**U.
      S. SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**


**QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


**FOR
      THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007**








Commission
      file number: 0-29963








**FINDEX.COM,
      INC.**


(Exact
      name of small business issuer as specified in its charter)








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





(402)
      333-1900


(Issuer’s
      telephone number)





N/A





(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 shell company (as defined in Rule
      12b-2 of the Exchange Act). **Yes [_] No [X]**





At
      November 19, 2007, the registrant had outstanding 52,150,817 shares of common
      stock, of which there is only a single class.





Transitional
      Small Business Disclosure Format (check one):  Yes __ No
X









































**TABLE
      OF CONTENTS**





**Page
                Number****PART
                I -
                FINANCIAL INFORMATION**ITEM
                1.
                Financial Statements.
            F-1ITEM
                2.
                Management’s Discussion and Analysis or Plan of
                Operation.
            1ITEM
                3.
                Controls and Procedures.
            10**PART
                II - OTHER INFORMATION**ITEM
                1.
                Legal Proceedings.
            12ITEM
                2. Unregistered Sales of Equity Securities
                and Use of Proceeds.
            12ITEM
                3.
                Defaults Upon Senior Securities.
            12ITEM
                4.
                Submission of Matters to a Vote of Security
                Holders.
            12ITEM
                5. Other Information.
            13ITEM
                6.
                Exhibits.
            13

































**PART
      I – FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS.**





**Findex.com,
                Inc.****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(Unaudited)****September
                30, 2007**
            
            
            December
                31, 2006**Assets**Current
                assets:Cash
                and cash equivalents
            
            **$**
            **---**
            
            
            $
            48,672Accounts
                receivable, trade, net
            
            ****
            **134,040**
            
            
            
            318,000Inventories
            
            ****
            **111,635**
            
            
            
            145,344Other
                current assets
            
            ****
            **295,889**
            
            
            
            213,162Total
                current assets
            
            ****
            **541,564**
            
            
            
            725,178Property
                and equipment, net
            
            ****
            **63,066**
            
            
            
            86,638Software
                license, net
            
            ****
            **881,138**
            
            
            
            1,258,769Capitalized
                software development costs, net
            
            ****
            **559,326**
            
            
            
            491,695Restricted
                cash
            
            ****
            **40,000**
            
            
            
            ---Deferred
                income taxes, net
            
            ****
            **577,787**
            
            
            
            443,600Other
                assets
            
            ****
            **43,856**
            
            
            
            49,965Total
                assets
            
            **$**
            **2,706,737**
            
            
            $
            3,055,845**Liabilities
                and stockholders’ equity**Current
                liabilities:Cash
                overdraft
            
            **$**
            **22,988**
            
            
            $
            ---Accounts
                payable, trade
            
            ****
            **791,854**
            
            
            
            693,260Accrued
                royalties
            
            ****
            **668,769**
            
            
            
            649,763Derivative
                liabilities
            
            ****
            **612,932**
            
            
            
            526,868Other
                current liabilities
            
            ****
            **561,268**
            
            
            
            561,111Total
                current liabilities
            
            ****
            **2,657,811**
            
            
            
            2,431,002Long-term
                obligations
            
            ****
            **16,726**
            
            
            
            80,568Commitments
                and contingencies (Note 9)Stockholders’
                equity: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,52,150,817
                and 49,788,317 shares issued and outstanding, respectively
            
            ****
            **52,151**
            
            
            
            49,788Paid-in
                capital
            
            ****
            **7,734,621**
            
            
            
            7,592,884Retained
                (deficit)
            
            ****
            **(7,754,572**
            **)**
            
            
            (7,098,397
            )Total
                stockholders’ equity
            
            ****
            **32,200**
            
            
            
            544,275Total
                liabilities and stockholders’ equity
            
            **$**
            **2,706,737**
            
            
            $
            3,055,845*See
                accompanying notes.*


F-1
 Table
            of Contents


**Findex.com,
                Inc.****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****(Unaudited)****Three
                Months Ended September 30,**
            
            
            **Nine
                Months Ended September 30,****2007**
            
            
            2006
            
            
            **2007**
            
            
            2006Revenues,
                net of reserves and allowances
            
            **$**
            **476,359**
            
            
            $
            826,127
            
            
            **$**
            **2,234,690**
            
            
            $
            2,586,197Cost
                of sales
            
            ****
            **192,726**
            
            
            
            391,771
            
            
            ****
            **969,601**
            
            
            
            1,361,157Gross
                profit
            
            ****
            **283,633**
            
            
            
            434,356
            
            
            ****
            **1,265,089**
            
            
            
            1,225,040Operating
                expenses:Sales
                and marketing
            
            ****
            **181,417**
            
            
            
            193,223
            
            
            ****
            **519,218**
            
            
            
            580,684General
                and administrative
            
            ****
            **264,111**
            
            
            
            385,658
            
            
            ****
            **1,001,920**
            
            
            
            1,310,340Other
                operating expenses
            
            ****
            **136,557**
            
            
            
            133,146
            
            
            ****
            **440,206**
            
            
            
            424,567Total
                operating expenses
            
            ****
            **582,085**
            
            
            
            712,027
            
            
            ****
            **1,961,344**
            
            
            
            2,315,591Loss
                from operations
            
            ****
            **(298,452**
            **)**
            
            
            (277,671
            )
            
            ****
            **(696,255**
            **)**
            
            
            (1,090,551
            )Other
                expenses, net
            
            ****
            **(9,580**
            **)**
            
            
            47,898
            )
            
            ****
            **(24,855**
            **)**
            
            
            (57,929
            )Registration
                rights penalties
            
            ****
            **---**
            
            
            
            ---
            
            
            ****
            **---**
            
            
            
            (49,314
            )Gain
                (loss) on valuation adjustment of derivatives
            
            ****
            **(139,809**
            **)**
            
            
            237,009
            
            
            ****
            **(86,064**
            **)**
            
            
            1,109,548Loss
                before income taxes
            
            ****
            **(447,841**
            **)**
            
            
            (88,560
            )
            
            ****
            **(807,174**
            **)**
            
            
            (88,246
            )Income
                tax benefit
            
            ****
            **140,899**
            
            
            
            114,909
            
            
            ****
            **150,999**
            
            
            
            89,457Net
                income (loss)
            
            **$**
            **(306,942**
            **)**
            
            $
            26,349
            
            
            ****
            **(656,175**
            **)**
            
            
            1,211Retained
                deficit at beginning of year
            
            
            ****
            **(7,098,397**
            **)**
            
            
            (7,752,097
            )Retained
                deficit at end of period
            
            
            **$**
            **(7,754,572**
            **)**
            
            $
            (7,750,886
            )Net
                earnings (loss) per share:Basic
            
            **$**
            **(0.01**
            **)**
            
            $
            0.00
            
            
            **$**
            **(0.01**
            **)**
            
            $
            0.00Diluted
            
            **$**
            **(0.01**
            **)**
            
            $
            0.00
            
            
            **$**
            **(0.01**
            **)**
            
            $
            0.00Weighted
                average shares outstanding:Basic
            
            ****
            **51,632,339**
            
            
            
            49,558,317
            
            
            ****
            **50,411,806**
            
            
            
            49,294,214Diluted
            
            ****
            **51,632,339**
            
            
            
            51,167,410
            
            
            ****
            **50,411,806**
            
            
            
            51,660,240*See
                accompanying notes.*


F-2
 Table
            of Contents


**Findex.com,
                Inc.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Unaudited)****Nine
                Months Ended September 30,**
            
            **2007**
            
            
            2006Cash
                flows from operating activities:Cash
                received from customers
            
            **$**
            **2,417,172**
            
            
            $
            2,683,215Cash
                paid to suppliers and employees
            
            ****
            **(2,085,968**
            **)**
            
            
            (2,375,960
            )Other
                operating activities, net
            
            ****
            **(17,282**
            **)**
            
            
            (16,204
            )Net
                cash provided by operating activities
            
            ****
            **313,922**
            
            
            
            291,051Cash
                flows from investing activities:Software
                development costs
            
            ****
            **(316,086**
            **)**
            
            
            (412,108
            )Deposits
                paid
            
            ****
            **(41,189**
            **)**
            
            
            ---Other
                investing activities, net
            
            ****
            **(13,182**
            **)**
            
            
            (12,955
            )Net
                cash used by investing activities
            
            ****
            **(370,457**
            **)**
            
            
            (425,063
            )Cash
                flows from financing activities:Proceeds
                from note payable, net
            
            ****
            **---**
            
            
            
            75,000Proceeds
                from issuance of common stock
            
            ****
            **32,500**
            
            
            
            ---Cash
                overdraft
            
            ****
            **22,988**
            
            
            
            ---Payments
                made on long-term notes payable
            
            ****
            **(47,625**
            **)**
            
            
            (59,556
            )Net
                cash provided by financing activities
            
            ****
            **7,863**
            
            
            
            15,444Net
                decrease in cash and cash equivalents
            
            ****
            **(48,672**
            **)**
            
            
            (118,568
            )Cash
                and cash equivalents, beginning of year
            
            ****
            **48,672**
            
            
            
            119,560Cash
                and cash equivalents, end of period
            
            **$**
            **---**
            
            
            $
            992Reconciliation
                of net loss to cash flows from operating activities:Net
                (loss) income
            
            **$**
            **(656,175**
            **)**
            
            $
            1,211Adjustments to reconcile net (loss) income to net cash provided
                by operating activities:Software
                development costs amortized
            
