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 September 30, 2008





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)








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





(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
proceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.Yes [X] No [_]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a 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
November 14, 2008, the registrant had outstanding 54,072,725 shares of common
stock, of which there is only a single class.








FINDEX.COM, INC.





QUARTERLY
REPORT ON FORM 10-Q


FOR
FISCAL QUARTER ENDED SEPTEMBER 30, 2008





-
INDEX -





PagePART I - FINANCIAL INFORMATION:Item 1.    Financial
      Statements:
            1Balance Sheets – September 30, 2008 (unaudited) and
      December 31, 2007
            F-1Statement of Operations (unaudited) for the
      three  and nine months ending September 30, 2008 and for the
      three and nine months ending September 30, 2007
            F-2Statement of Cash Flows (unaudited) for the nine months
      ending September 30, 2008 and for the nine months ending September 30,
      2007
            F-3Notes to Unaudited Financial
    Statements
            F-4Item 2.    Management's Discussion and
      Analysis of Financial Condition and Results of
    Operations
            1Item 3.    Quantitative and Qualitative
      Disclosures About Market Risk
            10Item 4T.  Controls and
    Procedures
            10PART II - OTHER INFORMATION:
            11Item
      1.    Legal Proceedings
            11Item 1A. Risk Factors
            11Item
      2.    Unregistered Sales of Equity Securities and Use
      of Proceeds
            11Item
      3.    Defaults Upon Senior
    Securities
            11Item
      4.    Submission of Matters to a Vote of Security
      Holders
            11Item
      5.    Other Information
            11Item
      6.    Exhibits
            11Signatures
            14











PART I – FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS.





Findex.com,
      Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)September
      30, 2008
            
            
            December
      31, 2007AssetsCurrent
      assets:Cash
      and cash equivalents
            
            $
            432,768
            
            
            $
            1,134,547Accounts
      receivable, trade, net
            
            
            80,348
            
            
            
            236,301Inventories
            
            
            72,066
            
            
            
            93,852Other
      current assets
            
            
            63,875
            
            
            
            135,626Total
      current assets
            
            
            649,057
            
            
            
            1,600,326Property
      and equipment, net
            
            
            41,721
            
            
            
            56,214Intangible
      assets, net
            
            
            930,419
            
            
            
            979,011Other
      assets
            
            
            155,574
            
            
            
            92,860Total
      assets
            
            $
            1,776,771
            
            
            $
            2,728,411Liabilities
      and stockholders’ equity (deficit)Current
      liabilities:Accounts
      payable, trade
            
            $
            599,038
            
            
            $
            627,720Accounts
      payable, related party
            
            
            104,111
            
            
            
            75,302Accrued
      royalties
            
            
            662,137
            
            
            
            587,692Derivative
      liabilities
            
            
            ---
            
            
            
            906,274Other
      current liabilities
            
            
            379,129
            
            
            
            417,903Total
      current liabilities
            
            
            1,744,415
            
            
            
            2,614,891Long-term
      debt, net
            
            
            22,329
            
            
            
            11,877Deferred
      income taxes, net
            
            
            14,263
            
            
            
            34,800Commitments
      and contingencies (Note 10)Stockholders’
      equity (deficit):Preferred
      stock, $.001 par value5,000,000
      shares authorized-0-
      and -0- shares issued and outstanding, respectively
            
            
            ---
            
            
            
            ---Common
      stock, $.001 par value120,000,000
      shares authorized,54,072,725
      and 52,250,817 shares issued and outstanding, respectively
            
            
            54,073
            
            
            
            52,251Paid-in
      capital
            
            
            7,787,780
            
            
            
            7,715,081Retained
      (deficit)
            
            
            (7,846,089
            )
            
            
            (7,700,489
            )Total
      stockholders’ equity (deficit)
            
            
            (4,236
            )
            
            
            66,843Total
      liabilities and stockholders’ equity (deficit)
            
            $
            1,776,771
            
            
            $
            2,728,411See
      accompanying notes.





F-1
 Table of Contents





Findex.com,
      Inc.CONDENSED CONSOLIDATED STATEMENTS OF
      OPERATIONS(Unaudited)Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      30,
            
            
            September
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues,
      net of reserves and allowances
            
            $
            425,541
            
            
            $
            476,359
            
            
            $
            1,558,056
            
            
            $
            2,234,690Cost
      of sales
            
            
            161,290
            
            
            
            192,726
            
            
            
            651,505
            
            
            
            969,601Gross
      profit
            
            
            264,251
            
            
            
            283,633
            
            
            
            906,551
            
            
            
            1,265,089Operating
      expenses:Sales
      and marketing
            
            
            125,695
            
            
            
            181,417
            
            
            
            467,220
            
            
            
            536,382General
      and administrative
            
            
            362,250
            
            
            
            400,668
            
            
            
            1,343,824
            
            
            
            1,424,962Total
      operating expenses
            
            
            487,945
            
            
            
            582,085
            
            
            
            1,811,044
            
            
            
            1,961,344Loss
      from operations
            
            
            (223,694
            )
            
            
            (298,452
            )
            
            
            (904,493
            )
            
            
            (696,255
            )Other
      income (expenses), net
            
            
            (3,247
            )
            
            
            (9,580
            )
            
            
            2,619
            
            
            
            (24,855
            )Gain
      (loss) on fair value adjustment of derivatives
            
            
            ---
            
            
            
            (139,809
            )
            
            
            305,620
            
            
            
            (86,064
            )Gain
      on settlement of derivative liabilities
            
            
            ---
            
            
            
            ---
            
            
            
            450,654
            
            
            
            ---Loss
      before income taxes
            
            
            (226,941
            )
            
            
            (447,841
            )
            
            
            (145,600
            )
            
            
            (807,174
            )Income
      tax benefit
            
            
            ---
            
            
            
            140,899
            
            
            
            ---
            
            
            
            150,999Net
      loss
            
            $
            (226,941
            )
            
            $
            (306,942
            )
            
            $
            (145,600
            )
            
            $
            (656,175
            )Net
      loss per share - Basic & Diluted:
            
            $
            0.00
            
            
            $
            (0.01
            )
            
            $
            0.00
            
            
            $
            (0.01
            )Weighted
      average shares used in computing basic and dilutedloss per
      share:
            
            
            54,072,725
            
            
            
            51,632,339
            
            
            
            53,553,381
            
            
            
            50,411,806See
      accompanying notes.


















