**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-QSB/A**


Amendment
          No. 2




(Mark
      One)





**[X]**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**





For
      the
      quarterly period ended June 30, 2005.





**[_]**
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**





For
      the
      transition period from ________ to _________.





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.)11204
                Davenport Street, Suite 100, Omaha, Nebraska 68154(Address
                of principal executive offices)





(402)
      333-1900


(Issuer’s
      telephone number)





NA.





(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 [_]**








**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
      YEARS**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.  **Yes
      [_] No [_]**








**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
          the
          number of shares outstanding of each of the issuer’s classes of common equity,
          as of the latest practicable date: 48,619,855 common shares as of December
          21, 2005.


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.
            12**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 SHEET****(Unaudited)****(Restated)****June
                    30, 2005****Assets**Current
                    assets:Cash
                    and cash equivalents
                
                **$**
                **95,941**Accounts
                    receivable, trade
                
                
                **617,692**Inventory
                
                
                **225,887**Other
                    current assets
                
                
                **359,461**Total
                    current assets
                
                
                **1,298,981**Property
                    and equipment, net
                
                
                **134,350**Software
                    license, net
                
                
                **2,014,030**Capitalized
                    software development costs, net
                
                
                **931,103**Other
                    assets
                
                
                **532,072**Total
                    assets
                
                **$**
                **4,910,536****Liabilities
                    and stockholders’ equity**Current
                    liabilities:Accounts
                    payable, trade
                
                **$**
                **650,984**Accrued
                    royalties
                
                
                **304,752**Derivative
                    liabilities
                
                
                **2,515,621**Other
                    current liabilities
                
                
                **495,573**Total
                    current liabilities
                
                
                **3,966,930**Long-term
                    obligations
                
                
                **179,317**Commitments
                    and contingenciesStockholders’
                    equity:Common
                    stock
                
                
                **48,620**Paid-in
                    capital
                
                
                **7,521,339**Retained
                    (deficit)
                
                
                **(6,805,670**
                **)**Total
                    stockholders’ equity
                
                
                **764,289**Total
                    liabilities and stockholders’ equity
                
                **$**
                **4,910,536***See
                    accompanying
                    notes.*




F-1
 Table
          of Contents




**Findex.com,
                    Inc.****CONDENSED
                    CONSOLIDATED STATEMENTS OF OPERATIONS****(Unaudited)****Three
                    Months Ended June 30,**
                **Six
                    Months Ended June 30,****2005**
                
                
                2004
                
                
                **2005**
                
                
                2004**(Restated)**
                
                
                (Restated)
                
                
                **(Restated)**
                
                
                (Restated)Revenues,
                    net of reserves and allowances
                
                **$**
                **1,276,996**
                
                $
                1,020,885
                
                **$**
                **2,954,410**
                
                $
                2,653,853Cost
                    of sales
                
                
                **450,993**
                
                
                271,410
                
                
                **959,778**
                
                
                740,069Gross
                    profit
                
                
                **826,003**
                
                
                749,475
                
                
                **1,994,632**
                
                
                1,913,784Operating
                    expenses:Sales
                    and marketing
                
                
                **307,521**
                
                
                267,902
                
                
                **734,968**
                
                
                510,501General
                    and administrative
                
                
                **690,078**
                
                
                615,895
                
                
                **1,325,796**
                
                
                1,171,574Bad
                    debt expense
                
                
                **22,016**
                
                
                ---
                
                
                **22,669**
                
                
                2,500Depreciation
                    and amortization
                
                
                **145,780**
                
                
                139,187
                
                
                **291,548**
                
                
                274,639Total
                    operating expenses
                
                
                **1,165,395**
                
                
                1,022,984
                
                
                **2,374,981**
                
                
                1,959,214Loss
                    from operations
                
                
                **(339,392**
                **)**
                
                (273,509
                )
                
                **(380,349**
                **)**
                
                (45,430
                )Loss
                    on fair value adjustment of derivatives
                
                
                **(328,123**
                **)**
                
                ---
                
                
                **(546,871**
                **)**
                
                ---Other
                    expenses, net
                
                
                **(2,920**
                **)**
                
                (16,188
                )
                
                **(6,775**
                **)**
                
                (30,518
                )Loss
                    before income taxes
                
                
                **(670,435**
                **)**
                
                (289,697
                )
                
                **(933,995**
                **)**
                
                (75,948
                )Provision
                    for income taxes
                
                
                **149,669**
                
                
                (31,011
                )
                
                **299,158**
                
                
                (61,322
                )Net
                    loss
                
                **$**
                **(520,766**
                **)**
                $
                (320,708
                )
                
                **(634,837**
                **)**
                
                (137,270
                )Retained
                    deficit at beginning of year
                
                **(6,170,833**
                **)**
                
                (7,130,761
                )Retained
                    deficit at end of period
                
                
                **$**
                **(6,805,670**
                **)**
                $
                (7,268,031
                )Net
                    earnings (loss) per share:Basic
                
                **$**
                **(0.01**
                **)**
                $
                (0.01
                )
                **$**
                **(0.01**
                **)**
                $
                (0.01
                )Diluted
                
                **$**
                **(0.01**
                **)**
                $
                (0.01
                )
                **$**
                **(0.01**
                **)**
                $
                (0.01
                )Weighted
                    average shares outstanding:Basic
                
                
                **48,619,855**
                
                
                23,276,312
                
                
                **48,619,855**
                
                
                22,143,875Diluted
                
                
                **48,619,855**
                
                
                23,276,312
                
                
                **48,619,855**
                
                
                22,143,875*See
                    accompanying notes.*


F-2
 Table
          of Contents


**Findex.com,
                      Inc.****CONSOLIDATED
                      STATEMENTS OF CASH FLOWS****(Unaudited)****Six
                      Months Ended June 30**
                  
                  
                  **2005**
                  
                  
                  2004**(Restated)**
                  
                  
                  (Restated)Cash
                      flows from operating activities:Cash
                      received from customers
                  
                  **$**
                  **2,887,090**
                  
                  $
                  2,639,964Cash
                      paid to suppliers and employees
                  
                  
                  **(2,531,135**
                  **)**
                  
                  (2,409,585
                  )Other
                      operating activities, net
                  
                  
                  **1,323**
                  
                  
                  (28,166
                  )Net
                      cash provided by operating activities
                  
                  
                  **357,278**
                  
                  
                  202,213Cash
                      flows from investing activities:Software
                      development costs
                  
                  
                  **(594,161**
                  **)**
                  
                  (178,049
                  )Other
                      investing activities, net
                  
                  
                  **20,000**
                  
                  
                  (50,933
                  )Net
                      cash (used) by investing activities
                  
                  
                  **(574,161**
                  **)**
                  
                  (228,982
                  )Cash
                      flows from financing activities:Payments
                      on line of credit, net
                  
                  
                  **---**
                  
                  
                  (2,999
                  )Cash
                      overdraft
                  
                  
                  ---
                  
                  
                  38,990Payments
                      made on long-term notes payable
                  
                  
                  **(28,535**
                  **)**
                  
                  (50,890
                  )Net
                      cash (used) by financing activities
                  
                  
                  **(28,535**
                  **)**
                  
                  (14,899
                  )Net
                      (decrease) in cash and cash equivalents
                  
                  
                  **(245,418**
                  **)**
                  
                  (41,668
                  )Cash
                      and cash equivalents, beginning of year
                  
                  
                  **341,359**
                  
                  
                  41,668Cash
                      and cash equivalents, end of period
                  
                  **$**
                  **95,941**
                  
                  $
                  ---Reconciliation
                      of net loss to cash flows from operating activities:Net
                      loss
                  
                  **$**
                  **(634,837**
                  **)**
                  $
                  (137,270
                  )Adjustments
                      to reconcile net loss to net cashprovided
                      by operating activities:Software
                      development costs amortized
                  
                  
                  **364,347**
                  
                  
                  258,258Stock
                      and warrants issued for services
                  
                  
                  **---**
                  
                  
                  44,186Loss
                      on fair value adjustment of derivatives
                  
                  
                  **546,871**
                  
                  
                  ---Rebate
                      reserve adjustment
                  
                  
                  ---
                  
                  
                  (142,039
                  )Provision
                      for bad debts
                  
                  
                  **22,669**
                  
                  
                  2,500Depreciation
                      & amortization
                  
                  
                  **291,548**
                  
                  
                  274,639Loss
                      on disposal of property, plant and equipment
                  
                  
                  **1,869**
                  
                  
                  ---Change
                      in assets and liabilities:(Increase)
                      decrease in accounts receivable
                  
                  
                  **(73,542**
                  **)**
                  
                  180,062Decrease
                      in inventories
                  
                  
                  **8,113**
                  
                  
                  110,697Decrease
                      in refundable taxes
                  
                  
                  **7,164**
                  
                  
                  ---(Increase)
                      decrease in prepaid expenses
                  
                  
                  **30,177**
                  
                  
                  (75,406
                  )Increase
                      (decrease) in accrued royalties
                  
                  
                  **17,238**
                  
                  
                  (204,937
                  )Increase
                      (decrease) in accounts payable
                  
                  
                  **29,180**
                  
                  
                  (174,711
                  )Increase
                      in income taxes payable
                  
                  
                  **180**
                  
                  
                  700Increase
                      (decrease) in deferred taxes
                  
                  
                  **(299,338**
                  **)**
                  
                  60,625Increase
                      in other liabilities
                  
                  
                  **45,639**
                  
                  
                  4,909Net
                      cash provided by operating activities
                  
                  **$**
                  **357,278**
                  
                  $
                  202,213*See
                      accompanying
                      notes.*




F-3
 Table
          of Contents


**Findex.com,
      Inc.**


**Notes
      to Condensed Consolidated Financial Statements**


**June
      30, 2005**


**(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/A for
      the
      fiscal year ended December 31, 2004.





**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, sales returns, price
      protection and rebates, (ii) provision for income taxes and realizability of
      the
      deferred tax assets, (iii) the life and realization of identifiable intangible
      assets, and (iv) provisions for obsolete inventory. 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. The software license is amortized over a 10 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 $2,342,895, less accumulated
      amortization of $1,411,792 at June 30, 2005.





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 $67,243 and $43,696 for the six months ended June 30, 2005 and 2004
      respectively.





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





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





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





Capitalized
      costs include those incurred to:





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





F-5
 Table
          of Contents




We
      amortize Website development costs on a straight-line basis over the estimated
      life of the site, generally 36 months. Total cumulative Website development
      costs, included in other assets on our condensed consolidated balance sheets,
      were $98,309, less accumulated amortization of $32,803 at June 30,
      2005.





**NET
      REVENUE**





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 six months ended June 30, 2005 and 2004
      and
      maintain a reserve for rebate claims remaining unpaid from 2000.





***Service
      Revenue***





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





F-6
 Table
          of Contents




***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, e-mail and other electronic means, and providing technical support
      assistance to our customers. In connection with the sale of certain products,
      we
      provide a limited amount of free technical support assistance to customers.
      We
      do not defer the recognition of any revenue associated with sales of these
      products, since the cost of providing this free technical support is
      insignificant. The technical support is provided within one year after the
      associated revenue is recognized and free product enhancements (bug fixes)
      are
      minimal and infrequent. We accrue the estimated cost of providing this free
      support upon product shipment and include it in cost of sales.





**INCOME
      TAXES**





We
      utilize SFAS No. 109, *Accounting
      for Income Taxes* .
      SFAS
      No. 109 requires the use of the asset and liability method of accounting for
      income taxes. Under this method, deferred income taxes are provided for the
      temporary differences between the financial reporting basis and the tax basis
      of
      our assets and liabilities. Deferred tax assets and liabilities are measured
      using enacted tax rates expected to apply to taxable income in the years in
      which those temporary differences are expected to be recovered or
      settled.





**EARNINGS
      PER SHARE**





We
      follow
      SFAS No. 128, *Earnings
      Per Share* ,
      to
      calculate and report basic and diluted earnings per share (“EPS”). Basic EPS is
      computed by dividing income available to common shareholders by the weighted
      average number of shares of common stock outstanding for the period. Diluted
      EPS
      is computed by giving effect to all dilutive potential shares of common stock
      that were outstanding during the period. For us, dilutive potential shares
      of
      common stock consist of the incremental shares of common stock issuable upon
      the
      exercise of stock options and warrants for all periods, convertible notes
      payable and the incremental shares of common stock issuable upon the conversion
      of convertible preferred stock.





F-7
 Table
          of Contents




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.


**DERIVATIVES,
          (Restated)**


We
              account for warrants issued with shares of common stock in a private
              placement
              according to the guidance of EITF Issue 00-19, *Accounting
              for Derivative Financial Instruments Indexed to, and Potentially Settled
              in, a
              Company’s Own Stock* . In
              accordance with the accounting mandate, the derivative liability associated
              with
              the warrants has been and, until our registration statement on Form
              SB-2
              originally filed on November 22, 2004 is declared effective, shall
              continue to
              be adjusted to fair value (calculated using the Black-Scholes method)
              at each
              balance sheet date and accordingly reassessed at each such date to
              determine
              whether the warrants should be classified (or reclassified, as appropriate)
              as a
              liability or as equity. The
              corresponding fair value adjustment is included in the consolidated
              statements
              of operations as other expenses should the value of the warrants increase
              from
              an increase in our stock price at the balance sheet date and as other
              income
              should the value of the warrants decreases from a decrease in our stock
              price at
              the balance sheet date.


