U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
_X_Annual report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended March 31, 2000.
___Transition report under section 13 or 15(d) of the Securities
Exchange 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.)
6363 Sunset Blvd., Suite 910
Address of Principal Executive Office (street and number)
Hollywood, California 90028
City, State and Zip Code
(Issuer's telephone number: (323) 769-8507
Securities to be registered under Section 12(b) of the Act:
Title of each class
N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
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 ____
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will
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 revenue for its most recent fiscal year: $ -0-
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked priced of such stock, as of a
specified date within the past 60 days (See definition of affiliate in
Rule 12b-2): $8,589,155 as of May 31, 2000.
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the
aggregate market value of the common equity held by non-affiliates
on the basis of reasonable assumptions, if the assumptions are stated.
(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 registrants) 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 May 31, 2000.
(Documents incorporated by reference. If the following documents are
incorporated by reference, briefly describe them and identify the part
of the Form 10-KSB (e.g. Part I, Part II, etc.) into which the
document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described
for identification purposes.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
The Company was incorporated under the laws of the State of
Colorado on August 27, 1997 and remained in the early
developmental and promotional stages from inception through August
4, 1999. As of August 4, 1999, the Company acquired a controlling
interest in Prologic Management Systems, Inc., an Arizona
corporation engaged in the business of providing systems integration
services, networking services, software development and applications
software for the commercial market. However, as of March 31,
2000, the Company determined that its investment in Prologic was
impaired and recorded an impairment loss for the full amount of its
investment in Prologic. As of March 31, 2000, the Company had no
commercial operations, owned no real estate, had no full-time
employees, and remained in the development stage. (See "
Description of Business - Prologic Transaction").
The Company's business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses. Such an
acquisition 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
Company intends to seek opportunities demonstrating the potential of
long-term growth as opposed to short-term earnings.
As of March 31, 2000, following the write-off of its
investment in Prologic, the Company had not identified any business
opportunity that it planned to pursue, nor had the Company reached
any agreement or definitive understanding with any person concerning
an acquisition. As of May 10, 2000, subsequent to the end of the
fiscal year, the Company entered into a non-binding letter of intent to
acquire all of the issued and outstanding common stock of
HollywoodBroadcasting.com, Inc., a Nevada corporation engaged in
the business of creating, producing and distributing original interactive
programming for the internet. (See Description of Business -
Subsequent Event).
No assurance can be given that the Company will be successful
in completing its acquisition of HollywoodBroadcasting, com, or
finding or acquiring another suitable business opportunity, given the
limited funds that are expected to be available for acquisitions. There
is also no assurance that any acquisition made by the Company will be
on terms that are favorable to the Company or its current
stockholders.
The Company's search has been directed toward enterprises
which have a desire to become a public corporation and which have a
business plan designed to allow them to take advantage of
opportunities available to public entities. This includes entities which
have been recently organized, with no operating history, or a history
of losses attributable to under-capitalization or other factors, entities
in need of funds to develop a new product or service or to expand
into a new market, entities which desire to use their securities to make
acquisitions, and entities which have a combination of these
characteristics.
In searching for investment opportunities, the Company was
not restricted to any particular geographical area or industry.
Therefore, subject to economic conditions, limitations on its ability to
locate available business opportunities, and other factors, the
Company has had substantial discretion in selecting an appropriate
business opportunity, and will continue to have such discretion in the
future in the event it is unable to complete its acquisition of
HollywoodBroadcasting.com, Inc.
In connection with any acquisition, it is highly likely that an
amount of stock constituting control of the Company would be issued
by the Company or purchased from the Company's current principal
shareholders by the target entity or its controlling shareholders.
Investigation and Selection of Business Opportunities
The analysis of business opportunities is expected to be
undertaken by or under the supervision of the Company's executive
officers and directors. Although there are no current plans to do so,
Company management might hire an outside consultant to assist in the
investigation and selection of business opportunities, and in that event,
might pay a finder's fee. Since Company management has no current
plans to use any outside consultants or advisors to assist in the
investigation and selection of business opportunities, no policies have
been adopted regarding use of such consultants or advisors, the
criteria to be used in selecting such consultants or advisors, the
services to be provided, the term of service, or regarding the total
amount of fees that may be paid. However, because of the limited
resources of the Company, it is likely that any such fee the Company
agrees to pay would be paid in stock and not in cash.
To the extent that the analysis and evaluation of business
opportunities is undertaken by Company management, it is anticipated
that among other things, the following factors will be considered:
(a) Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
(b) Competitive position as compared to other companies of
similar size and experience within the industry segment as well as
within the industry as a whole;
(c) Strength and diversity of existing management, or
management prospects that are scheduled for recruitment;
(d) Capital requirements and anticipated availability of required
funds, to be provided from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from
other sources;
(e) The cost of participation by the Company as compared to
the perceived tangible and intangible values and potential;
(f) The extent to which the business opportunity can be
advanced;
(g) The Company's perception of how any particular business
opportunity will be received by the investment community and by the
Company's stockholders;
(h) The accessibility of required management expertise,
personnel, raw materials, services, professional assistance, and other
required items; and
(i) Whether the financial condition of the business opportunity
would be, or would have a significant prospect in the foreseeable
future to become, such as to permit the securities of the Company,
following the business combination, to qualify to be listed on an
exchange or on a national automated securities quotation system, such
as NASDAQ, so as to permit the trading of such securities to be
exempt from the requirements of Rule 15c2-6 recently adopted by the
Securities and Exchange Commission. See "Risk Factors - The
Company - Regulation of Penny Stocks."
In regard to the last criterion listed above, the current
standards for NASDAQ listing include, among other things, the
requirements that the issuer of the securities that are sought to be
listed have net tangible assets of at least $4,000,000, or a market
capitalization of at least $50,000,000, or net income in its latest fiscal
year of not less than $750,000. Many, and perhaps most, of the
business opportunities that might be potential candidates for a
combination with the Company would not satisfy the NASDAQ listing
criteria. To the extent that the Company seeks potential NASDAQ
listing, therefore, the range of business opportunities that are available
for evaluation and potential acquisition by the Company would be
significantly limited.
