FINDEX COM INC - Quarter Report: 2010 March (Form 10-Q)

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Nevada		88-0379462
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
620 North 129th Street, Omaha, Nebraska		68154
(Address of principal executive offices)		(Zip Code)

 

 

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PART I - FINANCIAL INFORMATION:
Item 1.    Financial Statements:	F-1
Balance Sheets – March 31, 2010 (unaudited) and December 31, 2009	F-1
Statements of Operations (unaudited) for the three months ending March 31, 2010 and for the  three months ending March 31, 2009	F-2
Statements of Cash Flows (unaudited) for the three months ending March 31, 2010 and for the  three months ending March 31, 2009	F-3
Notes to Unaudited Financial Statements	F-4
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.    Quantitative and Qualitative Disclosures About Market Risk	8
Item 4T.  Controls and Procedures	8
PART II - OTHER INFORMATION:	9
Item 1.    Legal Proceedings	9
Item 1A. Risk Factors	9
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.    Defaults Upon Senior Securities	9
Item 4.    (Removed and Reserved)	9
Item 5.    Other Information	9
Item 6.    Exhibits	9
Signatures	12

Findex.com, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
		March 31, 2010				December 31, 2009
Assets
Current assets:
Cash and cash equivalents		$	98,016			$	138,539
Accounts receivable, trade, net			97,176				92,515
Inventories			71,042				88,546
Other current assets			24,831				35,823
Total current assets			291,065				355,423
Property and equipment, net			11,339				13,979
Intangible assets, net			414,877				488,691
Other assets			90,691				102,434
Total assets		$	807,972			$	960,527
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Current portion of term debt		$	65,077			$	83,898
Accounts payable, trade			413,495				387,082
Accounts payable, related party			53,159				78,869
Accrued royalties			849,755				815,687
Accrued payroll			108,930				125,846
Other current liabilities			219,682				205,558
Total current liabilities			1,710,098				1,696,940
Long-term debt, net			---				---
Deferred income taxes, net			4,575				4,700
Commitments and contingencies (Note 6)
Stockholders’ equity (deficit):
Preferred stock, $.001 par value
5,000,000 shares authorized
-0- and -0- shares issued and outstanding, respectively			---				---
Common stock, $.001 par value
120,000,000 shares authorized,
59,572,725 shares issued and outstanding			59,573				59,573
Paid-in capital			7,897,780				7,897,779
Retained (deficit)			(8,864,054	)			(8,698,465	)
Total stockholders’ equity (deficit)			(906,701	)			(741,113	)
Total liabilities and stockholders’ equity (deficit)		$	807,972			$	960,527
See accompanying notes.

Findex.com, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended
		March 31,
		2010				2009
Revenues, net of reserves and allowances		$	525,320			$	578,321
Cost of sales			204,748				192,009
Gross profit			320,572				386,312
Operating expenses:
Sales and marketing			96,739				164,435
General and administrative			384,706				542,088
Total operating expenses			481,445				706,523
Loss from operations			(160,873	)			(320,211	)
Other income (expenses), net			(4,717	)			(5,501	)
Loss before income taxes			(165,590	)			(325,712	)
Income taxes			---				---
Net loss		$	(165,590	)		$	(325,712	)
Net loss per share - Basic & Diluted:		$	0.00			$	(0.01	)
Weighted average shares used in computing basic and diluted loss per share			59,572,725				55,172,725
See accompanying notes.

 

 

 

 

 

 

 

 

Findex.com, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,		2010				2009
Cash flows from operating activities:
Cash received from customers		$	517,920			$	612,212
Cash paid to suppliers and employees			(528,263	)			(571,650	)
Other operating activities, net			(2,692	)			(2,350	)
Net cash (used) provided by operating activities			(13,035	)			38,212
Cash flows from investing activities:
Software development costs			(9,592	)			(56,233	)
Other investing activities, net			924				(11,780	)
Net cash used by investing activities			(8,668	)			(68,013	)
Cash flows from financing activities:
Payments made on term debt			(18,820	)			(6,616	)
Net cash used by financing activities			(18,820	)			(6,616	)
Net decrease in cash and cash equivalents			(40,523	)			(36,417	)
Cash and cash equivalents, beginning of year			138,539				423,371
Cash and cash equivalents, end of period		$	98,016			$	386,954
Reconciliation of net loss to cash flows from operating activities:
Net loss		$	(165,590	)		$	(325,712	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Software development costs amortized			74,557				51,645
Depreciation & amortization			22,308				123,696
Bad debts provision			---				7,214
Noncash operating expenses			---				70,500
Gain on sale of property and equipment			---				(99	)
Change in assets and liabilities:
(Increase) decrease in accounts receivable			(4,661	)			58,329
Decrease in inventories			17,504				2,983
Decrease in other current assets			10,867				26,174
Increase in accrued royalties			34,068				23,811
Increase (decrease) in accounts payable			12,703				(15,757	)
(Decrease) increase in other liabilities			(14,791	)			15,428
Net cash (used) provided by operating activities		$	(13,035	)		$	38,212
See accompanying notes.

