SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------
For Quarter Ended July 31, 1998 Commission File No. 00-22661
SUNBURST ACQUISITIONS I, INC.
(Exact name of registrant as specified in charter)
Colorado 84-1135638
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
at incorporation)
The Beren, Blisworth Hill Farm
Stoke Road
Blisworth, Northamptonshire NN7 3DB
- --------------------------------------------------------------------------------
(Address of principal (Postal Code)
executive offices)
Registrant's telephone number, including area code: (01604) 859893
--------------
4807 South Zang Way, Morrison Colorado 80165
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------ ------
As of September 2, 1998, there were 30,206,896 shares of the common stock, no
par value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
--- ---
<PAGE>
SUNBURST ACQUISITIONS I, INC.
July 31, 1998
INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Page No.
--------
PART I. FINANCIAL INFORMATION...........................................................................1
Item 1. Financial Statements............................................................................1
Balance Sheet as of July 31, 1998.............................................................F-1
Statements of Loss and Accumulated Deficit for the period February 25, 1997 to
July 31, 1998..............................................................................F-2
Statements of Cash Flow for the period February 25, 1997 to
July 31, 1998...............................................................................F-3
Notes to Financial Statements.................................................................F-4
Item 2. Management's Discussion and Analysis or Plan of Operation.......................................2
PART II. OTHER INFORMATION...............................................................................3
Item 1. Legal Proceedings...............................................................................3
Item 2. Changes in Securities...........................................................................3
Item 3. Default Upon Senior Securities..................................................................3
Item 4. Submission of Matters to a Vote of Security Holders.............................................3
Item 5. Other Information...............................................................................3
Item 6. Exhibits and Reports on Form 8-K................................................................4
SIGNATURES
</TABLE>
i
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(Attached)
CORPDAL:113114.3 40687-00001
1
<PAGE>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
BALANCE SHEET
July 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46
-------------------------
Total current assets 46
OTHER ASSETS
Organizational costs (net) 225
TOTAL ASSETS $ 271
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ --
-------------------------
Accounts payable - related party $ 331
-------------------------
Total current liabilities 331
STOCKHOLDERS' EQUITY
Preferred stock, no par value: 20,000,000 shares authorized;
80,000 shares issued and outstanding 8,000
Common stock, no par value; 100,000,000
shares authorized; 2,030,000 shares issued
and outstanding 2,220
Additional paid in capital 750
Deficit accumulated during the development stage (11,030)
--------------------------
Total stockholders' equity (60)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 271
=========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (February 25, 1997) to July 31, 1998
(Unaudited)
For the period
from inception
(March 24, For the three For the three
1997) to months ended months ended
July 31, 1998 July 31, 1997 July 31, 1998
--------------------- --------------------- ----------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
--------------------- --------------------- ----------------------
EXPENSES
Amortization expense 75 15 15
Legal and accounting 5,896 923 154
Office expense 778 24 9
Rent expense 750 150 150
Consulting fees 2,220 - -
Travel 220 - -
Bank Charges 21 - 14
Transfer agent fees 1,070 - 350
--------------------- --------------------- ----------------------
Total expenses 11,030 1,112 692
--------------------- --------------------- ----------------------
NET LOSS (11,030) (1,112) (692)
Accumulated deficit
Balance, beginning of period - (4,618) (10,338)
--------------------- --------------------- ----------------------
Balance, end of period $ (11,030) $ (5,730) $ (11,030)
===================== ===================== ======================
NET LOSS PER SHARE $ (NIL) $ (NIL) $ (NIL)
===================== ===================== ======================
WEIGHTED AVERAGE NUMBER 2,141,766 2,095,000 2,190,000
OF SHARES OF COMMON
STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING
===================== ===================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from Inception (February 25, 1997) to July 31, 1998
(Unaudited)
For the period
from inception
(March 24, For the three For the three
1997) to months ended months ended
CASH FLOWS FROM OPERATING ACTIVITIES July 31, 1998 July 31, 1997 July 31, 1998
------------------- ------------------- ------------------
<S> <C> <C> <C>
Net loss $ (11,030) $ (1,112) $ (692)
Adjustments to reconcile net loss to net cash used by
operating activities:
Amortization expense 75 15 15
Rent expense 750 150 150
Stock issued for consulting fees 2,220 - -
Decrease (increase) in accounts payable - (347) -
Increase (decrease) in accounts payable -
related party 331 - (499)
------------------- ------------------- ------------------
Net cash used by operating activities (7,654) (1,294) (1,026)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (300) - -
------------------- ------------------- ------------------
Net cash used by investing activities (300) - -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of preferred stock 8,000 - -
------------------- ------------------- ------------------
Net cash provided by financing activities 8,000 - -
------------------- ------------------- ------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 46 (1,294) (1,026)
CASH AND CASH EQUIVALENTS,
BEGINNING PERIOD - 5,429 1,072
------------------- ------------------- ------------------
CASH AND CASH EQUIVALENTS, $ 46 $ 4,135 $ 46
END OF PERIOD
=================== =================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 1998
(Unaudited)
1. Management's Representation of Interim Financial Information
------------------------------------------------------------
The accompanying financial statements have been prepared by Sunburst
Acquisitions I, Inc. without audit pursuant to the rules and regulations of
the Securities & Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
as allowed by such rules and regulations, and management believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements include all of the adjustments that, in the
opinion of management, are necessary to a fair presentation of financial
position and results of operations. All such adjustments are of a normal and
recurring nature. These financial should be read in conjunctions with the
audited financial statements at April 30, 1998.
