FINDEX COM INC - Quarter Report: 2009 March (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For
the quarterly period ended March 31, 2009
OR
[_]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For
the transition period from __________ to __________.
Commission
file number: 0-29963
FINDEX.COM,
INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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88-0379462
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(State
or other jurisdiction of
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(I.R.S.
Employer
|
|
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incorporation
or organization)
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Identification
No.)
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620 North 129th Street, Omaha, Nebraska
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68154
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(Address
of principal executive offices)
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(Zip
Code)
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(402)
333-1900
(Registrant’s
telephone number, including area code)
N/A
(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 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). Yes
[X] No [_]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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).Yes
[_] No [X]
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. 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:
At May 20,
2009, the registrant had outstanding 59,572,725 shares of
common stock, of which there is only a single class.
QUARTERLY
REPORT ON FORM 10-Q
FOR
FISCAL QUARTER ENDED MARCH 31, 2009
-
INDEX -
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Page
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F-1
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F-2
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F-3
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F-4
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|
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1
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8
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8
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9
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9
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9
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9
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9
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9
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9
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12
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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||||||||
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(Unaudited)
|
||||||||
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March
31, 2009
|
December
31, 2008
|
|||||||
|
Assets
|
||||||||
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Current
assets:
|
||||||||
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Cash
and cash equivalents
|
$ | 386,954 | $ | 423,371 | ||||
|
Accounts
receivable, trade, net
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83,337 | 148,880 | ||||||
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Inventories
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78,562 | 81,545 | ||||||
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Other
current assets
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31,423 | 58,270 | ||||||
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Total
current assets
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580,276 | 712,066 | ||||||
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Property
and equipment, net
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30,505 | 37,347 | ||||||
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Intangible
assets, net
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608,704 | 710,771 | ||||||
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Other
assets
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157,212 | 155,532 | ||||||
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Total
assets
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$ | 1,376,697 | $ | 1,615,716 | ||||
|
Liabilities
and stockholders’ equity (deficit)
|
||||||||
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Current
liabilities:
|
||||||||
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Current
maturities of long-term debt
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$ | 114,471 | $ | 112,908 | ||||
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Accounts
payable, trade
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476,389 | 496,957 | ||||||
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Accounts
payable, related party
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102,011 | 97,200 | ||||||
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Accrued
royalties
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744,116 | 720,305 | ||||||
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Accrued
payroll
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231,348 | 205,254 | ||||||
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Other
current liabilities
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127,273 | 182,937 | ||||||
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Total
current liabilities
|
1,795,608 | 1,815,561 | ||||||
|
Long-term
debt, net
|
--- | 8,180 | ||||||
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Deferred
income taxes, net
|
6,825 | 7,500 | ||||||
|
Commitments
and contingencies (Note 8)
|
||||||||
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Stockholders’
equity (deficit):
|
||||||||
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Preferred
stock, $.001 par value
|
||||||||
|
5,000,000
shares authorized
|
||||||||
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-0-
and -0- shares issued and outstanding, respectively
|
--- | --- | ||||||
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Common
stock, $.001 par value
|
||||||||
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120,000,000
shares authorized,
|
||||||||
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59,572,725
and 54,072,725 shares issued and outstanding, respectively
|
59,573 | 54,073 | ||||||
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Paid-in
capital
|
7,897,780 | 7,787,779 | ||||||
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Retained
(deficit)
|
(8,383,089 | ) | (8,057,377 | ) | ||||
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Total
stockholders’ equity (deficit)
|
(425,736 | ) | (215,525 | ) | ||||
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Total
liabilities and stockholders’ equity (deficit)
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$ | 1,376,697 | $ | 1,615,716 | ||||
|
See
accompanying notes.
|
||||||||
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
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(Unaudited)
|
||||||||
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Three
Months Ended
|
||||||||
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March
31,
|
||||||||
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2009
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2008
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|||||||
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Revenues,
net of reserves and allowances
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$ | 578,321 | $ | 611,531 | ||||
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Cost
of sales
|
192,009 | 254,909 | ||||||
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Gross
profit
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386,312 | 356,622 | ||||||
|
Operating
expenses:
|
||||||||
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Sales
and marketing
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164,435 | 188,143 | ||||||
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General
and administrative
|
542,088 | 510,526 | ||||||
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Total
operating expenses
|
706,523 | 698,669 | ||||||
|
Loss
from operations
|
(320,211 | ) | (342,047 | ) | ||||
|
Other
income (expenses), net
|
(5,501 | ) | 4,894 | |||||
|
Gain
on fair value adjustment of derivatives
|
--- | 305,620 | ||||||
|
Gain
on settlement of derivative liabilities
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--- | 450,654 | ||||||
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Income
(loss) before income taxes
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(325,712 | ) | 419,121 | |||||
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Income
taxes
|
--- | --- | ||||||
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Net
income (loss)
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$ | (325,712 | ) | $ | 419,121 | |||
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Net
earnings (loss) per share - Basic & Diluted:
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$ | (0.01 | ) | $ | 0.01 | |||
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Weighted
average shares used in computing basic and diluted earnings (loss)
per share:
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55,172,725 | 52,635,432 | ||||||
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See
accompanying notes.
|
||||||||
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CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
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||||||||
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(Unaudited)
|
||||||||
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Three
Months Ended March 31,
|
2009
|
2008
|
||||||
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Cash
flows from operating activities:
|
||||||||
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Cash
received from customers
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$ |
612,212
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$ |
681,510
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||||
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Cash
paid to suppliers and employees
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(571,650
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)
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(784,502
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)
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||||
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Other
operating activities, net
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(2,350
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)
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10,157
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|||||
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Net
cash provided (used) by operating activities
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38,212
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(92,835
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)
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|||||
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Cash
flows from investing activities:
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||||||||
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Software
development costs
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(56,233
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)
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(47,890
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)
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||||
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FormTool
purchase
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---
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(100,000
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)
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|||||
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Other
investing activities, net
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(11,780
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)
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(13,860
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)
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||||
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Net
cash used by investing activities
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(68,013
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)
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(161,750
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)
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||||
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Cash
flows from financing activities:
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||||||||
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Payment
made for settlement of derivative liabilities
|
---
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(150,000
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)
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|||||
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Payments
made on long-term notes payable
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(6,616
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)
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(5,865
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)
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||||
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Net
cash used by financing activities
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(6,616
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)
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(155,865
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)
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||||
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Net
decrease in cash and cash equivalents
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(36,417
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)
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(410,450
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)
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||||
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Cash
and cash equivalents, beginning of year
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423,371
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1,134,547
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||||||
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Cash
and cash equivalents, end of period
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$ |
386,954
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$ |
724,097
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||||
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Reconciliation
of net loss to cash flows from operating activities:
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||||||||
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Net
income (loss)
|
$ |
(325,712
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)
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$ |
419,121
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|||
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Adjustments
to reconcile net income (loss) to net cash provided
(used) by operating activities:
|
||||||||
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Software
development costs amortized
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51,645
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90,215
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||||||
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Depreciation
& amortization
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123,696
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109,140
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||||||
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Bad
debts provision
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7,214
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---
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||||||
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Noncash
operating expenses
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70,500
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---
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||||||
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Gain
on fair value adjustment of derivatives
|
---
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(305,620
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)
|
|||||
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Gain
on settlement of derivative liabilities
|
---
|
(450,654
|
)
|
|||||
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Gain
on sale of property and equipment
|
(99
|
)
|
---
|
|||||
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Change
in assets and liabilities:
|
||||||||
|
Decrease
in accounts receivable
|
58,329
|
127,108
|
||||||
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Decrease
in inventories
|
2,983
|
805
|
||||||
|
Decrease
in other current assets
|
26,174
|
50,920
|
||||||
|
Increase
(decrease) in accrued royalties
|
23,811
|
(21,833
|
)
|
|||||
|
(Decrease)
in accounts payable
|
(15,757
|
)
|
(31,648
|
)
|
||||
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Increase
(decrease) in other liabilities
|
15,428
|
(80,389
|
)
|
|||||
|
Net
cash provided (used) by operating activities
|
$ |
38,212
|
$ |
(92,835
|
)
|
|||
|
Schedule
of Noncash Investing and Financing Activities:
|
||||||||
|
Long-term
note payable issued for FormTool purchase
|
$ |
---
|
$ |
85,934
|
||||
|
Equity
issued for FormTool purchase
|
$ |
---
|
$ |
40,000
|
||||
|
See
accompanying notes.
|
||||||||
Notes
to Condensed Consolidated Financial Statements
March
31, 2009
(Unaudited)
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles for interim
financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by Generally Accepted Accounting Principles for complete
financial statements. The accompanying unaudited condensed consolidated
financial statements reflect all adjustments that, in the opinion of management,
are considered necessary for a fair presentation of the financial position,
results of operations, and cash flows for the periods presented. The results of
operations for such periods are not necessarily indicative of the results
expected for the full year or for any future period. The December 31, 2008
condensed consolidated balance sheet was derived from our audited financial
statements at that date. The accompanying financial statements should
be read in conjunction with the audited consolidated financial statements of
Findex.com, Inc. included in our Form 10-K for the year ended December 31,
2008.
