UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period ended September30, 2012
 
 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: 000-33933
 
 
 EXPLORE ANYWHERE HOLDING CORP.
 (Exact name of small business issuer as specified in its charter)
 
 Nevada
88-0319470(State or other jurisdiction of incorporation or organization)
(IRS Employer 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. [X] YES [  ] 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 [   ]

(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 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 (§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). [X] 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.
 20,923,750 common shares issued and outstanding as of November 5, 2012.
  
  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
 (FORMERLY KNOWN AS PORFAVOR CORPORATION)
 A DEVELOPMENT STAGE COMPANY
 NOTES TO UNAUDITED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012
 Page(s)Index
3Balance Sheets
4Statement of Operations
5Statements of Cash Flows
6Notes to the Financial Statements
7




3


EXPLORE ANYWHERE HOLDING CORPORATION


CONSOLIDATED BALANCE SHEET







September 30, 2012


December 31, 2011(Unaudited)


(Audited)ASSETSCurrent assetsCash and cash equivalents

$
333


$
2,930Total current assets


333



2,930Office equipment, furniture and fixtures, net


14,444



18,325Acquisition-related intangible assets, net


-



-Goodwill, net


-



-Total assets

$
14,777


$
21,255LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable

$
84,156


$
82,154Accrued expense and other liabilities


-



-Accrued Interest


55,245



34,408Loan from outside lenders


338,550



215,750Convertible Notes payable, net of BCF discount


8,470



89,089Loan from shareholders


-



-Warrant liability


4,654



13,402Deferred revenue


1,461



1,461Total current liabilities


492,536



436,264Total long-term liabilities


-



-Total liabilities


492,536



436,264Stockholders' (deficit) equityCommon stock, $.001 par value; 300,000,000 shares authorized,

20,923,750 and 262,500,000 shares issued and outstanding as of December 31, 2011

and September 30, 2012


20,924



31,924Additional paid-in capital


2,168,394



2,129,536Accumulated deficit


(2,667,077
)


(2,576,469
)Total stockholders' (deficit)


(477,759
)


(415,009
)Total liabilities and stockholders' (deficit) equity

$
14,777


$
21,255









See accompanying notes to condensed consolidated financial statements


4





EXPLORE ANYWHERE HOLDING CORPORATION


CONSOLIDATED STATEMENT OF OPERATIONS


UNAUDITED







Three Months Ended September 30,


Nine Months Ended September 30,2012


2011


2012


2011Revenues

$
3,829


$
1,689


$
13,672


$
5,903Cost of sales


-



-



-



-Gross profit


3,829



1,689



13,672



5,903Operating ExpensesResearch and development


10,038



38,235



56,491



-Sales and marketing


9,290



5,814



22,861



8,843General and administrative


5,099



22,694



67,902



1,518,354Total operating expenses


24,427



66,743



147,254



1,527,197Loss from operations


(20,598
)


(65,054
)


(133,582
)


(1,521,294
)Interest income (expense)Interest income (expense)


(8,461
)


(24,306
)


(32,064
)


(90,405
)Other income (expense)


-



-



38



-Total interest income (expense)


(8,461
)


(24,306
)


(32,025
)


(90,405
)Income (loss) before income taxes


(29,059
)


(89,360
)


(165,607
)


(1,611,699
)Provision for income taxes


-



-



-



-Net income (loss)

$
(29,059
)

$
(89,360
)

$
(165,607
)

$
(1,611,699
)Net loss per share of common stock:Basic

$
(0.00
)

$
(0.00
)

$
(0.01
)

$
(0.02
)Weighted average number of shares outstanding


20,923,750



31,923,750



20,923,750



81,954,542












See accompanying notes to condensed consolidated financial statements


5





EXPLORE ANYWHERE HOLDING CORPORATION


CONSOLIDATED STATEMENT OF CASH FLOWS


UNAUDITED






Nine Months Ended September 30,2012


2011Cash flows from operating activitiesNet loss

$
(90,608
)

$
(89,360
)Adjustments to reconcile net income to net cashused by operating activities:Depreciation


3,881



1,656Loan forgiven by shareholder


-



-Amortization of debt discount in connection with the issuance of convertible notes


-



-Interest expense associated with beneficial conversion feature


(80,619
)


9,045Impairment loss on acquisition related intangible assets


-



-Impairment loss on goodwill


-



-Fair value of common stock warrants






-Changes in operating assets and liabilities:Accounts payable


2,002



11,585Accrued expense and other liabilities


(8,748
)


