge or become
sustainable. If the market for Internet advertising fails to develop or
develops more slowly than we expect, then our ability to generate advertising
revenues would suffer. Further, our relationship with advertisers and sponsors
could be perceived as a conflict of interest by users regardless of the
safeguards put in place to segregate our editorial and commercial activities.

Companies use various pricing models to sell advertising on the Internet.
For example, some arrangements rely on the display of an "impression" to a
user, while others require that the user gain access to the advertiser's
website by clicking on a direct link located on our website. It is difficult to
predict which, if either, will emerge as the industry standard, thereby making
it difficult to project our future advertising rates and revenues. Our
advertising revenues could also suffer in the same way if we are unable to
adapt to new forms of Internet advertising. Moreover, "filter" software
programs have become available in the marketplace that filter, limit or prevent
advertising from being delivered to an Internet user's computer. Widespread
adoption of this software could halt the commercial viability of Internet
advertising.

In order to execute our growth plan we must attract, retain and motivate
highly skilled employees, and we face significant competition from other
Internet and new media companies in doing so.

Our ability to execute our growth plan and be successful also depends on our
continuing ability to attract, retain and motivate highly skilled employees. In
addition to Dr. C. Everett Koop, Chairman of the Board, we depend on the
continued services of key board members, our senior management and other
personnel. Competition for personnel throughout the Internet and related new-
media industry is intense. We have faced particular challenges recently in
light of our well publicized difficulty obtaining funds and capital, our low
stock price which has fallen below the exercise price of many of the stock
options granted to employees and a very competitive labor market for high
technology workers in Austin, Texas, where our headquarters are located.
Recently, a significant number of our employees have been terminated in cost
cutting efforts or voluntarily departed to pursue other opportunities. We may
be unable to retain our key employees or attract, assimilate or retain other
highly qualified employees in the future. We have from time to time in the past
experienced, and we expect to continue to experience in the future, difficulty
in hiring and retaining highly skilled employees with appropriate
qualifications. If we do not succeed in attracting new personnel or retaining
and motivating our current personnel, we will experience difficulty in
sustaining the level and quality of our business.

We depend on third-party relationships, many of which are short-term or
terminable, to generate advertising and provide us with content.

We depend, and will continue to depend, on a number of third-party
relationships to increase traffic on www.drkoop.com and www.drdrew.com and
generate advertising and other revenues. Outside parties on which we depend
include unrelated website operators that provide links to drkoop.com, providers
of health content and portals which provide us with the ability to operate and
run our websites. Many of our arrangements with third-party Internet sites and
other third-party service providers are not exclusive and are short-term or may
be

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terminated at any time by either party. We cannot assure you that third parties
regard our relationship with them as important to their own respective
businesses and operations. They may reassess their commitment to us at any time
in the future and may develop their own competitive services or products.

We intend to produce only a portion of the health content that will be found
on the drkoop.com network. We will rely on third-party organizations that have
the appropriate expertise, technical capability, name recognition, reputation
for integrity and willingness to syndicate product content for branding and
distribution by others. Several key content relationships are up for renewal in
the next year, including the name and likeness agreement with Dr. Nancy
Snyderman, dated May 31, 2001, and the content agreement for the Drug Checker
feature on our website. Failure to renew existing content relationships may
result in a competitor acquiring a key content provider on an exclusive basis.
This could make the drkoop.com network less attractive or useful for an end
user, which could reduce our advertising and e-commerce revenues.

We cannot assure you that we will be able to maintain relationships with
third parties that supply us with content, carriage, software or related
products or services that are crucial to our success, or that such content,
software, products or services will be able to sustain any third-party claims
or rights against their use. Also, we cannot assure you that the content,
software, products or services of those companies that provide access or links
to our website will achieve market acceptance or commercial success. As a
result, our existing relationships might not result in sustained business
partnerships, successful product or service offerings or the generation of
significant revenues for us.

If our ability to expand our network infrastructure is constrained in any way
we could lose customers and suffer damage to our operating results.

Presently, a relatively limited number of consumers use our website. We must
continue to expand and adapt our network infrastructure to accommodate
additional users, increased transaction volumes and changing consumer and
customer requirements. We may not be able to accurately project the rate or
timing of increases, if any, in the use of our website or to expand and upgrade
our systems and infrastructure to accommodate such increases. Our systems may
not accommodate increased use while maintaining acceptable overall performance.
Service lapses could cause our users to instead use the online services of our
competitors.

Many of our service agreements, such as those with our online community's
partners, contain performance standards. If we fail to meet these standards,
our customers could terminate their agreements with us or require that we
refund part or all of the license fees. The loss of any of our service
agreements and/or associated revenues would directly and significantly impact
our business. We may be unable to expand or adapt our network infrastructure to
meet additional demand or our customers' changing needs on a timely basis, at a
commercially reasonable cost, or at all.

We may have liability for information we provide on our website or which is
accessed from our website.

Because users of our website access health content and services relating to
a condition they may have or may distribute our content to others, third
parties may sue us for defamation, negligence, copyright or trademark
infringement, personal injury or other matters. We could also become liable if
confidential information is disclosed inappropriately. These types of claims
have been brought, sometimes successfully, against online services in the past.
Privacy concerns have also resulted in recent actions by the Federal Trade
Commission and other government agencies. Others could also sue us for the
content and services that are accessible from our website through links to
other websites or through content and materials that may be posted by our users
in chat rooms or bulletin boards. While our agreements, including those with
content providers, in some cases provide that we will be indemnified against
such liabilities, such indemnification, if available, may not be adequate. Our
insurance may not adequately protect us against these types of claims. Further,
our business is based on establishing the drkoop.com network as a trustworthy
and dependable provider of health information and services. Allegations of
impropriety, even if unfounded, could therefore damage our reputation and our
business.