	▪	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.

	▪	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.

For the Three Months Ended March 31,		2010				2009
Net loss		$	(165,590	)		$	(325,712	)
Preferred stock dividends			---				---
Net loss available to common shareholders		$	(165,590	)		$	(325,712	)
Basic weighted average shares outstanding			59,572,725				55,172,725
Dilutive effect of:
Stock options			---				---
Warrants			---				---
Diluted weighted average shares outstanding			59,572,725				55,172,725

Raw materials		$	59,882
Finished goods			20,395
Less reserve for obsolete inventory			(9,235	)
Inventories		$	71,042

Balance December 31, 2009		$	16,700
Bad debts provision (included in Other operating expenses)			---
Accounts written off			(2,684	)
Collection of accounts previously written off			---
Balance March 31, 2010		$	14,016

Balance December 31, 2009		$	14,781
Provision for obsolete inventory			3,675
Obsolete inventory written off			(9,221	)
Balance March 31, 2010		$	9,235

Balance December 31, 2009		$	121,165
Return provision – sales			33,600
Return provision – cost of sales			(5,040	)
Returns processed			(31,299	)
Balance March 31, 2010		$	118,426

Unsecured term note payable to a premium finance company due April 2010 in monthly installments of $1,664, including interest at 5.73%.		$	1,656
Unsecured term note payable to a vendor for advertising due July 2010 in monthly installments of $2,000, including interest at 10%.			7,421
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
Current portion of debt		$	65,077

		Chief Executive Officer				Chief Technology Officer				Chief Financial Officer
Base Annual Salary		$	150,000			$	150,000			$	110,000

		Accrued Base Salary				Vested Deferred Vacation Compensation
Included in Other current liabilities at March 31, 2010		$	13,796			$	30,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	▪	Fisherman Study Guide Series Complete Collection with a retail price of $169.95; and
	▪	Spiritual Encounter Guides with a retail price of $29.95.

Statements of Operations for Quarters Ending March 31		2010				2009				Change
Net revenues		$	525,320			$	578,321			$	(53,001	)
Cost of sales			(204,748	)			(192,009	)			(12,739	)
Gross profit		$	320,572			$	386,312			$	(65,740	)
Sales, marketing and general and administrative expenses			(481,445	)			(706,523	)			225,078
Loss from operations		$	(160,873	)		$	(320,211	)		$	159,338
Other income (expenses), net			(4,717	)			(5,501	)			784
Loss before income taxes		$	(165,590	)		$	(325,712	)		$	160,122
Income taxes			---				---				---
Net loss		$	(165,590	)		$	(325,712	)		$	160,122

	▪	a decrease in net revenues for the three months ended March 31, 2010 partly attributable to the following:
		▪	the decreased number of upgrade sales;
		▪	the decreased number of product releases; and
		▪	the current economic downturn; and
	▪	a decrease in sales, marketing and general and administrative expenses for the three months ended March 31, 2010 arising from our continuous efforts to cut costs.