F-2
 Table of Contents





Findex.com,
      Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)Nine
      Months Ended September 30,
            
            
            2008
            
            
            
            2007Cash
      flows from operating activities:Cash
      received from customers
            
            $
            1,674,610
            
            
            $
            2,417,172Cash
      paid to suppliers and employees
            
            
            (1,832,408)
            
            
            
            (2,085,968)Other
      operating activities, net
            
            
            11,149
            
            
            
            (17,282)Net
      cash (used) provided by operating activities
            
            
            (146,649)
            
            
            
            313,922Cash
      flows from investing activities:Software
      development costs
            
            
            (201,073)
            
            
            
            (316,086)FormTool
      purchase
            
            
            (100,000)
            
            
            
            ---Deposits
      refunded (paid)
            
            
            2,700
            
            
            
            (41,189)Other
      investing activities, net
            
            
            (80,035)
            
            
            
            (13,182)Net
      cash used by investing activities
            
            
            (378,408)
            
            
            
            (370,457)Cash
      flows from financing activities:Proceeds
      from issuance of common stock
            
            
            ---
            
            
            
            32,500Cash
      overdraft
            
            
            ---
            
            
            
            22,988Payment
      made for settlement of derivative liabilities
            
            
            (150,000)
            
            
            
            ---Payments
      made on long-term notes payable
            
            
            (26,722)
            
            
            
            (47,625)Net
      cash (used) provided by financing activities
            
            
            (176,722)
            
            
            
            7,863Net
      decrease in cash and cash equivalents
            
            
            (701,779)
            
            
            
            (48,672)Cash
      and cash equivalents, beginning of year
            
            
            1,134,547
            
            
            
            48,672Cash
      and cash equivalents, end of period
            
            $
            432,768
            
            
            $
            ---Reconciliation
      of net loss to cash flows from operating activities:Net
      loss
            
            $
            (145,600)
            
            
            $
            (656,175)Adjustments
      to reconcile net loss to net cash (used) provided by operating
      activitiesSoftware
      development costs amortized
            
            
            192,433
            
            
            
            248,455Depreciation
      & amortization
            
            
            343,178
            
            
            
            423,042Bad
      debts provision
            
            
            3,212
            
            
            
            17,164Noncash
      operating expenses
            
            
            34,521
            
            
            
            73,600(Gain)
      loss on fair value adjustment of derivatives
            
            
            (305,620)
            
            
            
            86,064(Gain)
      on settlement of derivative liabilities
            
            
            (450,654)
            
            
            
            ---(Gain)
      on sale of property and equipment
            
            
            ---
            
            
            
            (1,361)Change
      in assets and liabilities:Decrease
      in accounts receivable
            
            
            152,741
            
            
            
            166,796Decrease
      in inventories
            
            
            21,786
            
            
            
            33,709Decrease
      (increase) in other current assets
            
            
            62,509
            
            
            
            (45,775)Increase
      in accrued royalties
            
            
            74,445
            
            
            
            19,006Increase
      in accounts payable
            
            
            127
            
            
            
            118,595(Decrease)
      in other liabilities
            
            
            (129,727)
            
            
            
            (169,198)Net
      cash (used) provided by operating activities
            
            $
            (146,649)
            
            
            $
            313,922Schedule
      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.


F-3
 Table of Contents


Findex.com,
Inc.


Notes to Condensed Consolidated Financial
Statements


September
30, 2008


(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 fiscal year or for any future period. The December 31,
2007 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-KSB for the fiscal year ended December
31, 2007.





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.





F-4
 Table of Contents


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), or (ii) the ratio of current revenues to
total projected product revenues. Total cumulative capitalized software
development costs were $1,068,570, less accumulated amortization of $625,560 at
September 30, 2008.





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 $143,147 and $76,198 for the
nine months ended September 30, 2008 and 2007, 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.





F-5
 Table of Contents


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 $109,500, less accumulated amortization of $6,368 at September 30,
2008.





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 September 30, 2008 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 and nine months ended September 30,
2008 and 2007 and maintain a reserve for rebate claims remaining unpaid from
2000 and 2001.





F-6
 Table of Contents


Service
Revenue





We offer
several technical support plans and recognize support revenue over the life of
the plans, generally one year.





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.





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.





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.





F-7
 Table of Contents


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.





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. Management is currently evaluating the potential
impact, if any, of the provisions of SFAS No. 163 on our 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 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.  Management is currently evaluating
the potential impact, if any, of the provisions of SFAS No. 161 on our
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. Management is currently evaluating
the potential impact, if any, of the adoption of SFAS No. 160 on our
consolidated financial statements.





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 Table of Contents


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. Management is currently evaluating the potential
impact, if any, of the adoption of SFAS No. 141(R) on our consolidated financial
statements.





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. We are currently evaluating the
potential impact, if any, of the provisions of SFAS No. 157 on our consolidated
financial statements when adopted for nonfinancial assets and
liabilities.





RECLASSIFICATIONS





Certain
accounts in our 2007 financial statements have been reclassified for comparative
purposes to conform with the presentation in our 2008 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 September 30, 2008, we had a
year-to-date net loss of $145,600, and negative working capital of $1,095,358
and $1,014,565, and an accumulated deficit of $7,846,089 and $7,700,489 as of
September 30, 2008 and December 31, 2007, respectively. Although these factors
raise substantial doubt as to our ability to continue as a going concern through
December 31, 2008, we have taken several actions to mitigate against this risk.
These actions include relying on the approximately $433,000 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
September 30, 2008, inventories consisted of the following:





Raw
      materials
            
            $
            53,337Finished
      goods
            
            
            32,029Less
      reserve for obsolete inventory
            
            
            (13,300
            )Inventories
            
            $
            72,066





F-9
 Table of Contents


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
            
            AmountFair
      value of common stock
            
            $
            40,000Cash
            
            
            100,000Promissory
      note
            
            
            85,934Total
            
            $
            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).  See Note 8.