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Any failure or inability to protect our intellectual property rights could
adversely affect our ability to establish our brand.

Our intellectual property is important to our business. We rely on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our intellectual property.
Registrations are pending for the trademark "drkoop.com," as well as other
services and trademarks which incorporate the Dr. Koop name. Our right to use
the Dr. Koop name is granted to us under an agreement with Dr. C. Everett Koop.
If we lose our right to use the Dr. Koop name, we would be forced to change our
corporate name and adopt a new domain name. These changes could confuse current
and potential customers and would adversely impact our business. We also rely
on a variety of technologies that are licensed from third parties, including
our database and Internet server software, which is used in the drkoop.com
website to perform key functions. These third-party licenses may not be
available to us on commercially reasonable terms in the future.

We do not expect to pay dividends on our common stock, and investors should
not buy our common stock expecting to receive dividends.

We have never declared or paid any cash dividends on our common stock. We
presently intend to retain future earnings, if any, to finance the expansion of
our business and do not expect to pay any dividends in the foreseeable future
except to the extent required by the terms of our preferred stock. Investors
should not purchase our common stock with the expectation of receiving
dividends.

Certain anti-takeover provisions in our charter and in our contracts could
delay or prevent an acquisition of our company, even if such an acquisition
would be beneficial to our stockholders.

Certain provisions of our certificate of incorporation, our bylaws, Delaware
law and material contracts to which we are party could make it more difficult
for a third party to acquire us, even if doing so might be beneficial to our
stockholders.

Specifically, Delaware corporate law and our amended and restated
certificate of incorporation and bylaws contain provisions that could delay,
defer or prevent a change in control of our company or our management. These
provisions could also discourage proxy contests and make it more difficult for
you and other stockholders to elect directors and take other corporate actions.
These provisions include:

. Our board is classified into three classes of directors as nearly equal
in size as possible with staggered three year-terms.

. The authority of our board to issue up to 15,000,000 shares of preferred
stock and to determine the price, rights, preferences and privileges of
these shares, without stockholder approval.

. All stockholder actions must be effected at a duly called meeting of
stockholders and not by written consent.

. Special meetings of the stockholders may be called only by the Chairman
of the Board, our Chief Executive Officer or the board.

. We are required to indemnify officers and directors against certain
losses that they may incur in investigations and legal proceedings
resulting from their services to us, which may include services in
connection with takeover defense measures.

Additionally, we are subject to the Delaware anti-takeover laws regulating
corporate takeovers. In general, these anti-takeover laws prohibit a publicly-
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination one that is approved by the statute. The statute provides
that a "business combination" includes a merger, asset sale or other
transaction which results in a financial benefit to the interested stockholder,
and an "interested stockholder" is a person who, together with affiliates and
associates, owns or owned 15% or more of the corporation's voting stock.

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These laws could prohibit or delay mergers, other takeovers or a change of
control of drkoop.com and may discourage attempts by other companies to acquire
us, which could negatively impact our stock's market price or lessen any
premium or market price that an acquirer might otherwise pay.

Our business may face additional risks and uncertainties not presently known
to us, which could cause our business to suffer.

In addition to the risks specifically identified in this section or
elsewhere in this report, we may face additional risks and uncertainties not
presently known to us or that we currently deem immaterial which ultimately
impair our business, results of operations and financial condition.

Risks Related to Our Industry

Consumers and the healthcare industry must accept the Internet as a source of
health content and services for our business model to be successful.

To be successful, we must attract to our network a significant number of
consumers as well as other participants in the health industry. To date,
consumers have generally looked to healthcare professionals as their principal
source for health and wellness information. Our business model assumes that
consumers will use health information available on our network, that consumers
will access important health needs through electronic commerce using our
website, and that local healthcare organizations and other participants in the
healthcare industry will affiliate with us. Our business model also assumes
that the services provided by our network will be supported in part by
advertising, sponsorship and similar activities purchased by companies with
commercial interests in the healthcare industry and that this practice will be
accepted by consumers. Our business model is not yet proven and we have not
reached break-even as to earnings or cash flow.

The Internet industry is highly competitive and changing rapidly, and we may
not have the resources to compete adequately.

The number of Internet websites offering users health content, products and
services is vast and increasing at a rapid rate. These companies compete with
us for users, advertisers, e-commerce transactions and other sources of online
revenues. In addition, traditional media and healthcare providers compete for
consumers' attention both through traditional means as well as through new
Internet initiatives. We believe that competition for health consumers will
continue to increase as the Internet develops as a communication and commercial
medium. We compete directly for users, advertisers, e-commerce merchants,
syndication partners and other affiliates with numerous Internet and non-
Internet businesses, including:

. health-related online services or websites targeted at consumers, such as
healthcentral.com, healthgate.com, intelihealth.com, mayohealth.org;
mediconsult.com, onhealth.com, thriveonline.com and webmd.com;

. online and Internet portal companies, such as America Online, Inc.;
Microsoft Network; Yahoo! Inc.; Excite@Home, Inc.; Lycos Corporation and
GO.com which commonly distribute multiple sources of health data;

. electronic merchants and conventional retailers that provide health goods
and services competitive to those available from links on our website;

. hospitals, HMOs, managed care organizations, insurance companies and
other healthcare providers and payers which offer healthcare information
through the Internet; and

. healthcare information technology organizations such as Healtheon/WebMD,
CareInSite, Cerner, IDX and Eclipsys.

