UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
Amendment No. 2
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 001-33933
EXPLORE ANYWHERE HOLDING CORP.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0319470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6150 West 200 South, #3, Wabash, Indiana 46992
(Address of principal executive offices)
877.539.5644
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [X] YES [ ] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. YES [ ] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
31,923,750 common shares issued and outstanding as of June 15, 2011
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
2
EXPLORE ANYWHERE HOLDING CORPORATION
A DEVELOPMENT STAGE COMPANY
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
Page(s)
-------
Index 3
Balance Sheets 4
Statement of Operations 5
Statements of Cash Flows 6
Notes to the Financial Statements 7
3
EXPLORE ANYWHERE HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010
UNAUDITED
Explore Anywhere
Explore Anywhere Holding Corp.
Holding Corp. Consolidated
December 31, March 31,
2010 2011
---------- ----------
(Audited) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ 5,495
---------- ----------
TOTAL CURRENT ASSETS -- 5,495
---------- ----------
Non Current Assets
Office Equipment -- 29,818
Furniture and Fixtures -- 14,365
Acquisition-related intangible assets -- 20,000
Goodwill -- 1,321,884
---------- ----------
-- 1,386,067
Less Adjustments and Depreciation
Impairment of intangible assets -- (20,000)
Impairment of Goodwill -- (1,299,884)
Accumulated Depreciation -- (23,657)
-- (1,343,541)
---------- ----------
TOTAL NON-CURRENT ASSETS -- 42,526
---------- ----------
TOTAL ASSETS $ -- $ 48,021
========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,022 $ 49,011
Accrued Interest -- 28,804
Convertible Note payable -- 75,000
Warrant Liabilities -- 48,165
Loan from outside lenders -- 100,000
Loan from shareholders 12,100 230
---------- ----------
TOTAL LIABILITIES (ALL CURRENT) 14,122 301,210
STOCKHOLDERS' (DEFICIT) EQUITY
Common stock, $.001 par value; 300,000,000 shares authorized,
31,923,750 shares issued and outstanding at March 31, 2011,
262,500,000 shares issued and outstanding at December 31, 2010 262,500 31,924
Additional paid-in capital 545,708 1,991,996
Accumulated deficit (822,330) (2,277,109)
---------- ----------
TOTAL STOCKHOLDERS' DEFICIT (14,122) (253,189)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -- $ 48,021
========== ==========
See accompanying notes to financial statements
4
EXPLORE ANYWHERE HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 3 MONTHS ENDED MARCH 31, 2011 AND YEAR ENDED DECEMBER 31, 2010
UNAUDITED
Explore Anywhere
Explore Anywhere Holding Corp.
Holding Corp. Consolidated
The Year Three Months
Ended Ended
December 31, March 31,
2010 2011
------------ ------------
(Audited) (Unaudited)
Income
Revenues $ -- $ 1,796
------------ ------------
Total Income -- 1,796
Cost of Sales -- --
------------ ------------
Total Cost of Sales -- --
Gross Margin -- 1,796
------------ ------------
Operating Expenses
General and administrative 15,616 69,316
Impairment loss on acquisition related
intangible assets -- 20,000
Impairment loss on goodwill 1,299,884
------------ ------------
Total general and administrative 15,616 1,389,200
Selling expense -- 6,471
------------
Total Operating Expenses 15,616 1,395,671
------------ ------------
Total Operating Income / (Loss) (15,616) (1,393,875)
Interestexpense -- (60,904)
------------ ------------
Total other income/expense -- (60,904)
------------ ------------
Net Income / (Loss) $ (15,616 $ (1,454,778)
============ ============
Net Income (Loss) Per Share $ (0.00) $ (0.01)
============ ============
Weighted Average Number of Shares Outstanding 262,500,000 131,985,333
============ ============
See accompanying notes to financial statements
5
EXPLORE ANYWHERE HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 3 MONTHS ENDED MARCH 31, 2011 AND YEAR ENDED DECEMBER 31, 2010
UNAUDITED
Three Months Ended March 31,
2011 2010
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (1,454,778) $ --
Adjustments to reconcile net income to net cash used
by operating activities:
Depreciation 1,657 --
Impairment loss on goodwill 1,299,884 --
Impairment loss on acquisition related intangible assets 20,000 --
Fair value of common stock warrants 48,165 --
Changes in operating assets and liabilities:
Accounts payable 8,584 --
Accrued expense and other liabilities (11,220) --
Accrued Interest 12,739 --
------------ ------------
NET CASH USED BY OPERATING ACTIVITIES (74,970) --
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible promissory notes 75,000 --
Repayment of promissory notes (12,130) --
Repayment of shareholders loan (35,000) --
Issuance of common stocks 52,595 --
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 80,465 --
Net Increase (Decrease) in Cash and cash equivalents 5,496 --
CASH AT BEGINNING OF PERIOD -- 1,494
------------ ------------
CASH AT END OF PERIOD $ 5,496 $ 1,494
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid for Interest $ -- $ --
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Forgiven Note Payable in connection with the transfer of common stock $ -- $ 72,791
See accompanying notes to financial statements
6
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
ExploreAnywhere, Inc. ("Company"), formerly known as ExploreAnywhere Software,
LLC, is a privately held corporation incorporated in the state of Nevada, United
States. Originally founded in August of 2002, the Company specializes in
computer monitoring solutions for parents, corporations, and educational
facilities.
On November 6, 2007, the Company filed Articles of Conversion from
ExploreAnywhere Software, LLC a New Hampshire Jurisdiction to ExploreAnywhere,
Inc. a Nevada Corporation. A plan of conversion has been adopted by the
constituent entity in compliance with law of the Jurisdiction governing the
constituent entity.
