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FORM SB-2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GREAT XPECTATIONS MARKETING, INC.
(Name of small business issuer in its charter)
8925 STERLING STREET, SUITE 120, IRVING TEXAS 75063
(972) 929-2900
(Address and telephone number of principal executive offices)
8925 STERLING STREET, SUITE 120, IRVING TEXAS 75063
(Address of principal place of business or intended
principal place of business)
FORREST E. WATSON
PRESIDENT
GREAT XPECTATIONS MARKETING, INC.
8925 STERLING STREET
SUITE 120
IRVING, TX 75063
(972) 929-2900
(Name, address, and telephone number of agent for service)
APPROXIMATE DATE OF PROPOSED DISTRIBUTION TO THE PUBLIC: DECEMBER 31, 1998
Copies to:
T. ALAN OWEN, ESQ. H. DAWSON FRENCH, ESQ.
T. ALAN OWEN & ASSOCIATES, P.C. FRENCH & HAMILTON
1112 EAST COPELAND ROAD 14651 NORTH DALLAS PARKWAY
SUITE 420 SUITE 434
ARLINGTON, TEXAS 76011 DALLAS, TEXAS 75240
(817) 460-4498 (972) 404-1414
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Title of Each Amount to be Proposed Maximum Proposed Maximum Amount of
Class of Sec- Registered Offering Price Aggregate Offering Registration
urities to be Per Share Price Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 6,768,490 $0.001 (1) $6,768.49 (1) $1.88 (1)
Par Value of
$0.001/share
- -------------------------------------------------------------------------------------------------------------------
Total 6,768,490 $1.88
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</TABLE>
(1) The shares are being distributed to stockholders as a dividend. The
shares have nominal value which is assessed as the par value of the stock,
$0.001.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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GREAT XPECTATIONS MARKETING, INC.
Cross Reference Sheet
(Pursuant to Rule 404 and
Item 501 of Regulation S-B)
<TABLE>
<CAPTION>
Caption or Heading
Item in Form SB-2 In Prospectus
- ----------------- -------------------
<S> <C>
1. Front of the Registration
Statement and Outside Front
Cover Page of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . Outside Front Cover
Page
2. Inside Front and Outside Back
Cover Pages of Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . Outside Front Cover
Page; Table of Con-
tents; Additional
Information
3. Summary Information
o Summary of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . Summary of
Prospectus (Page 2)
o Summary Financial Data. . . . . . . . . . . . . . . . . . . . . . . . Summary Financial
Data (Page 3)
Risk Factors
o Potential inadequacy of capital
o Marketing network
o No recent profit from operations. . . . . . . . . . . . . . . . . . . Risk Factors (Page 4)
4. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
5. Determination of
Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution of Secur-
ities of Great Xpecta-
tions (Page 7)
6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
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<TABLE>
<S> <C>
8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution of Secur-
ities of Great Xpecta-
tions (Page 7)
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Litigation (Page 18)
10. Directors, Executive Officers,
Promoters, and Control Persons . . . . . . . . . . . . . . . . . . . . . . . . Management of Great
Xpectations (Page 14)
11. Security Ownership of
Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal Security
Holders of Great
Xpectations (Page 16)
12. Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . Description of Secur-
ities of Great Xpecta-
tions (Page 18)
13. Interest of Named
Experts and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Transactions
(Page 16)
14. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . . . Management - Indem-
nification of Directors
and Officers (Page 15)
15. Organization Within Last
Five Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xpectations
(Page 4)
16. Description of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xpectations
(Page 4); Manage-
ment's Discussion and
Analysis (Page 12)
17. Management's Discussion and
Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . . Management's Dis-
cussion and Analysis
of Financial Condition
and Results of Opera-
tions (Page 12)
</TABLE>
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<TABLE>
<S> <C>
18. Description of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
19. Certain Relationships and
and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of Great
Xpectations (Page 14)
20. Market for Common
Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors (Page 4);
Distribution of Secur-
ities of Great Xpecta-
tions (Page 7)
21. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of Great
Xpectations (Page 14)
22. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
23. Changes In and Disagree-
ments with Accountants
on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
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PROSPECTUS
GREAT XPECTATIONS MARKETING, INC.
7,268,490 SHARES OF $0.001 PAR VALUE COMMON STOCK
--------------------------------------
OWNERSHIP OF THE COMMON STOCK OF GREAT XPECTATIONS MARKETING, INC.
INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" AT PAGE 4 FOR A DISCUSSION OF
THESE RISKS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------
This prospectus relates to the distribution by GlobeNet International
I, Inc., a Delaware corporation, of 6,768,490 shares of the common stock of
Great Xpectations as a dividend to the holders of record of GlobeNet common
stock on June 5, 1998. The 6,768,490 shares of the Great Xpectations constitute
all of its presently issued and outstanding shares of common stock. GlobeNet
determined that spinning-off the stock of Great Xpectations would be in the best
interest of GlobeNet's stockholders. This spin-off will give the common
stockholders of GlobeNet an equity position in two publicly held companies that
engage in direct marketing of products and services.
Certificates evidencing 6,768,490 shares of Great Xpectations will be
distributed by mail within a reasonable time after the date of this prospectus
on the basis of 1 share of Great Xpectations' common stock for each 2 shares of
GlobeNet.
Clinton H. Howard, the President and Chairman of the Board of GlobeNet,
owns, directly or indirectly, 53.67% of the stock of GlobeNet. As a result of
this spin-off, Mr.
Howard will own a majority of Great Xpectations' stock.
GlobeNet is bearing all of the expenses of this spin-off, which is
estimated to be approximately $50,000.
There is no trading market for the common stock of Great Xpectations.
The date of this prospectus is April 9, 1999.
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SUMMARY OF PROSPECTUS
GREAT XPECTATIONS
Great Xpectations was incorporated in Texas on April 10, 1995, and
reincorporated in Nevada on December 31, 1998. Its principal executive office
address and telephone number are:
Great Xpectations Marketing, Inc.
8925 Sterling Street
Suite 120
Irving, Texas 75063
(972) 929-2900.
At the time of its formation, the main business of Great Xpectations
was to provide marketing services for direct marketing companies, and soon most
of Great Xpectations's business was related to Mighty Power U.S.A., Inc.
Effective as of April 1, 1997, Great Xpectations purchased the assets and
certain liabilities of Health Thru Nature, Inc., a Texas corporation, and Mighty
Power USA, L.C., a Texas limited liability company.
Simultaneously with Great Xpectations' purchase of the assets of Heath
Thru Nature, Inc. and Mighty Power USA, L.C., the following occurred:
1. All of the issued and outstanding stock of Great Xpectations
was acquired by Mighty Power U.S.A., Inc., GlobeNet's
predecessor in interest; and
2. GlobeNet Inc., a Texas corporation, merged into Mighty Power
U.S.A., Inc. Following the merger, Mighty Power U.S.A., Inc.
changed its name to GlobeNet International I, Inc.
Even while a wholly owned subsidiary of GlobeNet, Great Xpectations
always operated independently from its parent. Great Xpectations is currently
engaged in the direct marketing of a line of nutritional supplements and
automobile and home care products and service products through a network of
independent distributors. Historically, the nutritional products have accounted
for over 90% of Great Xpectations's sales, but it is anticipated that the
service products will become a significant portion of its total sales in the
future. Great Xpectations had over 2,500 members in its direct marketing network
as of December 31, 1998, all of whom are located in the United States.
OFFICES
Great Xpectations presently leases, through its wholly owned
subsidiary, GX Marketing, Inc., approximately 6,696 square feet of
office/warehouse space at a rental rate of $4,500 per month Great Xpectations'
office/warehouse lease expires on January 31, 2002. Approximately 1,700 square
feet of the warehouse space is subleased to an art framing company for $1,000
per month. Great Xpectations does not manufacture any of the products that it
sells, and it does not
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have or need manufacturing facilities as it buys its products (custom designed
and manufactured) from a third party manufacturer.
MANAGEMENT
The directors and executive officers of Great Xpectations are Forrest
E. Watson, Ed.D. and Everett Sparks. Dr. Watson, who is also a director of
GlobeNet, will resign from that position with GlobeNet upon the date of this
prospectus.
SUMMARY FINANCIAL DATA
The following summary financial data should be read in conjunction with
the Financial Statement and related Notes which comprise a part of this
prospectus.
<TABLE>
<CAPTION>
STATEMENT OF OPERATION DATA: DECEMBER 31
1998 1997
---- ----
<S> <C> <C>
Sales $ 1,234,217 $ 1,641,068
Net income (loss) from operations $ (928,494) $ (62,775)
Income taxes (benefit) $ (71,900) $ --
Net income (loss) $ (856,594) $ (62,775)
Income (loss) per share $ (0.13) $ (0.01)
Weighted average shares outstanding 6,768,490 6,768,490
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
---- ----
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalent $ 41,229 $ 155,987
Working capital (deficiency) $ (461,406) $ (228,646)
Total assets $ 263,148 $ 663,046
Retained earnings (deficit) $ (928,895) $ (72,301)
Total shareholders' equity (deficit) $ (411,904) $ 27,699
</TABLE>
OWNERSHIP OF GREAT XPECTATIONS' COMMON STOCK INVOLVES A HIGH DEGREE
OF RISK. PRIOR TO INVESTING IN GREAT XPECTATIONS' COMMON STOCK, INVESTORS SHOULD
CAREFULLY CONSIDER AND EVALUATE THE MATTERS DISCUSSED BELOW IN "RISK FACTORS".
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RISK FACTORS
1. POTENTIAL INADEQUACY OF CAPITAL. As of December 31, 1998, Great
Xpectations only has $41,229 cash available for operating funds. This sum may
very well be inadequate for all product purchases and payroll requirements of
Great Xpectations during calendar year 1999.
2. MARKETING NETWORK. In 1997, Great Xpectations lost approximately 50%
of its distribution network to its competitors, with the number of its
distributors falling from 5,204 to 2,720. This loss weakened Great Xpectations
financially by reducing its income. The loss of these distributors further
damaged Great Xpectations financially by requiring it to incur additional
expenses necessary to rebuild its distributor network. Great Xpectations was
only able to meet all of its cash needs in 1997 by deferring officers' salaries,
and there is no certainty that Great Xpectations' income will be sufficient to
cover all of its operating costs and rebuild its distributor network.
3. NO RECENT PROFIT FROM OPERATIONS. Great Xpectations has not made a
profit from its operations in the last two years (1997 and 1998). As a result,
there is a possibility that Great Xpectations will be unprofitable in 1999.
GREAT XPECTATIONS
Great Xpectations was incorporated under the laws of the State of
Texas on April 10, 1995, with 100,000 shares of $0.01 par value common stock
authorized. Great Xpectations was reincorporated in the State of Nevada on
December 31, 1998, with 50,000,000 shares of $0.001 par value common stock
authorized and 20,000,000 shares of $0.001 par value Preferred Stock authorized.
In 1997, Great Xpectations crossed a critical period in its
operations by surviving the loss of a large number of its distributors. Great
Xpectations' distributor network was raided by a competitor and approximately
60% of the leadership members in the network were lost, along with many of the
leaders' down line network personnel. Prior to the raid, Great Xpectations had
more than 5,000 distributors. Following this loss of distributors, sales were
sufficient to cover all cash expenses, but certain accruals (such as additional
compensation to officers) has not yet been paid. From the low ebb of 2,000
distributors at the beginning of 1998, Great Xpectations had recovered to a
level of slightly more than 2,500 distributors as of December 31, 1998.
At the end of 1997, Great Xpectations addressed several issues that
they believed would help them recruit and retain sales associates. The most
significant of these were decisions to add new products to its product line and
provide a greater support base for its distributors. Until recently, Great
Xpectations and its distributor network focused the majority of their marketing
efforts on consumable products such as vitamins and dietary supplements, skin
creams, and automobile and home care (cleaning) products. However, sales of
these products require continuous contact with the end user, or re-selling, and
are traditionally cyclical in nature, with very low sales in the months of
August, December, and January.
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<PAGE> 10
Commencing in March 1998, Great Xpectations has emphasized the
development and acquisition of service products more than sales of consumable
products and recruitment of distributors. As a result, overall sales did not
increase as expected. However, on December 1, 1998, the Great Xpectations'
distribution network began selling the following service products: (a) Internet
access service; (b) long distance telephone service; and (c) a family benefit
package. The amount of sales of the service products were greater than expected
by Great Xpectations' management, and it is anticipated that at some point the
sale of service products will be the largest source of revenue for Great
Xpectations. Additionally, once the service products are subscribed to by a
customer, the income generated from them is not cyclical and represents a more
stable source of cash flow for Great Xpectations and its distributor network. As
a result of these service product sales, Great Xpectations is starting to
receive stable, reliable cash flow.
The new products have given Great Xpectations' sales associates the
ability to sell additional products to their existing customer base and have
provided new ways to gain introductions to potential customers and potential
sales associates. The greater level of sales support now being supplied by Great
Xpectations provides the distributor network members with a greater feeling of
comfort, knowing that their support needs and requirements will be met, without
question, by Great Xpectations' corporate office staff. The initial results have
shown that these adjustments/changes are working well. Sales for 1998 are down
24.79% compared to sales in 1997, but Great Xpectations believes that this
decline in sales was brought on by Great Xpectations focusing the majority of
its efforts on the development and acquisition of service products that generate
stable cash flow (not traditional direct marketing cyclical cash flow) during
most of 1998, as sales have increased at a rapid rate during the month of
December 1998. Great Xpectations believes that the new focus on service
products, in conjunction with sales of existing product lines, will result in a
net profit for the calendar year 1999.
There is an ample supply of the raw materials needed for the
manufacture/blending of the products sold by Great Xpectations. The companies
that manufacture the nutritional supplements sold by Great Xpectations are:
SK Labs, Anaheim, California
Dews Research Labs, Mineral Wells, Texas
Summa Labs, Fort Worth, Texas
Production Labs, Vista, California
The company that manufactures/blends the household cleaning products
sold is Global Marketing, Dallas, Texas.
