SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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
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(State or other (IRS Employer Identification
jurisdiction of Incorporation) No.)
2082 Cherry Street
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Address of Principal Executive Office (street and number)
Denver, Colorado 80207
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City, State and Zip Code
(Issuer's telephone number: (303)321-0461
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Stock Purchase and Merger Agreement
On July 8, 1999, Sunburst Acquisitions IV, Inc., (the
"Company") entered into a Stock Purchase and Merger Agreement
("SPMA") with Prologic Management Systems, Inc., an Arizona
corporation ("Prologic"). The first stage of the transaction closed on
August 4, 1999.
Overview
The terms of the SPMA require that the Company purchase up
to 5,280,763 shares of common stock of Prologic for $3,000,000. The
purchase and sale of shares is structured as a private placement offering
which is exempt from registration under federal and state securities laws.
Under the SPMA the Company'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. Following closing of the Tranche 1 subscription,
Prologic had a total of approximately 8,171,321 shares of common stock
issued and outstanding, of which 3,459,972 shares, or approximately
42.34%, were owned by the Company. In addition, in conjunction with
closing of the Tranche 1 subscription, Mr. James Heim, the President
and CEO of Prologic, entered into a Voting Trust Agreement, granting
the Company voting rights to a total of 1,071,060 shares common stock
of Prologic of which he is the beneficial owner. Accordingly, following
closing of the Tranche 1 subscription, the Company owned or had voting
control of a total of 4,531,032 shares, or approximately 55.45% of the
issued and outstanding common stock of Prologic.
The Company'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.
The closing of Tranche 2 and the Tranche 2 Acquisition is
intended to occur not less than 14 days after receipt by the Company of
written notice from Prologic (a "Subscription Call") that Prologic is
prepared to close the debt portion of the financing required for the
Tranche 2 Acquisition. The Subscription Call will, at a minimum, set
forth (i) the proposed target company; (ii) the total purchase price and
terms; (iii) the total cash required to close the purchase; (iv) the equity
portion of such cash requirement (an amount not to exceed the less of
20% of such cash requirements or $2,000,000; (v) the date (not less than
14 days in the future) when the Company will be required to deliver the
Tranche 2 Acquisition funds; (vi) evidence that debt financing is
available which, together with Tranche 2 Acquisition funds, is sufficient
to close the Tranche 2 Acquisition, ; and (vii) evidence that the proposed
acquisition has been approved by the Board of Directors of Prologic.
Subject to receipt of any necessary shareholder approvals, on the
earlier of the closing of the Tranche 2 Acquisition or September 30,
1999, it is intended that Prologic initiate the process of completing a
merger into the Company or into a subsidiary of the Company organized
for that purpose. As a condition to closing of the merger, the Company
is obligated to have a binding commitment from investors to provide it,
in two stages, with up to $4,000,000 in equity capital. Each stage will
be in an amount equal to the lesser of $2,000,000 or 20% of the cash
equity portion needed to close a proposed acquisition(s). The first stage
will be represented by the Tranche 2 funding described above.
Accordingly, any portion of the Tranche 2 funding which is provided to
Prologic prior to the merger, will be credited against this obligation.
The second $2,000,000 stage (Tranche 3), which is intended to be
funded after completion of the merger, will require that the Company
have a binding commitment from investors to purchase a total of
890,287 shares of common stock for a total purchase price of
$2,000,000, or $2.246 per share.
In conjunction with execution of the SPMA, the Company and
certain of its shareholders entered into an agreement with a group of
investors led by Century Financial Partners, Inc., and Bristol Capital,
LLC, both principally of located in Los Angeles, California, to permit
the such investors to acquire control of the Company in return for
providing the funds required by the SPMA. The agreement with these
investors involves a four step reorganization of the Company including
(i) the sale by five current shareholders of the Company 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.
As of August 19, 1999, the first two stages of the reorganization
process had been completed. The two remaining stages are intended to
be completed on or before August 31, 1999. Completion of all four
stages of the reorganization process will result in a change of control of
the Company.
"SAFE HARBOR" Statement
This Form 8-K contains forward-looking statements, and opinions
of the Company, which are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such forward-
looking statements and opinions involve risks and uncertainties,
including, but not limited to , the ability of the Company, Century
Financial Partners, Inc, or Bristol Capital, LLC, to meet their
contractual obligations, the ability of Prologic to locate suitable
acquisition targets, and the ability of Prologic to obtain any necessary
debt financing and to complete the acquisitions. Additional risks and
uncertainties include the impact of competitive products and pricing,
product demand and market acceptance risks, the presence of
competitors with greater financial resources, product development and
marketability, capacity and supply constraints or difficulties, and the
results of additional financing efforts.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited financial statements of Prologic Management Systems,
Inc. are not available as of the date of this report on Form 8-K. Such
financial statements will be filed as soon as reasonably possible, but in
no event later than 60 days from the due date of this report.
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: August 19, 1999
/s/______________________________
Michael R. Quinn
President
