U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
Commission file number: ___________
EXPLORATIONS GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 65-1089222 | |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
777 South Flagler Drive Suite 800-West Tower
West Palm Beach, Florida 33401
(Address of principal executive offices)
Tel: (561) 515-6113
(Registrant’s telephone number, including area code)
34 Fifteenth Street
Brooklyn, NY 11215
(Previous address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.01 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently computed second fiscal quarter. $540,000
The number of shares of the issuer’s common stock issued and outstanding as of April 10, 2009 was 30,000,000 shares.
Documents Incorporated By Reference:
None
EXPLORATIONS GROUP, INC.
2008 FORM 10-K ANNUAL REPORT
Table of Contents
| Page | ||
| PART I | ||
| Item 1 | Business | 1 |
| Item 1A | Risk Factors | 5 |
| Item 1B | Unresolved Staff Comments | 10 |
| Item 2 | Properties | 10 |
| Item 3 | Legal Proceedings | 10 |
| Item 4 | Submission of Matters to a Vote of Security Holders | 10 |
| PART II | ||
| Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 10 |
| Item 6 | Selected Financial Data | 11 |
| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 11 |
| Item 7A | Quantitative and Qualitative Disclosures About Market Risk. | 12 |
| Item 8 | Financial Statements. | |
| Item 9 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 13 |
| Item 9A | Controls and Procedures | 13 |
| Item 9B | Other Information | 14 |
| PART III | ||
| Item 10 | Directors, Executive Officers and Corporate Governance | 14 |
| Item 11 | Executive Compensation | 16 |
| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 16 |
| Item 13 | Certain Relationships and Related Transactions, and Director Independence | 17 |
| Item 14 | Principal Accountant Fees and Services | 17 |
| PART IV | ||
| Item 15 | Exhibits, Financial Statement Schedules | 17 |
| SIGNATURES | 19 |
TRADEMARKS/DEFINITIONS
"Parking Pro" is a trademark of Explorations Group, Inc. All other trademarks, service marks or trade names referred to in this Form 10-K are the property of their respective owners. Except as otherwise required by the context, all references in this Form 10-K to (a) "we," "us," "our," the "Company" or "Explorations" refer to the consolidated operations of Explorations Group, Inc., a Delaware corporation, and its wholly-owned subsidiaries and (b) "you" refers to the reader of this Form 10-K.
1
DESCRIPTION OF OUR BUSINESS
We are engaged in the business of acquiring and managing parking lots and garages in New York City and surrounding areas through our Parking Pro, Inc., a New York corporation ("Parking Pro") subsidiary. In February, 2009, after the period covered by this annual report, we also entered the biometric security access and control business with the acquisition of Hawk Biometric Technology, Inc., a Florida corporation. This Annual Report on Form 10-K reflects only the operations of our Parking Pro subsidiary and does not necessarily fully reflect the Company’s business as of the date hereof. More information regarding the business of our Hawk Biometric Technology subsidiary can be found in our Form 8-K filing dated February 26, 2009. Since the acquisition of our Hawk Biometric Technology subsidiary, we will be concentrating our developing our access and control business.
Industry Overview
The parking industry is highly fragmented, consisting of a few nationwide companies and a large number of smaller operators, including a substantial number of companies providing parking as an ancillary service in connection with property management or ownership. The parking industry as a whole is experiencing a period of rapid consolidation. Based upon the research report of The Parking Market Research Company, dated May 1997, the parking sector consisted of approximately 2,200 firms generating over $4 billion in annual revenues in 1995. The report indicated that the overall size of the parking industry in 1995, including public parking lots, was in excess of $26 billion. There are approximately 35,000 parking structures representing 5,000,000 spaces in the United States.
Overall parking industry expansion is created by new construction. Since new construction in the United States slowed in the late 1980's and has only gradually begun to increase in recent years, growth in parking companies in the 1990's has generally resulted from take-aways from other parking companies. Take-aways and new construction are essential to growth in the parking industry because of the limitations on revenue growth of existing operations. While some growth in revenues from existing operations is possible through redesign, increased operational efficiency, or increased facility use and prices, such growth is ultimately limited by the size of a facility and market conditions.
Privatization of government operations and facilities could provide new opportunities for the parking industry. Currently, government-controlled parking facilities, operated by municipal entities, account for approximately 50% of all lots. Cities and municipal authorities may consider retaining private firms to operate facilities and parking-related services in an effort to reduce operating budgets and increase efficiency.
The Company anticipates the continued growth of the private parking industry due to general trends, which include the following:
• Major long-term industry consolidation through acquisitions.
• Privatization of government-controlled parking, patrolling, ticketing and other related services.
• Outsourcing of ancillary parking services by public and private commercial real estate owners.
• Changing industry leasing practices to require significant up-front lease payments, which favor well-capitalized operations.
New York Parking Market
The Company's growth will be as a result of a well-formulated acquisition strategy initially focused on the New York metropolitan area. Parking is a large business in the New York area with approximately 1 - 1.5 million cars entering New York City everyday. According to the Metropolitan Parking Authority, the New York parking industry is broken down as follows:
Lots
Manhattan 407 parking lots (capacity 35,411 cars)
Outer Boroughs 878 parking lots (capacity 111,218 cars)
Garages
Manhattan 822 garages (capacity 126,884 cars)
Outer Boroughs 1,183 garages (capacity 193,889 cars)
The New York parking industry is dominated by a handful of large companies with resources substantially greater than those of the Company. These companies generally focus on high profile, high turnover Manhattan facilities with capacities greater than 150 cars.