The Internet access service sold by Great Xpectations is provided by
Epoch Network, Inc., Irvine, California. The long distance telephone service
sold is provided by NCN Communications, Inc., Phoenix, Arizona, a reseller for
WorldTel, Santa Anna, California.
The family benefit package sold, which consists of discounted rates for
various health care providers, is provided by Plan USA, Houston, Texas.
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Fortunately, Great Xpectations is not dependent on just a few customers
for its sales, as its customer basis consists of thousands of individuals.
Great Xpectations holds no patents on the products that it sells, but
it does hold the "Great Xpectations" trademark. Further, Great Xpectations does
not owe any person or entity any royalty on the products it sells, it simply
buys and resells products.
Most of the products that are sold by Great Xpectations do not require
any type of government approval. However, on the ones that do require approval
(i.e., cleaning products), such approval is obtained by the manufacturer/blender
of such products prior to Great Xpectations' buying the products. There is no
government regulation applicable to the Internet service sold by Great
Xpectations. The Federal Communications Commission regulates the long distance
telephone service sold by Great Xpectations, but such regulation is applicable
only to the actual service provider.
In the past two fiscal years Great Xpectations has spent approximately
$25,000 on researching new products and services ($12,000 in 1997 and $13,000 in
1998). These costs were incurred by Great Xpectations for purpose of attempting
to identify products and services that could be sold to increase future sales
and profits.
Great Xpectations does not sell any products that are hazardous. As a
result, it has no expenditures, money or time, relating to environmental law
compliance.
Great Xpectations currently has two executive officers. They are Dr.
Forrest E. Watson, President and Treasurer, and Everett Sparks, Vice President,
Secretary, and Chief Financial Officer. Additionally, Great Xpectations relies
heavily on the talent and experience of Connie Marwitz, the President of GX
Marketing, Inc., Great Xpectations' principal subsidiary.
There are some risk factors associated with being an investor in Great
Xpectations that are common to many public companies. A brief discussion of such
common risk factors is set forth below:
1. Dependence on officers and directors. Great Xpectations will be
substantially dependent upon the experience and knowledge of its two principal
officers and directors, Forrest E. Watson, Ed.D. and Everett Sparks. The loss to
Great Xpectations of either or both of such persons could be expected to be
detrimental to Great Xpectations. Great Xpectations has entered into written
employment agreements with Dr. Watson, who will serve as Great Xpectations'
President and Treasurer, and Mr. Sparks, who will serve as Great Xpectations'
Vice President and Chief Financial Officer and Secretary for the calendar year
1999. Under the terms of the Employment Agreements, Dr. Watson and Mr. Sparks
will act in the above-stated capacities without cash compensation until Great
Xpectations is profitable.
2. Absence of trading market for the common stock. No market for
trading the common stock currently exists and there is no assurance that a
market ever will develop or, should such ever be established, that it will be
maintained. The common stock does not now, and
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may never, qualify for listing on any securities exchange. In the absence of an
over-the-counter market in the Great Xpectations' common stock, or listing on an
exchange, holders of the common stock will be unable to sell their securities
through usual and customary stock brokerage channels and may be unable to
determine the value of their securities.
3. Restrictions on sales of common stock of Great Xpectations by
affiliates. Persons who are deemed "affiliates" of Great Xpectations under the
rules and regulations of the Securities and Exchange Commission may not sell
their shares of common stock of Great Xpectations otherwise than in accordance
with all of the requirements of Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933. Rule 144 restricts the
time, amount, and manner in which affiliates may sell their common stock. Both
Dr. Watson and Mr. Sparks are affiliates of Great Xpectations. Additionally, due
to his ownership of 53.67% of the common stock, Clinton H. Howard is considered
to be an affiliate of Great Xpectations, and he will be in a position to control
Great Xpectations and its management.
DISTRIBUTION OF SECURITIES OF GREAT XPECTATIONS
BACKGROUND AND REASONS FOR DISTRIBUTION
The Board of Directors of GlobeNet decided to spin-off the stock of
Great Xpectations to the stockholders of GlobeNet for the purpose of benefitting
its stockholders. The Board of Directors of GlobeNet and the management of Great
Xpectations believe that GlobeNet and Great Xpectations will be more effective
as separate entities in attracting new distributors and promoting sales of their
respective products. If Great Xpectations proves to be successful, the
stockholders of GlobeNet will have an equity interest in two publicly held
direct marketing companies. Following the completion of the distribution of all
of the stock of Great Xpectations to the stockholders of GlobeNet, Great
Xpectations will have no affiliation with GlobeNet whatsoever.
METHOD OF DISTRIBUTION AND SUBSEQUENT TRADING
Certificates representing the 6,768,490 shares of Great Xpectations'
common stock will be distributed by mail within ten (10) business days after the
date of this prospectus to holders of GlobeNet common stock of record on June 5,
1998. On that date, GlobeNet had slightly fewer than 500 stockholders of record.
The dividend will be distributed on the basis of 1 share of Great Xpectations
for each 2 shares of GlobeNet. No exchange of shares, payment, or other action
by holders of GlobeNet common stock will be required. Common stock of Great
Xpectations will be distributed to the nearest number of whole shares rounding
up. No fractional shares will be issued.
A copy of this prospectus will be mailed to each GlobeNet stockholder
of record as of June 5, 1998. Copies of this prospectus will also be mailed to
brokers and dealers who are known to trade or make a market in the common stock
of GlobeNet and to other brokers and dealers who might be interested in Great
Xpectations. Great Xpectations does not anticipate that an
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active market for its common stock will develop within the foreseeable future.
In the absence of an active trading market, Great Xpectations' stock will be a
relatively illiquid investment. GlobeNet does not intend to make a market in the
Great Xpectations' common stock after the distribution.
DIVIDENDS
Great Xpectations has not paid any cash dividends on its common stock
and does not anticipate paying any such dividends in the foreseeable future.
FEDERAL INCOME TAXES
GlobeNet will report the distribution of Great Xpectations' common
stock as a distribution subject to the provisions of Section 301 of the United
States Internal Revenue Code of 1986, as amended. GlobeNet will recognize gain
as a result of the distribution to the extent the fair market value of the
common stock exceeds the adjusted basis of such common stock in the hands of
GlobeNet. GlobeNet will recognize no loss as a result of the distribution.
DIVIDENDS TAXED AS ORDINARY INCOME
In the opinion of T. Alan Owen & Associates, P.C., counsel to GlobeNet,
holders of GlobeNet common stock will be taxed on the dividend distribution as
ordinary income to the extent of GlobeNet's current and accumulated earnings and
profits, computed as of the close of the tax year during which the distribution
occurs. A portion of the distribution, if any, which exceeds a GlobeNet's
current and accumulated earnings and profits will reduce a stockholder's
adjusted basis in his GlobeNet common stock, but not below zero. To the extent
of any such reduction in basis, the distribution would not be currently taxable.
If the amount of the distribution would have the effect of reducing a
stockholder's adjusted basis in his GlobeNet common stock below zero, the excess
will be treated as a gain from the sale or exchange of property. If the GlobeNet
common stock is a capital asset in the hands of the stockholder, the gain will
be a capital, either long-term or short-term, depending on whether the
stockholder has held his GlobeNet common stock for more than six months.
Non-corporate stock owners will be treated as having received a
distribution equal to the fair market value at the date of the distribution of
the common stock they receive. Corporate stock owners will generally be treated
as having received a distribution in an amount equal to the lesser of (i)
GlobeNet's adjusted basis in the common stock immediately prior to the
distribution (which will be approximately $0.001 per share), increased by the
amount of any gain recognized by GlobeNet on the distribution, or (ii) the fair
market value of the common stock on the date of the distribution. However,
corporate stockholders may be entitled to the dividends-received deduction,
which would generally allow them a deduction, subject to certain limitations,
from their gross income of 80 percent of the amount of the dividend.
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A non-corporate stockholder's tax basis in the common stock will equal
the fair market value of the common stock on the date of the distribution and a
corporate stockholder's tax basis in the common stock will generally equal the
lesser of the fair market value of the common stock on the date of the
distribution or the adjusted basis of the common stock in the hands of GlobeNet
immediately prior to the distribution, increased in the amount of any gain
recognized to GlobeNet on the distribution.
The holding period of a corporate stockholder of GlobeNet will commence
on the date of the distribution. If gain is recognized on the distribution by
GlobeNet, as will be the case if the fair market value of the common stock
distributed exceeds it suggests basis, a corporate stockholder's holding period
will begin on the date of the distribution.
If gain is not recognized by GlobeNet on the distribution and the basis
of the common stock in the hands of the corporate stockholder is determined
under Internal Revenue Code Section 301(d)(2)(B), then (except for gain from
certain sales or exchanges of stock in foreign corporations) such corporate
stockholder will not be treated as holding the common stock distributed during
any period before the date on which such corporate stockholder's holding period
in his common stock began.
In the absence of a trading market for the common stock, "fair market
value" is to be calculated in accordance with Internal Revenue Service Revenue
Ruling 59-60, 1959-1C.B.237, which sets forth certain factors for such a
determination (for example, the nature of the business, its history, the general
economic outlook, book value, earnings capacity, dividend paying capacity,
existence of goodwill, and recent sales of Great Xpectations shares). Neither
GlobeNet nor Great Xpectations will advise the stockholders what the "fair
market value" of the common stock will be on the distribution date. Each
stockholder must make his own determination. However, GlobeNet intends to send
stockholders I.R.S. Form 1099 (DIV) which will indicate the approximation of
GlobeNet of the value of the dividend distribution, and such approximation will
be $0.001 per share.
The preceding discussion is a general summary of current federal income
tax consequences of the dividend distribution as presently interpreted, and a
given stockholder's particular tax consequences may vary depending on his
individual circumstances. Stockholders are encouraged to consult their own tax
counsel concerning the treatment of the distribution on their income tax
returns.
As a result of the Tax Reform Act of 1986, for a non-corporate
taxpayer, there will be no preferential tax treatment of long-term capital
gains. The distinction between short-term and a long-term capital gains will
still exist, but all gains will be taxed as ordinary income.
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<PAGE> 15
CAPITALIZATION
The following table shows the capitalization of Great Xpectations on
June 5, 1998, December 31, 1998, and as adjusted to reflect issuance of the
Bonus Stock to be issued pursuant to this prospectus.
<TABLE>
<CAPTION>
OUTSTANDING AS ADJUSTED (1)
----------- ---------------
<S> <C> <C>
Common stock, par value $0.001, $6,768 $7,268
50,000,000 shares authorized,
6,768,490 and 7,268,490
issued and outstanding
Additional Paid in Capital $ 500 $ 500
</TABLE>
(1) Includes the 500,000 shares of common stock to be issued to Forrest E.
Watson, Everett Sparks, and T. Alan Owen & Associates, P.C. pursuant to the
terms of their respective Employment Agreements with Great Xpectations.
10
<PAGE> 16
SELECTED FINANCIAL DATA
The following table sets forth selected financial information. Such
information has been derived from the financial statement of Great Xpectations
as of December 31, 1998, and for the previous years ended on December 31, 1997.
This information should be read in conjunction with the Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" set forth in this prospectus immediately below this
table.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Revenues:
Sales $ 1,234,217 $ 1,641,068
Cost of sales 500,759 269,926
------------- -------------
Gross profit 733,458 1,371,142
------------- -------------
Operating expenses:
General and administrative 835,928 632,044
Distributor commissions 590,178 739,246
Interest 8,115 21,375
Goodwill impairment 119,343
Fixed asset impairment 50,770
Depreciation and amortization 58,348 41,252
------------- -------------
Total operating expenses 1,661,952 1,433,917
------------- -------------
Net income (loss) from operations (928,494) (62,775)
Income taxes (benefit) (71,900)
-------------
Net income (loss) $ (856,594) $ (62,775)
============= =============
Earnings per share:
Income (loss) per share $ (0.13) $ (0.01)
============= =============
Weighted average shares outstanding 6,768,490 6,768,490
============= =============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $ 41,229 $ 155,987
Working capital (unaudited) $ (461,406) $ (228,646)
Total assets $ 263,148 $ 663,046
Retained earnings (deficit) $ (928,895) $ (72,301)
Total shareholders' equity $ (411,904) $ 27,699
</TABLE>
11
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
While Great Xpectations is in business and is not a "development
stage" company, it only has $41,229 cash for operating funds, and, as explained
in "Risk Factors" above, this may not be sufficient working capital for Great
Xpectations to survive as an operating entity. The only internal source of
working capital or liquidity is product and service sales. At the present time,
there are no external sources of liquidity.
It is estimated that the cash requirements of Great Xpectations will
be able to be satisfied with existing funds until October 1999. As a result,
gross sales will have to increase by approximately $21,000 per week or working
capital for the remainder of the year will have to be funded from additional
equity (currently unknown to be available) or loan proceeds.
Currently, Great Xpectations owes deferred compensation to Forrest
E.Watson and Savanna Marketing, Inc. for management services rendered to Great
Xpectations. The aggregate amount of such deferred compensation is $84,000.
In order to be truly viable, Great Xpectations will have to obtain
additional working capital in the form of a substantial line of credit loan or
equity infusion, and increase its sales markedly. There are no assurances that
additional capital would be available or, if available, could be obtained
without the issuance of additional equity securities with a resultant dilution
in the equity of the holders of common stock, or that financing could be
arranged, if at all, on terms favorable to Great Xpectations. Further, there is
no assurance that Great Xpectations will be able to increase its sales volume to
the extent needed to maintain viable operations.
