U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
|X| Annual report under Section 13 or 15 (d) of the Securities Exchange Act of
1934 for the fiscal year ended April 30, 1998.
| | Transition report under Section 13 or 15 (d) of the Securities Exchange Act
of 1934 for the transition period from _____________to _____________
Commission File Number 000-22661
---------
SUNBURST ACQUISITIONS I, INC.
(Name of Small Business Issuer in Its Charter)
Colorado 84-1135638
- ------------------------------------------ -------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4807 South Zang Way
Morrison, Colorado
- ------------------------------------------
(Address of Principal Executive Offices) 80465
-------------------------
(Zip code)
(303)979-2404
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code.)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange
------------------- on Which Registered
NONE ---------------------
N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock and Series A Convertible Preferred Stock
----------------------------------------------------------------
(Title(s) of class(es))
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 past 90 days.
Yes X No
-------------------- -------------------
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. | |
State issuer's revenues for its most recent fiscal year. $ 0
State the aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of July 30, 1998: $611 based upon the
original sales price of the common stock of $0.001 per share. For purposes of
this computation, all executive officers, directors and 10% stockholders were
deemed affiliates. Such a determination should not be construed as an admission
that such executive officers, directors or 10% stockholders are affiliates.
As of July 30, 1998, there were 2,030,000 shares of the common stock, no par
value, of the registrant issued and outstanding, and 80,000 shares of Series A
Convertible Preferred Stock, no par value, issued and outstanding.
Transitional Small Business Disclosure Format: Yes No X
------------ -------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Sunburst Acquisitions I, Inc.
Page Number
PART I .........................................................................................................1
Items 1 and 2. Description of Business and Property.....................................................1
Item 3. Legal Proceedings...............................................................................3
Item 4. Submission of Matters to a Vote of Securityholders..............................................4
PART II .........................................................................................................4
Item 5. Market for Common Equity and Related Stockholder Matters........................................4
Item 6. Management's Discussion and Analysis or Plan of Operations......................................6
Item 7. Financial Statements............................................................................7
Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure............7
PART III .........................................................................................................8
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...............................................8
Item 10. Executive Compensation.........................................................................9
Item 11. Security Ownership of Certain Beneficial Owners and Management................................10
Item 12. Certain Relationships and Related Transactions................................................10
Item 13. Exhibits and Reports on Form 8-K..............................................................12
SIGNATURES..............................................................................................13
Index to Exhibits................................................................................Index - 1
EXHIBIT 21 - SUBSIDIARIES OF THE COMPANY.........................................................Index - 2
EXHIBIT 99 - CONSULTING AGREEMENT................................................................Index - 3
EXHIBIT 27 - FINANCIAL DATA SCHEDULES............................................................Index - 4
</TABLE>
<PAGE>
PART I
Items 1 and 2. Description of Business and Property
General
Sunburst Acquisitions I, Inc. (the "Company") was incorporated under
the laws of the State of Colorado on February 25, 1997, as a "shell" company,
and is in the early developmental and promotional stages. It was initially
capitalized with approximately $10,000, and as of April 30, 1998, had current
assets of $1,072, liabilities of $830, and stockholders' equity of $482. Except
as described below with respect to the Share Exchange, the Company's only
activities have been organizational ones, directed at developing its business
plan and raising its initial capital. The Company has not commenced any
commercial operations. The Company has no full-time employees and owns no real
estate.
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.
The Share Exchange
General. On May 19, 1998, the Company entered into a conditional
agreement to acquire 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, by and between the
Company and Montague Limited ("Montague"), an Isle of Man company (as amended by
that certain First Amendment to Share Exchange Agreement, dated as of July 23,
1998, the "Share Exchange Agreement"). The Share Exchange Agreement provides
that upon satisfaction of certain conditions, including, but not limited to, (i)
receipt by Montague of a power of attorney from Halcyon Enterprises Plc, a
company incorporated under English law ("Halcyon") to transfer its shares of
Invu to the Company, and (ii) the conversion of all outstanding shares of
Sunburst Preferred Stock into Sunburst Common Stock, Invu will become a
wholly-owned subsidiary of the Company. As of May 19, 1998, the Company had a
total of 2,190,000 shares of Common Stock issued and outstanding assuming the
conversion of the Sunburst Preferred Stock. The Share Exchange Agreement
contemplates that, upon consummation of the Share Exchange, Montague and Halcyon
(collectively, the "Invu Shareholders") will receive in the aggregate
approximately 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 to be received by the Invu Shareholders in the Share Exchange will be
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, will
be restricted stock. The Share Exchange Agreement also provides that, upon
consummation of the Share Exchange, the Company will issue 1,510,344 shares of
Common Stock of the Company to its consultant (the "Consultant") for introducing
Invu to the Company. The shares to be issued to the Consultant will be issued
pursuant to a registration statement on Form S-8 under the Securities Act if
permitted by applicable law, or, if not permitted, such shares shall be issued
in a transaction exempt from registration under the Securities Act pursuant to
Section 4(2) of the Securities Act. The Share Exchange Agreement further
provided that Invu would deposit $500,000 into an account maintained by INVU
Services Limited, a company organized under English law, and a wholly-owned
subsidiary of INVU ("Invu Services"), on or before July 27, 1998, and an
additional $500,000 within fourteen (14) days after the consummation of the
Share Exchange. These funds will provide future working capital for the Company.
Subject to approval of the Board of Directors of the Company, compliance with
applicable proxy rules of the Securities Exchange Act of 1934, as amended, and
approval of the shareholders of the Company, Montague also agreed to vote in
favor of a 2.4 to 1 reverse split of the Common Stock of the Company.
Assuming the consummation of the Share Exchange pursuant to the Share
Exchange Agreement, the relative stock ownership of the Company will be 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%.