In applying the criteria listed above, no one of which will be
controlling, management will attempt to analyze all factors appropriate
to the opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available
business opportunities may occur in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex. Potential investors must recognize
that, because of the Company's limited capital available for
investigation and management's limited experience in business
analysis, the Company may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
Prior to making a decision to participate in a business
opportunity, the Company will generally request that it be provided
with written materials regarding the business opportunity containing
such items as a description of products, services and company history;
management resumes; financial information; available projections,
with related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions
between such company and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risks and
competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements or an indication that
audited statements will be available within sixty (60) days following
completion of a merger transaction; and other information deemed
relevant.
As part of the Company's investigation, the Company's
executive officers and directors may meet personally with
management and key personnel, may visit and inspect material
facilities, obtain independent analysis or verification of certain
information provided, check references of management and key
personnel, and take other reasonable investigative measures, to the
extent of the Company's limited financial resources and management
expertise.
Company management believes that various types of potential
merger or acquisition candidates might find a business combination
with the Company to be attractive. These include acquisition
candidates desiring to create a public market for their shares in order
to enhance liquidity for current shareholders, acquisition candidates
which have long-term plans for raising equity capital through the
public sale of securities and believe that the possible prior existence of
a public market for their securities would be beneficial, and
acquisition candidates which plan to acquire additional assets through
issuance of securities rather than for cash, and believe that the
possibility of development of a public market for their securities will
be assistance in that process. Acquisition candidates which have a
need for an immediate substantial cash infusion are not likely to find a
potential business combination with the Company to be an attractive
alternative unless they are able to negotiate separate arrangements
with third parties to raise capital in conjunction with the business
combination transaction.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the
Company's management to complete acquisitions without submitting
any proposal to the stockholders for their consideration. Company
management does not generally anticipate that it will provide holders
of the Company's securities with financial statements, or any other
documentation, concerning a target company or its business prior to
any merger or acquisition. In some instances, however, the proposed
participation in a business opportunity may be submitted to the
stockholders for their consideration, either voluntarily by Company
management which elects to seek the stockholders' advice and
consent, or because state law so requires.
As indicated previously, as of May 10, 2000, subsequent to the
end of the fiscal year, the Company entered into a non-binding letter
of intent to acquire all of the issued and outstanding common stock of
HollywoodBroadcasting.com, Inc., a Nevada corporation engaged in
the business of creating, producing and distributing original interactive
programming for the internet. (See Description of Business -
Subsequent Event). As of the date of filing of this report on Form
10-KSB, the Company has not yet executed a definitive agreement
relating to the acquisition of HollywoodBroadcasting.com, and
Company management is continuing to evaluate the potential
acquisition of HollywoodBroadcasting.com based upon the factors
outlined above.
Form of Acquisition
It is impossible to predict the manner in which the Company
may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and
desires of the Company and the promoters of the opportunity and,
upon the basis of that review and the relative negotiating strength of
the Company and such promoters, the legal structure or method
deemed by management to be suitable will be selected. Implementing
such structure may require the merger, consolidation or reorganization
of the Company with other corporations or forms of business
organization. In addition, the present management and stockholders
of the Company most likely will not have control of a majority of the
voting shares of the Company following a reorganization transaction.
As part of such a transaction, the Company's directors may resign and
new directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such
transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an
acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders
of the acquired company of up to 80% of the common stock of the
combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions
rather than other "tax free" provisions provided under the Internal
Revenue Code, the Company's stockholders in such circumstances
would retain in the aggregate 20% or less of the total issued and
outstanding shares. This could result in substantial additional dilution
in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might
also be done simultaneously with a sale or transfer of shares
representing a controlling interest in the Company by the current
officers, directors and principal shareholders. (See "Description of
Business - General").
It is anticipated that any securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available,
from registration under applicable federal and state securities laws. In
some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities either
at the time the transaction is consummated, or under certain
conditions or at specified times thereafter. The issuance of substantial
additional securities and their potential sale into any trading market
that might develop in the Company's securities may have a depressive
effect upon such market.
The Company will participate in a business opportunity only
after the negotiation and execution of a written agreement. Although
the terms of such agreement cannot be predicted, generally such an
agreement would require specific representations and warranties by all
of the parties thereto, specify certain events of default, detail the
terms of closing and the conditions which must be satisfied by each of
the parties thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed, set forth remedies upon default,
and include miscellaneous other terms.
As a general matter, the Company anticipates that it will enter
into a letter of intent with the management, principals or owners of a
prospective business opportunity prior to signing a binding agreement.
Such a letter of intent will set forth the terms of the proposed
acquisition but will not bind either the Company or the business
opportunity to consummate the transaction. Execution of a letter of
intent will by no means indicate that consummation of an acquisition
is probable. Neither the Company nor the business opportunity will
be bound to consummate the acquisition unless and until a definitive
agreement concerning the acquisition as described in the preceding
paragraph is executed. Even after a definitive agreement is executed,
it is possible that the acquisition would not be consummated should
either party elect to exercise any right provided in the agreement to
terminate it on specified grounds.
As of May 10, 2000, subsequent to the end of the fiscal year,
the Company entered into a non-binding letter of intent to acquire all
of the issued and outstanding common stock of
HollywoodBroadcasting.com, Inc., a Nevada corporation engaged in
the business of creating, producing and distributing original interactive
programming for the internet. (See Description of Business -
Subsequent Event). As of the date of filing of this report on Form
10-KSB, the Company has not yet entered into a definitive agreement
concerning the proposed acquisition of HollywoodBroadcasting.com,
Inc., and there is no assurance that the Company will successfully
complete the proposed acquisition. However, if it does proceed with
the proposed acquisition of HollywoodBroadcasting.com, Inc., is it
anticipated that the transaction will be structured as a share exchange
in which the Company acquires all of the issued and outstanding
common stock of HollywoodBroadcasting.com, Inc., in exchange for
the issuance of shares of the Company's common stock. In the event
the transaction is structured as a share exchange,
HollywoodBroadcasting.com would then become a wholly-owned
subsidiary of the Company.
Competition
The Company expects to encounter substantial competition in
its efforts to locate attractive acquisition candidates, primarily from
business development companies, venture capital partnerships and
corporations, venture capital affiliates of large industrial and financial
companies, small investment companies, and wealthy individuals.