USE
OF ESTIMATES
The
preparation of consolidated financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Significant estimates used in the consolidated financial
statements include the estimates of (i) doubtful accounts, obsolete inventory,
sales returns, price protection and rebates, (ii) provision for income taxes and
realizability of the deferred tax assets, and (iii) the life and realization of
identifiable intangible assets. The amounts we will ultimately incur or recover
could differ materially from current estimates.
INVENTORY
Inventory,
including out on consignment, consists primarily of software media, manuals and
related packaging materials and is recorded at the lower of cost or market
value, determined on a first-in, first-out, and adjusted on a per-item,
basis.
ACCOUNTING
FOR LONG-LIVED ASSETS
We review
property and equipment and intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability is measured by comparison of our carrying amount
to future net cash flows the assets are expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds its fair market value.
Property and equipment to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell.
INTANGIBLE
ASSETS
In
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142,
Goodwill and Other Intangible
Assets, intangible assets with an indefinite useful life are not
amortized. Intangible assets with a finite useful life are amortized on the
straight-line method over the estimated useful lives, generally three to ten
years.
SOFTWARE
DEVELOPMENT COSTS
In
accordance with SFAS No. 86, Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed, software development
costs are expensed as incurred until technological feasibility and marketability
has been established, generally with release of a beta version for customer
testing. Once the point of technological feasibility and marketability is
reached, direct production costs (including labor directly associated with the
development projects), indirect costs (including allocated fringe benefits,
payroll taxes, facilities costs, and management supervision), and other direct
costs (including costs of outside consultants, purchased software to be included
in the software product being developed, travel expenses, material and supplies,
and other direct costs) are capitalized until the product is available for
general release to customers. We amortize capitalized costs on a
product-by-product basis. Amortization for each period is the greater of the
amount computed using (i) the straight-line basis over the estimated product
life (generally from 12 to 18 months, but up to 60 months), or (ii) the ratio of
current revenues to total projected product revenues. Total cumulative
capitalized software development costs were $894,844, less accumulated
amortization of $560,238 at March 31, 2009.
Capitalized
software development costs are stated at the lower of amortized costs or net
realizable value. Recoverability of these capitalized costs is determined at
each balance sheet date by comparing the forecasted future revenues from the
related products, based on management’s best estimates using appropriate
assumptions and projections at the time, to the carrying amount of the
capitalized software development costs. If the carrying value is determined not
to be recoverable from future revenues, an impairment loss is recognized equal
to the amount by which the carrying amount exceeds the future revenues. To date,
no capitalized costs have been written down to net realizable
value.
SFAS No.
2, Accounting for Research and
Development Costs, established accounting and reporting standards for
research and development. In accordance with SFAS No. 2, costs we incur to
enhance our existing products after general release to the public (bug fixes)
are expensed in the period they are incurred and included in research and
development costs. Research and development costs incurred prior to
determination of technological feasibility and marketability and after general
release to the public and charged to expense were $25,175 and $69,038 for the
three months ended March 31, 2009 and 2008, respectively, included in general
and administrative expenses.
We
capitalize costs related to the development of computer software developed or
obtained for internal use in accordance with the American Institute of Certified
Public Accountants Statement of Position (“SOP”) 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. Software obtained for
internal use has generally been enterprise level business and finance software
that we customize to meet our specific operational needs. We have not sold,
leased, or licensed software developed for internal use to our customers and
have no intention of doing so in the future.
We
capitalize costs related to the development and maintenance of our website in
accordance with Financial Accounting Standard Board’s (“FASB’s”) Emerging Issues
Task Force (“EITF”) Issue No. 00-2, Accounting for Website Development
Costs. Under EITF Issue No. 00-2, costs expensed as incurred are as
follows:
|
▪
|
planning
the website,
|
|
|
▪
|
developing
the applications and infrastructure until technological feasibility is
established,
|
|
|
▪
|
developing
graphics such as borders, background and text colors, fonts, frames, and
buttons, and
|
|
|
▪
|
operating
the site such as training, administration and
maintenance.
|
Capitalized
costs include those incurred to:
|
▪
|
obtain
and register an Internet domain name,
|
|
|
▪
|
develop
or acquire software tools necessary for the development
work,
|
|
|
▪
|
develop
or acquire software necessary for general website
operations,
|
|
|
▪
|
develop
or acquire code for web applications,
|
|
|
▪
|
develop
or acquire (and customize) database software and software to integrate
applications such as corporate databases and accounting systems into web
applications,
|
|
|
▪
|
develop
HTML web pages or templates,
|
|
|
▪
|
install
developed applications on the web server,
|
|
|
▪
|
create
initial hypertext links to other websites or other locations within the
website, and
|
|
|
▪
|
test
the website applications.
|
We
amortize website development costs on a straight-line basis over the estimated
life of the site, generally 36 months. Total cumulative website development
costs, included in “Other assets” on our condensed consolidated balance sheets,
were $130,230, less accumulated amortization of $25,460 at March 31,
2009.
RESTRICTED
CASH
Restricted
cash represents cash held in reserve by our merchant banker to allow for a
potential increase in credit card charge backs from increased consumer
purchases. Total restricted cash at March 31, 2009 included in “Other
assets” on the condensed consolidated balance sheets was $40,000.
REVENUE
RECOGNITION
We derive
revenues from the sale of packaged software products, product support and
multiple element arrangements that may include any combination of these items.
We recognize software revenue for software products and related services in
accordance with SOP 97-2, Software Revenue Recognition,
as modified by SOP 98-9,
Modification of SOP 97-2, With Respect to Certain Transactions. We
recognize revenue when persuasive evidence of an arrangement exists (generally a
purchase order), we have delivered the product, the fee is fixed or determinable
and collectibility is probable.
In some
situations, we receive advance payments from our customers. We defer revenue
associated with these advance payments until we ship the products or offer the
support.
In
accordance with EITF Issue No. 01-9, Accounting for Consideration Given
by a Vendor to a Customer or a Reseller of the Vendor’s Product, we
generally account for cash considerations (such as sales incentives – rebates
and coupons) that we give to our customers as a reduction of revenue rather than
as an operating expense.
Product
Revenue
We
typically recognize revenue from the sale of our packaged software products when
we ship the product. We sell some of our products on consignment to a limited
number of resellers. We recognize revenue for these consignment transactions
only when the end-user sale has occurred. Revenue for software distributed
electronically via the Internet is recognized when the customer has been
provided with the access codes that allow the customer to take immediate
possession of the software on its hardware and evidence of the arrangement
exists (web order).
Some of
our software arrangements involve multiple copies or licenses of the same
program. These arrangements generally specify the number of simultaneous users
the customer may have (multi-user license), or may allow the customer to use as
many copies on as many computers as it chooses (a site license). Multi-user
arrangements, generally sold in networked environments, contain fees that vary
based on the number of users that may utilize the software simultaneously. We
recognize revenue when evidence of an order exists and upon delivery of the
authorization code to the consumer that will allow them the limited simultaneous
access. Site licenses, generally sold in non-networked environments, contain a
fixed fee that is not dependent on the number of simultaneous users. Revenue is
recognized when evidence of an order exists and the first copy is delivered to
the consumer.
Many of
our software products contain additional content that is “locked” to prevent
access until a permanent access code, or “key,” is purchased. We recognize
revenue when evidence of an order exists and the customer has been provided with
the access code that allows the customer immediate access to the additional
content. All of the programs containing additional locked content are fully
functional and the keys are necessary only to access the additional content. The
customer’s obligation to pay for the software is not contingent on delivery of
the “key” to access the additional content.
We reduce
product revenue for estimated returns and price protections that are based on
historical experience and other factors such as the volume and price mix of
products in the retail channel, trends in retailer inventory and economic trends
that might impact customer demand for our products. We also reduce product
revenue for the estimated redemption of end-user rebates on certain current
product sales. Our rebate reserves are estimated based on the terms and
conditions of the specific promotional rebate program, actual sales during the
promotion, the amount of redemptions received and historical redemption trends
by product and by type of promotional program. We did not offer any rebate
programs to our customers during the three months ended March 31, 2009 and
2008.
Multiple
Element Arrangements
We also
enter into certain revenue arrangements for which we are obligated to deliver
multiple products or products and services (multiple elements). For these
arrangements, which include software products, we allocate and defer revenue for
the undelivered elements based on their vendor-specific objective evidence
(“VSOE”) of fair value. VSOE is generally the price charged when that element is
sold separately.
In
situations where VSOE exists for all elements (delivered and undelivered), we
allocate the total revenue to be earned under the arrangement among the various
elements, based on their relative fair value. For transactions where VSOE exists
only for the undelivered elements, we defer the full fair value of the
undelivered elements and recognize the difference between the total arrangement
fee and the amount deferred for the undelivered items as revenue (residual
method). If VSOE does not exist for undelivered items that are services, we
recognize the entire arrangement fee ratably over the remaining service period.