1
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Directors and Officers of the Company. Effective on the Closing Date,
the existing directors and officers of the Company will resign and Montague will
appoint new directors and officers of the Company.
Transaction Fees. The Share Exchange Agreement provides, and the
Consultant has agreed pursuant to his consulting agreement with the Company, a
copy of which is attached hereto as Exhibit 99 and is incorporated herein by
reference, that in the event that the Share Exchange and the other transactions
contemplated by the Share Exchange Agreement are not consummated, the Consultant
will pay all expenses and costs incurred by the Company and Invu in connection
with the Share Exchange Agreement and the transactions contemplated thereby.
Termination. The Share Exchange Agreement may be terminated prior to
the Effective Date (as defined in the Share Exchange Agreement) by: (i) mutual
consent of the board of directors of the Company and Montague for any reason;
(ii) the Company, if Montague has failed to comply in any material respect with
any of its covenants or agreements under the Share Exchange Agreement that are
required to be complied with prior to the date of such termination; (iii)
Montague, if the Company has failed to comply in any material respect with any
of their covenants or agreements under the Share Exchange Agreement that are
required to be complied with prior to the date of such termination; (iv) either
the Company or Montague, if the closing does not take place prior to the 90th
day following the date of the Share Exchange Agreement, unless such delay is
attributable to actions by a Governmental Entity (as defined in the Share
Exchange Agreement); or (v) either the Company or Montague, if a Governmental
Entity has permanently enjoined or prohibited consummation of the Share Exchange
and such court or government action is final and nonappealable.
Proposed Name Change. Subject to final approval of the Board of
Directors of the Company, the Company plans to change its name to "INVU, Inc."
subsequent to the consummation of the Share Exchange.
INVU
General. Invu is a software development company incorporated on May 23,
1997 under the laws of the United Kingdom. The principal executive office of
Invu and its subsidiaries is located at The Beren, Blisworth Hill Farm, Stoke
Road, Blisworth, Northamptonshire NN7 3DB. Invu has two (2) wholly-owned
subsidiaries, Invu Services and Invu International Holdings Limited, a company
incorporated under English law ("Invu Holdings" and together with Invu and Invu
Services, collectively, the "Invu Group"). The former is the sales, marketing
and trading company and the latter holds the intellectual property rights to the
INVU software.
Management.
David Morgan - Mr. Morgan is 37 years old and graduated in 1982 from
the University of Warwick with a Bachelor of Laws degree, with honors. From 1982
to 1986, he was assistant to the Director of the Industrial & Marine Division of
Rolls Royce plc. From 1986 to 1991, he was Group Commercial Manager of Blackwood
Hodge plc, a worldwide distributor of construction and earthmoving equipment.
From 1991 to 1992, he was managing director of Hunsbury Computer Services Ltd, a
systems integrator and subsidiary of Blackwood Hodge. From 1992 to 1995, he was
Managing Director of the UK subsidiary of Network Imaging Inc., an international
software and systems house. From 1995 to 1996, he was Managing Director of
Orchid Ltd, a UK systems house. From 1996 to date, he has been the Chief
Executive Officer of Invu.
Martyn Doherty (Finance Director) - Mr. Doherty is 41 years old, a
qualified chartered accountant and was a partner in a firm of accountants from
1981 to 1993. From 1993 to November 1997, Mr. Doherty was Managing Director of
Car Group which was engaged in the distribution business. From November 1997 to
present, Mr. Doherty served as a director and Chief Financial Officer of Invu.
Paul O'Sullivan (Director of Development) - Mr. O'Sullivan is 29 years
old and graduated from the University of Birmingham with a Bsc (Honors) degree
in Computer Sciences. From September 1992 to January 1994 he was a software
engineer with British Telecom, and from January 1994 to October 1995 was a
senior systems analyst with Abbey National plc. From October 1995 to May 1996 he
was a senior system developer with Orchid Limited. Between May 1996 and November
1997 Paul was a consultant to British Telecom, Royal Bank of Scotland and Pearl
Assurance before joining Invu as Director of Development.
2
<PAGE>
Product.
Invu's business is to develop and sell software for electronic
management of many types of information and documents such as forms,
correspondence, literature, faxes and technical drawings
Invu's software programs operate on networked PC and client server
systems and allow documents of any size to be scanned onto computer memory and
retrieved instantly. Invu plans to sell four variations of the software program
"INVU," all concerned with the storage and retrieval of documents as follows:
i. INVU SOLO: Entry level information and document management.
ii. INVU PRO Version 4.0: as SOLO but with certain advanced features.
iii. INVU PRO Network Edition - Multi User.
iv. INVU WEBFAST: Information and document retrieval over the internet
via a browser.
INVU scans paper, creates, imports, manages and retrieves documents.
Management believes that the product is simple to use, inexpensive and ready to
launch.
Major Contracts. The Invu Group has entered into (i) a Reseller
Agreement, dated as of March 16, 1998, by and between Invu Services and Computer
Associates Plc (the "Reseller Agreement"), and (ii) a Limited Manufacturing
Agreement, dated as of March 25, 1998, by and between Invu Services and Centura.
These contracts involve joint marketing, press releases, distribution and the
use of combined technologies. Both Computer Associates Plc and Centura will be
endorsing INVU by use of their own logotypes on INVU materials and shrink-wrap
packaging containing the software. The product has been tested in three sites as
well as being used in-house at Invu. Invu plans to open an office in the United
States by the end of 1998 and to launch sale of its products to the public in
the third quarter of 1998. On July 10, 1998, Invu and Computer Associates Plc
executed a memorandum confirming certain agreements between Invu and Computer
Associates Plc with respect to the bundling and marketing of Invu's products
under the Reseller Agreement.