The
allocation of the purchase price to the assets acquired based on their estimated
fair values was as follows:





Description
            
            AmountTrademark/Trade
      name
            
            $
            67,780Internet
      domain names
            
            
            33,890Customer
      list
            
            
            22,594Copyrights
            
            
            67,780Computer
      software code
            
            
            22,594Distribution
      agreements
            
            
            11,296Total
            
            $
            225,934





The
assets will be amortized over a period of years as follows:





Description
            
            Estimated
      Remaining Life (years)Trademark/Trade
      name/Copyrights
            
            
            10Internet
      domain names
            
            
            5Customer
      list/Computer software code
            
            
            3Distribution
      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 and nine months ended September 30, 2008, sales from the FormTool
software product line were approximately 5% and 2%, respectively, of our gross
sales.





NOTE
5 – RESERVES AND ALLOWANCES





At
September 30, 2008, the allowance for doubtful accounts included in Accounts
receivable, trade, net, consisted of the following:





Balance
      December 31, 2007
            
            $
            2,000Bad
      debts provision (included in Other operating expenses)
            
            
            3,212Accounts
      written off
            
            
            (2,845
            )Collection
      of accounts previously written off
            
            
            633Balance
      September 30, 2008
            
            $
            3,000





At
September 30, 2008, the reserve for obsolete inventory included in Inventories
consisted of the following:





Balance
      December 31, 2007
            
            $
            14,400Provision
      for obsolete inventory
            
            
            12,700Obsolete
      inventory written off
            
            
            (13,800
            )Balance
      September 30, 2008
            
            $
            13,300





F-10
 Table of Contents


At
September 30, 2008, the reserve for sales returns included in Other current
liabilities consisted of the following:





Balance
      December 31, 2007
            
            $
            95,009Return
      provision – sales
            
            
            160,400Return
      provision – cost of sales
            
            
            (24,060
            )Returns
      processed
            
            
            (149,823
            )Balance
      September 30, 2008
            
            $
            81,526





NOTE
6 – DERIVATIVE LIABILITIES





In
November 2004, we issued two five-year warrants to purchase up to an aggregate
of 21,875,000 shares of our common stock in connection with a certain Stock
Purchase Agreement completed with a New York-based private investment
partnership on July 19, 2004. The first warrant entitled the holder to purchase
up to 10,937,500 shares of our common stock at a price of $0.18 per share, and
the second warrant entitled the holder to purchase up to 10,937,500 additional
shares of our common stock at a price of $0.60 per share. Each warrant was
subject to standard adjustment provisions and each provided for settlement in
registered shares of our common stock and may have been, at the option of the
holder, settled in a cashless, net-share settlement. These warrants were
accounted for as a liability according to the guidance of EITF 00-19 and the
fair value of each warrant was determined using the Black-Scholes valuation
method.





The
warrants were revalued at each measurement date by using parameters existing
thereon, reducing the expected term to reflect the passing of time, and using
the stock price at the measurement date. Net fair value adjustments included on
the condensed consolidated statements of operations were income adjustments of
$305,620 and ($86,064) for the nine months ended September 30, 2008 and 2007,
respectively.  Income adjustments generally reflect a decrease in the
market price of our common stock between measurement dates whereas expense
adjustments would generally reflect an increase in the market price of our
common stock between measurement dates.  The income adjustment
recorded for the nine months ended September 30, 2008 reflects the difference
between measurement parameters that existed on March 5, 2008 and December 31,
2007.





On March
6, 2008, we entered into and consummated an agreement with the holder pursuant
to which the outstanding common stock purchase warrants held by them, which were
subject to derivative treatment, were immediately canceled in exchange for a
single cash payment in the amount of $150,000.  As a result of this
transaction, these warrants are now null and void for all purposes (See Note
8).  Pursuant to this cancellation, we recorded a gain on the
settlement of derivative liabilities in the amount of $450,654, which represents
the difference between the cash payment and the Black-Scholes calculated
liability as of March 5, 2008.  The warrant cancellation has
eliminated 21,875,000 potentially dilutive shares and eliminated the future
non-cash effects associated with the volatility of our stock price.





NOTE
7 – DEBT





At
September 30, 2008, 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.
            
            $
            15,891Unsecured
      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.
            
            
            56,000Unsecured
      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.
            
            
            66,790Total
      Long-term debt
            
            
            138,681Less:  Current
      maturities
            
            
            (116,352
            )Long-term
      debt, net
            
            $
            22,329





F-11
 Table of Contents


At
September 30, 2008, we were current on the capital lease obligation and the
unsecured term note payable to a limited liability company.  We remain
in arrears for the final three payments of the unsecured term note payable to a
shareholder.





NOTE
8 – STOCKHOLDERS’ EQUITY





COMMON
STOCK





In
February 2008, we issued a total of 1,000,000 restricted shares of common stock
to a third party, at the closing price as of February 25, 2008 ($0.04), as part
of the acquisition of the FormTool software product line. This issuance was
valued at $40,000.





In April
2008, we committed to issue a total of 143,337 restricted shares of common stock
to three members of our management team, at the closing price as of April 14,
2008 ($0.042), in lieu of cash payment, net of appropriate tax withholdings, of
the amounts accrued for their 2007 bonus.  This issuance was valued at
$6,020.





In April
2008, we committed to issue a total of 678,571 restricted shares of common stock
to our outside directors, at the closing price as of April 14, 2008 ($0.042) in
lieu of cash payments of amounts accrued for service as members of our board
from the period of July 1, 2007 through March 31, 2008.  This issuance
was valued at $28,500.