**RECLASSIFICATIONS**





Certain
      accounts in the 2004 financial statements have been reclassified for comparative
      purposes to conform with the presentation in the 2005 financial
      statements.





**NOTE
      2 - INVENTORIES**





At
      June
      30, 2005, inventories consisted of the following:





Raw
                materials
            
            $
            138,587Finished
                goods
            
            
            87,300Inventories
            
            $
            225,887





During
      the six months ended June 30, 2004, we wrote-off obsolete inventory with a
      carried cost totaling $32,396. This has been included in cost of sales for
      2004.


**NOTE
          3 - LOSS ON VALUATION OF DERIVATIVES,** **(Restated)**


In
              November 2004, we issued two warrants to purchase an aggregate of 21,875,000
              shares of our common stock in connection with a certain Stock Purchase
              Agreement
              completed with Barron Partners, LP, on July 19, 2004. The first warrant
              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 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. These warrants
              have
              been accounted for as a liability according to the guidance of EITF
              00-19 and
              the fair value of each warrant has been assessed at $1,257,810 ($2,515,621
              total) using the Black-Scholes valuation method at June 30, 2005 with
              the
              following assumptions:
 **Warrant
                      A**
                  
                  
                  
                  **Warrant
                      B**Expected
                      term - years
                  
                  
                  4.05
                  
                  
                  
                  4.05Stock
                      price on June 30, 2005
                  
                  $
                  0.115
                  
                  
                  $
                  0.115Exercise
                      price
                  
                  $
                  0.18
                  
                  
                  $
                  0.60Expected
                      dividend yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %Expected
                      stock price volatility
                  
                  
                  490
                  %
                  
                  
                  490
                  %Risk-free
                      interest rate
                  
                  
                  3.80
                  %
                  
                  
                  3.80
                  %
  F-8
 Table
                of Contents
 The
            fair
            value of each warrant was estimated on the date of commitment with the
            following
            assumptions:
 
 **Warrant
                      A**
                  
                  
                  
                  **Warrant
                      B**Expected
                      term - years
                  
                  
                  5
                  
                  
                  
                  5Stock
                      price on date of commitment (July 19, 2004)
                  
                  $
                  0.20
                  
                  
                  $
                  0.20Exercise
                      price
                  
                  $
                  0.18
                  
                  
                  $
                  0.60Expected
                      dividend yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %Expected
                      stock price volatility
                  
                  
                  490
                  %
                  
                  
                  490
                  %Risk-free
                      interest rate
                  
                  
                  3.80
                  %
                  
                  
                  3.80
                  %
 
 We
            recognized a loss of $2,697,922 on the commitment of the warrants determined
            as
            follows:
 
 Fair
                      value of warrants on commitment date (July 19, 2004)
                  $
                  4,375,000Less:
                      Net proceeds receivedGross
                      proceeds received for stock and warrants
                  
                  $
                  1,750,000Par
                      value of common stock issued
                  
                  
                  (21,875
                  )Stock
                      offering costs
                  
                  
                  (51,047
                  )
                  $
                  1,677,078Loss
                      on fair value adjustment of derivatives
                  
                  
                  
                  
                  $
                  2,697,922
 
 The
            warrants are revalued at each balance sheet date by using the parameters
            described 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
            of
            $328,123 and $546,871, respectively, have been included in other expenses
            on the
            consolidated statements of operations for the three and six months ended
            June
            30, 2005.


**NOTE 4
      - INCOME TAXES**





The
      provision (benefit) for taxes on net income for the three and six months ended
      June 30, 2005 and 2004 consisted of the following:





**Three
                months ended June 30**
            
            **Six
                months ended June 30****2005**
            
            
            2004
            
            
            **2005**
            
            
            2004Current:Federal
            
            $
            ---
            
            $
            ---
            
            **$**
            **---**
            
            $
            ---State
            
            
            ---
            
            
            700
            
            
            **180**
            
            
            700---
            
            
            700
            
            
            **180**
            
            
            700Deferred:Federal
            
            
            **(141,093**
            **)**
            
            25,001
            
            
            **(282,186**
            **)**
            
            50,002State
            
            
            **(8,576**
            **)**
            
            5,310
            
            
            **(17,152**
            **)**
            
            10,620**(149,669**
            **)**
            
            30,311
            
            
            **(299,338**
            **)**
            
            60,622Total
                tax provision (benefit)
            
            
            **($149,669**
            **)**
            $
            31,011
            
            
            **($299,158**
            **)**
            $
            61,322




**NOTE 5
      - EARNINGS PER COMMON SHARE, (Restated)**





Earnings
      per common share are computed by dividing net income by the weighted average
      number of shares of common stock and common stock equivalents outstanding during
      the year. Common stock equivalents are the net additional number of shares
      that
      would be issuable upon the exercise of the outstanding common stock options
      and
      warrants, assuming that we reinvested the proceeds to purchase additional shares
      at market value.





F-9
 Table
          of Contents




The
      following table shows the amounts used in computing earnings per common share
      and the effect on income and the average number of shares of dilutive potential
      common stock:





**For
                  the Three Months Ended June 30**
              
              **2005**
              
              2004**(Restated)**
              
              (Restated)Net
                  loss
              
              **$**
              **(520,766**
              **)**
              $
              (320,708
              )Preferred
                  stock dividends
              
              
              **---**
              
              
              ---Net
                  loss available to common shareholders
              
              **$**
              **(520,766**
              **)**
              $
              (320,708
              )Basic
                  weighted average shares outstanding
              
              
              **48,619,855**
              
              
              23,276,312Dilutive
                  effect of:Stock
                  options
              
              
              **---**
              
              
              ---Convertible
                  notes payable
              
              
              **---**
              
              
              ---Convertible
                  Preferred Series A
              
              
              **---**
              
              
              ---Convertible
                  Preferred Series B
              
              
              **---**
              
              
              ---Warrants
              
              
              **---**
              
              
              ---Diluted
                  weighted average shares outstanding
              
              
              **48,619,855**
              
              
              23,276,312





**For
                  the Six Months Ended June 30**
              
              
              **2005**
              
              
              2004**(Restated)**
              
              
              (Restated)Net
                  loss
              
              **$**
              **(634,837**
              **)**
              $
              (137,270
              )Preferred
                  stock dividends
              
              
              **---**
              
              
              ---Net
                  loss available to common shareholders
              
              **$**
              **(634,837**
              **)**
              $
              (137,270
              )Basic
                  weighted average shares outstanding
              
              
              **48,619,855**
              
              
              22,143,875Dilutive
                  effect of:Stock
                  options
              
              
              **---**
              
              
              ---Convertible
                  notes payable
              
              
              **---**
              
              
              ---Convertible
                  Preferred Series A
              
              
              **---**
              
              
              ---Convertible
                  Preferred Series B
              
              
              **---**
              
              
              ---Warrants
              
              
              **---**
              
              
              ---Diluted
                  weighted average shares outstanding
              
              
              **48,619,855**
              
              
              22,143,875




A
      total
      of 25,585,000 and 5,008,892 dilutive potential securities for the three and
      six
      months ended June 30, 2005 and 2004, respectively, have been excluded from
      the
      computation of diluted earnings per common share, as their inclusion would
      be
      anti-dilutive.




**NOTE 6
      - COMMITMENTS AND CONTINGENCIES, (Restated)**





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 net income (3% 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), and our Chief Technology Officer (with a base annual salary of
      $150,000). In addition to the bonus provisions and annual base salary, each
      employment agreement provides for payment of all accrued base salaries, bonuses
      ($54,064 included in other current liabilities at June 30, 2005), and any vested
      deferred compensation ($28,311 included in other current liabilities at June
      30,
      2005) 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.





F-10
 Table
          of Contents




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.




As
          part
          of a July 2004 financing transaction, we entered into a certain Registration
          Rights Agreement with a New York based private investment partnership,
          Barron
          Partners, LP, pursuant to which we committed to registering all of the
          shares
          issued as part of such transaction, including those issuable under each
          of two
          warrants. On November 22, 2004, we filed a registration statement on Form
          SB-2
          covering the shares issued to Barron Partners, as well as the shares underlying
          the warrants issued to Barron Partners. Under the terms of the Registration
          Rights Agreement, as amended, we had until April 22, 2005 to cause such
          registration statement to be declared effective by the SEC. In accordance
          with
          the terms of the Registration Rights Agreement, any delays in meeting this
          obligation subjected us to liability to Barron Partners in an amount equal
          to $1,726 per day for the duration of any such delay. Through June 30,
          2005, we
          have accrued a total of $119,000 (69
          days
          at $1,726 per day)in registration rights penalties, inclusive of an
          adjustment made pursuant to a tentative verbal agreement reached with Barron
          Partners in April 2005, for failing to cause the registration statement
          to be
          declared effective by the SEC by April 22, 2005. If we are unable to cause
          such
          registration statement to be declared effective by December 31, 2005, we
          will
          incur total penalties of approximately $437,000 (April 23, 2005 through
          December
          31, 2005), which will directly decrease our net income and possibly cause
          a net
          loss for the year then ending.


**NOTE 7
      - 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 material available to us,
      operations could be adversely affected.




**NOTE 8
      - SUBSEQUENT EVENTS, (Restated)**




As
          of
          June 30, 2005, the registration statement filed on November 22, 2004 had
          not yet
          been declared effective, and wehave
          accrued $119,000 (69 days at $1,726 per day) in penalties under the Registration
          Rights Agreement, inclusive of an adjustment made pursuant to a tentative
          verbal
          agreement reached with Barron Partners in April 2005, wherein, in relation
          to
          the associated accruing penalties, we agreed to pay Barron Partners an
          amount in
          cash equal to $100,000 to toll the accrual of further penalties until June
          21,
          2005. Although this amount has been paid in full, in two equal installments
          of
          $50,000 on each of April 22, 2005 and July 8, 2005, penalties in the amount
          of
          $1,726 per day continue to accrue from June 21, 2005 until the registration
          statement is declared effective,at which
          time a negotiated reduction of such total amount is expected to be reached,
          the
          extent of which is as yet unknown, and terms of payment of which are expected
          to
          be agreed to which will allow us to reasonably meet our ongoing operating
          needs.
          We have
          experienced continued delays in effectiveness of such registration statement
          due
          principally to ongoing efforts made necessary by our determination to restate
          certain of our historical financial information.Although
          there can be no assurance, management is hopeful that we will cause the
          registration statement to be declared effective in the near future.The
          amount paid by us to date to satisfy this obligation has, and any continued
          delays in our ability to cause the registration statement to be declared
          effective coupled with additional amounts which we are and may be required
          to
          pay, will have a material adverse effect on our business, our financial
          condition, including liquidity and profitability, and our results of operations,
          including a corresponding reduction in our net income and the likelihood
          of a
          net loss for the year.


**NOTE 9
      - RESTATEMENT AND RECLASSIFICATION**




We
          have
          restated our financial statements for the three and six months ended June
          30,
          2005 and 2004 to reflect certain issues identified during a regulatory
          review of
          our financial statements associated with a certain registration statement
          filed
          with the SEC on November 22, 2004 on Form SB-2. Our management and our
          board of
          directors have concluded these restatements are necessary to reflect the
          changes
          described below. There was no net effect on cash provided by operating
          activities or cash used by investing and financing activities as a result
          of
          these corrections.


F-11
 Table
          of Contents


§
              In
                  June 1999 we entered into a certain software license agreement
                  with
                  Parsons Technology, Inc. to manufacture, distribute and sell a
                  variety of
                  software titles, including QuickVerse®and
                  Membership Plus®,
                  by far our two largest selling titles. During the three month period
                  ended
                  June 30, 2002we
                  reached a tentative settlement agreement in an arbitration arising
                  out of
                  the 1999 license with TLC, the licensor-assignee at the time. The
                  tentative settlement agreement forgave the final, unpaid installment
                  of
                  $1,051,785,
                  which we offset against the carrying amount of the 1999 license.
                  Although
                  paragraph 6 of Statement of Financial Accounting Standards (“SFAS”) No.
                  141,*Business
                  Combinations*,
                  which guides the recognition and measurement of intangible assets,
                  provides that the measurement of an asset in which the consideration
                  given
                  is cash is measured by the amount of cash paid, management has
                  concluded
                  that too much time had elapsed between the date of the 1999 license
                  and
                  the date of the tentative settlement agreement for such an offset
                  to be
                  appropriate. Therefore, we have recognized the extinguishment of
                  the
                  liability owed to TLC as income, in the amount of $1,051,785, in
                  our 2002
                  statement of operations. We have restated the retained deficit
                  as of
                  December 31, 2003 and there was no net effect on our consolidated
                  statements of operations and consolidated statements of cash flows
                  for the
                  three and six months then ended as a result of this correction.


§
              Also
                  during the three month period ended June 30, 2002, we extended
                  the
                  estimated life of the 1999 license from 10 years to 50 years in
                  accordance
                  with the terms of the tentative settlement agreement with TLC.
                  Although
                  the 1999 license provides for the unlimited and exclusive use of
                  the
                  trademarks related to the software programs, and our management
                  has
                  assessed the useful life of the 1999 license as indefinite, though
                  limited
                  by the contractual provisions to 50 years, based on the estimated
                  future
                  direct or indirect cash flows from the 1999 license, as provided
                  by
                  paragraphs 11 and 53 of SFAS No. 142,*Goodwill
                  and Other Intangible Assets*,
                  our management has concluded that a 10 year life is appropriate
                  on the
                  basis of our going concern opinions for 2002 and 2003. We have
                  restated
                  our condensed consolidated statements of operations ($251,753)
                  and
                  consolidated statements of cash flows for the three and six months
                  ended
                  June 30, 2004.
 