Management believes that the market for document and information
management is expanding significantly. Paper scanner sales are accelerating in
the United States, and a key finding of AIIM International's (the Association
for Information and Image Management) new industry report entitled "State of the
Document Technologies Market, 1996- 2002" is that the market is expected to grow
from approximately $13.9 billion in 1998 to more than $33 billion by the year
2002. INVU, being fully integrated, addresses this market, at a price
performance which management believes to be extremely competitive.
Employees.
As of July 30, 1998, the Company employed no individuals.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No director, officer, or affiliate of the Company, and no owner of
record or beneficial owner of more than five percent (5%) of the securities of
the Company, or any associate of any such director, officer, or security holder
is a party adverse to the Company or has a material interest adverse to the
Company in reference to pending litigation.
3
<PAGE>
Item 4. Submission of Matters to a Vote of Securityholders
No matter was submitted during the fourth quarter of the fiscal year
ended April 30, 1998 to a vote of the Company's stockholders through the
solicitation of proxies or otherwise.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company Common Stock is listed on the OTC Electronic Bulletin Board
of NASDAQ. However, there has been no trading in the Common Stock.
As of July 30, 1998, there were approximately 112 holders of record
of the Company Common Stock.
The Company has not declared or paid any cash or other dividends on the
Company Common Stock to date for the last two (2) fiscal years and in any
subsequent period for which financial information is required and has no
intention of doing so in the foreseeable future.
4
<PAGE>
Recent Sales of Unregistered Securities
Since February 25, 1997 (the date of the Company's formation), the
Company has sold its common stock to the persons listed in the table below in
transactions summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Aggregate
Name Date of Sale No. of Shares Purchase Price Per Share
- ---- ------------ ------------- -------------- ---------
Jay Lutsky 2/25/97 727,500 727.501 0.001
Michael R. Quinn 2/25/97 727,500 727.50(1) 0.001
John B. Marvin 2/25/97 195,000 195.00(1) 0.001
Gary S. Joiner 2/25/97 95,000 95.00(1) 0.001
Grant W. Peck 2/25/97 95,000 95.00(1) 0.001
Dean F. Sessions 2/25/97 95,000 95.00(1) 0.001
Since February 25, 1997 (date of the Company's formation), the Company
has sold its Series A Convertible Preferred Stock to the persons listed in the
table below in transaction summarized as follows:
Aggregate
Name Date of Sale No. of Shares Purchase Price Per Share
- ---- ------------ ------------- -------------- ---------
Michael R. Quinn 2/28/97 5,000 500 0.10
Jay Lutsky 2/28/97 5,000 500 0.10
John B. Marvin 2/28/97 5,000 500 0.10
Jerry Hughes 2/28/97 15,000 1,500 0.10
R. Gerald Spehar and 2/28/97 15,000 1,500 0.10
Susan M. Spehar, Joint
Tenants
Clayton Wood 2/28/97 15,000 1,500 0.10
Kip Pedrie 2/28/97 10,000 1,000 0.10
William Drubel 2/28/97 5,000 500 0.10
Ronald Como 2/28/97 5,000 500 0.10
Each of the sales listed in this subsection "Recent Sales of
Unregistered Securities" was made for cash. All of the listed sales were either
made in reliance upon the exemption from registration provided by Rule 701
adopted pursuant to Section 3(b) of the Securities Act of 1933, or in reliance
upon the exemption from registration offered by Section 4(2) of the Securities
Act of 1933. Based upon Purchaser Questionnaires and/or Consultation and
Subscription Agreements completed by each of the subscribers and the
pre-existing relationship between the subscribers of the Company's officers and
directors, the Company had reasonable grounds to believe immediately prior to
making an offer to the private
- --------
<FN>
(1) Consideration consisted of pre-incorporation consulting services rendered
to the Company related to investigating and developing the Company's
proposed business plan and capital structure and completing the
organization and incorporation of the Company. of pre-incorporation
consulting services rendered to the Company related to investigating and
developing the Company's proposed business plan and capital structure and
completing the organization and incorporation of the Company.
</FN>
</TABLE>
5
<PAGE>
investors, and did in fact believe, when such subscriptions were accepted, that
such purchasers (1) were purchasing for investment and not with a view to
distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid.
Item 6. Management's Discussion and Analysis or Plan of Operations
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 February 25, 1997 (inception) through April 30,
1998, the Company has engaged in no significant operations, organizational
activities, acquisition of capital, registration of its securities under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the location
and evaluation of acquisition candidates, due diligence with respect to Invu,
negotiation and execution of the Share Exchange Agreement, preparation of
reports required under the Exchange 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. The Company anticipates
that until a business combination is completed with an acquisition candidate, it
will not generate revenues other than interest income, and may continue to
operate at a loss after completing a business combination, depending upon the
performance of the acquired business.
Liquidity and Capital Resources
The Company intends to carry out its plan of business as discussed above.
However, its liquidity and capital resources have been diminished to the extent
that if the proposed Share Exchange is not consummated, the Company will likely
need to raise additional capital to pursue its business plan, although it is
entitled to be reimbursed for certain expenses incurred in connection therewith
by the Consultant. If the Share Exchange is consummated, the Company's liquidity
and capital resources will be based upon the liquidity and capital resources of
Invu.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses.
6
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Irrespective of whether the Company's cash assets prove to be inadequate to
meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash. For information as
to the Company's policy in regard to payment for consulting services, see
"Certain Relationships and Transactions."
Certain of the information contained in this Annual Report on Form
10-KSB constitutes forward looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended, 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.
Item 7. Financial Statements
Filed herewith beginning on page F-1 are the following audited
financial statements of the Company:
<TABLE>
<CAPTION>
<S> <C>
Page No.