If VSOE does not exist for undelivered elements that are specified products, we
defer revenue until the earlier of the delivery of all elements or the point at
which we determine VSOE for these undelivered elements.
We
recognize revenue related to the delivered products or services only if (i) the
above revenue recognition criteria are met, (ii) any undelivered products or
services are not essential to the functionality of the delivered products and
services, (iii) payment for the delivered products or services is not contingent
upon delivery of the remaining products or services, and (iv) we have an
enforceable claim to receive the amount due in the event that we do not deliver
the undelivered products or services.
Discounts
on Future Purchases
In
connection with the licensing of an existing product, we sometimes offer a
discount on additional licenses of the same product or on other
products. We apply a proportionate amount of the discount to each
element covered by the arrangement based on each element’s fair
value. If the future elements are unknown at the time of the original
sale, we apply the discount to the current product(s) purchased, defer the
discount amount to be recognized pro rata over the estimated period during which
additional purchases will be made (typically one year), and recognize current
revenue on the remainder.
Shipping
and Handling Costs
We record
the amounts we charge our customers for the shipping and handling of our
software products as product revenue and we record the related costs as cost of
sales on our condensed consolidated statements of operations.
Sales
Taxes
We record
the amounts we charge our customers for sales taxes assessed by state and local
governments on the sale of our software products and related shipping charges,
as appropriate, on the net basis. As such, we report the taxes
collected as a liability on our balance sheet and do not include them in product
revenue in our consolidated statements of operations.
Customer
Service and Technical Support
Customer
service and technical support costs include the costs associated with performing
order processing, answering customer inquiries by telephone and through
websites, email and other electronic means, and providing technical support
assistance to our customers. In connection with the sale of certain products, we
provide a limited amount of free technical support assistance to customers. We
do not defer the recognition of any revenue associated with sales of these
products, since the cost of providing this free technical support is
insignificant. The technical support is provided within one year after the
associated revenue is recognized and free product enhancements (bug fixes) are
minimal and infrequent. We accrue the estimated cost of providing this free
support upon product shipment and include it in cost of sales.
INCOME
TAXES
We
utilize SFAS No. 109, Accounting for Income Taxes.
SFAS No. 109 requires the use of the asset and liability method of accounting
for income taxes. Under this method, deferred income taxes are provided for the
temporary differences between the financial reporting basis and the tax basis of
our assets and liabilities. 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.
EARNINGS
PER SHARE
We follow
SFAS No. 128, Earnings Per
Share, to calculate and report basic and diluted earnings per share
(“EPS”). Basic EPS is computed by dividing income available to common
shareholders by the weighted average number of shares of common stock
outstanding for the period. Diluted EPS is computed by giving effect to all
dilutive potential shares of common stock that were outstanding during the
period. For us, dilutive potential shares of common stock consist of the
incremental shares of common stock issuable upon the exercise of stock options
and warrants for all periods, convertible notes payable and the incremental
shares of common stock issuable upon the conversion of convertible preferred
stock.
When
discontinued operations, extraordinary items, and/or the cumulative effect of an
accounting change are present, income before any of such items on a per share
basis represents the “control number” in determining whether potential shares of
common stock are dilutive or anti-dilutive. Thus, the same number of potential
shares of common stock used in computing diluted EPS for income from continuing
operations is used in calculating all other reported diluted EPS amounts. In the
case of a net loss, it is assumed that no incremental shares would be issued
because they would be anti-dilutive. In addition, certain options and warrants
are considered anti-dilutive because the exercise prices were above the average
market price during the period. Anti-dilutive shares are not included in the
computation of diluted EPS, in accordance with SFAS No. 128.
The
following table shows the amounts used in computing earnings per common share
and the average number of shares of dilutive potential common
stock:
|
For
the Three Months Ended March 31,
|
2009
|
2008
|
||||||
|
Net
income (loss)
|
$ | (325,712 | ) | $ | 419,121 | |||
|
Preferred
stock dividends
|
--- | --- | ||||||
|
Net
income (loss) available to common shareholders
|
$ | (325,712 | ) | $ | 419,121 | |||
|
Basic
weighted average shares outstanding
|
55,172,725 | 52,635,432 | ||||||
|
Dilutive
effect of:
|
||||||||
|
Stock
options
|
--- | --- | ||||||
|
Warrants
|
--- | --- | ||||||
|
Diluted
weighted average shares outstanding
|
55,172,725 | 52,635,432 | ||||||
RECENT
ACCOUNTING PRONOUNCEMENTS
Financial
Guarantee Insurance Contracts
In May
2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee
Insurance Contract-and Interpretation of FASB Statement No. 60 to clarify
how Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims
liabilities. SFAS No. 163 also requires expanded disclosures about
financial guarantee insurance contracts. SFAS No. 163 is effective
for fiscal years beginning on or after December 15, 2008, and interim periods
within those fiscal years. Adoption of SFAS No. 163 did not have a material
impact on our condensed consolidated financial statements.
GAAP
Hierarchy
In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles, to identify the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with GAAP. SFAS No. 162 directs the GAAP hierarchy to the
entity, not the independent auditors, as the entity is responsible for selecting
accounting principles for financial statements that are presented in conformity
with GAAP. SFAS No. 162 is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board amendments to remove
the GAAP hierarchy from the auditing standards. We do not expect SFAS
No. 162 to have a material impact on our condensed consolidated financial
statements.
Derivative
Instruments
In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, to improve financial reporting about
derivative instruments and hedging activities. The standard requires
enhanced disclosures to enable investors to better understand their effects on
an entity’s financial position, financial performance, and cash
flows. SFAS No. 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. Adoption of SFAS No. 161 did not
have a material impact on our condensed consolidated financial
statements.
Noncontrolling
Interests
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of Accounting Research Bulletin
No. 51. SFAS No. 160 establishes accounting and reporting standards
for ownership interests in subsidiaries held by parties other than the parent,
the amount of consolidated net income attributable to the parent and to the
noncontrolling interest, changes in a parent’s ownership interest and the
valuation of retained noncontrolling equity investments when a subsidiary is
deconsolidated. SFAS No. 160 also establishes disclosure requirements that
clearly identify and distinguish between the interests of the parent and the
interests of the noncontrolling owners. SFAS No. 160 is effective for fiscal
years beginning after December 15, 2008. Adoption of SFAS No. 160 did not
have a material impact on our condensed consolidated financial
statements.
Business
Combinations
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations. SFAS
No. 141(R) establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the acquiree
and the goodwill acquired. SFAS No. 141(R) also establishes disclosure
requirements to enable the evaluation of the nature and financial effects of the
business combination. SFAS No. 141(R) is effective for fiscal years beginning
after December 15, 2008. We will apply the guidance of SFAS No. 141(R) to
business combinations completed on or after January 1, 2009.
Fair
Value Measurements
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to
provide enhanced guidance for using fair value to measure assets and
liabilities. The standard also expands disclosure requirements for
assets and liabilities measured at fair value, how fair value is determined, and
the effect of fair value measurements on earnings. The standard
applies whenever other authoritative literature requires, or permits, certain
assets or liabilities to be measured at fair value, but does not expand the use
of fair value. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. In February 2008, the FASB issued Staff
Positions 157-1 and 157-2 which partially defer the effective date of
SFAS No. 157 for one year for certain nonfinancial assets and
liabilities and remove certain leasing transactions from its scope. Our adoption
of SFAS No. 157 for financial assets and liabilities did not have a material
impact on our consolidated financial statements. The impact of adoption of SFAS
No. 157 on non-financial assets and liabilities is not expected to have a
significant impact on our financial position, results of operations and cash
flows.
RECLASSIFICATIONS
Certain
accounts in our 2008 financial statements have been reclassified for comparative
purposes to conform with the presentation in our 2009 financial
statements.
NOTE
2 – GOING CONCERN
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles in the
United States applicable to a going concern. As of March 31, 2009, we had a
year-to-date net loss of $325,712, and negative working capital of $1,215,332
and $1,103,495, and an accumulated deficit of $8,383,089 and $8,057,377 as of
March 31, 2009 and December 31, 2008, respectively. Although these factors raise
substantial doubt as to our ability to continue as a going concern through
December 31, 2009, we have taken several actions to mitigate against this risk.
These actions include relying on the approximately $387,000 cash reserve from
the sale of our Membership Plus product line and pursuing mergers and
acquisitions that will provide profitable operations and positive operating cash
flow.
NOTE
3 – INVENTORIES
At March
31, 2009, inventories consisted of the following:
|
Raw
materials
|
$ | 62,770 | ||
|
Finished
goods
|
29,592 | |||
|
Less
reserve for obsolete inventory
|
(13,800 | ) | ||
|
Inventories
|
$ | 78,562 |
NOTE
4 – PRODUCT LINE ACQUISITION
On
February 25, 2008, we acquired the FormTool software product line from ORG
Professional, LLC. The purchase price of approximately $226,000 was
comprised as follows:
|
Description
|
Amount
|
|||
|
Fair
value of common stock
|
$ | 40,000 | ||
|
Cash
|
100,000 | |||
|
Promissory
note
|
85,934 | |||
|
Total
|
$ | 225,934 | ||
The fair
value of our common stock was determined based on 1,000,000 restricted shares of
our common stock issued and priced at the closing price as of February 22, 2008
($0.04).