RESULTS OF OPERATIONS
During the fiscal year ending on December 31, 1997, Great
Xpectations experienced a steep decline in sales that was caused primarily by a
large number of its distributors breaking off from Great Xpectations to form
their own direct marketing company. In 1997, Great Xpectations had sales of
$1,641,062, and had a net loss of $62,775. The loss in 1997 can be attributed to
Great Xpectations taking on sufficient fixed overhead to properly handle its
1996 sales volume and having an unexpected, precipitous drop in total sales.
However, Great Xpectations reorganized certain functions and responsibilities
relating to sales and sales support. After the drastic drop in sales occurred
and leveled out, sales started to increase slowly near the end of 1997. Although
Great Xpectations was accruing certain expenses relating to its debt and
employment contracts with its two principals, Great Xpectations covered its cash
requirements for operations.
During 1998, Great Xpectations' sales were relatively level, but
increased slightly at the end of the year. The rebuilding of Great Xpectations'
marketing network in 1997 was starting to show some returns in the form of
increased marketing and recruiting. During 1998, Great
12
<PAGE> 18
Xpectations had sales of $1,234,217 and had a net operational loss of $328,991.
In addition to this, Great Xpectations took a write-down in its fixed assets and
goodwill of $170,013, resulting in a total loss for 1998 of $498,994. Great
Xpectations' management believes that sales will increase in 1999, and that it
will report a small net profit for 1999.
OPERATING PLAN
Great Xpectations now has no research and development costs as
information on the products it sells such as herbal vitamin and food supplements
is broadly available to the public. Great Xpectations takes this available
information and "creates" its own mixes in order to have desirable products to
market.
Great Xpectations has property and equipment related to the
marketing of its products and the support of its distributors. There are no
significant capital items that could be used to create a large increase in
sales. Therefore, Great Xpectations has no plans to acquire or dispose of any
capital items during 1999, or at anytime in the forseeable future.
Since Great Xpectations' distributors are independent contractors,
not employees, it can double the size of its current sales force, which it
intends to do, without increasing the number of its employees.
There are no material commitments for capital expenditures as the
Company is merely a marketing organization structure that provides its
distributors with products and sales support.
DISCUSSION OF CHANGE IN FINANCIAL CONDITION
As of December 31, 1998, Great Xpectations had cash on hand in the
amount of $41,229, compared to $155,987 on December 31, 1997. While sales in
1998 were almost the same as in 1997, Great Xpectations increased its fixed
overhead in 1998 to be able to support an increased number of distributors and
this overhead cannot easily be trimmed. As of January 1999, Great Xpectations
had pared its operating expenses to a minimum, including moving its offices to a
less expensive lease space. In addition, Great Xpectations is no longer accruing
certain costs such as compensation to principal officers. Management believes
that this expense reduction will provide Great Xpectations with the cost savings
necessary for it to continue as a going concern and pay its operating expenses.
Should Great Xpectations not be able to cover its operating expenses
from its cash flow, it has few alternate sources of capital. The officers and
directors could, as they have done in the past, loan money to Great Xpectations.
Great Xpectations might obtain investment funds from a third party, but no such
negotiations are currently taking place.
There are no known trends, events, or circumstances known to
management that would cause a material impact on the financial position or the
sales of Great Xpectations. There are no significant items of income or loss
expected in the next twelve months that would materially affect the financial
statements of Great Xpectations.
13
<PAGE> 19
YEAR 2000 PROBLEM
Great Xpectations does not anticipate a Year 2000 or Y2K problem
with respect to its own equipment as all of its computers and software are Year
2000 compliant. In addition, Great Xpectations has retained paper copies of all
computer information. Therefore, Great Xpectations does not expect to be
materially affected by any Y2K problem or situation that should arise if it
relates solely to Great Xpectations. However, since long distance telephone
service, an industry that potentially will experience a Y2K problem, is one of
the products currently being sold by Great Xpectations' marketing network, Great
Xpectations could be indirectly affected. Additionally, if the trucking industry
is affected by the Y2K problem, Great Xpectations could be affected by erratic
or lack of product delivery.
MANAGEMENT OF GREAT XPECTATIONS
The following table identifies the officers and directors of Great
Xpectations.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Forrest E. Watson, Ed.D. 63 President , Treasurer, and
Chairman of the Board
Everett Sparks 49 Vice President, Secretary,
and Director
</TABLE>
Forrest E. Watson, Ed.D. Dr. Watson has served 34 years as a
Superintendent of public school systems with responsibility for annual budgets
in excess of $75,000,000. During his years of acting as a school system
Superintendent, Dr. Watson supervised over $400,000,000 in school construction.
Dr. Watson has served as the Chairman of the Board of Great Xpectations since
the date of its formation. Dr. Watson was also a director of GlobeNet prior to
his resignation upon the date of this prospectus. Dr. Watson acted as the
Chairman of the Board of Directors and C.E.O. of Mighty Power U.S.A., Inc. from
April 1995 to March 1997, the effective date of the merger of GlobeNet Inc., a
Texas corporation, into Mighty Power U.S.A., Inc., GlobeNet's predecessor in
interest.
Everett Sparks. Mr. Sparks has worked in the financial side of the
oil and gas production and marketing industry as an investor and a consultant
for approximately 18 years, and a portion of his duties were economic
forecasting and the building of economic models. Additionally, Mr. Sparks, has
acted as a financial consultant to various private companies, concerning their
operational and functional activities for approximately 15 years.
The term of office of a director of Great Xpectations ends at the
next annual meeting of Great Xpectations' stockholders or when his successor is
elected and qualifies. The term of office of an officer of Great Xpectations
ends at the annual meeting of the Board of Directors expected
14
<PAGE> 20
to take place immediately after the next annual meeting of the stockholders, or
when his successor is elected and qualifies. Mr. Sparks began acting as an
officer and a director of Great Xpectations as of December 31, 1998.
REMUNERATION
Great Xpectations has authorized the issuance, effective as of the
date of this prospectus, of 225,000, 225,000, and 50,000 shares of Great
Xpectations's common stock to Forrest E. Watson, Ed.D., Everett Sparks, and T.
Alan Owen & Associates, P.C., respectively, pursuant to Great Xpectations' Stock
Bonus Plan. Dr. Watson and Mr. Sparks, Great Xpectations' two principal
executive officers, have agreed with Great Xpectations that they will perform
their agreed upon duties for no cash compensation from the date of this
prospectus until Great Xpectations is profitable, and have agreed to perform
such duties for the entire calendar year of 1999 for only the common stock
described above, if necessary. Great Xpectations has paid no other remuneration
to its officers or directors, and, except as disclosed herein, does not
anticipate the payment of other remuneration until Great Xpectations becomes
profitable in its business.
STOCK BONUS PLAN
On December 15, 1998, the Board of Directors of Great Xpectations
adopted a Stock Bonus Plan for the purpose of employing persons to work for
Great Xpectations without cash payment for services and for incentive to perform
well. Under the terms of such Plan, the Board of Directors is empowered to award
common stock of Great Xpectations as compensation to employees of Great
Xpectations, including the officers and independent contractors. The plan
authorizes the Board of Directors to administer the Plan in its sole discretion,
but permits an award of no more than 750,000 shares of common stock in any one
year period. The Plan may be amended or terminated by the Board of Directors,
but such amendment or termination cannot abrogate existing rights in the plan,
and, with respect to any increase in the amount of stock to be awarded, requires
approval of a majority of the stockholders of Great Xpectations.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Nevada law, Great Xpectations' bylaws provide that
Great Xpectations will indemnify its directors and officers against expense and
liabilities they incurred to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or having been Great
Xpectations' directors or officers unless, in any such action, they are judged
to have acted with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to directors, officers, or persons controlling Great
Xpectations pursuant to the foregoing provisions, Great Xpectations has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable.
15
<PAGE> 21
CERTAIN TRANSACTIONS
The law firm of T. Alan Owen & Associates, P.C. has received legal
fees of $5,000.00 for services rendered in connection with the preparation of
the Registration Statement of which this prospectus forms a part and will be
paid an additional $5,000.00 upon the date of this prospectus.
On December 15,1998, Great Xpectations entered into Employment
Contracts with Forrest E. Watson, Ed.D. and Everett Sparks for a one year term,
beginning on January 1, 1999, without cash compensation. Under the terms of such
Employment Contracts, Great Xpectations agreed to include such persons under the
Great Xpectations' Stock Bonus Plan and issue 225,000 shares of Great
Xpectations' $0.001 par value common stock to each of them immediately upon the
date of this prospectus. Great Xpectations also presently intends that T. Alan
Owen & Associates, P.C. will render legal services to Great Xpectations in
connection with Great Xpectations' business to be conducted in the future, and
has agreed to issue 50,000 shares of Great Xpectations' common stock to this law
firm under the terms of the Great Xpectations' Stock Bonus Plan. However, as
stated above, the law firm of T. Alan Owen & Associates, P.C. will perform
services for Great Xpectations in the capacity of a third party, independent
contractor, not as Great Xpectations' employee. It should be noted that a state
court may determine not to enforce, or only partially enforce, certain
provisions of the Employment Agreements relating to Dr. Watson, Mr. Sparks, and
T. Alan Owen & Associates, P.C. Concerning the Employment Contracts, it should
be noted that a state court may determine not to enforce, or only partially
enforce, certain provisions of the Employment Contracts.
GlobeNet, Great Xpectations' parent, is paying all of the costs and
expenses of this offering, estimated to be approximately $50,000, without any
right to reimbursement, for Great Xpectations.
PRINCIPAL SECURITY HOLDERS OF GREAT XPECTATIONS
After issuance of 500,000 shares of common stock under this
prospectus pursuant to the Stock Bonus Plan of Great Xpectations (to Forrest E.
Watson, Ed.D., Everett Sparks, and T. Alan Owen & Associates, P.C.), and the
distribution as a dividend of the 6,768,490 shares of the common stock of Great
Xpectations by GlobeNet, the following persons will be the persons known to
Great Xpectations to own 5% or more, beneficially or of record, of the Common
stock, and by all officers and directors of Great Xpectations as a group:
16
<PAGE> 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
% OF
BENEFICIAL OWNER AMOUNT CLASS
- ---------------- -------- --------
<S> <C> <C>
Clinton H. Howard 3,900,928 53.67%
3917 Fox Glen Dr.
Irving, TX 75062
Penny Slinger Hills, Trustee 702,002 9.66%
Hills 1988 Living Trust
910 Herman Gulch Road
Boulden Creek, CA 95006
Penny Slinger Hills, Trustee 40,704 0.56%
Hills Survivors Trust
910 Herman Gulch Road
Boulden Creek, CA 95006
Dr. M. G. Robertson 500,000 6.88%
977 Centerville Turnpike
Virginia Beach, VA 23463
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
All shares of common stock reflected in the table below are owned
directly and are owned beneficially and of record, and such stockholder has sole
voting, investment, and dispositive power, unless otherwise noted. The shares
listed as owned by Clinton H. Howard, the President and Chairman of the Board of
GlobeNet, includes 57,633 shares owned of record by Mr. Howard's wife. As a
result, following the distribution of the common stock of Great Xpectations to
the GlobeNet stockholders, Mr. Howard will control a majority of Great
Xpectations' common stock. However, Mr. Howard has represented that he has no
intention of actively participating in the management of Great Xpectations and
does not plan to be an officer or director of Great Xpectations.
<TABLE>
<CAPTION>
Title of Class Beneficial Owner Amount % of Class
- -------------- ---------------- ------ ----------
<S> <C> <C> <C>
Common Forrest E. Watson, Ed.D. 225,000 3.10%
8925 Sterling Street
Suite 120
Irving, Texas 75063
Common Everett Sparks 225,000 3.10%
1861 Brown Boulevard
Suite 759
Arlington, TX 76011
Common All Officers & Directors 450,000 6.20%
as a Group
</TABLE>
17
<PAGE> 23
LITIGATION
Great Xpectations is currently engaged in a lawsuit that has been
filed in Dallas County Court at Law No. 3, Dallas, Texas, styled "Harry C.
Liversage v. Great Xpectations Marketing, Inc. and Mighty Power U.S.A., Inc.",
Cause No. cc-98-06854-c. In the lawsuit, the Plaintiff is claiming unliquidated
damages for alleged injuries sustained on the job and for wrongful termination.
This lawsuit was filed on July 16, 1998. In the opinion of Great Xpectations'
attorneys, T. Alan Owen & Associates, P.C., the lawsuit is without merit because
Texas is an employment "at will" state and the Plaintiff's allegations of
injuries are believed to be spurious.
Other than the above lawsuit, Great Xpectations is not engaged in
any litigation or similar proceeding.
Great Xpectations is currently in a dispute with Epoch Network,
Inc., the Internet service provider with whom Great Xpectations works. Epoch has
asserted that Great Xpectations currently owes $300,000.00 to it for the block
of Internet service contracted for by Great Xpectations. Great Xpectations
disputes this assertion. It is Great Xpectations' position that only a portion
of the applicable contractual provisions were adhered to by Epoch, as Epoch did
not supply the required services in a timely fashion. Further, Great Xpectations
is of the opinion that this dispute will be resolved in an amicable manner.
DESCRIPTION OF SECURITIES OF GREAT XPECTATIONS
COMMON STOCK
General. Great Xpectations' authorized capital stock consists of
50,000,000 shares of common stock, $0.001 par value, and 20,000,000 shares of
preferred stock, $0.001 par value. Holders of the common stock are entitled to
receive such dividends as may be declared by the Board of Directors out of funds
legally available therefor. Great Xpectations has not paid any dividends on its
common stock and does not anticipate paying dividends for the foreseeable
future. In the event of liquidation, holders of the common stock are entitled to
a proportionate share of any distribution of Great Xpectations' assets after the
payment of liabilities. Holders of the common stock do not have preemptive
rights. Each share of common stock is entitled to one vote, and cumulative
voting is not permitted in the election of directors. All of the issued and
18
<PAGE> 24
outstanding shares of common stock are, and the shares being offered hereby will
be, upon issuance, fully paid and non-assessable.