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Report of Independent Certified Public Accountants..............................................................F-1
Balance Sheet as of April 30, 1998..............................................................................F-2
Statements of Loss and Accumulated Deficit for the period February 25, 1997 to
April 30, 1998................................................................................................F-3
Statements of Stockholders' Equity for the period February 25, 1997 to
April 30, 1998................................................................................................F-4
Statements of Cash Flow for the period February 25, 1997 to
April 30, 1998................................................................................................F-5
Notes to Financial Statements...................................................................................F-6
</TABLE>
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
7
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Directors, Executive Officers, Promoters and Control Persons
The Board of Directors currently consists of two (2) persons, Jay
Lutsky and Michael R. Quinn. The following table sets forth information about
all Directors and executive officers of the Company and all persons nominated or
chosen to become such:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR FIRST
ELECTED
NAME AND BUSINESS ADDRESS AGE OFFICE DIRECTOR
------------------------- --- ------ -----------
Jay Lutsky 55 President 1997
4807 South Zang Way
Morrison, Colorado 80465
Michael R. Quinn 74 Secretary and Treasurer 1997
4807 South Zang Way
Morrison, Colorado 80465
</TABLE>
JAY LUTSKY - Mr. Lutsky has served as President and as a Director of the
Company since its inception. From 1968 to 1974, Mr. Lutsky was employed at
United Bank of Denver in various management positions, including Guaranteed
Check Manager, Corporate Programs Manager and Executive Lending Officer. From
April 1974 through April 1980, Mr. Lutsky was involved in the publishing and ski
promotions business, serving as President of Mountain Ski Association, a company
he helped to start. From August 1983 through September 1985, Mr. Lutsky worked
in the positions of General Manager of the SumFun Program, Regional Marketing
Manager, and Investor Relations Manager for Gold C Enterprises, Inc., a
publicly-traded Colorado corporation that published discount coupon books. Since
May of 1980, Mr. Lutsky has done business as Dolphin & Associates, a private
consulting firm and he has managed his personal investment portfolio.
Mr. Lutsky has served on the board and been president of several public
companies. From December 1986 through May, 1990, Mr. Lutsky served as president
of Eagle Venture Acquisitions, Inc. ("Eagle"). Eagle merged with Network
Financial Services, Inc. ("Network") in May 1990. Mr. Lutsky continued on the
board of Network which traded on the NASDAQ system until December, 1993. Mr.
Lutsky was a vice-president and served on the board of Starlight Acquisitions,
Inc. ("Starlight") a blank check offering. Starlight merged with Toucan Gold
Corporation ("Toucan"), TUGO-Bulletin Board, on May 10, 1996. Mr. Lutsky now
serves as an advisor to the current board of directors of Toucan. Mr. Lutsky
also served as a Secretary, Treasurer and director of Gatwick, Ltd., a
Regulation A public company ("Gatwick") from April 2, 1993 through October 30,
1997 at which time Mr. Lutsky resigned as an officer and director in connection
with the merger of Gatwick with and into Smart Aim Corporation. Mr. Lutsky
currently serves as a director and President of Sunburst Acquisitions III, Inc.
and a director Secretary and Treasurer of Sunburst Acquisitions IV, Inc.
He earned a Bachelor of Science degree from Kent State University in 1967.
MICHAEL R. QUINN - Mr. Quinn has served as Secretary, Treasurer and
Director of the Company since its inception. He has been involved with several
development stage companies. He consults with companies contemplating trading
publicly and his services consist of corporate structuring, management,
accounting, productions, sales, etc.
Over the last twelve years, Mr. Quinn has served as a consultant to equity
holders involved in bankruptcy and security cases. He was the lead plaintiff in
5 lawsuits, all of which resulted in favorable decisions for the plaintiff.
He served as President, Treasurer and Director of O.T.C. Capital
Corporation ("OTC"). OTC acquired Capital 2000 and is currently actively
trading. He was a founder of American Leverage, Inc., and was its
Secretary/Treasurer and a Director until American Leverage, Inc. acquired Data
National Corporation ("Data"). Data is active, profitable and in a growth mode.
8
<PAGE>
From July 11, 1988 through October 30, 1997, Mr. Quinn served as a director and
the President of Gatwick in connection with the merger of Gatwick with Smart Aim
Corporation. Mr. Quinn currently serves as a director and President of Sunburst
Acquisitions IV, Inc. and a director of Sunburst Acquisitions III, Inc.
The Company is not aware of any "family relationships" (as defined in
Item 401(c) of Regulation S-B promulgated by the Commission) among directors,
executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.
Except as set forth above, the Company is not aware of any event (as
listed in Item 401(d) of Regulation S-B promulgated by the Commission) that
occurred during the past five years that are material to an evaluation of the
ability or integrity of any director, person nominated to become a director,
executive officer, promoter or control person of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities (the
"10% Shareholders"), to file reports of ownership and changes of ownership with
the Securities and Exchange Commission ("SEC"). Officers, directors and 10%
Shareholders of the Company are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms so filed.
The Company believes that, during the last fiscal year, the following
forms required to be filed under Section 16(a) were not filed: (i) Mr. Lutsky
failed to file one Form 3 upon the effectiveness of the registration of the
Company's equity securities under the Exchange Act on Form 10-SB and
subsequently failed to file a Form 5 to reflect the failure to file such Form 3;
(ii) Mr. Quinn failed to file one Form 3 upon the effectiveness of the
registration of the Company's equity securities under the Exchange Act on Form
10-SB and subsequently failed to file a Form 5 to reflect the failure to file
such Form 3; and (iii) John B. Marvin, a former director of the Company, failed
to file one Form 3 upon the effectiveness of the registration of the Company's
equity securities under the Exchange Act on Form 10-SB and subsequently failed
to file a Form 5 to reflect the failure to file such Form 3.
Item 10. Executive Compensation
The following table sets forth the compensation paid by the Company to
its Executive Officers and Directors during the fiscal year ended April 30,
1998; no executive officer earned in excess of $100,000.
