EXHIBIT 99
CONSULTING AGREEMENT
[See Attached]
Index - 3
XXXXXX X. XXXXXXXX
Apt. B42, Roc Fleuri
0 Xxx xx Xxxxx
XX 00000, Xxxxxx
May 15, 1998
Sunburst Acquisitions I, Inc.
0000 Xxxxx Xxxx Xxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxx Xxxxxx, President
Dear Xx. Xxxxxx:
We are writing this letter to confirm our understanding that Xxxxxx X. Xxxxxxxx
("Finder") is authorized to represent Sunburst Acquisitions I, Inc. ("Sunburst")
in identifying acquisition candidates to engage in a "reverse merger" with
Sunburst. Finder's services will be limited to the identification of such
candidates, and he will not in any way be acting as an agent of Sunburst or
entering into any negotiations on behalf of Sunburst with any of the acquisition
candidates identified to Sunburst by Finder or arrange arrange or otherwise be
involved in the raising of funds on behalf of Sunburst.
For his services, it is agreed that upon consummation of any merger or share
exchange with any acquisition candidate introduced to Sunburst by Finder which
is approved by Finder (herein referred to as an "Approved Acquisition
Transaction"), Finder shall receive a "finder's fee" consisting of shares of
capital stock ("Finder Shares") in the surviving entity equal to five percent
(5%) of the issued and outstanding capital stock of such surviving entity on a
fully diluted basis and after taking into account the issuance of additional
shares of capital stock in the surviving entity pursuant to any financing
transactions entered into in connection with such Approved Acquisition
Transaction. Such Finder Shares shall be issued to Finder, at Finder's option,
either (i) pursuant to a registration statement filed on Form S-8 under the
Secruities Act of 1933, as amended (the "Securities Act"), if permitted under
the Securities Act, or (ii) with registration rights under the Securities Act
with respect to such Finder Shares substantially equivalent to those received by
other investors in such financing transactions entered into in connection with
such Approved Acquisition Transaction.
If the Approved Acquisition Transaction is not consummated, Finder shall not be
entitled to any finder's fee from Sunburst whatsoever, and agrees to pay any and
all costs and expenses incurred by Sunburst and the acquisition candidate
introduced and approved by Finder in connection with the proposed Approved
Acquisition Transaction.
This letter agreement may be terminated by Sunburst or Finder at any time with
or without cause, upon written advice to that effect to the other party;
provided, however, if Sunburst enters into negotiations with respect to a merger
or share exchange with any acquisition candidate introduced by Finder to
Sunburst within twenty-four (24) months after termination of this letter
agreement by either party (1) Sunburst shall give written notice to Finder of
Index - 3
such negotiations within five (5) days after the commencement thereof, and (2)
Finder will have thirty (30) days after the receipt of such written notice to
notify Sunburst in writing that such acquisition candidate is to be an
"approved" acquisition candidate. If Finder designates such candidate as an
"approved" acquisition candidate Sunburst will be required to pay to Finder the
"finder's fee" described in this letter agreement if the merger or share
exchange with such "approved" acquisition candidate is consummated, however,
Finder will not be required to reimburse Sunburst and the "approved" acquisition
candidate for any and all expenses incurred in connection with the proposed
acquisition transaction if such proposed acquisition transaction is not
ultimately consummated.
This letter agreement shall be binding upon and inure to the benefit of
Sunburst, Finder and their respective successors and assigns.
After reviewing this letter, please confirm that the foregoing is in accordance
with your understanding by signing and returning to me the duplicate of this
letter attached hereto, whereupon it shall be our binding agreement.
Very truly yours,
/s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx
Accepted and agreed to
this 15th day of May, 1998
SUNBURST ACQUISITIONS I, INC.
By: /s/ Xxx Xxxxxx
----------------------
Name: Xxx Xxxxxx
----------------------
Title: President
----------------------
Index - 3
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
The Board of Directors and Stockholders of
Sunburst Acquisitions I, Inc.
We have audited the accompanying balance sheet of Sunburst Acquisitions I, Inc.