2. Change in Control of Registrant - Subsequent Event
--------------------------------------------------
On August 31, 1998, the Company completed the exchange of a total of
26,506,582 of its common shares for all of the issuance and outstanding
shares of Invu, PLC, a developer of document and information management
software. As a result of this transaction and related transactions, Invu PLC
has become a wholly-owned subsidiary of the Company, and the former
shareholders of Invu, PLC became 87.75% shareholders of the Company. Further
details concerning this transaction can be found in the Company's most
recent Form 10-KSB.
F-4
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Business Plan and Results of Operations
The Company's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses, and to pursue other related
activities intended to enhance shareholder value. The acquisition of a business
opportunity may be made by purchase, merger, exchange of stock, or otherwise,
and may encompass assets or a business entity, such as a corporation, joint
venture, or partnership. The Company has very limited capital, and it is
unlikely that the Company will be able to take advantage of more than one such
business opportunity.
During the period from May 1, 1998 through July 31, 1998, the Company has
engaged in no significant operations other than the location and evaluation of
acquisition candidates (and in connection therewith entering into the Agreement
Regarding Consulting Services, dated May 15, 1998 with Robert P. Jeffcock (the
"Consultant")), due diligence with respect to Invu PLC, a company incorporated
under English law ("Invu"), negotiation and execution of the Share Exchange
Agreement and the First Amendment thereto, preparation of reports required under
the Securities Exchange Act of 1934, as amended (the "Act"), and related
matters. No revenues were received by the Company during this period. During
this period, the Company incurred a loss as a result of the foregoing
activities. Subsequent to this period, the Company completed a business
combination with Invu.
Liquidity and Capital Resources
The Company's liquidity and capital resources had been diminished to the
extent that if the proposed Share Exchange was not consummated, the Company
would likely have needed to raise additional capital to pursue its business plan
to complete a suitable business combination, although it was entitled to be
reimbursed for certain expenses incurred in connection therewith by the
Consultant. The Share Exchange has been consummated; therefore, the Company's
liquidity and capital resources is be based upon the liquidity and capital
resources of Invu.
Certain of the information contained in this Annual Report on Form 10-QSB
constitutes forward looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Act, that involves certain risks,
uncertainties and additional costs described herein. The actual results that are
achieved may differ materially from any forward looking projections, due to such
risks, uncertainties and additional costs. Although the Company believes that
the expectations reflected in such forward looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved. Subsequent written and oral forward looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by reference to such risks, uncertainties and additional costs.
2
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
(a) None
(b) None
(c) None
Item 3. Default Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
General. On August 31, 1998, the Company acquired all of the issued and
outstanding capital stock of Invu PLC, a company incorporated under English law
("Invu"), in exchange for shares (the "Share Exchange") of common stock, no par
value, of the Company (the "Common Stock"), pursuant to a Share Exchange
Agreement, dated as of May 19, 1998, by and between the Company and Montague
Limited, an Isle of Man company ("Montague"), as amended by that certain First
Amendment to Share Exchange Agreement, dated as of July 23, 1998 (as amended,
the "Share Exchange Agreement"), making Invu a wholly-owned subsidiary of the
Company. Upon consummation of the Share Exchange, Montague and Halcyon PLC
(collectively, the "Invu Shareholders") received in the aggregate 26,506,552
shares of Common Stock of the Company in exchange for all of the issued and
outstanding share capital of Invu. The shares of Common Stock received by the
Invu Shareholders in the Share Exchange were issued in a transaction exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and, therefore, are restricted securities. In addition,
the Company issued 1,510,344 shares of Common Stock of the Company to Robert P.