Certain voting requirements. The affirmative vote of the holders of
a majority of the shares present at a stockholders' meeting, at which a quorum
is present, generally constitutes stockholder approval or authorization of
matters for which such approval or authorization is required. A sale or transfer
of substantially all of Great Xpectations' assets, liquidation, merger,
consolidation, reorganization, or similar extraordinary corporate event
generally requires the affirmative vote of a majority of the shares issued and
entitled to vote thereon.
Elimination or limitation of liability of directors. Great
Xpectations' Articles of Incorporation contain a provision for the elimination
or limitation of liability of directors that is permitted by Nevada law. The
Articles of Incorporation provide that a director shall not be liable to Great
Xpectations or its stockholders for monetary damages for breach of fiduciary
duty as a director, but shall be liable (i) for any breach of the director's
duty of loyalty to Great Xpectations or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for approving the payment of a dividend or a stock
repurchase or redemption prohibited by the laws of the State of Nevada, and (iv)
for any transaction from which the director derived an improper personal
benefit.
A director of a corporation organized and existing under the laws of
the State of Nevada owes such corporation and its stockholders certain fiduciary
duties. Nevada law directs that a director owes fiduciary duties to his
corporation and it stockholders to act in the best interest of such corporation
with undivided and unselfish loyalty and to use that amount of care in the
management of such corporation's business which ordinary, careful, and prudent
men would use in similar circumstances in the handling of their own affairs.
More specifically, the duty of loyalty requires a director to place the
interests of the corporation ahead of his personal or other business interests.
The principal effect of the limitation of liability of the directors
of Great Xpectations is that stockholders will not have a cause of action for
monetary damages against a director for breach of fiduciary duty, including
grossly negligent business decisions by a director of Great Xpectations.
However, such limitation of liability provision has no effect on the
availability of equitable remedies, such as an injunction or rescission, for
breach of a director's fiduciary duty.
In any case, the limitation of directors provision contained in Great
Xpectations' Articles of Incorporation will not limit a director's liability for
a violation, or violations, of federal securities laws.
The directors of Great Xpectations have a personal interest in seeing
the limitation of liability of directors provisions included in the Articles of
Incorporation of Great Xpectations, at the potential expense of Great
Xpectations' stockholders. Because Great Xpectations does not intend to maintain
liability insurance covering its directors, Great Xpectations will incur a
significant increase in liability exposure, or a greater risk to Great
Xpectations's assets and equity. The potential effect of this increase in
liability exposure is that Great Xpectations may incur a
19
<PAGE> 25
monetary loss as a result of a director's violation of his duty of care or duty
of loyalty and may be unable to recoup such losses from the director. Any loss
so incurred would reduce the equity of Great Xpectations and could result in a
decline in the market value, if any, of the common stock held by Great
Xpectations' stockholders.
TRANSFER AGENT
Great Xpectations has retained Fidelity Transfer Company, 1800 SW
Temple, Suite 301, Salt Lake City, Utah 84115, as the transfer agent for the
common stock of Great Xpectations.
LEGAL MATTERS
The law firm of T. Alan Owen & Associates, P.C., 1112 East Copeland
Road, Suite 420, Arlington, Texas 76011, has acted as legal counsel for GlobeNet
and Great Xpectations in connection with the Registration Statement of which
this prospectus forms a part and related matters.
EXPERTS
The financial statements of Great Xpectations as of December 31,
1997 and 1998, as included herein, have been audited by Osborn, Swalm, Thomas &
Associates, PLLC, independent certified public accountants, as stated in its
report appearing herein, and those financial statements are included in reliance
upon the report of such accounting firm (appearing elsewhere herein) and upon
its authority as an expert in auditing and accounting.
ADDITIONAL INFORMATION
Great Xpectations has filed with the Securities and Exchange
Commission a Registration Statement on Form SB-2 under the Securities Act of
1933, for this Offering. This prospectus does not contain all the information in
the Registration Statement and its exhibits, which documents may be inspected
and copied at the Public Reference Section of the Securities and Exchange
Commission, at 450 Fifth Street, N.W., Washington D.C. 20549. Copies of such
materials may be obtained from the Public Reference Section of the Securities
and Exchange Commission at prescribed rates.
20
<PAGE> 26
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report F-2
Financial Statements
Balance Sheet as of December 31, 1998 F-3
Statements of Operations for the years ended December 31, 1998 and 1997 F-4
Statements of Shareholders' Equity for the years ended December 31, 1998 and 1997 F-5
Statements of Cash Flows for the years ended December 31, 1998 and 1997 F-6
Notes to Financial Statements F-7
</TABLE>
All other schedules and financial statements are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.
F-1
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
Board of Directors
Great Xpectations Marketing, Inc.
Dallas, Texas
We have audited the accompanying balance sheets of Great Xpectations Marketing,
Inc. as of December 31, 1998, and the related statements of operations,
shareholders' equity and cash flows for the two year period then ended. 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 audits 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 and schedules. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for
our opinions.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Great Xpectations Marketing,
Inc. as of December 31, 1998 and the results of their operations and their cash
flows for the two year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company's significant operating losses and financial
commitments raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
OSBORN, SWALM, THOMAS & ASSOCIATES, PLLC
/s/ OSBORN, SWALM, THOMAS & ASSOCIATES, PLLC
Plano, Texas
March 19, 1999
F-2
<PAGE> 28
GREAT XPECTATIONS MARKETING, INC.
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1999
-------------
<S> <C>
Current assets:
Cash $ 41,229
Accounts receivable, net of allowance
for doubtful accounts 4,726
Accounts receivable - related party 100,000
Inventory 67,691
-------------
Total current assets 213,646
Property and equipment, net of depreciation 42,316
Other assets 7,186
-------------
$ 263,148
=============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable, trade $ 243,330
Accrued expenses 200,022
Notes payable - related parties 231,700
-------------
Total current liabilities 675,052
-------------
Commitment and contingencies --
Shareholders' equity (deficiency):
Preferred stock, $.001 par value; authorized
20,000,000 shares: none issued --
Common stock, $.001 par value; authorized
50,000,000 shares; issued and outstanding
6,768,490 shares 6,768
Paid in capital 510,223
Retained earnings (deficit) (928,895)
-------------
(411,904)
-------------
$ 263,148
=============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 29
GREAT XPECTATIONS MARKETING, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Sales $ 1,234,217 $ 1,641,068
Cost of sales 500,759 269,926
----------- -----------
Gross profit 733,458 1,371,142
----------- -----------
Operating expenses:
General and administrative 835,298 632,044
Distributor commissions 590,178 739,246
Interest 8,115 21,375
Goodwill impairment 119,243 --
Fixed asset impairment 50,770 --
Depreciation and amortization 58,348 41,252
----------- -----------
Total operating expenses 1,661,952 1,433,917
----------- -----------
Loss from operations (928,494) (62,775)
Income taxes (benefit) (71,900) --
----------- -----------
Net loss $ (856,594) $ (62,775)
----------- -----------
Earnings per share:
Loss per share $ (0.13) $ (0.01)
----------- -----------
Weighted average shares outstanding 6,768,490 6,768,490
=========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 30
GREAT XPECTATIONS MARKETING, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Total
--------------------- Paid In Retained Shareholders'
Shares Amount Capital Earnings Equity
--------- ------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1996 6,768,490 $ 6,768 $ 472,038 $ (435,668) $ 43,138
Contributions -- -- 300 -- 300
Net Income - three months ended
March 31, 1997 -- -- -- 9,526 9,526
Acquisitions / reverse merger -- -- (379,106) 426,142 47,036
--------- ------- --------- ---------- -------------
Balances, March 31, 1997 6,768,490 6,768 93,232 -- 100,000
Net Loss - nine months ended
December 31, 1997 -- -- -- (72,301) (72,301)
--------- ------- --------- ---------- -------------
Balances, December 31, 1997 6,768,490 6,768 93,232 (72,301) 27,699
Forgiveness of inter-company debt -- -- 416,991 -- 416,991
Net Income (loss) -- -- -- (856,594) (856,594)
--------- ------- --------- ---------- -------------
Balances, December 31, 1998 6,768,490 $ 6,768 $ 510,223 $ (928,895) $ (411,904)
========= ======= ========= ========== =============
</TABLE>
See notes to financial statements.
F-5
<PAGE> 31
GREAT XPECTATIONS MARKETING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) from operations $ (856,594) $ (62,775)
Adjustments to reconcile loss to net cash
provided by (used for) operations:
Depreciation and amortization 58,348 41,252
Goodwill impairment 119,243 --
Fixed asset impairment 50,770 --
Loss on inventory 34,839 --
Income tax benefit (71,900)
Change in assets and liabilities:
Accounts receivable 10,945 (1,752)
Inventory 32,514 (6,664)
Other assets (543) 18,269
Accounts payable 228,227 (54,349)
Accrued expenses 70,870 75,291
Notes payable - related parties 229,500 --
----------- -----------
Cash provided by (used for) operating activities (93,781) 9,272
----------- -----------
Cash flow from investing activities:
Purchase of furniture and equipment (20,977) (36,186)
----------- -----------
Cash provided by (used for) investing activities (20,977) (36,186)
----------- -----------
Cash flow from financing activities:
Inter-company advances -- 250,000
Paid-in-capital -- 300
Payment on note payable -- (100,000)
----------- -----------
Cash provided by (used for) financing activities -- 150,300
----------- -----------
Net increase (decrease) in cash (114,758) 123,386
Cash, beginning of year 155,987 32,601
----------- -----------
Cash, end of year $ 41,229 $ 155,987
=========== ===========
</TABLE>
See notes to financial statements
F-6
<PAGE> 32
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. HISTORY:
Effective November 1, 1995 Seven Oaks Farms, Ltd. ("Seven Oaks") merged with
Mighty Power, Inc. ("MPI"). The merger, a purchase under Accounting Principles
Board Opinion 16, was accounted for as a reverse merger with MPI being the
acquirer. The Company then changed its name to Mighty Power USA, Inc. ("Mighty
Power).
Effective April 1, 1997, Mighty Power merged with GlobeNet Inc. (the "Merger").
The transaction, a purchase under Accounting Principles Board Opinion 16, has
been accounted for as a reverse merger with GlobeNet Inc. being the acquirer. In
connection with this transaction, the Company changed it name to GlobeNet
International I, Inc. ("GNI").
Concurrent with the Merger, an affiliate of Mighty Power, Great Xpectations
Marketing, Inc. ("GXI"), acquired all the assets and liabilities of two other
affiliates of the Company, Health Thru Nature, Inc. ("HTN") and Mighty Power
USA, L.C. ("MPLC") for $100,000 in notes payable. Mighty Power then purchased
all the outstanding common stock of GXI for an additional $100,000 note payable.
These transactions were also accounted for as purchases. Upon completion of the
acquisitions Mighty Power transferred all its operating assets and liabilities
to GXI.
As a result of these transactions, GXI (the "Company"), became a wholly-owned
subsidiary of GNI consisting of the assets, liabilities and operations of GXI,
Mighty Power, HTN, and MPLC. The Company is engaged in the marketing of
nutritional supplements and personal care products.
On July 28, 1998, GNI announced its intention to separate GXI from its network
marketing business through a spin-off to its shareholders ("the Distribution").
The Company's Board of Directors voted to approve, in principal, the
Distribution subject to other approvals and consents and satisfactory
implementation of the arrangements for the Distribution. The Company intends to
consummate the Distribution effective June 30, 1998, through a special dividend
to its stockholders of one share of GXI common stock for each two shares of
Company common stock.
The Company was originally organized in Texas on April 10, 1995. In August, 1998
the Company redomiciled to Nevada and changed its capital structure to authorize
20,000,000 shares of $1.00 par value preferred stock and 50,000,000 shares of
$.001 par value common stock. Issued and outstanding common stock was adjusted
to 6,768,490 shares effective on that date. All share and per share amounts have
been retroactively adjusted to reflect this change.
The financial statements present the financial position, results of operations
and cash flows of GXI as if it were formed as a separate entity of GNI for all
periods presented. GNI's historical basis in the assets and liabilities of GXI
has been carried over to the financial statements. All material inter-company
transactions and balances between GNI and GXI have been eliminated. GXI's
balance due to GNI for inter-company transactions has been forgiven by GNI and
recorded as additional paid-in-capital of $416,992.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION - The Company sells its products through a network of
independent distributors. The Company recognizes revenue upon sale to its
distributors and records an allowance for sales returns.
F-7
<PAGE> 33
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
INVENTORIES - Inventories, consisting of finished goods held for resale,
work-in-process and raw materials are stated at the lower of cost of market.
CASH EQUIVALENTS - For purposes of the statements 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.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation and amortization are being provided over the estimated useful lives
of the related assets, principally on the straight-line and declining balance
methods, ranging from three to seven years.
The Company reviews its property and other noncurrent assets for impairment when
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Impairment is measured as the amount by which the carrying
amount of the asset exceeds the fair market value of the asset less disposal
costs.
ACCOUNTING ESTIMATES - The preparation of financial statements, in conformity
with generally accepted accounting principles, requires management to make
estimates and assumptions that effect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INCOME TAXES - The Company has adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes". SFAS 109 requires
an asset and liability approach to financial accounting for income taxes. In the
event differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities result in deferred tax assets, SFAS 109
requires an evaluation of the probability of being able to realize the future
benefits indicated by such assets. A valuation allowance is provided for a
portion or all deferred tax assets when there is an uncertainty regarding the
Company's ability to recognize the benefits of the assets in future years.
EARNINGS (LOSS) PER SHARE - Earnings (loss) per share (EPS) are calculated in
accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earnings per Share", which was adopted in 1997 for all years presented. Basic
EPS is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS is not presented since it would be anti-dilutive.
