FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] 15,ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: 10/31/03
OR
[ ]15,TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number - 333-44882
Great Expectations, Inc.
(Exact name of Registrant as specified in its charter)
Colorado 84-1521955
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
501 South Cherry Street, Suite 610,
Denver, Colorado 80246
(Address of principal executive offices) (Zip Code)
(303) 320-0066
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Securities registered pursuant to
Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act: Common Stock,
$.001 par value
Check whether the Company (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes __x__ No _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of Company's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[ x ]
2
The Company's revenues for its most recent fiscal year were $0.00. As
of October 31, 2003 the market value of the Company's voting $.00l par
value common stock held by non-affiliates of the Company was $0.00.
The number of shares outstanding of Company's only class of common
stock, as of October 31, 2003 was 150,520,000 shares of its common
stock. Check whether the Issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes __x__ No _____
No documents are incorporated into the text by reference.
Transitional Small Business Disclosure Format (check one)
Yes No x
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PART I
ITEM 1. BUSINESS
Great Expectations was incorporated under the laws of the State of
Colorado on June 5, 1987 as Great Expectations, Inc. Great
Expectations was administratively dissolved on January 1, 1997 under
the Colorado Corporation Code for failure to file two biannual reports.
We filed for reinstatement on June 18, 1998, filed the past due
biannual reports, paid all fees and penalties and were reinstated on
that date as a corporation in good standing. Great Expectations was
required to change its name to Great Expectations and Associates, Inc.
based on the unavailability of its prior name.
Since 1987, Great Expectations has performed only those administrative
functions necessary in further pursuance of this offering. Great
Expectations is in the early developmental and promotional stages. To
date Great Expectation's only activities have been organizational ones,
directed at developing its business plan and raising its initial
capital. We have not generated any revenues.
Great Expectations has not commenced any commercial operations. Great
Expectations has no employees and owns no real estate. We do not
intend to perform any operations until a merger or acquisition
candidate is locates and a merger or acquisition consummated. Great
Expectations can be defined as a "shell" company whose sole purpose at
this time is to locate and consummate a merger or acquisition with a
private entity.
Another aspect of our business plan that Great Expectations intends to
implement after this registration statement becomes effective is to
seek to facilitate the eventual creation of a public trading market in
its outstanding securities. Great Expectation's business plan is to
seek, investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value.
The acquisition of a business opportunity may be made by purchase,
merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership.
Great Expectations has very limited capital, and it is unlikely that
Great Expectations will be able to take advantage of more than one such
business opportunity.
Great Expectations intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings. At the
present time Great Expectations has not identified any business
opportunity that it plans to pursue, nor has Great Expectations reached
any agreement or definitive understanding with any person concerning an
acquisition.
Frederick Mahlke, one of Company's officers and directors has
previously been involved in transactions involving a merger between an
established company and a shell entity, and has a number of contacts
within the field of corporate finance. As a result, he has had
preliminary contacts with representatives of numerous companies
concerning the general possibility of a merger or acquisition by a
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shell company. However, none of these preliminary contacts or
discussions involved the possibility of a merger or acquisition
transaction with Great Expectations.
We anticipate that Mr. Mahlke will contact broker-dealers and other
persons with whom he is acquainted who are involved in corporate
finance matters to advise them of Great Expectation's existence and to
determine if any companies or businesses they represent have an
interest in considering a merger or acquisition with Great
Expectations. No assurance can be given that Great Expectations will
be successful in finding or acquiring a desirable business opportunity,
given the limited funds that are expected to be available for
acquisitions, or that any acquisition that occurs will be on terms that
are favorable to Great Expectations or its stockholders.
Great Expectation's search will be directed toward small and medium-
sized enterprises which have a desire to become public corporations and
which are able to satisfy, or anticipate in the reasonably near future
being able to satisfy, the minimum asset requirements in order to
qualify shares for trading on NASDAQ or on a stock exchange
Great Expectations anticipates that the business opportunities
presented to it will
- be recently organized with no operating history, or a history of
losses attributable to under-capitalization or other factors;
- be in need of funds to develop a new product or service or to
expand into a new market;
- be relying upon an untested product or marketing any business,
to the extent of its limited resources. This includes industries such
as service, finance, natural resources, manufacturing, high technology,
product development, medical, communications and others.
Great Expectation's discretion in the selection of business
opportunities is unrestricted, subject to the availability of such
opportunities, economic conditions, and other factors. As a consequence
of this registration of its securities, any entity, which has an
interest in being acquired by, or merging into Great Expectations, is
expected to be an entity that desires to become a public company and
establish a public trading market for its securities.
In connection with such a merger or acquisition, it is highly likely
that an amount of stock constituting control of Great Expectations
would be issued by Great Expectations or purchased from the current
principal shareholders of Great Expectations by the acquiring entity or
its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to result in substantial gains to them relative to their
purchase price for such stock. In Great Expectation's judgment, none of
its officers and directors would thereby become an "underwriter" within
the meaning of the Section 2(11) of the Securities Act of 1933, as
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amended. The sale of a controlling interest by certain principal
shareholders of Great Expectations could occur at a time when the other
shareholders of Great Expectations remain subject to restrictions on
the transfer of their shares.
Depending upon the nature of the transaction, the current officers and
directors of Great Expectations may resign their management positions
with Great Expectations in connection with Great Expectation's
acquisition of a business opportunity.
In the event of such a resignation, Great Expectation's current
management would not have any control over the conduct of Great
Expectation's business following Great Expectation's combination with a
business opportunity. We anticipate that business opportunities will
come to Great Expectation's attention from various sources, including
our officer and director, our other stockholders, professional advisors
such as attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may
present unsolicited proposals.