 §
              During
                  the three months ended June 30, 2004, we erroneously included rebates,
                  and
                  adjustments to rebates, in sales and marketing expenses. The more
                  appropriate presentation should have been, and is now, as an adjustment
                  to
                  revenue, in accordance with EITF 01-09,*Accounting
                  for Consideration Given by a Vendor to a Customer (Including a
                  Reseller of
                  the Vendor’s Products)*.
                  During the three months ended June 30, 2004, we originally recorded
                  an
                  adjustment to the rebates reserve in the amount of $266,301 and
                  an
                  adjustment to rebates payable in the amount of $12,599. Upon reassessment
                  of the adequacy of our reserve at December 31, 2003, we have allocated
                  $124,262 of the total adjustment to fiscal year 2003 and $142,039
                  to
                  fiscal year 2004 with $66,575 allocated to the three months ended
                  March
                  31, 2004 and $75,464 allocated to the three months ended June 30,
                  2004.
                  These adjustments resulted from a change in our internal control
                  over
                  financial reporting. Previously, when making our assessment of
                  the
                  adequacy of our reserve for rebates, we did not take into consideration
                  the amount and number of outstanding checks, issued checks that
                  were
                  returned as undeliverable, or our ability to meet our recorded
                  financial
                  obligation. We have changed our internal control procedures to
                  include
                  review of each of these factors in our assessment of the adequacy
                  of our
                  reserve for rebates.
 
 §
              During
                  the three months ended March 31, 2004, and as a direct result of
                  the
                  settlement with Zondervan and TLC, we wrote-off obsolete inventory
                  with a
                  carried cost totaling $32,396. We originally recorded this as a
                  non-recurring item in the other income (expense) section of the
                  consolidated statement of operations. Our revised condensed consolidated
                  statement of operations for the three and six months ended June
                  30, 2004
                  reflects this inventory adjustment in cost of sales. There was
                  no net
                  effect on net income (loss) from this reclassification for the
                  three and
                  six months ended June 30, 2004.
 
 §
              Rebates
                  payable to a third-party processor were overstated ($98,946) on
                  our
                  consolidated financial statements for the year ended December 31,
                  2000. We
                  discovered the error during the preparation of our condensed consolidated
                  financial statements for the three months ended March 31, 2004.
                  We
                  originally recorded the error correction as an adjustment to the
                  beginning
                  retained earnings of the year ended December 31, 2003 on the 2004
                  quarterly and annual filings. Our revised consolidated statements
                  of
                  operations for the year ended December 31, 2000 reflects an adjustment
                  to
                  revenue and reported the correction on Form 10-KSB/A for the year
                  then
                  ended. This revision had no net effect on the net loss for the
                  three and
                  six months ended June 30, 2004 or retained deficit at June 30,
                  2004 or
                  December 31, 2003.
  F-12
 Table
              of Contents
 §
                  We
                      erroneously treated the warrants issued to a New York based
                      private
                      investment partnership in connection with a private placement
                      as equity.
                      The correct presentation is as a liability adjusted for changes
                      in fair
                      value, at each balance sheet date, through the consolidated
                      statements of
                      operations, as provided by EITF 00-19,*Accounting
                      for Derivative Financial Instruments Indexed to, and Potentially
                      Settled
                      in, a Company’s Own Stock.*We
                      reclassified the initial fair value of the warrants ($4,375,000
                      at July
                      19, 2004) as a current liability ($2,515,621 at June 30, 2005)
                      and have
                      included the net change in fair value through June 30, 2005
                      ($546,871) in
                      other expenses on the consolidated statements of
                      operations.
  §
                We
                    have also reclassified various other expense items in our condensed
                    consolidated statements of operations for the three and six months
                    ended
                    June 30, 2004 to conform to the presentation in the statements
                    of
                    operations for the year ended December 31, 2004. There was no
                    net effect
                    on net income (loss) from these reclassifications for the three
                    and six
                    months ended June 30, 2005 and
                    2004.
































F-13
 Table
          of Contents


A
        summary
        of the effects of these changes is as follows:
  **Findex.com,
                      Inc.****CONDENSED
                      CONSOLIDATED BALANCE SHEET****June
                      30, 2005****(Unaudited)****As
                      Previously Reported**
                  
                  
                  **As
                      Restated**
                  
                  
                  **Change****Assets**Current
                      assets:Cash
                      and cash equivalents
                  
                  
                  
                  
                  $
                  95,941
                  
                  $
                  95,941
                  
                  $
                  ---Accounts
                      receivable, trade
                  
                  
                  
                  
                  
                  617,692
                  
                  
                  617,692
                  
                  
                  ---Inventory
                  
                  
                  
                  
                  
                  225,887
                  
                  
                  225,887
                  
                  
                  ---Other
                      current assets
                  
                  
                  
                  
                  
                  359,461
                  
                  
                  359,461
                  
                  
                  ---Total
                      current assets
                  
                  
                  
                  
                  
                  1,298,981
                  
                  
                  1,298,981
                  
                  
                  ---Property
                      and equipment, net
                  
                  134,350
                  
                  
                  134,350
                  
                  
                  ---Software
                      license, net
                  
                  2,014,030
                  
                  
                  2,014,030
                  
                  
                  ---Capitalized
                      software development costs, net
                  
                  931,103
                  
                  
                  931,103
                  
                  
                  ---Other
                      assets
                  
                  532,072
                  
                  
                  532,072
                  
                  
                  ---Total
                      assets
                  
                  
                  
                  
                  $
                  4,910,536
                  
                  $
                  4,910,536
                  
                  $
                  ---**Liabilities
                      and stockholders’ equity**Current
                      liabilities:Accounts
                      payable, trade
                  
                  
                  
                  
                  $
                  650,984
                  
                  $
                  650,984
                  
                  $
                  ---Accrued
                      royalties
                  
                  
                  
                  
                  
                  304,752
                  
                  
                  304,752
                  
                  
                  ---Derivative
                      liabilities
                  
                  
                  
                  
                  
                  ---
                  
                  
                  2,515,621
                  
                  
                  2,515,621
                  
                  (a)Other
                      current liabilities
                  
                  
                  
                  
                  
                  495,573
                  
                  
                  495,573
                  
                  
                  ---Total
                      current liabilities
                  
                  
                  
                  
                  
                  1,451,309
                  
                  
                  3,966,930
                  
                  
                  2,515,621Long-term
                      obligations
                  
                  179,317
                  
                  
                  179,317
                  
                  
                  ---Commitments
                      and contingenciesStockholders’
                      equity:Common
                      stock
                  
                  
                  
                  
                  
                  48,620
                  
                  
                  48,620
                  
                  
                  ---Paid-in
                      capital
                  
                  
                  
                  
                  
                  9,198,417
                  
                  
                  7,521,339
                  
                  
                  (1,677,078
                  )
                  (b)Retained
                      (deficit)
                  
                  
                  
                  
                  
                  (5,967,127
                  )
                  
                  (6,805,670
                  )
                  
                  (838,543
                  )Total
                      stockholders’ equity
                  
                  
                  
                  
                  
                  3,279,910
                  
                  
                  764,289
                  
                  
                  (2,515,621
                  )Total
                      liabilities and stockholders’ equity
                  
                  
                  
                  
                  $
                  4,910,536
                  
                  $
                  4,910,536
                  
                  $
                  ---(a)Fair
                      value of common stock warrants reclassified as derivatives
                      under EITF
                      00-19.(b)Net
                      proceeds allocated to common stock warrants reclassified as
                      derivative
                      liability.
 F-14
 Table
                of Contents
  **Findex.com,
                        Inc.****CONDENSED
                        CONSOLIDATED STATEMENTS OF OPERATIONS****Six
                        Months Ended June 30, 2005****(Unaudited)****As
                        Originally Reported**
                    
                    
                    **As
                        Restated**
                    
                    
                    **Change**Revenues,
                        net of reserves and allowances
                    $
                    2,954,410
                    
                    $
                    2,954,410
                    
                    $
                    ---Cost
                        of sales
                    
                    959,778
                    
                    
                    959,778
                    
                    
                    ---Gross
                        profit
                    
                    
                    
                    
                    
                    1,994,632
                    
                    
                    1,994,632
                    
                    
                    ---Operating
                        expenses:Sales
                        and marketing
                    
                    
                    
                    
                    
                    734,968
                    
                    
                    734,968
                    
                    
                    ---General
                        and administrative
                    
                    
                    
                    
                    
                    1,325,796
                    
                    
                    1,325,796
                    
                    
                    ---Bad
                        debt provision
                    
                    
                    
                    
                    
                    22,669
                    
                    
                    22,669
                    
                    
                    ---Depreciation
                        and amortization
                    
                    
                    
                    
                    
                    291,548
                    
                    
                    291,548
                    
                    
                    ---Total
                        operating expenses
                    
                    
                    
                    
                    
                    2,374,981
                    
                    
                    2,374,981
                    
                    
                    ---Loss
                        from operations
                    
                    (380,349
                    )
                    
                    (380,349
                    )
                    
                    ---Loss
                        on fair value adjustment of derivatives
                    
                    ---
                    
                    
                    (546,871
                    )
                    
                    (546,871
                    )
                    (a)Other
                        expenses, net
                    
                    (6,775
                    )
                    
                    (6,775
                    )
                    
                    ---Loss
                        before income taxes
                    
                    
                    
                    
                    
                    (387,124
                    )
                    
                    (933,995
                    )
                    
                    (546,871
                    )Provision
                        for income taxes
                    
                    299,158
                    
                    
                    299,158
                    
                    
                    ---Net
                        loss
                    
                    
                    
                    
                    $
                    (87,966
                    )
                    $
                    (634,837
                    )
                    $
                    (546,871
                    )Net
                        loss per share:Basic
                    
                    
                    
                    
                    $
                    ---
                    
                    $
                    (0.01
                    )
                    $
                    (0.01
                    )Diluted
                    
                    
                    
                    
                    $
                    ---
                    
                    $
                    (0.01
                    )
                    $
                    (0.01
                    )Weighted
                        average shares outstanding:Basic
                    
                    
                    
                    
                    
                    48,619,855
                    
                    
                    48,619,855
                    
                    
                    ---Diluted
                    
                    
                    
                    
                    
                    48,619,855
                    
                    
                    48,619,855
                    
                    
                    ---(a)Fair
                        value adjustment on common stock warrants treated as derivatives
                        under
                        EITF 00-19.
 
 F-15
 Table
              of Contents
  **Findex.com,
                      Inc.****CONDENSED
                      CONSOLIDATED STATEMENTS OF OPERATIONS****Three
                      Months Ended June 30, 2005****(Unaudited)****As
                      Originally Reported**
                  
                  
                  **As
                      Restated**
                  
                  
                  **Change**Revenues,
                      net of reserves and allowances
                  $
                  1,276,996
                  
                  $
                  1,276,996
                  
                  $
                  ---Cost
                      of sales
                  
                  450,993
                  
                  
                  450,993
                  
                  
                  ---Gross
                      profit
                  
                  
                  
                  
                  
                  826,003
                  
                  
                  826,003
                  
                  
                  ---Operating
                      expenses:Sales
                      and marketing
                  
                  
                  
                  
                  
                  307,521
                  
                  
                  307,521
                  
                  
                  ---General
                      and administrative
                  
                  
                  
                  
                  
                  690,078
                  
                  
                  690,078
                  
                  
                  ---Bad
                      debt provision
                  
                  
                  
                  
                  
                  22,016
                  
                  
                  22,016
                  
                  
                  ---Depreciation
                      and amortization
                  
                  
                  
                  
                  
                  145,780
                  
                  
                  145,780
                  
                  
                  ---Total
                      operating expenses
                  
                  
                  
                  
                  
                  1,165,395
                  
                  
                  1,165,395
                  
                  
                  ---Loss
                      from operations
                  
                  (339,392
                  )
                  
                  (339,392
                  )
                  
                  ---Loss
                      on fair value adjustment of derivatives
                  
                  ---
                  
                  
                  (328,123
                  )
                  
                  (328,123
                  )
                  (a)Other
                      expenses, net
                  
                  (2,920
                  )
                  
                  (2,920
                  )
                  
                  ---Loss
                      before income taxes
                  
                  
                  
                  
                  
                  (342,312
                  )
                  
                  (670,435
                  )
                  
                  (328,123
                  )Provision
                      for income taxes
                  
                  149,669
                  
                  
                  149,669
                  
                  
                  ---Net
                      loss
                  
                  
                  
                  
                  $
                  (192,643
                  )
                  $
                  (520,766
                  )
                  $
                  (328,123
                  )Net
                      loss per share:Basic
                  
                  
                  
                  
                  $
                  ---
                  
                  $
                  (0.01
                  )
                  $
                  (0.01
                  )Diluted
                  
                  
                  
                  
                  $
                  ---
                  
                  $
                  (0.01
                  )
                  $
                  (0.01
                  )Weighted
                      average shares outstanding:Basic
                  
                  
                  
                  
                  
                  48,619,855
                  
                  
                  48,619,855
                  
                  
                  ---Diluted
                  
                  
                  
                  
                  