On December 20, 2010, the Company entered into a Share Exchange Agreement with
Explore Anywhere Holding Corporation (formerly known as PorFavor Corporation) a
publicly traded Nevada Corporation, whereby Explore Anywhere Holding Corporation
will acquire from the Shareholders all the issued and outstanding shares of
ExploreAnywhere, Inc. in exchange for 2,613,750 shares of Explore Anywhere
Holding Corporation's common stock. On February 4, 2011, the Company completed
this transaction, and the Company became a wholly-owned subsidiary of Explore
Anywhere Holding Corporation. Explore Anywhere Holding Corporation intends to
file the Company's last two fiscal years of audited financial statements and pro
forma financial statement showing the effects of the acquisition and other
information regarding the Company on a Form 8-K. Explore Anywhere Holding
Corporation signed a waiver agreeing to complete the merger while the
independent audit of ExploreAnywhere, Inc. is being completed. Management
anticipates completing the audit, on schedule, by the end of March.
BUSINESS COMBINATION
On February 4, 2011, Explore Anywhere Holding Corporation (formerly known as
PorFavor Corporation), a Nevada corporation (Pink Sheets:PFVR.pk - News),
completed the acquisition of the assets, including the website, intellectual
property, core technologies such as IP, R&D, and customer relations, etc and
assumed the liabilities from Explore Anywhere, Inc. In connection with the
acquisition, the Company issued 2,613,750 shares of its common stock, with a
fair market value of $1,163119. For details of the acquisition refer to Note E
on "Business Combinations," of Notes to Consolidated Financial Statements below
for detail.
Effective February 9, 2011, the Board of Directors elected Mr. Oliver Nelson as
CEO of the Company.
BASIS OF CONSOLIDATION AND PRESENTATION
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 at the date of the financial statements and the reported amounts of
revenue and expenses during the reported period. Actual results could differ
from those estimates. Management further acknowledges that it is solely
responsible for adopting sound accounting practices, establishing and
maintaining a system of internal accounting control and preventing and detecting
fraud. The Company's system of internal accounting control is designed to
assure, among other items, that (1) recorded transactions are valid; (2) all
valid transactions are recorded and (3) transactions are recorded in the period
in a timely manner to produce financial statements which present fairly the
financial condition, results of operations and cash flows of the company for the
respective periods being presented. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations. However, the Company believes
that the disclosures are adequate to make the information presented not
misleading. These Condensed Consolidated Financial Statements should be read in
conjunction with the stand alone Financial Statements and the notes thereto, of
PorFavor Corporation and ExploreAnywhere Inc. for the year ended December 31,
2010.
7
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
USE OF ESTIMATES
The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from these estimates.
REVENUE RECOGNITION
For internet sale, the Company recognizes revenue upon the online distribution
of products to customers. There is no technical support or warranty associated
with the sale of its online software. If the customers have any problems with
its software that cannot be easily resolved, the Company will fully refund it.
For retail sale, the Company recognizes revenue upon the shipment of products to
retailer and records provisions for discounts to customers based on the terms of
sale in the same period in which the related sales are recorded.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost, less accumulated depreciation and
amortization. Major improvements are capitalized, while repair and maintenance
are expensed when incurred. Renewals and betterments that materially extend the
life of the assets are capitalized. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is reflected in income for the period.
Depreciation is computed for financial statement purposes on a straight-line
basis over estimated useful lives of the related assets. The estimated useful
lives of depreciable assets are:
Estimated
Useful Lives
------------
Office Equipment 5-10 years
Furniture 5-7 years
Shop tools 5-7 years
Vehicles 5-10 years
For federal income tax purposes, depreciation is computed under the modified
accelerated cost recovery system. For book purposes, depreciation is computed
under the straight-line method.
GOODWILL AND ACQUISITION RELATED INTANGIBLE ASSETS
The Company allocates the purchase price of acquired companies to the tangible
and intangible assets acquired and liabilities assumed based on their estimated
fair values. Such allocations require management to make significant estimates
and assumptions, especially with respect to intangible assets.
The Company reviews the carrying values of long-lived assets whenever events and
circumstances, such as reductions in demand, lower projections of profitability,
significant changes in the manner of our use of acquired assets, or significant
negative industry or economic trends, indicate that the net book value of an
asset may not be recovered through expected undiscounted future cash flows from
its use and eventual disposition. If this review indicates that there is
impairment, the impaired asset is written down to its fair value, which is
typically calculated using: (i) quoted market prices and/or (ii) discounted
expected future cash flows. The Company estimates regarding future anticipated
revenue and cash flows, the remaining economic life of the products and
technologies, or both, may differ from those used to assess the recoverability
of assets. In that event, impairment charges or shortened useful lives of
certain long-lived assets may be required, resulting in a reduction in net
income or an increase to net loss in the period when such determinations are
made.
Critical estimates in valuing certain intangible assets include, but are not
limited to: future expected cash flows from customer contracts, customer lists,
distribution agreements, and acquired developed technologies and patents and the
8
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
expected costs to develop the in-process research and development into
commercially viable products and estimating cash flows from the projects when
completed. Management's estimates of fair value are based upon assumptions
believed to be reasonable, but which are inherently uncertain and unpredictable.
During the year that ended March 31, 2011, management recognized that the
existing core technology that the Company purchased from ExploreAnywhere, Inc.
in February 2011 was not designed to be used in newly evolving major Internet
applications such as Facebook, Twitter, and others. Moreover, its competitors
have many more features than the existing software developed by ExploreAnywhere,
Inc. Also, the Company's new software products, currently under development, are
not yet ready for market and have missed expected software release dates. Since
there is no certainty or guarantee that development can be completed or that
there will be market acceptance if ever completed, no value can be attributed to
these new products under development. As a result, the management recognized
that the existing software has highly limited potential for future revenues and
that no value can be attributed to the new products under development because
there is no certainty or guarantee that development can be completed or that
there will be market acceptance if ever completed. The Company recognized a
$20,000 "Impairment loss on acquisition-related intangible assets" at
ExploreAnywhere, Inc., under Selling, general and administrative in the
Consolidated Statement of Operations for the quarter that ended March 31, 2011.
Refer to Note J, "Goodwill and Intangible Assets," of Notes to Consolidated
Financial Statements for details.
Goodwill acquired during the quarter that ended March 31, 2011 represents the
goodwill of $1,321,884 related to the acquisition of the business from
ExploreAnywhere, Inc. Refer to Note E "Business Combination" of the Notes to
Consolidated Financial Statements for details.