(a development stage company) as of April 30, 1998, and the related statements
of loss and accumulated deficit, cash flows, and stockholders' equity for the
year ended April 30, 1998, the initial period ended April 30, 1997, and the
period from inception (February 25, 1997) to April 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sunburst Acquisitions I, Inc.
as of April 30, 1998, and the results of its operations and its cash flows for
the year ended April 30, 1998, the initial period ended April 30, 1997, and the
period from inception, (February 25, 1997) to April 30, 1998, in conformity with
generally accepted accounting principles.
Denver, Colorado
August 4, 1998 /s/ Xxxxxxxx & Company
PROFESSIONAL CORPORATION
F - 1
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
BALANCE SHEET
April 30, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,072
--------------------
Total current assets 1,072
OTHER ASSETS
Organizational costs (net) 240
TOTAL ASSETS $ 1,312
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ --
Accounts payable - related party $ 830
------------------------
Total current liabilities 830
STOCKHOLDERS' EQUITY
Preferred stock, no par value: 20,000,000 shares
authorized; 80,000 shares issued and outstanding 8,000
Common stock, no par value; 100,000,000
shares authorized; 2,030,000 shares issued
and outstanding 2,220
Additional paid in capital 600
Deficit accumulated during the development (10,338)
--------------------------
stage
Total stockholders' equity 482
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,312
=========================
The accompanying notes are an integral part of the financial statements.
F - 2
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (February 25, 1997) to April 30, 1998
For the period
from inception
(February 25, For the year For the year
1997) to ended ended
April 30, 1998 April 30, 1997 April 30, 1998
--------------------- --------------------- ----------------------
REVENUES $ - $ - $ -
--------------------- --------------------- ----------------------
EXPENSES
Amortization expense 60 - 60
Legal and accounting 5,742 2,612 3,130
Office expense 769 71 698
Rent expense 600 - 600
Consulting fees 2,220 1,935 285
Travel 220 - 220
Bank Charges 7 - 7
Transfer agent fees 720 - 720
--------------------- --------------------- ----------------------
Total expenses 10,338 4,618 5,720
--------------------- --------------------- ----------------------
NET LOSS (10,338) (4,618) (5,720)
Accumulated deficit
Balance, beginning of period - - (4,618)
--------------------- --------------------- ----------------------
Balance, end of period $ (10,338 $ (4,618) $ (10,338)
===================== ===================== ======================
NET LOSS PER SHARE $ (NIL) $ (NIL) $ (NIL)
===================== ===================== ======================
WEIGHTED AVERAGE NUMBER 2,131,350 2,095,000 2,137,425
OF SHARES OF COMMON
STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING
===================== ===================== ======================
The accompanying notes are an integral part of the financial statements.
F - 3
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (February 25, 1997) to April 30, 1998
Deficit
Preferred Stock Common Stock accumulated
--------------------- ------------------- Additional during the Total
Number of Number of paid in development stockholders'
shares Amount shares Amount capital stage equity
--------- ------ --------- ------ ---------- ----------- -------------
Preferred stock
issued for cash,
April 1997 at
$0.10 per share 80,000 $ 8,000 $ - $ - $ - $ 8,000
Common stock
issued for services,
February 1997
at $0.001 per share 1,935,000 1,935 1,935
Net loss for the
period
ended April 30,
1997 (4,618) (4,618)
--------- -------- ---------- ------- ---------- ----------- -----------
Balance, April 30,
1997 80,000 8,000 1,935,000 1,935 - (4,618) 5,317
Common stock
issued for services,
November 1997
at $0.003 per share 95,000 285 285
Rent provided at no
charge to the
company 600 600
Net loss for the
period
ended April 30,
1998 (5,720) (5,720)
--------- -------- ---------- ------- ---------- ----------- -----------
Balance, April 30, 80,000 $ 8,000 2,030,000 $ 2,220 $ 600 $ (10,338) $ 482
1998
========= ======== ========== ======= ========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F - 4
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from Inception (February 25, 1997) to April 30, 1998
For the period
from inception
(February 25, For the year For the year
1997) to ended ended
CASH FLOWS FROM OPERATING ACTIVITIES April 30, 1998 April 30, 1997 April 30, 1998
------------------- ------------------- ------------------
Net loss $ (10,338 $ (4,618) $ (5,720)
Adjustments to reconcile net loss to net cash used
by operating activities:
Amortization expense 60 - 60
Rent expense 600 - 600
Stock issued for consulting fees 2,220 1,935 285
Decrease (increase) in accounts payable - 347 (347)
Increase (decrease) in accounts payable -
related party 830 65 765
------------------- ------------------- ------------------
Net cash used by operating activities (6,628) (2,271) (4,357)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (300) (300) -
------------------- ------------------- ------------------
Net cash used by investing activities (300) (300) -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of preferred stock 8,000 8,000 -
------------------- ------------------- ------------------
Net cash provided by financing activities 8,000 8,000 -
------------------- ------------------- ------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,072 5,429 (4,357)
CASH AND CASH EQUIVALENTS,
BEGINNING PERIOD - - 5,429
------------------- ------------------- ------------------
CASH AND CASH EQUIVALENTS, $ 1,072 $ 5,429 $ 1,072
END OF PERIOD
=================== =================== ==================
The accompanying notes are an integral part of the financial statements.