CREDIT RISK - The Company's trade accounts receivable arise in the normal course
of business and primarily relate to sales of its products to its distributor
network. Such receivables are unsecured. The Company performs ongoing credit
evaluations of the entities from whom such accounts are receivable. The Company
places its cash investments in high credit quality institutions and limits the
amount of credit exposure to any one institution.
FINANCIAL INSTRUMENTS - The carrying value of cash and cash equivalents,
accounts receivable and payable, accrued liabilities and notes payable
approximate fair value due to the short-term maturities of these assets and
liabilities. Fair value of long-term debt is estimated based on interest rates
for the same or similar debt offered to the Company having the same or similar
maturities and collateral requirements.
COMPREHENSIVE INCOME - Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130), requires that total comprehensive
income be reported in the financial statements. For the years ended December 31,
1998, 1997 and 1996, the Company's comprehensive income (loss) was equal to its
net income (loss) and the Company does not have income meeting the definition of
other comprehensive income.
F-8
<PAGE> 34
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
3. BASIS OF PRESENTATION:
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern; they do not include any adjustments that may
be necessary relating to the recoverability of recorded asset amounts and
classification of recorded asset and liabilities. The going concern basis of
might not be appropriate since the Company has incurred substantial operating
losses in recent years and has incurred significant financial commitments as of
the date of this report.
The ability of the Company to continue as a going concern is dependant on the
Company's ability to achieve profitable operations and obtain additional equity
or long-term financing.
The Company is having preliminary discussions with potential investors regarding
additional equity capital. Management believes that upon effective registration
of the Company's common stock for trading, with the Securities and Exchange
Commission, such potential investors may effect a merger with the Company and/or
inject equity capital in to the Company. In addition, the Company plans to
continue seeking additional products or lines of business that will add volume
to its business without adding significant overhead costs.
4. INVENTORIES:
<TABLE>
<CAPTION>
<S> <C> <C>
At December 31, 1998 inventories consisted of the following: DECEMBER 31,
1998
Finished goods $67,691
--
Packaging materials and other -------
Total $67,691
=======
</TABLE>
5. PROPERTY AND EQUIPMENT:
<TABLE>
<S> <C> <C>
At December 31, 1998 property and equipment consisted of the following: DECEMBER 31,
1998
Furniture, fixtures and equipment
$ 31,801
Computer equipment and software 44,186
Leasehold improvements --
-------
Total property and equipment 75,987
Less accumulated depreciation and amortization (33,671)
-------
Net property and equipment $ 42,316
=======
</TABLE>
F-9
<PAGE> 35
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
6. ACCRUED EXPENSES:
<TABLE>
<S> <C> <C>
At December 31, 1998 accrued expenses consisted of the following: DECEMBER 31,
1998
Sales and other taxes $153,769
Commissions 21,000
Compensation / Payroll 23,599
Interest --
Other 1,654
--------
$200,022
========
</TABLE>
8. NOTES PAYABLE:
At December 31, 1998 notes payable consisted of the following: DECEMBER 31,
1998
Demand notes payable - related parties $229,500
Other 2,200
--------
$231,700
========
In connection with the spin-off from GNI certain officers of the Company and
related entities agreed to forgive debt receivable from GNI aggregating
$228,653. In consideration of those sacrifices and other services performed, the
Company awarded those individuals and their related entities compensation of
$229,500 in the form of note payable. The notes are due on demand and accrue
interest at 10% until paid. One note payable - related party in the amount of
$190,000 is collateralized by all the outstanding common stock of GX Marketing,
Inc. a newly formed subsidiary (see Note 13).
9. COMMITMENTS:
In connection with providing internet access to distributors and customers the
Company entered into a service agreement with Epoch Networks, Inc. ("Epoch").
Epoch agreed to provide internet access and related services for a two year
period for fees based on volume and services provided with a $50,000 minimum per
month after a six month ramp-up period. As of December 31, 1999 the Company owed
Epoch approximately $200,000. In March 1999, the Company received a demand
letter from Epochs attorneys demanding $300,000 and a commitment to honor the
remaining $900,000 commitment under the agreement. Management contends that
Epoch did not perform as agreed and verbally modified the agreements ramp-up.
The Company leases its office and warehouse space under an operating lease
calling for monthly rent payments of $4,500 thru February 2002. Basic annual
rents for each of the next four years are as follows:
<TABLE>
<S> <C>
1999 $49,500
2000 54,000
2001 54,000
2002 4,500
</TABLE>
F-10
<PAGE> 36
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
9. COMMITMENTS (CONTINUED):
The Company has employment agreements with two key employees calling for payment
for services for one year, beginning with the effective date of the Company's
registration statement, for 550,000 shares in Company common stock.
In 1998 the Company adopted a stock bonus plan reserving 750,000 shares of
common stock for possible award to employees of the Company. As of the date of
this report no shares had been awarded under this plan.
10. CONTINGENCIES:
As of December 31, 1998 and as of the date of this report the Company is
self-insured for casualty liability and product warranties. The Company's
exposure from casualty and product related claims could have a material adverse
effect to the Company.
From time to time the Company is involved in various legal matters arising in
the normal course of business. In the opinion of Management, such matters will
not have a material effect on the financial position of the Company.
11. INCOME TAXES:
The Company was part of a consolidated tax return during the period owned by
GNI. Net operating losses generated during that time were fully utilized by GNI
in reducing consolidated taxable income resulting in an income tax benefit of
$71,000. Deferred tax assets resulting from net operating loss carry-forwards
originating after the spin-off (approximately $572,000) have not been recorded
as there is doubt about the Company's ability to use them during the
carry-forward period. Therefore such deferred tax assets have been fully offset
by a valuation allowance.
Net operating loss carry forwards originating prior to the merger with GNI were
lost to the Company due the significant change in the Company's ownership, in
accordance with Internal Revenue Service Regulations.
12. YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect the Company's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, of
other third parties, will be fully resolved.
F-11
<PAGE> 37
GREAT XPECTATIONS MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
13. SUBSEQUENT EVENTS:
In January 1999, the Company formed a new subsidiary, GX Marketing, Inc. ("GXM")
and transferred all customer service and administrative functions to GXM. The
Company will pay GXM a fee for such services. In addition, the Company
transferred the majority of its operating assets to GXM. All the outstanding
common stock of GXM was pledged as collateral on one of the related party notes
payable (see Note 8).
In addition, the Company entered into a credit arrangement with a related party
to loan up to $30,000 to the Company (or its subsidiary) as needed for working
capital purposes. As of the date of this report $1,000 has been advanced under
the agreement.
F-12
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Nevada General Corporation Law provides that a corporation has the
power to (i) indemnify directors, officers, employees, and agents of Great
Xpectations against judgments, fines, and amounts paid in settlement in
connection with suits, actions, and proceedings against certain expenses
incurred by such parties if specified standards of conduct are met; and (ii)
purchase and maintain insurance on behalf of any of the foregoing parties
against liabilities incurred by such parties in the foregoing capacities. The
Bylaws of Great Xpectations provide for indemnification of its officers and
directors to the full extent permitted under Nevada law. In addition, such
instrument contains a mandatory general authorization provision to the effect
that expenses incurred by a director or officer in defending such inaction,
suit, or proceeding shall be paid in advance of the final disposition thereof
upon receipt of an undertaking to repay such amount if each yell ultimately be
determined to that he is not entitled to be indemnified by Great Xpectations.
(See item 17(c) below for a discussion of the position of the securities and
exchange commission with respect to indemnification for securities act
liabilities.)
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission $ 2
Transfer Agents and Registrar's Fees 1,000
Accounting Fees 37,748
Legal Fees 10,000
Printing Expenses 750
Miscellaneous 500
-----------
Total $ 50,000
</TABLE>
- -----------------
All of such fees will be borne by GlobeNet International I, Inc., the
parent corporation of registrant.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Great Xpectations plans to issue 500,000 shares of its $0.001 par value
common stock to Everett Sparks, Forrest E. Watson, and T. Alan & Associates,
P.C., in consideration of their agreement to perform work for Great Xpectations
in calendar year 1999.
GlobeNet plans to rely on Section 4(1) of the Securities Act of 1933,
as amended, for an exemption from the registration requirements of such Act.
Great Xpectations relied on Section
<PAGE> 39
4(2) of the Securities Act of 1933, as amended, for an exemption from such Act
when the stock of Great Xpectations was issued to GlobeNet. Additionally, Great
Xpectations obtained a signed representation from Mr. Sparks, Dr. Watson, and T.
Alan Owen & Associates, P.C., of their intent to acquire the common stock of
Great Xpectations for the purpose of investment only and not for purpose of the
subsequent distribution thereof. The certificates representing the common stock
to be issued to Mr. Sparks and Dr. Watson will be impressed with a legend
restricting transfer of the securities represented thereby, and they will issue
stop transfer instructions to Fidelity Transfer Company, Salt Lake City, Utah,
the transfer agent for the Common Stock of Great Xpectations, concerning the
certificates representing the shares of Common Stock to be issued to Mr. Sparks
and Dr. Watson.
Dr. Watson, Mr. Sparks, and T. Alan Owen & Associates, P.C. will, in
this particular instance, be classified as sophisticated investors due to their
in-depth knowledge of the business and assets of Great Xpectations.
ITEM 27. EXHIBITS.
The following is a list of all the exhibits and financial statement
schedules filed as part of this registration statement:
Exhibits:
1. Not applicable.
2. Not applicable.
3.1. Articles of Incorporation of Great Xpectations, as
filed on December 31, 1998 with the Secretary of
State of Nevada.
3.2. Bylaws of Great Xpectations.
4. Selected provisions of the Articles of Incorporation
of Great Xpectations that define the rights of the
holders of the Common Stock of Great Expectations
being registered under this Registration Statement.
5. Opinion of T. Alan Owen & Associates, P.C., 1112 East
Copeland Road, Suite 420, Arlington TX 76011,
regarding the legality of the securities being
registered under this Registration Statement.
6. Not applicable.
7. Not applicable.
8. Tax opinion of T. Alan Owen & Associates, P.C., 1112
East Copeland Road, Suite 420, Arlington TX 76011.
<PAGE> 40
9. Not applicable.
10.1. Employment Contract between Great Xpectations and
Forrest E. Watson.
10.2. Employment Contract between Great Xpectations and
Everett Sparks.
10.3. Employment Contract between Great Xpectations and T.
Alan Owen & Associates, P.C.
10.4. Stock Bonus Plan.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Not applicable.
18. Not applicable.
19. Not applicable.
20. Not applicable.
21. Not applicable.
22. Not applicable.
23. Not applicable.
24.1. The consent of T. Alan Owen & Associates, P.C.,
Arlington, Texas, to the use of its opinion with
respect to the legality of the securities covered by
this Registration Statement and to the use of its tax
opinion, and to the references to such firm in the
Prospectus filed as part of this Registration
Statement.
<PAGE> 41
24.2. The consent of Osborn, Swalm, Thomas & Associates,
PLLC, soon to be known as Swalm, Thomas & Associates,
Certified Public Accountants, to the use of the
financial statement of Great Xpectations that was
audited by such firm and to the references to such
firm in the Prospectus filed as a part of this
Registration Statement.
25. Not applicable.
26. Not applicable.
27. Not applicable.
28. Not applicable.
29. Not applicable.
Financial statement schedules:
None.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Irving,
State of Texas, on April 9, 1999, effective as of December 31, 1998.
GREAT XPECTATIONS MARKETING, INC.,
a Nevada corporation
By:
------------------------------------
Forrest E. Watson, President
<PAGE> 42
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement was signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
- -----------------------------
Forrest E. Watson President and April 9, 1999
Treasurer and
Director
- -----------------------------
Everett Sparks Vice President April 9, 1999
and Secretary and
Director
</TABLE>
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION
- ------- -----------
<S> <C>
3.1. Articles of Incorporation of the Company, as filed on December 31, 1998 with the
Secretary of State of Nevada.
3.2. Bylaws of the Company.
4. Selected provisions of the Articles of Incorporation of Great Xpectations that define
the rights of the holders of the Common Stock of Great Xpectations being registered
under this Registration Statement.
5. Opinion of T. Alan Owen & Associates, P.C., 1112 East Copeland Road, Suite 420,
Arlington TX 76011, regarding the legality of the securities being registered
under this Registration Statement.
8. Tax opinion of T. Alan Owen & Associates, P.C., 1112 East Copeland Road, Suite
420, Arlington TX 76011.
10.1. Employment Contract between Great Xpectations and Forrest E. Watson.
10.2. Employment Contract between Great Xpectations and Everett Sparks.
10.3. Employment Contract between Great Xpectations and T. Alan Owen & Associates, P.C.
10.4. Stock Bonus Plan.
24.1. The consent of T. Alan Owen & Associates, P.C., Arlington, Texas, to the use of
its opinion with respect to the legality of the securities covered by this
Registration Statement and to the use of its tax opinion, and to the references to
such firm in the Prospectus filed as part of this Registration Statement.
24.2. The consent of Osborn, Swalm, Thomas & Associates, PLLC, Certified Public Accountants, to
the use of the financial statement of Great Xpectations that was audited by such firm and to
the references to such firm in the Prospectus filed as a part of this Registration Statement.
</TABLE>
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
GREAT XPECTATIONS MARKETING, INC.
The undersigned, a natural person of the age of eighteen (18) years or
more, acting as incorporator of a corporation under the laws of the State of
Nevada, hereby adopts the following Articles of Incorporation for such
corporation:
ARTICLE ONE
The name of the corporation is Great Xpectations Marketing, Inc.
ARTICLE TWO
The period of the corporation's duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized are to
engage in and transact any or all lawful business for which corporations may be
incorporated under the laws of the State of Nevada.