-Accrued Interest


20,837



23,409Deferred Revenue


-



-Net cash used by operating activities


(153,255
)


(43,664
)Cash flows from investing activitiesEquipment purchases


-



(699
)Intangible acquisition


-



-Net cash provided (used) by investing activities


-



(699
)Cash flows from financing activitiesLoan(s) from outside lenders






-Loan(s) from shareholders






-Warrant liabilities


(11,000
)


-Proceeds from convertible promissory notes


161,658



37,353Additional paid in capital (non cash)


-



-Net cash provided by financing activities


150,658



37,353Net change in cash and cash equivalent


(2,597
)


(7,010
)Cash and cash equivalent at the beginning of period


2,930



8,073Cash and cash equivalent at the end of year

$
333


$
1,063










See accompanying notes to condensed consolidated financial statements


6


NOTE A – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Business


Explore Anywhere Holding Corp., 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 filed 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 Form 8-K.





On February 4, 2011, Explore Anywhere Holding Corporation (formerly known as PorFavor Corporation), or the Company, 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 $1,163,119.  For details of the acquisition refer to Note D 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.





On May 31, 2012, The Company's largest shareholder, Mr. Jose Fernando Garcia,  cancelled a total of 14,000,000  shares of the Company's  common stock.  The cancellation of such shares reduced the Company's total issued and  outstanding  shares to 17,923,750 shares.  It is management's  understanding  that Mr. Garcia,  who was the control person  of  Explore   Anywhere   Holding  Corp.  prior  to  the  acquisition  of ExploreAnywhere,  Inc. in February  2011,  wished to merge an operating  company into Explore  Anywhere  Holding Corp. and retain a minor equity  position in the entity so that he could perhaps  share in the growth of the operating  business.  When the shareholders  and  management of Explore agreed to merge with Explore, part of that agreement was that Mr. Garcia would retain small minority equity




position so that Explore  Anywhere Holding Corp. could be structured in a manner that management  believed would enhance the company's growth. In accordance with that agreement, Mr. Garcia has canceled the aforementioned shares.




On June 18, 2012, the Board of Directors (the “Board”) of Explore Anywhere Holding Corporation approves the issuance of 2,000,000 free trading shares to Amalfi Coast Capital, in exchange for the conversion and cancellation of the principal amount of the $100,000 of the Notes, with all of the accrued interest thereon remaining due and payable.




On June 18, 2012, the Board of Directors (the “Board”) of Explore Anywhere Holding Corporation entered into a Restricted Stock Award Agreement (“Stock Award”) with its President and CEO, Bryan Hammond, pursuant to which the Company agreed to issue One million (1,000,000) shares of its common stock to Mr. Hammond.  The Award is subject to vesting schedule whereby twenty percent (20%) of the Stock Award vests for every $1,000,000 in revenue that the Company receives.  The Stocks Award is also subject to a substantial risk of forfeiture as it is subject to the continued employment of Mr. Hammond by the Company in an executive capacity.





7


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 ExploreAnywhere Holding Corp for the year ended December 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 sales, 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 customers have any problems with its software that cannot be easily resolved, the Company will fully refund the price. For retail sales, 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:




EstimatedUseful LivesOffice Equipment

5-10 yearsFurniture

5 - 7 yearsShop tools

5 - 7 yearsVehicles

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.







8




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 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.





Goodwill is measured and tested for impairment on a quarterly 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 year of 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 non-competitive in the market, lack of demands, not designed 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 attributed from the software being currently developed by ExploreAnywhere, Inc.  The Company wrote off the entire $1,321,884 goodwill and $20,000 acquisition related intangible assets as “Impairment of goodwill” and “Impairment of intangible assets”, respectively under general and administrative expense.





Cash and Cash Equivalents


Cash and cash equivalents include highly liquid investments, primarily money market mutual funds, with maturities of nine 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.





9





Fair Value of Financial Instruments


The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  The Company believes that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:





Level 1: Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.





Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.





Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.





The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. The Company does not have any marketable securities in the “Level 2” and “Level 3” category. The Company believes that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short 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 September 30, 2012.





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 $22,861 for the nine months ended September 30, 2012.





Research and Development


The Company starts to capitalize any development or programmer fees according to ASC 985-20 when the software development stage reaches the feasibility period.  For the nine months ended September 30, 2012, the Company incurred $56,491 as software development under Research and Development as the product has not passed the feasibility period, all the software related development cost need to be expensed.