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Many of these potential competitors are likely to enjoy substantial
competitive advantages compared to our company, including:

. the ability to offer a wider array of online products and services;

. larger production and technical staffs;

. greater name recognition and larger marketing budgets and resources;

. larger customer and user bases; and

. substantially greater financial, technical and other resources.

To be competitive, we must respond promptly and effectively to the
challenges of technological change, evolving standards and our competitors'
innovations by continuing to enhance our products and services, as well as our
distribution, sales and marketing channels. We must also meet or exceed
evolving consumer expectations and competitive standards regarding medical
ethics, Internet ethics and privacy concerns. Increased competition could
result in a loss of our market share or a reduction in our prices or margins.
Competition is likely to increase significantly as new companies enter the
market and current competitors expand their services or consolidate with each
other.

Since we operate an Internet-based network, our business is subject to
government regulation relating to the Internet, which could impair our
operations.

Because of the increasing use of the Internet as a communication and
commercial medium, the government has adopted and may adopt additional laws and
regulations with respect to the Internet covering such areas as user privacy,
pricing, content, taxation, copyright protection, distribution and
characteristics and quality of production and services.

Since we operate a health network over the Internet, our business is subject
to government regulation specifically relating to medical devices, the practice
of medicine and pharmacology, healthcare regulation, insurance and other
matters unique to the healthcare area.

Laws and regulations have been or may be adopted with respect to the
provision of health-related products and services online, covering areas such
as:

. the regulation of medical devices;

. the practice of medicine and pharmacology and the sale of controlled
products such as pharmaceuticals online;

. the regulation of government and third-party cost reimbursement; and

. the regulation of insurance sales.

FDA Regulation of Medical Devices. The U.S. government considers some
computer applications and software to be medical devices and subject these
medical device applications and software to regulation by the United States
Food and Drug Administration. We do not believe that the FDA will regulate our
current applications or services; however, our applications and services may
become subject to FDA regulation. Additionally, we may expand our application
and service offerings into areas that subject us to FDA regulation. We have no
experience in complying with FDA regulations. We believe that complying with
FDA regulations would be time consuming, burdensome and expensive and could
delay or prevent our introduction of new applications or services.

Regulation of the Practice of Medicine and Pharmacology. The practice of
medicine and pharmacology requires licensing under applicable state law. We
have endeavored to structure our website and affiliate relationships to avoid
violation of state licensing requirements, but a state regulatory authority may
at some

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point allege that some portion of our business violates these statutes. Any
such allegation could impact on our business by resulting in lawsuits or
otherwise requiring that we substantially change our business to comply with
those statutes. If we were required to comply with these licensing statutes,
compliance could be costly or not possible. Further, any liability based on a
determination that we engaged in the practice of medicine without a license may
be excluded from coverage under the terms of our current general liability
insurance policy.

Federal and State Healthcare Regulation. We earn a service fee when users on
our website purchase prescription pharmacy products from certain of our e-
commerce partners. The fee is not based on the value of the sales transaction.
Federal and state "anti-kickback" laws prohibit granting or receiving referral
fees in connection with sales of pharmacy products that are reimbursable under
federal Medicare and Medicaid programs and other reimbursement programs.
Although there is uncertainty regarding the applicability of these regulations
to our e-commerce revenue strategy, we believe that the service fees we receive
from our e-commerce partners are for the primary purpose of marketing and do
not constitute payments that would violate federal or state "anti-kickback"
laws. However, if our program were deemed to be inconsistent with federal or
state law, we could face criminal or civil penalties. Further, we would be
required either not to accept any transactions which are subject to
reimbursement under federal or state healthcare programs or to restructure our
compensation to comply with any applicable anti-kickback laws or regulations.
In addition, similar laws in several states apply not only to government
reimbursement but also to reimbursement by private insurers. If our activities
were deemed to violate any of these laws or regulations, it could cause our
business, results of operations and financial condition to suffer.

State Insurance Regulation. In addition, we market insurance online, offered
by unrelated third parties, and receive referral fees from those providers in
connection with this activity. The use of the Internet in the marketing of
insurance products is a relatively new practice. It is not clear whether or to
what extent state insurance licensing laws apply to our activities. We have not
sought or received a license under any state's insurance laws. If we were
required to comply with such licensing laws, compliance could be costly or not
possible.

We plan to develop relationships with retailers, manufacturers and other
providers to offer health products and services through direct links from our
website to their website. Such a strategy involves numerous risks and
uncertainties. There is no established business model for the sale of health
products or services over the Internet. Accordingly, we have limited experience
in the sale of products and services online and the development of
relationships with retailers, manufacturers or other providers of such products
and services, and we cannot predict the rate at which consumers will elect to
engage in this form of commerce or the compensation that we will receive for
enabling these transactions.

Consumers may sue us if any of the products or services that are sold
through our website are defective, fail to perform properly or injure the user,
even if such goods and services are provided by unrelated third parties. Some
of our agreements with manufacturers, retailers and other providers contain
provisions intended to limit our exposure to liability claims. These
limitations may not, however, prevent all potential claims, and our insurance
may not adequately protect us from these types of claims. Liability claims
could require us to spend significant time and money in litigation or to pay
significant damages. As a result, any such claims, whether or not successful,
could seriously damage our reputation and our business.

Internet capacity constraints may impair the ability of consumers to access
our website, which could hinder our ability to generate advertising
revenues.