Our Strategy
The Company looks for smaller, obscure parking locations that tend to be under the "radar screens" of the larger operators.
Competition for the smaller sites is generally limited to a handful of existing players similar in size to the Company. New entrants generally encounter great difficulty entering the New York market as sellers will usually only deal with established operators. Therefore, the bidding process is usually less competitive, creating attractive opportunities for the Company.
The Company carefully selects and analyzes new sites by conducting an examination of a location's potential demand based on traffic patterns and counts, area demographics, and potential competitors, and compares this analysis to the projected revenues and costs of the facility.
The Company has established a successful acquisition strategy, which has resulted in rapid growth in both number of locations and revenues. This strategy depends heavily on management’s ability to identify and integrate acquisitions. Historically, the Company's management has experience in acquiring approximately 70 parking locations.
The Company believes that consolidation is being driven primarily by the opportunity to achieve economies of scale. The most obvious savings from consolidation will be attained by reducing redundant overhead costs, but may also be achieved through operating improvements such as implementing improved management practices and control systems. The Company has developed and successfully employed a strategy of consolidation by applying standardized professional management strategies to a fragmented, local business environment with exploitable economies of scale.
The Company seeks to reduce redundant overhead costs as well as realize operating improvements such as implementing standardized management practices and management information systems. Over the last several years, the Company’s management has completely re-engineered all of its accounting and operations software and now utilizes a sophisticated software system that generates a range of reports to audit access control systems for the Company's parking facilities. Labor cost is controlled by a decentralized structure of well-trained, highly motivated managers that is complemented by computerized parking and accounting systems.
On the demand side, consolidation is driven by the requirements of large property owners for professional management, increased services, up-front capital investments and superior financial reporting. These parties often outsource parking operations to parking management companies in an effort to maximize profits or leverage the original rental value to a third-party lender.
2
Operations
The parking facility which we operate is located in Manhattan and is operated under a lease from a third-party landlord. The following table shows the general location, size and remaining lease term for the parking facility:
Location | Capacity | Lease Term Remaining (in years) |
| Manhattan | 200 | 1 |
The Company plans to search out new parking facilities as well as valet opportunities. The company emphasizes the importance of marketing, containing costs, realizing economies of scale, maintaining strict cash control, using a decentralized management structure, providing strong training programs for employees and enhancing management information systems in order to attract new and retain existing parking patrons.
Leases
Lease arrangements are typically for terms of three to twenty years and provide for renewals and contractually established payments to the facility owner regardless of the operating earnings of the parking facility. Under these leases, the Company is responsible for all facets of the parking operations, including utilities and ordinary and routine maintenance, but is generally not responsible for major maintenance, repair, or property taxes.
Maintenance
At least annually, and when needed on a more frequent basis, the Company’s management services include painting of traffic guides and parking areas, lighting of areas for improved operations and safety, gate maintenance, and electronics upgrade and maintenance. As a result, the Company has, in a short period of time, built an enviable reputation for quality services operating within the demanding and highly competitive New York environment.
Management Controls
The parking industry in general is plagued by a high turnover of employees and a loss of receipts due to theft. The Company maintains an exceptionally low turnover rate and believes it has minimized theft due to its exceptional recruitment process and its sophisticated revenue control system. The Company utilizes a software system that generates a range of reports to audit the Company's parking facilities. These reports provide management with current data concerning patron traffic, revenue collection and all other facets of the Company's operations.
Intellectual Property
Our intellectual property consists of our trademarks including “Parking Pro.” The Company has not filed applications for registration of any of its trademarks. The Company regards the protection of our copyrights, service marks, trademarks, trade dress and trade secrets as critical to our future success. We rely on a combination of copyright, trademark, service mark and trade secret laws, and contractual restrictions to establish and protect our proprietary rights in products and services.
Although we do not believe that we infringe upon the proprietary rights of third parties, there can be no assurance that third parties will not claim infringement by us with respect to past, current or future technologies. Any such claim, whether meritorious or not, could be time-consuming, could result in costly litigation and could have a material adverse effect upon our business, results of operations and financial condition.
Employees
As of December 31, 2008, the Company employed one full-time employee.
The future success of the Company will depend in part on our continued ability to attract, integrate, retain and motivate highly qualified technical and managerial personnel, and upon the continued service of our senior management personnel. The competition for qualified personnel in our industry and geographical location is intense, and there can be no assurance that we will be successful in attracting, integrating, retaining and motivating a sufficient number of qualified personnel to conduct our business in the future. The Company has never had a work stoppage, and no employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.
3
Subsidiaries
The Company currently has one wholly-owned subsidiary, Parking Pro, Inc., a New York corporation. Parking Pro, Inc. has three wholly-owned subsidiaries: Big Scherm Corp., a New York corporation, Chiefs Management Corp., a New York corporation and NYC Parking Services Corp., a New York corporation.
Forward-Looking Statements
The Company or management may make or may have made certain forward-looking statements, orally or in writing, such as those within Management's Discussion and Analysis contained in its various SEC filings. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements, so as to ensure to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Such statements are therefore qualified in their entirety by reference to and are accompanied by the following discussion of certain important factors that could cause actual results to differ materially from those described in such forward-looking statements.
The Company cautions the reader that this list of factors is not intended to be exhaustive. The Company operates in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such factors, nor can it assess the impact, if any, of such factors on the Company's business or the extent to which any factors may cause actual results to differ materially from those described in any forward-looking statement. None of the Company's forward-looking statements should be relied upon as a prediction of actual results.