Goodwill is measured and tested for impairment on an annual basis in the fourth
quarter of each year in accordance with the Accounting Standards Codification
No. 350 ("ASC 350"), Intangibles-Goodwill and Other, or more frequently if we
believe indicators of impairment exist. Triggering events for impairment reviews
may include adverse industry or economic trends, restructuring actions, lower
projections of profitability, or a sustained decline in market capitalization.
The performance of the test involves a two-step process. The first step requires
comparing the fair value of the each of our reporting units to its net book
value, including goodwill. The Company has one reporting unit. A potential
impairment exists if the fair value of the reporting unit is lower than its net
book value. The second step of the process is only performed if a potential
impairment exists, and it involves determining the difference between the fair
values of the reporting unit's net assets other than goodwill to the fair value
of the reporting unit and if the difference is less than the net book value of
goodwill, impairment exists and is recorded.
During the quarter year that ended March 31, 2011, the Company evaluated the
viability of the software developed by ExploreAnywhere, Inc. The Company's
decision to recognize only the nominal value as to the existing software
developed by ExploreAnywhere, Inc. due to the lack of competition in the market,
lack of demand, and its lack of design for use in major Internet applications
such as Facebook, Twitterand others. Furthermore, management recognized that no
future value or revenue is certain or can be guaranteed to be gained from the
software being currently developed by ExploreAnywhere, Inc. The Company
considered this change as a triggering event and performed an interim impairment
test of goodwill in accordance with ASC 350 as of March 31, 2011. Based on the
results of the first step of the goodwill analysis, it was determined that
ExploreAnywhere, Inc.'s net book value exceeded its estimated fair value as
there is only highly limited potential for future revenue generated from the
ExploreAnywhere, Inc.'s software. As a result, the Company performed the second
step of the impairment test to determine the implied fair value of goodwill.
Under step two, the difference between the estimated fair value of
ExploreAnywhere, Inc. and the sum of the fair value of the identified net assets
result in the residual value of goodwill. The results of step two of the
goodwill analysis indicated that only $22,000 implied value attributable to
goodwill and accordingly, the Company recognized a $1,299,884 "Impairment Loss
on Goodwill" under General and Administrative in the Consolidated Statements of
Operations for the quarter ended March 31, 2011. Refer to Note J "Goodwill and
Intangible Assets" of the Notes to Consolidated Financial Statements for
details.
9
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments, primarily money
market mutual funds, with maturities of three months or less at the time of
purchase.
ACCOUNTS RECEIVABLE
The Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of the Company's customers to make payments. The
Company periodically reviews these allowances, including an analysis of the
customers' payment history and information regarding the customers'
creditworthiness. There is no Accounts Receivable as of March 31, 2011.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company maintains allowances for doubtful accounts relating to estimated
losses resulting from customers being unable to make required payments.
Allowances for doubtful accounts are based on historical experience and known
factors regarding specific customers and the industries in which those customers
operate. If the financial condition of the Company's customers were to
deteriorate, resulting in their ability to make payments being impaired,
additional allowances would be required.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Currently, the Company's financial instruments consist principally of cash and
cash equivalents and accounts payable. Pursuant to ASC 820, FAIR VALUE
MEASUREMENTS ("ASC 820"), the fair value of its cash equivalents is determined
based on "Level 1" inputs, which consist of quoted prices in active markets for
identical assets. The Company believes that the recorded values of all of its
other financial instruments approximate their recorded values because of their
nature and respective maturity dates or durations.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents and accounts
receivable. The Company maintains cash and cash equivalents with high quality
financial institutions.
INVENTORY
Inventories are computed using the lower of cost or market, which approximates
actual cost on a first-in-first-out basis. The Company writes down its inventory
value for estimated obsolescence equal to the difference between the cost of
inventory and the estimated market value based upon assumptions about future
demand and market conditions. These factors are impacted by market and economic
conditions, technology changes, new product introductions and changes in
strategic direction and require estimates that may include uncertain elements.
Actual demand may differ from forecasted demand, and such differences may have a
material effect on recorded inventory values. There was no inventory as of March
31, 2011.
COST OF GOODS SOLD
Cost of Goods Sold includes all software consulting costs, packaging & cases,
licensing, and customer charge back, and those indirect costs related to
software production. Selling, general and administrative costs are charged to
expense as incurred.
ADVERTISING
Advertising expenses are recorded as general and administrative expenses as
incurred. These expenses amounted to $6,471 for the quarter ended March 31,
2011.
RESEARCH AND DEVELOPMENT
The Company capitalizes any development or programmer fees according to ASC
985-20 when the software development stage reaches the feasibility period. When
the software products are ready for sale in the market, the Company expenses the
associated development or programmer fees under Research and Development
reflected under the statement of operations in our financial statements.
10
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
STOCKHOLDERS' EQUITY
The Company had authorized three hundred Million 300,000,000 shares of common
stock with a par value of $0.001 and 31,923,750 shares of common stock have been
issued and total outstanding as of March 31, 2011. See Note I, "Common Stock" of
Notes to Consolidated Financial Statements for detail.
WARRANTS LIABILITIES
The Company has issued warrants to purchase shares of its common stock in
connection with convertible notes. The Company records a debt discount related
to the warrants upon issuance, and amortizes this debt discount over the life of
the notes. In addition, the Company remeasures the warrants at each reporting
period to record their fair value. See Note H, "Notes Payable" of Notes to
Consolidated Financial Statements for detail.
INCOME TAXES
The Company recognizes the tax effects of transactions in the year in which such
transactions enter into the determination of net income, regardless of when
reported for tax purposes.
NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding for the reporting
period. Diluted net income (loss) per share is computed by dividing net income
by the combination of dilutive common share equivalents, comprised of shares
issuable under the Company's stock-based compensation plans and the weighted
average number of shares of common stock outstanding during the reporting
period. Dilutive common share equivalents include the dilutive effect of
in-the-money options to purchase shares, which is calculated based on the
average share price for each period using the treasury stock method. Under the
treasury stock method, the exercise price of an option, the amount of
compensation cost, if any, for future service that the Company has not yet
recognized, and the amount of estimated tax benefits that would be recorded in
paid-in capital, if any, when the option is exercised are assumed to be used to
repurchase shares in the current period.
