UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)





[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended September 30, 2010





OR





[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from __________ to __________.








Commission file number: 0-29963








FINDEX.COM, INC.





(Exact name of registrant as specified in its charter)








Nevada

88-0379462(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)4437 South 134thStreet, Omaha, Nebraska

68137(Address of principal executive offices)

(Zip Code)





(402) 333-1900





(Registrant’s telephone number, including area code)





N/A





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





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes [X] No [_]





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [_]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer [_]Accelerated filer [_]


Non-accelerated filer [_] (Do not check if a smaller reporting company)Smaller reporting company [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes [_] No [X]





APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS:





Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes [_] No [_]





APPLICABLE ONLY TO CORPORATE ISSUERS





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:





At November 22, 2010, the registrant had outstanding 67,349,153 shares of common stock, of which there is only a single class.










FINDEX.COM, INC.





QUARTERLY REPORT ON FORM 10-Q


FOR FISCAL QUARTER ENDED SEPTEMBER 30, 2010





- INDEX -





PagePART I - FINANCIAL INFORMATION:Item 1.    Financial Statements:
F-1Balance Sheets – September 30, 2010 (unaudited) and December 31, 2009
F-1Statements of Operations (unaudited) for the three and nine months ending September 30, 2010 and for the three and nine months ending September 30, 2009
F-2Statements of Cash Flows (unaudited) for the nine months ending September 30, 2010 and for the nine months ending September 30, 2009
F-3Notes to Unaudited Financial Statements
F-4Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
1Item 3.    Quantitative and Qualitative Disclosures About Market Risk
8Item 4T.  Controls and Procedures
8PART II - OTHER INFORMATION:
9Item 1.    Legal Proceedings
9Item 1A. Risk Factors
9Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
9Item 3.    Defaults Upon Senior Securities
9Item 4.    (Removed and Reserved)
9Item 5.    Other Information
9Item 6.    Exhibits
9Signatures
11











PART I – FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS.





Findex.com, Inc.CONDENSED CONSOLIDATED BALANCE SHEETSSeptember 30, 2010


December 31, 2009(Unaudited)


(Audited)AssetsCurrent assets:Cash and cash equivalents

$
9,594


$
138,539Accounts receivable, trade, net


41,241



92,515Inventories, net


49,620



88,546Other current assets


33,977



35,823Total current assets


134,432



355,423Property and equipment, net


8,656



13,979Intangible assets, net


418,964



488,691Other assets


69,020



102,434Total assets

$
631,072


$
960,527Liabilities and stockholders’ equity (deficit)Current liabilities:Current portion of term debt

$
66,441


$
83,898Accounts payable, trade


452,226



387,082Accounts payable, related party


51,139



78,869Accrued royalties


905,224



815,687Accrued payroll


104,908



125,846Other current liabilities


144,649



205,558Total current liabilities


1,724,587



1,696,940Deferred income taxes, net


3,543



4,700Commitments and contingencies (Note 8)Stockholders’ equity (deficit):Preferred stock, $.001 par value5,000,000 shares authorized-0- and -0- shares issued and outstanding, respectively


---



---Common stock, $.001 par value120,000,000 shares authorized,67,349,153 and 59,572,725 shares issued and outstanding, respectively


67,349



59,573Paid-in capital


7,988,834



7,897,779Retained (deficit)


(9,153,241
)


(8,698,465
)Total stockholders’ equity (deficit)


(1,097,058
)


(741,113
)Total liabilities and stockholders’ equity (deficit)

$
631,072


$
960,527See accompanying notes.





F-1
 Table of Contents





Findex.com, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)Three Months Ended September 30,


Nine Months Ended September 30,2010


2009


2010


2009Revenues, net of reserves and allowances

$
352,543


$
472,596


$
1,257,291


$
1,509,163Cost of sales


146,484



187,695



499,782



544,765Gross profit


206,059



284,901



757,509



964,398Operating expenses:Sales and marketing


77,746



96,756



267,551



359,779General and administrative


261,304



253,092



932,314



1,233,586Total operating expenses


339,050



349,848



1,199,865



1,593,365Loss from operations


(132,991
)


(64,947
)


(442,356
)


(628,967
)Other income (expenses), net


(4,563
)


(5,836
)


12,421
)


(17,930
)Loss before income taxes


(137,554
)


(70,783
)


(454,777
)


(646,897
)Income taxes


---



---



---



---Net loss

$
(137,554
)

$
(70,783
)

$
(454,777
)

$
(646,897
)Net loss per share - Basic & Diluted:

$
0.00


$
0.00


$
(0.01
)

$
(0.01
)Weighted average shares used in computing basic and diluted loss per share


63,968,097



59,572,725



61,053,949



58,122,176See accompanying notes.















F-2
 Table of Contents





Findex.com, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)Nine Months Ended September 30,

2010


2009Cash flows from operating activities:Cash received from customers

$
1,301,778


$
1,507,621Cash paid to suppliers and employees


(1,349,277
)


(1,543,286
)Other operating activities, net


(6,905
)


(11,851
)Net cash used by operating activities


(54,404
)


(47,516
)Cash flows from investing activities:Software development costs


(114,598
)


(204,317
)Other investing activities, net


(9,457
)


7,624Net cash used by investing activities


(124,055
)


(196,693
)Cash flows from financing activities:Contributed capital


82,500



---Payments made on term debt


(32,986
)


(51,821
)Net cash provided (used) by financing activities


49,514



(51,821
)Net decrease in cash and cash equivalents


(128,945
)


(296,030
)Cash and cash equivalents, beginning of year


138,539



423,371Cash and cash equivalents, end of period

$
9,594


$
127,341Reconciliation of net loss to cash flows from operating activities:Net loss

$
(454,777
)

$
(646,897
)Adjustments to reconcile net loss to net cash used by operating activities:Software development costs amortized


167,359



132,853Depreciation & amortization


65,843



273,584Bad debts provision


---



7,398Noncash operating expenses


16,331



70,500Gain on sale of property and equipment


(685
)


(520
)Change in assets and liabilities:Decrease in accounts receivable


51,274



28,738Decrease in inventories


38,926



25,927Decrease in other current assets


16,217



28,596Increase in accrued royalties


89,537



66,991Increase (decrease) in accounts payable


49,414



(63,151
)(Decrease) increase in other liabilities


(93,843
)


28,465Net cash used by operating activities

$
(54,404
)

$
(47,516
)See accompanying notes.





F-3
 Table of Contents


Findex.com, Inc.