                  48,619,855
                  
                  
                  48,619,855
                  
                  
                  ---(a)Fair
                      value adjustment on common stock warrants treated as derivatives
                      under
                      EITF 00-19.
 F-16
 Table
                of Contents
  **Findex.com,
                        Inc.****CONDENSED
                        CONSOLIDATED STATEMENTS OF OPERATIONS****Six
                        Months Ended June 30, 2004****(Unaudited)****As
                        Originally Reported**
                    
                    
                    **As
                        Restated**
                    
                    
                    **Change**Revenues,
                        net of reserves and allowances
                    $
                    2,499,215
                    
                    $
                    2,653,853
                    
                    $
                    154,638
                    
                    (a)Cost
                        of sales
                    
                    630,791
                    
                    
                    740,069
                    
                    
                    109,278
                    
                    (b)Gross
                        profit
                    
                    
                    
                    
                    
                    1,868,424
                    
                    
                    1,913,784
                    
                    
                    45,360Operating
                        expenses:Sales
                        and marketing
                    
                    
                    
                    
                    
                    497,049
                    
                    
                    510,501
                    
                    
                    13,452
                    
                    (c)General
                        and administrative
                    
                    
                    
                    
                    
                    1,249,306
                    
                    
                    1,171,574
                    
                    
                    (77,732
                    )
                    (d)Inventory
                        write down
                    
                    
                    
                    
                    
                    32,396
                    
                    
                    ---
                    
                    
                    (32,396
                    )
                    (e)Rebate
                        reserve adjustment
                    
                    
                    
                    
                    
                    (266,301
                    )
                    
                    ---
                    
                    
                    266,301
                    
                    (f)Bad
                        debt provision
                    
                    
                    
                    
                    
                    2,500
                    
                    
                    2,500
                    
                    
                    ---Depreciation
                        and amortization
                    
                    
                    
                    
                    
                    22,886
                    
                    
                    274,639
                    
                    
                    251,753
                    
                    (g)Total
                        operating expenses
                    
                    
                    
                    
                    
                    1,537,836
                    
                    
                    1,959,214
                    
                    
                    421,378Earnings
                        (loss) from operations
                    
                    330,588
                    
                    
                    (45,430
                    )
                    
                    (376,018
                    )Other
                        expenses, net
                    
                    (30,518
                    )
                    
                    (30,518
                    )
                    
                    ---Income
                        (loss) before income taxes
                    
                    
                    
                    
                    
                    300,070
                    
                    
                    (75,948
                    )
                    
                    (376,018
                    )Provision
                        for income taxes
                    
                    (2,305
                    )
                    
                    (61,322
                    )
                    
                    (59,017
                    )
                    (h)Net
                        income (loss)
                    
                    
                    
                    
                    $
                    297,765
                    
                    $
                    (137,270
                    )
                    $
                    (435,035
                    )Net
                        earnings (loss) per share:Basic
                    
                    
                    
                    
                    $
                    0.01
                    
                    $
                    (0.01
                    )
                    $
                    (0.02
                    )Diluted
                    
                    
                    
                    
                    $
                    0.01
                    
                    $
                    (0.01
                    )
                    $
                    (0.02
                    )Weighted
                        average shares outstanding:Basic
                    
                    
                    
                    
                    
                    22,143,875
                    
                    
                    22,143,875
                    
                    
                    ---Diluted
                    
                    
                    
                    
                    
                    23,821,007
                    
                    
                    22,143,875
                    
                    
                    (1,677,132
                    )
                    (i)(a)Increase
                        from reclassification of rebate reserve adjustment from Sales
                        and
                        marketing expenses.(b)Increase
                        from reclassification of non-capitalized technical support
                        wages from
                        General and administrative
                        expenses, reclassification of fulfillment costs from Sales
                        and marketing
                        expenses, and reclassification
                        of Inventory write down expense from operating
                        expenses.(c)Increase
                        from reclassification of rebate reserve adjustment to Revenues
                        and
                        reclassification of fulfillment
                        costs to Cost of sales.(d)Decrease
                        from reclassification of non-capitalized technical support
                        wages to Cost
                        of sales.(e)Decrease
                        from reclassification to Cost of sales.(f)Increase
                        from reclassification as an adjustment to revenue and allocation
                        between
                        2003 and 2004.(g)Increase
                        from effects of additional amortization of the software license
                        agreement.(h)Income
                        tax effects of additional software license
                        amortization.(i)Decrease
                        due to change from net income to net
                        loss.
 F-17
 Table
                  of Contents
  **Findex.com,
                          Inc.****CONDENSED
                          CONSOLIDATED STATEMENTS OF OPERATIONS****Three
                          Months Ended June 30, 2004****(Unaudited)****As
                          Originally Reported**
                      
                      
                      **As
                          Restated**
                      
                      
                      **Change**Revenues,
                          net of reserves and allowances
                      $
                      961,951
                      
                      $
                      1,020,885
                      
                      $
                      58,934
                      
                      (a)Cost
                          of sales
                      
                      233,102
                      
                      
                      271,410
                      
                      
                      38,308
                      
                      (b)Gross
                          profit
                      
                      
                      
                      
                      
                      728,849
                      
                      
                      749,475
                      
                      
                      20,626Operating
                          expenses:Sales
                          and marketing
                      
                      
                      
                      
                      
                      280,033
                      
                      
                      267,902
                      
                      
                      (12,131
                      )
                      (c)General
                          and administrative
                      
                      
                      
                      
                      
                      658,603
                      
                      
                      615,895
                      
                      
                      (42,708
                      )
                      (d)Rebate
                          reserve adjustment
                      
                      
                      
                      
                      
                      (266,301
                      )
                      
                      ---
                      
                      
                      266,301
                      
                      (e)Depreciation
                          and amortization
                      
                      
                      
                      
                      
                      13,311
                      
                      
                      139,187
                      
                      
                      125,876
                      
                      (f)Total
                          operating expenses
                      
                      
                      
                      
                      
                      685,646
                      
                      
                      1,022,984
                      
                      
                      337,338Earnings
                          (loss) from operations
                      
                      43,203
                      
                      
                      (273,509
                      )
                      
                      (316,712
                      )Other
                          expenses, net
                      
                      (16,188
                      )
                      
                      (16,188
                      )
                      
                      ---Income
                          (loss) before income taxes
                      
                      
                      
                      
                      
                      27,015
                      
                      
                      (289,697
                      )
                      
                      (316,712
                      )Provision
                          for income taxes
                      
                      (1,505
                      )
                      
                      (31,011
                      )
                      
                      (29,506
                      )
                      (g)Net
                          income (loss)
                      
                      
                      
                      
                      $
                      25,510
                      
                      $
                      (320,708
                      )
                      $
                      (346,218
                      )Net
                          earnings (loss) per share:Basic
                      
                      
                      
                      
                      $
                      ---
                      
                      $
                      (0.01
                      )
                      $
                      (0.01
                      )Diluted
                      
                      
                      
                      
                      $
                      ---
                      
                      $
                      (0.01
                      )
                      $
                      (0.01
                      )Weighted
                          average shares outstanding:Basic
                      
                      
                      
                      
                      
                      23,276,312
                      
                      
                      23,276,312
                      
                      
                      ---Diluted
                      
                      
                      
                      
                      
                      24,953,444
                      
                      
                      23,276,312
                      
                      
                      (1,677,132
                      )
                      (h)(a)Reclassification
                          of rebate reserve adjustment from Sales and marketing
                          expenses.(b)Increase
                          from reclassification of non-capitalized technical support
                          wages from
                          General and administrative
                          expenses, and reclassification of fulfillment costs from
                          Sales and
                          marketing expenses.(c)Decrease
                          from reclassification of fulfillment costs to Cost of
                          sales.(d)Decrease
                          from reclassification of non-capitalized technical support
                          wages to Cost
                          of sales.(e)Increase
                          from reclassification as an adjustment to revenue and allocation
                          between
                          2003 and 2004.(f)Increase
                          from effects of additional amortization of the software
                          license
                          agreement.(g)Income
                          tax effects of additional software license
                          amortization.(h)Decrease
                          due to change from net income to net
                          loss.
 F-18
 Table
            of Contents
  **Findex.com,
                      Inc.****CONSOLIDATED
                      STATEMENTS OF CASH FLOWS****For
                      the Six Months Ended June 30, 2005****(Unaudited)****As
                      Originally Reported**
                  
                  
                  **As
                      Restated**
                  
                  
                  **Change**Cash
                      flows from operating activities:Cash
                      received from customers
                  
                  
                  
                  
                  $
                  2,887,090
                  
                  $
                  2,887,090
                  
                  $
                  ---Cash
                      paid to suppliers and employees
                  
                  
                  
                  
                  
                  (2,531,135
                  )
                  
                  (2,531,135
                  )
                  
                  ---Other
                      operating activities, net
                  
                  
                  
                  
                  
                  1,323
                  
                  
                  1,323
                  
                  
                  ---Net
                      cash provided by operating activities
                  
                  
                  
                  
                  
                  357,278
                  
                  
                  357,278
                  
                  
                  ---Cash
                      flows from investing activities:Software
                      development costs
                  
                  
                  
                  
                  
                  (594,161
                  )
                  
                  (594,161
                  )
                  
                  ---Other
                      investing activities, net
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  20,000
                  
                  
                  ---Net
                      cash (used) by investing activities
                  
                  
                  
                  
                  
                  (574,161
                  )
                  
                  (574,161
                  )
                  
                  ---Cash
                      flows from financing activities:Payments
                      made on long-term notes payable
                  
                  
                  
                  
                  
                  (28,535
                  )
                  
                  (28,535
                  )
                  
                  ---Net
                      cash (used) by financing activities
                  
                  
                  
                  
                  
                  (28,535
                  )
                  
                  (28,535
                  )
                  
                  ---Net
                      (decrease) in cash and cash equivalents
                  
                  (245,418
                  )
                  
                  (245,418
                  )
                  
                  ---Cash
                      and cash equivalents, beginning of year
                  
                  341,359
                  
                  
                  341,359
                  
                  
                  ---Cash
                      and cash equivalents, end of period
                  
                  
                  
                  
                  $
                  95,941
                  
                  $
                  95,941
                  
                  $
                  ---Reconciliation
                      of net loss to cash flows from operating activities:Net
                      loss
                  
                  
                  
                  
                  $
                  (87,966
                  )
                  $
                  (634,837
                  )
                  $
                  (546,871
                  )Adjustments
                      to reconcile net loss to net cashprovided
                      by operating activities:Software
                      development costs amortized
                  
                  
                  
                  
                  
                  364,347
                  
                  
                  364,347
                  
                  
                  ---Loss
                      on fair value adjustment of derivatives
                  
                  
                  
                  
                  
                  ---
                  
                  
                  546,871
                  
                  
                  546,871
                  
                  (a)Provision
                      for bad debts
                  
                  
                  
                  
                  
                  22,669
                  
                  
                  22,669
                  
                  
                  ---Depreciation
                      and amortization
                  
                  
                  
                  
                  
                  291,548
                  
                  
                  291,548
                  
                  
                  ---Loss
                      on sale of property and equipment
                  
                  
                  
                  
                  
                  1,869
                  
                  
                  1,869
                  
                  
                  ---Change
                      in assets and liabilities:(Increase)
                      in accounts receivable
                  
                  
                  
                  
                  
                  (73,542
                  )
                  
                  (73,542
                  )
                  
                  ---Decrease
                      in inventories
                  
                  
                  
                  
                  
                  8,113
                  
                  
                  8,113
                  
                  
                  ---Decrease
                      in refundable taxes
                  
                  
                  
                  
                  
                  7,164
                  
                  
                  7,164
                  
                  
                  ---Decrease
                      in prepaid expenses
                  
                  
                  
                  
                  
                  30,177
                  
                  
                  30,177
                  
                  
                  ---Increase
                      in accrued royalties
                  
                  
                  
                  
                  
                  17,238
                  
                  
                  17,238
                  
                  
                  ---Increase
                      in accounts payable
                  
                  
                  
                  
                  
                  29,180
                  
                  
                  29,180
                  
                  
                  ---Increase
                      in income taxes payable
                  
                  
                  
                  
                  
                  180
                  
                  
                  180
                  
                  
                  ---(Decrease)
                      in deferred taxes
                  
                  
                  
                  
                  
                  (299,338
                  )
                  
                  (299,338
                  )
                  
                  ---Increase
                      in other liabilities
                  
                  
                  
                  
                  
                  45,639
                  
                  
                  45,639
                  
                  
                  ---Net
                      cash provided by operating activities
                  
                  
                  
                  
                  $
                  357,278
                  
                  $
                  357,278
                  
                  $
                  ---(a)Fair
                      value adjustment on common stock warrants treated as derivatives
                      under
                      EITF 00-19.
  F-19
 Table
            of Contents
  **Findex.com,
                      Inc.****CONSOLIDATED
                      STATEMENTS OF CASH FLOWS****For
                      the Six Months Ended June 30, 2004****(Unaudited)****As
                      Originally Reported**
                  
                  
                  **As
                      Restated**
                  
                  
                  **Change**Cash
                      flows from operating activities:Cash
                      received from customers
                  
                  
                  
                  
                  $
                  2,687,874
                  
                  $
                  2,639,964
                  
                  $
                  (47,910
                  )
                  (a)Cash
                      paid to suppliers and employees
                  
                  
                  
                  
                  
                  (2,691,400
                  )
                  
                  (2,409,585
                  )
                  
                  281,815
                  
                  (b)Other
                      operating activities, net
                  
                  
                  
                  
                  
                  205,739
                  
                  
                  (28,166
                  )
                  