RECLASSIFICATIONS
Certain financial statement items have been reclassified to conform to the
current year's presentation. These reclassifications had no impact on previously
reported net loss.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2010, the FASB updated its guidance related to when to perform step
two of the goodwill impairment test for reporting units with zero or negative
carrying amounts. The updated guidance requires that for any reporting unit with
a zero or negative carrying amount, an entity is required to perform Step 2 of
the goodwill impairment test if it is more likely than not that a goodwill
impairment exists. In determining whether it is more likely than not that
goodwill impairment exists, an entity should consider whether there are any
adverse qualitative factors indicating that impairment may exist. The updated
guidance is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2010. The Company's adoption did not have a
material impact on its consolidated results of operations or financial
condition.
In December 2010, the FASB updated its guidance related to disclosure of
supplementary pro forma information for business combinations. The updated
guidance requires that if comparative financial statements are presented, the
pro forma revenue and earnings of the combined entity for the comparable prior
reporting period should be reported as though the acquisition date for all
business combinations that occurred during the current year had been as of the
beginning of the comparable prior annual reporting period only. The updated
guidance is effective prospectively for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010, with early adoption permitted.
The Company's adoption did not have an impact on its consolidated results of
operations or financial condition as the updated guidance only affects
disclosures related to future business combinations.
11
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
In October 2009, the Financial Accounting Standards Board ("FASB") amended the
accounting standards for revenue recognition to remove tangible products
containing software components and non-software components that function
together to deliver the product's essential functionality from the scope of
industry specific software revenue recognition guidance. In October 2009, the
FASB also amended the standards for multiple deliverable revenue arrangements
to:
(i) provide updated guidance on whether multiple deliverables exist, how
the deliverables in an arrangement should be separated, and how the
arrangement consideration should be allocated among its elements;
(ii) require an entity to allocate the revenue using estimated selling
prices (ESP) of the deliverables if there is no vendor specific
objective evidence (VSOE) or third party evidence of selling price
(TPE); and
(iii) Eliminate the use of the residual method and require an entity to
allocate revenue using the relative selling price method.
This new accounting guidance became applicable to the Company beginning the
first quarter of its year 2011. The Company adopted this guidance for
transactions that were entered into or materially modified on or after January
1, 2011 using the prospective basis of adoption.
NOTE C - BALANCE SHEET COMPONENTS
The following table provides details of selected balance sheet components:
PROPERTY AND EQUIPMENT, NET:
The carrying values of fixed assets as of March 31, 2011 were as follows:
Office Equipment $ 29,818
Furniture and Fixtures 14,365
--------
44,183
--------
Less Adjustments and Depreciation
Accumulated Depreciation (23,657)
--------
(20,526)
========
Depreciation expense is $1, 657 for the three months ended March 31, 2011.
NOTE D - FAIR VALUE MEASUREMENTS
The Company follows applicable accounting guidance for its fair value
measurements. The guidance establishes a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument's
categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. The guidance
establishes three levels of inputs that may be used to measure fair value:
LEVEL 1 - Quoted prices in active markets for identical assets or liabilities.
LEVEL 2 - Observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets with insufficient volume
or infrequent transactions (less active markets); or model-derived valuations in
which all significant inputs are observable or can be derived principally from
or corroborated by observable market data substantially for the full term of the
assets or liabilities.
12
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
LEVEL 3 - Unobservable inputs to the valuation methodology that is significant
to the measurement of fair value of assets or liabilities.
DETERMINATION OF FAIR VALUE
Cash equivalents are classified within Level 1 of the fair value hierarchy
because they are valued using quoted market prices.
ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS
As of March 31, 2011, none of the Company's cash balances were invested in
financial instruments. The following table presents the Company's financial
assets and liabilities that are measured at fair value on a recurring basis
which were comprised of the following types of instruments as of March 31, 2011:
As of March 31, 2011
Fair Value Level 1 Level 2 Level 3
---------- ------- ------- -------
Cash and cash equivalents:
Cash(1) $5,495 $5,495
----------
(1) Included in Cash and cash equivalents on the Company's Condensed
Consolidated Balance Sheets.
Cash equivalents are classified within Level 1 of the fair value hierarchy
because they are valued using quoted market prices. The types of instruments
valued based on quoted market prices in active markets include money market
securities. The Company reviewed its financial and non-financial assets and
liabilities for the three months ended that March 31, 2011 and concluded that
there were no material impairment charges during each of these periods.
NOTE E - BUSINESS COMBINATIONS
BUSINESS COMBINATION
On February 4, 2011, the Company acquired ExploreAnywhere, Inc., a
privately-held company based in Boston, MA that designed and developed a
software monitoring product ("Spybuddy"), which can be used in the fourth
quarter of 2011. The acquisition of Explore is expected to expand and enhance
the Company to increase the market share of the software security sector. In
connection with the acquisition, the Company issued 2,613,750 shares of its
common stock at $0.445, representing 100% of its outstanding common stock, for a
total purchase price of approximately $1,163,120. The goodwill from the
acquisition is deductible for tax purposes. The purchase price was allocated to
tangible and intangible assets and liabilities assumed, based on their estimated
fair values as follows:
Tangible assets $ 22,183
Goodwill 1,321,884
Intangible assets 20,000
Liabilities assumed (200,947
----------
$1,163,120
==========
13
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
The unaudited pro forma financial information in the table below summarizes the
combined results of operations for the Company and ExploreAnywhere as though the
companies were combined as of the beginning of year 2011. The pro forma
financial information for all periods presented also includes the business
combination accounting effects resulting from the acquisition, including
amortization charges from acquired intangible assets, adjustments to interest
expenses for certain borrowings and exclusion of acquisition-related expenses
and the related tax effects as though the companies were combined as of the
beginning of the year 2011. The pro forma financial information as presented
below is for informational purposes only and is not indicative of the results of
operations that would have been achieved if the acquisition had taken place at
the beginning of the year 2011.