            ****
            **248,455**
            
            
            
            600,959(Gain)
                loss on fair value adjustment of derivatives
            
            ****
            **86,064**
            
            
            
            (1,109,548
            )Bad
                debts provision (recovery)
            
            ****
            **17,164**
            
            
            
            (11,216
            )Depreciation
                & amortization
            
            ****
            **423,042**
            
            
            
            435,783(Gain)
                loss on sale of property and equipment
            
            ****
            **(1,361**
            **)**
            
            
            1,746Noncash
                operating expenses
            
            ****
            **73,600**
            
            
            
            69,997Change
                in assets and liabilities:Decrease
                in accounts receivable
            
            ****
            **166,796**
            
            
            
            146,387Decrease
                in inventories
            
            ****
            **33,709**
            
            
            
            63,591Decrease
                in refundable taxes
            
            ****
            **2,050**
            
            
            
            5,764(Increase)
                in prepaid expenses
            
            ****
            **(47,825**
            **)**
            
            
            (7,603
            )Increase
                in accrued royalties
            
            ****
            **19,006**
            
            
            
            101,581Increase
                in accounts payable
            
            ****
            **118,595**
            
            
            
            164,327(Decrease)
                in deferred taxes
            
            ****
            **(150,999**
            **)**
            
            
            (89,457
            )(Decrease)
                in other liabilities
            
            ****
            **(18,199**
            **)**
            
            
            (82,471
            )Net
                cash provided by operating activities
            
            **$**
            **313,922**
            
            
            $
            291,051*See
                accompanying notes.*


F-3
 Table
            of Contents


**Findex.com,
      Inc.**


**Notes
      to Condensed Consolidated Financial Statements**


**September
      30, 2007**


**(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-QSB and Item 310
      of
      Regulation S-B. 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 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, 2006.





**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.
      Our software license is amortized over a ten-year useful life.





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
      $2,030,968, less accumulated amortization of $1,471,642 at September 30,
      2007.





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 $76,198
      and
      $131,013 for the nine months ended September 30, 2007 and 2006, respectively,
      included in general and administrative expenses.





We
      capitalize costs related to the development of computer software developed
      or
      obtained for internal use in accordance with the American Institute of Certified
      Public Accountants Statement of Position (“SOP”) 98-1, *Accounting for the
      Costs of Computer Software Developed or Obtained for Internal Use*. Software
      obtained for internal use has generally been enterprise level business and
      finance software that we customize to meet our specific operational needs.
      We
      have not sold, leased, or licensed software developed for internal use to our
      customers and have no intention of doing so in the future.





We
      capitalize costs related to the development and maintenance of our website
      in
      accordance with Financial Accounting Standard Board’s (“FASB’s”) Emerging Issues
      Task Force (“EITF”) Issue No. 00-2, *Accounting for Website Development
      Costs*. Under EITF Issue No. 00-2, costs expensed as incurred are as
      follows:





▪
            planning
                the website,▪
            developing
                the applications and infrastructure until technological feasibility
                is
                established,▪
            developing
                graphics such as borders, background and text colors, fonts, frames,
                and
                buttons, and▪
            operating
                the site such as training, administration and
                maintenance.





Capitalized
      costs include those incurred to:





▪
            obtain
                and register an Internet domain name,▪
            develop
                or acquire software tools necessary for the development
                work,▪
            develop
                or acquire software necessary for general website
                operations,▪
            develop
                or acquire code for web applications,▪
            develop
                or acquire (and customize) database software and software to integrate
                applications such as corporate databases and accounting systems into
                web
                applications,▪
            develop
                HTML web pages or templates,▪
            install
                developed applications on the web server,▪
            create
                initial hypertext links to other websites or other locations within
                the
                website, and▪
            test
                the website applications.





We
      amortize website development costs on a straight-line basis over the estimated
      life of the site, generally 36 months. Total cumulative website development
      costs, included in other assets on our condensed consolidated balance sheets,
      were $113,252, less accumulated amortization of $84,537 at September 30,
      2007.





F-5
 Table
          of Contents


**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.





**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,
      2007 and 2006 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.





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**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**





**Fair
      Value**





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 years.  Early adoption is permitted.  We plan
      to adopt SFAS No. 157 as of January 1, 2008. The balance sheet items carried
      at
      fair value consist of derivatives and other financial
      instruments.  Additionally, we use fair value concepts to test various
      long-lived assets for impairment and to initially measure assets and liabilities
      acquired in a business combination.  Management is currently
      evaluating the impact of adoption on how these liabilities are currently
      measured.





In
      February 2007 the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities,* to provide companies with an
      option to report selected financial assets and liabilities at fair
      value.  The standard’s objective is to reduce both complexity in
      accounting for financial instruments and the volatility in earnings caused
      by
      measuring related assets and liabilities differently.  The standard
      requires companies to provide additional information that will help investors
      and other users of financial statements to more easily understand the effect
      of
      the company’s choice to use fair value on its earnings.  It also
      requires companies to display the fair value of those assets and liabilities
      for
      which the company has chosen to use fair value on the face of the balance
      sheet.  The new standard does not eliminate disclosure requirements
      included in other accounting standards, including requirements for disclosures
      about fair value measurements included in SFAS 157, *Fair Value
      Measurements*, and SFAS 107, *Disclosures about Fair Value of Financial
      Instruments*.  SFAS 159 is effective for fiscal years beginning
      after November 15, 2007.  We plan to adopt SFAS No. 159 as of January
      1, 2008.  We are in the process of evaluating this standard and
      therefore have not yet determined the impact that the adoption will have on
      our
      financial position, results of operations or cash flows.





**RECLASSIFICATIONS**





Certain
      accounts in our 2006 financial statements have been reclassified for comparative
      purposes to conform with the presentation in our 2007 financial
      statements.





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**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, 2007, we had
      a
      year-to-date net loss of $656,175, and negative working capital of $2,116,247
      and $1,705,824, and an accumulated deficit of $7,754,572 and $7,098,397 as
      of
      September 30, 2007 and December 31, 2006, respectively. Although these factors
      raise substantial doubt as to our ability to continue as a going concern through
      December 31, 2007, we have taken several actions to mitigate against this risk.
      These actions include selling some of our intangible assets (See Note 11) and
      pursuing mergers and acquisitions that will provide profitable operations and
      positive operating cash flow.





**NOTE
      3 – INVENTORIES**





At
      September 30, 2007, inventories consisted of the following:





Raw
                materials
            
            **$**
            **69,373**Finished
                goods
            
            ****
            **61,383**Less
                reserve for obsolete inventory
            
            ****
            **(19,121**
            **)**Inventories
            
            **$**
            **111,635**





**NOTE
      4 – RESERVES AND ALLOWANCES**





At
      September 30, 2007, the allowance for doubtful accounts included in Accounts
      receivable, trade, net, consisted of the following:





Balance
                December 31, 2006
            
            **$**
            **11,000**Bad
                debts provision (included in Other operating expenses)
            
            ****
            **17,164**Accounts
                written off
            
            ****
            **(10,697**
            **)**Collection
                of accounts previously written off
            
            ****
            **715**Balance
                September 30, 2007
            
            **$**
            **18,182**





At
      September 30, 2007, the reserve for obsolete inventory included in Inventories
      consisted of the following:





Balance
                December 31, 2006
            
            **$**
            **---**Provision
                for obsolete inventory
            
            ****
            **19,121**Obsolete
                inventory written off
            
            ****
            **---**Balance
                September 30, 2007
            
            **$**
            **19,121**





At
      September 30, 2007, the reserve for sales returns included in Other current
      liabilities consisted of the following:





Balance
                December 31, 2006
            
            **$**
            **98,132**Return
                provision – sales
            
            ****
            **381,700**Return
                provision – cost of sales
            
            ****
            **(57,255**
            **)**Returns
                processed
            
            ****
            **(345,869**
            **)**Balance
                September 30, 2007
            
            **$**
            **76,708**





**NOTE
      5 – DERIVATIVE LIABILITIES**





At
      September 30, 2007, our derivative liability consisted of the
      following:





Warrant
                A
            
            **$**
            **---**Warrant
                B
            
            ****
            **334,402**Warrant
                C
            
            ****
            **278,530**Derivatives
            
            **$**
            **612,932**





In
      May
      2004, we issued a three-year warrant (Warrant A) to purchase up to 600,000
      shares of our common stock to a consultant. This warrant was exercisable on
      a
      cashless basis at the option of the warrant holder at a price per share of
      $0.15. This warrant was 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*. On May
      1, 2007, this warrant expired unexercised.  See Note 6.





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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 (Warrant B) entitles 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 (Warrant C) entitles 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 is subject to standard adjustment provisions and each provides
      for
      settlement in registered shares of our common stock and may, at the option
      of
      the holder, be settled in a cashless, net-share settlement. The warrant holder
      is prevented from electing a cashless exercise so long as there is in effect
      a
      registration statement covering the shares underlying these warrants. The
      maximum number of shares of our common stock to be received for each warrant
      in
      a net-share settlement would be 10,937,500 but the actual number of shares
      settled would likely be significantly less and would vary based on the last
      reported sale price (as reported by Bloomberg) of our common stock on the date
      immediately preceding the date of the exercise notice. These warrants are
      accounted for as a liability according to the guidance of EITF 00-19 and the
      fair value of each warrant has been determined using the Black-Scholes valuation
      method with the assumptions listed in the table below.