                  (233,905
                  )
                  (c)Net
                      cash provided by operating activities
                  
                  
                  
                  
                  
                  202,213
                  
                  
                  202,213
                  
                  
                  ---Cash
                      flows from investing activities:Acquisition
                      of property and equipment
                  
                  
                  
                  
                  
                  (18,612
                  )
                  
                  (18,612
                  )
                  
                  ---Software
                      development costs
                  
                  
                  
                  
                  
                  (178,049
                  )
                  
                  (178,049
                  )
                  
                  ---Website
                      development costs
                  
                  
                  
                  
                  
                  (31,836
                  )
                  
                  (31,836
                  )
                  
                  ---Deposits
                      made
                  
                  
                  
                  
                  
                  (485
                  )
                  
                  (485
                  )
                  
                  ---Net
                      cash (used) by investing activities
                  
                  
                  
                  
                  
                  (228,982
                  )
                  
                  (228,982
                  )
                  
                  ---Cash
                      flows from financing activities:Payments
                      made on line of credit, net
                  
                  
                  
                  
                  
                  (2,999
                  )
                  
                  (2,999
                  )
                  
                  ---Cash
                      overdraft
                  
                  
                  
                  
                  
                  ---
                  
                  
                  38,990
                  
                  
                  38,990
                  
                  (h)Payments
                      made on long-term notes payable
                  
                  
                  
                  
                  
                  (50,890
                  )
                  
                  (50,890
                  )
                  
                  ---Net
                      cash (used) by financing activities
                  
                  
                  
                  
                  
                  (53,889
                  )
                  
                  (14,899
                  )
                  
                  38,990Net
                      (decrease) in cash and cash equivalents
                  
                  (80,658
                  )
                  
                  (41,668
                  )
                  
                  38,990Cash
                      and cash equivalents, beginning of year
                  
                  142,022
                  
                  
                  41,668
                  
                  
                  (100,354
                  )
                  (d)Cash
                      and cash equivalents, end of period
                  
                  
                  
                  
                  $
                  61,364
                  
                  $
                  ---
                  
                  $
                  (61,364
                  )Reconciliation
                      of net income (loss) to cash flows from operating
                      activities:Net
                      income (loss)
                  
                  
                  
                  
                  $
                  297,765
                  
                  $
                  (137,270
                  )
                  $
                  (435,035
                  )Adjustments
                      to reconcile net income (loss) to net cashprovided
                      by operating activities:Software
                      development costs amortized
                  
                  
                  
                  
                  
                  258,258
                  
                  
                  258,258
                  
                  
                  ---Provision
                      for bad debts
                  
                  
                  
                  
                  
                  2,500
                  
                  
                  2,500
                  
                  
                  ---Stock
                      and warrants issued for services
                  
                  
                  
                  
                  
                  44,186
                  
                  
                  44,186
                  
                  
                  ---Rebate
                      reserve adjustment
                  
                  
                  
                  
                  
                  (266,301
                  )
                  
                  (142,039
                  )
                  
                  124,262
                  
                  (e)Depreciation
                      and amortization
                  
                  
                  
                  
                  
                  22,886
                  
                  
                  274,639
                  
                  
                  251,753
                  
                  (f)Change
                      in assets and liabilities:Decrease
                      in accounts receivable
                  
                  
                  
                  
                  
                  180,062
                  
                  
                  180,062
                  
                  
                  ---Decrease
                      in inventories
                  
                  
                  
                  
                  
                  110,697
                  
                  
                  110,697
                  
                  
                  ---(Increase)
                      in prepaid expenses
                  
                  
                  
                  
                  
                  (75,406
                  )
                  
                  (75,406
                  )
                  
                  ---(Decrease)
                      in accrued royalties
                  
                  
                  
                  
                  
                  (204,937
                  )
                  
                  (204,937
                  )
                  
                  ---(Decrease)
                      in accounts payable
                  
                  
                  
                  
                  
                  (174,711
                  )
                  
                  (174,711
                  )
                  
                  ---Increase
                      in income taxes payable
                  
                  
                  
                  
                  
                  700
                  
                  
                  700
                  
                  
                  ---Increase
                      in deferred taxes
                  
                  
                  
                  
                  
                  1,605
                  
                  
                  60,625
                  
                  
                  59,020
                  
                  (g)Increase
                      in other liabilities
                  
                  
                  
                  
                  
                  4,909
                  
                  
                  4,909
                  
                  
                  ---Net
                      cash provided by operating activities
                  
                  
                  
                  
                  $
                  202,213
                  
                  $
                  202,213
                  
                  $
                  ---(a)Decrease
                      from reclassification of estimated cost of sales returns against
                      cash
                      paid.(b)Increase
                      from reclassification of reserve for rebate adjustment from
                      other
                      operating activities, reclassification
                      of inventory write-down from other operating activities, and
                      estimated
                      cost of sales
                      returns from cash received.(c)Decrease
                      from reclassification of reserve for rebate adjustment and
                      inventory
                      write-down to cash
                      paid.(d)Decrease
                      from reclassification of restricted cash as other
                      asset.(e)Allocation
                      of rebate reserve adjustment to 2003 and 2004.(f)Additional
                      software license amortization.(g)Net
                      income tax effects of additional software amortization.(h)Reclassify
                      cash overdraft as financing
                      activity.


F-20
 Table
          of Contents




**ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION.**
 
 ***Cautionary
        Statement Regarding Forward-Looking Statements***
  *This
        Form 10-QSB/A, press releases and certain information provided periodically
        in
        writing or orally 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/A 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) market
        and
        other trends affecting our future financial condition or results of operations,
        (v) our growth strategy and operating strategy, and (vi) 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. The 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/A, entitled Management’s
        Discussion and Analysis or Plan of Operation, including without limitation
        the
        risk factors contained in the company’s annual report on Form 10-KSB/A for the
        period ending December 31, 2004. Except as required by law, we undertake
        no
        obligation to update any of the forward-looking statements in this Form 10-QSB/A
        after the date of this report.*
 
 This
        information should be read in conjunction with the financial statements and
        the
        notes thereto included in Item 1 of Part I of this Quarterly Report and the
        audited financial statements and notes thereto and Management’s Discussion and
        Analysis of Financial Condition and Results of Operations contained in the
        company’s Annual Report on Form 10-KSB/A for the fiscal year ended December
        31, 2004.
 
 **MANAGEMENT
        OVERVIEW**
 
 During
        the second quarter of 2005 and for the first time in our operating history,
        we
        introduced our flagship product, QuickVerse ® ,
        to the
        Macintosh ® Operating System platform. QuickVerse ® Macintosh
        is available in two new editions, QuickVerse ® Macintosh Black which has a suggested retail price of $99.95 and
        QuickVerse ® Macintosh
        White which has a suggested retail price of $49.95. We believe we are now
        the
        only publisher of Bible reference software for each of the Windows ® ,
        Macintosh ® ,
        PocketPC ® and
        Palm ® OS
        platforms. We also released an updated version of Bible Illustrator ® 3.0
        titled Sermon Builder ® 4.0
        during the second quarter of 2005. Sermon Builder ® 4.0 was
        the first update to this particular program in over six years and has a
        suggested retail price of $69.95. Sermon Builder ® 4.0 is
        ideal for pastors and teachers who want to create punctuated sermons,
        comprehensive lessons, and in-depth Bible studies. Furthermore, during the
        first
        quarter of 2005, and for the second consecutive year, we released an upgrade
        to
        our top-selling financial and data management software, Membership
        Plus ® ,
        and
        introduced two new QuickVerse ® editions, QuickVerse ® 2005
        Essentials and QuickVerse ® 2005
        Platinum. QuickVerse ® 2005
        Essentials appeals to those customers who are seeking their first Bible study
        software and it is a great way to begin a Bible study software collection.
        It
        has a suggested retail price of $49.95. QuickVerse ® 2005
        Platinum is the most comprehensive Bible study edition we have to offer and
        appeals to scholars who are serious about Bible study. It has a suggested
        retail
        price of $799.95. We believe that the unique features of the four new
        QuickVerse ® editions
        will provide us with an opportunity to broaden our customer base as our products
        are now available to PC and Macintosh users, and they appeal not only to
        those
        just beginning their journey into Bible study but also to the scholars who
        are
        searching for an in-depth knowledge of the Bible. As a result of these releases,
        as well as our release in December 2004 of our most recent upgrade to
        QuickVerse ® ,
        our
        second quarter 2005 revenues were higher than those during the second quarter
        of
        2004. Our performance during the three months ended June 30, 2005 marks the
        second straight year in which we have increased our gross revenues during
        our
        second quarter, which is typically one of our slower quarters in revenue
        growth
        due to the seasonality of our products. Although there can be no assurance,
        we
        believe that we can sustain our revenue growth through the third and fourth
        quarters based upon our development schedule which includes an update to
        our
        QuickVerse ® PDA
        software along with an update to our QuickVerse ® Windows
        software.
 
 -1-
 Table
            of Contents
  ***Results
        Of Operations for Quarters Ending June 30, 2005 and June 30,
        2004***
  **Statement
                      of Operations for Six Months Ended June 30**
                  
                  
                  **2005**
                  
                  
                  2004
                  
                  
                  Change
                  
                  
                  %Net
                      revenues
                  
                  **$**
                  **2,954,410**
                  
                  $
                  2,653,853
                  
                  $
                  300,557
                  
                  
                  11
                  %Cost
                      of sales
                  
                  **$**
                  **959,778**
                  
                  $
                  740,069
                  
                  $
                  219,709
                  
                  
                  30
                  %Gross
                      profit
                  
                  **$**
                  **1,994,632**
                  
                  $
                  1,913,784
                  
                  $
                  80,848
                  
                  
                  4
                  %Total
                      operating expenses
                  
                  **$**
                  **(2,374,981**
                  **)**
                  $
                  (1,959,214
                  )
                  $
                  (415,767
                  )
                  
                  21
                  %Loss
                      on fair value adjustment of derivatives
                  
                  **$**
                  **(546,871**
                  **)**
                  $
                  ---
                  
                  $
                  (546,871
                  )
                  
                  0
                  %Other
                      expenses
                  
                  **$**
                  **(6,775**
                  **)**
                  $
                  (30,518
                  )
                  $
                  23,743
                  
                  
                  -78
                  %Income
                      (loss) before income taxes
                  
                  **$**
                  **(933,995**
                  **)**
                  $
                  (75,948
                  )
                  $
                  (858,047
                  )
                  
                  1130
                  %Provision
                      for income taxes
                  
                  **$**
                  **299,158**
                  
                  $
                  (61,322
                  )
                  $
                  360,480
                  
                  
                  -588
                  %Net
                      loss
                  
                  **$**
                  **(634,837**
                  **)**
                  $
                  (137,270
                  )
                  $
                  (497,567
                  )
                  
                  362
                  %
  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 only
        about
        29% of our annual sales.
  During
            the six months ended June 30, 2004, we wrote down a distinct category
            of
            obsolete inventory of approximately $32,000 which is included in cost
            of sales.
            We also wrote down a reserve for rebates payable due to a change in accounting
            estimate of approximately $142,000 which is included as an adjustment
            to revenue
            in accordance with EITF Issue No. 01-09 for the six months ended June
            30, 2004.
            These write down items had no effect on the cash flow statement. During
            the
            three and six months ended June 30, 2005, we recognized a loss of approximately
            $328,000 and $547,000, respectively, related to the fair value adjustment
            of
            derivatives in other expenses. Warrants issued with shares of common
            stock in a
            private placement are considered derivative liabilities. The derivative
            liability associated with the warrants has been adjusted to fair value
            at each
            balance sheet date and accordingly reassessed at each such date to
            determine whether the warrants should be classified (or reclassified,
            as
            appropriate) as a liability or as equity. See “Derivatives” below. Our net loss
            increased approximately $200,000 from a net loss of approximately $321,000
            for
            the three months ended June 30, 2004 to a net loss of approximately $521,000
            for
            the three months ended June 30, 2005 and increased approximately $498,000
            from a
            net loss of approximately $137,000 for the six months ended June 30,
            2004 to a
            net loss of approximately $635,000 for the six months ended June 30,
            2005. For
            the six months ended June 30, 2004, we recognized approximately $44,000
            in
            non-cash expenses related to issuances of shares of common stock to our
            board of
            directors and employees as well as warrants issued for services. For
            the six
            months ended June 30, 2005 we did not recognize any non-cash expenses
            related to
            shares of common stock and warrants issued for services.
  ***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. For our packaged software products,
        we typically recognize revenue from the sale 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. Service revenue resulting from technical support plans is
        recognized over the life of the plan which is generally one year. Revenue
        associated with advance payments from our customers is deferred until we
        ship
        the product or offer the support service. 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. For revenue arrangements involving multiple elements and include
        software products, we allocate and defer revenue for the undelivered elements
        based on their vendor-specific objective evidence of fair value, which is
        generally the price charged when that element is sold separately.
 