Notes to Condensed Consolidated Financial Statements


September 30, 2010


(Unaudited)





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





BASIS OF PRESENTATION





The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by Generally Accepted Accounting Principles for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for the full year or for any future period. The December 31, 2009 condensed consolidated balance sheet was derived from our audited financial statements at that date.  The accompanying financial statements should be read in conjunction with the audited consolidated financial statements of Findex.com, Inc. included in our Form 10-K for the year ended December 31, 2009.





INTANGIBLE ASSETS





In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 350-30, General Intangibles Other Than Goodwill, intangible assets with an indefinite useful life are not amortized. Intangible assets with a finite useful life are amortized on the straight-line method over the estimated useful lives, generally three to ten years. All intangible assets are tested for impairment annually during the fourth quarter.





SOFTWARE DEVELOPMENT COSTS





In accordance with ASC 985-20-25, Costs of Software to Be Sold, Leased, or Marketed, software development costs are expensed as incurred until technological feasibility and marketability has been established, generally with release of a beta version for customer testing. Once the point of technological feasibility and marketability is reached, direct production costs (including labor directly associated with the development projects), indirect costs (including allocated fringe benefits, payroll taxes, facilities costs, and management supervision), and other direct costs (including costs of outside consultants, purchased software to be included in the software product being developed, travel expenses, material and supplies, and other direct costs) are capitalized until the product is available for general release to customers. We amortize capitalized costs on a product-by-product basis. Amortization for each period is the greater of the amount computed using (i) the straight-line basis over the estimated product life (generally from 12 to 18 months, but up to 60 months), or (ii) the ratio of current revenues to total projected product revenues. Total cumulative capitalized software development costs were $1,189,112, less accumulated amortization of $902,926 at September 30, 2010.





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.





ASC 730, Research and Development, established accounting and reporting standards for research and development. In accordance with ASC 730-10, 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 $126,468 and $125,234 for the nine months ended September 30, 2010 and 2009, respectively, included in general and administrative expenses.





F-4
 Table of Contents





We capitalize costs related to the development of computer software developed or obtained for internal use in accordance with the ASC 350-40, Internal-Use Software. 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 ASC 350-50, Website Development Costs. Accordingly, costs expensed as incurred are as follows:





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





Capitalized costs include those incurred to:





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





We amortize website development costs on a straight-line basis over the estimated life of the site, generally 36 months. Total cumulative website development costs, included in “Other assets” on our condensed consolidated balance sheets, were $150,084, less accumulated amortization of $90,044 at September 30, 2010.





RESTRICTED CASH





Restricted cash represents cash held in reserve by our merchant banker to allow for a potential increase in credit card charge backs from increased consumer purchases.  Total restricted cash included in “Other assets” on the condensed consolidated balance sheets was $ -0- and $6,000 at September 30, 2010 and December 31, 2009, respectively.





EARNINGS PER SHARE





We follow the guidance of ASC 260, Earnings Per Share, to calculate and report basic and diluted earnings per share (“EPS”). Basic EPS is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is computed by giving effect to all dilutive potential shares of common stock that were outstanding during the period. For us, dilutive potential shares of common stock consist of the incremental shares of common stock issuable upon the exercise of stock options and warrants for all periods, convertible notes payable and the incremental shares of common stock issuable upon the conversion of convertible preferred stock.





When discontinued operations, extraordinary items, and/or the cumulative effect of an accounting change are present, income before any of such items on a per share basis represents the “control number” in determining whether potential shares of common stock are dilutive or anti-dilutive. Thus, the same number of potential shares of common stock used in computing diluted EPS for income from continuing operations is used in calculating all other reported diluted EPS amounts. In the case of a net loss, it is assumed that no incremental shares would be issued because they would be anti-dilutive. In addition, certain options and warrants are considered anti-dilutive because the exercise prices were above the average market price during the period. Anti-dilutive shares are not included in the computation of diluted EPS, in accordance with ASC 260-10-45-17.





F-5
 Table of Contents





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





For the Three Months Ended September 30,

2010


2009Net loss

$
(137,554
)

$
(70,783
)Preferred stock dividends


---



---Net loss available to common shareholders

$
(137,554
)

$
(70,783
)Basic weighted average shares outstanding


63,968,097



59,572,725Dilutive effect of:Stock options


---



---Warrants


---



---Diluted weighted average shares outstanding


63,968,097



59,572,725





For the Nine Months Ended September 30,

2010


2009Net loss

$
(454,777
)

$
(646,897
)Preferred stock dividends


---



---Net loss available to common shareholders

$
(454,777
)

$
(646,897
)Basic weighted average shares outstanding


61,053,949



58,122,176Dilutive effect of:Stock options


---



---Warrants


---



---Diluted weighted average shares outstanding


61,053,949



58,122,176





RECENT ACCOUNTING PRONOUNCEMENTS





Subsequent Events





In February 2010, the FASB issued ASU 2010-09, Subsequent Events, (amendments to ASC 855). ASU 2010-09 removes the requirement to disclose the date through which an entity has evaluated subsequent events and is effective for interim annual periods beginning after June 15, 2010. The adoption of ASU 2010-09 is not expected to have a material impact on our consolidated financial statements.





Certain Revenue Arrangements That Contain Software Elements





In October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements That Include Software Elements, (amendments to ASC 985). ASU 2009-14 removes tangible products from the scope of software revenue guidance and provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. ASU 2009-14 is effective for fiscal years beginning after June 15, 2010, with early adoption permitted, and may be applied prospectively for new or materially modified arrangements. Adoption of ASU 2009-14 is not expected to have a material impact on our consolidated financial statements.





Multiple-Deliverable Revenue Arrangements





In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, (amendments to ASC 605). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of the selling price.  The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 is effective for fiscal years beginning after June 15, 2010, with early adoption permitted, and may be applied prospectively for new or materially modified arrangements. Adoption of ASU 2009-13 is not expected to have a material impact on our consolidated financial statements.





F-6
 Table of Contents





NOTE 2 – GOING CONCERN





The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States applicable to a going concern. As of September 30, 2010, we had a net loss of $454,777, and negative working capital of $1,590,155, and an accumulated deficit of $9,153,241 and $8,698,465 as of September 30, 2010 and December 31, 2009, respectively. Although these factors raise substantial doubt as to our ability to continue as a going concern through December 31, 2010, we are taking several actions intended to mitigate against this risk. These actions include pursuing the sale of product lines and pursuing mergers and acquisitions that are intended to potentially provide profitable operations and positive operating cash flow over the near- or long-term.