**Warrant
                B**
            
            
            **Warrant
                C**Expected
                term – years
            
            
            2.11
            
            
            
            2.11Stock
                price at September 30, 2007
            
            $
            0.04
            
            
            $
            0.04Expected
                dividend yield
            
            
            0
            %
            
            
            0
            %Expected
                stock price volatility
            
            
            212
            %
            
            
            212
            %Risk-free
                interest rate
            
            
            4.10
            %
            
            
            4.10
            %





The
      warrants are revalued at each balance sheet date by using the parameters above,
      reducing the expected term to reflect the passing of time, and using the stock
      price at the balance sheet date. Net fair value adjustments included in other
      income and expenses on the consolidated statements of operations were expense
      adjustments of ($139,809) and ($86,064) for the three and nine months ended
      September 30, 2007, respectively, and income adjustments of $237,009 and
      $1,109,548 for the three and nine months ended September 30, 2006,
      respectively.





**NOTE
      6 – STOCKHOLDERS’ EQUITY**





**COMMON
      STOCK**





In
      June
      2007, we committed to issue a total of 562,500 restricted shares of common
      stock
      to our outside director, at the closing price as of June 29, 2007 ($0.032),
      in
      lieu of cash payments of amounts accrued for services as a member of our board
      from the period of October 1, 2006 through June 30, 2007. This issuance was
      valued at $18,000.





In
      July
      2007, we entered into a stock subscription agreement with a business development
      consultant for the sale of 1,300,000 shares of common stock at a price of $0.025
      per share.  We realized $32,500 from this subscription.





In
      August
      2007, pursuant to settlement of an agreement with an individual for business
      consulting services, we committed to issue 500,000 restricted shares of common
      stock, valued at $0.04, in lieu of cash.





**COMMON
      STOCK OPTIONS**





In
      April
      2007, 50,000 vested stock options with an exercise price of $0.11, related
      to a
      former employee, expired unexercised. We did not grant any options or other
      stock-based awards to the individual for whom the options expired, during the
      six months prior to and after the option expirations.





In
      July
      2007, 80,000 vested stock options with an exercise price of $0.10, related
      to
      former employees, expired unexercised.  We did not grant any options
      or other stock-based awards to the individuals for whom the options expired,
      during the six months prior to and after the option expirations.





In
      August
      2007, 40,000 vested stock options with an exercise price of $0.10, related
      to a
      former employee, expired unexercised.  We did not grant any options or
      other stock-based awards to the individual for whom the options expired, during
      the six months prior to and after the option expirations.





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**COMMON
      STOCK WARRANTS**





In
      May
      2007, a warrant to purchase up to 600,000 restricted shares of our common stock
      with an exercise price of $0.15 per share expired unexercised. See Note
      5.





In
      June
      2007, a warrant to purchase up to 250,000 restricted shares of our common stock
      with an exercise price of $0.10 per share expired unexercised.





In
      July
      2007, we amended an agreement with a business development consultant to provide
      for additional compensation of warrants to purchase up to 2,300,000 shares
      of
      common stock at $0.032 per share.  The agreement provides that
      warrants to purchase up to 1,300,000 shares of common stock vested on August
      31,
      2007 and warrants to purchase up to 1,000,000 shares of common stock vest on
      January 1, 2008.  These warrants were valued at $48,160 using the
      Black-Scholes method and recorded as an expense.





**NOTE
      7 – INCOME TAXES**





The
      provision (benefit) for taxes on net loss for the three and nine months ended
      September 30, 2007 and 2006 consisted of the following:





**Three
                Months**
            
            
            **Nine
                Months****2007**
            
            
            2006
            
            
            **2007**
            
            
            2006Current:Federal
            
            **$**
            **---**
            
            
            $
            ---
            
            
            **$**
            **---**
            
            
            $
            ---State
            
            ****
            **---**
            
            
            
            ---
            
            
            ****
            **---**
            
            
            
            ---****
            **---**
            
            
            
            ---
            
            
            ****
            **---**
            
            
            
            ---Deferred:Federal
            
            ****
            **(140,937**
            **)**
            
            
            (112,543
            )
            
            ****
            **(151,162**
            **)**
            
            
            (84,655
            )State
            
            ****
            **38**
            
            
            
            (2,366
            )
            
            ****
            **163**
            
            
            
            (4,802
            )****
            **(140,899**
            **)**
            
            
            (114,909
            )
            
            ****
            **(150,999**
            **)**
            
            
            (89,457
            )Total
                tax provision (benefit)
            
            **$**
            **(140,899**
            **)**
            
            $
            (114,909
            )
            
            **$**
            **(150,999**
            **)**
            
            $
            (89,457
            )





**NOTE
      8 – 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,**
            
            **2007**
            
            
            2006Net
                income (loss)
            
            $
            (306,942
            )
            
            $
            26,349Preferred
                stock dividends
            
            
            ---
            
            
            ****
            **---**Net
                income (loss) available to common shareholders
            
            $
            (306,942
            )
            
            $
            26,349Basic
                weighted average shares outstanding
            
            ****
            **51,632,339**
            
            
            
            49,558,317Dilutive
                effect of:Convertible
                debt
            
            
            ---
            
            
            
            1,535,714Stock
                options
            
            
            ---
            
            
            
            ---Warrants
            
            
            ---
            
            
            
            73,379Diluted
                weighted average shares outstanding
            
            ****
            **51,632,339**
            
            
            
            51,167,410




F-11
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**For
                the Nine Months Ended September 30,**
            
            **2007**
            
            
            2006Net
                loss
            
            $
            (656,175
            )
            
            $
            1,211Preferred
                stock dividends
            
            
            ---
            
            
            ****
            **---**Net
                loss available to common shareholders
            
            $
            (656,175
            )
            
            $
            1,211Basic
                weighted average shares outstanding
            
            ****
            **50,411,806**
            
            
            
            49,294,214Dilutive
                effect of:Convertible
                debt
            
            
            ---
            
            
            
            1,535,714Stock
                options
            
            
            ---
            
            
            
            676,043Warrants
            
            
            ---
            
            
            
            154,269Diluted
                weighted average shares outstanding
            
            ****
            **50,411,806**
            
            
            
            51,660,240





**NOTE
      9 – COMMITMENTS AND CONTINGENCIES**





We
      are
      subject to legal proceedings and claims that arise in the ordinary course of
      our
      business. In the opinion of management, the amount of ultimate liability with
      respect to these actions will not materially affect our financial statements
      taken as a whole.





Our
      employment agreements with our management team each contain a provision for
      an
      annual bonus equal to 1% of our income from operations adjusted for other income
      and interest expense (4% total). We accrue this bonus on a quarterly basis.
      Our
      management team consists of our Chief Executive Officer (with a base annual
      salary of $150,000), our Chief Financial Officer (with a base annual salary
      of
      $110,000), our Chief Technology Officer (with a base annual salary of $150,000)
      and our Vice President of Sales (with a base annual salary of $110,000). In
      addition to the bonus provisions and annual base salary, each employment
      agreement provides for payment of all accrued base salaries ($10,873 included
      in
      Other current liabilities at September 30, 2007), bonuses ($30,542 included
      in
      other current liabilities at September 30, 2007), and any vested deferred
      vacation compensation ($32,874 included in other current liabilities at
      September 30, 2007) for termination by reason of disability. 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.





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.





F-12
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          of Contents


**NOTE
      10 – 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.





**NOTE
      11 – SUBSEQUENT EVENTS**





In
      October 2007, we entered into an unsecured 10-day note agreement with a
      shareholder for $25,000.  The agreement called for interest at 6% and
      provided for a $2,000 origination fee.  The note was repaid in
      full.





In
      October 2007, we entered into and consummated an Asset Purchase Agreement with
      an unrelated company for the sale of our Membership Plus product line for
      $1,675,000 cash.  We have not classified this asset as “held for sale”
at September 30, 2007 as we are currently in the process of determining the
      total unamortized historical cost of the product line and have engaged a third
      party expert to assist us in that determination.  The historical cost
      of the Membership Plus product line was originally lumped, along with the
      historical cost of our other software product lines, into the total software
      license and is included on the balance sheet in Software license,
      net.  In addition, $9,788 included in Inventories and $91,879 included
      in Capitalized software development, net are additional costs associated with
      the Membership Plus product line.  Finally, the Asset Purchase
      Agreement included open accounts receivable directly related to the Membership
      Plus product line (approximately $20,000 included in Accounts receivable, trade,
      net at September 30, 2007).






































F-13
 Table
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**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





***Cautionary
      Statement Regarding Forward-Looking Statements***





*This
      quarterly report on Form 10-QSB, press releases and certain information provided
      periodically in writing or verbally by our officers or our agents contain
      statements which constitute forward-looking statements.  The words
“may”, “would”, “could”, “will”, “expect”, “estimate”, “anticipate”, “believe”,
“intend”, “plan”, “goal”, and similar expressions and variations thereof are
      intended to specifically identify forward-looking statements.  These
      statements appear in a number of places in this Form 10-QSB and include all
      statements that are not statements of historical fact regarding the intent,
      belief or current expectations of us, our directors or our officers, with
      respect to, among other things (i) our liquidity and capital resources, (ii)
      our
      financing opportunities and plans, (iii) our ability to attract customers to
      generate revenues, (iv) competition in our business segment, (v) market and
      other trends affecting our future financial condition or results of operations,
      (vi) our growth strategy and operating strategy, and (vii) the declaration
      and/or payment of dividends.*





*Investors
      and prospective investors are cautioned that any such forward-looking statements
      are not guarantees of future performance and involve risks and uncertainties,
      and that actual results may differ materially from those projected in the
      forward-looking statements as a result of various factors.  Factors
      that might cause such differences include, among others, those set forth in
      Part
      I, Item 2 of this quarterly report on Form 10-QSB, entitled “Management’s
      Discussion and Analysis or Plan of Operation”, and including without limitation
      the ”Risk Factors” contained in the company’s annual report on Form 10-KSB for
      the period ending December 31, 2006.  Except as required by law, we
      undertake no obligation to update any of the forward-looking statements in
      this
      Form 10-QSB after the date of this report.*





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, 2006.