The Company faces risks and uncertainties that could render actual events materially different than those described in our forward-looking statements. These risks and uncertainties are described elsewhere in this report.
Item 1A. Risk Factors
Not required for Smaller Reporting Companies.
Item 1B. Unresolved Staff Comments
Not applicable.
Our executive office consists of approximately 1,200 square feet of office space in Brooklyn, New York. This facility is leased on a month to month basis from an affiliate of the Company. We currently do not pay any rent for the use of the office space. We believe that our current facilities are adequate for the purposes for which they are intended .
In addition, the Company currently leases one parking facility from a third-party landlord with various lease expiration terms, as shown below:
Location | Capacity | Lease Term Remaining (in years) |
| Manhattan | 200 | 1 |
There are no pending legal proceedings against the Company or which any of the Company’s property is the subject.
During the year ending December 31, 2008, there were no matters which were submitted to a vote of the Company’s shareholders through the solicitation of proxies or otherwise.
Market Information
Our common stock is eligible to be traded on the Over-The-Counter Bulletin Board, under the ticker symbol EXGI. However, there is no established public trading market for our common stock.
The following table sets forth the range of high and low bid prices per share of common stock. The quotations shown below reflect inter-dealer prices, without mark-up, markdown or commissions and may not present actual transactions.
Common Stock
| High | Low | |||||||
| Quarter ended: | ||||||||
| March 31, 2007 | .039 | .005 | ||||||
| June 30, 2007 | .03 | .015 | ||||||
| September 30, 2007 | .035 | .015 | ||||||
| December 31, 2007 | .03 | .015 | ||||||
| March 31, 2008 | .02 | .017 | ||||||
| June 30, 2008 | .018 | .008 | ||||||
| September 30, 2008 | .01 | .008 | ||||||
| December 31, 2008 | .09 | .013 | ||||||
Holders
As of March 30, 2009, there were approximately 400 beneficial stockholders of record of our common stock.
Dividends
We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.
Equity Compensation Plans
We do not have any equity compensation plans.
Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended December 31, 2008.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere herein. Historical results and percentage relationships are not necessarily indicative of the operating results for any future period. Within this discussion and analysis, all dollar amounts (except for per share amounts) have been rounded to the nearest thousand. In February, 2009, after the period covered by this annual report, we also entered the biometric security access and control business with the acquisition of Hawk Biometric Technology, Inc., a Florida corporation. This Annual Report on Form 10-K reflects only the operations of our Parking Pro subsidiary and does not necessarily fully reflect the Company’s business as of the date hereof.
4
REVENUES
Our revenue is comprised of parking fees for garages that we operate on our own, license fees or rent payments for garages that we license or sublease to third parties, and management fees that we receive under management agreements. For the year ended December 31, 2008, we generated revenue of $35,448 which consisted of parking fees from customers and management fees received under the management agreements entered into with third-party operators, as compared to $129,780 for the year ended December 31, 2007.
The $35,448 in revenue constitutes revenue earned but not yet collected by the Company and the Company has set up a bad debt reserve in the same amount. There can be no assurance that such amounts can be collected.
OPERATING EXPENSES
Our operating expenses are comprised of personnel expenses and general and administrative expense. Our total operating expenses for calendar year 2008 were $15,990, which includes the bad debt reserve of $35,448 as discussed in the Revenues section above, as compared to $192,672, for calendar year 2007.
Our personnel expenses for the year ended December 31, 2008 were $50,000 as compared to the $30,000 for calendar year 2007.
Our general and administrative expenses include all our other expenses other than salaries, such as administrative costs, fees for professional services and rent.
Our general and administrative expenses for the year ended December 31, 2008 were $(109,386) and $9,138 for calendar year 2007. The reason for the negative general and administrative expenses was a result of the write–off of old liabilities in the amount of $55,317 and the result of the cancellation of stock previously issued for the non-performance of services in the amount of $75,000.
NET PROFIT (LOSS)
Our net profit or loss is our revenue less our expenses. For the year ended December 31, 2008 our net profit was $19,458 as compared to a net loss of $62,892 for 2007.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s capital requirements are dependent on several factors, including: rent payments due, acquisitions, and professional fees. At December 31, 2008, the Company had cash and cash equivalents totaling $227. Although the Company’s working capital is currently in a shortfall position, we believe that cash to be generated by our new business operations in 2009 will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for the next fiscal year.
If cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to restructure the liabilities of the company and/or sell additional equity, debt securities and/or obtain a credit facility. The sale of additional equity or convertible debt securities could result in additional ownership dilution to our stockholders. The incurrence of indebtedness would result in an increase in our fixed obligations and could result in borrowing covenants that would restrict our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services. In addition, we may be unable to take advantage of business opportunities or respond to competitive pressures. Any of these events could have a material and adverse effect on our business, results of operations and financial condition.
RISKS AND UNCERTAINTY
Our business is subject to the effects of general economic conditions, and in particular competition and government regulation.
Other risks and uncertainties for the Company include, but are not limited to:
O Adverse changes in general economic conditions including the price of gasoline
O the Company might not be able to fund our working capital needs from cash flows
O Increased competition
O Litigation
The Company may experience material fluctuations in future revenues and operating results on a quarterly or annual basis resulting from a number of factors, including but not limited to the risks discussed above.
The preceding statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" which are not historical facts are forward-looking statements. These forward-looking statements involve risks and uncertainties that could render them materially different, including, but not limited to, the risk that new products and product upgrades may not be available on a timely basis, the risk that such products and upgrades may not achieve market acceptance, the risk that competitors will develop similar products and reach the market first, and the risk that we would not be able to fund its working capital needs from cash flow.