Many of these entities will have significantly greater experience,
resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will experience
competition from other public "blind pool" companies, many of which
may have more funds available than does the Company.
Administrative Offices
The Company currently maintains a mailing address at 6363
Sunset Boulevard, Hollywood, California 90028 which is the office
address of HollywoodBroadcasting.com., Inc. Its telephone number
at that address is 323-769-8507. The Company pays no rent or other
fees for the use of this mailing address.
Employees
The Company is a development stage company and currently
has no employees. Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not
anticipate a need to engage any full-time employees so long as it is
seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with
the decision whether or not to acquire or participate in specific
business opportunities. No remuneration will be paid to the
Company's officers except as set forth under "Executive
Compensation" and under "Certain Relationships and Related
Transactions."
Prologic Transaction
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 services, software development and applications software
for the commercial 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, in a transaction accounted for using the
purchase method, the Company acquired 3,459,972 shares of common
stock of Prologic for a subscription price of $1,000,000, or $0.2890
per share (Tranche 1"). In addition, a Voting Trust Agreement was
executed 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 approximately 55% of the issued and
outstanding common shares of Prologic. The Company funded the
purchase through the sale of 500,831 shares of its common stock at
$2.00 per share.
The SPMA contemplated that the Company would also make a
second stage investment in Prologic by purchasing up to 1,820,791
additional shares for a purchase price of $2,000,000, or approximately
$1.0984 per share. Under the terms of the SPMA, the proceeds from
Tranche 2 were intended to be used by Prologic to facilitate the
acquisition of another (unaffiliated) company (the "Tranche 2
Acquisition"), and Tranche 2 was to be funded essentially
simultaneously with the closing of the Tranche 2 Acquisition.
Under the terms of the SPMA, it was also intended that
Prologic merge into the Company or into a subsidiary of the Company
organized for that purpose. As a condition to closing of the merger,
the Company was 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 was to represent the
first stage. The second $2,000,000 stage (Tranche 3), which was
intended to be funded after completion of the merger between the
Company and Prologic, required that the Company have a binding
commitment from investors to purchase a total of 890,287 shares of
common stock from the Company for a total purchase price of
$2,000,000, or $2.246 per share.
In conjunction with its Tranche 1 investment in Prologic, the
Company changed its fiscal year end from August 31 to March 31,
which is the reporting year of Prologic, and Prologic was designated
as the accounting acquiror in the transaction.
The Company never completed the Tranche 2 investment in
Prologic, and neither the Tranche 2 Acquisition nor the merger
between the Company and Prologic, which had been contemplated by
the SPMA, were consummated. In addition, Prologic took steps
which it claims resulted in the cancellation of the Voting Trust
Agreement, and has also asserted that the Company should not have
been entitled to acquire 3,459,972 shares of Prologic for its Tranche 1
investment of $1,000,000.
The Company and Prologic are involved in an on-going dispute
regarding their respective rights and obligations under the SPMA
which they have been unable to resolve through negotiations. As of
March 31, 2000, the Company made the determination that its
investment in Prologic was substantially impaired as a result of
various factors, including the on-going dispute regarding the nature
and extent of its interest in Prologic, the lack of a trading market in
Prologic's common stock, the lack of marketability of its interest in
Prologic, the fact that the it lacks representation on the Prologic
Board of Directors, and the fact that Prologic has incurred continuing
operating losses.
As a result of the foregoing, effective as of March 31, 2000,
the Company recorded an impairment loss for its entire $1,000,000
investment in Prologic. Notwithstanding the write-off of its
investment in Prologic for financial reporting purposes, Company
management intends to continue to pursue resolution of its on-going
dispute with Prologic either through negotiation or other means, but
there is no assurance as to when or whether a satisfactory resolution
will be reached.
Subsequent Event
On May 10, 2000, the Company signed a non-binding Letter
of Intent with HollywoodBroadcasting.com, Inc., a Nevada
corporation. The Letter of Intent was signed in connection with a
proposed business combination transaction in which the Company
would acquire all of the issued and outstanding stock of
HollywoodBroadcasting.com, Inc., by exchanging one share of its
common stock for each outstanding share of
HollywoodBroadcasting.com.
The Company would have a total of approximately 47,800,000
shares issued and outstanding in the event the business combination
transaction is completed as proposed, and
HollywoodBroadcasting.com, Inc., would be a wholly-owned
subsidiary of the Company. Completion of the proposed transaction
would result in a change in control of the Company because following
the transaction, the current shareholders of
HollywoodBroadcasting.com, Inc., would own approximately 79.5%
of the Company's issued and outstanding common stock.
There is no assurance that the proposed business combination
transaction with HollywoodBroadcasting.com, Inc., will be completed.
As of the date of filing of this report on Form 10-KSB, the Company
has not yet executed a definitive agreement relating to the proposed
transaction. In addition, even following execution of a definitive
agreement, closing will be contingent upon completion of various
conditions precedent, including, but not limited to, successful
completion of a private placement offering of between $550,000 and
$750,000 by the Company. Proceeds from the private placement
offering would be used by the Company to finance operations of
HollywoodBroadcasting.com, Inc.
HollywoodBroadcasting.com, Inc., is engaged in the business
of creating, producing and distributing original interactive
programming for the Internet.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. Except for historical
matters, the matters discussed in this Form 10-KSB are
forward-looking statements based on current expectations, and involve
risks and uncertainties. Forward-looking statements include, but are
not limited to, statements under the following headings:
(i) "Description of Business - General" - the general
description of the Company's plan to seek a merger or acquisition
candidate, and the types of business opportunities that may be
pursued.
(ii) "Description of Business - Investigation and Selection of
Business Opportunities" - the steps which may be taken to investigate
prospective business opportunities, and the factors which may be used
in selecting a business opportunity.
(iii) "Description of Business - Form of Acquisition" - the
manner in which the Company may participate in a business
acquisition.