**MANAGEMENT
      OVERVIEW**





During
      the third quarter of 2007, we continued to concentrate on our core products,
      QuickVerse®
      and Membership Plus®(which we have since divested, as more specifically detailed
      below), and their respective features in order to prepare for  annual
      upgrade releases for these product lines.  We also continued to focus
      on expanding the content available for our QuickVerse® products
      which
      resulted during the period in the release of the following two new reference
      collections for QuickVerse®
      (Windows) users:





▪
            The
                Pulpit Commentary®,
                which includes 23 original volumes, over 23,000 pages, and 95,000
                entries
                with a retail price of $99.95; and▪
            The
                Biblical Illustrator®,
                which includes 56 volumes and 34,752 pages from hundreds of authors
                with a
                retail price of $99.95.





As
      of
      September 2007, we reacquired certain content publishing  rights to
      Zondervan’s New International Version® (NIV),
      heralded by
      many Bible enthusiasts as the most widely read and universally respected Bible
      translation currently in publication.  The NIV content had been
      incorporated into our QuickVerse®
      product lines for a number of years prior to 2001 when we were required to
      remove it as a result of a now long-since settled dispute with the holder of
      its
      primary publishing rights.  Our newly acquired NIV rights entitle us
      to resell the NIV to both existing customers and new customers across all
      currently offered software platforms. In early September 2007, we began offering
      the NIV Family®package
      which includes the New International Version® (NIV),
      the New
      International Readers Version® (NIrV)
      and Today's
      New International Version® (TNIV)
      at a retail
      price of $39.95.  The NIV Family® is available
      for
      each QuickVerse® platform
      including
      Windows, Mac, Palm and Pocket PC.





-1-
 Table
          of Contents


During
      the second quarter of 2007, we released other reference collections for
      QuickVerse®
      (Windows) users, including:





▪
            Theological
                Dictionary of the New Testament: Abridged®,
                commonly known as “Little Kittel”, which details more than 2,300
                theologically significant New Testament words with a retail price
                of
                $59.95; and▪
            Word
                Studies in the Greek New Testament®,
                which comes in a three volume set and provides a wealth of knowledge
                and
                insight on the majority of the Greek New Testament with a retail
                price of
                $59.95.





During
      the first quarter of 2007, as part of our ongoing partnership with Thomas Nelson
      Publishers®,
      we released the Nelson Reference Collection®
      for QuickVerse®
      (Windows) users at a retail price of $129.95.  In addition, we
      released QuickVerse® 2007 Macintosh,
      available in each of the following three editions:





▪
            QuickVerse®
                Macintosh
                White Box Edition, which includes 10 Bibles and 45 reference titles
                with a
                retail price of $59.95;▪
            QuickVerse®
                Macintosh
                Black Box Edition, which includes 15 Bibles and 66 reference titles
                with a
                retail price of $129.95; and▪
            QuickVerse®
                Macintosh
                Gold Box Edition, which includes 22 Bibles and 158 reference titles
                with a
                retail price of $349.95.





Comparatively,
      during the first nine months of 2006, we released the following:





▪
            QuickVerse®
                2007 in six different editions with a range in retail price from
                $39.95 to
                $799.95;▪
            QuickVerse®
                2006 Macintosh Gold Edition with a retail price of
                $349.95;▪
            Holman
                Christian Standard Bible®
                with a retail price of $29.95;▪
            QuickVerse®
                2006 Parable Edition with a retail price of $49.95; and▪
            QuickVerse®
                2006 Bible Suite with a retail price of
                $29.95.





Despite
      our decreased net revenues during the nine months ended September 30, 2007,
      we
      were able to considerably decrease our total operating expenses while reducing
      our sales and marketing costs as well as our general and administrative costs.
      Furthermore, during the third quarter of 2006 we had released our annual upgrade
      to our QuickVerse®
      product line whereas we had no annual upgrade release during the third quarter
      of 2007.  Although there can be no assurance, we currently anticipate
      releasing the QuickVerse®
      2008 annual upgrade during the fourth quarter of 2007.





***Results
      of Operations for Quarters Ending
      September 30, 2007 and September 30, 2006***





**Statement
                of Operations for Nine Months Ending September 30**
            
            **2007**
            
            
            2006
            
            
            ChangeNet
                revenues
            
            **$**
            **2,234,690**
            
            
            $
            2,586,197
            
            
            $
            (351,507
            )Cost
                of sales
            
            ****
            **(969,601**
            **)**
            
            
            (1,361,157
            )
            
            
            391,556Gross
                profit
            
            **$**
            **1,265,089**
            
            
            $
            1,225,040
            
            
            $
            40,049Total
                operating expenses
            
            ****
            **(1,961,344**
            **)**
            
            
            (2,315,591
            )
            
            
            354,247Loss
                from operations
            
            **$**
            **(696,255**
            **)**
            
            $
            (1,090,551
            )
            
            $
            394,296Other
                expenses
            
            ****
            **(24,855**
            **)**
            
            
            (57,929
            )
            
            
            33,074Registration
                rights penalties
            
            ****
            **---**
            
            
            
            (49,314
            )
            
            
            49,314Gain
                (loss) on fair value adjustment of derivatives
            
            ****
            **(86,064**
            **)**
            
            
            1,109,548
            
            
            
            (1,195,612
            )Loss
                before income taxes
            
            **$**
            **(807,174**
            **)**
            
            $
            (88,246
            )
            
            $
            (718,928
            )Income
                tax benefit
            
            ****
            **150,999**
            
            
            
            89,457
            
            
            
            61,542Net
                income (loss)
            
            **$**
            **(656,175**
            **)**
            
            $
            1,211
            
            
            $
            (657,386
            )





-2-
 Table
          of Contents


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





▪
            a
                decrease in net revenues for the nine months ended September 30,
                2007
                partly contributed to the timing difference of our annual upgrade
                release
                of our flagship product QuickVerse®;▪
            a
                decrease in cost of sales for the nine months ended September 30,
                2007 due
                primarily to decreased amortization of software development
                costs;▪
            a
                decrease in total operating expenses for the nine months ended September
                30, 2007 arising from our continuous efforts to decrease sales, marketing,
                general and administrative costs;▪
            a
                decrease in registration rights penalties for the nine months ended
                September 30, 2007 as our registration statement on Form SB-2, originally
                filed by us on November 22, 2004 was declared effective by the SEC
                on
                February 1, 2006; and▪
            most
                notably, the recognition of a loss related to the fair value adjustment
                of
                derivatives for the nine months ended September 30, 2007 due to expired
                warrants and a decrease in the estimated life of the remaining warrants
                compared to a significantly large gain on the fair valued adjustment
                of
                derivatives for the nine months ended September 30, 2006 resulting
                from
                fluctuation in our stock price.





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***





We
      derive
      revenues from the sale of packaged software products, product support and
      multiple element arrangements that may include any combination of these
      items.  Revenue is recognized 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.  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.  Shipping
      and handling costs in connection with our software products are expensed as
      incurred and included in cost of sales.





**Nine
                Months Ending September 30**
            
            **2007**
            
            
            **%
                to Sales**
            
            
            2006
            
            
            %
                to Sales
            
            
            Change
            
            
            %Gross
                revenues
            
            **$**
            **2,614,382**
            
            
            ****
            **100**
            **%**
            
            $
            2,793,594
            
            
            
            100
            %
            
            $
            (179,212
            )
            
            
            6
            %Less estimated
                sales returns and allowances
            
            ****
            **(379,692**
            **)**
            
            ****
            **15**
            **%**
            
            
            (207,397
            )
            
            
            7
            %
            
            
            (172,295
            )
            
            
            83
            %Net
                revenues
            
            **$**
            **2,234,690**
            
            
            ****
            **85**
            **%**
            
            $
            2,586,197
            
            
            
            93
            %
            
            $
            (351,507
            )
            
            
            14
            %





Gross
      revenues decreased for the nine months ended September 30, 2007, which was
      primarily attributable to the timing difference of our annual upgrade release
      for our flagship product QuickVerse®.  QuickVerse®
      2007, last year’s upgrade release, was released in late August of
      2006.  We anticipate releasing the QuickVerse®
      2008 annual upgrade during the first part of the fourth quarter of
      2007.  Despite the decrease in gross revenues for the nine months
      ended September 30, 2007, we have consistently released and will continue to
      attempt to release new content each quarter for our QuickVerse®
      products.





During
      each of the nine months ended September 30, 2006 and 2007, our sales efforts
      were focused on directly targeting end-users through telemarketing and Internet
      sales. However, 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, and offer our products at a range of price
      points intended to appeal to various market sub-segments.