CRITICAL ACCOUNTING POLICIES
The Company recognizes revenue from license fees and management contracts over the term of the related agreement using the straight-line method. The difference between the license fees and management contract revenue collected and the straight-line amount computed is included in the amount of deferred license fees and management contract revenue reported on the balance sheet.
Parking revenue from monthly customers is recognized as per the terms of the underlying contracts, usually on a monthly basis. Parking revenue from transient customers is recognized when received.
Item 8. Financial Statements
5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Audit Committee
Explorations Group, Inc.
Brooklyn, New York
We have audited the accompanying consolidated balance sheets of Explorations Group, Inc., as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the two years ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Company as of December 31, 2008 and 2007, and the results of its operations and cash flows for the two years ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has no material revenues, 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. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Liebman Goldberg & Hymowitz, LLP
Liebman Goldberg & Hymowitz, LLP
Garden City, New York
April 14, 2009
6
EXPLORATIONS GROUP, INC. AND SUBSIDIARIES | ||||||||||||||
| BALANCE SHEETS | ||||||||||||||
| DECEMBER 31, | ||||||||||||||
| ASSETS | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 227 | $ | 227 | ||||||||||
| Total current assets | 227 | 227 | ||||||||||||
| Other assets: | ||||||||||||||
| Security deposits | - | 59,000 | ||||||||||||
| Property and Equipment - Net | ||||||||||||||
| Total assets | $ | 227 | $ | 59,227 | ||||||||||
| LIABILITIES AND STOCKHOLDER'S DEFICIT | ||||||||||||||
| Accounts payable | $ | - | $ | 17,830 | ||||||||||
| Sales tax payable | 122,720 | 122,720 | ||||||||||||
| Accrued expenses and taxes payable | 605,567 | 688,776 | ||||||||||||
| Convertible bond payable | 25,000 | - | ||||||||||||
| Total current liabilities | 753,287 | 829,326 | ||||||||||||
| Long-term liabilities: | ||||||||||||||
| Due to related parties | 31,820 | 69,873 | ||||||||||||
| Convertible bond payable | - | 25,000 | ||||||||||||
| Total liabilities | 785,107 | 924,199 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Stockholder’s deficit: | ||||||||||||||
| Preferred stock - B ($0.01 par value, 500,000 shares | ||||||||||||||
| authorized, 67,500 issued and outstanding) | 675 | 675 | ||||||||||||
| Common stock ($0.01 par value, 100,000,000 shares authorized, 24,558,136 issued and outstanding | ||||||||||||||
| Additional paid-in capital | 1,204,682 | 1,226,971 | ||||||||||||
| Accumulated deficit | (2,235,819) | �� | (2,255,277) | |||||||||||
| Total stockholders’ deficit | (784,880) | (864,972) | ||||||||||||
| Total liabilities and stockholder's deficit | $ | 227 | $ | 59,227 | ||||||||||
7
EXPLORATIONS GROUP, INC. AND SUBSIDIARIES BALANCE SHEETS | ||||||||||||||
| DECEMBER 31, | ||||||||||||||
| ASSETS | ||||||||
| 2008 | 2007 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 227 | $ | 227 | ||||
| Total current assets | 227 | 227 | ||||||
| Other assets: | ||||||||
| Security deposits | - | 59,000 | ||||||
| Property and Equipment - Net | ||||||||
| Total assets | $ | 227 | $ | 59,227 | ||||
| LIABILITIES AND STOCKHOLDER'S DEFICIT | ||||||||
| Accounts payable | $ | - | $ | 17,830 | ||||
| Sales tax payable | 122,720 | 122,720 | ||||||
| Accrued expenses and taxes payable | 605,567 | 688,776 | ||||||
| Convertible bond payable | 25,000 | - | ||||||
| Total current liabilities | 753,287 | 829,326 | ||||||
| Long-term liabilities: | ||||||||
| Due to related parties | 31,820 | 69,873 | ||||||
| Convertible bond payable | - | 25,000 | ||||||
| Total liabilities | 785,107 | 924,199 | ||||||
| Commitments and contingencies | ||||||||
| Stockholder’s deficit: | ||||||||
| Preferred stock - B ($0.01 par value, 500,000 shares | ||||||||
| authorized, 67,500 issued and outstanding) | 675 | 675 | ||||||
| Common stock ($0.01 par value, 100,000,000 shares authorized, 24,558,136 issued and outstanding | ||||||||
| Additional paid-in capital | 1,204,682 | 1,226,971 | ||||||
| Accumulated deficit | (2,235,819 | ) | (2,255,277 | ) | ||||
| Total stockholders’ deficit | (784,880 | ) | (864,972 | ) | ||||
| Total liabilities and stockholder's deficit | $ | 227 | $ | 59,227 | ||||
The accompanying notes are an integral part of the consolidated financial statements
8
| Explorations Group, Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Operations | ||||||||
| Years Ended December 31, | ||||||||
| December 31, | ||||||||
| 2008 | 2007 | |||||||
| Revenues | ||||||||
| Parking | $ | 35,448 | $ | 129,780 | ||||
| Total Revenues | 35,448 | 129,780 | ||||||
| Operating Expenses | ||||||||
| Personnel expenses | 50,778 | 30,000 | ||||||
| Bad debt expense | 35,448 | 129,780 | ||||||
| General and administrative | (109,386 | ) | 9,138 | |||||
| Professional fees | 39,150 | 23,754 | ||||||
| Total Operating Expenses | 15,990 | 192,672 | ||||||
| Net Income (Loss) | $ | 19,458 | $ | (62,892 | ) | |||
| Income (loss) per share | $ | 0.001 | $ | (0.004 | ) | |||
The accompanying notes are an integral part of the consolidated financial statements. | ||||||||
9
| EXPLORATIONS GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT | ||||||||||||||||||||||||||||
| For the Years Ended December 31, 2008 and 2007 | ||||||||||||||||||||||||||||