The
allocation of the purchase price to the assets acquired based on their estimated
fair values was as follows:
|
Description
|
Amount
|
|||
|
Trademark/Trade
name
|
$ | 67,780 | ||
|
Internet
domain names
|
33,890 | |||
|
Customer
list
|
22,594 | |||
|
Copyrights
|
67,780 | |||
|
Computer
software code
|
22,594 | |||
|
Distribution
agreements
|
11,296 | |||
|
Total
|
$ | 225,934 | ||
The
assets will be amortized over a period of years as follows:
|
Description
|
Estimated
Remaining Life (years)
|
|||
|
Trademark/Trade
name/Copyrights
|
10
|
|||
|
Internet
domain names
|
5
|
|||
|
Customer
list/Computer software code
|
3
|
|||
|
Distribution
agreements (remaining contract term)
|
.33
|
|||
One of
our outside directors currently owns a 5% equity interest in ORG Professional,
LLC, and agreed to forego any direct personal economic benefit to which he would
otherwise be entitled, including the restricted shares of our common stock
issuable as part of the consideration.
During
the three months ended March 31, 2009 and 2008, sales from the FormTool software
product line were approximately 5% and 1%, respectively, of our gross
sales.
NOTE
5 – RESERVES AND ALLOWANCES
At March
31, 2009, the allowance for doubtful accounts included in Accounts receivable,
trade, net, consisted of the following:
|
Balance
December 31, 2008
|
$ | 16,300 | ||
|
Bad
debts provision (included in Other operating expenses)
|
7,214 | |||
|
Accounts
written off
|
(8,928 | ) | ||
|
Collection
of accounts previously written off
|
14 | |||
|
Balance
March 31, 2009
|
$ | 14,600 |
At March
31, 2009, the reserve for obsolete inventory included in Inventories consisted
of the following:
|
Balance
December 31, 2008
|
$ | 15,500 | ||
|
Provision
for obsolete inventory
|
--- | |||
|
Obsolete
inventory written off
|
(1,700 | ) | ||
|
Balance
March 31, 2009
|
$ | 13,800 |
At March
31, 2009, the reserve for sales returns included in Other current liabilities
consisted of the following:
|
Balance
December 31, 2008
|
$ | 119,821 | ||
|
Return
provision – sales
|
71,600 | |||
|
Return
provision – cost of sales
|
(10,740 | ) | ||
|
Returns
processed
|
(85,297 | ) | ||
|
Balance
March 31, 2009
|
$ | 95,384 |
NOTE
6 – DEBT
At March
31, 2009, long-term debt consisted of the following:
|
Capital
lease obligation payable to a corporation due November 2009 in monthly
installments of $1,144, including interest at 11.7%. Secured by telephone
equipment.
|
$ | 8,762 | ||
|
Unsecured
term note payable to a shareholder due March 2008 in monthly installments
of $10,000, plus interest at 8%, through April 2007, and monthly
installments of $20,000, plus interest at 8%, beginning May 2007. Interest
on overdue principal accrues at 15%.
|
56,000 | |||
|
Unsecured
term note payable to a limited liability company due February 2010 in
monthly installments of $4,167, including simple interest at 15%. See Note
4.
|
49,709 | |||
|
Total
Long-term debt
|
114,471 | |||
|
Less: Current
maturities
|
(114,471 | ) | ||
|
Long-term
debt, net
|
$ | --- | ||
At March
31, 2009, we were current on the capital lease obligation. We are in
arrears for the final three payments of the unsecured term note payable to a
shareholder and the unsecured term note payable to a limited liability
company.
NOTE
7 – STOCKHOLDERS’ EQUITY
COMMON
STOCK
In March
2009, we committed to issue a total of 3,357,143 restricted shares of common
stock consisting of 1,907,143 shares to our executive officers and 1,450,000
shares to our non-executive employees, at the closing price as of March 12, 2009
($0.021), in lieu of cash for services rendered from January 1, 2004 through
December 31, 2008. This issuance was valued at $70,500.
In March
2009, we committed to issue a total of 2,142,857 restricted shares of common
stock to our outside directors, at the closing price as of March 12, 2009
($0.021) in lieu of cash payments of amounts accrued for service as members of
our board from the period of April 1, 2008 through December 31,
2008. This issuance was valued at $45,000.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
We are
subject to legal proceedings and claims that arise in the ordinary course of our
business. In the opinion of management, the amount of ultimate liability with
respect to these actions will not materially affect our financial statements
taken as a whole.
Our
employment agreements with our management team each contain a provision for an
annual bonus equal to 1% of our income from operations adjusted for other income
and interest expense (3% total). We accrue this bonus on a quarterly basis. Our
management team consists of the following:
|
Chief
Executive Officer
|
Chief
Technology Officer
|
Chief
Financial Officer
|
||||||||||
|
Base
Annual Salary
|
$ | 150,000 | $ | 150,000 | $ | 110,000 | ||||||
In
addition to the bonus provisions and annual base salary, each employment
agreement provides for payment of the following for termination by reason of
disability.
|
Accrued
Base Salary
|
Accrued
Management Bonus
|
Vested
Deferred Vacation Compensation
|
||||||||||
|
Included
in Other current liabilities at March 31, 2009
|
$ | 12,098 | $ | --- | $ | 27,373 | ||||||
The
agreements also provide for severance compensation equal to the then base salary
until the later of (i) the expiration of the term of the agreement as set forth
therein or (ii) one year, when the termination is other than for cause
(including termination by reason of disability). There is no severance
compensation in the event of voluntary termination or termination for
cause.
We have
included content in QuickVerse, our flagship software product, under contracts
with publisher providers that have expired. We are currently pursuing
resolution, however, there is no guarantee that we will be able to secure a new
agreement, or an extension, and should any of the publishers demand we cease and
desist including their content, the unknown potential negative impact could be
material.
Our
royalty agreements for new content generally provide for advance payments to be
made upon contract signing. In addition, several new agreements
provide for additional advance payments to be made upon delivery of usable
content and publication. We accrue and pay these advances when the
respective milestone is met.
We do not
collect sales taxes or other taxes with respect to shipments of most of our
goods into most states in the U.S. Our fulfillment center and
customer service center networks, and any future expansion of those networks,
along with other aspects of our evolving business, may result in additional
sales and other tax obligations. One or more states may seek to
impose sales or other tax collection obligations on out-of-jurisdiction
companies that engage in e-commerce. A successful assertion by one or
more states that we should collect sales or other taxes on the sale of
merchandise or services could result in substantial tax liabilities for past
sales, decrease our ability to compete with traditional retailers, and otherwise
harm our business.
Currently,
decisions of the U.S. Supreme Court restrict the imposition of obligations to
collect state and local taxes and use taxes with respect to sales made over the
Internet. However, a number of states, as well as the U.S. Congress,
have been considering various initiatives that could limit or supersede the
Supreme Court’s constitutional concerns and resulted in a reversal of its
current position, we could be required to collect sales and use taxes in
additional states. The imposition by state and local governments of
various taxes upon Internet commerce could create administrative burdens for us,
put us at a competitive disadvantage if they do not impose similar obligations
on all of our online competitors and decrease our future sales.
NOTE
9 – RISKS AND UNCERTAINTIES
Our
future operating results may be affected by a number of factors. We depend upon
a number of major inventory and intellectual property suppliers. If a critical
supplier had operational problems or ceased making materials available to us,
operations could be adversely affected.
Cautionary
Statement Regarding Forward-Looking Statements
Certain
statements made in this Quarterly Report on Form 10-Q are “forward-looking
statements” (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future operations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Findex.com, Inc.
(“we”, “us”, “our” or the “Company”) to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included
herein are based on current expectations that involve numerous risks and
uncertainties. The Company's plans and objectives are based, in part, on
assumptions involving the continued expansion of
business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance the forward-looking
statements included in this Quarterly Report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
This
information should be read in conjunction with our unaudited condensed
consolidated financial statements and the notes thereto included in Item 1 of
Part I of this quarterly report, and our audited financial statements and the
notes thereto and our Management’s Discussion and Analysis of Financial
Condition and Results of Operation contained in our annual report on Form 10-K
for the fiscal year ended December 31, 2008.
Description
of Business
We
develop, publish, market, and distribute and directly sell off-the-shelf
consumer and organizational software products for PC, Macintosh®
and PDA platforms. We develop our software products through in-house initiatives
supplemented by outside developers. We market and distribute our software
products principally through direct marketing and Internet sales programs, but
also through secular and non-secular wholesale retailers.