Due
      to
      the sale of our Membership Plus® product
      line at the
      beginning of our current fourth quarter (see Part II, Item 5, Other
      Information), we anticipate that our reported revenues will substantially
      decrease in the near future.  However, we are currently pursuing
      opportunities for strategic product line acquisitions which we believe are
      likely to result in reported revenues that are commensurate with or potentially
      even greater than our historic revenues generated by the Membership Plus® product
      line.  Our divestiture of our Membership Plus® product
      line was
      driven by a combination of our need to raise much needed cash and a strategic
      determination to begin a long-term shift in our product lines away from those
      in
      the business-to-business segment and more towards those in the
      consumer segment.





-3-
 Table
          of Contents


Our
      reserves for sales returns and allowances (estimated at gross sales price)
      increased very significantly for the nine months ended September 30, 2007 in
      both amount and as a percentage of gross revenues. Typically, actual sales
      returns trend upward after a new product is released as distributors and retail
      stores return old product in exchange for the new product
      release.  For the nine months ended September 30, 2007, our reserves
      for sales returns increased in anticipation of our upcoming annual release
      of
      QuickVerse®
      2008, of at which time distributors and retails stores will begin to return
      the
      QuickVerse®
      2007 product line.  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.  This liquidated product was sold as non-returnable product;
      however, due to a determination on our part as to the difficulty and probability
      of collection of the receivables originally generated from the sale of the
      liquidated product, we accepted a return of the product.  The return
      of this product resulted in a significant decrease in accrued royalties that
      were otherwise payable to certain of our content providers, as well as prevented
      a significant increase in bad debt.  Finally, as a result of the
      return of the liquidated product, we created a reserve for obsolete
      inventory.  If we are unable to sell this product to another
      liquidator in the near future, the liquidated product will ultimately become
      obsolete and therefore discontinued and destroyed, and this, in turn, will
      necessitate an inventory write-off and related non-cash operating
      charge.





We
      expect
      to release enhanced versions of our biggest-selling products on an annual basis
      generally going forward, and anticipate sales returns and allowances as a
      percentage of gross revenues 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***





**Nine
                Months Ending September 30**
            
            **2007**
            
            
            **%
                to Sales**
            
            
            2006
            
            
            %
                to Sales
            
            
            Change
            
            
            %Direct
                costs
            
            **$**
            **339,813**
            
            
            ****
            **13**
            **%**
            
            $
            372,033
            
            
            
            13
            %
            
            $
            (32,220
            )
            
            
            9
            %Less
                estimated cost of sales returns and allowances
            
            ****
            **(57,255**
            **)**
            
            ****
            **2**
            **%**
            
            
            (30,810
            )
            
            
            1
            %
            
            
            (26,445
            )
            
            
            86
            %Amortization
                of software development costs
            
            ****
            **248,455**
            
            
            ****
            **10**
            **%**
            
            
            600,959
            
            
            
            22
            %
            
            
            (352,504
            )
            
            
            59
            %Royalties
            
            ****
            **261,100**
            
            
            ****
            **10**
            **%**
            
            
            256,737
            
            
            
            9
            %
            
            
            4,363
            
            
            
            2
            %Freight-out
            
            ****
            **113,470**
            
            
            ****
            **4**
            **%**
            
            
            76,218
            
            
            
            3
            %
            
            
            37,252
            
            
            
            49
            %Fulfillment
            
            ****
            **64,018**
            
            
            ****
            **2**
            **%**
            
            
            86,020
            
            
            
            3
            %
            
            
            (22,002
            )
            
            
            26
            %Cost
                of sales
            
            **$**
            **969,601**
            
            
            ****
            **37**
            **%**
            
            $
            1,361,157
            
            
            
            49
            %
            
            $
            (391,556
            )
            
            
            29
            %





Cost
      of
      sales consists primarily of direct costs, amortization of capitalized software
      development costs, non-capitalized technical support wages, royalties accrued
      to
      third party providers of intellectual property and the costs associated with
      reproducing, packaging, fulfilling and shipping our products.





The
      net
      decrease in cost of sales as between the nine month period ending September
      30,
      2007 and the corresponding period during 2006 is predominantly attributable
      to
      decreased amortization of capitalized software development costs.  The
      large amount of amortization recognized during the nine months ended September
      30, 2006 resulted primarily from the continued amortization of QuickVerse® 2006 Macintosh
      (released June 2005) and QuickVerse® 2006 Windows
      (released September 2005).  QuickVerse® 2006 Macintosh
      was
      our first product produced on the Macintosh platform and the amount of
      capitalized development cost recognized for that development project was
      therefore quite significant as compared to our development projects on the
      Windows platform. Furthermore, since QuickVerse® 2007 was
      released
      in late August of 2006, the amortization on this product is also recognized
      for
      the nine months ended September 30, 2006, whereas there was no corresponding
      upgrade release of QuickVerse® during
      the nine
      months ended September 30, 2007.





-4-
 Table
          of Contents


**Software
                Development Costs For**
            
            **Three
                Months Ended September 30,**
            
            
            **Nine
                Months Ended September 30,****2007**
            
            
            2006
            
            
            **2007**
            
            
            2006Beginning
                balance
            
            **$**
            **522,712**
            
            
            $
            487,849
            
            
            **$**
            **491,695**
            
            
            $
            707,067Capitalized
            
            ****
            **124,636**
            
            
            
            173,728
            
            
            ****
            **316,086**
            
            
            
            412,108Amortized
                (Cost of sales)
            
            ****
            **(88,022**
            **)**
            
            
            (143,361
            )
            
            ****
            **(248,455**
            **)**
            
            
            (600,959
            )Ending
                Balance
            
            **$**
            **559,326**
            
            
            $
            518,216
            
            
            **$**
            **559,326**
            
            
            $
            518,216Research
                and development expense (General and administrative)
            
            **$**
            **15,630**
            
            
            $
            47,393
            
            
            **$**
            **76,198**
            
            
            $
            131,013





Our
      software development costs for the three and nine months ended September 30,
      2007 and 2006 are summarized in the table above.  The relative
      decrease in capitalized costs reflects an increased efficiency from our
      development staff (including internal and external developers) as our
      development projects for the nine months ended September 30, 2007 focused on
      the
      annual releases of QuickVerse®, Membership
      Plus® and new
      content for our QuickVerse®
      products.  The relative decrease in amortization reflects the overall
      reduction in the number of products released during the year ended December
      31,
      2006 as well as the amortization recognized for QuickVerse® 2006 Macintosh,
      our
      first product produced on the Macintosh platform, brought to an
      end.





Freight
      costs increased for the nine months ended September 30, 2007 as a direct result
      from the overall increase in retail sales, which carry higher shipping costs
      for
      us than direct and/or upgrade sales, coupled with escalating per unit freight
      costs attributable to industry-wide rising fuel costs.  Fulfillment
      costs decreased for the nine months ended September 30, 2007 as a direct result
      of our deliberate initiatives to decrease our reliance on a third-party
      warehouse as we began operating our own fulfillment center as of June
      2007.





Royalties
      accrued to third party providers of intellectual property increased slightly
      for
      the nine months ended September 30, 2007 as a result of continuously expanding
      the content made available for our QuickVerse® line of
      products.  Our royalty accruals are expected to increase in the future
      in real terms as sales to new users 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.





On
      a
      percentage basis, we anticipate that direct costs and manufacturing overhead
      will remain relatively stable as we continue to keep pace with a more intensive
      development schedule than we had generally maintained in the past.





Despite
      the sale in the early part of our fourth fiscal quarter of our Membership
      Plus® product
      line, we expect our cost of sales in real terms to increase over time consistent
      with anticipated overall increases in revenues due to our aggressive product
      development and release schedules as well as the acquisitions of new product
      lines.





***Sales,
      General and Administrative***





**Nine
                Months Ending September 30**
            
            **2007**
            
            
            **%
                to Sales**
            
            
            2006
            
            
            %
                to Sales
            
            
            Change
            
            
            %***Selected
                expenses:***Commissions
            
            **$**
            **146,930**
            
            
            ****
            **6**
            **%**
            
            $
            151,499
            
            
            
            5
            %
            
            $
            (4,569
            )
            
            
            3
            %Advertising
                and direct marketing
            
            ****
            **144,175**
            
            
            ****
            **6**
            **%**
            
            
            156,537
            
            
            
            6
            %
            
            
            (12,362
            )
            
            
            8
            %Sales
                and marketing wages, reclassified
            
            ****
            **228,113**
            
            
            ****
            **9**
            **%**
            
            
            272,648
            
            
            
            10
            %
            
            
            (44,535
            )
            
            
            16
            %**Total
                sales and marketing**
            
            **$**
            **519,218**
            
            
            ****
            **20**
            **%**
            
            $
            580,684
            
            
            
            21
            %
            
            $
            (61,466
            )
            
            
            11
            %Research
                and development
            
            **$**
            **76,198**
            
            
            ****
            **3**
            **%**
            
            $
            131,013
            
            
            
            5
            %
            
            $
            (54,815
            )
            
            
            42
            %Personnel
                costs
            
            ****
            **463,213**
            
            
            ****
            **18**
            **%**
            
            
            564,825
            
            
            
            20
            %
            
            
            (101,612
            )
            
            
            18
            %Legal
            
            ****
            **37,578**
            
            
            ****
            **1**
            **%**
            
            
            83,539
            
            
            
            3
            %
            
            
            (45,961
            )
            