Our success will depend, in large part, upon a robust communications
industry and infrastructure for providing Internet access and carrying Internet
traffic. The Internet may not prove to be a viable commercial medium because
of:

. inadequate development of the necessary infrastructure such as a reliable
network backbone;

. timely development of complementary products such as high speed modems;

16
<PAGE>

. delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; or

. increased government regulation.

If the Internet continues to experience significant growth in the number of
users and the level of use, then the current structure of the Internet may not
be able to continue to support the demands placed on it.

Our business is dependent on the continuous, reliable and secure operation of
our website and related tools and functions we provide as well as the
Internet generally.

We rely on the Internet and, accordingly, depend upon the continuous,
reliable and secure operation of Internet servers and related hardware and
software. Recently, several large Internet commerce companies have suffered
highly publicized system failures which resulted in adverse reactions to their
stock prices, significant negative publicity and, in certain instances,
litigation. There have also been recent incidents involving significant
disruptions to websites and the Internet generally by hackers through computer
viruses, denial of service attacks or similar actions which compromise network
security and reliability or damage the personal computer and networks of users.
We have also suffered service outages from time to time, although to date none
of these interruptions has significantly harmed our business operations or
financial condition. To the extent that our service is interrupted, our users
will be inconvenienced, our commercial customers will suffer from a loss in
advertising or transaction delivery and our reputation may be diminished. Some
of these outcomes could directly result in a reduction in our stock price,
significant negative publicity and litigation. Our computer and communications
hardware are protected through physical and software safeguards. However, they
are still vulnerable to fire, storm, flood, power loss, telecommunications
failures, physical or software break-ins and similar events. We do not have
full redundancy for all of our computer and telecommunications facilities and
do not maintain a back-up data facility. Our business interruption insurance
may be inadequate to protect us in the event of a catastrophe. We also depend
on third parties to provide potential users with web browsers and Internet and
online services necessary for access to our website. In the past, our users
have occasionally experienced difficulties with Internet and other online
services due to system failures, including failures unrelated to our systems.
Any sustained disruption in Internet access provided by third parties could
adversely impact our business for the same reasons as stated above.

Growth of Internet businesses, particularly in the healthcare sector, may be
impacted by privacy or security concerns.

In February 2000, concerns about access to consumers' private data on the
Internet were raised through published reports over whether or not practices of
a large third-party ad serving corporation could result in individual consumers
being identified by their Internet behavior. In response to these reports, we
took immediate action, such as designating a Chief Privacy Officer, launching a
privacy center which explains to consumers issues regarding privacy online,
releasing a more detailed policy statement, removing personal data "cookies" on
all third party ads, and severing our business relationship with DoubleClick
for the use of its "Dart" third-party ad server which was replaced by an in-
house ad serving solution. In December 1999, we helped form a consortium of
over a dozen eHealth companies called Health Internet Ethics dedicated to
adopting "best practice standards" for companies in the sector. The group
ratified and released privacy policies related to content, advertising,
electronic commerce, and connectivity in the second quarter of 2000. We retain
confidential customer information in our database, and there is no way of
determining whether or not usage of health websites may be adversely impacted
by such concerns. While our privacy policy makes clear that no individual user
data will be shared without an individual's express written consent, it is
critical that the facilities and infrastructure which allows the company to
enforce this policy remain secure and is perceived by consumers to be secure.
Despite the implementation of privacy or security measures, our infrastructure
may be vulnerable to physical break-ins, computer viruses, programming errors
or similar disruptive problems. Security and privacy are important concerns for
our company especially as we develop additional interactive tools which retain
private user data on our system, and any perception that this personal data is
not private and secure would likely be a severe public relations problem for
our company and our brand.

17
<PAGE>

Risks Relating to This Offering

Our stock price could fluctuate widely in response to various factors, many of
which are beyond our control.

The market price of our common stock is likely to be highly volatile as the
stock market in general has been highly volatile. In particular, the market
prices of securities of technology companies, particularly Internet-related
companies, have been extremely volatile and have experienced fluctuations that
have often been unrelated to or disproportionate to the operating performance
of these companies. Factors that could cause fluctuations in the stock price
may include, among other things:

. actual or anticipated variations in our quarterly operating results;

. announcements of technological innovations, new products or new services
by us or our competitors;

. conditions or trends in our industry;

. changes in financial estimates or recommendations by stock market
analysts regarding us or our competitors;

. announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or strategic initiatives;

. capital commitments;

. additions or departures of key personnel;

. future equity or debt offerings or announcements of such offerings; and

. general market and economic conditions.

Many of these factors are beyond our control. These factors may cause the
market price of our common stock to decline, regardless of our operating
performance.

Substantial sales of our common stock by our existing stockholders could cause
our stock price to fall.

The market price of our common stock could decline as a result of sales by
our existing stockholders of shares of common stock in the market after this
offering or the perception that these sales could occur. As of December 28,
2000, we have 39,589,902 shares of common stock outstanding and 108,533,987
shares issuable upon exercise of outstanding warrants to purchase our common
stock and securities convertible into shares of our common stock. Of these
shares, 93,748,273 shares, upon conversion or exercise of outstanding preferred
stock and warrants, will be freely tradeable without restriction or further
registration under the Securities Act upon the effectiveness of the
registration statement to which this prospectus relates and of the registration
statement we have filed on the date hereof with the SEC relating to certain
other shares of our common stock. In addition, options to purchase up to
32,740,095 shares of our common stock are outstanding as of November 7, 2000
under our 1997 Stock Option Plan, 1999 Equity Participation Plan and 1999 Stock
Option Plan. We have registered or expect to register with the SEC all of the
shares of our common stock underlying these options.