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Individual Capacity in Cash
and Number in Group Which Served Compensation
- ------------------- ------------ ------------
Jay Lutsky President and Director $-0-
Michael R. Quinn Secretary/Treasurer and Director $-0-
John B. Marvin(2) Vice President and Director $-0-
All Executive Officers as $-0-
a Group (2 persons)
- --------
<FN>
(2) Mr. Marvin resigned as a director and officer of the Company effective
as of December 1, 1997.
</FN>
</TABLE>
At inception of the Company, two of the Company's directors received
727,500 shares of common stock, and the third director received 195,000 shares
of common stock valued at $0.01 per share which were issued for services
rendered to the Company in investigating and developing the Company's business
plan and for agreeing to be a Director. No officer or director has received any
other remuneration. Until the Company acquires additional capital, it is not
intended that any officer or director will receive compensation from the other
than reimbursement for out-of-pocket expenses incurred on behalf of the Company.
The Company has no stock option, retirement, pension, or profit-sharing programs
9
<PAGE>
for the benefit of directors, officers, or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.
Item 11. Security Ownership of Certain Beneficial Owners and Management
As of July 30, 1998, there were 2,030,000 shares of Common Stock of the
Company issued and outstanding, and 80,000 shares of Series A Convertible
Preferred Stock, no par value, of the Company (the "Sunburst Preferred Stock")
issued and outstanding. The following table sets forth as of July 30, 1998, the
name and address of each person who, to the knowledge of the Company, owned
beneficially more than 5% of the shares of Common Stock deemed outstanding at
such date, the number of shares owned by each such persons and by each of the
current directors and by the current directors and executive officers of the
Company as a group, and the nature of such ownership, and the percentage of the
outstanding shares of Common Stock represented thereby.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Beneficially Percent
Beneficial Owner Owned of Class
- ---------------- ------------ --------
Jay Lutsky 720,500(3) 32.90%
4807 South Zang Way
Morrison, Colorado 80465
Michael R. Quinn 718,500(4) 32.81%
4807 South Zang Way
Morrison, Colorado 80465
John B. Marvin 205,000(5) 9.36%
4807 South Zang Way
Morrison, Colorado 80465
All Directors and Officers 1,439,000(6) 65.71%
as a Group (Jay Lutsky
and Michael R. Quinn)
--------
<FN>
(3) Assuming conversion of 5,000 shares of the Sunburst Preferred Stock
currently held by Jay Lutsky into 10,000 shares of Common Stock. Such
conversion is required by the Share Exchange Agreement.
(4) Assuming conversion of 5,000 shares of the Sunburst Preferred Stock
currently held by Michael R. Quinn into 10,000 shares of Common Stock.
Such conversion is required by the Share Exchange Agreement.
(5) Assuming conversion of 5,000 shares of the Sunburst Preferred Stock
currently held by John B. Marvin into 10,000 shares of Common Stock.
Such conversion is required by the Share Exchange Agreement. Mr.
Marvin resigned as a director and Vice President of the Company on
December 1, 1997.
(6) Assuming conversion of 10,000 shares of the Sunburst Preferred Stock
currently held by Jay Lutsky and Michael R. Quinn into 20,000 shares
of Common Stock. Such conversion is required by the Share Exchange
Agreement.
</FN>
</TABLE>
Change in Control
Upon consummation of the Share Exchange, Montague will own
approximately 87.75% of the issued and outstanding shares of the Company. As a
result, a change in control of the Company will have occurred.
Item 12. Certain Relationships and Related Transactions
Related Transactions
Prior to the date of this Information Statement, the Company issued to
its officers and directors a total of 1,650,000 shares of Common Stock, valued
at $0.001 per share, or an aggregate total of $1,650, for services rendered to
the Company. The Company also issued a total of 15,000 shares of its Preferred
Stock at a price of $0.10 per share to such officers and directors. Each share
of Preferred Stock is convertible into two (2) shares of Common Stock on or
10
<PAGE>
after August 31, 1997. Upon conversion of the outstanding Preferred Stock to
Common Stock, the effective price per share of Common Stock paid by the persons
who purchased Preferred Stock will be $0.05 per share.
No officer, director, promoter, or affiliate of the Company has any
director or indirect material interest in any asset proposed to be acquired by
the Company through security holdings, contracts, options, or otherwise.
The Company has adopted a policy under which any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock or in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether, or in what amount, such a
stock issuance might be made. However, in connection with the Share Exchange
provided for in the Share Exchange Agreement, the Company has agreed to issue to
its consultant for introducing INVU to the Company such shares of Common Stock
equal to five percent (5%) of the total number of issued and outstanding Common
Stock after the Share Exchange.
The Company maintains a mailing address at the residence of its
President, for which it pays no rent, and for which it does not anticipate
paying rent in the future. The Company anticipates that following the
consummation of the Share Exchange, the Company's office will be moved, but
cannot predict future office or facility arrangements with officers, directors,
or affiliates of the Company.
11
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
<S> <C>
(a) Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
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).
3.1 Articles of Incorporation of Sunburst Acquisitions I, Inc. filed on February 25, 1997, with the
Secretary of State of the State of Colorado (Exhibit 3.1).
3.2(1) Bylaws of Sunburst Acquisitions I, Inc. (Exhibit 3.2).
21* Subsidiaries of the Company (Exhibit 21).
99* Agreement regarding consulting services, dated as of May 15, 1998, by and between Robert P.
Jeffcock and Sunburst Acquisitions I, Inc. (Exhibit 99).
27* Financial Data Schedules (Exhibit 27).
<FN>
*Filed herewith
</FN>
</TABLE>
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the last
quarter of the Company's fiscal year ended April 30, 1998. Since April 30, 1998,
the Company has filed the following reports on Form 8-K:
(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.