            
            55
            %Accounting/Auditing
            
            ****
            **67,553**
            
            
            ****
            **3**
            **%**
            
            
            48,505
            
            
            
            2
            %
            
            
            19,048
            
            
            
            39
            %Corporate
                services
            
            ****
            **54,400**
            
            
            ****
            **2**
            **%**
            
            
            54,000
            
            
            
            2
            %
            
            
            400
            
            
            
            1
            %Investor
                services
            
            ****
            **(7,875**
            **)**
            
            ****
            **0**
            **%**
            
            
            55,000
            
            
            
            2
            %
            
            
            (62,875
            )
            
            
            114
            %Storage
            
            ****
            **1,275**
            
            
            ****
            **0**
            **%**
            
            
            10,005
            
            
            
            0
            %
            
            
            (8,730
            )
            
            
            87
            %Insurance
            
            ****
            **23,545**
            
            
            ****
            **1**
            **%**
            
            
            16,934
            
            
            
            1
            %
            
            
            6,611
            
            
            
            39
            %Other
                general and administrative costs
            
            ****
            **286,033**
            
            
            ****
            **11**
            **%**
            
            
            346,519
            
            
            
            12
            %
            
            
            (60,486
            )
            
            
            17
            %**Total
                general and administrative**
            
            **$**
            **1,001,920**
            
            
            ****
            **38**
            **%**
            
            $
            1,310,340
            
            
            
            47
            %
            
            $
            (308,420
            )
            
            
            24
            %**Total
                sales, marketing, general and administrative**
            
            **$**
            **1,521,138**
            
            
            ****
            **58**
            **%**
            
            $
            1,891,024
            
            
            
            68
            %
            
            $
            (369,886
            )
            
            
            20
            %





-5-
 Table
          of Contents


As
      gross
      revenues decreased for the nine months ended September 30, 2007, total sales,
      general and administrative costs also decreased.  The decrease in the
      sales and marketing expenses for the nine months ended September 30, 2007 is
      mainly attributable to a decrease in the sales and marketing wages as a result
      of streamlining our CBA sales team.  However, we expect this reduction
      to be only temporary as our sales and marketing wages increase in future periods
      due to our expanding in-house direct telemarketing sales team as well as our
      other marketing and related personnel.  Commissions decreased slightly
      for this period , and we anticipate further decreases in the future as we expand
      our in-house direct telemarketing sales team and therefore become less dependent
      on a third party for telemarketing services.  Advertising and direct
      marketing costs also decreased as we continually monitor these items in relation
      to our gross revenues.  We anticipate advertising and direct marketing
      costs to increase in future periods as we enter the holiday season, 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.





Research
      and development costs include direct production costs (including labor directly
      associated with the development projects), indirect costs (including allocated
      fringe benefits, payroll taxes, facilities costs and management supervision),
      and other direct costs (including costs of outside consultants, purchased
      software to be included in the software product being developed, travel
      expenses, material and supplies, and other direct costs).  The
      decrease in software development costs related to third-party developers and
      direct labor expensed as research and development reflects the capitalization
      of
      research and development costs for the nine months ended September 30,
      2007.  Furthermore, the decrease reflects the increased efficiency
      from our development staff as our development projects for the nine months
      ended
      September 30, 2007 focused on the annual releases of our two main product lines
      and new content for our QuickVerse®
      products.  Research and development expenses are expected to increase
      in future periods as we anticipate expansion of our internal development team,
      add new products, product versions and product lines, and as we continue to
      expand the amount of content made available to our QuickVerse® users.





In
      addition to the decrease in total net personnel costs, gross direct salaries
      and
      wages, before adjustments of capitalized wages and reclassifications, decreased
      approximately $179,000, from approximately $1,148,000 for the nine months ended
      September 30, 2006 to approximately $969,000 for the nine months ended September
      30, 2007. The decrease in direct salaries and wages was a result of streamlining
      our CBA sales team and the departure of our marketing manager. Due to a cost
      cutting initiative in late 2006, we were able to shed compensation expenses
      associated with maintaining certain management level and product development
      staff.  Further, as a percentage of gross revenues, direct salaries
      and wages decreased approximately 4% from approximately 41% for the nine months
      ended September 30, 2006 to approximately 37% for the nine months ended
      September 30, 2007. We do anticipate direct salaries and wages to increase
      in
      the future given our continued focus on expanding our direct telemarketing
      sales
      team, marketing staff and product development staff.





As
      a
      result of having restructured our health benefits plans in October 2006 and
      the
      continual decrease in our direct salaries and wages, our employment-related
      healthcare costs decreased approximately $15,000 from approximately $85,000
      for
      the nine months ended September 30, 2006 to approximately $70,000 for the nine
      months ended September 30, 2007.  In July 2005, we initiated a Simple
      IRA retirement plan for our employees and, for those who participated, we chose
      to match up to 3% of the employee’s annual gross pay.  We anticipate
      that our costs related to this benefit will increase in future periods as more
      employees take advantage of the retirement plan.





Direct
      legal costs decreased for the nine months ended September 30, 2007 as a result
      of our having concluded certain ongoing registration and related securities
      matters in February 2006. It is anticipated that legal costs will increase
      in
      future periods in direct relation to the level of our capital-raising
      initiatives, acquisition and/or divestiture-related initiatives, and other
      transactional activity.





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Accounting
      and audit related expenses increased for the nine months ended September 30,
      2007, which is attributable principally to an increased fee from our principal
      accounting firm as compared to our previous principal accounting firm as well
      as
      our recent completion of our 2006 annual audit. It is anticipated that
      accounting costs will continue at these levels and increase substantially on
      an
      ongoing basis as we meet with our responsibilities as a smaller reporting
      company over the next twelve months to become fully compliant with the internal
      controls over financial reporting mandate of Section 404 of The Sarbanes-Oxley
      Act of 2002.





Corporate
      service fees increased slightly for the nine months ended September 30, 2007.
      We
      expect consulting-related expenses to increase in future periods based on our
      having engaged the services of an independent consultant who began performing
      business development related advisory services for us in March 2007 and who
      is
      expected to continue providing such services through June 2008.





Investor
      services fees decreased for the nine months ended September 30, 2007 as a result
      of our having terminated an investor relations service agreement originally
      entered into in April 2006, and pursuant to which we incurred fees for the
      period from April 2006 through March 2007 and an expense for the issuance of
      a
      total of 250,000 restricted shares of common stock allocated over the term
      of
      the agreement.  As of August 2006, fees payable to this service
      provider had ceased.  Furthermore, in August 2007, we committed to
      issue shares of common stock in lieu of cash as a settlement with a previous
      consultant who had provided investor relations and business development services
      during 2005.





Storage
      costs for inventory decreased for the nine months ended September 30,
      2007.  This reduction was directly related to our having opened our
      own fulfillment center in June 2007 and our ceasing to have to rely, as a
      result, on a third party facility.  We anticipate that storage costs
      will continue to decrease in the future.





Finally,
      insurance costs increased for the nine months ended September 30, 2007 as a
      result of our having procured an errors and omissions insurance policy for
      the
      benefit of our officers and directors.  We anticipate that insurance
      costs will increase in the future as we continue our search efforts in order
      to
      expand our executive level management team and board of directors.





***Registration
      Rights Penalties***





The
      results of operations for the nine months ended September 30, 2006 include
      an
      increase in our net loss due to having accrued registration rights penalties
      that were in connection with a 2004 private placement
      transaction.  For the comparable period during 2007, no similar
      accrual was recorded.





***Derivatives***





At
      September 30, 2007 and 2006, the fair value of the derivative liability
      associated with warrants issued in November 2004 was approximately $613,000
      and
      $527,000, respectively.  A non-cash fair value adjustment of
      approximately $86,000 has been included in other expenses for the nine months
      ended September 30, 2007, and a similar fair value adjustment of approximately
      $1,110,000 has been included in other income for the nine months ended September
      30, 2006.  If the market trading price of our stock rises, it could
      potentially have a materially adverse effect on our derivative liability which,
      in turn, could have a materially adverse effect on our reportable net
      income.





***Amortization***





Amortization
      expenses, included in other operating expenses, decreased approximately $9,000
      from approximately $399,000 for the nine months ended September 30, 2006 to
      approximately $390,000 for the nine months ended September 30, 2007. 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 2007 and
      2006 reflect the continual amortization of the 1999 license, as well as 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,
      2007 reflects the conclusion of the amortization of our website.





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***Income
      Tax Benefits***





Our
      effective tax rate differs from the statutory federal rate due to the following
      differences between income and expense recognition prescribed by the Internal
      Revenue Code and Generally Accepted Accounting Principles:





▪
            Different
                methods and useful lives for depreciating property and equipment;
                and▪
            changes
                in estimates (reserves) recognized as expense for financial reporting
                but
                not deductible for income tax
                purposes.





We
      have
      recognized deferred tax assets from estimated future tax benefits related to
      the
      timing of income tax deductions primarily from the following items:





▪
            Sales
                returns and allowances;▪
            accrued
                payroll; and▪
            net
                operating loss carryforwards.





We
      have
      established a valuation allowance against the deferred tax assets based on
      our
      estimate of how much benefit we will eventually realize in future periods,
      primarily from the net operating loss carryforwards.





We
      have
      recognized deferred tax liabilities from estimated future tax liabilities
      related to the timing of income tax deductions primarily from the following
      items:





▪
            Software
                license fees; and▪
            capitalized
                software development costs.