The Company wishes to caution the reader that there are many
uncertainties and unknown factors which could affect its ability to
carry out its business plan in the manner described herein.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company currently maintains a mailing address at 6363
Sunset Blvd., Suite 910, Hollywood, CA 90028, which is the office
address of HollywoodBroadcasting.com, Inc. The Company pays no
rent for use of this mailing address, and does not anticipate the need
for maintaining a separate office until it has completed a business
combination transaction.
The Company currently has no investments in real estate, real
estate mortgages, or real estate securities, and does not anticipate
making any such investments in the future. However, the policy of
the Company with respect to investment in real estate assets could be
changed in the future without a vote of security holders.
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 5.0% 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.
No matters were submitted to a vote of the security holders of
the Company during the last quarter of the fiscal year which ended
March 31, 2000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is currently traded on the Over
the Counter, Bulletin Board under the symbol "SBAQ." The following
table sets forth the Company's high and low closing prices for the
Company's common stock as reported on the Bulletin Board for the
periods indicated.
High Low
Fiscal Year 1998
First Quarter did not trade
Second Quarter did not trade
Third Quarter did not trade
Fourth Quarter did not trade
Fiscal Year 1999
First Quarter did not trade
Second Quarter 0.0313 0.0313
Third Quarter 1.031 .531
Fourth Quarter 1.300 1.250
The closing bid price of the Company's common stock as
reported on the Over the Counter, Bulletin Board on June 19, 2000
was $2.00 per share. The prices presented are bid prices which
represent prices between broker-dealers and don't include retail
mark-ups and mark-downs or any commission to the dealer. The
prices may not reflect actual transactions.
At March 31, 2000, there were approximately 139
stockholders of record of the Company's common stock.
There have been no cash dividends declared or paid on the
shares of common stock, and management does not anticipate payment
of dividends in the foreseeable future.
As reported in its report on Form 10-QSB for the period ended
September 30, 1999, in August, 1999, the Company sold a total of
500,831 of its authorized but previously unissued shares at a price of
$2.00 per share, and received total consideration of $1,001,662. Such
shares were sold to a group of investors led by Century Financial
Partners, Inc., and Bristol Capital, LLC, both principally of Los
Angeles, California. All of the investors were accredited investors
and the offering and sale of such shares was made pursuant to
exemptions from registration provided by Section 4(2) of the
Securities Act of 1933 and Regulation D promulgated thereunder,
which exemptions are applicable to private placement transactions.
The proceeds from this offering were used by the Company to make
its investment in Prologic (See "Description of Business - Prologic
Transaction").
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION.
As of March 31, 2000, the Company was a development stage
enterprise formed to operate as a capital market access corporation by
registering under the Securities Exchange Act of 1934. During the
fiscal year ending March 31, 2000, the Company raised $1,001,662
through a private placement offering of 500,831 shares of common
stock. In August, 1999, the Company invested a total of $1,000,000
in Prologic Management Systems, Inc., by purchasing 3,459,972
shares, representing approximately 42% of the issued and outstanding
common stock of Prologic. However, as of the end of the fiscal year,
the Company considered its investment in Prologic to be impaired and
effective as of March 31, 2000, wrote it off by charging the entire
amount of its investment to operations (See "Description of Business -
Prologic Transaction"). Therefore, the Company's balance sheet for
the fiscal year ended March 31, 2000, reflects a total asset value of
$2,182, which is all in the form of cash, current and total liabilities of
$2,681, consisting of accounts payable, and a deficit accumulated
during the development stage of $1,044,751.
Plan of Operations
Notwithstanding the write-off of its investment in Prologic for
financial reporting purposes, during the fiscal year ending March 31,
2001, Company management intends to continue to pursue resolution
of its on-going dispute with Prologic either through negotiation or
other means, but there is no assurance as to when or whether a
satisfactory resolution will be reached. In addition, during the fiscal
year ending March 31, 2001, the Company expects to continue its
efforts to locate a suitable business acquisition candidate other than
Prologic, and thereafter to complete a business acquisition transaction.
The Company anticipates incurring a loss for the fiscal year as
a result of expenses associated with compliance with the reporting
requirements of the Securities Exchange Act of 1934, and expenses
associated with locating and evaluating acquisition candidates. The
Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues. It may
also continue to operate at a loss after completing a business
combination, depending upon the performance of the acquired
business.
As a result of the anticipated losses for the fiscal year, the
Company will require additional capital in order to meet its cash
needs for the next year, including the costs of compliance with the
continuing reporting requirements of the Securities Exchange Act of
1934, as amended.
No specific commitments to provide additional funds have been
made by management or other stockholders, and the Company has no
current plans, proposals, arrangements or understandings with respect
to the sale or issuance of additional securities prior to the
location of a merger or acquisition candidate. Accordingly, there can
be no assurance that any additional funds will be available to the
Company to allow it to cover its expenses. Notwithstanding the
foregoing, to the extent that additional funds are required, the
Company anticipates receiving such funds in the form of
advancements from current shareholders without issuance of additional
shares or other securities, or through the private placement of
restricted securities rather than through a public offering. The
Company does not currently contemplate making a Regulation S
offering.
As of May 10, 2000, subsequent to the end of the fiscal year,
the Company entered into a non-binding Letter of Intent in connection
with a proposed business combination transaction in which the
Company would acquire all of the issued and outstanding stock of
HollywoodBroadcasting.com, Inc., a Nevada corporation, by
exchanging one share of its common stock for each outstanding share
of HollywoodBroadcasting.com.
There is no assurance that the proposed business combination
transaction with HollywoodBroadcasting.com, Inc., will be completed.
As of the date of filing of this report on Form 10-KSB, the Company
has not yet executed a definitive agreement relating to the proposed
transaction. In addition, even following execution of a definitive
agreement, closing will be contingent upon completion of various
conditions precedent, including, but not limited to, successful
completion of a private placement offering of between $550,000 and
$750,000 by the Company. Proceeds from the private placement
offering would be used by the Company to finance operations of
HollywoodBroadcasting.com, Inc. (See Description of Business -
Subsequent Event).