COMMON
STOCK WARRANTS





In
February 2008, warrants to purchase up to 125,000 restricted shares of our
common stock with an exercise price of $0.148 per share expired
unexercised.





In March
2008, a warrant to purchase up to 10,937,500 shares of our common stock with an
exercise price of $0.18 per share and a warrant to purchase up to 10,937,500
shares of our common stock with an exercise price of $0.60 per share were
canceled in exchanged for a single cash payment of $150,000.  These
warrants are now null and void for all purposes as a result of this
transaction.  See Note 6.





NOTE
9 – EARNINGS PER COMMON SHARE





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 September 30,
            
            2008
            
            
            2007Net
      loss
            
            $
            (226,941
            )
            
            $
            (306,942
            )Preferred
      stock dividends
            
            
            ---
            
            
            
            ---Net
      loss available to common shareholders
            
            $
            (226,941
            )
            
            $
            (306,942
            )Basic
      weighted average shares outstanding
            
            
            54,072,725
            
            
            
            51,632,339Dilutive
      effect of:Stock
      options
            
            
            ---
            
            
            
            ---Warrants
            
            
            ---
            
            
            
            ---Diluted
      weighted average shares outstanding
            
            
            54,072,725
            
            
            
            51,632,339





F-12
 Table of Contents


For
      the Nine Months Ended September 30,
            
            2008
            
            
            2007Net
      loss
            
            $
            (145,600
            )
            
            $
            (656,175
            )Preferred
      stock dividends
            
            
            ---
            
            
            
            ---Net
      loss available to common shareholders
            
            $
            (145,600
            )
            
            $
            (656,175
            )Basic
      weighted average shares outstanding
            
            
            53,553,381
            
            
            
            50,411,806Dilutive
      effect of:Stock
      options
            
            
            ---
            
            
            
            ---Warrants
            
            
            ---
            
            
            
            ---Diluted
      weighted average shares outstanding
            
            
            53,553,381
            
            
            
            50,411,806





NOTE
10 – 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.





We
entered into a license agreement in June 1999 with Parsons Technology, Inc., a
subsidiary of TLC, a copy of which has since been assigned to Riverdeep, Inc.,
the latest licensor-assignee in a succession of assignments that have occurred
since the original agreement. The license, as we acquired it in 1999, provided
us with the right, for a term of ten years, to publish, use, distribute,
sublicense and sell, exclusively worldwide in non-secular channels and
non-exclusively in secular channels, a collection of top-selling
Christian-related software titles and content owned by Parsons
Technology.  In October 2003, we reached settlement in a dispute with
The Zondervan Corporation and TLC which extended indefinitely the term of the
software license agreement.





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 (4% total). We accrue this bonus on a quarterly basis. Our
management team consists of the following:





Chief
      Executive Officer
            
            
            Chief
      Financial Officer
            
            
            Chief
      Technology Officer
            
            
            Vice
      President of SalesBase
      Annual Salary
            
            $
            150,000
            
            
            $
            110,000
            
            
            $
            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 CompensationIncluded
      in Other current liabilities at September 30, 2008
            
            $
            25,115
            
            
            $
            ---
            
            
            $
            30,240





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.





In 2003
and 2004, we reduced our reserve for rebates payable based, in part, on our
ability to meet the financial obligation of claims carried forward from our last
rebate program in 2001. As such, we may have a legal obligation to pay rebates
in excess of the liability recorded.





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.





F-13
 Table of Contents


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
11 – 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.






























F-14
 Table of Contents


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.





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 or Plan of Operation
contained in our annual report on Form 10-KSB for the fiscal year ended December
31, 2007.





Description
of Business





We
develop, publish, market, 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 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.





-1-
 Table of Contents


As part
of that objective, we acquired FormTool.com and the FormTool®
line of products in February of this year. 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 website includes the ability to purchase forms
on an individual basis or in bulk packs. In the future, our website will also
offer forms to be purchased on a subscription basis. Further, and in partnership
with a third party, through FormTool.com, we plan to offer secure data storage
for all types of documents, forms and other media on a subscription basis. This
service will allow for data backup and security as well as remote access to
critical data from anywhere via the Internet. This service will be targeted to
both the business and consumer markets.





Management
Overview





During
the third quarter of 2008, we focused on our two product lines, QuickVerse®
and FormTool®,
and their individual technological features in order to meet our development
schedule and our annual upgrade release for both product lines.  The
annual upgrade release of FormTool®,
FormTool®
7.0, was released in September 2008 and the annual upgrade release of
QuickVerse®,
QuickVerse®
2009, was released in October 2008. Furthermore, we concentrated on building our
technology platform and infrastructure in order to become a more Webcentric
provider of online products.





QuickVerse®





During
the third quarter of 2008, our development team worked on a number of projects
which resulted in five new content collections for our QuickVerse®
product line.  These collections include:





▪
            H.
      A. Ironside Collection with a retail price of $199.95,▪
            Timothy
      Dwight Collection with a retail price of $49.95,▪
            John
      Calvin Collection with a retail price of $49.95,▪
            Arthur
      W. Pink Collection with a retail price of $49.95; and▪
            John
      Bunyan Collection with a retail price of
$49.95.





In
addition, we launched a new feature on our website, www.quickverse.com,
called the Books page which enables our QuickVerse®
customers to purchase additional content and immediately download that content
for use within their QuickVerse®
software.  Our Books page currently features over 180 individual books
and/or collections with a range in retail price from $4.95 to $249.95. In June
2008, we released a free downloadable version of QuickVerse®
2008, which allows new customers to get a look and feel of our QuickVerse®
product line at no charge. Furthermore, in September 2008 we released an online
tutorial for our QuickVerse®
product line, which guides customers through a movie presentation on how to
navigate and use QuickVerse®
to its fullest potential.