Great Expectations has no plans, understandings, agreements, or
commitments with any individual for such person to act as a finder of
opportunities for Great Expectations. Great Expectations does not
foresee that it would enter into a merger or acquisition transaction
with any business with which its officers or directors are currently
affiliated. Should Great Expectations determine in the future,
contrary to the foregoing expectations, that a transaction with an
affiliate would be in the best interests of Great Expectations and its
stockholders, Great Expectations is permitted by Colorado law to enter
into such a transaction if:
- The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the Board of Directors, and the Board in good faith authorizes
the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors
constitute less than a quorum; or
- The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or
- The contract or transaction is fair as to Great Expectations as of
the time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business
opportunity may be made upon:
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- management's analysis of the quality of the other company's
management and personnel,
- the anticipated acceptability of new products or marketing
concepts,
- the merit of technological changes, the perceived benefit Great
Expectations will derive from becoming a publicly held entity, and
numerous other factors which are difficult, if not impossible, to
analyze through the application of any objective criteria.
In many instances, it is anticipated that the historical operations of
a specific business opportunity may not necessarily be indicative of
the potential for the future because of the possible need to shift
marketing approaches substantially, expand significantly, change
product emphasis, change or substantially augment management, or make
other changes. Great Expectations will be dependent upon the owners of
a business opportunity to identify any such problems which may exist
and to implement, or be primarily responsible for the implementation
of, required changes.
Because Great Expectations may participate in a business opportunity
with a newly organized firm or with a firm which is entering a new
phase of growth, it should be emphasized that Great Expectations will
incur further risks, because management in many instances will not have
proved its abilities or effectiveness, the eventual market for such
company's products or services will likely not be established, and such
company may not be profitable when acquired.
We anticipate that we will not be able to diversify, but will
essentially be limited to one such venture because of Great
Expectation's limited financing. This lack of diversification will
not permit Great Expectations to offset potential losses from one
business opportunity against profits from another, and should be
considered an adverse factor affecting any decision to purchase Great
Expectation's securities.
Holders of Great Expectation's securities should not anticipate that
Great Expectations necessarily will furnish such holders, prior to any
merger or acquisition, with financial statements, or any other
documentation, concerning a target company or its business. In some
instances, however, the proposed participation in a business
opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the
stockholders' advice and consent or because state law so requires. The
analysis of business opportunities will be undertaken by or under the
supervision of Great Expectation's President, who is not a professional
business analyst.
Although there are no current plans to do so, Company management might
hire an outside consultant to assist in the investigation and selection
of business opportunities, and might pay a finder's fee.
Since Company management has no current plans to use any outside
consultants or advisors to assist in the investigation and selection of
business opportunities, no policies have been adopted regarding use of
such consultants or advisors, the criteria to be used in selecting such
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consultants or advisors, the services to be provided, the term of
service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of Great Expectations, it is
likely that any such fee Great Expectations agrees to pay would be paid
in stock and not in cash. Otherwise, Great Expectations anticipates
that it will consider, among other things, the following factors:
- Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
- Great Expectation's perception of how any particular business
opportunity will be received by the investment community and by Great
Expectation's stockholders;
- Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a
significant prospect in the foreseeable future of becoming sufficient
to enable the securities of Great Expectations to qualify for listing
on an exchange or on a national automated securities quotation system,
such as NASDAQ, so as to permit the trading of such securities to be
exempt from the requirements of a Rule 15g-9 adopted by the Securities
and Exchange Commission.
- Capital requirements and anticipated availability of required
funds, to be provided by Great Expectations or from operations, through
the sale of additional securities, through joint ventures or similar
arrangements, or from other sources;
- The extent to which the business opportunity can be advanced;
- Competitive position as compared to other companies of similar
size and experience within the industry segment as well as within the
industry as a whole;
- Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
- The cost of participation by Great Expectations as compared to
the perceived tangible and intangible values and potential; and
- The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other required
items. In regard to the possibility that the shares of Great
Expectations would qualify for listing on NASDAQ, the current standards
include the requirements that the issuer of the securities that are
sought to be listed have total assets of at least $4,000,000 and total
capital and surplus of at least $2,000,000, and proposals have recently
been made to increase these qualifying amounts.
Many, and perhaps most, of the business opportunities that might be
potential candidates for a combination with Great Expectations would
not satisfy the NASDAQ listing criteria. No one of the factors
described above will be controlling in the selection of a business
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opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon
reasonable investigative measures and available data.
Potentially available business opportunities may occur in many
different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
Potential investors must recognize that, because of Great Expectation's
limited capital available for investigation and management's limited
experience in business analysis, Great Expectations may not discover or
adequately evaluate adverse facts about the opportunity to be acquired.
Great Expectations is unable to predict when it may participate in a
business opportunity. We expect, however, that the analysis of specific
proposals and the selection of a business opportunity may take several
months or more.
Prior to making a decision to participate in a business opportunity,
Great Expectations will generally request that we be provided with
written materials regarding the business opportunity containing such
items as
- a description of products
- services and company history
- management resumes
- financial information
- available projections, with related
assumptions upon which they are based
- an explanation of proprietary products and
services;
- evidence of existing patents, trademarks, or
services marks, or rights thereto
- present and proposed forms of compensation
to management
- a description of transactions between such
company and its affiliates during relevant
periods
- a description of present and required
facilities
- an analysis of risks and competitive
conditions
- a financial plan of operation and estimated
capital requirements
- audited financial statements, or if they are
not available, unaudited financial
statements, together with reasonable
assurances that audited financial
statements would be able to be produced
within a reasonable period of time not to
exceed 60 days following completion of a
merger transaction; and other information
deemed relevant.