NOTE 3 – INVENTORIES





At September 30, 2010, inventories consisted of the following:





Raw materials

$
46,892Finished goods


13,534Less reserve for obsolete inventory


(10,806
)Inventories

$
49,620





NOTE 4 – RESERVES AND ALLOWANCES





At September 30, 2010, the allowance for doubtful accounts included in Accounts receivable, trade, net, consisted of the following:





Balance December 31, 2009

$
16,700Bad debts provision (included in Other operating expenses)


---Accounts written off


(3,164
)Collection of accounts previously written off


---Balance September 30, 2010

$
13,536





At September 30, 2010, the reserve for obsolete inventory included in Inventories consisted of the following:





Balance December 31, 2009

$
14,781Provision for obsolete inventory


7,120Obsolete inventory written off


(11,095
)Balance September 30, 2010

$
10,806





At September 30, 2010, the reserve for sales returns included in Other current liabilities consisted of the following:





Balance December 31, 2009

$
121,165Return provision – sales


92,900Return provision – cost of sales


(13,935
)Returns processed


(85,752
)Balance September 30, 2010

$
114,378





F-7
 Table of Contents





NOTE 5 – INTANGIBLE ASSETS





In May 2010, we purchased certain copyrights from Houghton Mifflin Harcourt Publishing Company for $10,000.  The copyrights were related to our 1999 license agreement with Parsons Technology, Inc. in relation to which Houghton Mifflin Harcourt Publishing Company had been the latest licensor-assignee in a succession of assignments dating back to 1999 and originating with Parsons Technology, Inc.  The license that we acquired in 1999 provided us with the right to publish, use, distribute, sublicense and sell, exclusively worldwide in non-secular channels and non-exclusively  on an unrestricted basis in secular channels, a collection of 65 individual top-selling Christian-related software titles owned by Parsons Technology, including QuickVerse, among others. The acquired copyrights will be amortized over a 10 year useful life as was the original software license we acquired in 1999.





NOTE 6 – DEBT





At September 30, 2010, the current portion of debt consisted of the following:





Unsecured term note payable to a finance company due March 2011 in monthly installments of $1,775, including interest at 6.84% APR.

$
10,441Unsecured (delinquent) term note payable to a shareholder due March 2008 in monthly installments of $10,000, plus interest at 8% APR, through April 2007, and monthly installments of $20,000, plus interest at 8% APR, beginning May 2007. Interest on overdue principal accruing at 15% APR.


56,000Current portion of debt

$
66,441





At September 30, 2010, we were current on the unsecured term notes payable to the finance company.  We remain in arrears for the final three payments of the unsecured term note payable to a shareholder.





NOTE 7 – STOCKHOLDERS’ EQUITY





COMMON STOCK





In August 2010, we committed to issue 3,571,428 restricted shares of common stock to our outside directors, at the closing price as of August 9, 2010 ($0.0021), in lieu of cash for services rendered from January 1, 2009 through June 30, 2010. These services were valued at $90,000; however, the board of directors agreed that the difference between the value of the restricted shares of common stock and their services would be recorded as contributed capital.





In August 2010, we committed to issue 350,000 restricted shares of common stock to our outside directors, at the closing price as of August 9, 2010 ($0.0021), as compensation for services rendered in connection with their service on the board of directors. This issuance was valued at $735.





In August 2010, we committed to issue a total of 1,555,000 restricted shares of common stock consisting of 1,400,000 shares to our executive officers and 155,000 shares to our non-executive employees, at the closing price as of August 9, 2010 ($0.0021), as compensation for services rendered in connection with their employment. This issuance was valued at $3,266.





In August 2010, we committed to issue a total of 2,300,000 restricted shares of common stock to a consultant, at the closing price as of August 9, 2010 ($0.0021), as compensation for services rendered in connection with their time as a consultant to the Company. This issuance was valued at $4,830.





COMMON STOCK OPTIONS





In August 2010, our board of directors authorized the cancellation of a total of 905,000 vested stock options with an exercise price of $0.11 consisting of 350,000 stock options to our outside directors, 400,000 stock options to our executive officers and 155,000 stock options to our non-executive employees. The stock options for our outside directors had an expiration date of August 20, 2011, and the stock options for our executive officers and our non-executive employees had an expiration date of July 17, 2011.





In August 2010, our board of directors authorized the cancellation of a total of 1,000,000 vested stock options with an exercise price of $0.05 consisting of 500,000 stock options to our executive officers with an expiration date of June 6, 2012 and 500,000 stock options to our executive officers with an expiration date of June 5, 2013.





F-8
 Table of Contents





COMMON STOCK WARRANTS





In August 2010, our board of directors authorized the cancellation of a consultant’s warrant to purchase up to 1,300,000 shares of common stock with an exercise price of $0.032.  This warrant was fully vested on August 31, 2007 and had an expiration date of September 13, 2010.





NOTE 8 – COMMITMENTS AND CONTINGENCIES





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





The employment agreements with our management team each expired on April 14, 2010. None of the agreements were extended nor are new agreements being considered. Our management team consists of the following:





Chief Executive Officer


Chief Technology OfficerBase Annual Salary

$
150,000


$
150,000





Although the employment agreements have expired, we have accrued the following for our management team as of September 30, 2010:





Accrued Base Salary


Vested Deferred Vacation CompensationIncluded in Other current liabilities at September 30, 2010

$
26,921


$
22,664





Included in QuickVerse, our flagship software product, is substantial content that we have licensed from various publishers pursuant to agreements that in some cases have since expired in accordance with their stated terms and in relation to which we have, in the aggregate, material outstanding liabilities for unpaid royalties, including arrearages.  Although we are currently pursuing resolution of these matters, there can be no assurance that we will be able to secure new agreements or retroactive extensions of the now-expired agreements, and should any, some, or all of the publishers with which we are in discussions demand that we cease and desist from including their content in our products, the adverse consequences to our business would be highly material.





Our royalty agreements for new content generally provide for advance payments to be made upon contract signing.  In addition, several new agreements provide for additional advance payments to be made upon delivery of usable content and publication.  We accrue and pay these advances when the respective milestone is met.





We do not collect sales taxes or other taxes with respect to shipments of most of our goods into most states in the U.S.  Our fulfillment center and customer service center networks, and any future expansion of those networks, along with other aspects of our evolving business, may result in additional sales and other tax obligations.  One or more states may seek to impose sales or other tax collection obligations on out-of-jurisdiction companies that engage in e-commerce.  A successful assertion by one or more states that we should collect sales or other taxes on the sale of merchandise or services could result in substantial tax liabilities for past sales, decrease our ability to compete with traditional retailers, and otherwise harm our business.





Currently, decisions of the U.S. Supreme Court restrict the imposition of obligations to collect state and local taxes and use taxes with respect to sales made over the Internet.  However, a number of states, as well as the U.S. Congress, have been considering various initiatives that could limit or supersede the Supreme Court’s constitutional concerns and result in a reversal of its current position. As a result, we could be required to collect sales and use taxes in additional states.  The imposition by state and local governments of various taxes upon Internet commerce could create administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on all of our online competitors and decrease our future sales.