Over
time, we anticipate the number of downloadable options to grow substantially as
we continue to expand and build upon our website technology.  Along
with the annual upgrade release of QuickVerse®
in October 2008, we also offered the upgrade to QuickVerse®
2009 as a download for the first time; and therefore, providing instantaneous
delivery to the customer.




FormTool®





During
February 2008, we acquired FormTool.com and the FormTool®
line of products.  The FormTool®
product line offers quality, professionally designed forms for business,
accounting, construction, sales, real estate, human resources and personal
organization needs.  In September 2008, we re-launched the
FormTool.com website as an online marketplace for purchasing the FormTool®
product line, as well as a “one-stop” shop for finding, purchasing and
downloading customizable forms for a wide range of business and consumer needs.
In addition, FormTool®
7.0, the annual upgrade release of the FormTool®
product line, was released in September 2008.  FormTool.com now offers
the FormTool®
product line in four downloadable editions that range in retail price from
$24.99 to $199.99 as well as downloadable forms on an individual basis or in
bulk groups.





-2-
 Table of Contents


Results of Operations for Nine Months Ending
September 30, 2008 and September 30, 2007





Statements
      of Operations for Nine Months Ending September 30
            
            2008
            
            
            2007
            
            
            ChangeNet
      revenues
            
            $
            1,558,056
            
            
            $
            2,234,690
            
            
            $
            (676,634
            )Cost
      of sales
            
            
            (651,505
            )
            
            
            (969,601
            )
            
            
            318,096Gross
      profit
            
            $
            906,551
            
            
            $
            1,265,089
            
            
            $
            (358,538
            )Sales,
      marketing and general and administrative expenses
            
            
            (1,811,044
            )
            
            
            (1,961,344
            )
            
            
            150,300Loss
      from operations
            
            $
            (904,493
            )
            
            $
            (696,255
            )
            
            $
            (208,238
            )Other
      income (expenses)
            
            
            2,619
            
            
            
            (24,855
            )
            
            
            27,474Gain
      (loss) on fair value adjustment of derivatives
            
            
            305,620
            
            
            
            (86,064
            )
            
            
            391,684Gain
      on settlement of derivative liabilities
            
            
            450,654
            
            
            
            ---
            
            
            
            450,654Loss
      before income taxes
            
            $
            (145,600
            )
            
            $
            (807,174
            )
            
            $
            661,574Income
      tax benefit
            
            
            ---
            
            
            
            150,999
            
            
            
            (150,999
            )Net
      loss
            
            $
            (145,600
            )
            
            $
            (656,175
            )
            
            $
            510,575





The
differing results of operations are primarily attributable to the
following:





▪
            a
      decrease in net revenues for the nine months ended September 30, 2008
      partly attributable to the following:▪
            an
      overall net decrease in unit sales of our QuickVerse®
      product line due to a reduction in the perceived value on the part of
      customers of certain upgrades based on the relative frequency
      thereof;▪
            the
      sale of our Membership Plus®
      product line during October 2007; and▪
            the
      decreased number of product releases;▪
            a
      decrease in cost of sales for the nine months ended September 30, 2008 due
      primarily to decreased direct and royalty costs; and▪
            most
      notably for the nine months ended September 30, 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 nine months ended September 30,
2008 and September 30, 2007 and dollar and percentage changes from the prior
year.





ChangeRevenues
      for Nine Months Ending September 30
            
            2008
            
            
            %
      to Sales
            
            
            2007
            
            
            %
      to Sales
            
            
            $
            
            
            
            %Gross
      revenues
            
            $
            1,716,965
            
            
            
            100
            %
            
            $
            2,614,382
            
            
            
            100
            %
            
            $
            (897,417
            )
            
            
            34
            %Less
      estimated sales returns and allowances
            
            
            (158,909
            )
            
            
            9
            %
            
            
            (379,692
            )
            
            
            15
            %
            
            
            220,783
            
            
            
            58
            %Net
      revenues
            
            $
            1,558,056
            
            
            
            91
            %
            
            $
            2,234,690
            
            
            
            85
            %
            
            $
            (676,634
            )
            
            
            30
            %





During
each of the nine months ended September 30, 2008 and 2007, our sales efforts
were focused on directly targeting end-users through telemarketing and Internet
sales.  Our decrease in gross revenues for the nine months ended
September 30, 2008 was primarily attributed to the sale of our Membership
Plus®
product line in October 2007. By way of comparison, Membership Plus®
product revenue was approximately $638,000 from January through September
2007.  In addition, during the nine months ended September 30, 2007 we
released an upgrade to our QuickVerse®
Macintosh product line and had liquidation sales of our QuickVerse®
2006 product line (Windows and Macintosh editions).  In comparison,
during the nine months ended September 30, 2008 we released four new content
collections for our QuickVerse®
customers but had no new upgrade releases on our current QuickVerse®
platforms. Finally, due to 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.  Although there can be no assurance, we anticipate
that our revenues related to the QuickVerse®
product line will increase in the future at rates generally consistent with our
industry sector as we continue to expand the content 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.





-3-
 Table of Contents


During
the nine months ended September 30, 2008, we did recognize approximately $42,000
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.





Due to
the sale of our Membership Plus®
product line, we anticipate that our reported revenues will continue to
experience a substantial decline in the near term.  However, and
although there can be no assurance, we are currently pursuing opportunities for
strategic product line acquisitions, as we did with FormTool®,
which we are hopeful will enable us to achieve more favorable results of
operations than we have historically achieved throughout the period in which we
owned the Membership Plus®
product line.  Our divestiture of the Membership Plus®
product line 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 business-to-business and consumer segments more
generally.





