UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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 25, 2004
SUNBURST ACQUISITIONS IV, INC.
(Exact name of registrant as specified in its charter)
Colorado | 0-23561 | 84-1431797 |
(State or other jurisdiction of
incorporation) | (Commission File Number) | (IRS Employer Identification
Number) |
103 - 20120 64th Avenue
Langley, B.C., Canada |
V2Y 1M8 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (604) 533-9572
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ITEM 1.
CHANGES IN CONTROL OF REGISTRANT
On May 25, 2004, the Company completed a share exchange (the “Exchange”) with the shareholders (the
“Sierra Shareholders”) of Sierra Minerals and Mining, Inc. (“Sierra”), a Nevada corporation, pursuant to
the terms of the Share Exchange Agreement, dated May 3, 2004 (the “Exchange Agreement”). A copy of
the Exchange Agreement is attached as an exhibit hereto.
In the Exchange, the Company issued 43,000,000 shares of its common stock, representing approximately
51.7% of the Company’s then-outstanding common stock, to the Sierra Shareholders in exchange for all of
the shares of Sierra capital stock. As a result, Sierra became a wholly-owned subsidiary of the Company,
and the Company underwent a change of control.
SECURITY OWNERSHIP OF CERTAIN CURRENT BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the following information for both immediately prior to the Exchange and
immediately following the closing of the Exchange: (i) the stock ownership of each executive officer and
director of the Company, (ii) the stock ownership of all executive officers and directors of the Company, as
a group, and (iii) the stock ownership of each person known by the Company to be a beneficial owner of
5% or more of its Common Stock. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as to such shares. No person
listed below has any options, warrant or other right to acquire additional securities of the Company, except
as may be otherwise noted.
Name and Address | Number of
Shares
Beneficially
Owned Before Closing
Under the Share
Exchange
Agreement |
Percent of
Class Before
Closing
Under the
Share
Exchange
Agreement(1) | Number of
Shares
Beneficially
Owned After
Closing Under
the Share
Exchange
Agreement |
Percent of
Class After
Closing
Under the
Share
Exchange
Agreement (2) |
Charles Malette 1550 35th Avenue West Vancouver, B.C. Canada, V6M1H2 |
13,500,000 |
33.66% |
13,500,000 |
16.24% |
Terry Fields(3) (4) No. 3 Poipu Drive Honolulu, HI 96825 |
0 |
0.0% |
0 |
0.0% |
Kelly Zastowny(3) 103 - 20120 64th Avenue
Langley, BC V2Y 1M8 |
0 |
0.0% |
0 |
0.0% |
2
Paul Kessler(5) 6363 Sunset Boulevard, 5th Fl. Hollywood, CA 90028 |
6,525,000 |
16.27% |
6,525,000 |
7.85% |
Mario Ayub(4) Pascual Orozco# 2117-A Chihuahua, Chih. 31310 Mexico |
0 |
0.0% |
21,500,000 |
25.87% |
Patrick Kephart(6) 424 East Central Blvd., Ste. 342
Orlando, FL 32801 |
0 |
0.0% |
10,166,666 |
12.23% |
All officers and directors as a
group | 0 | 0.0% | 21,500,000 | 25.87% |
(1)
The percentages are calculated based upon 40,107,597 shares of Common Stock outstanding immediately
preceding the closing of the Exchange and do not take into account any shares that will be issued in the
private placement described in Item 5 below.
(2)
The percentages are calculated based upon 83,107,597 shares of Common Stock outstanding immediately
following the closing of the Exchange and do not take into account any shares that will be issued in the
private placement described in Item 5 below.
(3)
The person listed was an officer, a director, or both, of the Company prior to the Share Exchange.
(4)
The person listed is an officer, a director, or both, of the Company following completion of the share
exchange transaction.
(5)
Includes (i) 2,000,000 shares of the Company’s Common Stock which Mr. Kessler has an option to
acquire for a purchase price of $0.03 per share at any time on or before February 25, 2007, and (ii)
1,500,000 shares of the Company’s Common Stock which may be acquired by Bristol Capital, LLC
pursuant to a convertible debenture dated January 16, 2004, which shares are deemed to be beneficially
owned by Paul Kessler as an authorized signatory of Bristol Capital, LLC who has voting and investment
control over the shares owned by Bristol Capital, LLC. The outstanding principal amount of the
debenture and, at the option of the Company, the accrued interest on the debenture is convertible into
shares of the Company’s Common Stock at the rate of $0.02 per share. Pursuant to the terms of the stock
option agreement, Mr. Kessler may not exercise the option if the result of such exercise would cause Mr.
Kessler and his affiliates to beneficially own a number of shares of the Company’s Common Stock which
would exceed 4.9% of the Company’s outstanding Common Stock. Pursuant to the terms of the
debenture, Bristol Capital, LLC may not effect a conversion of the debenture if the result of such
conversion would cause Bristol Capital, LLC and its affiliates to beneficially own a number of shares of
the Company’s Common Stock which would exceed 4.9% of the Company’s outstanding Common Stock.
(6)
Includes the following shares of which Mr. Kephart may be deemed to be the beneficial owner: (i)
5,733,333 shares owned by Tenfold Services Incorporated, which is beneficially owned by the trustee of an
irrevocable trust of which Mr. Kephart is the grantor and also one of the beneficiaries. Mr. Kephart has
no power to vote, buy or sell these shares; (ii) 716,667 shares owned by Liberty Management, LLC
Defined Benefit Plan, which is an ERISA-qualified plan with a third party administrator. Mr. Kephart is
the Managing Member of Liberty Management, LLC (“Liberty Management”); (iii) 358,333 shares owned
by Jack F. Kephart - UTMA, of which Mr. Kephart is the grantor; (iv) 358,333 shares owned by
Annabelle S. Kephart - UTMA, of which Mr. Kephart is the grantor; and (v) an option to acquire up to
3,000,000 shares of the Company’s Common Stock for a purchase price of $0.01 per share at any time on
or before May 25, 2009. These options were granted to Liberty Management as a finder’s fee in
connection with the Exchange.