We are
currently in the early stages of a defining transformative period in our
development. In recent years, we have come to be recognized as a consumer
desktop software company that serves a demographic defined largely by an
interest in Christianity and faith-based “inspirational” values. The nature of
our products historically, and the fact that our product lines have not extended
materially beyond the boundaries of this affinity group, have fostered this
perception. Indeed, as the publisher of one of the industry-leading Bible study
desktop software products, QuickVerse®,
we are known to many users of that product only as “QuickVerse”, not Findex.
While we believe that the QuickVerse®
brand is among our most valuable assets, and we greatly value the goodwill that
our reputation in this regard has engendered, we also believe that working to
expand that reputation into one which is more closely associated with providing
high quality branded software and content products generally – and ones that
extend across both consumer and business segments – will afford us significantly
greater opportunities in both the near and long term to steadily increase
revenues and earnings, and, ultimately, to enhance shareholder value. We
believe, moreover, that coupling this strategic diversification with a
commitment to an increasing reliance on a sales and distribution model through
which our products are sold on a subscription basis and can be purchased and
downloaded directly from us online will be instrumental in furthering these
financial objectives. Consequently, while we expect to continue for the
indefinite future to invest substantially in the growth and development of our
existing primary software titles and content, we also expect as we go forward to
invest substantially in not only building a significantly more diverse line of
product titles, but also in building our technology platform and infrastructure
so as to enable our evolution over time into a principally Webcentric provider
of software solutions, content, and online products.
As part
of that objective, we acquired FormTool.com and the FormTool®
line of products in February 2008. In September 2008, we re-launched
the FormTool.com website as an online marketplace for purchasing the
FormTool®
line of form creation and form filler products, and also a one-stop shop for
finding, purchasing and downloading customizable forms for a wide range of
business and consumer needs. Our model includes the ability to purchase forms on
an individual basis, in bulk packs, or on a subscription basis.
Management
Overview
During
the first quarter of 2009, we focused on our two product lines, QuickVerse®
and FormTool®.
Specifically, for our QuickVerse®
product line, we released an upgraded software title as well as a new content
collection. These titles include:
|
▪
|
Sermon
Builder 5.0 with a retail price of $69.95; and
|
|
|
▪
|
Charles
H. Spurgeon Collection with a retail price of
$69.95.
|
In
addition, during the fist quarter of 2009 our development team worked on a new
edition to our quickverse.com website which will enable QuickVerse®
users to quickly find and navigate through multiple troubleshooting scenarios
online versus calling or emailing our technical support
department. Although there can be no assurance, this new addition to
our website is scheduled to be launched in the second quarter of
2009. Furthermore, we began revamping our website for our
FormTool®
product line in order to add greater functionality to the
website. Although there can be no assurance, this revamped website is
scheduled to be launched in the second quarter of 2009. We continue to
concentrate on building our technology platform and infrastructure in order to
become a more Webcentric provider of online products.
|
Statements
of Operations for Quarters Ending March 31
|
2009
|
2008
|
Change
|
|||||||||
|
Net
revenues
|
$ | 578,321 | $ | 611,531 | $ | (33,210 | ) | |||||
|
Cost
of sales
|
(192,009 | ) | (254,909 | ) | 62,900 | |||||||
|
Gross
profit
|
$ | 386,312 | $ | 356,622 | $ | 29,690 | ||||||
|
Sales,
marketing and general and administrative expenses
|
(706,523 | ) | (698,669 | ) | (7,854 | ) | ||||||
|
Loss
from operations
|
$ | (320,211 | ) | $ | (342,047 | ) | $ | 21,836 | ||||
|
Other
income (expenses), net
|
(5,501 | ) | 4,894 | (10,395 | ) | |||||||
|
Gain
on fair value adjustment of derivatives
|
--- | 305,620 | (305,620 | ) | ||||||||
|
Gain
on settlement of derivative liabilities
|
--- | 450,654 | (450,654 | ) | ||||||||
|
Income
(loss) before income taxes
|
$ | (325,712 | ) | $ | 419,121 | $ | (744,833 | ) | ||||
|
Income
taxes
|
--- | --- | --- | |||||||||
|
Net
income (loss)
|
$ | (325,712 | ) | $ | 419,121 | $ | (744,833 | ) | ||||
The
differing results of operations are primarily attributable to the
following:
|
▪
|
a
decrease in net revenues for the three months ended March 31, 2009 partly
attributable to the current economic downturn;
|
||
|
▪
|
a
decrease in cost of sales for the three months ended March 31, 2009 due
primarily to decreased direct costs and amortization of software
development costs ; and
|
||
|
▪
|
most
notably for the three months ended March 31, 2008:
|
||
|
▪
|
the
recognition of a gain related to the fair value adjustment of derivatives
up to the settlement date of March 6, 2008 due to the fluctuation of our
stock price; and
|
||
|
▪
|
the
recognition of a gain on settlement of derivative liabilities in relation
to warrants issued in November 2004 and which were canceled on March 6,
2008 in exchange for a single cash payment ($150,000) that was less than
the calculated fair value of the derivatives on such
date.
|
||
Our
software products are highly seasonal. More than 50% of our annual sales are
expected to occur in the five months of September through January; the five
months of April through August are generally our weakest, generating less than
30% of our annual sales.
Revenues
The
following table presents our revenues for the three months ended March 31, 2009
and March 31, 2008 and dollar and percentage changes from the prior
year.
|
Change
|
||||||||||||||||||||||||
| Revenues for Three Months Ending March 31 |
2009
|
%
to Sales
|
2008
|
%
to Sales
|
$
|
%
|
||||||||||||||||||
|
Gross
revenues
|
$ | 650,061 | 100 | % | $ | 671,932 | 100 | % | $ | (21,871 | ) | 3 | % | |||||||||||
|
Less
estimated sales returns and allowances
|
(71,740 | ) | 11 | % | (60,401 | ) | 9 | % | (11,339 | ) | 19 | % | ||||||||||||
|
Net
revenues
|
$ | 578,321 | 89 | % | $ | 611,531 | 91 | % | $ | (33,210 | ) | 5 | % | |||||||||||
During
each of the three months ended March 31, 2009 and 2008, our sales efforts were
focused on directly targeting end-users through telemarketing and Internet
sales. Due to the increased frequency and consistency in our
development schedule, and the annual releases of our flagship product,
QuickVerse®,
upgrade sales have not been increasing at as rapid a rate as they have in
previous years; and therefore, we experienced a decrease in gross revenues for
the three months ended March 31, 2009. Although there can be no
assurance, we anticipate that our revenues in the future related to the
QuickVerse®
product line will remain consistent with our 2008 quarterly and annual figures
as we continue to expand the content made available for our QuickVerse®
products, develop new products for multiple platforms, offer our products at a
range of price points intended to appeal to various market sub-segments and
offer new venues to gain access to the expanded content available for our
QuickVerse®
customers.
During
the three months ended March 31, 2009, we did recognize approximately $30,000 in
revenue from the FormTool®
product line, which we acquired in February 2008. We do anticipate
our revenues in relation to the FormTool®
product line to increase in the near-term based on our launch of the new and
enhanced FormTool.com website and our annual upgrade release of the
FormTool®
desktop product line in September 2008.
As a
percentage of gross revenues, our sales returns and allowances increased for the
three months ended March 31, 2009 compared to March 31,
2008. Typically, product returns trend upward after a new version is
released as distributors and retail stores return old product in exchange for
the new version release. As anticipated for the three months ended
March 31, 2009, distributors and retail stores finalized their old product
exchange of QuickVerse®
2008 for the new version release QuickVerse®
2009. Furthermore, for the three months ended March 31, 2009 we
increased our reserve of sales returns due to the current economic
environment. Generally going forward, it is our objective to release
enhanced versions of our biggest-selling products on an annual basis, and as a
percentage of gross revenues we anticipate sales returns and allowances to
decrease over time as a result of increased stability in the functionality of
our products, decreasing reliance on retail sales and increasing reliance on
direct sales, which have historically resulted in fewer returns, and improved
planning in the timing of new product version releases.
Cost
of Sales
The
following table presents our cost of sales for the three months ended March 31,
2009 and March 31, 2008 and dollar and percentage changes from the prior
year.
|
|
Change
|
|||||||||||||||||||||||
| Cost of Sales for Three Months Ending March 31 |
2009
|
%
to Sales
|
2008
|
%
to Sales
|
$
|
%
|
||||||||||||||||||
|
Direct
costs
|
$ | 57,849 | 9 | % | $ | 75,742 | 11 | % | $ | (17,893 | ) | 24 | % | |||||||||||
|
Less
estimated cost of sales returns and allowances
|
(10,740 | ) | 2 | % | (9,105 | ) | 1 | % | (1,635 | ) | 18 | % | ||||||||||||
|
Amortization
of software development costs
|
51,645 | 8 | % | 90,215 | 13 | % | (38,570 | ) | 43 | % | ||||||||||||||
|
Royalties
|
45,620 | 7 | % | 45,222 | 7 | % | 398 | 1 | % | |||||||||||||||
|
Freight-out
|
26,795 | 4 | % | 34,036 | 5 | % | (7,241 | ) | 21 | % | ||||||||||||||
|
Fulfillment
|
20,840 | 3 | % | 18,799 | 3 | % | 2,041 | 11 | % | |||||||||||||||
|
Cost
of sales
|
$ | 192,009 | 30 | % | $ | 254,909 | 38 | % | $ | (62,900 | ) | 25 | % | |||||||||||
Cost of
sales consists primarily of direct costs, amortization of capitalized software
development costs, non-capitalized technical support wages, royalties accrued to
third party providers of intellectual property and the costs associated with
reproducing, packaging, fulfilling and shipping our products.