(Unaudited)
Three Months Ended
March 31,
2011 2010
----------- -----------
Total revenue $ 1,796 0
Net loss (1,454,778) 0
Basic and diluted earnings per share (0.01) 0
NOTE F - INCOME TAXES
The Company accounts for its income taxes in accordance with ASC 740, Accounting
for Income Taxes, which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date.
PROVISION FOR INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial statement
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of March 31, 2011 are as
follows:
2011
----------
Deferred tax assets:
Net operating loss $1,454,778
Income tax rate 34%
----------
494,624
Less valuation allowance (494,624)
----------
$ --
==========
Through December 31, 2009, a valuation allowance has been recorded to offset the
deferred tax assets, including those related to the net operating losses. During
the three months ended March 31, 2011, the Company determined that it was more
likely than not that it would not realize its deferred tax assets and a
valuation allowance was recorded. At March 31, 2011, the Company had
approximately $1,454,778 of federal and state net operating losses respectively.
Reconciliations of the U.S. federal statutory rate to the actual tax rate
follows for the three months ended March 31, 2011 is as follows:
14
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
U.S. Federal statutory income tax rate 34%
State tax - net of federal benefit 0%
---
34%
Increase in valuation allowance (34%)
---
Effective tax 0%
===
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry-forwards for Federal income tax reporting purposes are
subject to annual limitations.
NOTE G - RELATED PARTY TRANSACTIONS
On November 6, 2007, the Company filed Articles of Conversion from
ExploreAnywhere Software, LLC, New Hampshire Jurisdiction, to ExploreAnywhere,
Inc., Nevada Corporation. A plan of conversion has been adopted by the
constituent entity in compliance with law of the Jurisdiction governing the
constituent entity.
On December 19, 2008, Bryan Hammond, an officer of the Company, obtain American
Express Gold card for operating expenses throughout years of operations. The
credit card had a balance of $270 at March 31, 2011.
On June 16, 2009, the Company has a related-party loan from Mark Hammond, an
officer of the Company, with non-interest bearing totaled $230 as of March 31,
2011 and December 31, 2010. There was no formal agreement for these unsecured
advances which are due on demand.
NOTE H - NOTES PAYABLE
On July 6, 2007, the Company has an unsecured convertible promissory note from
Amalfi Coast Capital in the amount of $50,000 at 8% simple annual interest rate
and at a conversion price of $0.05 per share. The principal balance with accrued
interest of this note shall originally be payable on February 6, 2009. As of
March 31, 2011, the outstanding balance with accrued interest was $70,910. No
interest was paid as of March 31, 2011.
On March 9, 2010, the Company has an unsecured promissory note in the amount of
$7,500 at 8% simple annual interest rate. The principal balance with accrued
interest of this note shall be payable on March 31, 2011. As of March 31, 2011,
the outstanding balance with accrued interest was $7,648. No interest was paid
as of March 31, 2011.
On March 23, 2010, the Company has an unsecured convertible promissory note from
Amalfi Coast Capital in the amount of $25,000 at 8% simple annual interest rate
and at a conversion price of $0.05 per share. The principal balance with accrued
interest of this note shall be payable on March 31, 2011. As of March 31, 2011,
the outstanding balance with accrued interest was $25,493. No interest was paid
as of March 31, 2011.
On December 3, 2010, the Company has an unsecured promissory note in the amount
of $10,000 at 8% simple annual interest rate. The principal balance with accrued
interest of this note shall be payable on March 31, 2011. As of March 31, 2011,
the outstanding balance with accrued interest was $10, 197. No interest was paid
as of March 31, 2011.
On December 29, 2010, the Company has an unsecured promissory note in the amount
of $7,500 at 8% simple annual interest rate. The principal balance with accrued
interest of this note shall be payable on March 31, 2011. As of March 31, 2011,
the outstanding balance with accrued interest was $7, 648. No interest was paid
as of March 31, 2011
15
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
On January 24, 2011, the Company has an unsecured convertible promissory note
from Amalfi Coast Capital in the amount of $10,000 at 8% simple annual interest
rate and at a conversion price of $0.05 per share. The principal balance with
accrued interest of this note shall be payable on January 24, 2012. As of March
31, 2011, the outstanding balance with accrued interest was $10, 145. No
interest was paid as of March 31, 2011.
On January 28, 2011, the Company has an unsecured convertible promissory note
from Amalfi Coast Capital in the amount of $25,000 at 8% simple annual interest
rate and at a conversion price of $0.05 per share. The principal balance with
accrued interest of this note shall be payable on January 28, 2012. As of March
31, 2011, the outstanding balance with accrued interest was $25, 340. No
interest was paid as of March 31, 2011.
On February 9, 2011, the Company has an unsecured convertible promissory note
from Amalfi Coast Capital in the amount of $25,000 at 8% simple annual interest
rate and at a conversion price of $0.05 per share. The principal balance with
accrued interest of this note shall be payable on February 09, 2012. As of March
31, 2011, the outstanding balance with accrued interest was $25, 274. No
interest was paid as of March 31, 2011.
On March 17, 2011, the Company has an unsecured convertible promissory note from
Amalfi Coast Capital in the amount of $15,000 at 8% simple annual interest rate.
The principal balance with accrued interest of this note shall be payable on
March 17, 2012. As of March 31, 2011, the outstanding balance with accrued
interest was $15, 046. No interest was paid as of March 31, 2011.
EXPLORE ANYWHERE HOLDING CORP., CONVERTIBLE NOTE.
On January 24, 2011, the Company had unsecured convertible promissory notes from
Amalfi Coast Capital in the total amount of $75,000 at 8% simple annual interest
rate with a conversion price of $.05 per share. At the time the convertible
promissory notes were issued, the stock value of the current fair market valued
greater than the proceeds of the convertible promissory notes. Accordingly, we
recorded a current fair market value of $0.26 per share in January 24, 2011 and
$0.24 per share on March 31, 2011, which are greater than the convertible
promissory note with a conversion option of $0.05 per share.
