Instructions
Go to the Armored Armadillo stage from the stage-select screen.
Stock up on extra lives at the beginning of the stage. One of the bats on the ceiling always gives an extra life, and they respawn when you run down the hill and back up. You will need at least six lives, but it's a good idea to get more just in case you die.
Go through the level until you reach the final rolling platform section of the stage. At the end of the section, the platform will shoot off a cliff. Jump off the platform just before it starts to fall and you will automatically catch the far wall on the right. Find a health restore item on the ledge at the top.
Climb up the ledge and grab the health power up, and then jump off the cliff into the pit below and die. You can exit the stage instead, but dying is faster.
Repeat Steps 3 and 4, four more times. When you reach the ledge for the fifth time, make sure you have full health when you reach the cliff. The upgrade capsule will appear at the top of the cliff instead of the health power up. Enter the capsule to claim your reward.