The Company's financial statements which accompany this
Report on Form 10-KSB do not include any financial information
relating to HollywoodBroadcasting.com, Inc. The acquisition of an
interest in HollywoodBroadcasting.com, Inc., would be expected to
have a material positive affect on the Company's operations for the
fiscal year ending March 31, 2001. However, as of the date of this
report on Form 10-KSB, Company management has not prepared
financial projections or otherwise sought to quantify the anticipated
financial impact of its proposed acquisition of
HollywoodBroadcasting.com, Inc.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements attached to this Report on Form 10-
KSB as pages F-1 to F-21 are incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
The Company has had no change in, or disagreements with, its
principal independent accountant since the date of inception.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
The directors and executive officers currently serving the
Company are as follows:
<TABLE>
<CAPTION>
Positions Held and
Name Age Tenure
<S> <C> <C>
Theo Sanidas 38 President and a Director
since March 10, 2000
Silvio Forigo 36 Secretary and a Director
since March 10, 2000
</TABLE>
The directors named above will serve until the next annual
meeting of the Company's stockholders. Thereafter, directors will be
elected for one-year terms at the annual stockholders' meeting.
Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding
between any of the directors or officers of the Company and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer.
The directors and officers will devote their time to the
Company's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within
the range of five to ten hours per month.
Biographical Information
THEO SANIDAS
Mr. Sanidas has served as President and Director of the
Company since March, 2000. He is a marketing consultant who
advises Canadian companies and other clients in a variety of market
sectors including retail, high tech, wholesale, manufacturing, services,
publishing, and real estate, as well as fund raising for both public and
private companies. Mr. Sanidas holds a bachelors degree in business
administration, with a major in marketing, from Lakehead University
and a diploma in marketing management and international business
from British Columbia Institute of Technology.
SILVIO FORIGO
Mr. Forigo is currently CEO and Director of Heritage
Ventures, Ltd. and has been a founding member since 1988. Heritage
Ventures Ltd. was one of the first JCP approved on the Alberta Stock
Exchange. Heritage is a technology-based company that takes new
high-tech products to market. Mr. Forigo has served as Director,
President and CEO of a number of their public companies and has
gained a sound knowledge of corporate restructuring, mergers and
acquisitions.
Compliance With Section 16(a) of the Exchange Act.
Mr. Sanidas has filed an Initial Statement of Beneficial
Ownership of Securities on Form 3.
Mr. Forigo has filed an Initial Statement of Beneficial
Ownership of Securities on Form 3.
ITEM 10. EXECUTIVE COMPENSATION.
No officer or director received any remuneration from the
Company during the fiscal year. Until the Company acquires
additional capital, it is not intended that any officer or director will
receive compensation from the Company other than reimbursement
for out-of-pocket expenses incurred on behalf of the Company. See
"Certain Relationships and Related Transactions." The Company has
no stock option, retirement, pension, or profit-sharing programs 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 March 31, 2000, the number of shares of Common
Stock owned of record and beneficially by executive officers,
directors and persons who hold 5.0% or more of the outstanding
Common Stock of the Company. Also included are the shares held
by all executive officers and directors as a group.
<TABLE>
<CAPTION>
Name and Number of Shares Percent of
Address Owned Beneficially Class Owned
<S> <C> <C>
Theo Sanidas<F1>
1200 Pender St W.
Suite 200
Vancouver, BC V6E 2S9 0 0%
Silvio Forigo <F1>
615 11 Avenue S.E.
Calgary, Alberta T2G 0Y8 0 0%
Diamond Eight, Ltd.
Box 61GT
Grand Cayman,
Cayman Islands 800,100 9.09%
Paul Kessler
11777 San Vicente Blvd.
Suite 702
Los Angeles, CA
90049 <F2> 675,000 7.67%
Turret Holdings, Inc.
PO Box N8318
Nassau, Bahamas 622,000 7.07%
All directors and executive
officers (2 persons) 0 0%
<FN>
<F1> The person listed is an officer and a director of the Company.
<F2> Includes 675,000 shares owned of record by Bristol Capital,
LLC, of which Mr. Kessler may be deemed to be the beneficial
owner.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of
Incorporation provide that the Company will indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on
account of their being or having been Company directors or officers
unless, in any such action, they are adjudged to have acted with gross
negligence or willful misconduct. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and
is, therefore, unenforceable.
Exclusion of Liability
Pursuant to the Colorado Corporation Code, the Company's
Articles of Incorporation exclude personal liability for its directors for
monetary damages based upon any violation of their fiduciary duties
as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts in violation
of Section 7-5-114 of the Colorado Corporation Code, or any
transaction from which a director receives an improper personal
benefit. This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
Conflicts of Interest
None of the officers of the Company will devote more than a
portion of his time to the affairs of the Company. There will be
occasions when the time requirements of the Company's business
conflict with the demands of the officers' other business and
investment activities. Such conflicts may require that the Company
attempt to employ additional personnel. There is no assurance that
the services of such persons will be available or that they can be
obtained upon terms favorable to the Company.
Each of the Company's officers and directors also are officers,
directors, or both of several other Colorado based development-stage
corporation in the same business as the Company. These companies
may be in direct competition with the Company for available
opportunities. However, as of the end of the Company's fiscal year,
each of these entities had substantially the same shareholders as the
Company, which means that there was no actual conflict of interest
between the Company and these other entities as of that time.
Reorganization Preceding Prologic Transaction
As previously disclosed in a report on Form 8-K relating to the
transaction with Prologic (See "Description of Business - Prologic
Transaction"), in July, 1999, in conjunction with execution of the
SPMA certain of its shareholders, including its then officers and
directors, Michael R. Quinn and Jay Lutsky, entered into an
agreement with a group of investors led by Century Financial
Partners, Inc., and Bristol Capital, LLC, both principally located in
Los Angeles, California, to permit such investors to acquire control of
the Company in return for providing the funds required by the SPMA.
The agreement with these investors involved 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 to certain
individuals designated by the investors; (ii) the voluntary surrender
for cancellation by another group of current shareholders of the
Company of a total of 436,000 shares; (iii) completion of a 20:1
forward split; and (iv) the voluntary surrender for cancellation by Mr.
Quinn and Mr. Lutsky of a total of 31,680,000 shares (post-split).
Following completion of the reorganization, Mr. Lutsky resigned as
an officer and director of the Company in November, 1999, and Mr.