CONVERSION RIGHTS:
Conversion of the notes is at the election of the Note holder upon the
occurrence of an Event of Default. The holder of the note shall have the option
to convert the outstanding principal amount and all other sums payable under the
Note into fully paid and non-assessable shares of Maker's common stock by
dividing the principal amount under such Note surrendered for conversion by the
conversion price in effect at such time. Events of Default are defined to be (1)
failure to make required payments (failure by the Company to pay the principal
of the Note within five (5) business days following the date when due), (2)
Voluntary Bankruptcy, and (3) Involuntary Bankruptcy.
As of January 24, 2011 the fair value of the shares underlying the convertible
promissory note to Explore Anywhere Holding during 2011 was estimated to be
$75,000 using the Black-Scholes pricing model with a volatility of 0.00% and the
following assumptions: no dividend yield, an exercise price of $0.05 per share,
a $0.26 current price of the underlying per share as of February 24, 2011, and a
risk-free interest rate of 0.00%. As of March 31, 2011, the fair value of the
shares underlying the convertible promissory note issued to Explore Anywhere
Holding was estimated to be a total of $75,000 using the Black-Scholes pricing
model with a volatility of 0.00% and the following assumptions: no dividend
yield, an exercise price of $0.05 per share, a $0.24 current price of the
underlying per share, and a risk-free interest rate of 0.00%. In accordance with
ASC 470-20, DEBT WITH CONVERSIONS AND OTHER OPTIONS, the proceeds from the notes
were allocated based on the relative fair values of the notes without the
warrants issued in conjunction with the notes and the value of the warrants
themselves at the time of issuance. Additionally, as a result of issuing the
warrants with the convertible promissory notes, a beneficial conversion charge
was recorded as a debt discount on each note reflecting the incremental
intrinsic value benefit totaling $75,000 at the time of each issuance provided
to ExploreAnywhere Holding in connection with the Convertible Note up to and
including March 31, 2011. The debt discounts are amortized as interest expense
over the life of the notes. The Company recorded interest expense in the amounts
of $48,165 and $0 for the three months that ended March 31, 2011 and 2010,
respectively.
16
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
The following is the summary of the notes payable with related accrued interest
as of 3/31/2011:
Adjusted Date of Note Interest Rate 2011 Interest Balance Materiality Date
-------- ------------ ------------- ------------- ------- ----------------
$ 50,000.00 07/06/07 8% $ 10,947.95 $ 70,909.59 2/6/2009
7,500.00 03/09/10 8% 147.95 7,647.95 3/31/2011
25,000.00 03/23/10 8% 493.15 25,493.15 3/23/2011
10,000.00 12/03/10 8% 197.26 10,197.26 3/31/2011
7,500.00 12/29/10 8% 147.95 7,647.95 3/31/2011
10,000.00 01/24/11 8% 144.66 10,144.66 1/24/2012
25,000.00 01/28/11 8% 339.73 25,339.73 1/28/2012
25,000.00 02/09/11 8% 273.97 25,273.97 2/9/2012
15,000.00 03/17/11 8% 46.03 15,046.03 3/17/2012
------------ ----------- ------------
$ 175,000.00 $ 12,738.63 $ 197,700.27
============ =========== ============
NOTE I - COMMON STOCK
Following is the activity for the Company's shares of common stock during the
three months ended March 31, 2011:
Shares
------------
Shares outstanding January 1, 2011 262,500,000
Issued February 4, 2011 2,613,750
Retired February 9, 2011 (233,190,000)
------------
Shares outstanding March 31, 2011 31,923,750
============
On February 04, 2011, the Company has acquired ExploreAnywhere, Inc. assets and
core technologies such as IP, R&D, and customer relations, etc. and issue
2,613,750 shares of stock to Explore Anywhere, Inc, refer to NOTE E "Business
Combination" above for detail. On February 09, 2011, Fernando Garcia, Director,
has retired 233,190,000 of its common stock.
NOTE J - GOODWILL AND INTANGIBLE ASSETS
Goodwill and impairment
The following table presents goodwill balances and the movements during the
quarter ended March 31, 2011:
Balance as of December 31, 2010
Goodwill acquired $1,321,884
----------
Impairment charge (1,299,884)
----------
Balance as of March 31, 2011 $ 22,000
==========
17
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
As discussed above, goodwill acquired during the quarter ended March 31, 2011
represents the goodwill of $1,321,884 related to the acquisition of the business
from ExploreAnywhere, Inc. Refer to Note E "Business Combination" of the Notes
to Consolidated Financial Statements for details.
During the quarter year that ended March 31, 2011, the Company evaluated the
viability of the software developed by ExploreAnywhere, Inc. The Company's
decision to recognize only nominal value as to the existing software developed
by ExploreAnywhere, Inc. due to the lack of competition in the market, lack of
demands, lack of design for use in major Internet applications such as Facebook,
Twitter and others. Furthermore, management recognized that no future value or
revenues are certain or can be guaranteed to be acquired from the software being
currently developed by ExploreAnywhere, Inc. The Company considered this change
as a triggering event and performed an interim impairment test of goodwill in
accordance with ASC 350 as of March 31, 2011.
Goodwill is measured and tested for impairment on an annual basis in the fourth
quarter in accordance with the Accounting Standards Codification No. 350 ("ASC
350"), Intangibles-Goodwill and Other, or more frequently if we believe
indicators of impairment exist. Triggering events for impairment reviews may
include adverse industry or economic trends, restructuring actions, lower
projections of profitability, or a sustained decline in market capitalization.
The performance of the test involves a two-step process. The first step requires
comparing the fair value of the each of our reporting units to its net book
value, including goodwill. We have one reporting unit. A potential impairment
exists if the fair value of the reporting unit is lower than its net book value.
The second step of the process is only performed if a potential impairment
exists, and it involves determining the difference between the fair values of
the reporting unit's net assets other than goodwill to the fair value of the
reporting unit and if the difference is less than the net book value of
goodwill, impairment exists and is recorded.
