SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of The Securities Act of
1934.
Date of Report (Date of earliest event reported):
August 4, 1999
Commission File No: 0-23561
SUNBURST ACQUISITIONS IV, INC.
(Name of small business in its charter)
Colorado 84-1431797
__________________________________________________________
(State or other (IRS Employer Identification
jurisdiction of Incorporation) No.)
2082 Cherry Street
__________________________________________________________
Address of Principal Executive Office (street and number)
Denver, Colorado 80207
__________________________________________________________
City, State and Zip Code
(Issuer's telephone number: (303)321-0461
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
(a) Audited financial statements of Prologic Management Systems,
Inc. for its fiscal year ended March 31, 1999, are incorporated herein by
reference from the report on Form 10-KSB filed by Prologic
Management Systems, Inc., on July 14, 1999.
(b) Unaudited pro forma financial statements of Sunburst, giving
effect to the merger of Prologic into Sunburst, under the terms of the
Stock Purchase and Merger Agreement, follow:
On July 8, 1999, Sunburst Acquisitions IV, Inc., ("Sunburst") entered
into a Stock Purchase and Merger Agreement ("SPMA") with
Prologic Management Systems, Inc., an Arizona corporation
("Prologic"). The terms of the SPMA required that Sunburst purchase
up to 5,280,763 shares of common stock of Prologic for $3,000,000.
Under the SPMA Sunburst's investment is to be staged in two parts.
The first stage ("Tranche 1"), which was fully funded upon closing on
August 4, 1999, involved the purchase of 3,459,972 shares of
common stock of Prologic for a subscription price of $1,000,000, or
$0.2890 per share. In conjunction with the closing of Tranche 1, a
Voting Trust Agreement was executed granting Sunburst voting rights
to a total of 1,071,060 shares of common stock. Following the closing
of Tranche 1 and execution of the Voting Trust Agreement, Sunburst
owned or had voting control of more than 50% of the issued and
outstanding common shares of Prologic. Sunburst funded Tranche 1
through the issuance of 500,831 shares of common stock at $2.00 per
share.
Sunburst's second stage investment under the SPMA ("Tranche 2")
involves the purchase of up to 1,820,791 additional shares for a
purchase price of $2,000,000, or approximately $1.0984 per share.
The proceeds from Tranche 2 are intended to be used by Prologic to
facilitate the acquisition of another (unaffiliated) company (the
"Tranche 2 Acquisition"), and Tranche 2 is to be funded essentially
simultaneously with the closing of the Tranche 2 Acquisition.
Tranche 2 has not yet closed.
It is intended that Prologic merge into Sunburst. As a condition to
closing the merger, Sunburst is obligated to have a binding
commitment from investors to provide it, in two stages, with up to
$4,000,000 in equity capital. The first stage will be represented by
the Tranche 2 funding described above. The second $2,000,000 stage
("Tranche 3"), which is intended to be funded after completion of the
merger, will require that Sunburst have a binding commitment from
investors to purchase a total of 890,287 shares of Sunburst common
stock for a total purchase price of $2,000,000, or $2.246 per share.
In conjunction with execution of the SPMA, Sunburst and certain of
its shareholders entered into an agreement with a group of investors to
permit the investors to acquire control of Sunburst in return for
providing the funds required by the SPMA. The agreement with these
investors involves a four step reorganization of Sunburst including (i)
the sale by five current shareholders of Sunburst of a total of 385,000
shares of common stock; (ii) the voluntary surrender for cancellation
of a total of 436,000 shares of common stock, reducing the number of
issued and outstanding shares from 2,435,000 to 1,999,000; (iii)
completion of a 20:1 forward split increasing the number of issued
and outstanding shares to 39,980,000; and (iv) the voluntary surrender
for cancellation of a total of 31,680,000 shares, reducing the number
of issued and outstanding shares (following completion of the forward
split described above) to 8,300,000.
Only after the successful completion of the above transactions, will
Prologic merge into Sunburst. To effect the merger, Sunburst will
issue common and preferred shares for all of the outstanding common
and preferred shares of Prologic in the ratio of one Sunburst share for
each Prologic share surrendered. Prologic shares held in treasury, by
way of any Prologic subsidiary, and by Sunburst directly as a result
of the transactions noted above will be cancelled. An adjustment to
the number of shares of Sunburst common stock will be made in order
that the shares of common stock issued to former Prologic
shareholders as described above will result in those shareholders
holding 47.15% of the outstanding common stock of Sunburst after
the merger but prior to Tranche 3, as detailed in Section 8.6(a)(v) of
the SPMA.
Sunburst will adopt a fiscal year end of March 31,which is the
reporting year of Prologic, the accounting acquiror. The following
unaudited pro forma financial statements are based on the historical
presentation of the financial statements of Prologic and Sunburst for
each of the periods indicated.