Jeffcock (the "Consultant") pursuant to an Agreement Regarding Consulting
Services, dated May 15, 1998, for introducing Invu to the Company and for
agreeing to pay certain expenses if the Share Exchange was not consummated. The
shares issued to the Consultant were issued pursuant to a registration statement
on Form S-8 under the Securities Act.
Conversion of Preferred Stock. As a condition precedent to the consummation
of the Share Exchange, all of the outstanding shares of Series A Convertible
Preferred Stock ("Preferred") of the Company were converted into Common Stock of
Sunburst at a conversion rate of two (2) shares of Common Stock for each share
of Preferred (the "Preferred Stock Conversion").
After consummation of the Share Exchange pursuant to the Share Exchange
Agreement, the issuance of shares pursuant to the Consulting Agreement, and the
Preferred Stock Conversion, the relative stock ownership of the Company is as
follows: (i) the Company shareholders immediately prior to the Share Exchange -
7.25%; (ii) the Consultant - 5%; and (iii) the Invu Shareholders - 87.75%.
Directors and Officers of the Company. Effective on the Closing Date, the
existing directors and officers of the Company resigned, and the following new
directors and officers of the Company were appointed:
David Morgan - Director, President and Chief Executive Officer
Martyn Doherty - Director, Vice President-Chief Financial Officer and
Secretary
3
<PAGE>
Paul O'Sullivan - Director and Vice President-Director of Development
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS
The following exhibit is furnished in accordance with Item 601 of Regulation
S-B.
2.1 Share Exchange Agreement, dated as of May 19, 1998, by and between
Sunburst Acquisitions I, Inc. and Montague Limited, which includes
the Invu Disclosure Schedule, the Sunburst Disclosure Schedule and
Exhibit 9(n) - Form of Release (the Disclosure Schedules and
Exhibits have been omitted pursuant to Regulation S-B 601(b)(2)
but will be furnished to the Securities and Exchange Commission
upon request) (incorporated by reference from the Current Report
on Form 8-K dated May 19, 1998, Exhibit 2.1).
2.2 First Amendment to Share Exchange Agreement, dated as of July 23,
1998, by and between Sunburst Acquisitions I, Inc. and Montague
Limited (incorporated by reference from the Current Report on Form
8-K/A dated July 23, 1998, Exhibit 2.2).
27* Financial Data Schedule (Exhibit 27).
99 Agreement Regarding Consulting Services, dated as of May 15, 1998,
by and between Robert P. Jeffcock and Sunburst Acquisitions I,
Inc. (incorporated by reference from Form 10-KSB, dated August 13,
1998, Exhibit 99).
*Filed herewith
Form 8-K: The Company filed the following Reports on Form 8-K during
the last quarter of the Company's fiscal year ended July 31, 1998:
(i) On May 19, 1998, the Company filed with the Securities and Exchange
Commission a current Report on Form 8-K reporting the execution of the
Share Exchange Agreement.
(ii) On July 23, 1998, the Company filed with the Securities Exchange
Commission a Current Report on Form 8-K/A reporting the amendment of
the Share Exchange Agreement.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Quarterly Report to be signed on
its behalf by the undersigned thereunto duly authorized.
SUNBURST ACQUISITIONS I, INC.
(Registrant)
Date: September 14, 1998 By: /s/ David Morgan
------------------------------
David Morgan, President and
Chief Executive Office
(Principal Executive Officer)
Date: September 14, 1998 By: /s/ Martyn Doherty
------------------------------
Martyn Doherty, Vice President
-Chief Financial Officer and
Secretary (Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Sunburst Acquisitions I, Inc.
</LEGEND>
<CIK> 0001035039
<NAME> Sunburst Acquisitions I, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<EXCHANGE-RATE> 1.00
<CASH> 46
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 271
<CURRENT-LIABILITIES> 331
<BONDS> 0
0
8000
<COMMON> 2220
<OTHER-SE> (10280)
<TOTAL-LIABILITY-AND-EQUITY> 271
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 692
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (692)
<INCOME-TAX> 0
<INCOME-CONTINUING> (692)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (692)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