Based on the results of the first step of the goodwill analysis, it was
determined that ExploreAnywhere, Inc.'s net book value exceeded its estimated
fair value as there is only highly limited potential for future revenue
generated from the ExploreAnywhere, Inc.'s software. As a result, the Company
performed the second step of the impairment test to determine the implied fair
value of goodwill. Under step two, the difference between the estimated fair
value of ExploreAnywhere, Inc. and the sum of the fair value of the identified
net assets results in the residual value of goodwill. The results of step two of
the goodwill analysis indicated that there would be only $22,000 implied value
attributable to goodwill and accordingly, the Company recognized a goodwill
impairment charge of $1,299,884 under "Impairment loss on goodwill" under
selling, general and administrative expenses in the Consolidated Statements of
Operations for the quarter ended March 31, 2011.
ACQUISITION RELATED INTANGIBLE ASSETS
The carrying values of the Company's amortized acquired intangible assets as of
the quarter ended March 31, 2011 are as follows:
March 31, 2011
-------------------------------------------
Accumulated
Amortization
Gross Write-off and Net
-------- -------- --------
Customer relationships 20,000 (20,000) 0
-------- -------- --------
Total $ 20,000 $(20,000) $ 0
======== ======== ========
The Company allocates the purchase price of acquired companies to the tangible
and intangible assets acquired and liabilities assumed based on their estimated
fair values. Such allocations require management to make significant estimates
and assumptions, especially with respect to intangible assets.
The Company reviews the carrying values of long-lived assets whenever events and
circumstances, such as reductions in demand, lower projections of profitability,
significant changes in the manner of our use of acquired assets, or significant
18
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
negative industry or economic trends, indicate that the net book value of an
asset may not be recovered through expected undiscounted future cash flows from
its use and eventual disposition. If this review indicates that there is
impairment, the impaired asset is written down to its fair value, which is
typically calculated using: (i) quoted market prices and/or (ii) discounted
expected future cash flows. The Company estimates regarding future anticipated
revenue and cash flows, the remaining economic life of the products and
technologies, or both, may differ from those used to assess the recoverability
of assets. In that event, impairment charges or shortened useful lives of
certain long-lived assets may be required, resulting in a reduction in net
income or an increase to net loss in the period when such determinations are
made.
Critical estimates in valuing certain intangible assets include, but are not
limited to: future expected cash flows from customer contracts, customer lists,
distribution agreements, acquired developed technologies and patents; expected
costs to develop the in-process research and development into commercially
viable products and estimating cash flows from the projects when completed.
Management's estimates of fair value are based upon assumptions believed to be
reasonable, but which are inherently uncertain and unpredictable.
During the year ended March 31, 2011, management recognized that the existing
core technology that the Company purchased from Explore Anywhere, Inc. in
February 2011 was not designed to be used in newly evolving major Internet
applications such as Facebook, Twitter, and others. And the competitors have
much more features than the existing software developed by Explore Anywhere,
Inc. Also the new software products, currently under development, are not yet
ready for market and have missed expected software release dates. Since there is
no certainty or guarantee that development can be completed or that there will
be market acceptance if ever completed, no value can be attributed to these new
products under development. As a result, the management recognized that the
existing software has highly limited potential for future revenues and that no
value can be attributed to the new products under development because there is
no certainty or guarantee that development can be completed or that there will
be market acceptance if ever completed. The Company recognized a $20,000
"Impairment loss on acquisition-related intangible assets" at Explore Anywhere,
Inc., under "Selling, general and administrative" in the Consolidated Statement
of Operations for the quarter that ended March 31, 2011.
NOTE K - SEGMENT INFORMATION
The Company is organized as, and operates in, one reportable segment: the
development and sale of specialty respiratory products. The Company's chief
operating decision-maker is its Chief Executive Officer. The Company's Chief
Executive Officer reviews financial information presented on a consolidated
basis for purposes of evaluating financial performance and allocating resources,
accompanied by information about revenue by geographic regions. The Company's
assets are primarily located in the United States of America and not allocated
to any specific region and it does not measure the performance of its geographic
regions based upon asset-based metrics. Therefore, geographic information is
presented only for revenue. Revenue by geographic region is based on the ship to
address on the customer order.
The following presents total revenue by geographic region for the three month
periods ended March 31, 2011, and for the year ended December 31, 2010:
Three Months Year
Ended Ended
March 31, December 31,
2011 2010
------ ------
REVENUES:
United States - product sales $1,796 $ 0
------ ------
Total revenues $1,796 $ 0
====== ======
19
EXPLORE ANYWHERE HOLDING CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTE L - GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America and applicable to a going
concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
As of March 31, 2011, the Company has incurred net operating losses of
$1,454,778 respectively for the three months that ended. The Company has a
working capital deficit of approximately $253,189 as of March 31, 2011.
During the next 12 months, the Company's foreseeable cash requirements will
relate to continual development of the operations of its business, maintaining
its good standing, making the requisite filings with the Securities and Exchange
Commission, and the payment of expenses associated with reviewing or
investigating any potential business ventures. The Company may experience a cash
shortfall and be required to raise additional capital. Historically, it has
relied upon internally generated funds and funds from the sale of shares of
stock and loans from its shareholders and private investors to finance its
operations and growth. Management may raise additional capital through future
public or private offerings of the Company's stock or through loans from private
investors, although there can be no assurance that it will be able to obtain
such financing. The Company's failure to do so could have a material and adverse
effect upon it and its shareholders.
The Company has a series of plans to mitigate the going concern:
Management expected to seek potential investors and other business opportunities
from all known sources. Management's efforts are ongoing to complete the
development of new software products in order to bring these products currently
in development to the marketplace.
Furthermore, management's efforts are ongoing to enhance the Company's Internet
visibility towards potential customers through search engine optimization (SEO).
LEGAL PROCEEDINGS
The Company is not presently involved in any legal proceedings and was not
involved in any such legal proceedings during the three months that ended March
31, 2011.
INDEMNIFICATION
Under the indemnification provisions of the Company's customer agreements, the
Company agrees to indemnify and defend its customers against infringement of any
patent, trademark, or copyright of any country or the is appropriation of any
trade secret, arising from the customers' legal use of the Company's services.