Quinn resigned as an officer and director of the Company in March,
2000. Prior to submitting his resignation, Mr. Quinn appointed Theo
Sanidas and Silvio Forigo as directors of the Company to fill the
vacancies created by his own resignation and the resignation of Mr.
Lutsky.
The reorganization described above, the Company's investment
in Prologic and the subsequent write-off of that investment, as well as
the resignations of Mr. Lutsky and Mr. Quinn, as officers and
directors and the appointment by Mr. Quinn of the successor directors
named in this report on Form 10-KSB, resulted in a change in voting
control of the Company as well as a change in Company management.
Both the change in voting control as well as the change in Company
management were the result of negotiations between Company
management and various third parties, but they were completed
without any prior vote or approval by the Company's shareholders.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
1. Financial Statements. The financial statements attached to
this Report on Form 10-KSB as pages F-1 to F-21 which are
incorporated herein by reference are as follows:
Report of Independent Accountants
Balance Sheet (As of March 31, 2000)
Statements of Operations
Statement of Stockholders' Deficit
Statements of Cash Flows
Notes to Financial Statements
2. The Exhibits listed below are filed as part of this Annual
Report.
<TABLE>
<CAPTION>
Exhibit No. Document
<S> <C>
2.1 Stock Purchase and Merger Agreement
(incorporated by reference from Report on Form 8-K dated August 4,
1999, filed with the Securities and Exchange Commission on October
20, 1999).
3.1 Articles of Incorporation
(incorporated by reference from Registration Statement on Form 10-
SB/A filed with the Securities and Exchange Commission on
December 29, 1997).
3.2 Bylaws
(incorporated by reference from Registration Statement on Form 10-
SB/A filed with the Securities and Exchange Commission on
December 29, 1997).
4.1 Specimen Common Stock Certificate
(incorporated by reference from Registration Statement on Form 10-
SB/A filed with the Securities and Exchange Commission on
December 29, 1997).
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during
the last quarter of its fiscal year ending March 31, 2000.
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/ ________________
Theo Sanidas (Principal Executive Officer and Director)
Date: June 29, 2000
By: /s/ ________________
Terry Fields (Director)
Date: June 29, 2000
SUNBURST ACQUISITIONS IV, INC.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of
Sunburst Acquisitions IV, Inc.
We have audited the accompanying balance sheet of Sunburst
Acquisitions IV, Inc. (a development stage company) as of March 31,
2000, and the related statements of operations, stockholders' deficit,
and cash flows for the year ended March 31, 2000, the seven month
period ended March 31, 1999, for the year ended August 31, 1998,
and for the period from inception (August 27, 1997) to March 31,
2000. 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 audits.
We conducted our audits 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 audits provide 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 IV, Inc. as of March 31, 2000, and the results of its
operations, the changes in its stockholders' deficit and its cash flows
for the year ended March 31, 2000, for the seven month period ended
March 31, 1999, for the year ended August 31, 1998, for the initial
period ended August 31, 1997, and for the period from inception
(August 27, 1997) to March 31, 2000, in conformity with generally
accepted accounting principles.
Denver, Colorado
June 1, 2000
/s/ Comiskey & Company
PROFESSIONAL CORPORATION
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
BALANCE SHEET for March 31, 2000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,182
Investment (at net realizable value) -
Total current assets 2,182
TOTAL ASSETS $ 2,182
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 2,221
Accounts payable - related party 460
Total current liabilities 2,681
STOCKHOLDERS' EQUITY
Preferred stock, no par value,
20,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value;
100,000,000 shares authorized;
8,800,831 shares issued and
outstanding 1,018,935
Additional paid-in capital 25,317
Deficit accumulated during the
development stage (1,044,751)
Total stockholders' deficit (499)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 2,182
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(page 1 of 2)
<TABLE>
<CAPTION>
For the period
from inception For the year
(August 31, 1997) ended
to March 31, March 31,
2000 2000
<S> <C> <C>
REVENUES $ - $ -
EXPENSES
Amortization 300
Bank charges - (21)
Consulting fees 4,935 -
General Office 472 144
Legal fees 11,000 4,710
Professional fees 23,263 19,616
Rent 1,550 600
Taxes and licenses 107 -
Transfer agent 2,847 1,400
Travel 277 -
44,751 26,470
Loss on investment in
Prologic Systems, Inc. 1,000,000 1,000,000
Total expenses 1,044,751 1,026,470
NET LOSS (1,044,751) (1,026,470)
Accumulated deficit
Balance,
beginning of period - (18,281)
Balance,
end of period $(1,044,751) $(1,044,751)
NET LOSS PER SHARE $(0.14) $(0.12)
WEIGHTED AVERAGE
NUMBER OF SHARES
OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS
OUTSTANDING 7,491,158 8,543,478
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(page 2 of 2)
<TABLE>
<CAPTION>
For the seven For the
month period year ended
March 31, August 31,
1999 1998
<S> <C> <C>
REVENUES $ - $ -
EXPENSES
Amortization 240 60
Bank charges (21) 21
Consulting fees - 3,000
General Office - 328
Legal fees 2,103 4,187
Professional fees 1,530 2,117
Rent 350 600
Taxes and licenses - 107
Transfer agent 737 710
Travel - 277
4,939 11,407
Loss on investment in
Prologic Systems, Inc. - -
Total expenses 4,939 11,407
NET LOSS (4,939) (11,407)
Accumulated deficit
Balance,
beginning of period (13,342) (1,935)
Balance,
end of period $(18,281) (13,342)
NET LOSS PER SHARE $ (NIL) (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS
OUTSTANDING 7,171,940 7,176,555
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the period from inception (August 27, 1997) to March 31, 2000
(Page 1 of 3)
<TABLE>
<CAPTION>
Preferred Stock
Number of
shares Amount
<S> <C> <C>
Preferred stock issued for
cash, August 1997
at $0.10 per share 80,000 $ 8,000
Common stock issued for
services, August 1997
at $0.00005 per share - -
Net loss for the year
ended August 31, 1997 - -
Balance, August 31, 1997 80,000 8,000
Rent at no charge - -
Common stock issued for
services, July 1998
at $0.0015 per share - -
Net loss for the year
ended August 31, 1998 - -
Balance, August 31, 1998 80,000 8,000
Rent at no charge - -
Common stock issued for