10




Stockholders’ Equity


The Company had authorized three hundred million (300,000,000) shares of common stock with a par value of $0.001 and 20,923,750 shares of common stock have been issued and total outstanding as of September 30, 2012. See Note I, “Common Stock” of Notes to Consolidated Financial Statements for detail.





Warrant 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 re-measures 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.





Litigation and Settlement Costs
 Legal costs are expensed as incurred. We record a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) accrue the best estimate within a range of loss if there is a loss or, whenthere is no amount within a range that forms a better estimate, we will accrue the minimum amount in the range. We are not presently involved in any legal proceedings, litigation or other legal actions.





Recently Issued Accounting Pronouncements


In September 2011, the FASB issued ASU No. 2011-8, Intangibles—Goodwill and Other (Topic 350) - Testing Goodwill for Impairment, that provides guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning January 1, 2012.







11




In June 2011, the Financial Accounting Standards Board, or FASB, issued guidance regarding the presentation of comprehensive income. The new standard requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive incomer in two separate but consecutive statements. The updated guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. We adopted the provisions of this guidance effective January 1, 2012, as reflected in the unaudited condensed consolidated statements of comprehensive income herein.





NOTE B - BALANCE SHEET COMPONENTS





The following table provides details of selected balance sheet components:




PROPERTY AND EQUIPMENT:




The carrying values of fixed assets as of September 30, 2012 were as follows:







Office Equipment

$
29,818Furniture and Fixtures


14,36544,182Less Adjustments and DepreciationAccumulated Depreciation


(29,739
)Fixed assets, net of depreciation

$
14,777





Depreciation expense is $2,769 for the nine months ended September 30, 2012.





NOTE C - 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.





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:


12




As of December 31, 2011Fair Value


Level 1

Level 2
Level 3Cash and cash equivalents:Cash (1)

$
12,363


$
12,363
 
 (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 nine months ended September 30, 2012 and concluded that there were no material impairment charges during each of these periods.





NOTE D - BUSINESS COMBINATIONS




Business Combination







On February 4, 2011, the Company acquired ExploreAnywhere, Inc., a privately-held company based in Kingston, NH 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 monitoring software 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

$
22,183Goodwill


1,321,884Intangible assets


20,000Liabilities assumed


(200,947)$
1,163,120




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)Year EndedSeptember 30,2012

2011Total revenue

$
13,672


$
5,903Net Income (loss)

$
(165,607
)

$
(1,611,699
)Basic and diluted loss per share

$
(0.01
)

$
(0.02
)






13




NOTE E – 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 September 30, 2012 are as follows:


Deferred tax assets:Net Loss (before taxes)$
165,607Income tax rate


34
%56,306Less valuation allowance


(53,306
)$
-


Reconciliations of the U.S. federal statutory rate to the actual tax rate follows for the nine months ended September 30, 2012 is as follows:





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.





While management believes that the Company has adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than the Company’s current position. Accordingly, the Company’s provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved.





NOTE F – 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, obtained American Express Gold card for operating expenses throughout years of operations.  The credit card had a balance owed $0 and $3,088 as of September 30, 2012 and December 31, 2011, respectively.





The fourteen promissory notes in the following amounts were issued to Amalfi Coast Capital through the nine months ended September 30, 2012 are related party transactions as Amalfi Coast Capital holds the Company’s shares.  For detail of the notes payable, please refer to Note G, “Notes Payable” for the Notes to Condensed Consolidated Financial Statements for the nine months ended September 30, 2012.






14




$50,000 on July 6, 2007 (convertible promissory note)


$7,500 on March 9, 2010


$25,000 on March 23, 2010 (convertible promissory note)


$10,000 on December 3, 2010


$7,500 on December 29, 2010


$10,000 on January 24, 2011 (convertible promissory note)


$25,000 on January 28, 2011 (convertible promissory note)


$25,000 on February 9, 2011 (convertible promissory note)


$15,000 on March 17, 2011 (convertible promissory note)


$15,000 on April 18, 2011 (convertible promissory note)


$10,000 on May 17, 2011 (convertible promissory note)


$7,500 on June 13, 2011 (convertible promissory note)


$2,500 on June 24, 2011 (convertible promissory note)$5,000 on November 15, 2011 (convertible promissory note)





Total = $215,000 ($190,000convertible and $25,000 non-convertible)





NOTE G – NOTES PAYABLE





As of September 30, 2012, the Company had $234,750 regular notes payable and $103,800 net of discount convertible notes from outsider lenders.





