U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X__Quarterly report under section 13 or 15(d) of the Securities Ex-
change Act of 1934 for the fiscal year ended June 30, 1999.
__Transition report under section 13 or 15(d) of the Securities Ex-
change Act of 1934 for the transition period from _________ to
___________.
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
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act 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 the past 90 days. Yes X No ____
Applicable only to issuers involved in bankruptcy proceedings during
the past five years:
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ____
No ____
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 8,800,831 as of
October 21, 1999.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) The unaudited financial statements of registrant as of and
for the quarter ending June 30, 1999, and for the period from incep-
tion through June 30, 1999 follow. The financial statements reflect
all adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the interim period presented.
SUNBURST IV ACQUISITIONS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Quarter ended June 30, 1999
SUNBURST IV ACQUISITIONS, INC.
(A Development Stage Company)
Index to Financial Statements
Balance Sheet
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,124
Total current assets 1,124
TOTAL ASSETS $ 1,124
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
Total current liabilities -
STOCKHOLDERS' EQUITY
Preferred stock, no par value,
20,000,000 shares authorized;
0 shares issued and outstanding -
Common stock, no par value;
100,000,000 shares authorized;
48,700,000 shares issued and
outstanding 18,935
Additional paid-in capital 1,100
Deficit accumulated during the
development stage (18,911)
Total stockholders' equity 1,124
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,124
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Period from
August 27, 1997 For the three months
(inception) ended 6/30
to 6/30/99 1999 1998
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
Amortization 300 - 15
Consulting fees 4,935 - -
General office 328 - 142
Legal fees 6,290 - -
Professional fees 4,027 380 748
Rent 1,100 150 150
Taxes and Licenses 107 - -
Transfer Agent 1,547 100 -
Travel 277 - -
Total expenses 18,911 630 1,054
NET LOSS (18,911) (630) (1,054)
Accumulated deficit
Balance, beginning
of period - (18,281) (7,911)
Balance, end of
period $(18,911) $(18,911) $(8,965)
NET LOSS PER SHARE:
$(NIL) $ (NIL) $ (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS
OUTSTANDING:
44,272,020 49,900,000 41,900,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period from
August 27, 1997 For the three months
(Inception) ended 6/30
to 6/30/99 1999 1998
<S> <C> <C> <C>
Net Loss $(18,911) $ (630) $(1,054)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Amortization 300 - 15
Rent expense 1,100 150 150
Stock issued for consulting
fees 4,935 - -
Increase (decrease) in
accounts payable - (50) -
Increase (decrease) in
accounts payable -
related party - (342) -
Net cash used by
operating activities (12,576) (872) (889)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in organization
costs (300) - -
Net cash used by
investing activities (300) - -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock:
6,000 - -
Conversion of preferred
to common 8,000 - -
Net cash provided by
financing activities 14,000 - -
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,124 (872) (889)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD - 1,996 2,109
CASH AND CASH EQUIVLALENTS,
END OF PERIOD $ 1,124 $ 1,124 $ 1,220
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
MANAGEMENT'S REPRESENTATION OF INTERIM
FINANCIAL INFORMATION
The accompanying financial statements have been prepared by Sun-
burst Acquisitions IV, Inc. without audit pursuant to the rules and
regulations of the Securities and 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 which, in the
opinion of management, are necessary to a fair presentation of finan-
cial position and results of operations. All such adjustments are of a
normal and recurring nature. These financial statements should be
read in conjunction with the audited financial statements at March 31,
1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
General
The Company was formed as a blind pool or blank check
company, whose business plan is to seek, investigate, and, if warrant-
ed, acquire one or more properties or businesses, and to pursue other
related activities intended to enhance shareholder value. As of June
30, 1999, the Company remains in the development stage.
Since inception, the Company's activities have been limited to
acquisition of capital, registration of its securities under the Securities
Exchange Act of 1934 compliance with the on-going reporting re-
quirements for a public company registered under the Securities
Exchange Act of 1934, and initial efforts to seek out and investigate
business acquisition opportunities. During this period, the Company
has received no revenues and has experienced a cumulative net loss of
$18,911, primarily as a result of legal and accounting costs related to
registration and compliance with the on-going reporting requirements
under the Securities Exchange Act of 1934. Consequently, the Comp-
any's balance sheet for the period ended June 30, 1999, reflects
current and total assets of $1,124, which is in the form of cash, no
liabilities, and a deficit accumulated during the development stage of
($18,911).
On July 8, 1999, the Company entered into a Stock Purchase
and Merger Agreement (SPMA) with Prologic Management Systems,
Inc., an Arizona corporation (Prologic). Prologic is engaged in the
business of providing systems integration services, networking servic-
es, software development and applications software for the commer-
cial market.
The terms of the SPMA required that the Company purchase
up to 5,280,763 shares of common stock of Prologic for $3,000,000.