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As part of Great Expectation's investigation, Great Expectation's
executive officers and directors
- may meet personally with management and key
personnel,
- may visit and inspect material facilities,
- obtain independent analysis or verification
of certain information provided,
- check references of management and key
personnel, and
- take other reasonable investigative
measures, to the extent of
Great Expectation's limited financial
resources and management expertise.
Regulation of Penny Stocks
Our management believes that various types of potential merger or
acquisition candidates might find a business combination with Great
Expectations to be attractive. These include
- acquisition candidates desiring to create a public market for
their shares in order to enhance liquidity for current shareholders,
- acquisition candidates which have long-term plans for raising
capital through the public sale of securities and believe that the
possible prior existence of a public market for their securities would
be beneficial, and
- acquisition candidates which plan to acquire additional assets
through issuance of securities rather than for cash, and believe that
the possibility of development of a public market for their securities
will be of assistance in that process.
Acquisition candidates that have a need for an immediate cash infusion
are not likely to find a potential business combination with Great
Expectations to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which Great Expectations may
participate in a business opportunity. Specific business opportunities
will be reviewed as well as the respective needs and desires of Great
Expectations and the promoters of the opportunity and, upon the basis
of that review and the relative negotiating strength of Great
Expectations and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may
include, but is not limited to
- leases, purchase and sale agreements,
- licenses,
- joint ventures and
- other contractual arrangements.
Great Expectations may act directly or indirectly through an interest
in a partnership, corporation or other form of organization.
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Implementing such structure may require the merger, consolidation or
reorganization of Great Expectations with other corporations or forms
of business organization, and although it is likely, we cannot assure
you that Great Expectations would be the surviving entity. In addition,
the present management and stockholders of Great Expectations most
likely will not have control of a majority of the voting shares of
Great Expectations following a reorganization transaction. As part of
such a transaction, Great Expectation's existing directors may resign
and new directors may be appointed without any vote by stockholders. It
is likely that Great Expectations will acquire its participation in a
business opportunity through the issuance of common stock or other
securities of Great Expectations.
Although the terms of any such transaction cannot be predicted, in
certain circumstances, the criteria for determining whether or not an
acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest equal to 80% or more of
the common stock of the combined entities immediately following the
reorganization.
If a transaction were structured to take advantage of these provisions
rather than other "tax free" provisions provided under the Internal
Revenue Code, Great Expectation's current stockholders would retain in
the aggregate 20% or less of the total issued and outstanding shares.
This could result in substantial additional dilution in the equity of
those who were stockholders of Great Expectations prior to such
reorganization. Our issuance of these additional shares might also be
done simultaneously with a sale or transfer of shares representing a
controlling interest in Great Expectations by the current officers,
directors and principal shareholders.
We anticipate that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In
some circumstances, however, as a negotiated element of the
transaction, Great Expectations may agree to register such securities
either at the time the transaction is consummated, or under certain
conditions or at specified times thereafter.
The issuance of substantial additional securities and their potential
sale into any trading market that might develop in Great Expectation's
securities may have a depressive effect upon such market. Great
Expectations will participate in a business opportunity only after the
negotiation and execution of a written agreement.
Although the terms of such agreement cannot be predicted, generally
such an agreement would require
- specific representations and warranties by all of the parties
thereto,
- specify certain events of default,
- detail the terms of closing and the conditions which must be
satisfied by each of the parties thereto prior to such closing,
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- outline the manner of bearing costs if the transaction is not
closed,
- set forth remedies upon default, and
- include miscellaneous other terms.
Great Expectations anticipates that we, and/or our officers and
principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity
prior to signing a binding agreement. This letter of intent will set
forth the terms of the proposed acquisition but will not bind any of
the parties to consummate the transaction. Execution of a letter of
intent will by no means indicate that consummation of an acquisition is
probable. Neither Great Expectations nor any of the other parties to
the letter of intent will be bound to consummate the acquisition unless
and until a definitive agreement concerning the acquisition as
described in the preceding paragraph is executed.
Even after a definitive agreement is executed, it is possible that the
acquisition would not be consummated should any party elect to exercise
any right provided in the agreement to terminate it on specified
grounds. We anticipate that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for
accountants, attorneys and others.
If we decide not to participate in a specific business opportunity, the
costs incurred in the related investigation would not be recoverable.
Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are
provided, our inability to pay until an indeterminate future time may
make it impossible to procure goods and services.
Investment Company Act and Other Regulation
Great Expectations may participate in a business opportunity by
purchasing, trading or selling the securities of such business. Great
Expectations does not, however, intend to engage primarily in such
activities.
Specifically, Great Expectations intends to conduct its activities so
as to avoid being classified as an investment company under the
Investment Company Act of 1940, and therefore to avoid application of
the costly and restrictive registration and other provisions of the
Investment Act, and the regulations promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
investment company, and it excludes any entity that does not engage
primarily in the business of investing, reinvesting or trading in
securities, or that does not engage in the business of investing,
owning, holding or trading investment securities defined as all
securities other than government securities or securities of majority-
owned subsidiaries the value of which exceeds 40% of the value of its
total assets excluding government securities, cash or cash items.
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Great Expectations intends to implement its business plan in a manner
that will result in the availability of this exception from the
definition of investment company. As a result, Great Expectation's
participation in a business or opportunity through the purchase and
sale of investment securities will be limited.
Great Expectation's plan of business may involve changes in our capital
structure, management, control and business, especially if we
consummates a reorganization as discussed above. Each of these areas
is regulated by the Investment Act, in order to protect purchasers of
investment company securities. Since Great Expectations will not
register as an investment company, stockholders will not be afforded
these protections.
Any securities which Great Expectations might acquire in exchange for
our common stock will be restricted securities within the meaning of
the Securities Act of 1933. If Great Expectations elects to resell such
securities, such sale cannot proceed unless a registration statement
has been declared effective by the Securities and Exchange Commission
or an exemption from registration is available. Section 4(1) of the
Act, which exempts sales of securities not involving a distribution,
would in all likelihood be available to permit a private sale.