| Preferred Stock B | $.01 Par Value | Additional | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance at December 31, 2006 | 67,500 | $ | 675 | 10,265,869 | $ | 102,659 | $ | 1,198,971 | $ | (2,192,385 | ) | $ | (890,080 | ) | ||||||||||||||
| Common stock issued for debt | 6,000,000 | 60,000 | 28,000 | 88,000 | ||||||||||||||||||||||||
Net loss for the year ended December 31, 2007 | - | - | - | - | - | (62,892 | ) | (62,892 | ) | |||||||||||||||||||
| Balance at December 31, 2007 | 67,500 | $ | 675 | 16,265,869 | $ | 162,659 | $ | 1,226,971 | $ | (2,255,277 | ) | $ | (864,972 | ) | ||||||||||||||
| Convertible | Common Stock | Total | ||||||||||||||||||||||||||
| Preferred Stock B | $.01 Par Value | Additional | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance at December 31, 2007 | 67,500 | $ | 675 | 16,265,869 | $ | 162,659 | $ | 1,226,971 | $ | (2,255,277 | ) | $ | (864,972 | ) | ||||||||||||||
| Common stock issued for debt | 9,042,267 | 90,423 | 45,211 | 135,634 | ||||||||||||||||||||||||
| Cancellation of common stock | (750,000 | ) | (7,500 | ) | (67,500 | ) | (75,000 | ) | ||||||||||||||||||||
| Net income for the year ended December 31, 2008 | - | - | - | - | - | 19,458 | 19,458 | |||||||||||||||||||||
| Balance at December 31, 2008 | 67,500 | $ | 675 | 24,558,136 | $ | 245,582 | $ | 1,204,682 | $ | (2,235,819 | ) | $ | (784,880 | ) | ||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
10
Consolidated Statements of Cash Flows For The Year Ended December 31, | ||||||||
| 2008 | 2007 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net Income (Loss) from operations | $ | 19,458 | $ | (62,892 | ) | |||
| Adjustments to reconcile net income (loss) from operations to | ||||||||
| net cash (used in) operating activities: | ||||||||
| Bad debt expense | - | 35,724 | ||||||
| Changes in assets and liabilities: | ||||||||
| Security deposits | 59,000 | - | ||||||
| Accounts payable | (17,830 | ) | - | |||||
| Accrued expenses | (22,575 | ) | 27,168 | |||||
| Due to related parties | (38,053 | ) | - | |||||
| Net Cash (Used In) Operating Activities | - | - | ||||||
| Net Increase (Decrease) in Cash | - | - | ||||||
| Cash - Beginning of Year | 227 | 227 | ||||||
| Cash - End of Year | $ | 227 | $ | 227 | ||||
| Supplemental items (non-cash) | ||||||||
| Issuance of common stock for debt | $ | 135,634 | $ | 88,000 | ||||
| Cancellation of common stock for non-performance of services | $ | (75,000 | ) | - | ||||
The accompanying notes are an integral part of the consolidated financial statements. | ||||||||
11
EXPLORATIONS GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
1. Summary of significant accounting policies:
| General: |
On September 9, 2004, Explorations Group, Inc. (the "Company") acquired all of the issuedand outstanding stock of Parking Pro, Inc., a New York corporation (“Parking Pro”).
Parking Pro was formed in the State of New York on May 25, 2004. The Company and
its subsidiaries operate and lease public parking garages located in New York City and the surrounding area. On July 20, 2004, the Company issued 3,000 shares of common stock to acquire all of the outstanding shares of three affiliated companies: Big Scherm Corp. (“Big Scherm”), Chiefs Management Corp. (“Chiefs”) and NYC Parking Services Corp. (“NYC”).
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a stockholders deficit of $ 112,045 and a working capital deficit of $ 112,045 at December 31, 2008. The Company had a loss of $ 75,411 from operations for the year ended December 31, 2008. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might be necessary if the Company were unable to continue as a going concern. The continued existence of the Company and its subsidiaries is dependent upon the ability to obtain additional capital and/or debt financing needed to repay the current obligations of the Company and its subsidiaries. There is no assurance that the Company will be able to obtain such capital or enough financing to provide the necessary cash flow needed to fund the Company’s operations.
Basis of consolidation:
The financial statements are prepared using the accounts of the Company and its whollyowned subsidiaries. All material intercompany transactions and account balances have beeneliminated upon consolidation.
Cash and cash equivalents:
Cash and cash equivalents include cash on hand and in the banks. They are carried at cost, which approximates fair market value.
Concentration of credit risk:
The Company maintains its cash in bank deposit accounts at high credit, quality financial institutions. The balances, at times, may exceed federally insured limits.
12
EXPLORATIONS GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
1. Summary of significant accounting policies (continued):
Property and equipment:
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in Other Income (Expense).
Depreciation is provided over the estimated useful lives of the assets involved using the straight-line or accelerated methods.
The Company continually evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment should be evaluated for possible impairment.
Advertising costs:
The Company expenses advertising costs as they are incurred. The Company did not incur any advertising expense for the year ended December 31, 2008.
Income taxes:
The Company files a consolidated federal income tax return. The tax return is prepared using the same method of accounting that is used for the preparation of the financial statements.
Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition:
Parking revenue from monthly customers is recognized as per the terms of the underlying contracts, usually on a monthly basis. Parking revenue from transient customers is recognized when received.
Recent Accounting Pronouncements –
There were no new FASB accounting pronouncements issued during the years 2007 and 2008 that affected the Company’s financial statements.
13
EXPLORATIONS GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
2. Reorganization:
On July 29, 2004, Explorations Entertainment and Education, Inc. (the “Company”) executed a reorganization agreement (the “Agreement”) with Explorations Group, Inc. (“Explorations”). Under the terms of the Agreement, the Company’s shareholders shall exchange all of the issued and outstanding shares of common stock of the Company in exchange for 1,500,000 shares of Explorations, $ .01 par value, common stock and 60,000 shares of Class B voting convertible preferred shares. Each Class B share is convertible into 100 shares of Explorations common stock. Of the 7,500,000 shares of common stock that may be received by the Company’s shareholders, 6,000,000 shares shall be designated as “Restricted Shares”. Upon the Company’s acquisition of interests in other parking facilities (a “Facility”) either owned or operated by affiliates of the Company or third parties (a “Facility Acquisition”), for which it acquires leases and/or management contracts, all restriction and cancellation provisions on six (6) restricted shares shall be removed for each one hundred ($ 100) dollars in annualized earnings before interest, taxes, depreciation and amortization (“EBITDA “) acquired by the Company as a result of such Facility Acquisition, which shall be determined by the December 31, 2003 financial statements. There were no changes under the terms of this agreement during the year ended December 31, 2008.
3. Related party transactions:
The Company uses the services of a related entity to perform management services for the subsidiaries. F.B. Acquisitions, Inc., affiliated through common management, processed and collected cash receipts and paid certain expenses as well as providing other services on behalf of the subsidiaries. No formal agreement exists and no additional fee is charged for the other services. For the year ended December 31, 2008 the company did not pay any management fees.
During the quarter ended December 31, 2008, the Company recorded a write-off off old liabilities in the amount of $55,317 for amounts owed to various related parties.This debt was incurred for expenses paid by the related parties.
4. Property and equipment:
December 31,
Property and equipment consists of the following: 2008 2007
| Furniture and fixtures | $ | 1,586 | 1,586 | |||||
| Less: accumulated depreciation | (1,586 | ) | (1,586 | ) | ||||
| Property and equipment, net | $ | - 0 - | - 0 - |
14
EXPLORATIONS GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
5. Income taxes:
Due to a net operating loss carryfoward, there is no current income tax provision for the year ended December 31, 2008.
The tax provision for income taxes differs from the “expected” tax expense for the year ended December 31, 2008, computed by applying a federal corporation tax rate of 34% as follows:
| Computed “expected” tax expense | $ | 5,166 | ||
| Valuation allowance | 5,166 | |||
| $ | - 0 - |
The tax effects of the temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
Tax benefit of net operating loss carryforward | $ | 700,000 | ||
| Gross deferred tax asset | 700,000 | |||
| Valuation allowance | (700,000 | ) | ||
| Net deferred tax asset | $ | - 0 - |
As of December 31, 2008, the Company has a net operating loss carryforward of approximately $ 2,300,000 for income tax purposes, available to offset future earnings which expire on various dates through 2025. Uses of the net operating losses may be limited based upon the Internal Revenue Code.
In assessing the possibility of being able to use the deferred tax assets, management must consider whether it is more likely than not that the Company will generate taxable income in excess of these losses. Due to the Company’s reorganization and the ceasing of operations, except for consulting activities, it is more likely than not that the benefit of the deferred tax asset will never be realized.
6. Convertible bond payable:
During 2004, Explorations Group Inc. issued a Class A, Series A Convertible Bond to the Tucker Family Spendthrift Trust (the “Trust”) in exchange for a series of matured and past due promissory notes aggregating $25,000 held by the Trust. The Class A Bond is in the principal amount of $25,000 plus interest accrued and has a term of five years, with interest payable upon maturity at the annualized rate of 2% over the prime rate charged by Citibank, N.A. (New York City). The Bond is secured by all of the Company’s assets and may be subdivided at the Trust’s option, into two or more separate obligations in the principal amount of at least $10,000 each.
The Class A Bond is convertible into shares of the Company’s securities such that, upon complete conversion, the number of shares owned by the Trust shall be equal to 10% of the Company’s outstanding and reserved capital stock, as defined in the bond document. In any event, the number of shares to be issued shall not exceed 4,200,000 shares of common stock. The Bond is subject to anti-dilutive rights for six months thereafter. Conversion may be effected in whole or in part and to this date the Trust has not exercised the option of conversion.
15
EXPLORATIONS GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
7. Commitments and contingencies:
The Internal Revenue Service has a federal tax lien against all of the property and rights tothe property of Big Scherm’s, Chiefs and NYC’s former parent, Smart Parking, Inc., for unpaid federal withholding taxes for the years ended December 31, 1999 and 2000. The unpaid balance is included in the accrued expenses.
On August 30, 2004, the Company entered into an employment agreement with its Chief Executive Officer/President. On August 30, 2004, Parking Pro entered into an employment agreement with its Vice President. Both agreements expired on August 29, 2007 as stated in the terms of the agreement. For their services, each received an annual base compensation of $25,000.
During the year ended December 31, 2008 there was $ 50,000 recorded for the employment agreement.