F-9
 Table of Contents





NOTE 9 – RISKS AND UNCERTAINTIES





Our future operating results may be affected by a number of factors. We depend upon a number of major inventory and intellectual property suppliers. If a critical supplier had operational problems or ceased making materials available to us, operations could be adversely affected.





NOTE 10 – SUBSEQUENT EVENTS





Management has reviewed and evaluated material subsequent events from the balance sheet date of September 30, 2010 through the financial statements issue date of November 22, 2010.  All appropriate subsequent disclosures, if any, have been made in the Notes to the Condensed Consolidated Financial Statements.



















































F-10
 Table of Contents


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





Cautionary Statement Regarding Forward-Looking Statements





Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Findex.com, Inc. (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business.  Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.  Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.





This information should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of Part I of this quarterly report, and our audited financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operation contained in our annual report on Form 10-K for the fiscal year ended December 31, 2009.





Description of Business





We develop, publish, market, and distribute and directly sell off-the-shelf consumer and organizational software products for PC, Macintosh® and PDA platforms. We develop our software products through in-house initiatives supplemented by outside developers. We market and distribute our software products principally through direct marketing and Internet sales programs, but also through secular and non-secular wholesale retailers.





We are currently in the early stages of a defining transformative period in our development. In recent years, we have come to be recognized as a consumer desktop software company that serves a demographic defined largely by an interest in Christianity and faith-based “inspirational” values.  The nature of our products historically, and the fact that our product lines have not extended materially beyond the boundaries of this affinity group, have fostered this perception. Indeed, as the publisher of one of the industry-leading Bible study desktop software products, QuickVerse®, we are known to many users of that product only as “QuickVerse”, not Findex.  While we believe that the QuickVerse® brand has substantial brand recognition, and we greatly value the goodwill that our reputation in this regard has engendered, we also believe that working to expand that reputation into one which is more closely associated with providing high quality branded software and content products generally – and ones that extend across both consumer and business segments – will afford us significantly greater opportunities in both the near and long term to steadily increase revenues and earnings, and, ultimately, to enhance shareholder value.





As part of that objective, we acquired FormTool.com and the FormTool® line of products in February 2008.  In September 2008, we re-launched the FormTool.com website as an online marketplace for purchasing the FormTool® line of form creation and form filler products, and also a one-stop shop for finding, purchasing and downloading customizable forms for a wide range of business and consumer needs. Our model includes the ability to purchase forms on an individual basis, in bulk packs, or on a subscription basis.





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 Table of Contents





Management Overview





During the nine months ended September 30, 2010, we focused on our two product lines, QuickVerse® and FormTool® and their respective websites.  Specifically, we focused on expanding the content for the QuickVerse® product line and an upgrade to the FormTool® website. Overall, we continued to concentrate on building our technology platform and infrastructure in order to become a more Webcentric provider of online products.





For the nine months ended September 30, 2010, we reintroduced, reformatted and made available as a downloadable product two content collections for our QuickVerse® product line.  In addition, we released a new commentary collection series as we continue to focus on expanding the library for our QuickVerse® product line. These collections include the following:





▪
Fisherman Study Guide Series Complete Collection with a retail price of $169.95;▪
Spiritual Encounter Guides with a retail price of $29.95; and▪
John Phillips Commentary Collection Series with a retail price of $399.95.





Furthermore, during the nine months ended September 30, 2010 our development team continued to focus on our annual upgrade release of the QuickVerse® Windows platform. Although there can be no assurance, the new edition of QuickVerse® Windows is scheduled to be released in the fourth quarter of 2010. Finally, we continued working on the revamping of our website for our FormTool® product line in order to add greater functionality to the website.  Although there can be no assurance, this revamped website is scheduled to be launched in the first quarter of 2011.





Results of Operations for Nine Months Ending September 30, 2010 and September 30, 2009





Statements of Operations for Nine Months Ending September 30

2010


2009


ChangeNet revenues

$
1,257,291


$
1,509,163


$
(251,872
)Cost of sales


(499,782
)


(544,765
)


44,983Gross profit

$
757,509


$
964,398


$
(206,889
)Sales, marketing and general and administrative expenses


(1,199,865
)


(1,593,365
)


393,500Loss from operations

$
(442,356
)

$
(628,967
)

$
186,611Other income (expenses), net


(12,421
)


(17,930
)


5,509Loss before income taxes

$
(454,777
)

$
(646,897
)

$
192,120Income taxes


---



---



---Net loss

$
(454,777
)

$
(646,897
)

$
192,120





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





▪
a decrease in net revenues for the nine months ended September 30, 2010 partly attributable to the following:▪
the decreased number of upgrade sales;▪
the overall decreased number of product releases;▪
no release of the QuickVerse® Macintosh platform during 2010; and▪
the current economic downturn; and▪
a decrease in sales, marketing and general and administrative expenses for the nine months ended September 30, 2010 arising from our continuous efforts to cut costs.





Our software products are highly seasonal. More than 50% of our annual sales are expected to occur in the five months of September through January; the five months of April through August are generally our weakest, generating less than 30% of our annual sales.





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 Table of Contents





Revenues





The following table presents our revenues for the nine months ended September 30, 2010 and September 30, 2009 and dollar and percentage changes from the prior year.





ChangeRevenues for Nine Months Ending September 30

2010


% to Sales


2009


% to Sales


$



%Gross revenues

$
1,351,829



100
%

$
1,678,364



100
%

$
(326,535
)


19
%Less estimated sales returns and allowances


(94,538
)


7
%


(169,201
)


10
%


74,663



44
%Net revenues

$
1,257,291



93
%

$
1,509,163



90
%

$
(251,872
)


17
%





During each of the nine months ended September 30, 2010 and 2009, our sales efforts were focused on directly targeting end-users through telemarketing and Internet sales.  Due to the increased frequency and consistency in our development schedule in regards to the annual release of our flagship product, QuickVerse®, upgrade sales have not been increasing at as rapid a rate as they have in previous years; and therefore, we experienced a decrease in gross revenues for the nine months ended September 30, 2010.  We’ve also experienced a decrease in the number of product releases for the nine months ended September 30, 2010, which is a large contributing factor to the decrease in our gross revenues. For instance, during the third quarter of 2009, we released an upgrade to the QuickVerse® Macintosh platform; whereas, we had no such release during the third quarter of 2010. Finally, we believe the current economic downturn has had a negative impact on our retail sales as well as our direct sales. Although we have experienced decreased revenues for the nine months ended September 30, 2010, and although there can be no assurance, we anticipate that revenues will increase for the fourth quarter of 2010 as it is typically our strongest quarter of the year as years past have shown.