 -2-
 Table
            of Contents
  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. Estimated returns are
        also
        based upon a percentage of total retail and direct sales. Direct sales accounted
        for approximately 65% of our 2004 fiscal year revenue. We account for cash
        considerations (such as sales incentives - rebates and coupons) that we give
        our
        customers as a reduction of revenue rather than as an operating expense.
        Product
        revenue is also reduced for the estimated redemption of end-user rebates
        on
        certain current product sales. We did not have any rebate programs during
        the
        three and six months ended June 30, 2004 and 2005, respectively.
 Trends
          that our returns typically follow include (i) the seasonality of sales,
          and (ii)
          the fact that, generally, relatively higher return rates occur during periods
          of
          new title or title version releases. Historically, actual returns have
          been
          within management’s prior estimates, however, we cannot be certain that any
          future write-offs exceeding reserves will not occur or that amounts written
          off
          will not have a material adverse effect on our business, our financial
          condition, including liquidity and profitability, and our results of operations.
          Management continually monitors and adjusts these allowances to take into
          account actual developments and sales results in the marketplace. In the
          past,
          particularly during title and title version transitions, we have had to
          increase
          price concessions to our retail customers.
  Product
          returns from distributors and Christian bookstores are allowed primarily
          in
          exchange for new products or for credit towards purchases as part of a
          stock-balancing program. These returns are subject to certain limitations
          that
          may exist in the contract. Under certain circumstances, such as termination
          or
          when a product is defective, distributors and bookstores could receive
          a cash
          refund if returns exceed amounts owed. Returns from sales made directly
          to the
          consumer are accepted within 45 days of purchase and are issued a cash
          refund.
          Product returns or price protection concessions that exceed our reserves
          could
          materially adversely affect our business and operating results and could
          increase the magnitude of quarterly fluctuations in our operating and financial
          results. We do anticipate implementing a price protection program within
          the
          third quarter of 2005 on our current QuickVerse ® 2005
          titles within the Christian Booksellers Association retail channel in order
          to
          prepare for our next updated release of QuickVerse ® 2006.
          QuickVerse ® 2006 is
          anticipated to be released in late September 2005 or early October 2005,
          and we
          feel we have reserved appropriately for the anticipated price protections.
  Software
        products are sold separately, without future performance such as upgrades
        enhancements or additional software products, and are sold with post contract
        customer support services such as customer service and technical support
        assistance. In connection with the sale of certain products, we provide a
        limited amount of free technical support assistance to our 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.
 
 Shipping
        and handling costs in connection with our software products are expensed
        as
        incurred and included in cost of sales.
  -3-
 Table
            of Contents
  **Revenues
                    for Three Months Ended June 30**
                
                
                **2005**
                
                
                **%
                    to Sales**
                
                
                2004
                
                
                %
                    to Sales
                
                
                Change
                
                
                %Gross
                    sales
                
                **$**
                **1,527,334**
                
                
                **100**
                **%**
                
                $
                1,057,504
                
                
                100
                %
                
                $
                469,830
                
                
                44
                %Add
                    rebate adjustment
                
                
                **4,910**
                
                
                **0**
                **%**
                
                
                75,464
                
                
                7
                %
                
                
                (70,554
                )
                
                -93
                %Less
                    reserve for sales returns and allowances
                
                
                **(255,248**
                **)**
                
                **-17**
                **%**
                
                
                (112,083
                )
                
                -11
                %
                
                
                (143,165
                )
                
                128
                %Net
                    sales
                
                **$**
                **1,276,996**
                
                
                **83**
                **%**
                
                $
                1,020,885
                
                
                96
                %
                
                $
                256,111
                
                
                25
                %
  **Revenues
                    for Six Months Ended June 30**
                
                
                **2005**
                
                
                **%
                    to Sales**
                
                
                2004
                
                
                %
                    to Sales
                
                
                Change
                
                
                %Gross
                    sales
                
                **$**
                **3,511,370**
                
                
                **100**
                **%**
                
                $
                2,772,975
                
                
                100
                %
                
                $
                738,395
                
                
                27
                %Add
                    rebate adjustment
                
                
                **9,820**
                
                
                **0**
                **%**
                
                
                202,548
                
                
                7
                %
                
                
                (192,728
                )
                
                -95
                %Less
                    reserve for sales returns and allowances
                
                
                **(566,780**
                **)**
                
                **-16**
                **%**
                
                
                (321,670
                )
                
                -12
                %
                
                
                (245,110
                )
                
                76
                %Net
                    sales
                
                **$**
                **2,954,410**
                
                
                **84**
                **%**
                
                $
                2,653,853
                
                
                95
                %
                
                $
                300,557
                
                
                8
                %
 Gross
        revenues increased approximately $470,000 from approximately $1,057,000 for
        the
        three months ended June 30, 2004 to approximately $1,527,000 for the three
        months ended June 30, 2005 and increased approximately $738,000 from
        approximately $2,773,000 for the six months ended June 30, 2004 to approximately
        $3,511,000 for the six months ended June 30, 2005. Such increase is due to
        our
        releases of an enhanced version of our top financial and data management
        product, Membership Plus ® ,
        an
        enhanced version of QuickVerse ® Essentials and a new edition to the QuickVerse ® family,
        the QuickVerse ® Platinum
        edition, during the first quarter of 2005. QuickVerse ® Essentials retails for $49.95. QuickVerse ® Platinum
        contains the most Bible translations and reference titles of any
        QuickVerse ® edition
        and retails for $799.95. During the second quarter of 2005, we introduced
        QuickVerse ® Macintosh in two editions, White Box edition at the retail price of $49.95
        and
        Black Box edition at the retail price of $99.95. This was our first product
        release on the Macintosh®Operating System platform. We also released
        an enhanced version of Bible Illustrator ® 3.0
        titled Sermon Builder ® 4.0.
        This was the first update to this program in over six years and retails for
        $69.95. Comparatively, during the six months ended June 30, 2004, we had
        only
        the one product release of Membership Plus ® 8.0
        which ranged in price from $199.95 to $299.95. We anticipate that revenues
        will
        continue to increase throughout the year as we remain on schedule to have
        an
        updated annual release of our two major product lines, QuickVerse ® and
        Membership Plus ® .
  Sales
        returns and allowances increased approximately $143,000 from approximately
        $112,000 for the three months ended June 30, 2004 to approximately $255,000
        for
        the three months ended June 30, 2005 and increased approximately $245,000
        from
        approximately $322,000 for the six months ended June 30, 2004 to approximately
        $567,000 for the six months ended June 30, 2005. As a percentage of gross
        sales,
        sales returns and allowances increased from approximately 11% for the three
        months ended June 30, 2004 to approximately 17% for the three months ended
        June
        30, 2005 and increased from approximately 12% for the six months ended June
        30,
        2004 to approximately 16% for the six months ended June 30, 2005. The upward
        trend in sales returns and allowances as a percentage is attributable to
        our
        release of enhanced versions of QuickVerse®and
        Membership Plus®in
        December of 2004 and February of 2005, respectively. The release of these
        two
        enhanced products resulted in an increased quantity of sales returns and
        allowances of prior versions as the last enhancements for both of these titles
        was approximately one year. In the past, product enhancements were typically
        extended over two to three years. We have also increased our reserve for
        sales
        returns due to a higher price point in connection with QuickVerse®Platinum
        being released in the first quarter of 2005. Furthermore, due to the resignation
        of the primary developer of Membership Plus®and some
        unresolved maintenance issues, we have experienced higher actual returns
        on the
        Membership Plus®2005
        product line. However, we are currently utilizing both domestic and
        international contracted developers to not only resolve the maintenance issues
        but to also continue the development for our annual update on the Membership
        Plus®program.
        We are on track to continue to release enhanced versions of our products
        on an
        annual basis; however, we do anticipate the sales return and allowances as
        a
        percentage to follow a downward trend due to the increased focus of our sales
        efforts to the end-user and our decreased presence in the retail market.
        Incidents of return are lower for sales direct to the end-user than sales
        into
        the retail stores.
 
 -4-
 Table
            of Contents
  ***Cost
        of Sales***
 
 Cost
        of
        sales consists primarily of royalties to third party providers of intellectual
        property and the direct costs and manufacturing overhead required to reproduce,
        package, fulfill and ship the software products. Direct costs and manufacturing
        overhead also include the amortized software development costs and the
        non-capitalized technical support wages. The direct costs and manufacturing
        overhead increased approximately $123,000 from approximately $229,000 for
        the
        three months ended June 30, 2004 to approximately $352,000 for the three
        months
        ended June 30, 2005 and increased approximately $99,000 from approximately
        $625,000 for the six months ended June 30, 2004 to approximately $724,000
        for
        the six months ended June 30, 2005. As a percentage of gross revenues, the
        direct costs and manufacturing overhead slightly increased approximately
        1% for
        the three months ended June 30, 2005 and slightly decreased approximately
        2% for
        the six months ended June 30, 2005. The six months ended June 30, 2004 include
        the write down of a distinct category of obsolete inventory of approximately
        $32,000. Fulfillment costs from a third-party warehouse and included in the
        manufacturing overhead costs noted above decreased approximately $15,000
        from
        approximately $47,000 for the six months ended June 30, 2004 to approximately
        $32,000 for the six months ended June 30, 2005 as we moved our retail
        fulfillment to a new outside entity in late October 2004. The steady percentage
        of cost of sales reflects the continual software development cycle of enhancing
        our two major product lines within a one year timeframe and the amortization
        of
        those software development costs. The amortization recognized during the
        six
        months ended June 30, 2004 resulted from several new software releases in
        late
        2003 and early 2004 including QuickVerse ® 8.0 and
        Membership Plus ® 8.0.
        Similarly, the amortization recognized during the six months ended June 30,
        2005
        resulted from the December 2004 release of QuickVerse ® 2005,
        the February 2005 release of Membership Plus ® 2005,
        the late June 2005 releases of QuickVerse ® Macintosh and Sermon Builder ® 4.0 and
        the remainder of QuickVerse ® 8.0 and
        Membership Plus ® 8.0. The
        direct costs and manufacturing overhead percentage are expected to continue
        at
        the 2005 levels as working capital remains more consistent and as more
        development projects are implemented in a shortened timeframe.
  Royalties
        to third party providers of intellectual property increased approximately
        $66,000 from approximately $35,000 for the three months ended June 30, 2004
        to
        approximately $101,000 for the three months ended June 30, 2005 and increased
        approximately $121,000 from approximately $115,000 for the six months ended
        June
        30, 2004 to approximately $236,000 for the six months ended June 30, 2005.
        Royalties also increased as a percentage of gross revenues from approximately
        3.3% for the three months ended June 30, 2004 to approximately 6.6% for the
        three months ended June 30, 2005 and increased from approximately 4.1% for
        the
        six months ended June 30, 2004 to approximately 6.7% for the six months ended
        June 30, 2005. The increase of royalties reflects the release of the
        QuickVerse ® 2005
        editions in early December 2004, and the three additional QuickVerse ® editions, specifically QuickVerse ® Essentials and QuickVerse ® Platinum, which were released in early March of 2005 and QuickVerse ® Macintosh which was released in June 2005. We also released Sermon
        Builder ® 4.0 in
        June 2005 which was an update to Bible Illustrator ® 3.0.
        This was the first update to Bible Illustrator ® 3.0 in
        over six years and included not only technological updates but content
        additions. Furthermore, we sold some of the older QuickVerse ® versions
        to liquidators at a reduced price throughout the first and second quarter
        of
        2005 compared to no sales to liquidators during the first and second quarter
        of
        2004. During the year ended 2004, we renegotiated several royalty contracts
        which resulted in some cases in a higher royalty rate along with access to
        more
        content. The royalty rate as a percentage of gross sales is expected to increase
        in the future as sales to new users are expected to increase and as more
        development projects are implemented for new and/or enhanced products. However,
        upgrade sales will continue to be subject to royalties only on content additions
        of the upgraded version.
  Software
        development costs are expensed as incurred until technological feasibility
        and
        marketability has been established, at which time development costs are
        capitalized until the software title is available for general release to
        customers. 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). Software
        development is segregated by title and technology platform. Once a product
        has
        been successfully released, subsequent revisions and upgrades are considered
        development and the costs of the revision and upgrade are capitalized.
        Capitalized costs are amortized on a product-by-product basis using the greater
        of (i) the straight-line amortization over the estimated life of the product
        (generally from 12 to 18 months), or (ii) the ratio of current revenues from
        the
        product to the total projected revenue over the life of the product. Generally,
        we consider technological feasibility to have been established with the release
        of a beta version for testing.
  -5-
 Table
            of Contents
  Software
        development costs are summarized in the table below. The software development
        costs, consisting primarily of direct and indirect labor and related overhead
        charges, capitalized during the three months ended June 30, 2004 and 2005
        were
        approximately $104,000 and approximately $330,000, respectively and
        approximately $178,000 and $594,000 for the six months ended June 30, 2004
        and
        2005, respectively. Accumulated amortization of these development costs included
        in cost of sales totaled approximately $106,000 and approximately $182,000
        for
        the three months ended June 30, 2004 and 2005, respectively and approximately
        $252,000 and 364,000 for the six months ended June 30, 2004 and 2005,
        respectively. The increase in both the capitalization and amortization is
        a
        direct result of the increase in the number of development projects we have
        undertaken in the last two years and the consistent one year turn around
        on
        enhanced versions of our two major product lines QuickVerse ® and
        Membership Plus ® .
  **Three
                    Months Ended****June
                    30,**
                **Six
                    Months Ended **June
                    30,******2005**
                
                
                2004
                
                
                **2005**
                
                
                2004Beginning
                    balance
                
                **$**
                **783,250**
                
                $
                506,121
                
                **$**
                **701,289**
                
                $
                584,706Capitalized
                
                
                **329,512**
                
                
                104,421
                
                
                **594,161**
                
                
                178,049Amortized
                    (Cost of sales)
                