Although the plan of operation does not contemplate resale of
securities acquired, if such a sale were to be necessary, Great
Expectations would be required to comply with the provisions of the Act
to effect such resale. An acquisition made by Great Expectations may be
in an industry that is regulated or licensed by federal, state or local
authorities. Compliance with such regulations can be expected to be a
time-consuming and expensive process.
Competition
Great Expectations expects to encounter substantial competition in its
efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than Great Expectations and will therefore be
in a better position than Great Expectations to obtain access to
attractive business opportunities. Great Expectations also will
experience competition from other public blind pool companies, many of
which may have more funds available than does Great Expectations.
Employees
Great Expectations is a development stage company and currently has no
employees. Management of Great Expectations expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a need
to engage any full-time employees so long as it is seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether
or not to acquire or participate in specific business opportunities.
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Although there is no current plan with respect to its nature or amount,
we may pay or accrue remuneration for the benefit of, Great
Expectation's officers prior to, or at the same time as the completion
of a business acquisition
ITEM 2. PROPERTIES.
Great Expectations has a mailing address at 501 South Cherry St., Suite
610, Denver, Colorado 80246, phone number is (303) 320-0066. Other
than this mailing address, Great Expectations does not currently have
any other office facilities. We do not anticipate the need for office
facilities at any time in the foreseeable future. Great Expectations
pays no rent or other fees for the use of this mailing address.
ITEM 3. LEGAL PROCEEDINGS.
Great Expectations is not involved in any legal proceedings at this
date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year ended October 31, 2003, no
matters were submitted to a vote of Great Expectations' security
holders, through the solicitation of proxies.
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PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information. Great Expectation's common stock is not listed
in the pink sheets or in the OTC Bulletin Board maintained by the NASD.
Holders. The approximate number of holders of record of Great
Expectation's no par value common stock, as of January 31, 2003 was 10.
Dividends. Holders of Great Expectation's common stock are entitled
to receive such dividends as may be declared by its board of directors.
Tradability. We do not meet the requirements for our stock to be
quoted on NASDAQ and the tradability in our stock will be limited under
the penny stock regulation.
If the trading price of our common stock is less than $5.00 per share,
trading in the common stock would also be subject to the requirements
of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers
who recommend low-priced securities to persons other than established
customers and accredited investors must satisfy special sales practice
requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the purchaser's
written consent prior to the transaction.
SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock", including the delivery, prior to
any penny stock transaction, of a disclosure schedule explaining the
penny stock market and its associated risks. Such requirements severely
limit the liquidity of the common stock in the secondary market because
few broker or dealers are likely to undertake such compliance
activities. Generally, the term penny stock refers to a stock with a
market price of less than $5.00 per share.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
Great Expectations remains in the development stage and, since
inception, has experienced no significant change in liquidity or
capital resources. Great Expectation's balance sheet as of October
31, 2003, reflects a current asset value of $0, and a total asset value
of $22,099 in the form of deferred offering costs. Great Expectations
will carry out its plan of business as discussed above. Great
Expectations cannot predict to what extent its liquidity and capital
resources will be diminished prior to the consummation of a business
combination or whether its capital will be further depleted by the
operating losses, if any of the business entity which Great
Expectations may eventually acquire.
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For the years ended October 31, 2003 and 2002, Great Expectations did
not pursue any investing activities.
For the year ended October 31, 2003, Great Expectations received
stockholders loans of $9,825 resulting in cash flow provided by
financing activities of $9,825.
For the year ended October 31, 2002, Great Expectations received
stockholders loans of $7,059 resulting in cash flow provided by
financing activities of $7,059
Results of Operations
During the period from June 5, 1987 (inception) through October 31,
2003, Great Expectations has engaged in no significant operations other
than organizational activities, acquisition of capital, preparation for
registration of its securities under the Securities Exchange Act of
1934, as amended and negotiations with potential merger candidates.
No revenues were received by Great Expectations during this period.
The registration statement was declared effective on September 10,
2001.
For the year ended October 31, 2003, Great Expectations had expenses of
$9,825 consisting of office supplies and expense of $50, legal fees of
$6,174 relating to negotiations with potential merger candidates and
preparation of SEC filings, transfer fees of $751, filing fees of $250
and accounting expense of $2,600.
For the year ended October 31, 2002, Great Expectations had expenses of
$7,059 consisting of office supplies and expenses of $84, legal of
$3,575, transfer fees of $1,800 and accounting expense of $1,600.
For the current fiscal year, Great Expectations anticipates incurring a
loss as a result of expenses associated with periodic filings required
under the Securities Exchange Act of 1934 and expenses associated with
locating and evaluating acquisition candidates. Great Expectations
anticipates that until a business combination is completed with an
acquisition candidate, we will not generate revenues other than
interest income, and may continue to operate at a loss after completing
a business combination, depending upon the performance of the acquired
business.
Great Expectations believes that our existing capital will not be
sufficient to meet Great Expectation's cash needs, including the costs
of compliance with the continuing reporting requirements of the
Securities Exchange Act of 1934, as amended, for a period of
approximately one year. Accordingly, in the event Great Expectations is
able to complete a business combination during this period, it
anticipates that our existing capital will not be sufficient to allow
us to accomplish the goal of completing a business combination. Great
Expectations will depend on additional advances from stockholders.
We cannot assure you that the available funds will ultimately prove to
be adequate to allow it to complete a business combination, and once a
business combination is completed, Great Expectation's needs for
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additional financing are likely to increase substantially. Management
and other stockholders have not made any commitments to provide
additional. We cannot assure you that any additional funds will be
available to Great Expectations to allow us to cover our expenses.