After this offering, our officers, directors and significant stockholders can
act together to substantially influence our business and policies and delay
or prevent a change in control of our company.

Our executive officers and directors beneficially own approximately 53.4% of
our outstanding common stock, assuming conversion of shares of our preferred
stock and exercise of warrants to purchase common stock held by such executive
officers and directors. These stockholders may be able to exercise control over
matters requiring approval by our stockholders, including the election of
directors and the approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing
an acquisition or change of control of drkoop.com, which could negatively
impact our stock price or lessen any premium or market price that an acquirer
might otherwise pay.

18
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains, and incorporates by reference, forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"intend," "anticipate," "believe," "estimate" and "continue" or similar words.
You should read statements that contain these words carefully because they
discuss our future expectations, contain projections of our future results of
operations or of our financial condition or state other forward-looking
information. We believe that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
we are not able to accurately predict or control. We undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future. The factors
listed in the section captioned "Risk Factors" as well as any cautionary
language in this prospectus, provide examples of risks, uncertainties and
events that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements. Before you invest
in our common stock, you should be aware that the occurrence of the events
described in the "Risk Factors" section and elsewhere in this prospectus could
have a material adverse effect on our business, operating results and financial
condition.

19
<PAGE>

USE OF PROCEEDS

We will not receive any proceeds upon from the sale of the common stock
offered by the selling stockholders for their own account.

We will receive the exercise price of any warrants to purchase shares of our
common stock that are being registered pursuant to the Registration Statement
to which this prospectus relates that may be exercised by the selling
stockholders, but they are under no obligation to exercise. Although the
selling stockholders may exercise their warrants without making any cash
payments to us, the selling stockholders may elect to make cash payments in
connection with their exercise of the warrants. Assuming exercise of all of the
warrants and the selling stockholders' election of a cash payment in connection
with their exercise of all of such warrants, the estimated net proceeds from
the exercise of such warrants to purchase shares of our common stock that are
being registered pursuant to the registration statement to which this
prospectus relates would be $15,331,633.20. We intend to use any proceeds, if
any, from the exercise of the warrants for general corporate purposes and
working capital.

20
<PAGE>

SELLING STOCKHOLDERS

The 11,608,740 shares of our common stock which may be offered under this
prospectus are, to our knowledge, beneficially owned by the selling
stockholders listed in the table below. All of the shares of common stock
offered by this prospectus are being offered by the selling stockholders for
their own accounts. Because the selling stockholders may sell all, some or none
of the shares covered by this prospectus, and there are currently no
agreements, arrangements or understandings with respect to the sale of any
shares, we cannot estimate the number of shares or the percentage or
outstanding shares of common stock, that will be held by any of them upon
termination of any of the sales.

This prospectus also covers any additional shares of common stock which
become issuable in connection with shares sold by reason of a stock dividend,
stock split, recapitalization or other similar transaction effected without us
receiving any cash or other value which results in an increase in the number of
our outstanding shares of common stock.

The following table identifies each selling stockholder and sets forth
information to our knowledge as of the date of this prospectus with respect to
the number of shares of common stock which may be offered under this prospectus
from time to time by each selling stockholder. This information includes shares
obtainable upon exercise of warrants, which are currently convertible or
exercisable into shares of common stock. Except as otherwise indicated, to our
knowledge, the persons named in the table below have sole voting and investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable. Percentage ownership is based on
39,589,902 shares of common stock outstanding on November 7, 2000.

<TABLE>
<CAPTION>
Number of
Shares Number of
Common Stock Shares
Hereby Common Stock Percentage of
Registered Beneficially Common Stock
Selling Stockholder for Sale Owned(1) Outstanding
------------------- ------------ ------------ -------------
<S> <C> <C> <C>
Adventist Health System Sunbelt
Healthcare Corporation(2)............ 3,023,269 3,223,269 8.1%
America Online, Inc.(3)............... 3,500,000 3,500,000 8.6%
Neil Longwill......................... 1,437 1,437 *
Venture Direct........................ 184,872 184,872 *
Akin, Gump, Straus, Hauer & Feld,
LLP.................................. 56,818 56,818 *
One, Inc. ............................ 86,653 86,653 *
adam.com, Inc. ....................... 1,927,079 1,927,079 4.9%
Mike Davis & Associates............... 120,286 120,286 *
Family Education Network.............. 62,500 62,500 *
Infoseek Corporation(4)............... 2,483,562 2,483,562 8.5%
DoubleClick........................... 162,264 162,264 *
</TABLE>
--------
* Represents less than 1% of the issued and outstanding shares.

(1) Beneficial ownership is determined in accordance with the SEC's rules and
generally includes voting or investment power with respect to securities.
Under the SEC's rules, shares of common stock subject to options and
warrants which are currently exercisable, or will become exercisable
within 60 days of November 7, 2000, are deemed outstanding for computing
the percentage of the person or entity holding such securities but are not
outstanding for computing the percentage of any other person or entity.
Accordingly, for purposes of determining the beneficial ownership of
common stock of a holder of warrants, such holder would be deemed to hold
the number of shares of common stock into which such holder's warrants are
exerciseable, but no other derivative securities would be treated as
having been converted into common stock for purposes of the calculation.
As a result, given the significant number of derivative securities that we
have outstanding, each holder's percentage of common stock outstanding set
forth above will overstate the percentage that such holder would have of
all of our common stock on a fully diluted basis.