8. Common stock:
During the quarter ended March 31, 2008, the Company issued 9,042,267 shares of common stock for the satisfaction of debt amounting to $135,634 or $0.015 per share. The Company valued these common shares at the quoted trading price on the date of issuance.
During the quarter ended December 31, 2008, the Company cancelled 750,000 shares of common stock that were previously issued in 2005, for services rendered. The Company cancelled said shares for non-performance of services.
| 9. | Subsequent event: |
On February 19, 2009, pursuant to the terms of an Agreement and Plan of Merger by and between the Company, Hawk Acquisition Corp., a Florida corporation, and Hawk Biometric Technologies, Inc., Hawk Acquisition Corp, a newly formed, wholly-owned subsidiary of the Company (the “Merger Agreement”), merged with Hawk Biometric Technologies, Inc. Pursuant to the merger, Hawk Biometric was the surviving entity and became a wholly-owned subsidiary of the Company.
Pursuant to the terms of the Merger Agreement, the former stockholders of Hawk Biometric received .02 shares of the Company’s Series B Preferred Stock for each share of Hawk Biometric Class A and Class B common stock for a total of 599,288 shares of the Company’s Series B Preferred Stock as consideration for the merger. Pursuant to the Amended and Restated Certificate of Designation of the Company’s Series B Preferred Stock, each share of Series B Preferred Stock is convertible into one hundred (100) shares of the Company’s common stock at any time, at the option of the holder and will automatically be converted on the day following the completion of the Company’s 6-for-1 reverse split of its common stock (the “Reverse Common Stock Split”). The Series B Preferred Stock is not subject to adjustment upon the occurrence of the Reverse Common Stock Split. Upon the completion of the Reverse Common Stock Split, the Series B Preferred Stock issued as consideration under the Merger Agreement will automatically convert into 59,928,800 shares of the Company’s common stock.
“In February, 2009, the Company issued a total of 5,441,864 shares of common stock to related parties in exchange for the following: 1,772,400 shares issued for the reimbursement of non-reimbursed expenses, 1,943,779 shares for payment of accrued by unpaid salary and 1,125,000 shares for services rendered in connection with the above-mentioned transaction.”
16
Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None
Item 9A (T). Controls and Procedures.
We carried out an evaluation required by Rule 13a-15(b) of the Securities Exchange Act of 1934 under the supervision and with the participation of our chief executive officer and chief financial officer of the effectiveness of the design and operation of our “disclosure controls and procedures” as of the end of the period covered by this Report.
Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer’s reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this Report. This type of evaluation will be done quarterly so that the conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant.
Based on their evaluation, our chief executive officer and chief financial officer has concluded that our disclosure controls and procedures are not effective in timely alerting him to material information relating to the Company required to be included in our periodic reports filed with the SEC as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, 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. Management necessarily applied its judgment in assessing the benefits of controls 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 been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Our internal control over financial reporting was not effective for the following reasons:
| a) | The deficiency was identified as the Company's limited segregation of duties amongst the Company's employees with respect to the Company's control activities. This deficiency is the result of the Company's limited number of employees. This deficiency may affect management's ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures. |
| b) | The deficiency was identified in respect to the Company's Board of Directors. This deficiency is the result of the Company's absence of external board members. This deficiency may give the impression to the investors that the board is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the organization of the Board of Directors. |
17
(b) Management’s Report On Internal Control Over Financial Reporting. It is management’s responsibilities to establish and maintain adequate internal controls over the Company’s financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers and effected by the issuer’s management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management of the issuer; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.
As of the end of the period covered by the Annual Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
(c) Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROL
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal 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 on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost effective internal control system, financial reporting misstatements due to error or fraud may occur and may not be detected on a timely basis.
Item 9B. Other Information.
None.
18
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and positions of our directors and executive officers and of December 31, 2008:
| Name | Age | Position |
| Eric Brown | 45 | Chairman, CEO, CFO and Director |
| Ian Brown | 42 | Secretary, Treasurer and Director |
The following sets forth biographical information concerning our directors and executive officers for at least the past five years:
Eric S. Brown, President/Director
Eric started in the parking industry in 1979 working in his family business. Eric has been responsible for all aspects of the business from parking attendant, daily operations, marketing, financing and consulting. He has owned and operated over 60 parking locations, along with two gas stations. This experience has allowed him to consummate numerous deals with some of the largest parking companies in the world. Eric is responsible for acquisitions, financing, design and construction for all new locations. He oversees the total financial planning and management for each location as well as growth and expansion.
Ian D. Brown Secretary/Treasurer/Director
Ian has over twenty (20) years of experience in the parking industry. Ian has extensive management experience, which he acquired working in the family-owned parking business as in college. Ian has owned and operated over sixty (60) parking locations, along with two gas stations. Due to this experience, Ian oversees all operations from rate structures to growth expansions. Ian monitors all employees and supervisors and trains the staff. He is actively involved with the day-to-day operations and handles payroll duties. He reviews potential acquisitions and coordinates, with management, the planning and preparation to open new facilities.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on the review of copies of such reports furnished to the Company during the year ended December 31, 2008, all Section 16(a) filing requirements applicable to the Company's officers, directors and greater than ten percent shareholders were complied with.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or charged by the Company to become directors or executive officers, except that Eric Brown and Ian Brown are brothers.
Involvement in Legal Proceedings
To the best of the Company's knowledge, during the past five years, none of the following occurred with respect to a present or former director or executive officer of the Company: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
On December 1, 2004, the Company adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For purposes of this Item, the term “Code of Ethics” means written standards that are reasonably designed to deter wrongdoing and to promote: Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely, and understandable disclosure in reports and documents that the issuer files with, or submits to, the SEC and in other public communications made by the Company; compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the code to the board of directors or another appropriate person or persons; and, accountability for adherence to the code. A copy of the Code of Ethics can be found as Exhibit 99 to our Form 10-KSB filed for the year ended December 31, 2004.