On August 4, 1999, subsequent to the end of the quarter, the Compa-
ny acquired 3,459,972 shares of Prologic for a subscription price of
$1,000,000, or $0.2890 per shares ("Tranche 1"). The Company
funded this purchase through sale of 500,831 shares of its common
stock at $2.00 per share.
Simultaneously with the closing of Tranche 1 under the
SPMA, a Voting Trust Agreement was signed granting the Company
voting rights to a total of 1,071,060 shares of Prologic common stock.
Following the closing of Tranche 1 and execution of the Voting Trust
Agreement, the Company owned or had voting control of approxi-
mately 55% of the issued and outstanding common shares of Prologic.
In conjunction with closing the the Tranche 1 investment, the
Company changed its fiscel year from August 31 to March 31, which
is the reporting year of Prologic. Prologic is considered to be the
accounting acquiror in the transaction. However, the accompanying
financial statements do not include the results of Prologic for the
period presented.
Plan of Operations
The Plan of Operations for the remainder of the fiscal year is
to proceed with the steps necessary for completion of the additional
transactions contemplated by the SPMA.
The Company's second stage investment under the SPMA
("Tranche 2") involves the purchase of up to 1,820,791 additional
shares of common stock of Prologic for a purchase price of
$2,000,000, or approximately $1.0984 per share. The Company will
be required either to sell additional securities or obtain debt financing
in order to raise the funds needed for completion of the Tranche 2
investment under the SPMA. The Company has not identified a
source for the funds needed to complete the Tranche 2 investment,
and there is no assurance that the Company will be able to obtain the
necessary funds for that purpose.
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 essen-
tially simultaneously with the closing of the Tranche 2 Acquisition.
Under the terms of the SPMA, it is intended that Prologic
merge into the Company. As a condition to closing 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.
The Tranche 2 funding described above would represent the first
portion of the required equity capital commitment. The additional
$2,000,000 of equity capital (which is referred to in the SPMA as
"Tranche 3"), is intended to be funded after completion of the merg-
er. However, in order to complete the merger prior to funding of
Tranche 3, the SPMA requires the Company to have a binding com-
mitment from investors to purchase a total of 890,287 shares of the
Company's common stock for a total purchase price of $2,000,000, or
$2.246 per share. The Company has not identified a source for the
funds needed to complete the Tranche 3 investment, and there is no
assurance that the Company will be able to obtain the necessary funds
for that purpose.
In the event the Company is able to complete the Tranche 2
investment and is able to obtain the commitment necessary to com-
plete the Tranche 3 investment following the merger, Prologic will
merge into the Company. In order to effect the merger, the SPMA
requires the Company to 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 by the Company and any Prologic shares which it holds in
treasury would be cancelled as part of the merger transaction. In
addition, in order to comply with the terms of the SPMA, it is antici-
pated that as part of completion of the merger transaction, an adjust-
ment will be required to be made in the number of shares of common
stock which the Company has issued and outstanding, so that the
number of shares of common stock of the Company issued in the
merger transaction to former shareholders of Prologic, will be equal
to 47.15% of the outstanding shares of common stock of the Company
after the merger, but prior to the Tranche 3 investment described
above. This adjustment, if needed, is expected to be accomplished
through the voluntary surrender of shares for cancellation by certain
existing shareholders of the Company.
There is no assurance as to when, or whether, the merger
transaction with Prologic will be completed. In the event the Company
is unable to obtain the necessary financial commitments to complete
the Tranche 2 and Tranche 3 investments contemplated by the SPMA,
the Company intends, with the assistance and cooperation of the
management of Prologic, to investigate other alternatives or options
for completing a business combination transaction with Prologic.
However, as of the date hereof, no such alternatives or options have
been developed.
In addition to the capital required to proceed with the merger
transaction with Prologic, the Company will also require additional
capital to pay its on-going expenses related to compliance with its
reporting obligations under the Securities Exchange Act of 1934.
Although no commitments have been made by management or other
Company shareholders to provide the funds necessary for payment of
on-going expenses, it is anticipated that the Company will seek loans
or additional capital contributions from certain of its existing principal
shareholders in order to obtain any additional working capital required
for that purpose. However, there can be no assurance that funds will
be available to cover the Company's expenses.
PART II - EXHIBITS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The Exhibits listed below are filed as part of this
Annual Report.
Exhibit No. Document
27. Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company
during the quarter ended June 30, 1999.
2.1 Stock Purchase and Merger Agreement (incorporated by
reference from Report on Form 8-K/A dated August 4, 1999, filed
with the Securities and Exchange Commission on October 21, 1999.)
Signatures
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
SUNBURST ACQUISITIONS IV, INC.
By: /s/ ________________
Michael R. Quinn (Principal Executive Officer and Director)
Date: November 18, 1999
By: /s/ ________________
Jay Lutsky (Principal Financial Officer and Director)
Date: November 18, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,124
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,124
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,124
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 18,935
<OTHER-SE> 1,100
<TOTAL-LIABILITY-AND-EQUITY> 1,124
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 630
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (630)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (630)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