12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this annual report on Form 10-KSB to be
signed on its behalf by the undersigned thereto duly authorized.
SUNBURST ACQUISITIONS I, INC.
(Registrant)
Date: August 13, 1998 By: /s/ Jay Lutsky
----------------------
Jay Lutsky, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report on Form 10-KSB has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE OFFICE DATE
--------- ------ ----
/s/ Jay Lutsky
- ---------------------------- President (principal executive August 13, 1998
Jay Lutsky officer)
/s/ Michael R. Quinn Secretary and Treasurer (principal August 13, 1998
- ---------------------------- financial officer)
Michael R. Quinn
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Index to Exhibits
(a) Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
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).
3.1 Articles of Incorporation of Sunburst Acquisitions I, Inc. filed on February 25, 1997, with the
Secretary of State of the State of Colorado (Exhibit 3.1).
3.2(1) Bylaws of Sunburst Acquisitions I, Inc. (Exhibit 3.2).
21* Subsidiaries of the Company (Exhibit 21).
99* Agreement regarding consulting services, dated as of May 15, 1998, by and between Robert P.
Jeffcock and Sunburst Acquisitions I, Inc. (Exhibit 99).
27* Financial Data Schedule (Exhibit 27).
<FN>
*Filed herewith
</FN>
</TABLE>
Index - 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
The following is a list of all subsidiaries, the state or other
jurisdiction of incorporation or organization of each, and the names under which
such subsidiaries do business: None
Index - 2
EXHIBIT 99
CONSULTING AGREEMENT
[See Attached]
Index - 3
<PAGE>
ROBERT P. JEFFCOCK
Apt. B42, Roc Fleuri
1 Rue de Tenao
MC 98000, Monaco
May 15, 1998
Sunburst Acquisitions I, Inc.
4807 South Zang Way
Morrison, Colorado 80465
Attention: Mr. Jay Lutsky, President
Dear Mr. Lutsky:
We are writing this letter to confirm our understanding that Robert P. Jeffcock
("Finder") is authorized to represent Sunburst Acquisitions I, Inc. ("Sunburst")
in identifying acquisition candidates to engage in a "reverse merger" with
Sunburst. Finder's services will be limited to the identification of such
candidates, and he will not in any way be acting as an agent of Sunburst or
entering into any negotiations on behalf of Sunburst with any of the acquisition
candidates identified to Sunburst by Finder or arrange arrange or otherwise be
involved in the raising of funds on behalf of Sunburst.
For his services, it is agreed that upon consummation of any merger or share
exchange with any acquisition candidate introduced to Sunburst by Finder which
is approved by Finder (herein referred to as an "Approved Acquisition
Transaction"), Finder shall receive a "finder's fee" consisting of shares of
capital stock ("Finder Shares") in the surviving entity equal to five percent
(5%) of the issued and outstanding capital stock of such surviving entity on a
fully diluted basis and after taking into account the issuance of additional
shares of capital stock in the surviving entity pursuant to any financing
transactions entered into in connection with such Approved Acquisition
Transaction. Such Finder Shares shall be issued to Finder, at Finder's option,
either (i) pursuant to a registration statement filed on Form S-8 under the
Secruities Act of 1933, as amended (the "Securities Act"), if permitted under
the Securities Act, or (ii) with registration rights under the Securities Act
with respect to such Finder Shares substantially equivalent to those received by
other investors in such financing transactions entered into in connection with
such Approved Acquisition Transaction.
If the Approved Acquisition Transaction is not consummated, Finder shall not be
entitled to any finder's fee from Sunburst whatsoever, and agrees to pay any and
all costs and expenses incurred by Sunburst and the acquisition candidate
introduced and approved by Finder in connection with the proposed Approved
Acquisition Transaction.
This letter agreement may be terminated by Sunburst or Finder at any time with
or without cause, upon written advice to that effect to the other party;
provided, however, if Sunburst enters into negotiations with respect to a merger
or share exchange with any acquisition candidate introduced by Finder to
Sunburst within twenty-four (24) months after termination of this letter
agreement by either party (1) Sunburst shall give written notice to Finder of
Index - 3
<PAGE>
such negotiations within five (5) days after the commencement thereof, and (2)
Finder will have thirty (30) days after the receipt of such written notice to
notify Sunburst in writing that such acquisition candidate is to be an
"approved" acquisition candidate. If Finder designates such candidate as an
"approved" acquisition candidate Sunburst will be required to pay to Finder the
"finder's fee" described in this letter agreement if the merger or share
exchange with such "approved" acquisition candidate is consummated, however,
Finder will not be required to reimburse Sunburst and the "approved" acquisition
candidate for any and all expenses incurred in connection with the proposed
acquisition transaction if such proposed acquisition transaction is not
ultimately consummated.
This letter agreement shall be binding upon and inure to the benefit of
Sunburst, Finder and their respective successors and assigns.
After reviewing this letter, please confirm that the foregoing is in accordance
with your understanding by signing and returning to me the duplicate of this
letter attached hereto, whereupon it shall be our binding agreement.
Very truly yours,
/s/ Robert P. Jeffcock
---------------------------
Robert P. Jeffcock
Accepted and agreed to
this 15th day of May, 1998
SUNBURST ACQUISITIONS I, INC.
By: /s/ Jay Lutsky
----------------------
Name: Jay Lutsky
----------------------
Title: President
----------------------
Index - 3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
The Board of Directors and Stockholders of
Sunburst Acquisitions I, Inc.
We have audited the accompanying balance sheet of Sunburst Acquisitions I, Inc.