                
                **181,659**
                
                
                106,045
                
                
                **364,347**
                
                
                258,258Ending
                    Balance
                
                **$**
                **931,103**
                
                $
                504,497
                
                **$**
                **931,103**
                
                $
                504,497Research
                    and development expense (General and administrative)
                
                **$**
                **30,164**
                
                $
                27,522
                
                **$**
                **67,243**
                
                $
                43,696
  ***Sales,
        General and Administrative***
  **Sales,
                    General and Administrative Costs for Six Months Ended June
                    30**
                
                
                **2005**
                
                
                **%
                    to Sales**
                
                
                
                2004
                
                
                %
                    to Sales
                
                
                
                Change
                
                
                %***Selected
                    expenses:***Commissions
                
                **$**
                **478,168**
                
                
                **14**
                **%**
                
                $
                345,461
                
                
                12
                %
                
                $
                132,707
                
                
                38
                %Advertising
                    and direct marketing
                
                
                **256,800**
                
                
                **7**
                **%**
                
                
                165,040
                
                
                6
                %
                
                
                91,760
                
                
                56
                %**Total
                    sales and marketing**
                
                **$**
                **734,968**
                
                
                **21**
                **%**
                
                $
                510,501
                
                
                18
                %
                
                $
                224,467
                
                
                44
                %Research
                    and development
                
                **$**
                **67,243**
                
                
                **2**
                **%**
                
                $
                43,696
                
                
                2
                %
                
                $
                23,547
                
                
                54
                %Personnel
                    costs
                
                
                **693,586**
                
                
                **20**
                **%**
                
                
                751,967
                
                
                27
                %
                
                
                (58,381
                )
                
                -8
                %Legal
                
                
                **123,280**
                
                
                **4**
                **%**
                
                
                34,031
                
                
                1
                %
                
                
                89,249
                
                
                262
                %Telecommunications
                
                
                **32,152**
                
                
                **1**
                **%**
                
                
                76,811
                
                
                3
                %
                
                
                (44,659
                )
                
                -58
                %Corporate
                    services
                
                
                **55,972**
                
                
                **2**
                **%**
                
                
                28,486
                
                
                1
                %
                
                
                27,486
                
                
                96
                %Administration
                
                
                **10,749**
                
                
                **0**
                **%**
                
                
                53,388
                
                
                2
                %
                
                
                (42,639
                )
                
                -80
                %Other
                    general and administrative costs
                
                
                **342,814**
                
                
                **10**
                **%**
                
                
                183,195
                
                
                7
                %
                
                
                159,619
                
                
                87
                %**Total
                    general and administrative**
                
                **$**
                **1,325,796**
                
                
                **38**
                **%**
                
                $
                1,171,574
                
                
                42
                %
                
                $
                154,222
                
                
                13
                %
  -6-
 Table
            of Contents
  Gross
        revenues increased approximately $470,000 from approximately $1,057,000 for
        the
        three months ended June 30, 2004 to approximately $1,527,000 for the three
        months ended June 30, 2005 and increased approximately $738,000 from
        approximately $2,773,000 for the six months ended June 30, 2004 to approximately
        $3,511,000 for the six months ended June 30, 2005. However, sales and marketing
        expenses also increased approximately $40,000 from approximately $268,000
        for
        the three months ended June 30, 2004 to approximately $308,000 for the three
        months ended June 30, 2005 and increased approximately $225,000 from
        approximately $510,000 for the six months ended June 30, 2004 to approximately
        $735,000 for the six months ended June 30, 2005. Included in sales expenses,
        commissions to a third-party telemarketing firm increased approximately $133,000
        from approximately $345,000 for the six months ended June 30, 2004 to
        approximately $478,000 for the six months ended June 30, 2005. Commissions
        also
        increased as a percentage of gross revenues from approximately 12.5% to
        approximately 13.6% for the six months ended June 30, 2004 and 2005,
        respectively. This increase is attributed to the increased focus of our sales
        to
        the direct consumer along with the number of new and enhanced product releases
        during the six months ended June 30, 2005 compared with just one product
        release
        during the six months ended June 30, 2004. Advertising and direct marketing
        costs increased approximately $94,000 from approximately $162,000 for the
        six
        months ended June 30, 2004 to approximately $256,000 for the six months ended
        June 30, 2005 and increased as a percentage of gross revenues from approximately
        5.8% to 7.3%, respectively. This increase is a direct result in continuing
        to
        market our products online through multiple sources, continuing to increase
        and
        focus more on our direct marketing efforts, and the increased number of
        publication advertisements due to the new product enhancements of
        QuickVerse ® and
        Membership Plus ® along
        with the introduction of the three new QuickVerse ® editions
        and the updated Sermon Builder ® 4.0
        during the six months ended June 30, 2005.
 
 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). Software development
        costs related to third-party developers and direct labor expensed as research
        and development (see table above) amounted to approximately $28,000 for the
        three months ended June 30, 2004 compared to approximately $30,000 incurred
        for
        the three months ended June 30, 2005 and approximately $44,000 for the six
        months ended June 30, 2004 compared to approximately $67,000 for the six
        months
        ended June 30, 2005. The increase in 2005 reflects more research and development
        costs associated with maintenance issues on titles after they are released
        to
        the general public along with exploring new platforms for future products.
        Research and development expenses are expected to increase in future periods
        as
        we add new products and versions to our product mix along with new platforms
        for
        our current and future products.
 Total
          personnel costs decreased approximately $58,000 from approximately $752,000
          for
          the six months ended June 30, 2004 to approximately $694,000 for the six
          months
          ended June 30, 2005. However, direct salaries and wages increased approximately
          $96,000 from approximately $726,000 for the six months ended June 30, 2004
          to
          approximately $822,000 for the six months ended June 30, 2005. As a percentage
          of gross revenues, direct salaries and wages decreased approximately 2.8%
          from
          approximately 26.2% for the six months ended June 30, 2004 to approximately
          23.4% for the six months ended June 30, 2005. The direct salaries and wages
          include approximately $8,000 and $10,000 in expense for upper management
          year-end bonus accrual for the year ends December 31, 2004 and 2005,
          respectively. Furthermore, we recognized approximately $14,000 of expense
          related to 635,000 restricted common shares issued to employees during
          the six
          months ended June 30, 2004. The increase in direct salaries and wages is
          a
          direct result of increasing our sales and marketing team and our development
          staff. The associated health care costs decreased approximately $5,000
          from
          approximately $76,000 for the six months ended June 30, 2004 to approximately
          $71,000 for the six months ended June 30, 2005 as we restructured our health
          benefits plans in late October 2004. The capitalization of direct and indirect
          labor and related overhead charges as software development costs (see “Cost of
          Sales” above) increased by approximately $158,000 from approximately $90,000 for
          the six months ended June 30, 2004 to approximately $248,000 for the six
          months
          ended June 30, 2005. This increase is due to the addition of development
          staff
          and the increased amount of new development projects. It is anticipated
          that
          personnel costs will increase in future periods as operating capital is
          available to fund full staffing of our product development team and expansion
          of
          the direct sales staff.
  -7-
 Table
              of Contents
  Direct
          legal costs increased approximately $89,000 for the six months ended June
          30,
          2005 as the company continues to work through the registration process
          for the
          SB-2 registration statement. It is anticipated that legal costs will continue
          at
          increased levels as we pursue our business plan for growth by acquiring
          companies that are synergistic with our current product line and customer
          base.
          Telecommunications costs decreased approximately $45,000 for the six months
          ended June 30, 2005 as we switched our local and long distance carriers
          in order
          to take advantage of the provider’s current technology. Our increased call
          volume enabled us to change our service to dedicated T-1 lines which in
          turn
          reduced the long distance charges. Furthermore, we invested in internet
          protocol
          phones for our remote locations which reduced the overall local and long
          distance charges in our Illinois and Iowa locations. The increased call
          volume
          in the technical support and customer service departments resulted from
          the
          release of the two major product upgrades in December 2004 and February
          2005
          along with the two new product releases during the second quarter of 2005.
          Corporate service fees increased approximately $27,000 for the six months
          ended
          June 30, 2005. These fees are related to the hiring of an outside consultant
          and
          the expense for a 2004 issuance of a warrant to purchase 600,000 shares
          of
          common stock allocated over the term of the consulting contract. Administration
          expenses decreased approximately $43,000 for the six months ended June
          30, 2005
          due to not incurring interest and penalty fees on back payroll taxes as
          we did
          during the six months ended June 30, 2004. Interest expense for the six
          months
          ended June 30, 2005 decreased by approximately $25,000 compared to 2004.
          This is
          due to our continuing efforts to reduce our trade payables and meet the
          scheduled terms and the reduced loans and long-term note payables. Finally,
          bad
          debt expense increased approximately $20,000 for the six months ended June
          30,
          2005 as we were notified by one of our liquidation customers of the possibility
          that they will not be able to pay on their full balance due to us.
  ***Other
        Income and Expenses***
  On
        July
        19, 2004, we completed an equity financing in the amount of $1,750,000 through
        a
        private placement with Barron Partners, LP where Barron Partners purchased
        21,875,000 restricted shares of common stock and received two warrants to
        purchase up to an additional 21,875,000 shares of common stock. As part of
        the
        financing transaction, we also entered into a certain Registration Rights
        Agreement with Barron Partners pursuant to which we became committed to
        registering all of the shares issued as part of such transaction, including
        those issuable under the warrants.
  Upon
        receipt of the requisite stockholder approval to increase the number of
        authorized common shares so as to allow us to deliver the warrants, effectively
        obtained and effectuated as of November 10, 2004, we had 30 days within which
        to
        file a registration statement on Form SB-2 coveringthe
        shares issued to Barron Partners, as well as the shares underlying the warrants
        issued to Barron Partners. Such registration statement wasfiledon
        November 22, 2004. In accordance withthe
        terms
        of the Registration Rights Agreement, as amended, we had another 150 days,
        until
        April 22, 2005, to cause such registration statement to be declared effective
        by
        the SEC,
        with
        any delays in meeting this obligation resulting in our being liable to Barron
        Partners, LP in an amount equal to $630,000 per year, pro-rated for the duration
        of any such delay, which amounts to $1,726 per day.
 As
              of
              June 30, 2005, we had accrued a total of $119,000 (69
              days
              at $1,726 per day)in penalties under the Registration
              Agreement,inclusive of an adjustment made pursuant to a tentative verbal agreement
              reached
              with Barron Partners in April 2005, wherein, in relation to the associated
              accruing penalties, we agreed to pay Barron Partners an amount in cash
              equal to
              $100,000 to toll the accrual of further penalties until June 21, 2005.Although
              this amount has been paid in full, in two equal installments of $50,000
              on each
              of April 22, 2005 and July 8, 2005,
              penalties in the amount of $1,726 per day continue to accrue from June
              21, 2005
              until the registration statement is declared effective,at which
              time a negotiated reduction of such total amount is expected to be
              reached, the
              extent of which is as yet unknown, and terms of payment of which are
              expected to
              be agreed to which will allow us to reasonably meet our ongoing operating
              needs.
              We have
              experienced continued delays in effectiveness of the registration statement
              due
              principally to ongoing efforts made necessary by our determination
              to restate
              certain of our historical financial information.Although
              there can be no assurance, management is hopeful that we will cause
              such
              registration statement to be declared effective in the near future.The
              amount paid by us to date to satisfy this obligation has, and any continued
              delays in our ability to cause the registration statement to be declared
              effective coupled with additional amounts which we are and may be required
              to
              pay, will have a material adverse effect on our business, our financial
              condition, including liquidity and profitability, and our results of
              operations,
              including a corresponding reduction in our net income and the likelihood
              of a
              net loss for the year.
  ***Derivatives***
 In
                November 2004, we issued two warrants to purchase an aggregate of
                21,875,000
                shares of our common stock in connection with a certain Stock Purchase
                Agreement
                completed with Barron Partners, LP, on July 19, 2004. The first warrant
                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 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. These
                warrants have
                been 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.*In
                accordance with the accounting mandate, the derivative liability
                associated with
                these warrants has been and, until our registration statement on
                Form SB-2
                originally filed on November 22, 2004 is declared effective, shall
                continue to
                be adjusted to fair value at each balance sheet date and accordingly
                reassessed
                at each such date to determine whether the warrants should be classified
                (or
                reclassified, as appropriate) as a liability or as equity. The fair
                value of
                each warrant was initially assessed at $2,187,500 ($4,375,000 total)
                using the
                Black-Scholes valuation method. At June 30, 2005, the fair value
                of the
                derivative liability was approximately $2,516,000, and a fair value
                adjustment
                of approximately $547,000 has been included in other expenses for
                the six months
                then ended.
 -8-
 Table
            of Contents
  ***Amortization***
 
 Amortization
        expense increased approximately $12,000 for the six months ended June 30,
        2005.
        The software license acquired from The Learning Company in July of 1999 is
        amortized over a 10 year useful life. Amortization expense for 2005 reflects
        the
        continual amortization of the software license along with the amortization
        for
        the launch of our website, www.quickverse.com, during the second quarter
        of
        2004.
 
 ***Income
        Tax Benefits***
 
 Our
        effective tax rate differs from the statutory federal rate due to differences
        between income and expense recognition prescribed by the Internal Revenue
        Code
        and Generally Accepted Accounting Principles. We utilize different methods
        and
        useful lives for depreciating property and equipment. Changes in estimates
        (reserves) are recognized as expense for financial reporting but are not
        deductible for income tax purposes.
 