We
      have
      reported our deferred tax assets and liabilities in a net current and a net
      non-current amount as follows:





▪
            Net
                current deferred tax asset – Federal and State (approximately $116,000
                included in other current assets);▪
            net
                non-current deferred tax asset – Federal (approximately $578,000 included
                in other assets); and▪
            net
                non-current deferred tax liability – State (approximately $1,200 included
                in long-term obligations).





Realization
      of our net deferred tax assets, and the benefits associated with those in terms
      of after-tax reportable income, depends on our generating future taxable
      income.





Our
      net
      income tax benefit of approximately $151,000 for the nine months ended September
      30, 2007 results primarily from our anticipated utilization of net operating
      loss carryforwards, and the related effect in the valuation allowance for future
      tax benefits, and management’s estimate of changes to the book and tax basis
      differences of the following items from their December 31, 2006 basis
      differences:





▪
            Reserve
                for sales returns;▪
            accrued
                payroll;▪
            software
                license fees; and▪
            capitalized
                software development costs.





***Liquidity
      And Capital Resources***





Our
      primary needs for liquidity and capital resources are the funding of our
      continued operations, which includes the ongoing internal development of new
      products, expansion and upgrade of existing products, and marketing and
      sales.  Although there can be no assurance, we believe cash generated
      through our continuing operations will be at least minimally sufficient to
      sustain our operations, albeit with very limited growth.  However, our
      pursuit of an aggressive growth plan, whether based on internally developed
      products or strategic product line acquisitions and/or licensing opportunities,
      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 including software development.





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**Working
                Capital at September 30**
            
            **2007**Current
                assets
            
            **$**
            **541,564**Current
                liabilities
            
            **$**
            **2,657,811**Retained
                deficit
            
            **$**
            **7,754,572**





While
      liquidity remains an ongoing concern for us, and while there can be no
      continuing assurance, given the combined facts that (i) a substantial portion
      of
      our net sales – 53% 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), and (ii) our derivative liability is an item that does not
      necessitate actual cash payout, the situation suggested by our notably and
      consistently low ratio of our current assets to current liabilities has
      historically been manageable.





**Cash
                Flows for Nine Months Ended September 30**
            
            **2007**
            
            
            2006
            
            
            Change
            
            
            %Cash
                flows provided by operating activities
            
            **$**
            **313,922**
            
            
            $
            291,051
            
            
            $
            22,871
            
            
            
            8
            %Cash
                flows (used) by investing activities
            
            **$**
            **(370,457**
            **)**
            
            $
            (425,063
            )
            
            $
            54,606
            
            
            
            13
            %Cash
                flows provided by financing activities
            
            **$**
            **7,863**
            
            
            $
            15,444
            
            
            $
            (7,581
            )
            
            
            49
            %





The
      increase in net cash provided by operating activities for the nine months ended
      September 30, 2007 was primarily due to a short-term imbalance as between
      payments made to content providers and vendors, on the one hand, and receivables
      collected, on the other.





The
      decrease in net cash used by investing activities for the nine months ended
      September 30, 2007 was mainly the result of our having capitalized fewer costs
      associated with software development.  Offsetting this to some extent,
      however, was the fact that, during the nine months ended September 30, 2007,
      our
      credit card financing service insisted on retaining a $40,000 cash reserve
      imposed during the first quarter of 2007 to enable a potential increase in
      credit card chargebacks from increased consumer purchases during the fourth
      quarter of 2006.





The
      decrease in net cash provided by financing activities for the nine months ended
      September 30, 2007 was the result of several events.  During the nine
      months ended September 30, 2006, we received proceeds from a note payable of
      approximately $75,000.  Comparatively, during the nine months ended
      September 30, 2007, we received proceeds of approximately $33,000 from the
      issuance of common stock along with a cash overdraft of approximately $23,000.
      Finally, there was a decrease in payments made on long-term notes payable during
      the nine months ended September 30, 2007 as principal balances
      decreased.




Due
      to our negative cash balance at the end of September 2007, normal check runs
      were delayed until our available cash balance increased in October
      2007.  Normal check runs refers to weekly payments to vendors and
      content providers.





***Financing***





We
      have
      been unsuccessful in previous attempts 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 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.





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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, 2007, the future minimum annual rental payments required under
      these leases are as follows:





2007
            
            $
            22,5092008
            
            
            90,0342009
            
            
            78,9932010
            
            
            63,8832011
            
            
            54,3392012
            
            
            23,335Total
                future minimum rental payments
            
            $
            333,093





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.  Minimum future lease payments under capital leases as of
      September 30, 2007 for each of the next three years and in the aggregate
      are:





2007
            
            $
            3,4312008
            
            
            13,7262009
            
            
            12,582Total
                minimum lease payments
            
            $
            29,739





**ITEM
      3. CONTROLS AND PROCEDURES.**





**(a)
      Formation of Disclosure Controls and Procedures Officer
      Committee**





Our
      Disclosure Controls and Procedures Officer Committee (the “Disclosure Policy
      Committee”) was formed in September 2002 and reports directly to our Chief
      Executive Officer and Chief Financial Officer. The Disclosure Policy Committee
      has implemented disclosure controls and procedures that meet the standards
      established by Rule 13a-15 of the Securities Exchange Act of 1934, as amended
      (the “Exchange Act”).





**Disclosure
      Controls and Procedures**





The
      Disclosure Policy Committee is primarily responsible for establishing and
      maintaining disclosure controls and procedures designed to ensure that the
      information required to be disclosed in our reports filed or submitted under
      the
      Exchange Act, is recorded, processed, summarized and reported in a timely manner
      as specified in the rules and forms set forth by the SEC and that the
      information required to be disclosed in our reports is accumulated and
      communicated to our management, including our principal executive and principal
      financial officers, or other persons performing similar functions, as
      appropriate to allow timely decisions regarding required
      disclosure.





**(b)
      Evaluation of Disclosure Controls
      and Procedures and Annual Report on Internal Control over Financial
      Reporting**





The
      Disclosure Policy Committee meets quarterly within one week of the last day
      of
      the period in which a given report is due. Members provide information that
      is
      documented in the Quarterly Control and Procedures Report for the period in
      which a quarterly 10-QSB or annual 10-KSB report is due. This report contains
      attestations and documentation in regard to the following:




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▪
            the
                fact that disclosure controls and procedures have been reviewed as
                of the
                end of the period covered by a given report;▪
            any
                concerns regarding weaknesses in disclosure controls and
                procedures;▪
            any
                concerns relating to events that may require
                disclosure;▪
            any
                concerns relating to internal fraud/defalcation;▪
            potential
                material losses;▪
            new
                off-balance sheet arrangements; and▪
            material
                amounts not reflected on the general
                ledger.





The
      Quarterly Control and Procedures Report is completed, signed and presented
      to
      the CEO and CFO prior to completion of the first draft of each 10-QSB and
      10-KSB.  Because material issues may occur between regularly scheduled
      quarterly meetings, this report is to be generated by the disclosure policy
      committee and provided to the appropriate officers at any time
      warranted.  The CEO and CFO will consult with our Disclosure Policy
      Committee to determine any action that is necessary.





Our
      CEO
      and CFO have evaluated the effectiveness of the design and operation of our
      disclosure controls and procedures (as defined in Rule 13a-15(e) under the
      Exchange Act) as of the end of the fiscal quarter covered by this quarterly
      report on Form 10-QSB.  Based on this evaluation, our CEO and CFO have
      concluded that our disclosure controls and procedures are effective and designed
      to ensure that the information required to be disclosed in our reports filed
      or
      submitted under the Exchange Act, is recorded, processed, summarized and
      reported within the requisite time periods.





During
      the course of their evaluation our CEO and CFO did not discover any fraud
      involving management or any other personnel who play a significant role in
      our
      disclosure controls and procedures.  Furthermore, because there were
      no significant deficiencies and/or material weaknesses discovered no remedial
      measures were necessary or taken during the period covered by this report to
      correct any such deficiencies.





**(c)
      Changes in Internal Control over Financial Reporting**





No
      changes in our disclosure controls and procedures, internal control over
      financial reporting or other factors have occurred during the fiscal quarter
      covered by this report that would materially affect or be reasonably likely
      to
      materially affect our disclosure controls and procedures or 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-QSB for the period ended September
      30,
      2007, 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.  Moreover, there can be no assurance that our insurance
      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
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
        OF PROCEEDS.**
  **Date
                  Securities Issued**
              **Securities
                  Title**
              **Issued
                  to**
              
              **Number
                  of Securities Issued**
              
              
              **Consideration**
              
              **Footnotes****Common
                  Stock Issuances*****Sold
                  for cash***7/14/2007
              Common
                  Stock
              Gordon
                  Landies
              
              
              1,300,000
              
              
              $
              32,500
              
              (A)***Issued
                  as settlement with consultant***********8/28/2007
              Common
                  Stock
              Joseph
                  Abrams
              
              
              500,000
              
              
              $
              20,000
              
              (B)(A)
                  $32,500 ($0.025 per share) total offering price.(B)
                  Consideration is calculated to be the value of the security at
                  the date of
                  issuance.**Common
                  Stock Warrant Issuances*************Issued
                  for compensation to independent contractor***********7/9/2007
              Common
                  Stock
              GL
                  Ventures, LLC
              
              
              2,300,000
              
              
              $
              48,160
              
              (C)(C)
                  Issued as compensation for corporate business planning, financing
                  and
                  merger and acquisition
                  assistance.