On the other hand, during the nine months ended September 30, 2010, we did recognize approximately $91,000 in revenue from the FormTool® product line, which was an increase of approximately $20,000 from approximately $71,000 for the nine months ended September 30, 2009. Although there can be no assurance, we do anticipate our revenues in relation to the FormTool® product line to increase in the near-term based on our anticipated enhancements of the revamped FormTool.com website and a greater retail penetration derived from our new partnership with Encore Software, Inc.





As a percentage of gross revenues, our sales returns and allowances decreased significantly for the nine months ended September 30, 2010 compared to September 30, 2009.  Typically, product returns trend upward after a new version is released as distributors and retail stores return old product in exchange for the new version release. The decrease for the nine months ended September 30, 2010 is a result of our distributors and retail stores returning a majority of their old product exchange of QuickVerse® 2009 for the newest version release QuickVerse® 2010 during the last three months of the year ended December 31, 2009. In past years, these returns and exchanges generally have taken place in the first quarter of the year. Although there can be no assurance, we anticipate a majority of our distributors and retail stores to return their old product exchange of QuickVerse® 2010 for the upcoming release of QuickVerse® 2011 during the fourth quarter of 2010. Finally, for the nine months ended September 30, 2009 we had increased our reserve of sales returns due to the downturn in the economic environment.  Generally going forward, it is our objective to release enhanced versions of our biggest-selling products on an annual basis, and as a percentage of gross revenues we anticipate sales returns and allowances to decrease over time as a result of increased stability in the functionality of our products, decreasing reliance on retail sales and increasing reliance on direct sales, which have historically resulted in fewer returns, and improved planning in the timing of new product version releases.





Cost of Sales





The following table presents our cost of sales for the nine months ended September 30, 2010 and September 30, 2009 and dollar and percentage changes from the prior year.





ChangeCost of Sales for Nine Months Ending September 30

2010


% to Sales


2009


% to Sales


$



%Direct costs

$
95,834



7
%

$
148,427



9
%

$
(52,593
)


35
%Less estimated cost of sales returns and allowances


(13,935
)


1
%


(25,245
)


2
%


11,310



45
%Amortization of software development costs


167,358



12
%


132,853



8
%


34,505



26
%Royalties


140,445



10
%


166,489



10
%


(26,044
)


16
%Freight-out


72,955



5
%


74,344



4
%


(1,389
)


2
%Fulfillment


37,125



3
%


47,897



3
%


(10,772
)


22
%Cost of sales

$
499,782



37
%

$
544,765



32
%

$
(44,983
)


8
%





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 Table of Contents





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





The net decrease in cost of sales between the nine months ended September 30, 2010 and the corresponding period during 2009 is predominately attributable to the offset of a decrease in direct costs and royalties and an increase in amortization of software development costs. The decrease in direct costs is a result of scaling down our technical support department as our products continue to become more functionally stable as well as reducing the costs of our raw materials by producing a majority of our cd’s in house and by offering more of our products as a download from our websites. In addition, the decrease in royalties is a direct result of the decrease in net revenues.  Although there can be no assurance, we anticipate our royalty obligation accruals to either remain stable or increase in the future in real terms as sales to new customers increase, more development projects are implemented for new and/or enhanced products, and as we continue to expand the content available for our QuickVerse® line of products. Upgrade sales will remain only subject to royalties on their content additions. The increase in the amount of amortization for the nine months ended September 30, 2010 is a result of the releases of QuickVerse® Macintosh 3.0 in August 2009, QuickVerse® 2010 in October 2009, the QuickVerse® Commentary Series in December 2009 and the John Phillips Commentary Collection Series in September 2010.  We did not have a Macintosh release during 2008 which led to less amortization during 2009.





Freight costs remained relatively stable but increased as a percentage of gross revenues due to increased fees from the shipping companies.  We do anticipate freight costs to increase throughout the remainder of the year as retail sales tend to increase in the fourth quarter, which carry higher shipping costs for us than direct and/or upgrade sales.  On an ongoing basis, we anticipate freight costs to decrease in real terms as we continue to focus our sales effort on direct and/or upgrade sales and continue to advertise and enhance the ability to offer our software products as downloads from our website. Fulfillment costs decreased in real terms as we have reduced our fulfillment workforce due to the decreased sales volume.





Software development costs continue to put a strain on and consume a very significant, and increasing, portion of our financial, and most notably cash, resources.  Within our highly competitive marketplace, there is a recurring necessity for development advances in our products in order to keep them relevant and desirable to our existing customers, and to draw the interest of potential new customers from among the variety of offerings by our competitors,  While we believe that a significant percentage of the driving force behind the need to consistently improve the quality and functionality of our products, and to expand on the content offered by our products, is attributable to a perceived obsolescence on the part of consumers, we also believe that the developments that we have historically made to our products and continue to make are highly substantive and necessary in order for our customers to be able to take advantage of and benefit from the constant advancements that are being made in terms of both our content and the technological platforms through which they are accessible.





The amortization recognized during the nine months ended September 30, 2010 resulted mainly from the following software releases:





▪
QuickVerse® 2009 (released October 2008),Sermon Builder 5.0 (released March 2009),▪
QuickVerse® Macintosh 3.0 (released August 2009),▪
QuickVerse® 2010 (released October 2009),▪
QuickVerse® Commentary Series (released December 2009),John Phillips Commentary Collection Series (released September 2010) and▪
Multiple new content additions for QuickVerse® products (released April 2007 through August 2009).





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 Table of Contents





Comparatively, during the nine months ended September 30, 2009, the amortization recognized resulted mainly from the following software releases:





▪
FormTool® 7.0 (released September 2008),▪
QuickVerse® 2009 (released October 2008),▪
Charles H. Spurgeon Collection (released February 2009),▪
Sermon Builder 5.0 (released March 2009),▪
QuickVerse® Macintosh 3.0 (released August 2009),▪
Early Church Fathers Collection (released August 2009) and▪
Multiple new content additions for QuickVerse® products (released April 2007 through November 2008).





The overall increase in amortization for the nine months ended September 30, 2010 is the result of fewer development projects that were released during the fiscal year 2008, which ultimately led to less amortization for the year of 2009. In the future, our objective is to realize overall increases in revenues due to aggressive product development and release schedules as well as the acquisitions of new product lines.





In the future, as we continue to implement our strategy to become a principally Webcentric provider of online products, we anticipate experiencing a decrease in cost of sales, specifically direct costs, freight and fulfillment, as more of our products will become available for download.