 We
        have
        recognized a net deferred tax asset whose realization depends on generating
        future taxable income. At June 30, 2005, management established the valuation
        allowance based on the assessment that the company will produce sufficient
        income in the future to realize its net deferred tax asset. The resulting
        deferred tax liability reflects income taxes payable in future periods on
        the
        net deductible differences related to the software license agreement. We
        currently have net operating loss carryforwards, for income tax purposes,
        of
        approximately $7,648,000. The carryforwards are the result of income tax
        losses
        generated in 2000 ($2,480,000 expiring in 2020) and 2001 ($5,168,000 expiring
        in
        2021). We will need to achieve a minimum annual taxable income, before deduction
        of operating loss carryforwards, of approximately $450,000 to fully utilize
        the
        current loss carryforwards. We believe this is achievable through careful
        expense management and continued introduction of new products and enhanced
        versions of our existing products.
 
 Although
        there can be no assurance, management expects the deductible temporary
        differences (reserves) to reverse sometime beyond the next fiscal year.
  ***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 and expansion and upgrade of existing products. We believe our future
        cash provided by operations will be sufficient to fund our continued operations.
        However, our pursuit of future strategic product line and/or corporate
        acquisitions and licensing will require funding from outside sources. Funding
        from outside sources may include but are 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.
 **Working
                      Capital at June 30**
                  
                  
                  **2005**
                  
                  
                  
                  2004
                  
                  
                  
                  Change
                  
                  
                  %Current
                      assets
                  
                  **$**
                  **1,298,981**
                  
                  
                  $
                  442,470
                  
                  
                  $
                  856,511
                  
                  
                  194
                  %Current
                      liabilities
                  
                  **$**
                  **3,966,930**
                  
                  
                  $
                  2,896,175
                  
                  
                  $
                  1,070,755
                  
                  
                  37
                  %Retained
                      deficit
                  
                  **$**
                  **(6,805,670**
                  **)**
                  
                  $
                  (7,268,031
                  )
                  
                  $
                  462,361
                  
                  
                  -6
                  %
  As
            of
            June 30, 2005, we had $1,298,981 in current assets, $3,966,930 in current
            liabilities and a retained deficit of $6,805,670. We had a net loss of
            $520,766
            for the three months ended June 30, 2005 and a net loss of $634,837 for
            the six
            months ended June 30, 2005. In comparison, as of June 30, 2004 we had
            $442,470
            in current assets, $2,896,175 in current liabilities and a retained deficit
            of
            $7,268,031.
  -9-
 Table
                of Contents
 **Cash
                        Flows for Six Months Ended June 30**
                    
                    
                    **2005**
                    
                    
                    
                    2004
                    
                    
                    
                    Change
                    
                    
                    %Cash
                        flows provided by operating activities
                    
                    **$**
                    **357,278**
                    
                    
                    $
                    202,213
                    
                    
                    $
                    155,065
                    
                    
                    77
                    %Cash
                        flows used by investing activities
                    
                    **$**
                    **(574,161**
                    **)**
                    
                    $
                    (228,982
                    )
                    
                    $
                    (345,179
                    )
                    
                    151
                    %Cash
                        flows used by financing activities
                    
                    **$**
                    **(28,535**
                    **)**
                    
                    $
                    (14,899
                    )
                    
                    $
                    (13,636
                    )
                    
                    92
                    %
 Net
        cash
        provided by operating activities was approximately $202,000 for the six months
        ended June 30, 2004 and approximately $357,000 for the six months ended June
        30,
        2005. The increase in cash provided was primarily due to an increase in the
        amounts received from customers resulting from increased sales along with
        a
        decrease in the amount paid out to suppliers and employees.
 
 Net
        cash
        used in investing activities was approximately $229,000 for the six months
        ended
        June 30, 2004 and approximately $574,000 for the six months ended June 30,
        2005.
        The increase in cash used for investing activities results from capitalizing
        costs associated with software development and Website development along
        with
        upgrading our internal computer equipment and software in order to increase
        our
        operating efficiency capabilities. Furthermore, during the three months ended
        June 30, 2005 the restriction on the cash held in reserve by our merchant
        banker
        was lifted and made available to us.
  Net
            cash
            used by financing activities was approximately $15,000 for the six months
            ended
            June 30, 2004 and approximately $29,000 for the six months ended June
            30, 2005.
            Cash used by financing activities reflects payments made on long-term
            note
            payables and cash overdraft.
 On
                July
                19, 2004 we completed an equity financing in the amount of $1,750,000
                through a
                private placement with Barron Partners, LP. Under the terms of the
                agreement,
                Barron Partners purchased 21,875,000 restricted shares of common
                stock at a
                price of $0.08 per share. In addition, according to the terms of
                the agreement,
                Barron Partners received two warrants to purchase common stock. The
                first
                warrant entitles Barron Partners to purchase up to 10,937,500 shares
                of common
                stock at a price of $0.18 per share and the second warrant entitles
                Barron
                Partners to purchase up to 10,937,500 additional shares of common
                stock at a
                price of $0.60 per share; each warrant is subject to standard adjustment
                provisions. These warrants have been accounted for as a liability
                according to
                the guidance of EITF 00-19. In accordance with the accounting mandate,
                the
                derivative liability associated with these warrants has been and,
                until our
                registration statement on Form SB-2 originally filed on November
                22, 2004 is
                declared effective, shall continue to be adjusted to fair value at
                each balance
                sheet date and accordingly reassessed at each such date to determine
                whether the
                warrants should be classified (or reclassified, as appropriate) as
                a liability
                or as equity. The fair value of each warrant was initially assessed
                at
                $2,187,500 ($4,375,000 total) using the Black-Scholes valuation method.
                At June
                30, 2005, the fair value of the derivative liability was approximately
                $2,516,000 and a fair value adjustment of approximately $547,000
                has been
                included in other expenses for the six months then
                ended.
  As
        part
        of the July 19, 2004 financing transaction with Barron Partners, LP, we also
        entered into a certain Registration Rights Agreement pursuant to which we
        became
        committed to registering all of the shares issued as part of such transaction,
        including those issuable under the warrants. On
        November 22, 2004we
        filed
        a registration statement onForm
        SB-2
        coveringthe
        shares issued to Barron Partners, as well as the shares underlying the warrants
        issued to Barron Partners. In accordance with the terms of the Registration
        Rights Agreement, as amended, we hadanother
        150 days,until
        April 22, 2005, to cause such registration statement to be declared effective
        by
        the SEC, with any delays in meeting this obligation resulting in our being
        liable to Barron Partners in an amount equal to $630,000 per year, pro-rated
        for
        the duration of any such delay, which amounts to $1,726 per day.
 -10-
 Table
              of Contents
 As
              of
              June 30, 2005 we have accrued $119,000 (69 days at $1,726 per day)
              in penalties
              under the terms of the Registration Rights Agreement, inclusive of
              an adjustment
              made pursuant to a tentative verbal agreement reached with Barron Partners
              in
              April 2005, wherein, in relation to the associated accruing penalties,
              we agreed
              to pay Barron Partners an amount in cash equal to $100,000 to toll
              the accrual
              of further penalties until June 21, 2005. Although this amount has
              been paid in
              full, in two equal installments of $50,000 on each of April 22, 2005
              and July 8,
              2005, penalties in the amount of $1,726 per day continue to accrue
              from June 21,
              2005 until the registration statement is declared effective, at which
              time a
              negotiated reduction of such total amount is expected to be reached,
              the extent
              of which is as yet unknown, and terms of payment of which are expected
              to be
              agreed to so as to allow us to reasonably meet our ongoing operating
              needs.
              Although there can be no assurance, management is hopeful that we will
              cause
              such registration statement to be declared effective in the near future.
              The
              amount paid by us to date to satisfy this obligation has, and any continued
              delays in our ability to cause the registration statement to be declared
              effective coupled with additional amounts which we are and may be required
              to
              pay, will have a material adverse effect on our business, our financial
              condition, including liquidity and profitability, and our results of
              operations,
              including a corresponding reduction in our net income and the likelihood
              of a
              net loss for the year. See Exhibits 10.10, 10.11, 10.12, and 10.13.
 ***Contractual
        Liabilities***
 
 We lease
        office space/warehouse facilities in Omaha, Nebraska under an operating lease
        with a third-party with terms extending through 2007. We
        are responsible for all taxes, insurance and utility expenses associated
        with this lease. There is no lease renewal option contained in the lease.
 
 We lease
        office space in Naperville, Illinois under an operating lease with a third-party
        with terms extending through March 2006. We are responsible for all
        insurance expenses associated with this lease.
  At
        June
        30, 2005, the future minimum rental payments required under these leases
        are as
        follows:
 
 2005
              
              $
              40,6652006
              
              
              69,4512007
              
              
              27,288Total
                  future minimum rental payments
              
              $
              137,404
 
 We lease
        telephone equipment under a capital lease expiring 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 June 30, 2005 for each of
        the
        next five years and in the aggregate are:
 
 2005
              
              $
              6,8632006
              
              
              13,7262007
              
              
              13,7262008
              
              
              13,7262009
              
              
              12,582Total
                  minimum lease payments
              
              
              60,623Less:
                  Amount representing interest
              
              
              13,444Total
                  obligations under capital lease
              
              
              47,179Less:
                  Current installments of obligations under capital lease
              
              
              8,667Long-term
                  obligation under capital lease
              
              $
              38,512
  ***The
        Potential Impact of Known Facts, Commitments, Events and Uncertainties on
        Future
        Operating Results or Future Liquidity Requirements***
 
 ***New
        Accounting Pronouncements***
 
 In
        the
        past, we have applied Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
        for Stock Issued to Employees,* and
        related interpretations in accounting as allowed by SFAS No 123, *Accounting
        for Stock Based Compensation* ,
        for
        various forms of share-based awards including incentive and nonqualified
        stock
        options and stock appreciation rights attached to stock options; and therefore,
        no compensation cost had been recognized. However, in December 2004, the
        FASB
        issued SFAS No 123 (R), *Share-Based
        Payment* ,
        which
        replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123 (R)
        requires compensation costs related to share-based payment transactions to
        be
        recognized in the financial statements. With limited exceptions, the amount
        of
        compensation cost will be measured based on the fair value on the grant date
        of
        the equity or liability instruments issued. Compensation cost will be recognized
        over the period that the service is provided for that award. This new standard
        will be effective for the company the first quarter of fiscal 2006. We did
        not
        grant any form of share-based awards during the six months ended June 30,
        2005.
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  **ITEM
        3. CONTROLS AND PROCEDURES**
 
 **(a)**  **Evaluation
        of Disclosure Controls and Procedures.**
  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
        Securities Exchange Act of 1934, as amended) as of the end of the fiscal
        quarter
        covered by this report on Form 10-QSB/A. Based on this evaluation, our CEO
        and
        CFO have concluded that these 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 Securities Exchange Act of 1934, as
        amended, is recorded, processed, summarized and reported within the requisite
        time periods.
  **(b)**  **Changes
        In Internal Controls Over Financial Reporting.**
 
 No
        changes in our disclosure controls and procedures, internal controls 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 controls
        over financial reporting.
 
 **PART
        II - OTHER INFORMATION**
 
 **ITEM
        1. LEGAL PROCEEDINGS.**
 
 As
        of the
        date of this report, 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, financial condition, and operating
        results.
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS.**
 
 Subsequent
        to December 31, 2004, the company restored a stale check that was issued
        to
        Business Investor Services, Inc. as payment in full of a note payable. This
        resulted in the conversion of the note payable into 466,666 shares of common
        stock. The conversion of such securities was effected without registration
        under
        the Securities Act of 1933, as amended, based on their being exempted securities
        under Section 3(a)(9) thereof. There were no underwriters or placement agents
        involved in this issuance and no commissions were paid.
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES.**
 
 There
        were no reportable events under this Item 3 during the quarterly period ended
        June 30, 2005.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
 
 There
        were no reportable events under this Item 4 during the quarterly period ended
        June 30, 2005.
 
 -12-
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 **I** **TEM
        5. OTHER INFORMATION.**
 
 The
        Annual Meeting of the Stockholders of Findex.com, Inc. will be held on December
        9, 2005. Stockholders of record who wish to submit a proposal at the 2005
        Annual
        Meeting must provide written notice to the Secretary of the company in
        accordance with Article IX of our Articles of Incorporation. Under our Articles
        of Incorporation, such notice must be received by the Secretary no earlier
        than
        October 10, 2005, and no later than November 9, 2005.
 
 There
        were no material changes to the procedures by which security holders may
        recommend nominees to our board of directors.
 
 **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)
                Articles
                    of Incorporation of Findex.com, Inc., 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
                      12, 2004
                      incorporated by reference to Exhibit 3.1(ii) on Form 10-QSB
                      filed November
                      12, 2004.3(ii)
                  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 Barron Partners, LP Stock Purchase Agreement 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, 2004.31.1
                    Certification
                        of Findex.com, Inc. Chief Executive Officer, Steven Malone,
                        required by
                        Rule 13a-14(a) or Rule 15d-14(a), and dated December 21, 2005. 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 December 21, 2005. 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 December 21,
                        2005. 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 December 21,
                        2005. 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: December
                    21, 2005
                By
                /s/
                    Steven MaloneSteven
                    MalonePresident
                    and Chief Executive Officer
 
 Date: December
                    21, 2005
                By
                /s/
                    Kirk R. RowlandKirk
                    R. Rowland, CPAChief
                    Financial Officer
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