The net
decrease in cost of sales between the three months ended March 31, 2009 and the
corresponding period during 2008 is predominately attributable to decreased
direct costs and amortization of software development costs. The
decrease in direct costs is a result of scaling down our technical support
department as our products continue to become more functionally
stable. Furthermore, the decreased amount of new and/or enhanced
product releases during the fiscal year 2008 led to the decreased amount of
amortization for the three months ended March 31, 2009.
Royalties
remained relatively stable in real terms and as a percentage of gross revenues
for the three months ended March 31, 2009. However, our royalty
accruals are expected to increase in the future in real terms as sales to new
customers increase, more development projects are implemented for new and/or
enhanced products, and as we continue to expand the content available for our
QuickVerse®
line of products. Upgrade sales will remain only subject to royalties on their
content additions.
The
decrease in freight costs in real terms and as a percentage of gross revenues is
a result of decreased sales volume as well as our internal transformation to
provide more of our software products to be delivered via a download from our
website. Although there can be no assurance, we anticipate freight costs to
continue on a downward trend as we focus our sales efforts on direct and/or
upgrade sales and continue to advertise and enhance the ability to offer our
software products as downloads from our website.
The
amortization recognized during the three months ended March 31, 2009 resulted
mainly from the following software releases:
|
▪
|
FormTool®
7.0 (released September 2008),
|
|
|
▪
|
QuickVerse®
2009 (released October 2008),
|
|
|
▪
|
Charles
H. Spurgeon Collection (released February 2009),
|
|
|
▪
|
Sermon
Builder 5.0 (released March 2009) and
|
|
|
▪
|
Multiple
new content additions for QuickVerse®
products (released April 2007 through November
2008).
|
Comparatively,
during the three months ended March 31, 2008, the amortization recognized
resulted mainly from the following software releases:
|
▪
|
QuickVerse®
2007 (released August 2006),
|
|
|
▪
|
QuickVerse®
2007 Mobile (released December 2006),
|
|
|
▪
|
QuickVerse®
2007 Macintosh (released March 2007),
|
|
|
▪
|
QuickVerse®
2008 (released November 2007) and
|
|
|
▪
|
Multiple
new content additions for QuickVerse®
products (released April through October
2007).
|
As stated
above, the decrease in amortization for the three months ended March 31, 2009 is
the result of fewer development projects that were released during the fiscal
year 2008. In the future, our objective is to realize overall increases in
revenues due to aggressive product development and release schedules as well as
the acquisitions of new product lines.
In the
future, as we continue to implement our strategy to become a principally
Webcentric provider of online products, we anticipate experiencing a decrease in
cost of sales, specifically direct costs, freight and fulfillment, as more of
our products will become available for download.
|
Software
Development Costs For Three Months Ending March 31,
|
2009
|
2008
|
||||||
|
Beginning
balance
|
$ | 330,018 | $ | 392,172 | ||||
|
Capitalized
|
56,233 | 47,890 | ||||||
|
Amortized
(Cost of sales)
|
(51,645 | ) | (90,215 | ) | ||||
|
Ending
Balance
|
$ | 334,606 | $ | 349,847 | ||||
|
Research
and development expense (General and administrative)
|
$ | 25,175 | $ | 69,038 | ||||
For the
three months ended March 31, 2009, the increase in capitalized costs as well as
the decrease in research and development expense is the result of our
development team focusing their efforts on several new software and website
development projects. We continue to experience increased efficiency
in our development output (both internal and external) as evidenced by our
development project pace for the three months ended March 31, 2009 in relation
to our QuickVerse®
product line.
Sales,
General and Administrative
|
|
Change
|
|||||||||||||||||||||||
| Sales, General and Administrative Costs for Three Months Ending March 31 |
2009
|
%
to Sales
|
2008
|
%
to Sales
|
$
|
%
|
||||||||||||||||||
|
Selected
expenses:
|
||||||||||||||||||||||||
|
Commissions
|
$ | 1,500 | 0 | % | $ | 43,260 | 6 | % | $ | (41,760 | ) | 97 | % | |||||||||||
|
Advertising
and direct marketing
|
38,390 | 6 | % | 46,180 | 7 | % | (7,790 | ) | 17 | % | ||||||||||||||
|
Sales
and marketing wages
|
117,331 | 18 | % | 98,703 | 15 | % | 18,628 | 19 | % | |||||||||||||||
|
Other
sales and marketing costs
|
7,214 | 1 | % | --- | 0 | % | 7,214 | 0 | % | |||||||||||||||
|
Total
sales and marketing
|
$ | 164,435 | 25 | % | $ | 188,143 | 28 | % | $ | (23,708 | ) | 13 | % | |||||||||||
|
Personnel
costs
|
$ | 190,714 | 29 | % | $ | 133,495 | 20 | % | $ | 57,219 | 43 | % | ||||||||||||
|
Amortization
and depreciation
|
123,696 | 19 | % | 109,140 | 16 | % | 14,556 | 13 | % | |||||||||||||||
|
Research
and development
|
25,175 | 4 | % | 69,038 | 10 | % | (43,863 | ) | 64 | % | ||||||||||||||
|
Other
general and administrative costs
|
202,503 | 31 | % | 198,853 | 30 | % | 3,650 | 2 | % | |||||||||||||||
|
Total
general and administrative
|
$ | 542,088 | 83 | % | $ | 510,526 | 76 | % | $ | 31,562 | 6 | % | ||||||||||||
|
Total
sales, marketing, general and administrative
|
$ | 706,523 | 109 | % | $ | 698,669 | 104 | % | $ | 7,854 | 1 | % | ||||||||||||
As gross
revenues decreased for the three months ended March 31, 2009, total sales and
marketing costs also decreased. Commissions decreased significantly
as we have discontinued our contract with a third party for telemarketing
services. Although there can be no assurance, we do not anticipate
relying on a third party for telemarketing services in the future, and
therefore, we anticipate third party commissions to further decrease in the
future. Advertising and direct marketing costs also decreased as we
managed to cut our costs due to the decreased gross revenues. We anticipate
advertising and direct marketing costs to remain relatively stable in future
periods while we continue to enhance our product visibility online, increase and
focus more on our direct marketing efforts, yet limit the scope and frequency of
our print advertising campaigns to those that we can capitalize on the most in
order to maximize sales associated with new products, product enhancements and
potential new product lines. During the three months ended March 31,
2009, sales and marketing wages - reclassified, increased as we recognized
approximately $21,000 of expense related to 725,000 restricted shares of common
stock issued to our sales team employees. While we would like to expand our
in-house direct-telemarketing sales team in relation to our current and
potential new product lines, we may not be able to do so in the immediate future
due to the current economic climate. Therefore, we anticipate our
sales and marketing wages to remain relatively steady in future
periods.
In
addition to the increase in total net personnel costs, gross direct salaries and
wages, before adjustments of capitalized wages and reclassifications, increased
approximately $73,000, from approximately $316,000 for the three months ended
March 31, 2008 to approximately $389,000 for the three months ended March 31,
2009. For the three months ended March 31, 2009, we recognized approximately
$112,000 of expense related to 3,357,143 restricted shares of common stock
issued to employees as compensation for services rendered January 1, 2004
through December 31, 2008. However, at the same time we experienced a decrease
in regular salaries and wages as a result of the departure of a member of the
product development team as we have streamlined this department with external,
independently contracted developers and the reduction in our technical support
staff as our software products become more stable. As a percentage of gross
revenues, gross direct salaries and wages increased approximately 13% from
approximately 47% for the three months March 31, 2008 to approximately 60% for
the three months ended March 31, 2009. Due to this significant increase as well
as the current economic climate, we anticipate direct salaries and wages to
decrease slightly in the future.
The
increase in the amortization and depreciation expense is mainly attributable to
the increase in amortization. The software license we acquired in 1999, from
which we derive our base intellectual property rights associated with the
products that are responsible for generating the overwhelming majority of our
revenues (the “1999 license”), is being amortized over a 10 year useful life and
will have been fully amortized by the close of the year ending December 31,
2009. Amortization expense for the three months ended March 31, 2009 and 2008
reflect the continual amortization of the 1999 license as well as the
amortization of the FormTool®
assets we acquired in February 2008. The FormTool®
assets are amortized over a period of years that range from less than one year
to ten years and approximate $3,000 of amortization expense each
month. In addition, for the three months ended March 31, 2009 we
recognized amortization expense for our FormTool®
website, www.formtool.com,
which was successfully re-launched in September 2008. Overall, we
anticipate amortization and depreciation expense to decrease in future periods
as the amortization related to the 1999 license will cease.