Three Months Ending


Nine Months EndingSeptember 30,


September 30,Software Development Costs For

2010


2009


2010


2009Beginning balance

$
279,869


$
340,605


$
338,947


$
330,018Capitalized


50,696



105,419



114,597



204,317Amortized (Cost of sales)


(44,379
)


(44,542
)


(167,358
)


(132,853
)Ending Balance

$
286,186


$
401,482


$
286,186


$
401,482Research and development expense (General and administrative)

$
30,568


$
11,175


$
126,468


$
125,234





For the three months ended September 30, 2010, the decrease in capitalized costs as well as the increase in research development expense is the result of our development team being focused on only two development projects whereas they were focused on three development projects during the same period in 2009.  As stated above, we did not have an upgrade release for the QuickVerse® Macintosh platform during the quarter ended September 30, 2010 as we did in the quarter ended September 30, 2009. These differences also speak to the decrease in capitalized costs for the nine months ended September 30, 2010. The relative stable research development expense is a result of discontinuing four development projects during the nine months ended September 30, 2009; and therefore, all associated capitalized costs were expensed. Overall, we have continued to experience increased efficiency in our development output both internally and externally.





Sales, General and Administrative





ChangeSales, General and Administrative Costs for Nine Months Ending September 30

2010


% to Sales


2009


% to Sales


$



%Selected expenses:Commissions

$
---



0
%

$
3,000



0
%

$
(3,000
)


100
%Advertising and direct marketing


109,864



8
%


105,904



6
%


3,960



4
%Sales and marketing wages


157,687



12
%


243,477



15
%


(85,790
)


35
%Other sales and marketing costs


---



0
%


7,398



0
%


(7,398
)


100
%Total sales and marketing

$
267,551



20
%

$
359,779



21
%

$
(92,228
)


26
%Personnel costs

$
316,663



23
%

$
407,119



24
%

$
(90,456
)


22
%Amortization and depreciation


65,843



5
%


273,584



16
%


(207,741
)


76
%Research and development


126,468



9
%


125,234



7
%


1,234



1
%Other general and administrative costs


423,340



31
%


427,649



25
%


(4,309
)


1
%Total general and administrative

$
932,314



69
%

$
1,233,586



73
%

$
(301,272
)


24
%Total sales, marketing, general and administrative

$
1,199,865



89
%

$
1,593,365



95
%

$
(393,500
)


25
%





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 Table of Contents





As gross revenues decreased for the nine months ended September 30, 2010, total sales, marketing and general and administrative costs also significantly decreased.  We have discontinued our contract with a third party for telemarketing services, and therefore, no longer incur commission fees. Although there can be no assurance, we do not anticipate relying on a third party for telemarketing services in the future. Advertising and direct marketing costs increased slightly as we have moved towards advertising plans which allows us to recognize a set amount of expense each month rather than recognize large amounts of advertising expense at the end of the year and during the holiday season. We anticipate advertising and marketing costs to remain consistent with those recognized for the full year of 2009. We continue to focus on enhancing our product visibility online by increasing and focusing more on our direct marketing efforts, while limiting the scope and frequency of our print advertising campaigns to those that we can capitalize on the most in order to maximize sales associated with new products, product enhancements and potential new product lines.  During the nine months ended September 30, 2010, sales and marketing wages - reclassified, decreased as a result of streamlining our CBA sales team, and therefore, we anticipate a decrease throughout the remainder of the year for 2010. Furthermore, during the nine months ended September 30, 2009 we recognized approximately $21,000 of expense related to 725,000 restricted shares of common stock issued to our sales team employees. While we would like to expand our in-house direct-telemarketing sales team in relation to our current and potential new product lines, we may not be able to do so in the immediate future due to budget constraints that we have imposed as a result of our weak working capital position and the current, relatively unfavorable macro-economic climate for non-essential consumer products.





In addition to the decrease in total net personnel costs, gross direct salaries and wages, before adjustments of capitalized wages and reclassifications, decreased approximately $257,000, from approximately $867,000 for the nine months ended September 30, 2009 to approximately $610,000 for the nine months ended September 30, 2010. For the nine months ended September 30, 2009, we recognized approximately $105,000 of expense related to 3,357,143 restricted shares of common stock issued to employees as compensation for services rendered January 1, 2004 through December 31, 2008. The decrease in gross personnel costs is the result of the departure of a member of the product development team as we have streamlined this department with external, independently contracted developers, the reduction in our technical support staff as our software products become more stable, the loss of our Vice President of Sales as we have restructured our CBA sales team, the departure of a customer service representative as well as a member of the accounting team and a member of the fulfillment team. As a percentage of gross revenues, gross direct salaries and wages decreased approximately 7% from approximately 52% for the nine months September 30, 2009 to approximately 45% for the nine months ended September 30, 2010. Due to workforce reductions attributable to the current, relatively unfavorable macro-economic climate for non-essential consumer products, and the loss in July, 2010 of our Chief Financial Officer, Kirk R. Rowland, who had been receiving an annual salary of $110,000 and who we have no present intentions of replacing in the foreseeable future, we anticipate direct salaries and wages to decrease in the future.





The decrease in the amortization and depreciation expense is mainly attributable to the decrease in the amortization of intellectual property rights and other assets. The software license we acquired in 1999, from which we derive our base intellectual property rights associated with the products that are responsible for generating the overwhelming majority of our revenues, and which has historically been the principal source of amortization expense since 1999, became fully amortized as of June 30, 2009. Currently, amortization expense principally reflects the depreciating book value of the FormTool® assets we acquired in February 2008, which are being written down over periods ranging in each case from less than one year to ten years and which, in the aggregate, total approximately $3,000 per month.  Going forward, and unless and until we acquire additional assets, we anticipate amortization and depreciation expense to trend downward relative to our historic averages in recent years.





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). While research development expense remained relatively stable, we recognized approximately $27,000 in expense for the nine months ended September 30, 2009 due to the discontinuation of four development projects; and therefore, all associated capitalized costs were expensed.  The elevated amount of research development expense for the nine months ended September 30, 2010 is the result of fewer development projects as compared to the same period in 2009. In future periods, we anticipate research and development expenses to either slightly decrease or remain stable as we have experienced increased efficiency in our development output (both internal and external).





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 Table of Contents





Income Taxes





For the nine months ended September 30, 2010 and 2009, based on uncertainty about the timing of and ability to generate future taxable income and our assessment that the realization of the deferred tax assets no longer met the “more likely than not” criterion for realization, we provided for a full valuation allowance against our net deferred tax assets. If we determine that it is more likely than not that we will be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset valuation allowance would be recorded in the period when such determination is made.