21
<PAGE>

(2) The shares of common stock listed as beneficially owned by Adventist
Health System Sunbelt Healthcare Corporation consist of (i) 3,023,269
shares of common stock and (ii) warrants to purchase 200,000 shares of
common issued to Adventist. The number of shares of common stock
registered for sale on behalf of Adventist excludes the warrants to
purchase shares of common stock listed in clause (ii) above.

(3) The shares of common stock listed as beneficially owned by America Online,
Inc. consist of 3,500,000 shares of common issued to America Online.

(4) The shares of common stock listed as beneficially owned by Infoseek
Corporation consist of warrants to purchase 2,483,562 shares of common
issued to Infoseek Corporation.

22
<PAGE>

MATERIAL RELATIONSHIPS WITH SELLING STOCKHOLDERS

Adventist Health System Sunbelt Healthcare Corporation

On January 29, 1999, we received $3,500,000 in cash and a license to certain
Internet technology, and acquired 10% of the outstanding stock of HealthMagic,
Inc., a subsidiary of Adventist Health System Sunbelt Healthcare Corporation
(which we refer to as Adventist), in exchange for 2,615,677 shares of Series C
convertible preferred stock. We also established a technology relationship with
HealthMagic, a supplier of applications to Internet companies, in which we
contributed certain technology, which we had assigned a zero value, and
received from HealthMagic a license to use a broad range of Internet
technologies, including a web-enabled personal medical record, personalization
tools, security and authentication features. HealthMagic will develop,
implement and support these technologies for us. Upon the closing of our
initial public offering, each share of Series C converted into one share of
common stock. We entered into related agreements with Adventist which provide
for registration rights with respect to this common stock.

America Online

Effective July 1, 1999, we signed a four-year interactive services agreement
with America Online, Inc. (which we refer to as AOL) pursuant to which we were
designated as AOL's premier provider of healthcare content. The agreement
obligated us to make carriage payments totaling $89.0 million in cash over a
four-year period. Concurrently, we entered into a four-year development and
services agreement with AOL pursuant to which we are to provide specified
software development services to AOL for the term of the agreement and AOL is
to pay us $8.0 million. In addition, we provided AOL with 1,570,932 immediately
vested warrants to purchase drkoop.com, Inc. common stock at an exercise price
of $15.94 per share and the right to earn up to an additional 4,320,063
warrants based on performance. In June 1999, we made a total cash payment of
$24.3 million under the interactive services agreement. In September 1999 and
February 2000, we received two equal installments representing payment in full
for the $8.0 million under the development and services agreement.

Effective April 12, 2000 we entered into a First Amendment to the
interactive services agreement with AOL. In exchange for 3.5 million shares of
our common stock, we were relieved of any further cash payment obligations to
AOL under the interactive services agreement; all existing warrant agreements,
vested and unvested, were canceled; and we will receive reduced carriage for a
twelve-month period subject to compliance with the modified terms of the
interactive services agreement. We also agreed to register the shares of our
common stock issued to AOL.

Infoseek Corporation

On April 9, 1999, we entered into agreements with Infoseek Corporation and
the Buena Vista Internet Group, each a unit of The Walt Disney Company (which
we collectively refer to as Infoseek or the Go Network), under which we became
the exclusive provider of health and related content on three websites of the
Go Network: GO.com Health Center, ESPN.com Training Room and the Family.com
Health Channel. Under the Infoseek agreement, we also became the premier health
content provider for ABCnews.com. Under these agreements, users on the Go
Network were to be able to access various health information, services,
interactive tools and commerce opportunities through a website branded with
both the GO Network and Infoseek corporation names served by drkoop.com.

The term of both agreements was originally three years with the ability to
terminate the relationship after two years. We were scheduled to pay Infoseek
and the Buena Vista Internet Group $57.9 million in cash and warrants to
purchase 775,000 shares of common stock at an exercise price of $8.60 per share
over the full three-year term.

Effective April 15, 2000, we entered into an amendment to the original
agreements. In exchange for additional cash payments of $5.3 million, an

23
<PAGE>

additional 820,000 warrants to purchase common stock at an exercise price of
$1.25, and acceleration of the vesting of the initial warrants, we agreed to
terminate the original agreements effective July 15, 2000 without further
obligation for either party. Due to the anti-dilution rights of the $8.60
warrants, we issued an additional 888,562 warrants on the same terms and price.
In connection with our preferred stock financing, we agreed to register the
shares of our common stock underlying the warrants issued to Infoseek.

Other Selling Stockholders

In connection with our preferred stock financing described above under
"Recent Developments," we agreed to issue shares of our common stock to certain
of our trade creditors who are selling stockholders in settlement of amounts
owed to such trade creditors. The shares of Venture Direct, Akin, Gump, Straus,
Hauer & Feld, LLP, One, Inc., adam.com, Inc., Mike Davis & Associates, Family
Education Network and Double Click listed as registered hereby for sale under
"Selling Stockholders" above represent shares we issued to such parties in
settlement of trade payables. We also agreed to register such shares.

24
<PAGE>

PLAN OF DISTRIBUTION

Shares of our common stock held by the selling stockholders and covered by
this prospectus may be sold or distributed at any time or from time to time by
the selling stockholders, their donees, transferees or other successors in
interest, in one or more transactions. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell their shares at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at such other prices as the selling
stockholders may determine from time to time.