As a
percentage of gross revenues, our sales returns and allowances decreased for the
nine months ended September 30, 2008 compared to September 30, 2007 due to the
increased stability of our products. Further, for the nine months ended
September 30, 2007, we experienced a significant increase in actual returns due
to the return of liquidated product sold during the first and second quarter of
2007. 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. Due to our annual release of QuickVerse®
in October 2008, we do anticipate our sales returns and allowances to follow
this upward trend within the fourth quarter of 2008. It is our objective to
release enhanced versions of our biggest-selling products on an annual basis
generally going forward, 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 nine months ended September
30, 2008 and September 30, 2007 and dollar and percentage changes from the prior
year.





ChangeCost
      of Sales for Nine Months Ending September 30
            
            2008
            
            
            %
      to Sales
            
            
            2007
            
            
            %
      to Sales
            
            
            $
            
            
            
            %Direct
      costs
            
            $
            220,125
            
            
            
            13
            %
            
            $
            339,813
            
            
            
            13
            %
            
            $
            (119,688
            )
            
            
            35
            %Less
      estimated cost of sales returns and allowances
            
            
            (24,060
            )
            
            
            1
            %
            
            
            (57,255
            )
            
            
            2
            %
            
            
            33,195
            
            
            
            58
            %Amortization
      of software development costs
            
            
            192,433
            
            
            
            11
            %
            
            
            248,455
            
            
            
            10
            %
            
            
            (56,022
            )
            
            
            23
            %Royalties
            
            
            142,522
            
            
            
            8
            %
            
            
            261,100
            
            
            
            10
            %
            
            
            (118,578
            )
            
            
            45
            %Freight-out
            
            
            72,001
            
            
            
            4
            %
            
            
            113,470
            
            
            
            4
            %
            
            
            (41,469
            )
            
            
            37
            %Fulfillment
            
            
            48,484
            
            
            
            3
            %
            
            
            64,018
            
            
            
            2
            %
            
            
            (15,534
            )
            
            
            24
            %Cost
      of sales
            
            $
            651,505
            
            
            
            38
            %
            
            $
            969,601
            
            
            
            37
            %
            
            $
            (318,096
            )
            
            
            33
            %





The
decrease in direct costs for the nine months ended September 30, 2008 is
predominately attributable to the sale of Membership Plus®.  As
a percentage of gross revenues, direct costs remained steady and we anticipate
relatively the same for the future as we continue to review our hard costs and
seek out those vendors that provide the most competitive prices.





-4-
 Table of Contents


Royalties
decreased significantly in real terms and as a percentage of gross revenues for
the nine months ended September 30, 2008 due to the following:





▪
            decreased
      royalty rates on our higher end QuickVerse®
      editions (i.e. Deluxe and Platinum) through a realignment of our content
      mix in the QuickVerse®
      2008 versions and▪
            a
      change in our sales mix for the nine months ended September 30, 2008 which
      resulted in more sales of our lower end QuickVerse®
      edition, QuickVerse®
      2008 Bible Suite, compared to those sales of our top of the line
      QuickVerse®
      edition, QuickVerse®2008 Platinum.





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.





Freight
and fulfillment costs decreased in real terms as a result of our decreased sales
volume.  We do anticipate freight costs to increase in the future as a
percentage of gross revenues as retail sales tend to increase in the fourth
quarter, which carry higher shipping costs for us than direct and/or upgrade
sales. Furthermore, due in large part to the establishment of our own
fulfillment center in June 2007, fulfillment costs should remain relatively
stable in the future as a percentage of gross revenues.





The
amortization recognized during the nine months ended September 30, 2008 resulted
mainly from the following software releases:





▪
            QuickVerse®
      2007 Mobile (released December 2006),▪
            QuickVerse®
      2007 Macintosh (released March 2007),▪
            QuickVerse®
      2008 (released November 2007),▪
            Multiple
      new content additions for QuickVerse®
      products (released April 2007 through September 2008)
  and▪
            FormTool®
      7.0 (released September 2008).





Comparatively,
during the nine months ended September 30, 2007, the amortization recognized
resulted mainly from the following software releases:





▪
            QuickVerse
      2006 Macintosh (released June 2005),▪
            QuickVerse
      2006 (released September 2005),▪
            QuickVerse®
      2007 (released August 2006),▪
            Membership
      Plus®
      2007 (released October 2006),▪
            QuickVerse®
      2007 Mobile (released December 2006) and▪
            QuickVerse®
      2007 Macintosh (released March
2007).





The
shorter timeframes between our product upgrades along with the increased amount
of product releases during the fiscal year 2007 led to the increased amount of
amortization as a percentage of gross revenues for the nine months ended
September 30, 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. We expect an increase in real terms, therefore, despite
the sale of our Membership Plus®
product line. Furthermore, as we implement our strategy to become a principally
Webcentric provider of online products we anticipate to experience a decrease in
cost of sales, specifically direct costs, freight and fulfillment, as more of
our products will become available for download.





-5-
 Table of Contents


Software
      Development Costs For
            
            Three
      Months Ending September 30,
            
            
            Nine
      Months Ending September 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Beginning
      balance
            
            $
            402,332
            
            
            $
            522,712
            
            
            $
            392,173
            
            
            $
            491,695Capitalized
            
            
            75,983
            
            
            
            124,636
            
            
            
            243,270
            
            
            
            316,086Amortized
      (Cost of sales)
            
            
            (35,305
            )
            
            
            (88,022
            )
            
            
            (192,433
            )
            
            
            (248,455
            )Ending
      Balance
            
            $
            443,010
            
            
            $
            559,326
            
            
            $
            443,010
            
            
            $
            559,326Research
      and development expense (General and administrative)
            
            $
            39,192
            
            
            $
            15,630
            
            
            $
            143,147
            
            
            $
            76,198





The
overall decrease in capitalized costs for the nine months ended September 30,
2008 is a result of the sale of our Membership Plus®
product line and our development staff having been faced with greater
maintenance challenges than anticipated, primarily in the first quarter of 2008,
in connection with the new layout and engine design within the QuickVerse®
2008 product line. The maintenance challenges also led to the relative increase
in research and development expense.  Despite these challenges, during
the three months ended September 30, 2008 our development team focused their
efforts on our annual upgrade releases of QuickVerse®
and FormTool®,
several new content additions for our QuickVerse®
products, as well as the enhanced technology and infrastructure on our websites
www.quickverse.com
and www.formtool.com, and
we have experienced increased efficiency in our development output (both
internal and external).The increase in research and development expense for the
three months ended September 30, 2008 is the result of two development projects
no longer being pursued and therefore, all capitalized costs were
expensed.