The unaudited pro forma statements of operations for the interim
period ended June 30, 1999 and for the year ended March 31, 1999
give effect to the SPMA as if it had occurred on April 1, 1999 and
April 1, 1998, respectively. The unaudited pro forma balance sheet
as of June 30, 1999 gives effect to the SPMA as if it had occurred on
June 30, 1999. The unaudited pro forma financial statements should
be read in conjunction with the historical financial statements,
including notes thereto, of Prologic and Sunburst previously filed or
included herein.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Balance Sheet(Note 1)
June 30, 1999
(page 1 of 2)
(Note 2) (Note 2)
Sunburst Prologic
May 31 June 30
1999 1999
ASSETS
CURRENT ASSETS:
Cash 1,424 304,112
Restricted cash - 300,000
Accounts receivable - 5,895,081
Other current assets - 217,460
Total current assets 1,424 6,716,654
Property and
equipment, net - 495,554
Intangible assets, net 195 967,037
Other assets - 33,024
$ 1,619 $ 8,212,269
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and short
term notes payable 300 6,129,651
Accrued expenses - 891,276
Deferred revenue - 128,566
Total current
liabilities 300 7,149,493
Long term notes
payable - 2,631,829
$ 300 $ 9,781,322
SHAREHOLDERS' EQUITY:
Preferred stock, no par value,
20,000,000 shares
authorized, no shares
issued and oustanding - -
Common stock, no par value,
100,000,000 shares
authorized, 2,435,000
shares issued
and outstanding 18,935 -
Series A cumulative
convertible preferred stock,
no par value, 750,000
shares authorized,
16,667 shares issued and
outstanding - 100,000
Series B cumulative
convertible preferred stock,
no par value, 100,000
shares authorized,
72,000 shares issued and
outstanding - 519,883
Common stock, no par value,
10,000,000 shares
authorized, 4,711,349
shares issued
and outstanding - 8,700,137
Common stock, no par value,
50,000,000 shares
authorized, 10,882,399
shares issued
and outstanding - -
Series A cumulative
convertible preferred stock,
no par value, 750,000
shares authorized,
16,667 shares issued and
outstanding - -
Series B cumulative
convertible preferred stock,
no par value, 100,000
shares authorized,
72,000 shares issued and
outstanding - -
Warrants - 694,230
Warrants - -
Additional paid-in
capital 1,050 -
Additional paid-in
capital - -
Accumulated deficit (18,666) (11,583,303)
Total Stockholders'
Equity 1,319 (1,569,053)
1,619 8,212,269
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Balance Sheet
June 30, 1999
(page 2 of 2)
(Note 3) Pro Forma
June 30
Adjustments 1999
ASSETS
CURRENT ASSETS:
Cash 5,000,000 5,305,536
Restricted cash - 300,000
Accounts receivable - 5,895,081
Other current assets - 217,460
Total current assets 5,000,000 11,718,078
Property and
equipment, net - 495,554
Intangible assets, net - 967,037
Other assets - 33,024
$ 5,000,000 $ 13,213,888
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and short
term notes payable - 6,129,651
Accrued expenses - 891,276
Deferred revenue - 128,566
Total current
liabilities - 7,149,793
Long term notes
payable - 2,631,829
- $ 9,781,622
SHAREHOLDERS' EQUITY:
Preferred stock, no par value,
20,000,000 shares
authorized, no shares
issued and oustanding - -
Common stock, no par value,
100,000,000 shares
authorized, 2,435,000
shares issued
and outstanding (18,935) -
Series A cumulative
convertible preferred stock,
no par value, 750,000
shares authorized,
16,667 shares issued and
outstanding (100,000) -
Series B cumulative
convertible preferred stock,
no par value, 100,000
shares authorized,
72,000 shares issued and
outstanding (519,883) -
Common stock, no par value,
10,000,000 shares
authorized, 4,711,349
shares issued
and outstanding (8,700,137) -
Common stock, no par value,
50,000,000 shares
authorized, 10,882,399
shares issued
and outstanding 5,019,985 5,019,985
Series A cumulative
convertible preferred stock,
no par value, 750,000
shares authorized,
16,667 shares issued and
outstanding 100,000 100,000
Series B cumulative
convertible preferred stock,
no par value, 100,000
shares authorized,
72,000 shares issued and
outstanding 519,883 519,883
Warrants (694,230) -
Warrants 694,230 694,230
Additional paid-in
capital (1,050) -
Additional paid-in
capital 8,681,471 8,681,471
Accumulated deficit 18,666 (11,583,303)
Total Stockholders'
Equity 5,000,000 3,432,266
5,000,000 13,213,888
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Statements of Operations (Note 1)
For the interim period ended June 30, 1999
(page 1 of 2)
(Note 2) (Note 2)
Sunburst Prologic
3 Months 3 Months
5/31/99 6/30/99
REVENUES - 8,194,508
Cost of revenue - 6,646,080
Gross Profit - 1,548,428
Operating expenses 719 1,592,485
Loss from operations (719) (44,057)
Other expenses - 69,597
Net loss (719) (113,654)
Cumulative preferred
stock dividend - 20,222
Net loss available to
common shareholders (719) (133,876)
Net loss per share 0 n/a
Weighted average shares
outstanding 2,435,000