cash, January 1999
at $0.00125 per share - -
Net loss for the period
ended March 31, 1999 - -
Balance March 31, 1999 80,000 8,000
Preferred stock converted to
common stock on 5/20/99 (80,000) (8,000)
Rent at no charge - -
Voluntary surrender of shares
as part of SPMA (436,000 pre-
split shares) August 4, 1999 - -
Sale of 500,831 shares @ $2.00
per share in private placement
August 4, 1999 - -
Costs of offering - -
Voluntary surrender of shares as
part of SPMA August 4, 1999 - -
Capital contribution from shareholders,
January 24, 2000 - -
Capital contribution from shareholders,
February 17, 2000 - -
Capital contribution from shareholders,
March 15, 2000 - -
Net loss for the period ended
March 31, 2000 - -
Balance, March 31, 2000 - $ -
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the period from inception (August 27, 1997)
to March 31, 2000 (Page 2 of 3)
<TABLE>
<CAPTION>
Common Stock
Number of
shares Amount
<S> <C> <C>
Preferred stock issued for
cash, August 1997
at $0.10 per share - -
Common stock issued for
services, August 1997
at $0.00005 per share 38,700,000 1,935
Net loss for the year
ended August 31, 1997 - -
Balance, August 31, 1997 38,700,000 1,935
Rent at no charge - -
Common stock issued for
services, July 1998
at $0.0015 per share 2,000,000 3,000
Net loss for the year
ended August 31, 1998 - -
Balance, August 31, 1998 40,700,000 4,935
Rent at no charge - -
Common stock issued for
cash, January 1999
at $0.00125 per share 4,800,000 6,000
Net loss for the period
ended March 31, 1999 - -
Balance March 31, 1999 45,500,000 10,935
Preferred stock converted to
common stock on 5/20/99 3,200,000 8,000
Rent at no charge - -
Voluntary surrender of shares
as part of SPMA (436,000 pre-
split shares) August 4, 1999 (8,720,000) -
Sale of 500,831 shares @ $2.00
per share in private placement
August 4, 1999 500,831 1,009,474
Costs of offering - (9,474)
Voluntary surrender of shares as part
of SPMA August 4, 1999 (31,680,000) -
Capital contribution from shareholders,
January 24, 2000 - -
Capital contribution from shareholders,
February 17, 2000 - -
Capital contribution from shareholders,
March 15, 2000 - -
Net loss for the period ended
March 31, 2000 - -
Balance, March 31, 2000 8,800,831 $1,018,935
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the period from inception (August 27, 1997)
to March 31, 2000 (Page 3 of 3)
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during the Total
Paid-in development stockholders'
Capital stage equity
<S> <C> <C> <C>
Preferred stock issued for
cash, August 1997
at $0.10 per share - - $ 8,000
Common stock issued for
services, August 1997
at $0.0005 per share - - 1,935
Net loss for the year
ended August 31, 1997 - (1,935) (1,935)
Balance, August 31, 1997 - (1,935) 8,000
Rent at no charge 600 - 600
Common stock issued for
services, July 1998 - - 3,000
at $0.0015 per share
Net loss for the year - (11,407) (11,407)
ended August 31, 1998
Balance, August 31, 1998 600 (13,342) 193
Rent at no charge 350 - 350
Common stock issued for
cash, January 1999
at $0.00125 per share - - 6,000
Net loss for the period
ended March 31, 1999 - (4,939) (4,939)
Balance March 31, 1999 $950 $(18,281) $ 1,604
Preferred stock converted to
common stock on 5/20/99 - - -
Rent at no charge 600 - 600
Voluntary surrender of shares
as part of SPMA (436,000 pre-
split shares) August 4, 1999 - - -
Sale of 500,831 shares @ $2.00
per share in private placement
August 4, 1999 - - 1,009,474
Costs of offering - - (9,474)
Voluntary surrender of shares as part
of SPMA August 4, 1999 - - -
Capital contribution from shareholders,
January 24, 2000 500 - 500
Capital contribution from shareholders,
February 17, 2000 21,267 - 21,267
Capital contribution from shareholders,
March 15, 2000 2,000 - 2,000
Net loss for the period ended
March 31, 2000 - (1,026,470) (1,026,470)
Balance, March 31, 2000 $25,317 $(1,044,751) $(499)
</TABLE>
The accompanying notes are an integral part of the financial statements.
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(page 1 of 2)
<TABLE>
<CAPTION>
For the period
from inception For the
(August 27, 1997) year ended
to March 31, March 31,
2000 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,044,751) $ (1,026,470)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Loss on investment 1,000,000 1,000,000
Amortization 300 -
Rent expense 1,550 600
Stock issued for
consulting fees 4,935 -
Decrease (increase) in
prepaid expenses - -
Increase (decrease) in
accounts payable 2,221 2,171
Increase (decrease) in
accounts payable - related party 460 118
Net cash used by
operating activities (35,285) (23,581)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Prologic
Systems, Inc. (1,000,000) (1,000,000)
Organization costs (300) -
Net cash used by
investing activities (1,000,300) (1,000,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from
shareholders 2,500 2,500
Issuance of common stock
for cash 1,036,741 1,030,741
Cost of issuing common stock (9,474) (9,474)
Issuance of preferred stock
for cash 8,000 -
Net cash provided by
financing activities 1,037,767 1,023,767
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,182 186
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD - 1,996
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,182 $ 2,182
</TABLE>
The accompanying notes are an integral part of the financial statements
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(page 2 of 2)
<TABLE>
<CAPTION>
For the seven
month period For the
ended year ended
March 31, August 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(4,939) $(11,407)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Loss on investment - -
Amortization 240 60
Rent expense 350 600
Stock issued for
consulting fees - 3,000
Decrease (increase) in
prepaid expenses 23 (23)
Increase (decrease) in
accounts payable (410) 460
Increase (decrease) in
accounts payable - related party 342 (300)
Net cash used by
operating activities (4,394) (7,610)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in Prologic Systems, Inc. - -
Organization costs - -
Net cash used by
investing activities - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions from
shareholders - -
Issuance of common stock
for cash 6,000 -
Cost of issuing common stock - -
Issuance of preferred stock
for cash - -
Net cash provided by
financing activities 6,000 -
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,606 (7,610)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 390 8,000
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 1,996 $ 390
</TABLE>
The accompanying notes are an integral part of the financial
statements
SUNBURST ACQUISITIONS IV, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development stage company.