ARTICLE FOUR
The total authorized capital stock of the corporation is:
50,000,000 shares of common stock, with a par value of $0.001
per share
20,000,000 shares of preferred stock, with a par value of
$0.001 per share
Such stock may be issued from time to time without action by
the shareholders for such consideration as may be determined,
from time to time, by the Board of Directors, and such shares
so issued shall be deemed fully paid stock, and the holders of
such stock shall not be liable for any further payments
thereon. Further, the preferred stock may be issued in one or
more series, from time to time, at the discretion of the Board
of Directors without shareholder approval, with each such
series to consist of such number of shares and to have
ARTICLES OF INCORPORATION -- Page 1
GX-AOI (GX Spin-Off)
<PAGE> 2
such voting powers (whether full or limited, or no voting
powers) and such designations, powers, preferences, and
relative, participating, optional, redemption, conversion,
exchange, or other special rights, and such qualifications,
limitations, or restrictions thereof, as shall be stated in
the resolution or resolutions providing for the issuance of
such series adopted by the Board of Directors, and the Board
of Directors is hereby expressly vested with the authority, to
the full extent now or hereafter provided by law, to adopt any
such resolution or resolutions. Each share of any series of
preferred stock shall be identical with all other shares of
such series, except as to the date from which dividends, if
any, shall accrue.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done, or property actually
received.
ARTICLE SIX
Directors shall be elected by majority vote. Cumulative voting shall
not be permitted.
ARTICLE SEVEN
The street address of the initial registered office of the corporation
is One East First Street, Reno, Nevada 89501, and the name of its initial
registered agent at such address is The Corporation Trust Company.
ARTICLE EIGHT
The number of directors constituting the initial Board of Directors is
two (2); however, thereafter the Bylaws shall fix the number of directors. The
names and addresses of the persons who will serve as the directors until the
first annual meeting of the shareholders, or until their successors are elected
and qualified are:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Forrest E. Watson 9202 West Royal Lane
Irving, Texas 75063
Everett S. Sparks 9202 West Royal Lane
Irving, Texas 75063
</TABLE>
ARTICLES OF INCORPORATION -- Page 2
GX-AOI (GX Spin-Off)
<PAGE> 3
ARTICLE NINE
The name and address of the incorporator is:
<TABLE>
<CAPTION>
Name Address
<S> <C>
T. Alan Owen 1112 East Copeland Road
Suite 420
Arlington, Texas 76011
</TABLE>
ARTICLE TEN
No holder of any stock of the corporation shall be entitled as a matter
of right to purchase or subscribe for any part of any stock of the corporation
authorized by these Articles or of any additional stock of any class to be
issued by reason of any increase in the authorized stock of the corporation, or
of any bonds, certificates of indebtedness, debentures, warrants, options, or
other securities convertible into any class of stock of the corporation, but any
stock authorized by these Articles or any such additional authorized stock or
securities convertible into any stock may be issued and disposed of by the Board
of Directors to such persons, firms, corporations, or associations for such
consideration and upon such terms and in such manner as the Board of Directors
may in its discretion determine without offering any thereof on the same terms
or on any terms to the shareholders then of record or to any class of
shareholders, provided only that such issuance may not be inconsistent with any
provision of law or with any of the provisions of these Articles.
ARTICLE ELEVEN
The initial Bylaws shall be adopted by the Board of Directors. The
Board of Directors may amend or repeal the Bylaws or adopt new Bylaws, unless:
(1) these Articles of Incorporation or the Nevada corporate laws reserve the
power exclusively to the shareholders in whole or in part; or (2) the
shareholders in amending, repealing, or adopting a particular bylaw expressly
provide that the Board of Directors may not amend or repeal that bylaw. Unless
these Articles of Incorporation or a bylaw adopted by the shareholders provides
otherwise as to all or some portion of the corporation's Bylaws, the
corporation's shareholders may amend, repeal, or adopt the corporation's Bylaws
even though the Bylaws may also be amended, repealed, or adopted by the Board of
Directors.
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ARTICLE TWELVE
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for any act or omission in
his capacity as a director, except to the extent otherwise expressly provided by
a statute of the State of Nevada. Any repeal or modification of this Article
shall be prospective only, and shall not adversely affect any limitation of the
personal liability of a director of the corporation existing at the time of the
repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 18th day of
December, 1998.
/s/ T. ALAN OWEN
------------------------------------
T. Alan Owen
THE STATE OF TEXAS )
)
COUNTY OF TARRANT )
BEFORE ME, the undersigned authority, on this day personally appeared
T. ALAN OWEN, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 18th day of December, 1998.
/s/ JOANN R. COX
-------------------------------------
Notary Public in and for
The State of Texas
My Commission Expires:
9-18-2000
- ----------------------
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
GREAT XPECTATIONS MARKETING, INC.
ARTICLE I
OFFICES
Section 1. The principal office shall be located in the City of Irving,
County of Dallas, State of Texas.
Section 2. The corporation may also have offices at such other places
within or without the State of Texas or the State of Nevada as the Board of
Directors may from time to time determine, or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of the shareholders shall be held at such place
within or without the State of Texas or the State of Nevada as shall be
specified in the notice of the meeting or in a waiver thereof.
Section 2. An annual meeting of the shareholders, commencing in the
year 1999, shall be held on December 15 of each year, unless such day is a legal
holiday, in which case such meeting shall be held at the specified time on the
first business day thereafter which is not a legal holiday. At such meeting the
shareholders entitled to vote thereat shall elect by a majority vote a Board of
Directors, and may transact such other business as may properly be brought
before the meeting.
Section 3. Special meetings of the shareholders may be called: (1) by
the Chairman of the Board of Directors, the President, or the Board of
Directors; or (2) by the holders of at least ten percent (10%) of the shares
entitled to vote at the proposed special meeting, unless the Articles of
Incorporation provide for a number of shares greater than or less than ten
percent (10%), in which event special meetings of the shareholders may be called
by the holders of at least the percentage of shares so specified in the Articles
of Incorporation. The record date for determining shareholders entitled to call
a special meeting is the date the first shareholder signs the notice of that
meeting.
Section 4. Written or printed notice stating the place, day, and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten (10) nor
more than sixty (60) days
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before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each shareholder at his address as it appeared on the stock transfer
books of the corporation with postage thereon prepaid.
Section 5. Any notice required to be given to any shareholder, under
any provision of Nevada Corporation Law, the Articles of Incorporation, or these
Bylaws, need not be given to the shareholder if (1) notice of two consecutive
annual meetings and all notices of meetings held during the period between those
annual meetings, if any, or (2) all (but in no event less than two) payments (if
sent by first class mail) of distributions or interest on securities during a
12-month period have been mailed to that person, addressed at his address as
shown on the records of the corporation, and have been returned undeliverable.
Any action or meeting taken or held without notice to such a person shall have
the same force and effect as if the notice had been duly given and, if the
action taken by the corporation is reflected in any articles or document filed
with the Secretary of State, those articles or that document may state that
notice was duly given to all persons to whom notice was required to be given. If
such a person delivers to the corporation a written notice setting forth his
then current address, the requirement that notice be given to that person shall
be reinstated.
Section 6. Only business within the purpose or purposes described in
the notice of any special meeting of shareholders may be conducted at such
special meeting.
Section 7. The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at meetings of
shareholders except as otherwise provided in the Articles of Incorporation. If,
however, a quorum shall not be present or represented at any meeting of the
shareholders, the shareholders present in person, or represented by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which may have been transacted at the meeting as
originally notified.
Section 8. The vote of the holders of a majority of the shares entitled
to vote and represented at a meeting at which a quorum is present shall be the
act of the shareholders' meeting, unless the vote of a greater number is
required by law or by the Articles of Incorporation.
Section 9. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney-in-fact. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless otherwise provided in the proxy. Each proxy shall be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and
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the proxy is coupled with an interest.
Section 10. The officer or agent having charge of the stock transfer
books shall make, at least ten (10) days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address and the
number of shares held by each, which list, for a period of ten (10) days prior
to such meeting, shall be kept on file at the registered office of the
corporation, and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original stock transfer
book shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any such meeting of
shareholders.
Section 11. Any action required by law to be taken at a meeting of the
shareholders, or any action which may be taken at a meeting of the shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof.
ARTICLE III
DIRECTORS
Section 1. (a) The number of directors of the corporation shall be not
less than one (1) nor more than nine (9). The directors shall be elected at the
annual meeting of shareholders, except as provided in Sections 2, 3, 4, or 5 of
this Article III, and each director elected shall hold office until his
successor is elected and qualified. Directors need not be residents of the State
of Nevada or Texas or shareholders of the corporation.
(b) Any director may be removed with cause by the affirmative
vote of the holders of a majority of the shares represented at any shareholders'
meeting at which a quorum is present; provided, that the proposed removal is
stated in the notice of the meeting.
(c) This Section 1 may not be amended in absence of a
unanimous vote of the Board of Directors.
Section 2. Any vacancy occurring in the Board of Directors shall be
filled in accordance with Section 5 of this Article III or may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office.
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Section 3. A directorship to be filled by reason of an increase in the
number of directors may be filled in accordance with Section 5 of this Article
III or may be filled by the Board of Directors for a term of office continuing
only until the next election of one (1) or more directors by the shareholders;
provided, that the Board of Directors may not fill more than two (2) such
directorships during the period between any two (2) successive annual meetings
of the shareholders.
Section 4. Notwithstanding Sections 2 and 3 above, whenever the
holders of any class or series of shares are entitled to elect one or more
directors by the provisions of the Articles of Incorporation, any vacancies in
such directorships and any newly created directorships of such class or series
to be filled by reason of an increase in the number of such directors shall be
filled in accordance with the provisions of Nevada Corporation Law.
Section 5. Any vacancy occurring in the Board of Directors or any
directorship to be filled by reason of an increase in the number of directors
may be filled by election at an annual or special meeting of shareholders called
for that purpose.
Section 6. The business and affairs of the corporation shall be
managed by its Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by law or by the
Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders.
Section 7. Meetings of the Board of Directors, regular or special, may
be held either within or without the State of Texas or the State of Nevada.
Section 8. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, providing a quorum shall be present. In the event of the failure of the
shareholders to fix the time and place of such a first meeting of the newly
elected Board of Directors, or in the event such meeting is not held at the time
and place so fixed by the shareholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 9. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 10. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors or the President, and shall be called by
the Secretary on the written request of two directors. Written notice of
special meetings of
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the Board of Directors shall be given to each director at least three (3) days
before the date of the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 11. A majority of the directors shall constitute a quorum for
the transaction of business, and the act of the majority of the directors
present at the meeting at which a quorum is present shall be the act of the
Board of Directors, unless a greater number is required by the Articles of
Incorporation or elsewhere in these Bylaws. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 12. The Board of Directors, by resolution adopted by a majority
of the whole Board, may designate one or more directors to constitute an
executive committee and one or more other committees, each of which, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board of Directors in the business and affairs of the
corporation except as otherwise provided by law. Vacancies in the membership of
any such committee shall be filled by the Board of Directors at a regular or
special meeting of the Board of Directors. The committees shall keep regular
minutes of their proceedings and report the same to the Board when required. The
designation of such committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed upon it or him by law.
Section 13. Any action required or permitted to be taken at a meeting
of the Board of Directors or any committee may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all the
members of the Board of Directors or committee, as the case may be.
ARTICLE IV
NOTICES
Section 1. Notices to directors and shareholders shall be in writing,
shall specify the time and place of the meeting, and shall be delivered
personally or mailed to the directors or shareholders at their addresses
appearing on the books of the corporation. Notice by mail shall be deemed to be
given at the time when same shall be mailed. Notice to directors may also be
given by telegram.
Section 2. Whenever any notice is required to be given to any
shareholder or director under the provisions of any laws or of the Articles of
Incorporation or these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be
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equivalent to the giving of such notice.
Section 3. Attendance of a director at a meeting shall constitute a
waiver of notice of such a meeting, except where a director attends a meeting
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall consist of a President
and a Secretary, and may include one or more Vice Presidents, a Treasurer, and a
Chairman of the Board, each of whom shall be elected by the Board of Directors.
Any two or more offices may be held by the same person.
Section 2. The Board of Directors, at its first meeting after each
annual meeting of shareholders, shall choose a President and a Secretary and may
choose one or more Vice Presidents and a Treasurer, none of whom need be a
member of the Board, and may appoint one of their number Chairman of the Board.
Section 3. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer or agent or member of the
executive committee elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgement the best interests
of the corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any vacancy
occurring in any office of the corporation by death, resignation, removal, or
otherwise shall be filled by the Board of Directors.
Chairman of the Board and President
Section 6. The Board of Directors may designate whether the Chairman of
the Board, if such an officer shall have been appointed, or the President, shall
be the chief executive officer of the corporation. In the absence of a contrary
designation, the Chairman of the Board shall be the chief executive officer. The
chief executive officer shall preside at all meetings of the shareholders and
the Board of Directors, and shall have such other powers and duties as usually
pertain to such office or as may be delegated by the Board of Directors. The
President shall have such powers and duties as usually pertain to such office,
except as the
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same may be modified by the Board of Directors. If the Board of Directors shall
not have appointed a Treasurer, then all the duties and powers set forth in
Sections 11 through 14 of this Article V to be performed or exercised by such an
officer shall be performed or exercised by the President. Unless the Board of
Directors shall otherwise delegate such duties, the President shall have general
and active management of the business of the corporation, and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Section 7. The President shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
Vice President
Section 8. The Vice Presidents, if any such officers shall have been
appointed, in the order of their seniority, unless otherwise determined by the
Board of Directors, shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. They shall perform
such other duties and have such other powers as the Board of Directors shall
prescribe.
Secretary
Section 9. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders, and record all the proceedings
of the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or the President, under whose supervision he shall be. He shall keep in safe
custody the seal of the corporation, and, when authorized by the Board of
Directors, affix the same to any instrument requiring it, and, when so affixed,
it shall be attested by his signature or the signature of the Treasurer, an
Assistant Secretary, or an Assistant Treasurer.
