SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 15, 2000
MERCHANTONLINE.COM, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-22607 84-1233073
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1600 SOUTH DIXIE HIGHWAY
BOCA RATON, FLORIDA 33432
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 395-3585
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 24, 2000, the Company entered into an Agreement and Plan of
Reorganization with Innovonics, Inc., a Arizona corporation, and Dereck Clark as
representative of the shareholders, pursuant to which Innovonics would merge
with a wholly-owned subsidiary of the Company. The merger was completed on May
15, 2000. Pursuant to the agreement, 90.1% of the outstanding shares of
Innovonics were exchanged for 8,976,486 shares of the Company's common stock (as
adjusted for the 2-for-1 stock split that occurred effective May 8, 2000). An
additional 897,649 shares are being held in escrow to cover potential
liabilities. The Company also issued an aggregate of 1,023,514 options to
purchase common stock in exchange for outstanding Innovonics options. The
Company has the right to purchase, and Mr. Clark has the right to require the
Company to purchase, the 9.9% still owned by Mr. Clark.
Simultaneously with the closing, Dereck Clark became a director of the
Company.
The Company also entered into five-year employment agreement with
Dereck Clark, pursuant to he will continue to act as President of the Company's
Innovonics subsidiary. The agreement provides for an annual salary of $175,000
and an aggregate of 2,000,000 options to purchase common stock with an exercise
price of $2.94 per share.
Innovonics was co-founded in 1991 by Mr. Clark. Much of its efforts to date have
been devoted to the development of the PC Pay(R) encryption hardware and
software product (the "PC Pay(R) system") and to the protection of its
intellectual property rights. The PC Pay(R) system provides the means for making
secure payments for on-line purchases utilizing a combined swipe/smart card
device with a built-in PIN code pad. Substantial effort has been directed over
the past five years to developing alliances with key industry players in the
on-line financial industry, including major banks and ATM networks. Utility and
design patents have been issued or are pending, including a secure PC keyboard
version for virus-proof ecommerce authentication. Innovonics is currently
pursuing customers through Internet advertising, direct sales, including system
integrators and distributors, tradeshows, and through independent software
developers that are developing a wide cadre of computer solutions that require
the PC Pay device.
The primary current use in pilot projects with major corporations for smart
cards is to dispense "cash" electronically in the home via the PC. Innovonics
believes that smart cards will become very popular for small Internet-based
purchases in within the next two years. The Company already has customers that
plan to use the PC Pay technology in major eCommerce projects, kiosks, EBT
projects, loyalty projects, wire-transfer projects, medical access control,
medical smart card projects, and many government related projects.
Innovonics has already sold developer kits to over 250 major companies around
the world regarding such uses. Innovonics is also selling developer kits to many
companies that plan to use the product for medical and/or insurance applications
by using the capability of the PC Pay device to accept smart cards.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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The required audited financial statements of Innovonics, Inc. will be
filed within the required time period.
(b) Pro Forma Financial Information.
The required pro forma financial statements will be filed with the
audited financial statements.
(c) Exhibits.
2.7 Agreement and Plan of Reorganization dated as of April 24, 2000, by and
among MerchantOnline.com, Inc., Innovonics, Inc. and Innovonics
Acquisition Corp
2.7.1 Amendment dated May 15, 2000 to Agreement and Plan of Reorganization
dated as of April 24, 2000, by and among MerchantOnline.com, Inc.,
Innovonics, Inc. and Innovonics Acquisition Corp
10.10 Employment Agreement dated May 15, 2000 among MerchantOnline.com, Inc.,
Innovonics, Inc. and Dereck Clark.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERCHANTONLINE.COM, INC.
Date: May 26, 2000 By: /s/ TAREK KIRSCHEN
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Tarek Kirschen, President