Research
and development costs include direct production costs (including labor directly
associated with the development projects), indirect costs (including allocated
fringe benefits, payroll taxes, facilities costs and management supervision),
and other direct costs (including costs of outside consultants, purchased
software to be included in the software product being developed, travel
expenses, material and supplies, and other direct costs). The decrease in
software development costs related to third-party developers and direct labor
expensed as research and development reflects more capitalization of research
and development costs for the three months ended March 31, 2009. Comparatively,
during the three months ended March 31, 2008 our development staff was faced
with greater maintenance issues than anticipated due to a new layout and engine
design within the QuickVerse®
2008 product line which ultimately resulted in an increase in research and
development costs expensed. In future periods, we anticipate research and
development expenses to slightly decrease as we have experienced increased
efficiency in our development output (both internal and external).
Gain
on Fair Value Adjustment of Derivatives
In
connection with warrants issued in November 2004, a non-cash fair value
adjustment of approximately $306,000 has been included in other income for the
three months ended March 31, 2008. These warrants were accounted for as a
liability according to the guidance of EITF 00-19, Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock
and the guidance of EITF 00-19-2, Accounting for Registration Payment
Arrangements. These warrants were canceled on March 6, 2008
and there is no recognition, therefore, of a derivative liability on our
December 31, 2008 balance sheet. Furthermore, we will not experience
a non-cash fair value adjustment related to these warrants which would be
included in other expenses or other income beyond the date of March 6,
2008.
Gain
on Settlement of Derivative Liabilities
On March
6, 2008, we entered into and consummated an agreement with Barron Partners, LP
in which warrants issued to that entity in November 2004 were immediately
canceled in exchange for a single cash payment to Barron Partners, LP in the
amount of $150,000. As a result of this transaction, these warrants
are now null and void for all purposes. We recorded a one time gain
during the three months ended March 31, 2008 due to the agreement calling for a
cash payment that was less than the Black-Scholes calculated fair value of the
derivatives on such date.
Income
Taxes
For the
three months ended March 31, 2009 and 2008, based on uncertainty about the
timing of and ability to generate future taxable income and our assessment that
the realization of the deferred tax assets no longer met the “more likely than
not” criterion for realization, we provided for a full valuation allowance
against our net deferred tax assets. If we determine that it is more likely than
not that we will be able to realize our deferred tax assets in the future, an
adjustment to the deferred tax asset valuation allowance would be recorded in
the period when such determination is made.
Liquidity
And Capital Resources
Our
primary needs for liquidity and capital resources are the working capital
requirements of our continued operations, which includes the ongoing internal
development of new products, expansion and upgrade of existing products, and
marketing and sales, as well as funding for the acquisition of new product lines
and/or companies. At this time it is unlikely that cash generated through our
continuing operations will be sufficient to sustain our continuing operations.
Furthermore, our pursuit of an aggressive growth plan, whether based on
internally developed products, licensing opportunities, or strategic product
line and/or company acquisitions, will likely require funding from outside
sources or the divestiture of one or more existing product lines (as occurred
with respect to our Membership Plus® product
line). Funding from outside sources may include but is not limited to the
pursuit of other financing options such as commercial loans, common stock and/or
preferred stock issuances and convertible notes. At this time, we have no
legally committed funds for future capital expenditures.
The
divestiture of our Membership Plus® product
line in October 2007 was driven by a combination of our need to raise cash and a
strategic determination to begin a long-term shift in our product lines away
from those within the faith-based vertical market and more towards those that
extend across the business-to-business and consumer segments more
generally. With a portion of the funds we realized from the sale of
our Membership Plus® product
line, we purchased FormTool® in
February 2008 which was our first product line acquisition outside of the
faith-based market. Although there can be no assurance, we anticipate
acquiring additional product lines and/or entering into business combinations
which will either replace or increase the revenue and free cash flow previously
produced by the Membership Plus® product
line.
|
Working
Capital
|
March
31, 2009
|
December
31, 2008
|
||||||
|
Current
assets
|
$ | 580,276 | $ | 712,066 | ||||
|
Current
liabilities
|
$ | 1,795,608 | $ | 1,815,561 | ||||
|
Retained
deficit
|
$ | 8,383,089 | $ | 8,057,377 | ||||
While
liquidity for our day-to-day continued operations remains an ongoing concern for
us, and while there can be no continuing assurance, given the fact that a
substantial portion of our net sales – 57% of which we collected during the year
ended December 31, 2008 through credit card processing transactions – are able
to be collected in a much shorter timeframe (several days) than that in which we
must generally pay our trade payables (30 days) and our accrued royalties
(quarterly, semi-annually, or annually), the situation suggested by our
consistently and significantly negative ratio of current assets to current
liabilities has historically been manageable.
|
Cash
Flows for Three Months Ending March 31
|
2009
|
2008
|
Change
|
%
|
||||||||||||
|
Cash
flows provided (used) by operating activities
|
$ | 38,212 | $ | (92,835 | ) | $ | 131,047 | 141 | % | |||||||
|
Cash
flows (used) by investing activities
|
$ | (68,013 | ) | $ | (161,750 | ) | $ | 93,737 | 58 | % | ||||||
|
Cash
flows (used) by financing activities
|
$ | (6,616 | ) | $ | (155,865 | ) | $ | 149,249 | 96 | % | ||||||
Net cash
provided by operating activities increased for the three months ended March 31,
2009 primarily due to a reduction in payments made to content providers and
vendors.
The
decrease in net cash used by investing activities for the three months ended
March 31, 2009 was due to the lack of investing activities. Comparatively, the
cash used by investing activities for the three months ended March 31, 2008 was
a result of the purchase of FormTool® in
February 2008.
The
decrease in net cash used by financing activities for the three months ended
March 31, 2009 was the result of only having continued payments made on
long-term notes payable. Comparatively for the three months ended March 31,
2008, cash used by financing activities included payments made on long term
notes payable as well as a settlement payment to Barron Partners, LP in the
amount of $150,000 in exchange for the cancellation of the warrants issued in
November 2004.
Financing
We have
been unable to secure bank financing due to our internal financial ratios and
negative working capital position and do not expect that we will be successful
in securing any such financing unless and until our ratios in this regard
improve. However, it may be possible to secure financing on our open accounts
receivable in order to satisfy our future financing needs. Equity financing,
too, remains an option for us, though no definitive prospects for any such
financing have been specifically identified.
Contractual
Liabilities
In May
2007, we secured an operating lease with a third-party for our corporate office
facility in Omaha, Nebraska with terms extending through May 2012. We also
secured an operating lease with a third-party for a warehouse facility in Omaha,
Nebraska with terms extending through June 2010. In accordance with the terms of
these leasehold agreements, we are responsible for all associated taxes,
insurance and utility expenses.
At March
31, 2009, the total future minimum rental payments required under these leases
is approximately $198,000 through the year 2012.
We lease
telephone equipment under a capital lease due to expire in November 2009. The
asset and liability under the capital lease are recorded at the present value of
the minimum lease payments. The asset is depreciated over a 5 year life. Total
minimum future lease payments under capital leases as of March 31, 2009 is
approximately $9,000 through the year 2009.
Off-Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.
Contractual
Obligations
As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide this information.
As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide this information.
Evaluation
of Disclosure Controls and Procedures
As
required by paragraph (b) of Rule 13a-15 under the Exchange Act, our principal
executive and principal financial officers are responsible for assessing the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(f) under the Exchange Act). Accordingly, we maintain
disclosure controls and procedures designed to ensure that information required
to be disclosed in our filings under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Our
Chief Executive Officer and Chief Financial Officer have evaluated our
disclosure controls and procedures as of the end of the period covered by this
Quarterly Report on Form 10-Q March 31, 2009, and have determined that such
disclosure controls and procedures are effective.
Changes
in Internal Controls
There
were no changes in our internal control over financial reporting during the
fiscal quarter covered by this report that have materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
On April
27, 2009, we received a letter from counsel for the plaintiff, Gary Odom, in a
civil proceeding that has been commenced in federal district court against
Findex, among numerous other co-defendants, notifying us of such proceeding. The
action alleges that our QuickVerse® product
incorporates certain patented source code owned by the plaintiff and for which
no appropriate authorization has been granted to Findex. While we are of the
belief that the intellectual property infringement claims asserted against us in
this action are without merit, any such claims, whether or not meritorious,
could result in costly litigation or require us to enter into royalty or
licensing agreements. If we are found to have infringed the proprietary rights
of others, we could be required to pay damages, redesign the products or
discontinue their sale. Any of these outcomes, individually or collectively,
could have a material adverse effect on our business, our financial condition,
including liquidity and profitability, and our results of
operations.
As of the
date of this quarterly report on Form 10-Q for the period ended March 31, 2009,
and to the best knowledge of our officers and directors, there were no other
pending material legal proceedings to which we were a party and we were not
aware that any were contemplated. There can be no assurance, however, that we
will not be made a party to litigation in the future.