Section 10. The Assistant Secretaries, if any such officers shall have
been appointed, in the order of their seniority, unless otherwise determined by
the Board of Directors, shall, in the absence or disability or the Secretary,
perform the duties and exercise the power of the Secretary. They shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
Treasurer
Section 11. The Treasurer, if such an officer shall have been
appointed, shall have the custody of the corporate funds and
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securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
Section 12. The Treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer, and of the financial condition of the
corporation.
Section 13. If required by the Board of Directors, the Treasurer shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in his possession
or under his control belonging to the corporation.
Section 14. The Assistant Treasurers, if any such officers shall have
been appointed, in the order of their seniority, unless otherwise determined by
the Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. They shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
ARTICLE VI
CERTIFICATE FOR SHARES
Section 1. The corporation shall deliver certificates representing all
shares to which shareholders are entitled; and such certificates shall be signed
by the President and a Vice President, the Secretary, or an Assistant Secretary
of the corporation, and may be sealed with the seal of the corporation or a
facsimile thereof. No certificate shall be issued for any share until the
consideration therefor has been fully paid. Each certificate representing shares
shall state upon the face thereof that the corporation is organized under the
laws of the State of Nevada, the name of the person to whom issued, the number
and class and the designation of the series, if any, which such certificate
represents, and the par value of each share represented by such certificate or a
statement that shares are without par value.
Section 2. The signature of the President and a Vice President, the
Secretary, or an Assistant Secretary, as the case may be, upon a certificate may
be facsimiles. In case any officer who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer
before such
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certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of the issuance.
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of the fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation, or the transfer agent of
the corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment, or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive a distribution by the corporation (other than a
distribution involving a purchase or redemption by the corporation of any of its
own shares) or a share dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, sixty (60) days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than sixty (60) days, and, in the case of a meeting of shareholders, not
less than ten (10) days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive a distribution (other than a distribution
involving a purchase or redemption by the corporation of any of its own shares)
or a share dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such
distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.
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When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof, except where the determination has been made
through the closing of stock transfer books and the stated period of closing has
expired.
Section 6. Distributions of cash or property (tangible or intangible)
made or payable by the corporation, whether in liquidation or from earnings,
profits, assets, or capital, including all distributions that were payable but
not paid to the registered owner of the shares, his heirs, successors, or
assigns but that are now being held in suspense by the corporation or that were
paid or delivered by it into an escrow account or to a trustee or custodian,
shall be payable by the corporation, escrow agent, trustee, or custodian to the
person registered as owner of the shares in the corporation's stock transfer
books as of the record date determined for that distribution as provided in
Section 5 of this Article VI, his heirs, successors, or assigns. The person in
whose name the shares are or were registered in the stock transfer books of the
corporation as of the record date shall be deemed to be the owner of the shares
registered in his name at that time. Neither the corporation nor any of its
officers, directors, or agents shall be under any liability for making such a
distribution to a person in whose name shares were registered in the stock
transfer books as of the record date or to the heirs, successors, or assigns of
the person, even though the person, or his heirs, successors, or assigns, may
not possess a certificate for shares.
Section 7. The corporation shall be entitled to recognize the exclusive
rights of a person registered on its books as the owner of shares to receive
distributions or share dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Nevada or these Bylaws.
Section 8. When shares are registered on the books of the corporation
in the names of two or more persons as joint owners with the right of
survivorship, after the death of a joint owner and before the time that the
corporation receives actual written notice that parties other than the surviving
joint owner or owners claim an interest in the shares or any distributions
thereon, the corporation may record on its books and otherwise effect the
transfer of those shares to any person, firm, or corporation (including that
surviving joint owner individually) and pay any distributions made in respect of
those shares, in each case as if the surviving joint owner or owners were the
absolute owner(s) of the shares. The corporation by permitting such a transfer
by and making any distribution to such a surviving joint owner or owners before
the receipt of written notice from other parties claiming an interest in those
shares or distributions is discharged from all liability for the transfer or
payment so made; provided, however, that the discharge of the corporation from
liability and the transfer of full legal and equitable title of the shares in no
way
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affects, reduces, or limits any cause of action existing in favor of any owner
of an interest in those shares or distributions against the surviving owner or
owners.
ARTICLE VII
GENERAL PROVISIONS
Section 1. The Board of Directors may authorize and the corporation may
(1) make distributions or (2) pay share dividends, subject to any restrictions
in its Articles of Incorporation and to the limitations set forth in the Nevada
Corporation Laws.
Section 2. The Board of Directors may by resolution create a reserve or
reserves out of its surplus or designate or allocate any part or all of surplus
in any manner for any proper purpose or purposes, and may increase, decrease, or
abolish any such reserve, designation, or allocation in the same manner.
Section 3. The Board of Directors must, when requested by the holders
of at least twenty five percent (25%) of the outstanding shares of the
corporation, present written reports of the situation and amount of business of
the corporation.
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation and may be in such form as the Board of Directors may determine,
and may be used by causing it or a facsimile thereof to be impressed or affixed
or in any other manner reproduced.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The corporation shall indemnify directors, officers, employees, and
agents of the corporation to the extent required by the Nevada Corporation Laws
and shall indemnify such individuals to the extent permitted by the Nevada
Corporation Laws. The corporation may purchase and maintain liability insurance,
or make other arrangements for such obligations or otherwise, to the extent
permitted by the Nevada Corporation Laws.
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ARTICLE IX
AMENDMENTS
The Board of Directors may amend or Repeal the Bylaws of the
corporation or adopt new Bylaws, unless: (1) the Articles of Incorporation or
the Nevada Corporation Laws reserves the power exclusively to the shareholders
in whole or in part; or (2) the shareholders in amending, repealing, or adopting
a particular bylaw expressly provide that the Board of Directors may not amend
or repeal that bylaw. Unless the Articles of Incorporation or a bylaw adopted by
the shareholders provides otherwise as to all or some portion of the Bylaws, the
shareholders may amend, repeal, or adopt the Bylaws even though the Bylaws may
also be amended, repealed, or adopted by the Board of Directors.
* * *
I certify that the foregoing is a true and correct copy of the
Bylaws of Great Xpectations Marketing, Inc., adopted by the Board of Directors
of said corporation on the 31st day of December, 1998.
/s/ EVERETT SPARKS
- -----------------------------------
Everett Sparks, Secretary
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EXHIBIT 4
ARTICLE FOUR
The total authorized capital stock of the corporation is:
50,000,000 shares of common stock, with a par value of $0.001
per share
20,000,000 shares of preferred stock, with a par value of
$0.001 per share
Such stock may be issued from time to time without action by
the shareholders for such consideration as may be determined,
from time to time, by the Board of Directors, and such shares
so issued shall be deemed fully paid stock, and the holders of
such stock shall not be liable for any further payments
thereon. Further, the preferred stock may be issued in one or
more series, from time to time, at the discretion of the Board
of Directors without shareholder approval, with each such
series to consist of such number of shares and to have such
voting powers (whether full or limited, or no voting powers)
and such designations, powers, preferences, and relative,
participating, optional, redemption, conversion, exchange, or
other special rights, and such qualifications, limitations, or
restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issuance of such series adopted
by the Board of Directors, and the Board of Directors is
hereby expressly vested with the authority, to the full extent
now or hereafter provided by law, to adopt any such resolution
or resolutions. Each share of any series of preferred stock
shall be identical with all other shares of such series,
except as to the date from which dividends, if any, shall
accrue.
<PAGE> 1
EXHIBIT 5
[T. ALAN OWEN & ASSOCIATES, P. C. LETTERHEAD]
December 31, 1998
Board of Directors
Great Xpectations Marketing, Inc.
9202 West Royal Lane
Irving Texas 75063
Gentlemen:
We have acted as counsel to Great Xpectations Marketing, Inc., a Nevada
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The Registration Statement covers 6,768,490 shares of the $0.001 par value
Common Stock (the "Common Stock") of the Company.
As counsel for the Company, we have examined the original or copies
certified, or otherwise authenticated to our satisfaction, of the corporate
records of the Company and such other documents or certificates of public
officials as we have deemed necessary for the Opinion expressed herein.
In rendering the Opinion set forth herein, we have assumed (a) the
legal capacity of all natural persons, (b) the authenticity of all documents
submitted to us as originals, and (c) the conformity to original documents of
all documents submitted to us as copies.
Based upon our examination of such documents, materials, certificates,
and information as we had deemed appropriate or relevant for purpose of
delivering this Opinion, but subject to the qualifications set forth herein, we
are of the following opinion:
1. The Company is duly incorporated and validly existing and in good
standing under the laws of the State of Nevada.
2. The 6,768,490 shares of the common stock are validly issued, fully
paid, and non-assessable.
<PAGE> 2
Board of Directors
Great Xpectations Marketing, Inc.
December 31, 1998
Page 2
This Opinion is provided for the purpose of being filed with the
Securities and Exchange Commission as an Exhibit to the Registration Statement
and, without our prior written consent, may not be relied upon by any person,
firm, or entity whatsoever other than you, your counsel, and your successors and
assigns.
We hereby consent to the use of this Opinion as an Exhibit to the
Registration Statement into the use of our name in the Prospectus forming a part
of the Registration Statement.
Sincerely,
T. ALAN OWEN & ASSOCIATES, P.C.
By:
---------------------------------
T. Alan Owen
TAO/jac
<PAGE> 1
EXHIBIT 8
[T. ALAN OWEN & ASSOCIATES, P.C. LETTERHEAD]
December 31, 1998
Board of Directors
Great Xpectations Marketing, Inc.
9202 West Royal Lane
Irving, Texas 75063
Gentlemen:
We have acted as tax counsel to Great Xpectations Marketing, Inc., a
Nevada corporation (the "Company"), in connection with the preparation of the
"Federal Income Taxes" caption of the Prospectus forming part of the
Registration Statement on Form SB-2 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended.
The Registration Statement covers 6,678,490 shares of the $0.001 par
value Common Stock (the "Common Stock") of the Company.
The 6,768,490 shares of the Common Stock has been issued by the Company
to GlobeNet International I, Inc. ("GlobeNet") and will be distributed (the
"Distribution") to all holders of record on June 10, 1998 (the "Record Date"),
of Common Stock of GlobeNet on the effective date of the Registration Statement.
Holders of GlobeNet stock will not be charged or assessed for the
dividend stock. Neither GlobeNet nor the Company will receive any proceeds from
the offering. GlobeNet will report the distribution of stock as a distribution
subject to the provisions of Section 301 of the Internal Revenue Code of 1986,
as amended (the "Code").
For purposes of rendering the opinions hereinafter set forth, we have
examined (a) the Registration Statement and the Prospectus included as a part
thereof (the "Prospectus") and (b) such other documents and instruments as we
have deemed necessary or relevant. Based solely upon such examination and our
interpretation of existing Federal Income Tax Laws, Court Decisions, Treasury
Department Regulations, and Internal Revenue Service Rulings, we are of the
opinion that Federal Income Tax consequences to the distributees of the Common
Stock will be as follows:
1. Under Section 311(b) of the Code, GlobeNet will recognize gain
as a result of the Distribution to the extent that the fair
market value of the Common Stock distributed
<PAGE> 2
Board of Directors
Great Xpectations Marketing, Inc.
December 31, 1998
Page 2
exceeds its adjusted basis in the hands of GlobeNet. For this
purpose, GlobeNet will be treated as though it had sold the
Common Stock to its stockholders at its fair market value. On
the other hand, if the fair market value of the Common Stock
is less than its adjusted basis in the hands of GlobeNet,
GlobeNet will recognize a loss as a result of the
distribution.
2. The Distribution will be taxable to GlobeNet's stockholders
pursuant to Section 301 of the Code.
3. With respect to a non-corporate distributee, the amount of the
Distribution will be the fair market value of the Distribution
to such distributee determined as of the date of the
Distribution. Under Sections 301(c) and 316(a) of the Code,
the amount of the Distribution will be a dividend to the
extent the Distribution is made out of GlobeNet's current and
accumulated earnings and profits computed as of the close of
the tax year in which the Distribution occurs.
The portion, if any, of the Distribution which is not a
dividend will reduce the adjusted basis of the GlobeNet Common
Stock in the hands of the non-corporate distributees. That
portion (if any) of the Distribution which is not a dividend,
to the extent that such portion exceeds the adjusted basis
above such GlobeNet Common Stock, will be treated as gain from
the sale or exchange of property. Such gain will be capital
gain if such GlobeNet Common Stock is a capital asset in the
hands of such distributee and will be either long-term or
short-term depending on whether he has held such stock for
more than six months. The holding period of the Common Stock
to be distributed will commence on the day following the date
of the Distribution.
4. The tax basis to the non-corporate distributee of the Common
Stock to be distributed will be the fair market value of such
Common Stock on the date of the Distribution.
5. With respect to a corporate distributee, the amount of the
Distribution will be the lesser of: (i) the fair market value
of the Distribution, determined as of the date of the
Distribution; or (ii) the adjusted basis (in the hands of
GlobeNet immediately prior to the Distribution) of the Common
Stock to be distributed increased in the amount of gain
recognized to GlobeNet on the Distribution. However, under
Section 301(b) of the Code, if the distributee is a foreign
corporation, and in the amount received by such foreign
corporation is not effectively connected with the conduct by
it of a trade or business within the United States, the amount
of the Distribution to such foreign corporation will be the
fair market value of the Distribution determined as of the
date of the Distribution. Under Sections 301(c) and 316(a) of
the Code, the amount of the Distribution will be a dividend to
the extent the Distribution is made out of GlobeNet's
<PAGE> 3
Board of Directors
Great Xpectations Marketing, Inc.
December 31, 1998
Page 3
current and accumulated earnings and profits computed as of
the close of the tax year in which the Distribution occurs.