Unsecured promissory notes payable

$
234,750Unsecured convertible notes payable


103,800Net of discount for the unsecured convertible notes payables


(8,470
)Total notes payable as of 9/30/12

$
342,366Accrued interest expense as of 9/30/12

$
55,245





On July 6, 2007, the Company issued an unsecured convertible promissory note to 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 and the principal balance with accrued interest of this note was payable on February 6, 2009.  However, the Company is technically in default on its promissory notes to the persons or entities detailed hereafter, the note was matured on February 6, 2009. The Company is continuously accruing the interest.  As of March 31, 2012, the outstanding balance with the total accrued interest was $68,959.  No interest was paid as of March 31, 2012.


On March 9, 2010, the Company issued 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 September 30, 2012, the outstanding balance with accrued interest was $8,887.  No interest was paid as of September 30, 2012.





On March 23, 2010, the Company issued an unsecured convertible promissory note to 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 was payable on March 23, 2011.  However, the Company is technically in default on its promissory notes to the persons or entities detailed hereafter, the note was matured on March 23, 2011.  The Company is continuously accruing the interest.  As of September 30, 2012, the outstanding balance with the total accrued interest was $29,548.  No interest was paid as of September 30, 2012.





On December 3, 2010, the Company issued 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 December 3, 2011.  As of September 30, 2012, the outstanding balance with accrued interest was $11,260.  No interest was paid as of September 30, 2012.






15





On December 29, 2010, the Company issued 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 December 29, 2011.  As of September 30, 2012, the outstanding balance with accrued interest was $8,402.  No interest was paid as of September 30, 2012





On January 24, 2011, the Company issued an unsecured convertible promissory note to 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 was payable on January 24, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $11,260.  No interest was paid as of September 30, 2012.





On January 28, 2011, the Company issued an unsecured convertible promissory note to 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 was payable on January 28, 2012.  As of March 31, 2012, the outstanding balance with accrued interest was $27,345.  No interest was paid as of March 31, 2012.





On February 9, 2011, the Company issued an unsecured convertible promissory note to 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 was payable on February 09, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $27,778.  No interest was paid as of September 30, 2012.





On March 17, 2011, the Company issued an unsecured convertible promissory note to Amalfi Coast Capital   in the amount of $15,000 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 was payable on March 17, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $16,548.  No interest was paid as of September 30, 2012.





On April 8, 2011, the Company issued 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 April 8, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $8,238.  No interest was paid as of September 30, 2012.





On April 18, 2011, the Company issued an unsecured convertible promissory note to Amalfi Coast Capital   in the amount of $15,000 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 April 18, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $16,443.  No interest was paid as of September 30, 2012.





On May 17, 2011, the Company issued an unsecured convertible promissory note to 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 May 17, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $10,899.  No interest was paid as of September 30, 2012.





On June 2, 2011, the Company issued 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 June 2, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $10,864.  No interest was paid as of September 30, 2012.





On June 13, 2011, the Company issued an unsecured convertible promissory note to Amalfi Coast Capital   in the amount of $7,500 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 June 13, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $8,130.  No interest was paid as of September 30, 2012.






16




On June 24, 2011, the Company issued an unsecured convertible promissory note to Amalfi Coast Capital   in the amount of $2,500 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 June, 24, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $2,704.  No interest was paid as of September 30, 2012.





On June 28, 2011, the Company issued an unsecured promissory note in the amount of $6,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on June 28, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $7,024.  No interest was paid as of September 30, 2012.





On July 1, 2011, the Company issued an unsecured promissory note in the amount of $6,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on July 1, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $7,020.  No interest was paid as of September 30, 2012.





On July 21, 2011, the Company issued an unsecured promissory note in the amount of $2,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on July 21, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $2,151.  No interest was paid as of September 30, 2012.





On July 26, 2011, the Company issued 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 July 26, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $8,059.  No interest was paid as of September 30, 2012.





On August 5, 2011, the Company issued an unsecured promissory note in the amount of $8,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on August 5, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $9,115.  No interest was paid as of September 30, 2012.





On August 8, 2011, the Company issued an unsecured promissory note in the amount of $8,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on August 8, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $9,109.  No interest was paid as of September 30, 2012.