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Statements of Operations (Note 1)
For the interim period ended June 30, 1999
(page 2 of 2)
Pro Forma
3 Months
Adjustments 6/30/99
REVENUES - 8,194,508
Cost of revenue - 6,646,080
Gross Profit - 1,548,428
Operating expenses - 1,593,204
Loss from operations - (44,776)
Other expenses - 69,597
Net loss - (114,373)
Cumulative preferred
stock dividend - 20,222
Net loss available to
common shareholders - (134,595)
Net loss per share 0 (.01)
Weighted average shares
outstanding 10,882,399
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Statements of Operations (Note 1)
For the year ended March 31, 1999
(page 1 of 2)
(Note 2) (Note 2)
Sunburst Prologic
12 Months 12 Months
2/28/99 3/31/99
REVENUES - 17,078,678
Cost of revenue - 13,006,808
Gross Profit - 4,071,870
Operating expenses 10,205 5,919,729
Loss from operations (10,205) (1,847,859)
Other expenses - 380,328
Net loss (10,205) (2,228,187)
Cumulative preferred
stock dividend - 83,033
Net loss available to
common shareholders (10,205) (2,311,220)
Net loss per share 0 n/a
Weighted average shares
outstanding 2,095,000
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisitions IV, Inc.
Prologic Management Systems, Inc.
Unaudited Pro Forma Statements of Operations (Note 1)
For the year ended March 31, 1999
(page 2 of 2)
Pro Forma
12 Months
Adjustments 3/31/99
REVENUES - 17,078,678
Cost of revenue - 13,006,808
Gross Profit - 4,071,870
Operating expenses - 5,929,934
Loss from operations - (1,858,064)
Other expenses - 380,328
Net loss - (2,238,392)
Cumulative preferred
stock dividend - 83,033
Net loss available to
common shareholders - (2,321,425)
Net loss per share - (0.37)
Weighted average shares
outstanding 6,243,269
The accompanying notes are an integral part of these pro forma financial
statements.
Sunburst Acquisition IV, Inc.
Prologic Management Systems, Inc.
Notes To Unaudited Pro Forma Financial Statements
Note 1. The unaudited pro forma financial data do not give effect to
any potential savings or other synergies that could result from the
combination of Sunburst and Prologic. The pro forma data are not
necessarily indicative of the operating results or financial position that
would have occurred had the SPMA been consummated as of the
dates indicated, nor are they necessarily indicative of future operating
results or financial position. The pro forma adjustments are based on
available information and upon certain assumptions that management
believes are reasonable under the circumstances.
Note 2. These columns represent historical results of operations and
financial position as of and for the dates indicated.
Note 3. The adjustments present the effect of the following elements
of the SPMA and corresponding reorganization agreement among the
parties:
A. A total of $3,000,000 in outside equity investment in Sunburst
and corresponding purchase by Sunburst of Prologic stock (Tranche 1
and Tranche 2),
B. four-step reorganization of Sunburst:
1. sale of 385,000 pre-split common shares;
2. surrender and cancellation of 436,000 pre-split common shares;
3. 20:1 forward split of common stock; and
4. surrender and cancellation of an additional 31,680,000 post split
common shares.
C. adjustment to reflect a reduction in the number of pre-merger
Sunburst common shares to 52.85% of the total post-merger common
shares outstanding prior to Tranche 3, assuming a one for one share
exchange.
D. the merger of Prologic into Sunburst, including the issuance by
Sunburst of at least 4,711,349 common shares, 88,667 preferred
shares and 1,262,486 warrants, and
E. the sale of an additional 890,287 Sunburst common shares to
outside investors for $2,000,000 (Tranche 3).
After the merger, the shareholders and management of Prologic will
have effective operating control of the combined company. The
transaction is considered to be a capital transaction in substance,
rather than a business combination and therefore purchase accounting
has been applied, except that no goodwill or other intangible has been
recorded. Direct expenses related to the agreement and plan of
reorganization have been charged to operations in the interim period
ended June 30, 1999. Future expenses, which are not expected to be
material, will be charged in the period incurred.
Except as otherwise indicated, all share and per share amounts in
these pro forma combined financial statements have been adjusted to
reflect the surrender of Sunburst common shares and the forward
stock split. For purposes of computing loss per share, shares issued
in the merger, adjustments to outstanding shares to comply with the
SPMA and shares sold to outside investors are shown as outstanding
as of the beginning of each period presented.
ITEM 7. (b) EXHIBITS.
None.
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 IV, INC.
Dated: October 18, 1999
/s/______________________________
Michael R. Quinn, President