The portion, if any, of the Distribution which is not a
dividend will reduce the adjusted basis of the GlobeNet Common
Stock in the hands of the corporate distributee. That portion
(if any) of the Distribution which is not a dividend and, to
the extent that such portion exceeds the adjusted basis of
such GlobeNet Common Stock will be treated as gain from the
sale or exchange of property. Such gain will be capital gain
if such GlobeNet Common Stock is a capital asset in the hands
of such distributee and will be either long-term or short-term
depending on whether it has held such stock for more than six
months.
6. The tax basis to the corporate distributee of the Common Stock
to be distributed will be the lesser of: (i) the fair market
value of such Common Stock on the date of the distribution; or
(ii) the adjusted basis (in the hands of GlobeNet immediately
before the Distribution) of the Common Stock to be
distributed, increased in the amount gain recognized to
GlobeNet on the Distribution. However, under Section 301(d)(3)
of the Code, if such distributee is a foreign corporation, and
if the amount received by such corporation is not effectively
connected with the conduct by it of a trade or business within
the United States, the tax basis of the Common Stock to be
distributed will be the fair market value of the Distribution
determined as of the date of the Distribution.
7. The determination of the holding period with respect to a
corporate distributee of the Common Stock to be distributed
does not appear settled. The corporate distributee (which is
not a foreign corporation of the type described in paragraph 6
above) could contend that such holding period includes the
period for which the common stock to be distributed was held
by GlobeNet. Such position would be predicated on the theory
that since the tax basis (as described above) of the Common
Stock to such corporate distributee might be the adjusted
basis of the Common Stock in the hands of GlobeNet pursuant to
Section 1223(2) of the Code, which provides that the holding
period of the property, however acquired, shall include the
period for which such property was held by any other person
where such property has, for determining gain or loss from a
sale were changed, the same basis (in whole or in part) in his
hands as it would have in the hands of such other person.
However, the Internal Revenue Service might take the position
that Section 1223(2) of the Code is not applicable to the
Distribution and, consequently, that the holding period of the
Common Stock to be distributed will commence on the day
following the date of the Distribution
<PAGE> 4
Board of Directors
Great Xpectations Marketing, Inc.
December 31, 1998
Page 4
8. In the absence of a trading market for the Common Stock, "fair
market value" should be calculated in accordance with Revenue
Ruling 59-60 1959(1)C.B.237, which sets forth certain factors
to be considered in making such determination.
We hereby consent to the inclusion of this Opinion as an Exhibit to the
Registration Statement and to the reference in the Prospectus to our firm under
the heading of "Federal Income Taxes".
Persons reviewing this opinion should be aware that:
1. Statutes, regulations, and rulings with respect to all of the
foregoing tax matters are subject to change by Congress or by
the Department of the Treasury, and the interpretation of such
statutes, regulations, and rulings may be modified or affected
by judicial decision or by the Department of the Treasury.
Because of the continual changes by Congress, the Treasury
Department, and the Courts with respect to the administration
and the interpretation of the tax laws, no assurance can be
given that the foregoing opinions and interpretations will not
be challenged by the Internal Revenue Service, or, if
challenged, that such opinions and interpretations will be
sustained.
2. Each individual taxpayer's situation will be different.
Accordingly, we recommend that the respective distributee be
advised to seek their own personal tax counsel with respect to
the tax considerations discussed above.
3. No opinion in any matter not expressly stated should be
inferred from the opinion set forth herein.
Sincerely,
T. ALAN OWEN & ASSOCIATES, P.C.
By:
-------------------------------
T. Alan Owen
TAO/jac
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into this 15th day of December,
1998, by and between Great Xpectations Marketing, Inc., a Nevada corporation ("
Employer") and Forrest E. Watson ("Employee") under the terms and for
consideration herein stated.
Employer hereby employs and Employee hereby agrees to become employed
under the terms stated herein by Employer as its President for a period of one
year beginning with the effective date of the Registration Statement referred to
below.
Employer hereby agrees to include Employee under its Stock Bonus Plan
whereby Employee will receive as his sole compensation as an employee the sum of
225,000 shares of the Company's Common Stock (restricted under Rule 144).
Employee agrees to provide such services as are customary and normal in
the capacity of President of Employer and shall use his best efforts to further
of the Company's business of direct sales and marketing of products.
Nothing herein shall be deemed to preclude Employee from engaging in
other employment with other entities so long as Employee performs his necessary
job functions, it being understood between Employer and Employee that Employee
will exercise such discretion as he deems advisable in resolving any conflicts
that may arise.
Employee shall be entitled to reimbursement for the expenses he incurs
in connection with the performance of his duties hereunder.
This Agreement shall be interpreted by and construed in accordance with
the laws of the State Texas, and shall be deemed entered into in Irving, Texas.
EXECUTED this 15th day December, 1998.
EMPLOYER:
GREAT XPECTATIONS MARKETING, INC.,
a Nevada corporation
By: /s/ EVERETT S. SPARKS
-------------------------------
Everett S. Sparks, Vice President
EMPLOYMENT AGREEMENT - Page 1
GX-Watson Emp Agrmt (GX Spin-Off)
<PAGE> 2
EMPLOYEE:
/s/ FORREST E. WATSON
------------------------------------------
FORREST E. WATSON
EMPLOYMENT AGREEMENT - Page 2
GX-Watson Emp Agrmt (GX Spin-Off)
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into this 15th day of December,
1998, by and between Great Xpectations Marketing, Inc., a Nevada corporation ("
Employer") and Everett Sparks ("Employee") under the terms and for consideration
herein stated.
Employer hereby employs and Employee hereby agrees to become employed
under the terms stated herein by Employer as Vice President and Chief Financial
Officer for a period of one year beginning with the effective date of the
Registration Statement referred to below.
Employer hereby agrees to include Employee under its Stock Bonus Plan
whereby Employee will receive as his sole compensation as an employee the sum of
225,000 shares of the Company's Common Stock (restricted under Rule 144).
Employee agrees to provide such services as are customary and normal in
the capacity of Vice President and Chief Financial Officer of Employer and shall
use his best efforts to further of the Company's business of direct sales and
marketing of products.
Nothing herein shall be deemed to preclude Employee from engaging in
other employment with other entities so long as Employee performs his necessary
job functions, it being understood between Employer and Employee that Employee
will exercise such discretion as he deems advisable in resolving any conflicts
that may arise.
Employee shall be entitled to reimbursement for the expenses he incurs
in connection with the performance of his duties hereunder.
This Agreement shall be interpreted by and construed in accordance with
the laws of the State Texas, and shall be deemed entered into in Irving, Texas.
EXECUTED this 15th day December, 1998.
EMPLOYER:
GREAT XPECTATIONS MARKETING, INC.,
a Nevada corporation
By: /s/ FORREST E. WATSON
------------------------------
Forrest E. Watson, President
EMPLOYMENT AGREEMENT - Page 1
GX-Sparks Emp Agrmt (GX Spin-Off)
<PAGE> 2
EMPLOYEE:
/s/ EVERETT SPARKS
------------------------------------------
EVERETT SPARKS
EMPLOYMENT AGREEMENT - Page 2
GX-Sparks Emp Agrmt (GX Spin-Off)
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into this 15th day of December,
1998, by and between Great Xpectations Marketing, Inc., a Nevada corporation
("Employer") and T. Alan Owen & Associates, P.C. ("Employee") under the terms
and for consideration herein stated.
Employer hereby employs and Employee hereby agrees to become employed
under the terms stated herein by Employer as Employer's general counsel for the
calendar year of 1999.
Employer hereby agrees to include Employee under its Stock Bonus Plan
whereby Employee will receive as its sole compensation for the services
described below the sum of 50,000 registered shares of the Company's Common
Stock.
Employee agrees to provide general legal counsel to Employer, which
shall not include legal work incident to significant transactions, for the
calendar year of 1999.
Nothing herein shall be deemed to preclude Employee from engaging in
other employment with other entities so long as Employee performs its necessary
functions, it being understood between Employer and Employee that Employee will
exercise such discretion as its management deems advisable in resolving any
conflicts that may arise.
Employee shall be entitled to reimbursement for the expenses it incurs
in connection with the performance of its duties hereunder.
This Agreement shall be interpreted by and construed in accordance with
the laws of the State Texas, and shall be deemed entered into in Irving, Texas.
EXECUTED this 15th day December, 1998.
EMPLOYER:
GREAT XPECTATIONS MARKETING, INC.,
a Nevada corporation
By: /s/ FORREST E. WATSON
---------------------------------------
Forrest E. Watson, President
EMPLOYMENT AGREEMENT - Page 1
GX-TAO PC- Emp Agrmt (GX Spin-Off)
<PAGE> 2
EMPLOYEE:
T. ALAN OWEN & ASSOCIATES, P.C.,
a Texas professional corporation
By: /s/ T. ALAN OWEN
---------------------------------------
T. Alan Owen
EMPLOYMENT AGREEMENT - Page 2
GX-TAO PC- Emp Agrmt (GX Spin-Off)
<PAGE> 1
EXHIBIT 10.4
GREAT XPECTATIONS MARKETING, INC.
STOCK BONUS PLAN
4. ADOPTION
This Stock Bonus Plan (the "Plan") is adopted for the benefit of Great
Xpectations Marketing, Inc. (the "Company") and its employees for the following
purposes:
1. to induce its employees to remain in the employ of the Company;
2. to provide incentive to employees to perform services for the
Company without cash compensation; and
3. to facilitate and encourage ownership of the Stock of the Company
by its employees.
II. STRUCTURE OF THE PLAN
The Board of Directors of the Company has authority to award bonus
stock benefits to designated employees, in the discretion of the Board. There is
no intention that this plan qualify as a tax free trusteed plan under Section
401, et seq., of the Internal Revenue Code, nor under the Employee Retirement
Income Security Act of 1974, as amended. All bonus stock issued hereunder will
represent compensation to recipients, subject to income tax, and will constitute
a deductible expense to the Company.
Administration of the Plan. In connection with the administration of
the Plan, (i) the Board of Directors of the Company shall have sole discretion
and authority with respect to awards of bonus stock, and (ii) the Board of
Directors shall be the sole authority with respect to interpretation of this
Plan, and its decision shall be final and binding. The Board of Directors shall
determine the recipients of bonus stock and the amount of such stock to be
awarded.
III. SHARES TO BE SUBJECT TO AWARD
There shall be awarded a maximum of 750,000 shares in any fiscal year
of the Company.
IV. REGISTRATION OF BONUS STOCK
The Company may, at its sole and absolute discretion, register the
Bonus Stock, if any, awarded by the Board of Directors, with the Securities and
Exchange Commission prior to the issuance of such Bonus Stock.
STOCK BONUS PLAN - Page 1
GX-Stock Bonus Plan (GX Spin-Off)
<PAGE> 2
V. DEFINITIONS
The following meanings are ascribed to the terms listed below, as used
herein.
"Company" means Great Xpectations Marketing, Inc.
"Employee" means any person employed by the Company to render
services to the Company in any capacity, including, without limitation,
the officers and directors of the Company and third party service
providers such as accountants, attorneys, and consultants.
"Board of Directors" means the Board of Directors of the
Company, which shall administer the Plan.
"Participant" means any Employee awarded any Bonus Stock under
this Plan.
"Plan" means this Stock Bonus Plan.
VI. AMENDMENT - TERMINATION
This Plan maybe amended or terminated at any time by the Board of
Directors. Such amendment, if any shall be adopted, shall not, however, serve to
increase the number of shares of Bonus Stock which may be awarded in any one
year period, except upon approval of a majority of the shareholders of the
Company. No amendment or termination of this Plan shall have any effect on any
awards of Bonus Stock made prior to such amendment or termination..
VII. EFFECTIVE DATE
This Plan shall become effective when adopted by and so declared
effective by the Board of Directors of the Company.
Executed this 15th day of December, 1998.
GREAT XPECTATIONS MARKETING, INC.
ATTEST:
/s/ FORREST E. WATSON
------------------------------------
/s/ EVERETT SPARKS Forrest E. Watson, President
- -----------------------------
Everett Sparks, Secretary
STOCK BONUS PLAN - Page 2
GX-Stock Bonus Plan (GX Spin-Off)
<PAGE> 1
EXHIBIT 24.1
CONSENT OF INDEPENDENT LEGAL COUNSEL
By execution hereof, T. Alan Owen & Associates, P.C. hereby consents to
the use by Great Xpectations Marketing, Inc. ("Great Xpectations"), a Nevada
corporation, of (i) its opinion with respect to the securities covered in Great
Xpectations' filing of a Registration Statement on Form SB-2, and (ii) its tax
opinion regarding the issuance of the securities covered in the aforementioned
Registration Statement.
Additionally, T. Alan Owen & Associates, P.C. consents to the
references by Great Xpectations to T. Alan Owen & Associates, P.C. under the
heading "Experts" in the prospectus that was prepared as part of the
Registration Statement.
T. ALAN OWEN & ASSOCIATES, P.C.
By:
---------------------------------
T. Alan Owen
Arlington, Texas
April 9, 1999
<PAGE> 1
EXHIBIT 24.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
By execution hereof, Osborn, Swalm, Thomas & Associates, PLLC hereby
consents to the use by Great Xpectations Marketing, Inc. (Great Xpectations"), a
Nevada corporation, of financial statements on Great Xpectations, prepared by
Osborn, Swalm, Thomas & Associates, PLLC, in connection with Great Xpectations'
filing of a Registration Statement on Form SB-2.
Additionally, Osborn, Swalm, Thomas & Associates, PLLC consents to the
references by Great Xpectations to Osborn, Swalm, Thomas & Associates, PLLC
under the heading "Experts" in the prospectus that was prepared as part of the
Registration Statement.
OSBORN, SWALM, THOMAS & ASSOCIATES,
PLLC
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
Dallas, Texas
April 9, 1999