(a development stage company) as of April 30, 1998, and the related statements
of loss and accumulated deficit, cash flows, and stockholders' equity for the
year ended April 30, 1998, the initial period ended April 30, 1997, and the
period from inception (February 25, 1997) to April 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sunburst Acquisitions I, Inc.
as of April 30, 1998, and the results of its operations and its cash flows for
the year ended April 30, 1998, the initial period ended April 30, 1997, and the
period from inception, (February 25, 1997) to April 30, 1998, in conformity with
generally accepted accounting principles.
Denver, Colorado
August 4, 1998 /s/ Comiskey & Company
PROFESSIONAL CORPORATION
F - 1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
BALANCE SHEET
April 30, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,072
--------------------
Total current assets 1,072
OTHER ASSETS
Organizational costs (net) 240
TOTAL ASSETS $ 1,312
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ --
Accounts payable - related party $ 830
------------------------
Total current liabilities 830
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 600
Deficit accumulated during the development (10,338)
--------------------------
stage
Total stockholders' equity 482
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,312
=========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (February 25, 1997) to April 30, 1998
For the period
from inception
(February 25, For the year For the year
1997) to ended ended
April 30, 1998 April 30, 1997 April 30, 1998
--------------------- --------------------- ----------------------
REVENUES $ - $ - $ -
--------------------- --------------------- ----------------------
EXPENSES
Amortization expense 60 - 60
Legal and accounting 5,742 2,612 3,130
Office expense 769 71 698
Rent expense 600 - 600
Consulting fees 2,220 1,935 285
Travel 220 - 220
Bank Charges 7 - 7
Transfer agent fees 720 - 720
--------------------- --------------------- ----------------------
Total expenses 10,338 4,618 5,720
--------------------- --------------------- ----------------------
NET LOSS (10,338) (4,618) (5,720)
Accumulated deficit
Balance, beginning of period - - (4,618)
--------------------- --------------------- ----------------------
Balance, end of period $ (10,338 $ (4,618) $ (10,338)
===================== ===================== ======================
NET LOSS PER SHARE $ (NIL) $ (NIL) $ (NIL)
===================== ===================== ======================
WEIGHTED AVERAGE NUMBER 2,131,350 2,095,000 2,137,425
OF SHARES OF COMMON
STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING
===================== ===================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (February 25, 1997) to April 30, 1998
Deficit
Preferred Stock Common Stock accumulated
--------------------- ------------------- Additional during the Total
Number of Number of paid in development stockholders'
shares Amount shares Amount capital stage equity
--------- ------ --------- ------ ---------- ----------- -------------
Preferred stock
issued for cash,
April 1997 at
$0.10 per share 80,000 $ 8,000 $ - $ - $ - $ 8,000
Common stock
issued for services,
February 1997
at $0.001 per share 1,935,000 1,935 1,935
Net loss for the
period
ended April 30,
1997 (4,618) (4,618)
--------- -------- ---------- ------- ---------- ----------- -----------
Balance, April 30,
1997 80,000 8,000 1,935,000 1,935 - (4,618) 5,317
Common stock
issued for services,
November 1997
at $0.003 per share 95,000 285 285
Rent provided at no
charge to the
company 600 600
Net loss for the
period
ended April 30,
1998 (5,720) (5,720)
--------- -------- ---------- ------- ---------- ----------- -----------
Balance, April 30, 80,000 $ 8,000 2,030,000 $ 2,220 $ 600 $ (10,338) $ 482
1998
========= ======== ========== ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from Inception (February 25, 1997) to April 30, 1998
For the period
from inception
(February 25, For the year For the year
1997) to ended ended
CASH FLOWS FROM OPERATING ACTIVITIES April 30, 1998 April 30, 1997 April 30, 1998
------------------- ------------------- ------------------
Net loss $ (10,338 $ (4,618) $ (5,720)
Adjustments to reconcile net loss to net cash used
by operating activities:
Amortization expense 60 - 60
Rent expense 600 - 600
Stock issued for consulting fees 2,220 1,935 285
Decrease (increase) in accounts payable - 347 (347)
Increase (decrease) in accounts payable -
related party 830 65 765
------------------- ------------------- ------------------
Net cash used by operating activities (6,628) (2,271) (4,357)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (300) (300) -
------------------- ------------------- ------------------
Net cash used by investing activities (300) (300) -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of preferred stock 8,000 8,000 -
------------------- ------------------- ------------------
Net cash provided by financing activities 8,000 8,000 -
------------------- ------------------- ------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,072 5,429 (4,357)
CASH AND CASH EQUIVALENTS,
BEGINNING PERIOD - - 5,429
------------------- ------------------- ------------------
CASH AND CASH EQUIVALENTS, $ 1,072 $ 5,429 $ 1,072
END OF PERIOD
=================== =================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 5
<PAGE>
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
1. Summary of Significant Account Policies
Development Stage Company
Sunburst Acquisitions I, Inc. (a development stage company) ("the Company")
was incorporated under the laws of the State of Colorado on February 25,
1997. The initial principal office of the corporation is 4807 Zang Way,
Morrison, Colorado 80465.
The Company is a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has not
engaged in any business other than organizational efforts. It has no
full-time employees and owns no real property. The Company intends to
operate as a capital market access corporation by registering with the U.S.
Securities and Exchange Commission under the Securities Exchange Act of
1934. After this, the Company intends to seek to acquire one or more
existing businesses which have existing management, through merger or
acquisition. Management of the Company will have virtually unlimited
discretion in determining the business activities in which the Company might
engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year of the corporation shall be established by the board of
directors.
Loss Per Share
Loss per share was computed using the weighted average number of common
shares and common share equivalents outstanding during this period.
Organizational Costs
Costs to incorporate the Company have been capitalized and will be amortized
over a sixty-month period
Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management
to make estimates and assumptions that effect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
from those estimates.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
2. Stockholder's Equity
As of April 30, 1998, 2,030,000 shares of the Company's no par value common
stock had been issued for consulting services provided. The services were
converted at $0.001 per share for 1,935,000 shares and $0.003 for 95,000
shares.