As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item.
There
were no reportable events under this Item 3 during the quarterly period ended
March 31, 2009.
There
were no reportable events under this Item 3 during the quarterly period ended
March 31, 2009.
No
matters were submitted to a vote of our stockholders during the quarterly period
ended March 31, 2009.
There
were no reportable events under this Item 5 during the quarterly period ended
March 31, 2009.
Exhibits
required by Item 601 of Regulation S-K.
|
No.
|
Description
of Exhibit
|
|
2.1
|
Share
Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan
Holdings, Inc. dated March 7, 2000, incorporated by reference to Exhibit
2.1 on Form 8-K filed March 15, 2000.
|
|
3(i)(1)
|
Restated
Articles of Incorporation of Findex.com, Inc. dated June 1999 incorporated
by reference to Exhibit 3.1 on Form 8-K filed March 15,
2000.
|
|
3(i)(2)
|
Amendment
to Articles of Incorporation of Findex.com, Inc. dated November 10, 2004
incorporated by reference to Exhibit 3.1(ii) on Form 10-QSB filed November
10, 2004.
|
|
3(ii)
|
Restated
By-Laws of Findex.com, Inc., incorporated by reference to Exhibit 3.3 on
Form 8-K filed March 15, 2000.
|
|
10.1
|
Stock
Incentive Plan of Findex.com, Inc. dated May 7, 1999, incorporated by
reference to Exhibit 10.1 on Form 10-KSB/A filed May 13,
2004.
|
|
10.2
|
Share
Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan
Holdings Inc., dated March 7, 2000, incorporated by reference to Exhibit
2.1 on Form 8-K filed March 15, 2000.
|
|
10.3
|
License
Agreement between Findex.com, Inc. and Parsons Technology, Inc. dated June
30, 1999, incorporated by reference to Exhibit 10.3 on Form 10-KSB/A filed
May 13, 2004.
|
|
10.4
|
Employment
Agreement between Findex.com, Inc. and Steven Malone dated July 25, 2003,
incorporated by reference to Exhibit 10.4 on Form 10-KSB/A filed May 13,
2004.
|
|
10.5
|
Employment
Agreement between Findex.com, Inc. and Kirk Rowland dated July 25, 2003,
incorporated by reference to Exhibit 10.5 on Form 10-KSB/A filed May 13,
2004.
|
|
10.6
|
Employment
Agreement between Findex.com, Inc. and William Terrill dated June 7, 2002,
incorporated by reference to Exhibit 10.6 on Form 10-KSB/A filed May 13,
2004.
|
|
10.7
|
Restricted
Stock Compensation Agreement between Findex.com, Inc. and John A. Kuehne
dated July 25, 2003, incorporated by reference to Exhibit 10.7 on Form
10-KSB/A filed May 13, 2004.
|
|
10.8
|
Restricted
Stock Compensation Agreement between Findex.com, Inc. and Henry M.
Washington dated July 25, 2003, incorporated by reference to Exhibit 10.8
on Form 10-KSB/A filed May 13, 2004.
|
|
10.9
|
Restricted
Stock Compensation Agreement between Findex.com, Inc. and William Terrill
dated July 25, 2003, incorporated by reference to Exhibit 10.9 on Form
10-KSB/A filed May 13, 2004.
|
|
10.10
|
Stock
Purchase Agreement, including the form of warrant agreement, between
Findex.com, Inc. and Barron Partners, LP dated July 19, 2004, incorporated
by reference to Exhibit 10.1 on Form 8-K filed July 28,
2004.
|
|
10.11
|
Amendment
No. 1 to Stock Purchase Agreement between Findex.com, Inc. and Barron
Partners, LP dated September 30, 2004, incorporated by reference to
Exhibit 10.3 on Form 8-K filed October 6, 2004.
|
|
10.12
|
Registration
Rights Agreement between Findex.com, Inc. and Barron Partners, LP dated
July 26, 2004, incorporated by reference to Exhibit 10.2 on Form 8-K filed
July 28, 2004.
|
|
10.13
|
Waiver
Certificate between Findex.com, Inc. and Barron Partners, LP dated
September 16, 2004, incorporated by reference to Exhibit 10.4 on Form 8-K
filed October 6, 2004.
|
|
10.14
|
Settlement
Agreement between Findex.com, Inc., The Zondervan Corporation, Mattel,
Inc., TLC Multimedia, Inc., and Riverdeep, Inc. dated October 20, 2003,
incorporated by reference to Exhibit 10.14 on Form 10-KSB/A filed December
14, 2005.
|
|
10.15
|
Employment
Agreement Extension between Findex.com, Inc and Steven Malone dated March
31, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed
April 6, 2006.
|
|
10.16
|
Employment
Agreement Extension between Findex.com, Inc and William Terrill dated
March 31, 2006, incorporated by reference to Exhibit 10.2 on Form 8-K
filed April 6, 2006.
|
|
10.17
|
Employment
Agreement Extension between Findex.com, Inc and Kirk R. Rowland dated
March 31, 2006, incorporated by reference to Exhibit 10.3 on Form 8-K
filed April 6, 2006.
|
|
10.18
|
Promissory
Note to Barron Partners, LP dated April 7, 2006, incorporated by reference
to Exhibit 10.1 on Form 8-K filed April 13, 2006.
|
|
10.19
|
Share
Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan
Holdings Inc., dated March 7, 2000, incorporated by reference to Exhibit
2.1 on Form 8-K filed March 15, 2000.
|
|
10.20
|
Convertible
Secured Promissory Note between FindEx.com, Inc. and W. Sam Chandoha,
dated July 20, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K
filed July 26, 2006.
|
|
10.21
|
Security
Agreement between FindEx.com, Inc. and W. Sam Chandoha, dated July 20,
2006 incorporated by reference to Exhibit 10.2 on Form 8-K filed July 26,
2006.
|
|
10.22
|
Common
Stock Purchase Warrant between FindEx.com, Inc. and W. Sam Chandoha, dated
July 20, 2006 incorporated by reference to Exhibit 10.3 on Form 8-K filed
July 26, 2006.
|
|
10.23
|
Modification
and Extension Agreement Between FindEx.com, Inc. and W. Sam Chandoha,
dated September 20, 2006, incorporated by reference to Exhibit 10.1 on
Form 8-K filed September 25,2006.
|
|
10.24
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and Steven Malone
dated April 13, 2007, incorporated by reference to Exhibit 10.24 on Form
10-KSB filed April 17, 2007.
|
|
10.25
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and William Terrill
dated April 13, 2007, incorporated by reference to Exhibit 10.25 on Form
10-KSB filed April 17, 2007.
|
|
10.26
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and Kirk R. Rowland
dated April 13, 2007, incorporated by reference to Exhibit 10.26 on Form
10-KSB filed April 17, 2007.
|
|
10.27
|
Asset
Purchase Agreement between Findex.com, Inc. and ACS Technologies Group,
Inc. dated October 18, 2007, incorporated by reference to Exhibit 10.27 on
Form 8-K filed October 24, 2007.
|
|
10.28
|
Partial
Assignment of License Agreement Among Findex.com, Inc., Riverdeep,
Inc.,LLC and ACS Technologies Group, Inc. dated October 11, 2007,
incorporated by reference to Exhibit 10.28 on Form 8-K filed October 24,
2007.
|
|
10.29
|
Asset
Purchase Agreement between Findex.com, Inc. and ORG Professional, LLC
dated February 25, 2008, incorporated by reference to Exhibit 10.29 on
Form 8-K filed on February 28, 2008.
|
|
10.30
|
Warrant
Cancellation Agreement between Findex.com, Inc. and Barron Partners, L.P.
dated March 6, 2008, incorporated by reference to Exhibit 10.30 on Form
8-K filed on March 10, 2008.
|
|
10.31
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and Steven Malone
dated April 14, 2008, incorporated by reference to Exhibit 10.31 on Form
10-KSB filed on April 15, 2008.
|
|
10.32
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and William Terrill
dated April 14, 2008, incorporated by reference to Exhibit 10.32 on Form
10-KSB filed on April 15, 2008.
|
|
10.33
|
Employment
Agreement Extension Amendment between Findex.com, Inc. and Kirk R. Rowland
dated April 14, 2008, incorporated by reference to Exhibit 10.33 on Form
10-KSB filed on April 15, 2008.
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and dated May
20, 2009. FILED HEREWITH.
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and dated May
20, 2009. FILED HEREWITH.
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and dated May
20, 2009. FILED HEREWITH.
|
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
FINDEX.COM,
INC.
|
|||
|
Date:
May
20, 2009
|
By
|
/s/ Steven Malone
|
|
|
Steven
Malone
|
|||
|
President
and Chief Executive Officer
|
|
Date:
May
20, 2009
|
By
|
/s/ Kirk R. Rowland
|
|
|
Kirk
R. Rowland, CPA
|
|||
|
Chief
Financial Officer (Principal Financial & Accounting
Officer)
|