The selling stockholders may offer their shares at various times in one or
more of the following transactions

. in a distribution by one or more underwriters on a firm commitment or
best efforts basis;

. in ordinary brokers' transactions and transactions in which the broker
solicits purchasers;

. in transactions involving cross or block trades or otherwise on any of
the United States securities exchanges or quotation services where the
common stock is listed or quoted at the time of the sale, including the
Nasdaq National Market where our common stock is listed;

. in transactions other than on the exchanges or services described above;

. in the over-the-counter market;

. in privately negotiated transactions;

. in connection with transactions to cover short sales;

. by pledge or by grant of a security interest in the shares to secure
debts and other obligations;

. through the writing of options, whether the options are listed on an
option exchange or otherwise;

. in connection with the writing of non-traded and exchange traded-call
options or put options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter options;

. through the distribution of the shares by any selling stockholder to its
partners, members or stockholders; or

. in a combination of any of the above transactions.

The selling stockholders have sole discretion not to accept any purchase
offer or make any sale of shares offered by this prospectus if they deem the
purchase price to be unsatisfactory. Any broker or dealer participating in any
such sale may be deemed to be an "underwriter" within the meaning of the
Securities Act and will be required to deliver a copy of this prospectus to any
person who purchases any of the shares offered by this prospectus from or
through such broker or dealer. The compensation of such broker-dealers may be
deemed underwriting discounts and commissions. In addition, any shares covered
by this prospectus that qualify for sale under Rule 144 may be sold under Rule
144 rather than this prospectus.

The selling stockholders may enter into hedging transactions with broker-
dealers or other financial institutions in connection with distribution of the
shares or otherwise. In such transactions, broker-dealers or other financial
institutions may engage in short sales of the shares in the course of hedging
the positions they assume with selling stockholders. The selling stockholders
may also sell shares short and redeliver the shares to close out such short
positions. The selling stockholders may enter into option or other transactions
with broker-dealers or other financial institutions which require the delivery
to the broker-dealer or other financial institutions of the shares.

The broker-dealer or other financial institutions may then resell or
otherwise transfer such shares pursuant to this prospectus. The selling
stockholders also may loan or pledge the shares to a broker-dealer. The broker-
dealer may sell the shares so loaned, or upon a default the broker-dealer may
sell the pledged shares pursuant to this prospectus.

25
<PAGE>

To comply with the securities laws of certain states, if applicable, the
shares offered by this prospectus will be sold in those states only through
registered or licensed brokers or dealers. In certain states, the shares
offered by this prospectus may not be sold unless (1) the shares offered by
this prospectus have been registered or qualified for sale in such state or an
exemption from registration exists or (2) qualification is available and is
complied with. Also, each selling stockholder will be subject to the applicable
provisions of the Securities Act and Exchange Act and the rules and regulations
of both acts, including Regulation M. The provisions of Regulation M may limit
the timing of purchases and sales of shares of the common stock by the selling
stockholders.

We will make copies of this prospectus available to the selling
stockholders. We have informed them of the need for delivery of copies of this
prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.

At the time a particular offer of shares is made, if required, we will
distribute a prospectus supplement that will provide the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission
or concession allowed or reallowed or paid to any dealer, and the proposed
selling price to the public.

Pursuant to the terms of the registration rights agreements between us and
the selling stockholders, we will pay all expenses of the registration of the
common stock, except that the selling stockholders will pay any applicable
underwriting discounts and commissions. We will indemnify the selling
stockholders against certain civil liabilities, including certain civil
liabilities under the Securities Act. Conversely, the selling stockholders will
indemnify us against certain civil liabilities, including certain liabilities
under the Securities Act.

26
<PAGE>

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for drkoop.com, Inc. by Latham & Watkins, Los Angeles, California.

EXPERTS

The financial statements as of December 31, 1999 and 1998 and for each of
the two years in the period ended December 31, 1999, and for the period from
inception (July 17, 1997) to December 31, 1997 incorporated by reference in
this Registration Statement on Form S-3 have been so included in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-3 (including
the exhibits, schedules and amendments thereto) under the Securities Act with
respect to the shares of common stock to be sold in this offering. As permitted
by the SEC's rules and regulations, this prospectus does not contain all the
information set forth in the registration statement. For further information
regarding our company and the shares of common stock to be sold in this
offering, please refer to the registration statement and the contracts,
agreements and other documents filed as exhibits to the registration statement.

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy all or any portion of any
report, document or any other information that we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by
writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our SEC filings are
also available to you on the SEC's website (http://www.sec.gov).

27
<PAGE>

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 you to those documents. The information incorporated is considered to
be a part of this prospectus, and information that we later file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and the exhibits thereto and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until the earlier of the date that the selling
stockholders sell all of the common stock or another date as the offering is
terminated and any unsold shares are deregistered by the filing of a post-
effective amendment.

<TABLE>
<CAPTION>
SEC Filing Period Covered or Date of Filing
---------- --------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1999

Amended Annual Report on Form 10-K/A Year ended December 31, 1999

Quarterly Report on Form 10-Q Quarter ended September 30, 2000

Quarterly Report on Form 10-Q/A Quarter ended September 30, 2000

Quarterly Report on Form 10-Q Quarter ended June 30, 2000

Quarterly Report on Form 10-Q/A Quarter ended June 30, 2000

Quarterly Report on Form 10-Q Quarter ended March 31, 2000

Quarterly Report on Form 10-Q/A Quarter ended March 31, 2000

Form 8-K November 30, 2000

Form 8-K September 15, 2000

Form 8-K September 1, 2000

Form 8-K July 17, 2000

Form 8-K April 27, 2000

Schedule 14(f)(1) September 1, 2000

Preliminary Schedule 14A December 22, 2000
</TABLE>

You may request a copy of these filings or exhibits thereto, at no cost, by
making a telephonic or written request to:

drkoop.com, Inc.
Attn: Secretary
7000 North Mopac, Suite 400
Austin, TX 78731
Telephone: (512) 583-5667

The information incorporated by reference is deemed to be a part of this
prospectus, except for any information superseded by information contained
directly in this prospectus. Any information we later file with the SEC will
automatically update and supersede this information.