Sales,
General and Administrative





ChangeSales,
      General and Administrative Costs for Nine Months Ending September 30
            
            2008
            
            
            %
      to Sales
            
            
            2007
            
            
            %
      to Sales
            
            
            $
            
            
            
            %Selected
      expenses:Commissions
            
            $
            66,959
            
            
            
            4
            %
            
            $
            146,930
            
            
            
            6
            %
            
            $
            (79,971
            )
            
            
            54
            %Advertising
      and direct marketing
            
            
            131,638
            
            
            
            8
            %
            
            
            144,175
            
            
            
            6
            %
            
            
            (12,537
            )
            
            
            9
            %Sales
      and marketing wages - reclassified
            
            
            265,411
            
            
            
            15
            %
            
            
            228,113
            
            
            
            9
            %
            
            
            37,298
            
            
            
            16
            %Other
      sales and marketing costs
            
            
            3,212
            
            
            
            0
            %
            
            
            17,164
            
            
            
            1
            %
            
            
            (13,952
            )
            
            
            81
            %Total
      sales and marketing
            
            $
            467,220
            
            
            
            27
            %
            
            $
            536,382
            
            
            
            22
            %
            
            $
            (69,162
            )
            
            
            13
            %Personnel
      costs
            
            $
            370,268
            
            
            
            22
            %
            
            $
            463,213
            
            
            
            18
            %
            
            $
            (92,945
            )
            
            
            20
            %Amortization
      and depreciation
            
            
            343,178
            
            
            
            20
            %
            
            
            423,042
            
            
            
            16
            %
            
            
            (79,864
            )
            
            
            19
            %Research
      and development
            
            
            143,147
            
            
            
            8
            %
            
            
            76,198
            
            
            
            3
            %
            
            
            66,949
            
            
            
            88
            %Corporate
      services
            
            
            74,280
            
            
            
            4
            %
            
            
            54,400
            
            
            
            2
            %
            
            
            19,880
            
            
            
            37
            %Other
      general and administrative costs
            
            
            412,951
            
            
            
            24
            %
            
            
            408,109
            
            
            
            16
            %
            
            
            4,842
            
            
            
            1
            %Total
      general and administrative
            
            $
            1,343,824
            
            
            
            78
            %
            
            $
            1,424,962
            
            
            
            55
            %
            
            $
            (81,138
            )
            
            
            6
            %Total
      sales, marketing, general and administrative
            
            $
            1,811,044
            
            
            
            105
            %
            
            $
            1,961,344
            
            
            
            75
            %
            
            $
            (150,300
            )
            
            
            8
            %





For the
nine months ended September 30, 2008, total sales and marketing costs decreased
but increased as a percentage of gross revenues due to the overall decrease in
gross revenues.  Commissions decreased for this period 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 decreased; although we
anticipate advertising and direct marketing costs to increase in future periods
as we continue to enhance our product visibility online, increase and focus more
on our direct marketing efforts, and increase the scope and frequency of our
print advertising campaigns in order to maximize sales associated with new
products, product enhancements and potential new product
lines.  During the nine months ended September 30, 2008, sales and
marketing wages - reclassified, increased as we began to transform our customer
service department and its representatives into our in-house direct
telemarketing sales team in late 2007. As we expand our in-house direct
telemarketing sales team, we anticipate our sales and marketing wages to
increase in future periods.





-6-
 Table of Contents


In
addition to the decrease in total net personnel costs, gross direct salaries and
wages, before adjustments of capitalized wages and reclassifications, decreased
approximately $89,000, from approximately $969,000 for the nine months ended
September 30, 2007 to approximately $880,000 for the nine months ended September
30, 2008. The decrease in direct salaries and wages was a result of the
departure of our marketing manager, a customer service representative and the
further reduction in our technical support staff in relation to the sale of our
Membership Plus®
product line. We do anticipate direct salaries and wages to increase nonetheless
in the future given our continued focus on expanding our direct telemarketing
sales team, marketing staff and product development staff.




The
decrease in the amortization and depreciation expense is mainly attributable to
the decrease 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 nine months ended September 30, 2008 and 2007
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.  Due to the sale of the Membership Plus®
product line, we no longer carry on our books the net value associated with the
Membership Plus®
product in relation to the 1999 license and, as a result, we no longer had the
corresponding amortization expense as of mid-October 2007. Finally, the
amortization expense for 2007 reflects the amortization of our website,
www.quickverse.com, the most recent version of which we launched during the
second quarter of 2004.  However, the decrease in the amortization
expense for the nine months ended September 30, 2008 reflects the
discontinuation of this amortization item following full
recognition.




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 increase in
software development costs related to third-party developers and direct labor
expensed as research and development reflects less capitalization of research
and development costs for the nine months ended September 30, 2008. During the
first quarter of 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. During the third quarter of 2008, we determined that
two of our development projects were no longer viable and therefore,
approximately $10,000 of capitalized costs were expensed. In future periods, we
anticipate research and development expenses to increase as we expand our
internal development team and add new products and product versions, platforms
and product lines.





Corporate
service fees increased for the nine months ended September 30, 2008 from
engaging the services of a consultant for business development related advisory
services in March 2007.  The consultant’s contract expired in June
2008, at which time we extended the contract on a month by month
basis.  We anticipate continuing to renew the consultant’s contract on
a month by month basis for another period of six to twelve months as well as
engaging additional business development consultants in the future.