On August 24, 2011, the Company issued an unsecured promissory note in the amount of $5,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on August 24, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $5,341.  No interest was paid as of September 30, 2012.





On September 13, 2011, the Company issued 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 September 13, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $7,978.  No interest was paid as of September 30, 2012.





On October 4, 2011, the Company issued 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 October 4, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $7,944.  No interest was paid as of September 30, 2012.





On October 6, 2011, the Company issued an unsecured promissory note in the amount of $2,250 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on October 6, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $2,382.  No interest was paid as of September 30, 2012.





17





On October 17, 2011, the Company issued 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 October 17, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $10,563.  No interest was paid as of September 30, 2012.





On November 2, 2011, the Company issued an unsecured promissory note in the amount of $5,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on November 2, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $5,264.  No interest was paid as of September 30, 2012.





On November 7, 2011, the Company issued an unsecured promissory note in the amount of $5,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on November 7, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $5,259.  No interest was paid as of September 30, 2012.





On November 15, 2011, the Company issued an unsecured promissory note in the amount of $3,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on November 15, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $3,150.  No interest was paid as of September 30, 2012.





On November 15, 2011, the Company issued an unsecured convertible promissory note to Amalfi Coast Capital   in the amount of $5,000 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 November 15, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $5,250.  No interest was paid as of September 30, 2012.





On November 28, 2011, the Company issued an unsecured promissory note in the amount of $4,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on November 28, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $4,712.  No interest was paid as of September 30, 2012.





On December 7, 2011, the Company issued an unsecured promissory note in the amount of $3,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on December 7, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $3,658.  No interest was paid as of September 30, 2012.





On December 27, 2011, the Company issued an unsecured promissory note in the amount of $5,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on December 27, 2012.  As of September 30, 2012, the outstanding balance with accrued interest was $5,724.  No interest was paid as of September 30, 2012.





On January 19, 2012, the Company issued an unsecured promissory note in the amount of $12,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on January 19, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $12,947.  No interest was paid as of September 30, 2012.





On February 23, 2012, the Company issued an unsecured promissory note in the amount of $5,000 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on February 23, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $5,140.  No interest was paid as of September 30, 2012.





On March 2, 2012, the Company issued 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 2, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $10,263.  No interest was paid as of September 30, 2012.





18





On March 9, 2012, the Company issued an unsecured promissory note in the amount of $12,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on March 9, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $12,810.  No interest was paid as of September 30, 2012.





On April 4, 2012, the Company issued an unsecured promissory note in the amount of $3,800 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on April 4, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $3,873.  No interest was paid as of September 30, 2012.





On April 17, 2012, the Company issued 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 April 17, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $10,162 No interest was paid as of September 30, 2012.





On May 3, 2012, the Company issued an unsecured promissory note in the amount of $12,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on May 3, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $12,659.  No interest was paid as of September 30, 2012.





On May 22, 2012, the Company issued 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 May 22, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $7,564.  No interest was paid as of September 30, 2012.





On June 4, 2012, the Company issued an unsecured promissory note in the amount of $9,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on June 4, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $9,554.  No interest was paid as of September 30, 2012.





On June 11, 2012, the Company issued an unsecured promissory note in the amount of $8,500 at 8% simple annual interest rate.  The principal balance with accrued interest of this note shall be payable on June 11, 2013.  As of September 30, 2012, the outstanding balance with accrued interest was $8,535.  No interest was paid as of September 30, 2012.




Explore Anywhere Holding Corp., Unsecured Convertible Notes:




Through September 30, 2012, the Company issued 11 unsecured convertible promissory notes to Amalfi Coast Capital in the total amount of $190,000 at 8% simple annual interest rate with a conversion price of $.05 per share and with different periods of expiration.  At the time the convertible promissory notes were issued, the current fair market value of the stock was greater than the proceeds of the convertible promissory notes.





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.






19




As of September 30, 2012, the fair value of the shares underlying the convertible promissory notes issued to Explore Anywhere Holding was estimated to be a total of $116,850 using the Black-Scholes pricing model with a volatility of 152% and the following assumptions: no dividend yield, an exercise price of $0.05 per share, a $0.186 current price of the underlying per share, and a risk-free interest rate of 1.04%. 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 $6,530 at the time of each issuance provided to Explore Anywhere Holding in connection with the Convertible Note up to and including as of September 30, 2012. The debt discounts are amortized as interest expense over the life of the notes. The Company recorded interest expense for the Beneficial Conversion Feature or BCF in the amounts of $0 and $0 for the 6 months ended September 30, 2012 and September 30, 2011, respectively.  As convertible promissory notes with warrant issuance are considered a liability, the Company recorded the changes in the fair value of the warrant liability in the amount of $1,405 as interest expense for the 6 months ended September 30, 2012.





