SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 28, 2000
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Date of Report (date of earliest event reported)
ART CARDS, INC.
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Exact name of Registrant as Specified in its Charter
Colorado 33-17229-D 84-00978689
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State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
933 Pearl Street, Denver, Colorado 80203
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Address of Principal Executive Offices Zip Code
(303) 831-9335
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Registrant's Telephone Number, Including Area Code
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
On January 28, 2000, Art Cards, Inc. (the "Company") and uMember.com,
Inc. ("uMember") signed a Letter of Intent whereby the Company plans to
acquire all of the outstanding shares of uMember in exchange for restricted
shares of the Company's common stock.
Prior to the closing, the Company intends to raise additional capital and
to hold a special shareholders meeting for the purpose of approving a name
change and a reverse split which will reduce the number of shares outstanding
prior to the closing to approximately 476,500.
If this transaction is consummated, the Company will issue 15,000,100
(post-split) restricted shares of its common stock to the shareholders of
uMember and 2,537,000 (post-split) restricted shares of its common stock for
various finders fees.
uMember.com, a California corporation, recently launched its one-stop
online "megastore" offering a wide range of brand name, competitively priced
merchandise and services with a major southern California credit union with
over 50,000 members and plans to set up similar online megastores with other
credit unions, large corporate groups and other organizations.
The closing of this transaction is subject to various matters including
the Company raising additional capital, the Company's shareholders approving
the name change and reverse stock split and the execution of a definitive
agreement which will contain various representations and warranties of each
party and which will be subject to the approval of the directors of each
company and the shareholders of uMember.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) EXHIBITS.
Exhibit 10 Letter of Intent dated January 28, 2000 between
Art Cards, Inc. and uMember.com, Inc. (filed
herewith electronically)
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.
ART CARDS, INC.
Dated: February 4, 2000 By:/s/ Richard Miller
Richard Miller, President
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Art Cards, Inc.
933 Pearl Street
Denver, Colorado 80203
January 28, 2000
Orie Rechtman, Chairman and CEO
uMember.com, Inc.
2361 Rosecrans Avenue
El Segundo, California 90245
Re: Proposed Exchange of Shares of Art Cards, Inc. ("Art Cards") for
one hundred percent (100%) of the outstanding shares of
uMember.com, Inc. ("uMember")
Dear Mr. Rechtman:
This letter will confirm the recent discussions we have had with you and
your representatives relative to the proposed exchange of shares of the common
stock of Art Cards for all of the issued and outstanding common stock of
uMember. The objective of our discussions has been the execution and
consummation, as soon as feasible, of a formal agreement between Art Cards and
uMember (the "Agreement"), which among other things, would provide for the
various matters set forth below:
1. Just prior to the closing of this transaction, Art Cards will complete
a name change and reverse split which will reduce the total number of shares
outstanding in Art Cards to approximately 476,500 plus any shares that must be
issued to round fractional shares to one whole share. All numbers used in
this Letter of Intent will be based on post-split numbers.
2. Art Cards will acquire all of the issued and outstanding common stock
of uMember from the shareholders of uMember in exchange for 15,000,100
restricted shares of $.0001 par value common stock of Art Cards ("Art Cards
Common Stock"), which will be delivered upon the closing of this transaction
(the "Closing Date"). This exchange is intended to qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended, and the shares of Art Cards received by uMember shareholders will be
received on a tax-free basis. The shares to be issued by Art Cards will be
"restricted securities" as defined in Rule 144 under the Securities Act of
1933, and an appropriate legend will be placed on the certificates
representing such shares, and stop transfer orders placed against them.
3. In a separate transaction to be closed concurrently with the reverse
acquisition of uMember, Richard Miller, a principal shareholder of Art Cards,
will sell 13,600 of his personal shares to uMember in exchange for $180,000 in
cash.
4. uMember will pay Art Cards $70,000 which will be used by Art Cards to
pay off all of its existing indebtedness. $25,000 of this amount will be
paid to Art Cards on the signing of this Letter of Intent and the balance of
$45,000 will be payable on Closing and will be paid by Art Cards to Richard
Miller to reimburse Richard Miller for his expenses incurred on behalf of Art
Cards. If this transaction is terminated for any reason, the $25,000 deposit
will be forfeited to Art Cards.
uMember also agrees to reimburse Art Cards up to $5,000 for its legal
fees at the Closing. If the legal fees exceed $5,000, Mike Underwood will pay
the excess at the Closing.