Exposure to the Company under these indemnification provisions is generally
limited to the total amount paid by the customers under pertinent agreements.
However, certain indemnification provisions potentially expose the Company to
losses in excess of the aggregate amount received from the customer. To date,
there have been no claims against the Company or its customers pertaining to
such indemnification provisions and no amounts have been recorded.
NOTE M - SUBSEQUENT EVENTS
On May 20, 2011, the Board of Directors (the "Board") of Explore Anywhere
Holding Corp., a Nevada corporation (the "Company") received the resignation of
Mr. William Corso as the Company's Secretary and Treasurer.
On May 24, 2011, the Board elected Mr. Oliver Nelson (age 27) was appointed as
the Company's Secretary and Treasurer. Mr. Nelson has been serving as the
Company's CEO since February 9, 2011.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This section of this quarterly report includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like: believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements, which apply only
as of the date of this report. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions.
As used in this quarterly report, the terms "we", "us", "our", "our company"
means Explore Anywhere Holding Corp., unless otherwise indicated.
GENERAL OVERVIEW
Our company's name is Explore Anywhere Holding Corp. The company was
incorporated on April 3, 1996 in the State of Nevada as Jubilee Trading Corp. On
March 3, 2002, we filed Articles of Amendment to the company's Articles of
Incorporation with the Nevada Secretary of State to change its name from Jubilee
Trading Corp. to PorFavor Corp. On November 10, 2010, we changed the company's
name to Explore Anywhere Holding Corp.
Since inception until March 2010, we operated as a broker of structural wood
materials. In March 2010, our former CEO/President, Mr. Boyd Appelgate started
to suffer from ill-health and our operations underwent a slow and consistent
demise. We therefore decided to change our business focus and look for other
opportunities and discontinue the sale of structural wood materials. We
identified a target company in the area of computer monitoring software, known
as ExploreAnywhere, Inc. We closed on the acquisition of ExploreAnywhere on
February 4, 2011.
ExploreAnywhere is in the business of selling computer monitoring software,
specializing in offering computer monitoring solutions for parents, corporations
and educational facilities. Our company's business is more fully described
below.
PLAN OF OPERATION FOR THE NEXT TWELVE (12) MONTHS
Our ability to continue operations will be dependent upon the successful
completion of additional long-term or permanent equity financing, the support of
creditors and shareholders, and, ultimately, the achievement of profitable
operations. There can be no assurances that we will be successful, which would
in turn significantly affect our ability to be successful in our new business
plan. If not, we will likely be required to reduce operations or liquidate
assets. We will continue to evaluate our projected expenditures relative to our
available cash and to seek additional means of financing in order to satisfy our
working capital and other cash requirements.
21
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2011, we had a working capital deficit of $(295,715) (December 31,
2010: $14,122). At March 31, 2011, our current assets consisted of cash of
$5,495. This compared to our current assets as of December 31, 2010, consisting
of cash of Nil.
At March 31, 2011, our total current liabilities increased to $301,210 ($14,122
as at December 31, 2010).
RESULT OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2011 AND MARCH 31, 2010.
REVENUE
We recognized $1,796 in revenue for the quarter ended March 31, 2011 (March 31,
2010: Nil). Cost of goods sold for the quarter ended March 31, 2010, were Nil
(March 31, 2010: Nil), resulting in a gross profit of $1,796 (March 31, 2010:
Nil).
COSTS AND EXPENSES
For the quarter ended March 31, 2011, operating expenses were $1,395,671
($15,616 for the quarter ended March 31, 2010). Operating expenses for the
quarter ended March 31, 2011, consisted of impairment loss on goodwill of
$1,229,884, general and administrative expenses of $69,316 and selling expense
of $6,471 and impairment loss on acquisition related intangible assets of
$20,000.
From inception to March 31, 2011, we have incurred an accumulated deficit of
$(2,736, 876) (December 31, 2010: $14,122).
As of June 17, 2011, our cash balance is approximately $7,093.21. We expect that
we have sufficient cash on hand to meet our operating needs through June 2011.
We will have to raise an additional $150,000 to meet all of our operating needs
for the next 12 months. We do not have any lending arrangements in place with
banking or financial institutions and we do not anticipate that we will be able
to secure these funding arrangements in the near future. We may attempt to sell
additional equity shares or issue debt to support our operations. Any sale of
additional equity securities will result in dilution to our stockholders. There
can be no assurance that additional financing will be available to us or, if
available to us, on acceptable terms.
We believe our market risk exposures arise primarily from exposures to
fluctuations in interest rates. We do not use derivative financial instruments
to manage risks or for speculative or trading purposes.
OFF BALANCE SHEET ARRANGEMENTS
None.
22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
the Principal Executive Officer and Principal Financial Officer, we have
evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Principal Executive Officer and
Principal Financial Officer have concluded that these disclosure controls and
procedures are effective. There were no changes in our internal control over
financial reporting during the quarter ended March 31, 2011 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. [REMOVED AND RESERVED]
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following documents are included herein:
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Exhibit No. Document Description
----------- --------------------
3(i) Articles of Incorporation and Amendments(1)
3(ii) Bylaws(1)
31.1 Section 302 Certification - President and Principal Executive
Officer.
31.2 Section 302 Certification - CFO, Principal Financial Officer and
Principal Accounting Officer.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
President and Principal Executive Officer.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - CFO,
Principal Financial Officer and Principal Accounting Officer.
----------
(1) Incorporated by reference to the Exhibits filed with the registrant's
registration statement on Form SB-2, filed with the Securities and Exchange
Commission on January 17, 2008, file number 333-148732.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the Registrant and in
the capacities indicated.
EXPLORE ANYWHERE HOLDING CORP.
Date: October 17, 2011 /s/ Bryan Hammond
----------------------------------------
BRYAN HAMMOND
CEO and Member of the Board of Directors
(Principal Executive Officer)
Date: October 17, 2011 /s/ Khris Thetsy
----------------------------------------
KHRIS THETSY
CFO (Principal Financial and Principal
Accounting Officer)
24