The following is the summary of the notes payable with related accrued interest as of 6/30/2012:





Convertible notes payable





50,000

7/06/07


8
%


18,959

2/26/200925,000

3/23/10


8
%


4,547

3/31/201110,000

1/24/11


8
%


1,146

1/24/201225,000

1/28/11


8
%


2,345

1/28/201225,000

2/09/11


8
%


2,778

2/9/201215,000

3/17/11


8
%


1,548

3/17/201215,000

4/18/11


8
%


1,443

4/18/201210,000

5/17/11


8
%


898

5/17/20127,500

6/13/11


8
%


630

6/13/20122,500

6/24/11


8
%


204

6/24/20125,000

11/15/11


8
%


250

11/15/12190,000








34,750





(1,850)minus discount of beneficial conversion feature,


$470,363





The Company incurred $47,813 interest expenses on regular and convertible notes payable during the 6 months ended 6/30/12.





NOTE H – COMMON STOCK





On June 18, 2012, the Board of Directors (the “Board”) of Explore Anywhere Holding Corporation approves the issuance of 2,000,000 free trading shares to Amalfi Coast Capital, in exchange for the conversion and cancellation of the principal amount of the $100,000 of the Notes, with all of the accrued interest thereon remaining due and payable.





On June 18, 2012, The company entered into a Restricted Stock Award Agreement (“Stock Awad”) with its President and CEO, Bryan Hammond, pursuant to which the Company agreed to issue One million (1,000,000) shares of its common stock to Mr. Hammond.  The Award is subject to vesting schedule whereby twenty percent (20%) of the Stock Award vests for every $1,000,000 in revenue that the Company receives.  The Stocks Award is also subject to a substantial risk of forfeiture as it is subject to the continued employment of Mr. Hammond by the Company in an executive capacity.




20







SharesShares outstanding December 31, 2011


31,923,750Shares outstanding September 30, 2012


20,923,750





NOTE I - GOODWILL AND INTANGIBLE ASSETS





Goodwill and impairment




The following table presents goodwill balances and the movements as of September 30, 2012





Balance as of December 31, 2010

$
1,321,884Goodwill acquired during the 3 months ended September 30, 2012


0Impairment charge (during the year ended December 31, 2011)


(1,321,884
)Balance as of September 30, 2012

$
-





Goodwill acquired during the three months 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 ended September 30, 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 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 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 three months ended March 31, 2011.





21


Acquisition related intangible assets





The carrying values of the Company’s amortized acquired intangible assets as of September 30, 2012 are as follows:




Gross

Accumulated

Amortization and

Write-off

(incurred during

the year ended

December 31, 2011)

NetCustomer relationships acquired as of September 30, 2012

$
20,000


$
(20,000
)

$
0Total

$
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.





During the three months 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 three months ended March 31, 2011.





NOTE J – SEGMENT INFORMATION





The Company is organized as, and operates in, one reportable segment: software application 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 present total revenue by geographic region for the nine month period ended September 30, 2012, and for the nine month period ended September 30, 2011:





Nine Months Ended


Nine Months EndedSeptember 30,


September 30,2012


2011Revenues:United States - product sales

$
13,672


$
5,903Total revenues

$
13,672


$
5,903





22





NOTE K – 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.





During the nine months ended September 30, 2012 the Company recognized $13,672 revenue.  However, the Company incurred a net operating loss of $165,607. The Company has a working deficit of $477,759 as of September 30, 2012.





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. Management’s ongoing priority focus is the enhancement of existing software products and the development of new ones to continuously enhance the company’s position in the marketplace.





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 nine months ended September 30, 2012.