Even if Great Expectation's cash assets prove to be inadequate to meet
Great Expectation's operational needs, Great Expectations might seek to
compensate providers of services by issuances of stock in lieu of cash.
We do not expect to purchase or sell any significant equipment, engage
in product research or development and do not expect any significant
changes in the number of employees.
17
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Great Expectations and Associates Inc.
Englewood, Colorado
We have audited the accompanying balance sheet of Great Expectations
and Associates Inc. (a development stage enterprise) as of October 31,
2003, and the related statements of stockholders' equity, loss and
accumulated deficit, and cash flows for the period from the date of
inception (June 5, 1987) to October 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Great
Expectations and Associates Inc., as of October 31, 2003, the changes
in its stockholders' equity, the results of its operations and its cash
flows for the period then ended 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 6
to the financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that 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.
Denver, Colorado
January 26, 2004
Tannenbaum & Company P.C.
18
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
BALANCE SHEET
October 31, 2003
October
31, 2003
----------
ASSETS
CURRENT ASSETS
Cash $ -
----------
Total current assets -
Other Assets
Deferred offering costs (Note 1) 22,099
----------
Total other assets 22,099
----------
Total assets 22,099
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to stockholders (Note 4) $ 50,638
----------
Total current liabilities 50,638
STOCKHOLDERS' EQUITY
Common stock, no par value, 500,000,000 shares
authorized;150,520,000 shares issued and
outstanding (Note 1) 20,432
Deficit accumulated during the development stage (48,971)
----------
Total stockholders' equity (28,539)
----------
Total liabilities and stockholders' equity $ 22,099
==========
The accompanying notes are an integral part of the financial
statements.
19
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (June 5, 1987) to October 31, 2003
Inception
to October October
31, 2003 31, 2003
---------- ----------
Revenue
Interest Income $ 166 -
---------- ----------
Total revenue 166 -
Other expense
Amortization 700 -
Rent 4,512 -
Salaries (Note 3) 6,129 -
Office supplies and expense 4,681 50
Legal 13,749 6,174
Travel 1,435 -
Escrow fees 1,500 -
Transfer fees 4,051 751
Filing fees 4,825 250
Accounting 7,555 2,600
---------- ----------
Total expense 49,137 9,825
---------- ----------
NET LOSS (48,971) (9,825)
Accumulated deficit
Balance, beginning of period - (39,146)
---------- ----------
Balance, end of period $ (48,971) $ (48,971)
========== ==========
Loss per share $ (Nil) $ (Nil)
========== ==========
Shares outstanding 150,520,000 150,520,000
=========== ===========
The accompanying notes are an integral part of the financial
statements.
20
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (June 5, 1987) to October 31, 2003
Total
Common Stock Stock-
Number Accumulated holders'
of shares Amount Deficit Equity
---------- ---------- ---------- ----------
Balance, June 5, 1987 $ - $ - $ -
Issuance of stock for cash
July 1987 ($.00005 per share) 67,000,000 3,000 - 3,000
Issuance of stock for cash
July 1987 ($.0017 per share) 7,200,000 12,000 - 12,000
Issuance of stock for services
(Note 3) July 1987
($.0017 per share) 1,000,000 1,666 - 1,666
Issuance of stock for services
(Note 3) March 1998
($.00005 per share) 75,320,000 3,766 - 3,766
Net loss for the period inception
to October 31, 1998 - - (10,833) (10,833)
----------- ---------- ---------- ----------
Balance, October 31, 1998 150,520,000 20,432 (10,833) 9,599
Issuance of stock for services
(Note 3) October 1999
($.00005 per share) 7,300,000 326 - 326
Issuance of stock for services
(Note 3) October 1999
($.00005 per share) 7,300,000 326 - 326
Issuance of stock for services
(Note 3) October 1999
($.00005 per share) 1,000,000 45 - 45
Net loss for the period
October 31, 1999 - - (697) (697)
----------- ---------- ---------- ----------
Balance, October 31, 1999 166,120,000 $ 21,129 $ (11,530) $ 9,599
Net loss for the period
October 31, 2000 - - (8,815) (8,815)
Treasury stock (15,600,000) (697) - (697)
----------- ---------- ---------- ----------
Balance, October 31, 2000 150,520,000 $ 20,432 $ (20,345) $ 87
21
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (June 5, 1987) to October 31, 2003
(Continued)
Total
Common Stock Stock-
Number Accumulated holders'
of shares Amount Deficit Equity
---------- ---------- ---------- ----------
Net loss for the period
October 31, 2001 - - (11,742) (11,742)
----------- ---------- ---------- ----------
Balance, October 31, 2001 150,520,000 20,432 (32,087) (11,655)
Net loss for the period
October 31, 2002 - - (7,059) (7,059)
----------- ---------- ---------- ----------
Balance, October 31, 2002 150,520,000 20,432 (39,146) (18,714)
Net loss for the period
October 31, 2003 - - (9,825) (9,825)
----------- ---------- ---------- ----------
Balance, October 31, 2003 150,520,000 20,432 (48,971) (28,539)
=========== ========== ========== ==========
The accompanying notes are an integral part of the financial
statements.
22
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For the periods ended October 31, 2003
Inception
to October October
31, 2003 31, 2003
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (48,971) $ (9,825)
Add non-cash items:
Salaries paid with stock (Note 3) 5,432 -
Organizational cost amortization 700 -
Increase in organizational cost (700) -
---------- ----------
Cash used in operations (43,539) (9,825)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans-stockholders (Note 4) 50,638 9,825
Proceeds from issuance of common stock 15,000 -
Offering costs (Note 1) (22,099) -
Treasury stock - -
---------- ----------
Cash provided by financing activities 43,539 9,825
---------- ----------
Net increase (decreease) in cash - -
Cash, beginning of periods - -
---------- ----------
Cash, end of periods $ - $ -
========== ==========
The accompanying notes are an integral part of the financial
statements.