Sunburst Acquisitions IV, Inc. (a development stage company) (the
"Company") was incorporated under the laws of the State of Colorado
on August 27, 1997. The principal office of the corporation is 6363
Sunset, Suite 910, Hollywood, CA 90028.
The Company is an enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and, at
March 31, 2000, has not generated significant revenue as a result of
its activities. It has no full-time employees and owns no real property.
The Company is operating as a capital market access corporation by
registering with the U.S. Securities and Exchange Commission under
the Securities Exchange Act of 1934. In August 1999 the Company
invested $1,000,000 in Prologic Systems, Inc. (see Note 5). The
Company considers this investment impaired, and has charged the
entire amount to operations. On May 10, 2000 the Company entered
into a letter of intent to merge with HollywoodBroadcasting.com,
more fully described in Footnote 6.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
In connection with the Prologic transaction, the Company's Board of
Directors changed the Company's fiscal year end from August 31 to
March 31.
Loss per Share
Loss per share was computed using the weighted average number of
shares of common stock and common stock equivalents outstanding
during the period.
Organization Costs
Costs to incorporate the Company were capitalized and have been
amortized over a sixty-month period. In fiscal 1999, the remaining
unamortized organization costs were charged to expense.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities that represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such
amounts.
Statement of Cash Flows
For 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.
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.
Consideration of Other Comprehensive Income Items
SFAF 130 - Reporting Comprehensive Income, requires companies to
present comprehensive income (consisting primarily of net income
plus other direct equity changes and credits) and its components as
part of the basic financial statements. For the year ended March 31,
2000, the Company's financial statements do not contain any changes
in equity that are required to be reported separately in comprehensive
income.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received
in exchange.
2. STOCKHOLDERS' EQUITY
As described in footnote 5, the Company underwent a 20:1 stock
split. Unless otherwise indicated, all share and per share amounts
have been restated to reflect the split.
As of March 31, 1999, 40,700,000 shares of the Company's no par
value common stock had been issued for consulting services provided.
The services were converted to shares at $0.00005 per share. An
additional 4,800,000 shares were issued for cash at $0.00125 per
share.
As of March 31, 1999, 80,000 shares of the Company's no par value
Series A preferred stock had been issued at $0.10 per share. On May
25, 1999, the Series A preferred shares were converted into a total of
3,200,000 common shares.
In August of 1999 as part of the stock purchase and merger agreement
with Prologic Systems, Inc., a total of 40,400,000 common shares
were surrendered for cancellation by existing shareholders. In
addition, the Company issued 500,831 common shares for cash
proceeds of $1,009,474.
3. RELATED PARTY TRANSACTIONS
The Company's management provided office space at no charge to the
Company. For purposes of the financial statements, the Company
accrued $50 per month as additional paid-in capital for this use.
From time to time, the Company's management has contributed cash
to the Company for which no stock has been issued. Such
contributions have been recorded as additional paid-in capital.
4. INCOME TAXES
The Company has deductible temporary differences and Federal net
operating loss carryforwards of approximately $1,045,000. The net
operating losses will expire during the years 2018 and 2020. The tax
benefit of these net operating losses and deductible temporary
differences is approximately $201,000 and 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 March 31, 2000, the valuation allowance increased
by approximately $197,500.
5. INVESTMENT IN PROLOGIC MANAGEMENT SYSTEMS,
INC.
On July 8, 1999, the company executed a Stock Purchase and Merger
Agreement ("SPMA") with Prologic Management Systems, Inc. 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, in accordance with Tranche 1 of the SPMA,
Sunburst purchased 3,459,972 shares of common stock of Prologic for
a cash investment of $1,000,000. The Company also executed a
Voting Trust Agreement with shareholders of Prologic which granted
the Company voting rights to a total of 1,071,060 shares of Prologic
Common Stock. This Voting Trust Agreement was subsequently
cancelled. Sunburst funded this investment through the issuance of
500,831 of its common shares at $2.00 per share. No additional
funds were advanced by Sunburst under the SPMA, and all parties to
the SPMA are currently disputing their respective rights and
responsibilities as a result of the failure of the parties to fully
consummate the agreement. The management of Sunburst is
negotiating with Prologic to terminate the SPMA.
As of March 2000, management of the Company has determined that
its investment in 3,459,972 common shares of Prologic, which
constituted approximately a 42% share in Prologic's then outstanding
voting shares, is impaired. Factors considered include the lack of
trading market in Prologic's common stock, lack of representation on
the Prologic Board of Directors, and recent operating losses sustained
by Prologic. Consequently, the Company has recorded an impairment
loss for the entire $1,000,000 investment.
6. NON-BINDING LETTER OF INTENT
On May 10, 2000 Sunburst Acquisitions IV, Inc. signed a
Non-Binding Letter of Intent with HollywoodBroadcasting.com. In
connection with a proposed share exchange with
HollywoodBroadcasting.com, it is agreed that Sunburst Acquisitions
IV, Inc. will issue to the Shareholders of HollywoodBroadcasting.com
one share of Sunburst Acquisitions IV, Inc. for each share held in
HollywoodBroadcasting.com, Inc. Following completion of the share
exchange, it is anticipated that Sunburst will change its name to
HollywoodBroadcasting Corporation or another acceptable name.
A condition precedent to completion of the share exchange is that
Sunburst raises between $550,000 and $750,000 to be used as
working capital by HollywoodBroadcasting.com, Inc., following
completion of the share exchange. Sunburst currently plans to offer
shares at $0.75 per share to raise the necessary funds. Following sale
of such shares and completion of the contemplated share exchange
transaction with HollywoodBroadcasting.com, former shareholders of
HollywoodBroadcasting.com will own approximately 38,000,000
shares or approximately 79.5% of the issued and outstanding shares,
and shareholders of Sunburst will own approximately 9,800,000
shares, or approximately 20.5% of the issued and outstanding shares.