Gain
on Fair Value Adjustment of Derivatives




In
connection with the warrants issued in November 2004, a non-cash fair value
adjustment of approximately $306,000 and ($86,000) has been included in other
income (expenses) for the nine months ended September 30, 2008 and 2007,
respectively. 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.  As described more fully below, these warrants
were canceled on March 6, 2008 and there is no recognition, therefore, of a
derivative liability on our September 30, 2008 balance
sheet.  Furthermore, there will not be a non-cash fair value
adjustment related to these warrants included in other income or other expenses
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 nine months ended September 30, 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.





-7-
 Table of Contents


Income
Tax Benefit





We did
not record an income tax provision or benefit for the nine months ended
September 30, 2008. Based upon available evidence, there is uncertainty
regarding our ability to realize our deferred tax assets and we have therefore
recorded a full valuation allowance against the net deferred tax assets in our
condensed consolidated financial statements. Based on our estimates for 2009 and
beyond, we believe the uncertainty regarding the ability to realize our deferred
tax assets may diminish to the point where the recognition of our deferred tax
assets may be warranted in the future. 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.





For the
nine months ended September 30, 2007, we recorded an income tax benefit based
upon our estimate of realization of deferred tax assets arising primarily from
net operating loss carryforwards for federal income tax purposes. We based our
estimate of realization upon a number of factors, including cumulative taxable
income from two of the prior four years and the expectation of significant
taxable income before net operating loss carryforwards for 2007.





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. Despite the seasonality of our main product line and although
there can be no assurance, we believe cash generated through our continuing
operations will be at least minimally sufficient to sustain our continuing
operations, albeit with very limited growth. However, 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 recently occurred with respect to our Membership
Plus® product
line). Funding from outside sources may include but is not limited to the
exercise of outstanding warrants and 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
            
            September
      30, 2008
            
            
            December
      31, 2007Current
      assets
            
            $
            649,057
            
            
            $
            1,600,326Current
      liabilities
            
            $
            1,744,415
            
            
            $
            2,614,891Retained
      deficit
            
            $
            7,846,089
            
            
            $
            7,700,489





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 – 54% of which we collected during our last
fiscal year 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.





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Cash
      Flows for Nine Months Ending September 30
            
            2008
            
            
            2007
            
            
            Change
            
            
            %Cash
      flows (used) provided by operating activities
            
            $
            (146,649
            )
            
            $
            313,922
            
            
            $
            (460,571
            )
            
            
            147
            %Cash
      flows (used) by investing activities
            
            $
            (378,408
            )
            
            $
            (370,457
            )
            
            $
            (7,951
            )
            
            
            2
            %Cash
      flows (used) provided by financing activities
            
            $
            (176,722
            )
            
            $
            7,863
            
            
            $
            (184,585
            )
            
            
            2,348
            %





Net cash
used by operating activities increased for the nine months ended September 30,
2008 primarily due to a reduction in cash collections, from reduced net
revenues, and continued payments made to employees, content providers and
vendors.




The
increase in net cash used by investing activities for the nine months ended
September 30, 2008 was primarily a result of the purchase of FormTool® in
February 2008. Specifically, and in connection with FormTool®, we
increased our cash investment for the development and re-launch of the
FormTool.com website.  Offsetting this to some extent, however, was
the fact that, during the nine months ended September 30, 2008 we capitalized
fewer costs associated with software development as compared to the nine months
ended September 30, 2007 due to maintenance issues (as previously described) as
well as the curtailment of development work associated with the now-divested
Membership Plus® product
line.




The
increase in net cash used by financing activities for the nine months ended
September 30, 2008 was the result of our settlement payment to Barron Partners,
LP in the amount of $150,000 in exchange for the cancellation of the warrants
issued in November 2004 along with continued payments made on long-term notes
payable.





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 a new operating lease with a third-party for our corporate
office facility in Omaha, Nebraska with terms extending through May 2012. We
also secured a new 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.





We lease
office space in Naperville, Illinois under an operating lease with a third-party
with terms extending through March 2009. We are responsible for all insurance
expenses associated with this lease.





At
September 30, 2008, the total future minimum rental payments required under
these leases is approximately $243,000 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 September 30, 2008 is
approximately $16,000 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.





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Contractual
Obligations





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide this information.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide this information.





ITEM 4T. CONTROLS AND PROCEDURES.





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, September 30, 2008, 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.


























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PART II – OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS.





As of the
date of this quarterly report on Form 10-Q for the period ended September 30,
2008, and to the best knowledge of our officers and directors, there were no
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.  Although we currently maintain liability insurance coverage
in an amount equal to $5,000,000, there can be no assurance that such coverage
will prove adequate to cover all liabilities arising out of any claims that may
be initiated against us in the future. Any finding of liability imposed against
us coupled with a lack of corresponding insurance coverage is likely to have an
adverse effect on our business, our financial condition, and including liquidity
and profitability, and our results of operations.





ITEM
1A. RISK FACTORS.





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.





ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.





There
were no reportable events under this Item 3 during the quarterly period ended
September 30, 2008.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES.





There
were no reportable events under this Item 3 during the quarterly period ended
September 30, 2008.





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.





No
matters were submitted to a vote of our stockholders during the quarterly period
ended September 30, 2008.





ITEM 5. OTHER INFORMATION.





There
were no reportable events under this Item 5 during the quarterly period ended
September 30, 2008.





ITEM 6. EXHIBITS.





Exhibits
required by Item 601 of Regulation S-K.





No.
            Description
      of Exhibit2.1
            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.




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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.




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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 November 14, 2008. FILED
HEREWITH.31.2
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 and dated November 14, 2008. 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 November 14,
      2008.  FILED HEREWITH.





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Signatures





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:
      November 14, 2008
            By
            /s/ Steven MaloneSteven
      MalonePresident
      and Chief Executive Officer





Date:
      November 14, 2008
            By
            /s/ Kirk R. RowlandKirk
      R. Rowland, CPAChief
      Financial Officer (Principal Financial & Accounting
      Officer)































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