23
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
1. Summary of significant accounting policies
Organization
Great Expectations and Associates Inc. (the "Company", formerly Great
Expectations, Inc.) was organized under the laws of the State of
Colorado on June 5, 1987, for the purpose of evaluating and seeking
merger candidates. The Company is currently considered to be in the
development stage as more fully defined in the Financial Accounting
Standards Board Statement No. 7. The Company has engaged in limited
activities, but has not generated significant revenues to date. The
Company is currently seeking business opportunities.
Accounting methods
The Company records income and expenses on the accrual method.
Fiscal year
The Company has selected October 31 as its fiscal year.
Deferred offering cost
Costs associated with any public offering were charged to proceeds of
the offering.
Loss per share
All stock outstanding prior to the public offering had been issued at
prices substantially less than that which was paid for the stock in the
public offering. Accordingly, for the purpose of the loss per share
calculation, shares outstanding at the end of the period were
considered to be outstanding during the entire period.
2. Income taxes
Since its inception, the Company has incurred a net operating loss.
Accordingly, no provision has been made for income taxes.
3. Stock issued for services
The value of the stock issued for services is based on management's
estimate of the fair market value of the services rendered.
4. Due to stockholders
During the fiscal year advances totaling $50,638 were made to the
Company by stockholders. There are no specific repayment terms and no
interest is charged.
24
5. Management representation
For the period ended October 31, 2003 management represents that all
adjustments necessary to a fair statement of the results for the period
have been included and such adjustments are of a normal and recurring
nature.
6. Going concern
The company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability to
continue as a going concern.
25
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Great Expectations and Associates Inc.
Englewood, Colorado
We have audited the accompanying balance sheet of Great Expectations
and Associates Inc. (a development stage enterprise) as of October 31,
2002, and the related statements of stockholders' equity, loss and
accumulated deficit, and cash flows for the period from the date of
inception (June 5, 1987) to October 31, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Great
Expectations and Associates Inc., as of October 31, 2002, the changes
in its stockholders' equity, the results of its operations and its cash
flows for the period then ended 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 6
to the financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that 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.
Denver, Colorado
January 23, 2003
Tannenbaum & Company P.C.
26
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
BALANCE SHEET
October 31, 2002
October
31, 2002
--------
ASSETS
CURRENT ASSETS
Cash $ -
--------
Total current assets -
Other Assets
Deferred offering costs (Note 1) 22,099
--------
Total other assets 22,099
--------
Total assets 22,099
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to stockholders (Note 4) $ 40,813
--------
Total current liabilities 40,813
STOCKHOLDERS' EQUITY
Common stock, no par value, 500,000,000
shares authorized;150,520,000 shares
issued and outstanding (Note 1) 20,432
Deficit accumulated during the development stage (39,146)
--------
Total stockholders' equity (18,714)
--------
Total liabilities and stockholders' equity $ 22,099
========
The accompanying notes are an integral part of the financial
statements.
27
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (June 5, 1987) to October 31, 2002
Inception
to October October
31, 2002 31, 2002
----------- ----------
Revenue
Interest Income $ 166 -
-------- -------
Total revenue 166 -
Other expense
Amortization 700 -
Rent 4,512 -
Salaries (Note 3) 6,129 -
Office supplies and expense 4,631 84
Legal 7,575 3,575
Travel 1,435 -
Escrow fees 1,500 -
Transfer fees 3,300 1,800
Filing fees 4,575 -
Accounting 4,955 1,600
--------- -------
Total expense 39,312 7,059
--------- -------
NET LOSS (39,146) (7,059)
Accumulated deficit
Balance, beginning of period - (32,087)
--------- -------
Balance, end of period $ (39,146) (39,146)
========= =======
Loss per share $ (Nil) $ (Nil)
========= =======
Shares outstanding 150,520,000 150,520,000
=========== ===========
28
Great Expectations And Associates, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period form inception (June 5, 1987) to
October 31, 2002
Total
Common stock Accumu- stock-
Number lated holders'
of shares Amount deficit equity
--------- ------ ------- --------
Balance, June 5, 1987 - $ - $ - $ -
Issuance of stock for cash
July 1987 ($.00005 per share) 67,000,000 3,000 - 3,000
Issuance of stock for cash
July 1987 ($.0017 per share) 7,200,000 12,000 - 12,000
Issuance of stock for services (Note 3)
July 1987 ($.0017 per share) 1,000,000 1,666 - 1,666
Issuance of stock for services (Note 3)
March 1998 ($.00005 per share) 75,320,000 3,766 - 3,766
Net loss for the period inception
to October 31, 1998 - - (10,833) (10,833)
---------- -------- -------- -------
Balance, October 31, 1998 150,520,000 20,432 (10,833) 9,599
Issuance of stock for services (Note 3)
October 1999 ($.00005 per share) 7,300,000 326 326
Issuance of stock for services (Note 3)
October 1999 ($.00005 per share) 7,300,000 326 326
Issuance of stock for services (Note 3)
October 1999($.00005 per share) 1,000,000 45 45
Net loss for the period October
31, 1999 - - (697) (697)
---------- -------- -------- -------
Balance, October 31, 1999 166,120,000 $ 21,129 $ (11,530) $ 9,599
Net loss for the period October
31, 2000 (8,815) (8,815)
Treasury stock (15,600,000) (697) (697)
----------- -------- --------- -------
Balance, October 31, 2000 150,520,000 $ 20,432 $ (20,345) $ 87
Net loss for the period October
31, 2001 (11,742) (11,742)
Balance, October 31, 2001 150,520,000 20,432 (32,087) (11,655)
29
Net loss for the period October
31, 2002 (7,059) (7,059)
----------- ------ --------- -------
Balance, October 31, 2002 150,520,000 20,432 (39,146) (18,714)
=========== ====== ========= =======
The accompanying notes are an integral part of
the financial statements.