Liquidity And Capital Resources





Our primary needs for liquidity and capital resources are the working capital requirements of our continued operations, which includes the ongoing internal development of new products, expansion and upgrade of existing products, and marketing and sales, as well as funding for the acquisition of new product lines and/or companies. At this time it is unlikely that cash generated through our continuing operations will be sufficient to sustain our continuing operations. Furthermore, our pursuit of an aggressive growth plan, whether based on internally developed products, licensing opportunities, or strategic product line and/or company acquisitions, will likely require funding from outside sources or the divestiture of one or more existing product lines (as occurred with respect to our Membership Plus® product line). Funding from outside sources may include but is not limited to the pursuit of other financing options such as common stock and/or preferred stock issuances and convertible notes. At this time, we have no legally committed funds for future capital expenditures.





The divestiture of our Membership Plus® product line in October 2007 was driven by a combination of our need to raise cash and a strategic determination to begin a long-term shift in our product lines away from those within the faith-based vertical market and more towards those that extend across the business-to-business and consumer segments more generally.  With a portion of the funds we realized from the sale of our Membership Plus® product line, we purchased FormTool® in February 2008 which was our first product line acquisition outside of the faith-based market.  Although there can be no assurance, we anticipate acquiring additional product lines and/or entering into business combinations which will either replace or increase the revenue and free cash flow previously produced by the Membership Plus® product line.





Working Capital

September 30, 2010


December 31, 2009Current assets

$
134,432


$
355,423Current liabilities

$
1,724,587


$
1,696,940Retained deficit

$
9,153,241


$
8,698,465





While liquidity for our day-to-day continued operations remains an ongoing concern for us, and while there can be no continuing assurance, given the fact that a substantial portion of our net sales – 63% of which we collected during the year ended December 31, 2009 through credit card processing transactions – are able to be collected in a much shorter timeframe (several days) than that in which we must generally pay our trade payables (30 days) and our accrued royalties (quarterly, semi-annually, or annually), the situation suggested by our consistently and significantly negative ratio of current assets to current liabilities has historically been manageable.





Cash Flows for Nine Months Ending September 30

2010


2009


Change


%Cash flows (used) by operating activities

$
(54,404
)

$
(47,516
)

$
(6,888
)


14
%Cash flows (used) by investing activities

$
(124,055
)

$
(196,693
)

$
72,638



37
%Cash flows provided (used) by financing activities

$
49,514


$
(51,821
)

$
101,335



196
%





-7-
 Table of Contents





Net cash used by operating activities increased for the nine month ended September 30, 2010 due to mainly more cash going out as payments to content providers, vendors and employees than cash received in from customers.




The decrease in net cash used by investing activities for the nine months ended September 30, 2010 was due to the lack of investing activities related to capitalized software and website development costs





Net cash provided by financing activities increased for the nine months ended September 30, 2010 as a result of issuing our board of directors stock for their services from January 1, 2009 to June 30, 2010. These services were previously valued at $90,000; however, the board of directors agreed that the difference between the value of the restricted shares of common stock ($7,500) and their services, which totaled $82,500, would be recorded as contributed capital. Offsetting to a degree to the increase in cash provided by financing activities for the nine months ended September 30, 2010 were the continued payments made on long-term notes payable.





Financing





We have been unable to secure bank financing due to our internal financial ratios and negative working capital position and do not expect that we will be successful in securing any such financing unless and until our ratios in this regard improve. However, it may be possible to secure financing on our open accounts receivable in order to satisfy our future financing needs. Equity financing, too, remains an option for us, though no definitive prospects for any such financing have been specifically identified.





Contractual Liabilities





In May 2007, we secured an operating lease with a third-party for our corporate office facility in Omaha, Nebraska with terms extending through May 2012. At September 30, 2010, the total payments required under this lease were approximately $91,000.  At the end of September 2010, we consolidated our corporate offices with our warehouse facility and entered into a lease termination agreement for our corporate office.  We expect to finalize the lease termination agreement on November 30, 2010; and therefore, eliminate the $91,000 liability for the past due sum of approximately $17,000.





Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.





Contractual Obligations





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





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





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





ITEM 4T. CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and Procedures





As required by paragraph (b) of Rule 13a-15 under the Exchange Act, our principal executive and principal financial officers are responsible for assessing the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(f) under the Exchange Act).  Accordingly, we maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Our Chief Executive Officer/Chief Financial Officer has evaluated our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q September 30, 2010, and has determined that such disclosure controls and procedures are effective.





Changes in Internal Controls





There were no changes in our internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





-8-
 Table of Contents


PART II – OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS.





As of the date of this quarterly report on Form 10-Q for the period ended September 30, 2010, and to the best knowledge of our officers and directors, there were no pending material legal proceedings to which we were a party and we were not aware that any were contemplated. There can be no assurance, however, that we will not be made a party to litigation in the future.





ITEM 1A. RISK FACTORS.





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





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





There were no reportable events under this Item 2 during the quarterly period ended September 30, 2010.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES.





As of the date of this quarterly report on Form 10-Q for the period ended September 30, 2010, we are in default under a certain unsecured term note payable to a shareholder in the total amount of approximately $79,000.  The arrearage as of such date was $56,000, plus interest.  In accordance with the terms of the note, our default has triggered an acceleration of the entire balance plus accumulated interest.





ITEM 4. (REMOVED AND RESERVED).




ITEM 5. OTHER INFORMATION.





There were no reportable events under this Item 5 during the quarterly period ended September 30, 2010.





ITEM 6. EXHIBITS.





Exhibits required by Item 601 of Regulation S-K.