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Sierra is a party to a Joint Venture Agreement (the “JV Agreement”), dated April 26, 2004 and amended on
June 1, 2004, by and between Sierra and Minera Rio Tinto S.A. de C.V., a Mexican company (“MRT”),
pursuant to which Sierra and MRT have agreed to explore and, if feasible, develop certain mining
properties which MRT has the option to acquire. The properties are located in the state of Chihuahua,
Mexico. A copy of the JV Agreement, as amended, is attached as an exhibit hereto.
Pursuant to the terms of the JV Agreement, Sierra has a number of financial obligations, including an
immediate advance of $167,500 to MRT, an investment of $1,000,000 by June 30, 2004 and the
establishment of a $2,000,000 line of credit on behalf of the joint venture within 60 days of the signing of
the JV Agreement. The funds are to be used as working capital and to prepare one of the joint venture
properties for production. MRT will contribute the properties to the joint venture concurrently with the
$1,000,000 investment by Sierra. The joint venture will be owned 60% by Sierra and 40% by MRT.
In connection with the Exchange, Kelly Zastowny, one of the Company’s directors resigned, and a nominee
of the Sierra Shareholders was appointed as a successor. The Company’s new director is Mario Ayub, and
he will serve as a director until his successor is elected and qualified. Mr. Ayub has served as the President
of MRT since 1994, and from 1997 to 2001 he was a director on the Board of Metalline Mining Company
and Sheffield Resources. He graduated in 1976 from the Universidad Iberoamericana in Mexico City with
a degree in chemical engineering, and he has complete post-graduate studies in metallurgy at Comision de
Fomento Minero and South Dakota University. Mr. Ayub also serves on the boards of numerous social
and industrial organizations.
ITEM 2.
ACQUISITION OR DISPOSITION OF ASSETS
The Company acquired 3,000 shares of Sierra common stock from the Sierra Shareholders in the
Exchange, and the Company now owns 100% of Sierra’s issued and outstanding capital stock. Sierra is a
wholly-owned subsidiary of the Company, and the shares of Sierra common stock represent the Company’s
most significant asset. In determining the amount of consideration to give to the Sierra Shareholders in the
Exchange, the Board considered the anticipated value of the properties and mining options that will be
contributed pursuant to the JV Agreement.
Sunburst is assisting Sierra with its funding obligations under the JV Agreement. To that end, Sunburst
loaned $57,500 to MRT pursuant to a promissory note dated January 9, 2004 and an additional $167,500
pursuant to a promissory note dated May 3, 2004. The money from each of these loans was to be used for
payment of costs relating to title issues affecting certain of the mining properties. The JV Agreement
provides that the $1,000,000 investment required by Sierra pursuant to the JV Agreement shall be reduced
by an amount equal to these loans, or $225,000.
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ITEM 5.
OTHER EVENTS
Sunburst is in the process of completing a private placement consisting of up to 3,000,000 at a price of
$0.10 per unit. Each unit is comprised of one share of common stock and one warrant to purchase an
additional share of common stock at a price of $0.20 per share. The funds from the private placement will
be used to fund the loan to MRT and to help satisfy the other capital requirements of Sierra under the JV
Agreement. To date, Sunburst has raised approximately $197,000 in the private placement. There can be
no assurance that Sunburst or Sierra will be successful in raising all of the funds required under the JV
Agreement.
Sunburst will enter into a registration rights agreement (the “Registration Rights Agreement”) with each of
the purchasers in the private placement. Under the terms of the Registration Rights Agreement, the
purchasers have the right to include the common stock of the Company held by them in any registration
statement filed by the Company before April 15, 2006. In addition, if requested by the holders of 75% of
the shares that will be issued upon the conversion of the warrants that are part of the units, the Company
will be required to complete one registration statement covering such shares. A copy of the Registration
Rights Agreement is attached as an exhibit hereto.
ITEM 7.
FINANCIAL STATEMENTS AND EXHIBITS
(a)
Financial statements of business acquired:
Sierra Minerals and Mining, Inc. interim financial statements for the period ended June 30,
2004.
(b)
Pro forma financial information.
Pro forma condensed consolidated financial statements.
(c)
The following exhibits are herein incorporated by reference from Form 8-K filed with the
Securities and Exchange Commission on July 16, 2004:
2.1
Share Exchange Agreement, dated May 3, 2004, by and among Sunburst Acquisitions IV,
Inc., a Colorado corporation, Sierra Minerals and Mining, Inc., a Nevada corporation, and
the shareholders of Sierra Minerals & Mining, Inc.
2.2
Joint Venture Agreement, dated April 26, 2004 and amended on June 1, 2004, by and
between Sierra Mining and Minerals, Inc., a Nevada corporation, and Minera Rio Tinto
S.A. de C.V., a Mexican company
2.2a
Amendment to Joint Venture Agreement dated June 1, 2004.
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4.1
Registration Agreement dated April 20, 2004, by and among Sunburst Acquisitions IV,
Inc., a Colorado company, and each of the purchasers in a private placement of shares of
Sunburst.
10.1
Promissory Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto S.A. de
C.V. in the amount of $ 57,500 dated January 9, 2004.
10.2
Promissory Note between Sierra Mineral and Mining, Inc. and Minera Rio Tinto S.A. de
C.V. in the amount of $ 167,500, dated May 3, 2004.
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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.
SUNBURST ACQUISITIONS, INC.
By: /S/
Terry Fields, President and Director
Date: August 9, 2004
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