																		Change
Revenues for Three Months Ending March 31		2010				% to Sales				2009				% to Sales				$					%
Gross revenues		$	559,728				100	%		$	650,061				100	%		$	(90,333	)			14	%
Less estimated sales returns and allowances			(34,408	)			6	%			(71,740	)			11	%			37,332				52	%
Net revenues		$	525,320				94	%		$	578,321				89	%		$	(53,001	)			9	%

																Change
Cost of Sales for Three Months Ending March 31		2010			% to Sales				2009			% to Sales				$				%
Direct costs		$	41,357			7	%		$	57,849			9	%		$	(16,492	)		29	%
Less estimated cost of sales returns and allowances			(5,040	)		1	%			(10,740	)		2	%			5,700			53	%
Amortization of software development costs			74,557			13	%			51,645			8	%			22,912			44	%
Royalties			54,742			10	%			45,620			7	%			9,122			20	%
Freight-out			24,285			4	%			26,795			4	%			(2,510	)		9	%
Fulfillment			14,847			3	%			20,840			3	%			(5,993	)		29	%
Cost of sales		$	204,748			37	%		$	192,009			30	%		$	12,739			7	%

	▪	FormTool® 7.0 (released September 2008),
	▪	QuickVerse® 2009 (released October 2008),
	▪	QuickVerse® Macintosh 3.0 (released August 2009),
	▪	QuickVerse® 2010 (released October 2009),
	▪	QuickVerse® Commentary Series (released December 2009) and
	▪	Multiple new content additions for QuickVerse® products (released April 2007 through August 2009).

	▪	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).

Software Development Costs For Three Months Ending March 31,		2010				2009
Beginning balance		$	338,947			$	330,018
Capitalized			9,592				56,233
Amortized (Cost of sales)			(74,557	)			(51,645	)
Ending Balance		$	273,982			$	334,606
Research and development expense (General and administrative)		$	71,033			$	25,175

															Change
Sales, General and Administrative Costs for Three Months Ending March 31	2010			% to Sales				2009			% to Sales				$				%
Selected expenses:
Commissions	$	---			0	%		$	1,500			0	%		$	(1,500	)		100	%
Advertising and direct marketing		38,472			7	%			38,390			6	%			82			0	%
Sales and marketing wages		58,267			10	%			117,331			18	%			(59,064	)		50	%
Other sales and marketing costs		---			0	%			7,214			1	%			(7,214	)		100	%
Total sales and marketing	$	96,739			17	%		$	164,435			25	%		$	(67,696	)		41	%
Personnel costs	$	122,183			22	%		$	190,714			29	%		$	(68,531	)		36	%
Amortization and depreciation		22,308			4	%			123,695			19	%			(101,387	)		82	%
Research and development		71,033			13	%			25,175			4	%			45,858			182	%
Other general and administrative costs		169,182			30	%			202,504			31	%			(33,322	)		16	%
Total general and administrative	$	384,706			69	%		$	542,088			83	%		$	(157,382	)		29	%
Total sales, marketing, general and administrative	$	481,445			86	%		$	706,523			109	%		$	(225,078	)		32	%

As gross revenues decreased for the three months ended March 31, 2010, total sales, marketing and general and administrative costs also significantly decreased.  We have discontinued our contract with a third party for telemarketing services, and therefore, no longer incur commission fees. Although there can be no assurance, we do not anticipate relying on a third party for telemarketing services in the future. Advertising and direct marketing costs remained relatively stable, and we anticipate these costs to remain on this current trend in future periods. We continue to focus on enhancing our product visibility online by increasing and focusing more on our direct marketing efforts, while limiting 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, 2010, sales and marketing wages - reclassified, decreased as a result of streamlining our CBA sales team, and therefore, we anticipate a decrease in future periods. Furthermore, during the three months ended March 31, 2009 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 budget constraints that we have imposed as a result of our weak working capital position and the current, relatively unfavorable macro-economic climate for non-essential consumer products.

 

Working Capital		March 31, 2010				December 31, 2009
Current assets		$	291,065			$	355,423
Current liabilities		$	1,710,098			$	1,696,940
Retained deficit		$	8,864,054			$	8,698,465

Cash Flows for Three Months Ending March 31		2010				2009				Change				%
Cash flows (used) provided by operating activities		$	(13,035	)		$	38,212			$	(51,247	)			134	%
Cash flows (used) by investing activities		$	(8,668	)		$	(68,013	)		$	59,345				87	%
Cash flows (used) by financing activities		$	(18,820	)		$	(6,616	)		$	(12,204	)			184	%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

		FINDEX.COM, INC.
Date: May 17, 2010	By	/s/ Steven Malone
		Steven Malone
		President and Chief Executive Officer

Date: May 17, 2010	By	/s/ Kirk R. Rowland
		Kirk R. Rowland, CPA
		Chief Financial Officer (Principal Financial & Accounting Officer)