F - 5
Sunburst Acquisitions I, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
1. Summary of Significant Account Policies
Development Stage Company
Sunburst Acquisitions I, Inc. (a development stage company) ("the Company")
was incorporated under the laws of the State of Colorado on February 25,
1997. The initial principal office of the corporation is 0000 Xxxx Xxx,
Xxxxxxxx, Xxxxxxxx 00000.
The Company is a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has not
engaged in any business other than organizational efforts. It has no
full-time employees and owns no real property. The Company intends to
operate as a capital market access corporation by registering with the U.S.
Securities and Exchange Commission under the Securities Exchange Act of
1934. After this, the Company intends to seek to acquire one or more
existing businesses which have existing management, through merger or
acquisition. Management of the Company will have virtually unlimited
discretion in determining the business activities in which the Company might
engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year of the corporation shall be established by the board of
directors.
Loss Per Share
Loss per share was computed using the weighted average number of common
shares and common share equivalents outstanding during this period.
Organizational Costs
Costs to incorporate the Company have been capitalized and will be amortized
over a sixty-month period
Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management
to make estimates and assumptions that effect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
from those estimates.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
2. Stockholder's Equity
As of April 30, 1998, 2,030,000 shares of the Company's no par value common
stock had been issued for consulting services provided. The services were
converted at $0.001 per share for 1,935,000 shares and $0.003 for 95,000
shares.
As of April 30, 1998, 80,000 shares of the Company's no par value Series A
preferred stock had been issued at $0.10 per share.
Commencing on March 31, 1999, the holders of record of shares of this Series
A preferred stock shall be entitled to receive, when and as declared by the
board of directors out of funds legally available therefor, cash dividends
at the rate of $0.01 per share per annum, payable quarterly, in arrears, on
such dates as may from time to time be determined by the board of directors.
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3. Stockholder's Equity (continued)
In the event of a liquidation, dissolution, or winding up of the
Corporation, the holders of shares of this Series A shall be entitled to
receive out of the assets of the Corporation an amount equal to $0.10 per
share, plus any accrued and unpaid dividends thereon to the date fixed for
distribution. This distribution shall be in preference and have priority
over any such distribution upon the common stock of the Corporation and all
other preferred stock of the Corporation. If the assets of the Corporation
are not sufficient to pay such amount in full to the holders of this Series
A and all such other Series shall share ratably in any such distribution of
assets in accordance with the amounts which would be payable on such
distribution if the amounts to which the holders of this and all such other
Series are entitled were paid in full.
To the extent not previously converted into shares of common stock, this
Series A may be redeemed, in whole or in part, at the option of the
Corporation by resolution of its board of directors at a redemption price
per share of $0.15, plus any accrued and unpaid dividends thereon to the
date fixed for redemption.
