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PROSPECTUS SUPPLEMENT FILED UNDER RULE 424(b)(3)
REGISTRATION NUMBER 333-91619
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PROSPECTUS SUPPLEMENT NO. 2, DATED JUNE 20, 2000
(TO PROSPECTUS, DATED APRIL 7, 2000)
MD2PATIENT, INC.
2,000,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK
WARRANTS TO PURCHASE 4,000,000 SHARES OF
SERIES A CONVERTIBLE PREFERRED STOCK
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This prospectus supplement to the prospectus dated April 7, 2000 relates to
our offering of 2,000,000 shares of Series A Convertible Preferred Stock and
Warrants to purchase 4,000,000 shares of Series A Convertible Preferred Stock,
which is being conducted simultaneously with an offering of up to 34,000,000
shares of Series B Convertible Preferred Stock.
This prospectus supplement should be read in conjunction with the
prospectus dated April 7, 2000, as supplemented, which is to be delivered with
this prospectus supplement. The information in this prospectus supplement
updates certain information contained in the prospectus dated April 7, 2000 and
prospectus supplement no. 1 dated May 22, 2000.
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INVESTING IN THE SERIES A CONVERTIBLE PREFERRED STOCK AND WARRANTS INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THE PROSPECTUS
DATED APRIL 7, 2000.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
(WR HAMBRECHT & CO LOGO)
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1. $2,250,000 BRIDGE FINANCING
As indicated in Supplement No. 1 to this prospectus, we have accelerated
our efforts to implement our business plan and our associated spending. In
addition, we have instituted a plan whereby we intend to satisfy many of our
information technology requirements, including programming, in-house rather than
using outside vendors. We are seeking to complete this plan by August 1, 2000.
As part of this plan, we have hired three new information technology personnel
and intend to hire two to three additional information technology personnel in
the near future.
These efforts have created an immediate need for capital. Because we have
not sold the minimum 5,000,000 shares necessary to conduct an initial closing in
this offering, we have borrowed a total of $2,250,000 to meet our immediate need
for capital. We have borrowed these funds pursuant to promissory notes that bear
interest at an annual rate of 12% and mature on June 19, 2001. We may pre-pay
the promissory notes at any time without penalty. We intend to use a portion of
the proceeds of this offering to repay the promissory notes. We issued a total
of $1,600,000 of these promissory notes to directors, executive officers, family
members of an executive officer and employees of md2patient, including: $200,000
to Rock A. Morphis (Chairman); $200,000 to Joseph B. Crace (President, Chief
Executive Officer and Director); $200,000 to Mr. Crace's parents, R. Joseph and
Rita H. Crace; $200,000 to Mr. Crace's brother, Robert K. Crace; $200,000 to
Albert Rodewald (Executive Vice President, Chief Technology Officer and
Director); $100,000 to John E. Blount (Executive Vice President and Director)
and $200,000 to James G. Petway, Jr. (Executive Vice President and Chief
Financial Officer).
We believe that the promissory notes were entered into on terms that are
not less favorable to us than those that could have been obtained from
unaffiliated third parties. In addition, a standing special committee for our
independent directors as well as our Board of Directors have approved of our
issuance of the promissory notes.
2. STRATEGIC ALLIANCE WITH HERITAGE HEALTH SYSTEMS
We have entered into an Internet Services Agreement with Heritage Health
Systems, Inc. HHS provides various management and administrative services to
independent physician associations. Pursuant to the terms of the agreement, we
will have the opportunity to provide consulting and Internet-related services to
HHS. HHS has agreed to exclusively endorse and recommend our services to its
affiliated independent physician associations and to their physician members.
Based on these introductions, we also intend to establish relationships with
independent physician associations involving joint ownership of entities that
will provide Internet services to the associations. In return, we have agreed to
issue 3,600,000 shares of Common Stock to HHS.
Mr. Morphis, our Chairman, is the Chairman, President and Chief Executive
Officer of HHS. We believe that the Internet Services Agreement contains terms
that are no less favorable to us than those that could have been obtained from
unaffiliated third parties. In addition, a standing special committee of our
independent directors as well as our Board of Directors have approved the terms
of the Internet Services Agreement.
3. LETTER OF INTENT WITH CANCERCONSULTANTS.COM
We have entered into a letter of intent with CancerConsultants.com. The
letter of intent contemplates entering into a definitive agreement pursuant to
which CancerConsultants would provide us with information and content relating
to cancer and cancer treatments suitable for both physicians and their patients
to be displayed on our web site and our physician subscribers' web sites.
CancerConsultants would also provide marketing and consulting services and would
develop for us on-line market research tools and an on-line clinical trials
strategy. In exchange, we would issue 80,000 shares of Common Stock to
CancerConsultants with a possibility of issuing up to an additional 280,000
shares of Common Stock if CancerConsultants meets specified performance
criteria. Additionally, we would have the option but not the obligation to
acquire CancerConsultants for cash or shares of Common Stock. Because the
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arrangement with CancerConsultants remains subject to the negotiation of a
definitive agreement, the terms may change or a definitive agreement may not be
reached.
4. RESTRICTED STOCK AWARDS
In June 2000, we granted restricted stock awards for a total of 2,350,000
shares of common stock to employees. These grants included an award of 500,000
shares of common stock to Nicholas A. Balog, our Executive Vice President for
Operations.
5. USE IN MINNESOTA
Persons in Minnesota are now authorized to purchase our securities under
this prospectus.
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