28
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the
underwriting discount, payable by drkoop.com in connection with the sale of the
common stock being registered. All amounts are estimates except the SEC
registration fee.

<TABLE>
<S> <C>
Securities and Exchange Commission Fee.......................... $ 2,114.65
-----------
Legal Fees, Accounting Fees and Expenses........................ 50,000.00
Printing Expenses............................................... 0,000.00
Miscellaneous................................................... 50,000.00
-----------
Total......................................................... $102,114.65
===========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our restated certificate of incorporation in effect as of the date hereof,
and our restated certificate of incorporation to be in effect upon the closing
of this offering provides that, except to the extent prohibited by the Delaware
General Corporation Law, as amended, the Registrant's directors shall not be
personally liable to the Registrant or its stockholders for monetary damages
for any breach of fiduciary duty as directors of the Registrant. Under Delaware
law, the directors have a fiduciary duty to the Registrant which is not
eliminated by this provision of the Certificate and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
nonmonetary relief will remain available. In addition, each director will
continue to be subject to liability under Delaware law for breach of the
director's duty of loyalty to the Registrant, for acts or omissions which are
found by a court of competent jurisdiction to be not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by Delaware
law. This provision also does not affect the directors' responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. The Registrant has applied for liability insurance for its
officers and directors.

Section 145 of Delaware law empowers a corporation to indemnify its
directors and officers and to purchase insurance with respect to liability
arising out of their capacity or status as directors and officers, provided
that this provision shall not eliminate or limit the liability of a director:
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of Delaware law, or (iv) for any transaction from which the
director derived an improper personal benefit. Delaware law provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of Delaware law and provides that the
Registrant may fully indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative)
by reason of the fact that such person is or was a director or officer of the
Registrant, or is or was serving at the request of the Registrant as a director
or officer of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding.

We have entered into contractual indemnification agreements with each of our
executive officers and directors. These agreements provide for contractual
indemnification to the fullest extent permitted by applicable law and provide
mechanical and administrative procedures to be followed in the event of any
such claim.

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<PAGE>

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
4.1(i) Specimen common stock certificate

4.2(i) Amended and Restated Registration Rights Agreement among Empower
Health Corporation, Superior Consultant Holdings Corporation,
Neal Longwill and Adventist Health System, dated January 29, 1999

4.3(ii) Registration Rights Agreement between drkoop.com, Inc. and America
Online, dated
July 1, 1999

4.4(i) Warrant to Purchase Shares of Common Stock Issued to Infoseek
Corporation as of April 9, 1999

4.5(i) Warrant to Purchase Shares of Common Stock Issued to Buena Vista
Interactive Group as of April 9, 1999

4.6(iii) Warrant to Purchase 820,000 Shares of Common Stock Issued to
Infoseek Corporation dated April 24, 2000.

4.7(iii) Registration Agreement by and between the Company and Adventist
Health System Sunbelt Healthcare Corporation effective April 18,
2000.

5.1 Opinion of Latham & Watkins (To be filed by amendment)

23.1 Consent of Independent Accountants.

23.2 Consent of Latham & Watkins (included in Exhibit 5.1 to be filed
by amendment).

24.1 Powers of Attorney (included on pages II-4 and II-5).
</TABLE>
--------
(i) Incorporated by reference to the Registrant's Form S-1 (333-73459).

(ii) Incorporated by reference to the Registrant's quarterly report on Form
10-Q for the quarter ended September 30, 1999, filed November 15, 1999.

(iii) Incorporated by reference to the Registrant's quarterly report on
Form 10-Q for the quarter ended June 30, 2000, filed August 21, 2000.

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3)
Securities Act of 1933 (the "Securities Act");

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;

(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

II-2
<PAGE>

provided, however, that paragraphs A(l)(i) and A(l)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the registration
statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim information.

(d) 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 such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such 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 such 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
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Austin,
State of Texas, on this 29th day of December, 2000.

drkoop.com, Inc.

/s/ Richard M. Rosenblatt
By: _________________________________
Name: Richard M. Rosenblatt
Title: Chief Executive Officer and
Director

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Richard
M. Rosenblatt and Stephen Plutsky, and each of them individually, as attorney-
in-fact, with the power of substitution, for him or her in any and all
capacities, to sign any amendment to this Registration Statement (including
post-effective amendments and registration statements filed pursuant to Rule
462 and otherwise), and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting to said attorneys-in-fact, and each of the individually, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as her or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact or each of them individually, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Richard M. Rosenblatt Chief Executive Officer and December 29, 2000
____________________________________ Director (Principal Executive
Richard M. Rosenblatt Officer)

/s/ Stephen Plutsky Chief Financial Officer December 29, 2000
____________________________________ (Principal Financial and
Stephen Plutsky Accounting Officer)

Chairman of the Board
____________________________________
C. Everett Koop, M.D.

* Director December 29, 2000
____________________________________
Donald W. Hackett

Director
____________________________________
Edwin M. Cooperman

* Director December 29, 2000
____________________________________
Marshall S. Geller

</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Director December 29, 2000
____________________________________
Scott J. Hyten

* Director December 29, 2000
____________________________________
George A. Vandeman

Director
____________________________________
Joseph P. Wynne
</TABLE>

/s/ Richard M. Rosenblatt
*By:______________________
Richard M. Rosenblatt
Attorney-in-fact

II-5