The holders of shares of this Series A shall have the right, at their option
to convert such shares into fully paid and nonassessable shares of common
stock of the Corporation at any time on or after August 3, 1997. Each
outstanding share of this Series A shall be convertible into two shares of
common stock of the Corporation.
The holders of this Series A shall have no right to vote either in the
election of directors or in any other matter.
4. Related Party Transactions
As of April 30, 1998, Xxxxxxx X. Xxxxx and Xxx Xxxxxx are the officers and
directors of the Company, and are the owners of 1,419,000 shares of its
issued and outstanding common stock, constituting approximately 70% of the
Company's issued and outstanding common stock. If the purchasers of the
Series A shares exercise the conversion privilege, Xxx Xxxxxx and Xxxxxxx X.
Xxxxx will own 1,439,000 shares constituting approximately 66% of the
Company's issued and outstanding shares.
The accounts payable of $830 is due to Xxxx Xxxxxx, corporate counsel and
one of the principal shareholders of the Company.
The Company's President is providing office space at no charge to the
Company. For purposes of the financial statements, the Company is accruing
$50 per month as additional paid-in capital for this use.
5. Income Taxes
The Company has a Federal net operating loss carryforwards of approximately
$4,600 expiring in the year 2012 and $5,000 expiring in the year 2013. The
tax benefit of this net operating loss of approximately $1843, has been
offset by a full allowance for realization. This carryforward may be limited
upon the consummation of a business combination under IRC Section 381. For
the period ended April 30, 1998 the valuation allowance increased by $954.
6. Supplemental Disclosure of Non-cash Financing Activities
During the year ended April 30, 1997 the company elected not to accumulate
any amortization of the organization costs, as two months of amortization is
immaterial to the financial statements taken as a whole.
Similarly, the Company elected to forego any rent expense for the year ended
April 30, 1997, but has recorded the rent expense as additional paid-in
capital during the year ended April 30, 1998.
7. Share Exchange Agreement
On May 19, 1998, Sunburst Acquisitions I, Inc., a Colorado corporation
("Sunburst"), entered into a conditional agreement to acquire all of the
issued and outstanding capital stock if Invu PLC, a company incorporated
under English law ("Invu"), in exchange for shares (the "Share Exchange" of
common stock, no par value, of Sunburst (the "Common Stock"), pursuant to a
Share Exchange Agreement (the "Agreement") by and between Sunburst and
Montague Limited, an Isle of Man company ("Montague").
F - 7
The Agreement, as amended July 23, 1998, provides that upon satisfaction of
certain conditions, including, but not limited to, (i) certain capital
investment by Invu as disclosed below, (ii) receipt by Montague of a power
of attorney from Halcyon Enterprises Plc, a company incorporated under
English law ("Halcyon") to transfer its shares of Invu to Sunburst and (iii)
the conversion of all outstanding shares of Sunburst Preferred Stock into
Sunburst Common Stock, Invu will become a wholly-owned subsidiary of
Sunburst.
As of May 19, 1998, Sunburst has a total of 2,190,000 shares of Common Stock
issued and outstanding assuming the conversion of the Sunburst Preferred
Stock. The Agreement contemplates that Montague and Halcyon (collectively,
the "Invu Shareholders") will receive in the aggregate approximately
26,506,552 shares of Common Stock of Sunburst in exchange for all of the
issued and outstanding share capital of Invu.
The Agreement further provides that, upon satisfaction of certain
conditions, on the Closing Date, Sunburst will issue a total of 1,510,344
shares of common stock to a consultant to the Company as a finder's fee. In
addition, the Amendment also provides that Invu would deposit $500,000 into
an account maintained by INVU Services Limited, a company organized under
English law, and a wholly-owned subsidiary of INVU, within four (4) days of
the execution of the Agreement, and an additional $500,000 within fourteen
(14) days after the consummation of the share Exchange. Said funds will
provide future working capital for the Company. Subject to approval of the
Board of Directors and shareholders of the Company, Montague also agreed to
vote in favor of a 2.4-to-1 reverse split of the Common Stock of the
Company.
F - 8
EXHIBIT 27
FINANCIAL DATA SCHEDULES
[See Attached]
Index - 4