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 misappropriation 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 L – SUBSEQUENT EVENTS





On October 14, 2012, the Board of Directors (the “Board”) of Explore Anywhere Holding Corp., a Nevada corporation (the “Company”) received the resignation of Mr. William Corso as a Company Director. From September 30, 2012 through the date of this report, the company issued ten unsecured promissory notes totaling $37,742.55  Each includes an 8% simple annual interest rate. One note out of the ten that was issued in the amount of $15,000 on October 29, 2012 is an unsecured convertible promissory note at a conversion price of $0.05 per share. Additionally, seven of the ten notes that were issued in the combined amount of $13,992.55 are short term unsecured promissory notes (none have a conversion feature) with three month maturity dates. $11,654.23 has been repaid to date against the short term unsecured promissory notes. The principal and any unpaid interest will be due and payable beginning on January 3, 2013 through October 29, 2013.


23


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 September 22, 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





The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position should be read in conjunction with our most recent financial statements and notes filed on PinkSheets.com and also on the Securities and Exchange Commission’s website.





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.





Management's Discussion and Analysis of Financial Condition and Results of Operations





Liquidity and Capital Resources





At September 30, 2012, we had working capital deficit of $492,536 (December 31, 2011: $433,334).  At September 30, 2012 our assets consisted only of cash of $333, compared to cash of $2,930 as of December 31, 2011.


At September 30, 2012, our total current liabilities were $492,536, compared to $436,264 as at December 31, 2011. The reason for the increase in our current liabilities was mainly due to the increase of our loan from outside lenders from $215,750 as of December 31, 2011, to $338,550 as of September 30, 2012, offset in part by a decrease in our convertible note payable from $89,089 to $8,470.


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As of November 19, 2012, our cash balance is approximately $146.01, which will meet our operating requirements for only one (1) week. 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.





Result of Operations





Comparison of the Nine Months ended September 30, 2012 and September 30, 2011.





Revenue





We recognized $13,672 in revenue for the nine (9) months ended September 30, 2012 (September 30, 2011: $5,903). Cost of sales for the nine (9) months ended September 30, 2012, were Nil (September 30, 2011: Nil), resulting in a gross profit of $13,672 (September 30, 2011: $5,903).





Costs and Expenses





For the nine (9) months ended September 30, 2012, operating expenses were $147,254 ($1,527,198 for the nine (9) months end September 30, 2011). The decrease was principally due to the decrease of our general and administrative costs from $1,527,197 in 2011 to $67,902 in 2012.





Operating expenses during the nine (9) months ended September 30, 2012, consisted of general and administration of $67,902, sales and marketing of $22,861 and research and development $56,491.





During the nine (9) month period ended September 30, 2012, we recognized a net loss of $165,607 compared to a net loss of $1,611,699 for the nine-month period ended September 30, 2011. The decrease in our loss was due to a decrease in our operating expenses over the prior period as discussed above.





From inception to September 30, 2012, we have incurred an accumulated deficit of $2,667,077 (December 31, 2011: $2,576,469).




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.




Comparison of the Three Months ended September 30, 2012 and September 30, 2011.





Revenue





We recognized $3,829 in revenue for the quarter ended September 30, 2012 (September 30, 2011: $1,689). Cost of sales for the quarter ended September 30, 2012, were Nil (September 30, 2011: Nil), resulting in a gross profit of $3,829 (September 30, 2011: $1,689).




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Costs and Expenses





For the quarter ended September 30, 2012, operating expenses were $24,427 ($66,743 for the quarter end September 30, 2011). The decrease was principally due to a decrease in our research and development from $38,235 in 2011 to $10,038 in 2012 and a decrease in general and administrative from $22,694 in 2011 to $5,099 in 2012.





Operating expenses during the three (3) months ended September 30, 2012, consisted of general and administration of $5,099 and sales and marketing of $9,290 and research and development at $10,038.





During the three (3) month period ended September 30, 2011, we recognized a net loss of $41,343 compared to a net loss of nil for the nine-month period ended September 30, 2010. The increased loss of $41,343 was due to an increase in our activities over the prior period as discussed above.





Off Balance Sheet Arrangements.




None.




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 September 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




PART II. OTHER INFORMATION




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. MINE SAFETY DISCLOSURES




None.






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ITEM 5. OTHER INFORMATION




None.




ITEM 6. EXHIBITS




The following documents are included herein:


Exhibit No.

Document Description31.1

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.101

Interactive Data Files pursuant to Rule 405 of Regulation S-T(1)
  (1) To be provided by amendment.
 
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 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: November 19, 2012
/s/ Bryan HammondBRYAN HAMMONDPresident and Member of the Board of Directors(Principal Executive Officer)Date: August 14, 2012
/s/ Khris ThetsyKHRIS THETSYCFO (Principal Financial and Principal Accounting Officer)


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