COMPENSATION SUMMARY
The following table sets forth the compensation earned by our Chief Executive Officer and all of our other executive officers who earned in excess of $100,000 in salary and bonus (collectively the "Named Executives") for services rendered to us during the fiscal year.
SUMMARY COMPENSATION TABLE (1)
| Long term compensation | |||
| Number of securities | |||
| Name and Position | Year | Salary (2) | Underlying options (3) |
| Eric Brown, CEO | 2008 | $50,000 | - |
| Eric Brown, CEO | 2007 | $30,000 | - |
(1) The columns for "Bonus", "Other Annual Compensation", "Restricted Stock Awards", "LTP Payouts" and "All other Compensation" have been omitted because there is no such compensation to be reported.
(2) Accrued but not paid.
(3) Represents options granted to such executives.
The following table sets forth certain information concerning options granted to the named executives.
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 2008
None
COMPENSATION OF DIRECTORS
None
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
No officers or directors have employment agreements with the Company.
The following table sets forth, as of April 10, 2009, the ownership of the Company’s common stock and Series B Preferred stock by (i) each of our directors and executive officers; (ii) all of our executive officers and directors as a group; and (iii) all persons known by us to beneficially own more than 5% of our common stock. Unless otherwise indicated in the footnotes to the table, (1) the following individuals have sole voting and sole investment control with respect to the shares they beneficially own and (2) the address of each beneficial owner listed below is c/o the Company, 777 South Flagler Dr., Suite 800, West Tower, West Palm Beach, Florida, 33401.
Name and Address of Beneficial Owner | Shares of Common Stock (1) | Percentage Ownership of Shares of Common Stock (2) | Shares of Series B Preferred Stock (3) | Voting Power of Shares of Preferred Stock (3)(4) |
Executive Officers and Directors | ||||
David Coriaty | 0 | 0 | 160,000 | 17.8% |
Tony De Risi | 0 | 0 | 80,000 | 8.9% |
Edward Sebastiano | 0 | 0 | 80,000 | 8.9% |
| Mark Spanakos | 0 | 0 | 80,000 | 8.9% |
| All Executive Officers and Directors as a group (4 persons) | 0 | 0 | 400,000 | 44.5% |
5% Stockholders | ||||
| CLR Associates, Inc. | 0 | 0 | 60,000 | 6.7% |
| All Executive Officers, Directors and 5% Stockholders as a group (five persons) | 0 | 0% | 460,000 | 51.2% |
(1) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule 13d-3(d), shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed.
(2) Based upon 30,000,000 shares of Common Stock issued and outstanding as of February 20, 2009.
(3) Based upon 599,288 shares of Series B Preferred Stock issued and outstanding as of February 20, 2009. Shares of Series B Preferred Stock can be converted, at any time, into 100 shares of common stock and are entitled to vote in all matters on an as-converted basis. Since each shares of Series B Preferred Stock can be voted on an as-converted basis, the effective voting power of each individual listed is shown.
(4) Shares of Series B Preferred Stock are not subject to the Company’s announced 1-for-6 reverse common stock split which has no yet been effectuated. Immediately upon the effectuation of the anticipated 1-for 6 reverse stock split, each shares of Series B Preferred stock then issued and outstanding will be automatically converted into 100 shares of common stock. On a post-reverse 1-for 6 stock split basis, assuming that no additional shares of common stock have been issued and assuming no prior conversions of shares of Series B Preferred Stock into common stock, the voting power shown for each individual will increase by approximately 17.6%.
Item 12: Certain Relationships and Related Transactions
As of December 31, 2008, the Company was indebted to Eric Brown, our President in the amount of $50,000 representing salary which is accrued but unpaid.
The following documents are filed as a part of this Report:
1. Financial Statements
The following consolidated financial statements of Explorations Group, Inc., and Subsidiaries, and the Independent Auditors' Reports issued thereon, are incorporated by reference in Part II, Item 7:
Report of Independent Certified Public Accountants
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statement of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Exhibits
The following exhibits are filed as part of, or incorporated by reference into this Report:
| Exhibit | Contents |
| 31 | Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934 |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934 |
3. Reports on Form 8-K
None.
Item 14. Principal Accountant Fees and Services
AUDIT AND NON-AUDIT FEES
The following presents fees for professional audit services rendered by Liebman Goldberg & Drogin, LLP for the audit of the Company’s annual financial statements for 2008 and 2007.
| 2008 | 2007 | |
| Audit fees | $21,850 | $13,000 |
| All other fees | - | - |
| Audit related | - | - |
| Other non-audit | $1,800 | - |
| Services | - | - |
| Total all other fees | - | - |
| Total | $23,650 | $13,000 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EXPLORATIONS GROUP, INC.
(Registrant)
By /s/ David Coriaty
------------------------------
(David Coriaty, Chief Executive
Officer, Chief Financial Officer,
President and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated below.
--------------------------------------------------------------------------------------------------------------
Signature Title Date
--------------------------------------------------------------------------------------------------------------
/s/ David Coriaty Chief Executive Officer, April 15, 2009
------------------------------------
Chief Financial Officer
(David Coriaty)
------------------------------------
President and Director
OTheR DIRECTORS
EXHIBIT INDEX
| Exhibit | Contents |
| 31 | Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934 |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934 |
19