30
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
For the periods ended October 31, 2002
Inception
to October October
31, 2002 31, 2002
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (39,146) $ (7,059)
Add non-cash items:
Salaries paid with stock (Note 3) 5,432 -
Organizational cost amortization 700 -
Increase in organizational cost (700) -
--------- --------
Cash used in operations (33,714) (7,059)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans-stockholders (Note 4) 40,813 7,059
Proceeds from issuance of common stock 15,000 -
Offering costs (Note 1) (22,099) -
--------- --------
Cash provided by financing activities 33,714 7,059
--------- --------
Net increase (decrease) in cash - -
Cash, beginning of periods - -
--------- --------
Cash, end of periods $ - $ -
========= ========
The accompanying notes are an integral part of the financial
statements.
31
Great Expectations and Associates, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
October 31, 2002
Summary of significant accounting policies
Organization
Great Expectations and Associates Inc. (the "Company", formerly Great
Expectations, Inc.) was organized under the laws of the State of
Colorado on June 5, 1987, for the purpose of evaluating and seeking
merger candidates. The Company is currently considered to be in the
development stage as more fully defined in the Financial Accounting
Standards Board Statement No. 7. The Company has engaged in limited
activities, but has not generated significant revenues to date. The
Company is currently seeking business opportunities.
Accounting methods
The Company records income and expenses on the accrual method.
Fiscal year
The Company has selected October 31 as its fiscal year.
Deferred offering cost
Costs associated with any public offering were charged to proceeds of
the offering.
Loss per share
All stock outstanding prior to the public offering had been issued at
prices substantially less than that which was paid for the stock in the
public offering. Accordingly, for the purpose of the loss per share
calculation, shares outstanding at the end of the period were
considered to be outstanding during the entire period.
Income taxes
Since its inception, the Company has incurred a net operating loss.
Accordingly, no provision has been made for income taxes.
Stock issued for services
The value of the stock issued for services is based on management's
estimate of the fair market value of the services rendered
Due to stockholders
During the fiscal year advances totaling $40,813 were made to the
Company by stockholders. There are no specific repayment terms and no
interest is charged.
Management representation
For the period ended October 31, 2002 management represents that all
adjustments necessary to a fair statement of the results for the period
have been included and such adjustments are of a normal and recurring
nature.
32
Going concern
The company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability to
continue as a going concern.
33
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have not been any changes in or disagreements with accountants on
accounting and financial disclosure.
ITEM 8A CONTROLS and PROCEDURES
Evaluation of Great Expectation's Disclosure Controls. As of the end
of the period covered by this Annual Report on Form 10-KSB, Great
Expectation's principal executive officer and principal financial
officer have evaluated the effectiveness of Great Expectation's
"disclosure controls and procedures" ("Disclosure Controls").
Disclosure Controls, as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") are procedures
that are designed with the objective of ensuring that information
required to be disclosed in our reports filed under the Exchange Act,
such as this Annual Report, is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission's (SEC) rules and forms. Disclosure Controls are
also designed with the objective of ensuring that such information is
accumulated and communicated to our management, including the CEO and
CFO, as appropriate to allow timely decisions regarding required
disclosure.
Great Expectation's management, including the CEO and CFO, does not
expect that our Disclosure Controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within the company have
34
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The principal executive officers and directors of Great Expectations
are
Name Position Term of office
Raphael M. Solot President/Treasurer November 1999
Director to present
Frederick W. Mahlke Vice President/Secretary July 1987
Director to present
Only Mr. Mahlke has been involved with prior blank check companies.
The directors named above will serve until the next annual meeting of
Great Expectation's stockholders. Officers will hold their positions
at the pleasure of the board of directors, absent any employment
agreement, of which none currently exists or is contemplated.
There is no arrangement or understanding between the directors and
officers of Great Expectations and any other person under which any
director or officer was or is to be selected as a director or officer.
The directors and officer of Great Expectations will devote their time
to Great Expectation's affairs on an "as needed" basis. As a result,
the actual amount of time which they will devote to Great Expectation's
affairs is unknown and is likely to vary substantially from month to
month.
Biographical Information
Raphael M. Solot. Mr. Solot has been an attorney in private practice
in Colorado since 1964 with an emphasis on complex civil litigation,
corporate and franchise law. From 1994 until March 1996, Mr. Solot
served on the Board of Directors of Jones Global, Ltd., a corporation
engaged in the international cable business. From March 1996 until the
sale of Jones Intercable, M. Solot served on the Board of Directors of
Jones Intercable, Inc., the eighth largest cable television company in
the United States. Mr. Solot was elected Vice Chairman of the Board
of Jones Intercable, Inc. at the annual meeting of shareholders in 1997
and served in that capacity until April 1998.
Mr. Solot received a Bachelor of Science degree from the University of
Colorado in 1958 and a Juris Doctor degree from the University of
Denver in 1963.
Frederick W. Mahlke. Mr. Malhke has served as a Director of Great
Expectations since July 1987. From November 1979 to present, Mr.
Mahlke has been President of Cumberland Sales and management of Denver,
Colorado, a commercial and residential management company. For the
35
past ten years, Mr. Mahlke has also worked as a Colorado court-
appointed receiver on over forty properties and has also been appointed
receiver for two California properties.
Mr. Mahlke's prior experience with blank check companies. Mr. Mahlke
was a director of Deversified Management Acquisitions II, Inc.