5. Prior to the Closing, Art Cards will raise $5,000,000 in a Rule 506
offering to accredited investors overseas by selling 2,000,000 shares of Art
Cards common stock at $2.50 per share. The offering will be managed by CCRI
Corporation and the funds will be escrowed in the trust account of Krys Boyle
Freedman & Sawyer, P.C., legal counsel for uMember. The funds will be
released to Art Cards upon the Closing of the acquisition of uMember.
6. On the Closing, Art Cards will also issue a total of 2,537,000 shares
as finder's fees for this transaction, which will bring the total number of
shares issued and outstanding after the closing to approximately 20,000,000
shares. uMember will cancel the 13,600 shares it purchases from Richard
Miller. Following is a breakdown of the shares to be outstanding.
Shares to be retained by current Art Cards shareholders 462,900
Shares to be issued for $5,000,000 2,000,000
Shares to be issued for uMember.com 15,000,100
Shares to be issued for finder's fees 2,537,000
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Total 20,000,000
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Upon the Closing, uMember will become a wholly-owned subsidiary of Art
Cards.
7. The parties will use their best efforts to close this transaction on
or before March 3, 2000. If this Agreement is not executed by March 31, 2000,
this Letter will terminate.
8. At the Closing, the present Art Cards officers and directors shall
deliver to uMember their respective letters of resignation, along with minutes
of the Art Cards Board of Directors accepting such resignations and appointing
to the Art Cards Board those persons designated by uMember to be directors of
Art Cards.
9. Prior to Closing, uMember will provide an unaudited balance sheet and
income statement for the period ended on a date within 60 days of the Closing.
10. On the date of this Letter of Intent, the common stock of Art Cards
is registered with the Securities and Exchange Commission pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended, (the "Act"), and Art
Cards has filed all reports required to be filed by Section 15(d) of the Act
during the past 12 months. These reports were, when filed, accurate, not
misleading and complete in all material respects.
11. The common stock of Art Cards is currently listed for trading on the
OTC Bulletin Board under the symbol ATCD.
12. On the Closing, Art Cards will have no assets and no liabilities.
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13. Once this letter is executed, all parties hereto, in reliance upon
the agreement represented herein, shall not, for a period of 35 days from the
date of execution hereof, negotiate with any other third party with respect to
undertaking any merger or stock or asset acquisition. Both parties hereto
agree to proceed diligently with the completion of all necessary due diligence
and the drafting of all necessary documentation and agreements.
14. Art Cards and uMember will take all necessary steps to call meetings
of their respective directors as soon as possible to approve the terms of this
Letter of Intent.
15. Upon the signing of this Letter of Intent, Art Cards and uMember will
provide to each other full access to their books and records and will furnish
financials and operating data and such other information with respect to their
business and assets as may reasonably be requested from time to time. If the
proposed transaction is not consummated, all parties shall keep confidential
any information (unless ascertainable from public filings or published
information) obtained concerning the other's operations, assets and business.
16. This Letter of Intent may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
17. Upon the execution by you and return to us of this Letter of Intent,
counsel for uMember and Art Cards will prepare an Exchange Agreement and a
Stock Purchase Agreement which shall contain provisions in accordance with
this Letter together with such further appropriate terms and conditions as
legal counsel and the parties may mutually determine. The Exchange Agreement
shall be subject, in all respects, to the approval of the respective Boards of
Directors of Art Cards and uMember.
18. It is understood that the terms set forth in this Letter may not
constitute all of the major terms which will be included in the Exchange
Agreement, that the terms set forth herein are subject to further discussion
and negotiation, and that this Letter is an expression of intent only and is
not to create or result in any legally binding obligation upon the parties
hereto except with respect to paragraphs 4, 13 and 15 and the obligation to
pursue negotiations in good faith.
If the foregoing accurately reflects our discussions, please execute and
return to the undersigned one copy of this Letter.
ART CARDS, INC. uMEMBER.COM, INC.
By:/s/ Richard H. Miller By:/s/ Orie Rechtman
Richard H. Miller, President Orie Rechtman, Chairman and CEO
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