For
      these
      unregistered sales, we relied on the private offering exemption of Section
      4(2)
      of the Securities Act and/or the private offering safe harbor provision of
      Rule
      506 of Regulation D promulgated thereunder based on the following factors:
      (i)
      the number of offerees or purchasers, as applicable, (ii) the absence of general
      solicitation, (iii) representations obtained from the acquirors relative to
      their accreditation and/or sophistication (or from offeree or purchaser
      representatives, as applicable), (iv) the provision of appropriate disclosure,
      and (v) the placement of restrictive legends on the certificates reflecting
      the
      securities coupled with investment representations obtained from the
      acquirors.





**ITEM
      3. DEFAULTS UPON SENIOR
      SECURITIES.**





There
      were no reportable events under this Item 3 during the quarterly period ended
      September 30, 2007.





**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, 2007.





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**ITEM
      5. OTHER
      INFORMATION.**





On
      October 18, 2007, we entered into and
      consummated an Asset Purchase Agreement with an unrelated entity for all of
      the
      assets and liabilities associated with our Membership Plus® product
      line for
      $1,675,000 in cash. The Membership Plus®product
      line had
      accounted for approximately 27% of our 2006 aggregate revenues. The specific
      assets conveyed included, among others, the underlying software source code,
      existing product inventories, online marketing channels, registered trade names,
      and accounts receivable. For more detailed information, please refer to our
      Current Report on Form 8-K filed on October 24, 2007





There
      were no reportable events under this Item 5 during the quarterly period ended
      September 30, 2007.





**ITEM
      6. EXHIBITS.**





**No.**
            **Description
                of Exhibit**2.1
            Share
                Exchange Agreement between Findex.com, Inc. and the stockholders
                of Reagan
                Holdings, Inc. dated March 7, 2000, incorporated by reference to
                Exhibit
                2.1 on Form 8-K filed March 15, 2000.3(i)(1)
            Restated
                Articles of Incorporation of Findex.com, Inc. dated June 1999 incorporated
                by reference to Exhibit 3.1 on Form 8-K filed March 15,
                2000.3(i)(2)
            Amendment
                to Articles of Incorporation of Findex.com, Inc. dated November 10,
                2004
                incorporated by reference to Exhibit 3.1(ii) on Form 10-QSB filed
                November
                10, 2004.3(ii)
            Restated
                By-Laws of Findex.com, Inc., incorporated by reference to Exhibit
                3.3 on
                Form 8-K filed March 15, 2000.10.1
            Stock
                Incentive Plan of Findex.com, Inc. dated May 7, 1999, incorporated
                by
                reference to Exhibit 10.1 on Form 10-KSB/A filed May 13,
                2004.10.2
            Share
                Exchange Agreement between Findex.com, Inc. and the stockholders
                of Reagan
                Holdings Inc., dated March 7, 2000, incorporated by reference to
                Exhibit
                2.1 on Form 8-K filed March 15, 2000.10.3
            License
                Agreement between Findex.com, Inc. and Parsons Technology, Inc. dated
                June
                30, 1999, incorporated by reference to Exhibit 10.3 on Form 10-KSB/A
                filed
                May 13, 2004.10.4
            Employment
                Agreement between Findex.com, Inc. and Steven Malone dated July 25,
                2003,
                incorporated by reference to Exhibit 10.4 on Form 10-KSB/A filed
                May 13,
                2004.10.5
            Employment
                Agreement between Findex.com, Inc. and Kirk Rowland dated July 25,
                2003,
                incorporated by reference to Exhibit 10.5 on Form 10-KSB/A filed
                May 13,
                2004.10.6
            Employment
                Agreement between Findex.com, Inc. and William Terrill dated June
                7, 2002,
                incorporated by reference to Exhibit 10.6 on Form 10-KSB/A filed
                May 13,
                2004.10.7
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and John A.
                Kuehne
                dated July 25, 2003, incorporated by reference to Exhibit 10.7 on
                Form
                10-KSB/A filed May 13, 2004.10.8
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and Henry M.
                Washington dated July 25, 2003, incorporated by reference to Exhibit
                10.8
                on Form 10-KSB/A filed May 13, 2004.10.9
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and William
                Terrill
                dated July 25, 2003, incorporated by reference to Exhibit 10.9 on
                Form
                10-KSB/A filed May 13, 2004.10.10
            Stock
                Purchase Agreement, including the form of warrant agreement, between
                Findex.com, Inc. and Barron Partners, LP dated July 19, 2004, incorporated
                by reference to Exhibit 10.1 on Form 8-K filed July 28,
                2004.




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10.11
            Amendment
                No. 1 to Stock Purchase Agreement between Findex.com, Inc. and Barron
                Partners, LP dated September 30, 2004, incorporated by reference
                to
                Exhibit 10.3 on Form 8-K filed October 6, 2004.10.12
            Registration
                Rights Agreement between Findex.com, Inc. and Barron Partners, LP
                dated
                July 26, 2004, incorporated by reference to Exhibit 10.2 on Form
                8-K filed
                July 28, 2004.10.13
            Waiver
                Certificate between Findex.com, Inc. and Barron Partners, LP dated
                September 16, 2004, incorporated by reference to Exhibit 10.4 on
                Form 8-K
                filed October 6, 2004.10.14
            Settlement
                Agreement between Findex.com, Inc., The Zondervan Corporation, Mattel,
                Inc., TLC Multimedia, Inc., and Riverdeep, Inc. dated October 20,
                2003,
                incorporated by reference to Exhibit 10.14 on Form 10-KSB/A filed
                December
                14, 2005.10.15
            Employment
                Agreement Extension between Findex.com, Inc and Steven Malone dated
                March
                31, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed
                April 6, 2006.10.16
            Employment
                Agreement Extension between Findex.com, Inc and William Terrill dated
                March 31, 2006, incorporated by reference to Exhibit 10.2 on Form
                8-K
                filed April 6, 2006.10.17
            Employment
                Agreement Extension between Findex.com, Inc and Kirk R. Rowland dated
                March 31, 2006, incorporated by reference to Exhibit 10.3 on Form
                8-K
                filed April 6, 2006.10.18
            Promissory
                Note to Barron Partners, LP dated April 7, 2006, incorporated by
                reference
                to Exhibit 10.1 on Form 8-K filed April 13, 2006.10.19
            Share
                Exchange Agreement between Findex.com, Inc. and the stockholders
                of Reagan
                Holdings Inc., dated March 7, 2000, incorporated by reference to
                Exhibit
                2.1 on Form 8-K filed March 15, 2000.10.20
            Convertible
                Secured Promissory Note between FindEx.com, Inc. and W. Sam Chandoha,
                dated July 20, 2006, incorporated by reference to Exhibit 10.1 on
                Form 8-K
                filed July 26, 2006.10.21
            Security
                Agreement between FindEx.com, Inc. and W. Sam Chandoha, dated July
                20,
                2006 incorporated by reference to Exhibit 10.2 on Form 8-K filed
                July 26,
                2006.10.22
            Common
                Stock Purchase Warrant between FindEx.com, Inc. and W. Sam Chandoha,
                dated
                July 20, 2006 incorporated by reference to Exhibit 10.3 on Form 8-K
                filed
                July 26, 2006.10.23
            Modification
                and Extension Agreement Between FindEx.com, Inc. and W. Sam Chandoha,
                dated September 20, 2006, incorporated by reference to Exhibit 10.1
                on
                Form 8-K filed September 25,2006.10.24
            Employment
                Agreement Extension Amendment between Findex.com, Inc. and Steven
                Malone
                dated April 13, 2007, incorporated by reference to Exhibit 10.24
                on Form
                10-KSB filed April 17, 2007.10.25
            Employment
                Agreement Extension Amendment between Findex.com, Inc. and William
                Terrill
                dated April 13, 2007, incorporated by reference to Exhibit 10.25
                on Form
                10-KSB filed April 17, 2007.10.26
            Employment
                Agreement Extension Amendment between Findex.com, Inc. and Kirk R.
                Rowland
                dated April 13, 2007, incorporated by reference to Exhibit 10.25
                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.




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31.1
            Certification
                of Findex.com, Inc. Chief Executive Officer, Steven Malone, required
                by
                Rule 13a-14(a) or Rule 15d-14(a), and dated November 19, 2007. FILED
                HEREWITH.31.2
            Certification
                of Findex.com, Inc. Chief Financial Officer, Kirk R. Rowland, required
                by
                Rule 13a-14(a) or Rule 15d-14(a), and dated November 19, 2007. FILED
                HEREWITH.32.1
            Certification
                of Findex.com, Inc. Chief Executive Officer, Steven Malone, required
                by
                Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of
                Title
                18 of the United States Code (18 U.S.C. 1350), and dated November
                19,
                2007.  FILED HEREWITH.32.2
            Certification
                of Findex.com, Inc. Chief Financial Officer, Kirk R. Rowland, required
                by
                Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of
                Title
                18 of the United States Code (18 U.S.C. 1350), and dated November
                19,
                2007.  FILED HEREWITH.





**Signatures**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**FINDEX.COM,
                INC.**Date:
                November 19, 2007
            By
            /s/
                Steven MaloneSteven
                MalonePresident
                and Chief Executive Officer





Date:
                November 19, 2007
            By
            /s/
                Kirk R. RowlandKirk
                R. Rowland, CPAChief
                Financial Officer



















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