Deversified Management Acquisitions II, Inc. completed an offering on
From S-18 dated June 19, 1988. Deversified Management Acquisitions
II, Inc. merged with Constellation Development, Inc. (33-16885-1) in
March 1989. Mr. Mahlke resigned from Deversified Management
Acquisitions II, Inc. simultaneously with its merger with Constellation
Development, Inc. Thereafter, Constellation Development, Inc. merged
with Carpet Holdings, Inc. Constellation Development, Inc. was an
English real estate development and acquisition company with real
estate holdings in Liverpool, England consisting of a shopping center.
Carpet Holdings, Inc. was a carpet wholesaler located in Dalton,
Georgia.
Great Expectation's officers and directors may elect, in the future, to
form one or more additional shell companies with a business plan
similar or identical to that of Great Expectations. Any such additional
shell companies would also be in direct competition with Great
Expectations for available business opportunities.
We do not have a procedure in place that would allow these individuals
to resolve potential conflicts in an arms-length fashion. They will
be required to use their discretion to resolve them in a manner that
they consider appropriate. Great Expectation's officers and directors
may actively negotiate or otherwise consent to the purchase of a
portion of his common stock as a condition to, or in connection with, a
proposed merger or acquisition transaction.
We anticipate that a substantial premium over the initial cost of such
shares may be paid by the purchaser at the same time as any sale of
shares by Great Expectation's officers and directors which is made as a
condition to, or in connection with, a proposed merger or acquisition
transaction. The fact that a substantial premium may be paid to Great
Expectation's officers and directors to acquire their shares creates a
potential conflict of interest for them in satisfying their fiduciary
duties to Great Expectations and its other shareholders. Even though
such a sale could result in a substantial profit to them, they would be
legally required to make the decision based upon the best interests of
Great Expectations and Great Expectation's other shareholders, rather
than their own personal pecuniary benefit.
ITEM 10. EXECUTIVE COMPENSATION
Other than described below, no compensation was awarded to, earned by,
or paid in the last three years. Mr. Solot received 1,000,000 Common
Shares at $.00005 per share in October 1999 as partial payment of
services.
36
Although there is no current plan in existence, it is possible that
Great Expectations will adopt a plan to pay or accrue compensation to
its officers and directors for services related to seeking business
opportunities and completing a merger or acquisition transaction.
Great Expectations has no stock option, retirement, pension, or profit-
sharing programs for the benefit of directors, officers or other
employees, but the board of directors may recommend adoption of one or
more such programs in the future.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the number of shares of common stock
owned of record and beneficially by executive officers, directors and
persons who hold 5.0% or more of the outstanding common stock of Great
Expectations. Also included are the shares held by all executive
officers and directors as a group.
Name and Address Number of Percentage Percentage
Shares Outstanding of Shares of Shares
Outstanding After Offering
Frederick W. Mahlke(1) 500,000 .30% .30%
4105 S. Florida Avenue
Suite 100
Denver, Colorado 80222
Raphael M. Solot 1,000,000 .60% .60%
501 South Cherry Street
Suite 610
Denver, Colorado 80222
Miles Wynn 139,340,000 83.88% 83.38%
3679 South Dawson Street
Aurora, Colorado 80014
Officers and Directors as a group
(2 persons) 1,500,000 .90% .90%
(1)Mr. Mahlke and Mr. Solot are officers and directors of Great
Expectations
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are currently advances from shareholders totaling $40,813 were
made to the Company by stockholders. There are no specific repayment
terms and no interest is charged.
37
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
List of Exhibits
The following exhibits are filed with this report:
None
Reports on Form 8-K
None
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees. The Company incurred aggregate fees and expenses of $1,000
and $1,000, respectively, from Tannenbaum & Company P.C. for the fiscal
years 2003 and 2002 annual audit and for review of the Company's
consolidated financial statements included in its Forms 10-QSB for the
2003 and 2002 fiscal year.
Tax Fees. Great Expectation did not incur any tax fees to Tannenbaum
& Company P.C. for the fiscal years 2003 and 2002 for professional
services rendered for tax compliance, tax advice, and tax planning.
All Other Fees. During the 2003 fiscal year, the Company incurred
aggregate fees and expenses of $600 from Tannenbaum & Company P.C. for
all other services consisting of other fees and expenses of $600.
Audit-related fees and expenses were for the audit of the Company's
accounting consultation and consents. Other fees and expenses were
primarily for tax compliance and tax consultation.
The Audit Committee considered whether, and determined that, the
auditor's provision of non-audit services was compatible with
maintaining the auditor's independence. All of the services described
above for fiscal year 2003 and 2002 were approved by the Audit
Committee pursuant to its policies and procedures. The Company intends
to continue using Tannenbaum & Company P.C. solely for audit and audit-
related services, tax consultation and tax compliance services, and, as
needed, for due diligence in acquisitions.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this
Report to be signed on its behalf by the undersigned duly authorized
person.
Date: February 2, 2004
GREAT EXPECTATIONS, INC.
/s/ Raphael Solot
--------------------
By: Raphael Solot, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated.
/s/Raphael Solot, Principal Executive Officer February 2, 2004
-------------------- Principal Financial Officer
Controller Director
/s/Fredrick Mahlke Secretary/Vice President February 2, 2004
-------------------- Director
CERTIFICATION
-------------
I, Raphael Solot, certify that:
1. I have reviewed this report on Form 10-KSB of Great
Expectations;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report.
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14) for
the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to me by others within
those entities, particularly during the period in which this report is
being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to
the filing date of this report (the "Evaluation Date"); and
c) presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial
data and have identified for the registrant's auditors any material
weakness in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. I have indicated in this report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
February 2, 2004 By /s/ Raphael Solot
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Raphael Solot
Chief Executive Officer and
Chief Financial Officer