No.
Description of Exhibit2.1
Share Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan Holdings, Inc. dated March 7, 2000, incorporated by reference to Exhibit 2.1 on Form 8-K filed March 15, 2000.3(i)(1)
Restated Articles of Incorporation of Findex.com, Inc. dated June 1999 incorporated by reference to Exhibit 3.1 on Form 8-K filed March 15, 2000.3(i)(2)
Amendment to Articles of Incorporation of Findex.com, Inc. dated November 10, 2004 incorporated by reference to Exhibit 3.1(ii) on Form 10-QSB filed November 10, 2004.3(ii)
Restated By-Laws of Findex.com, Inc., incorporated by reference to Exhibit 3.3 on Form 8-K filed March 15, 2000.10.1
Stock Incentive Plan of Findex.com, Inc. dated May 7, 1999, incorporated by reference to Exhibit 10.1 on Form 10-KSB/A filed May 13, 2004.10.2
Share Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan Holdings Inc., dated March 7, 2000, incorporated by reference to Exhibit 2.1 on Form 8-K filed March 15, 2000.  -9-
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  10.3
License Agreement between Findex.com, Inc. and Parsons Technology, Inc. dated June 30, 1999, incorporated by reference to Exhibit 10.3 on Form 10-KSB/A filed May 13, 2004.10.4
Employment Agreement between Findex.com, Inc. and Steven Malone dated July 25, 2003, incorporated by reference to Exhibit 10.4 on Form 10-KSB/A filed May 13, 2004.10.5
Employment Agreement between Findex.com, Inc. and Kirk Rowland dated July 25, 2003, incorporated by reference to Exhibit 10.5 on Form 10-KSB/A filed May 13, 2004.10.6
Employment Agreement between Findex.com, Inc. and William Terrill dated June 7, 2002, incorporated by reference to Exhibit 10.6 on Form 10-KSB/A filed May 13, 2004.10.7
Restricted Stock Compensation Agreement between Findex.com, Inc. and John A. Kuehne dated July 25, 2003, incorporated by reference to Exhibit 10.7 on Form 10-KSB/A filed May 13, 2004.10.8
Restricted Stock Compensation Agreement between Findex.com, Inc. and Henry M. Washington dated July 25, 2003, incorporated by reference to Exhibit 10.8 on Form 10-KSB/A filed May 13, 2004.10.9
Restricted Stock Compensation Agreement between Findex.com, Inc. and William Terrill dated July 25, 2003, incorporated by reference to Exhibit 10.9 on Form 10-KSB/A filed May 13, 2004.10.10
Stock Purchase Agreement, including the form of warrant agreement, between Findex.com, Inc. and Barron Partners, LP dated July 19, 2004, incorporated by reference to Exhibit 10.1 on Form 8-K filed July 28, 2004.10.11
Amendment No. 1 to Stock Purchase Agreement between Findex.com, Inc. and Barron Partners, LP dated September 30, 2004, incorporated by reference to Exhibit 10.3 on Form 8-K filed October 6, 2004.10.12
Registration Rights Agreement between Findex.com, Inc. and Barron Partners, LP dated July 26, 2004, incorporated by reference to Exhibit 10.2 on Form 8-K filed July 28, 2004.10.13
Waiver Certificate between Findex.com, Inc. and Barron Partners, LP dated September 16, 2004, incorporated by reference to Exhibit 10.4 on Form 8-K filed October 6, 2004.10.14
Settlement Agreement between Findex.com, Inc., The Zondervan Corporation, Mattel, Inc., TLC Multimedia, Inc., and Riverdeep, Inc. dated October 20, 2003, incorporated by reference to Exhibit 10.14 on Form 10-KSB/A filed December 14, 2005.10.15
Employment Agreement Extension between Findex.com, Inc and Steven Malone dated March 31, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed April 6, 2006.10.16
Employment Agreement Extension between Findex.com, Inc and William Terrill dated March 31, 2006, incorporated by reference to Exhibit 10.2 on Form 8-K filed April 6, 2006.10.17
Employment Agreement Extension between Findex.com, Inc and Kirk R. Rowland dated March 31, 2006, incorporated by reference to Exhibit 10.3 on Form 8-K filed April 6, 2006.10.18
Promissory Note to Barron Partners, LP dated April 7, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed April 13, 2006.10.19
Share Exchange Agreement between Findex.com, Inc. and the stockholders of Reagan Holdings Inc., dated March 7, 2000, incorporated by reference to Exhibit 2.1 on Form 8-K filed March 15, 2000.10.20
Convertible Secured Promissory Note between FindEx.com, Inc. and W. Sam Chandoha, dated July 20, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed July 26, 2006.  -10-
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  10.21
Security Agreement between FindEx.com, Inc. and W. Sam Chandoha, dated July 20, 2006 incorporated by reference to Exhibit 10.2 on Form 8-K filed July 26, 2006.10.22
Common Stock Purchase Warrant between FindEx.com, Inc. and W. Sam Chandoha, dated July 20, 2006 incorporated by reference to Exhibit 10.3 on Form 8-K filed July 26, 2006.10.23
Modification and Extension Agreement Between FindEx.com, Inc. and W. Sam Chandoha, dated September 20, 2006, incorporated by reference to Exhibit 10.1 on Form 8-K filed September 25,2006.10.24
Employment Agreement Extension Amendment between Findex.com, Inc. and Steven Malone dated April 13, 2007, incorporated by reference to Exhibit 10.24 on Form 10-KSB filed April 17, 2007.10.25
Employment Agreement Extension Amendment between Findex.com, Inc. and William Terrill dated April 13, 2007, incorporated by reference to Exhibit 10.25 on Form 10-KSB filed April 17, 2007.10.26
Employment Agreement Extension Amendment between Findex.com, Inc. and Kirk R. Rowland dated April 13, 2007, incorporated by reference to Exhibit 10.26 on Form 10-KSB filed April 17, 2007.10.27
Asset Purchase Agreement between Findex.com, Inc. and ACS Technologies Group, Inc. dated October 18, 2007, incorporated by reference to Exhibit 10.27 on Form 8-K filed October 24, 2007.10.28
Partial Assignment of License Agreement Among Findex.com, Inc., Riverdeep, Inc.,LLC and ACS Technologies Group, Inc. dated October 11, 2007, incorporated by reference to Exhibit 10.28 on Form 8-K filed October 24, 2007.10.29
Asset Purchase Agreement between Findex.com, Inc. and ORG Professional, LLC dated February 25, 2008, incorporated by reference to Exhibit 10.29 on Form 8-K filed on February 28, 2008.10.30
Warrant Cancellation Agreement between Findex.com, Inc. and Barron Partners, L.P. dated March 6, 2008, incorporated by reference to Exhibit 10.30 on Form 8-K filed on March 10, 2008.10.31
Employment Agreement Extension Amendment between Findex.com, Inc. and Steven Malone dated April 14, 2008, incorporated by reference to Exhibit 10.31 on Form 10-KSB filed on April 15, 2008.10.32
Employment Agreement Extension Amendment between Findex.com, Inc. and William Terrill dated April 14, 2008, incorporated by reference to Exhibit 10.32 on Form 10-KSB filed on April 15, 2008.10.33
Employment Agreement Extension Amendment between Findex.com, Inc. and Kirk R. Rowland dated April 14, 2008, incorporated by reference to Exhibit 10.33 on Form 10-KSB filed on April 15, 2008.31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and dated November 22, 2010. FILED HEREWITH.32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and dated November 22, 2010.  FILED HEREWITH.





Signatures





Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





FINDEX.COM, INC.Date: November 22, 2010
By
/s/ Steven MaloneSteven MalonePresidentChief Executive Officer (Principal Executive Officer)Chief Financial Officer (Principal Accounting Officer)





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