As of April 30, 1998, 80,000 shares of the Company's no par value Series A
preferred stock had been issued at $0.10 per share.
Commencing on March 31, 1999, the holders of record of shares of this Series
A preferred stock shall be entitled to receive, when and as declared by the
board of directors out of funds legally available therefor, cash dividends
at the rate of $0.01 per share per annum, payable quarterly, in arrears, on
such dates as may from time to time be determined by the board of directors.
F - 6
<PAGE>
3. Stockholder's Equity (continued)
In the event of a liquidation, dissolution, or winding up of the
Corporation, the holders of shares of this Series A shall be entitled to
receive out of the assets of the Corporation an amount equal to $0.10 per
share, plus any accrued and unpaid dividends thereon to the date fixed for
distribution. This distribution shall be in preference and have priority
over any such distribution upon the common stock of the Corporation and all
other preferred stock of the Corporation. If the assets of the Corporation
are not sufficient to pay such amount in full to the holders of this Series
A and all such other Series shall share ratably in any such distribution of
assets in accordance with the amounts which would be payable on such
distribution if the amounts to which the holders of this and all such other
Series are entitled were paid in full.
To the extent not previously converted into shares of common stock, this
Series A may be redeemed, in whole or in part, at the option of the
Corporation by resolution of its board of directors at a redemption price
per share of $0.15, plus any accrued and unpaid dividends thereon to the
date fixed for redemption.
The holders of shares of this Series A shall have the right, at their option
to convert such shares into fully paid and nonassessable shares of common
stock of the Corporation at any time on or after August 3, 1997. Each
outstanding share of this Series A shall be convertible into two shares of
common stock of the Corporation.
The holders of this Series A shall have no right to vote either in the
election of directors or in any other matter.
4. Related Party Transactions
As of April 30, 1998, Michael R. Quinn and Jay Lutsky are the officers and
directors of the Company, and are the owners of 1,419,000 shares of its
issued and outstanding common stock, constituting approximately 70% of the
Company's issued and outstanding common stock. If the purchasers of the
Series A shares exercise the conversion privilege, Jay Lutsky and Michael R.
Quinn will own 1,439,000 shares constituting approximately 66% of the
Company's issued and outstanding shares.
The accounts payable of $830 is due to Gary Joiner, corporate counsel and
one of the principal shareholders of the Company.
The Company's President is providing office space at no charge to the
Company. For purposes of the financial statements, the Company is accruing
$50 per month as additional paid-in capital for this use.
5. Income Taxes
The Company has a Federal net operating loss carryforwards of approximately
$4,600 expiring in the year 2012 and $5,000 expiring in the year 2013. The
tax benefit of this net operating loss of approximately $1843, has been
offset by a full allowance for realization. This carryforward may be limited
upon the consummation of a business combination under IRC Section 381. For
the period ended April 30, 1998 the valuation allowance increased by $954.
6. Supplemental Disclosure of Non-cash Financing Activities
During the year ended April 30, 1997 the company elected not to accumulate
any amortization of the organization costs, as two months of amortization is
immaterial to the financial statements taken as a whole.
Similarly, the Company elected to forego any rent expense for the year ended
April 30, 1997, but has recorded the rent expense as additional paid-in
capital during the year ended April 30, 1998.
7. Share Exchange Agreement
On May 19, 1998, Sunburst Acquisitions I, Inc., a Colorado corporation
("Sunburst"), entered into a conditional agreement to acquire all of the
issued and outstanding capital stock if Invu PLC, a company incorporated
under English law ("Invu"), in exchange for shares (the "Share Exchange" of
common stock, no par value, of Sunburst (the "Common Stock"), pursuant to a
Share Exchange Agreement (the "Agreement") by and between Sunburst and
Montague Limited, an Isle of Man company ("Montague").
F - 7
<PAGE>
The Agreement, as amended July 23, 1998, provides that upon satisfaction of
certain conditions, including, but not limited to, (i) certain capital
investment by Invu as disclosed below, (ii) receipt by Montague of a power
of attorney from Halcyon Enterprises Plc, a company incorporated under
English law ("Halcyon") to transfer its shares of Invu to Sunburst and (iii)
the conversion of all outstanding shares of Sunburst Preferred Stock into
Sunburst Common Stock, Invu will become a wholly-owned subsidiary of
Sunburst.
As of May 19, 1998, Sunburst has a total of 2,190,000 shares of Common Stock
issued and outstanding assuming the conversion of the Sunburst Preferred
Stock. The Agreement contemplates that Montague and Halcyon (collectively,
the "Invu Shareholders") will receive in the aggregate approximately
26,506,552 shares of Common Stock of Sunburst in exchange for all of the
issued and outstanding share capital of Invu.
The Agreement further provides that, upon satisfaction of certain
conditions, on the Closing Date, Sunburst will issue a total of 1,510,344
shares of common stock to a consultant to the Company as a finder's fee. In
addition, the Amendment also provides that Invu would deposit $500,000 into
an account maintained by INVU Services Limited, a company organized under
English law, and a wholly-owned subsidiary of INVU, within four (4) days of
the execution of the Agreement, and an additional $500,000 within fourteen
(14) days after the consummation of the share Exchange. Said funds will
provide future working capital for the Company. Subject to approval of the
Board of Directors and shareholders of the Company, Montague also agreed to
vote in favor of a 2.4-to-1 reverse split of the Common Stock of the
Company.
F - 8
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULES
[See Attached]
Index - 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and statements of loss and accumulated deficit and is
qualified in its entirety by reference to such 10KSB for the year ended
April 30, 1998.
</LEGEND>
<CIK> 0001035039
<NAME> Sunburst Acquisitions I, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
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0
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