**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**








(Mark
      One)





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





For
      the
      quarterly period ended March 31, 2006.





**[_]**
            **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 [_]**





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**





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: 49,058,317 common shares as of May 19,
      2006.





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.
            13ITEM
                2. Unregistered Sales of Equity Securities and Use
                of Proceeds.
            13ITEM
                3. Defaults Upon Senior
                Securities.
            13ITEM
                4. Submission of Matters to a Vote of Security
                Holders.
            13ITEM
                5. Other Information.
            14ITEM
                6. Exhibits.
            14





















Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS.**





**Findex.com,
                Inc.****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(Unaudited)****March
                31, 2006**
            
            
            December
                31, 2005**Assets**Current
                assets:Cash
                and cash equivalents
            
            **$**
            **53,668**
            
            $
            119,560Accounts
                receivable, trade, net
            
            
            **340,023**
            
            
            405,380Inventory
            
            
            **162,050**
            
            
            214,604Other
                current assets
            
            
            **131,310**
            
            
            128,206Total
                current assets
            
            
            **687,051**
            
            
            867,750Property
                and equipment, net
            
            
            **105,886**
            
            
            114,191Software
                license, net
            
            
            **1,636,399**
            
            
            1,762,276Capitalized
                software development costs, net
            
            
            **586,171**
            
            
            707,067Other
                assets
            
            
            **202,843**
            
            
            253,001Total
                assets
            
            **$**
            **3,218,350**
            
            $
            3,704,285**Liabilities
                and stockholders’ equity**Current
                liabilities:Accounts
                payable, trade
            
            **$**
            **413,313**
            
            $
            556,042Accrued
                royalties
            
            
            **452,707**
            
            
            472,548Derivative
                liabilities
            
            
            **2,671,334**
            
            
            2,062,462Other
                current liabilities
            
            
            **469,346**
            
            
            802,395Total
                current liabilities
            
            
            **4,006,700**
            
            
            3,893,447Long-term
                obligations
            
            
            **275,545**
            
            
            52,891Commitments
                and contingencies (Note 7)Stockholders’
                equity:Common
                stock
            
            
            **49,058**
            
            
            48,620Paid-in
                capital
            
            
            **7,525,940**
            
            
            7,461,424Retained
                (deficit)
            
            
            **(8,638,893**
            **)**
            
            (7,752,097
            )Total
                stockholders’ equity
            
            
            **(1,063,895**
            **)**
            
            (242,053
            )Total
                liabilities and stockholders’ equity
            
            **$**
            **3,218,350**
            
            $
            3,704,285*See
                accompanying notes.*


F-1
 Table
            of Contents





**Findex.com,
                Inc.****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****(Unaudited)****Three
                Months Ended March 31,**
            
            
            **2006**
            
            
            2005Revenues,
                net of reserves and allowances
            
            **$**
            **1,098,791**
            
            $
            1,677,414Cost
                of sales
            
            
            **463,612**
            
            
            508,785Gross
                profit
            
            
            **635,179**
            
            
            1,168,629Operating
                expenses:Sales
                and marketing
            
            
            **98,611**
            
            
            427,447General
                and administrative
            
            
            **586,555**
            
            
            635,718Other
                operating expenses
            
            
            **145,883**
            
            
            146,421Total
                operating expenses
            
            
            **831,049**
            
            
            1,209,586Loss
                from operations
            
            
            **(195,870**
            **)**
            
            (40,957
            )Other
                income
            
            
            **361**
            
            
            514Other
                expenses
            
            
            **(2,293**
            **)**
            
            (4,370
            )Registration
                rights penalties
            
            
            **(49,314**
            **)**
            
            ---Loss
                on valuation adjustment of derivatives
            
            
            **(608,872**
            **)**
            
            (218,748
            )Loss
                before income taxes
            
            
            **(855,988**
            **)**
            
            (263,561
            )Provision
                for income taxes
            
            
            **(30,808**
            **)**
            
            149,489Net
                loss
            
            
            **(886,796**
            **)**
            
            (114,072
            )Retained
                deficit at beginning of year
            
            
            **(7,752,097**
            **)**
            
            (6,170,833
            )Retained
                deficit at end of period
            
            **$**
            **(8,638,893**
            **)**
            $
            (6,284,905
            )Net
                loss per share:Basic
            
            **$**
            **(0.02**
            **)**
            $
            0.00Diluted
            
            **$**
            **(0.02**
            **)**
            $
            0.00Weighted
                average shares outstanding:Basic
            
            
            **48,766,009**
            
            
            48,619,855Diluted
            
            
            **48,766,009**
            
            
            48,619,855*See
                accompanying notes.*


F-2
 Table
            of Contents






**Findex.com,
                Inc.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Unaudited)****Three
                Months Ended March 31,**
            
            
            **2006**
            
            
            2005Cash
                flows from operating activities:Cash
                received from customers
            
            **$**
            **1,138,412**
            
            $
            1,707,292Cash
                paid to suppliers and employees
            
            
            **(1,135,406**
            **)**
            
            (1,456,683
            )Other
                operating activities, net
            
            
            **3,872**
            
            
            (3,076
            )Net
                cash provided by operating activities
            
            
            **6,878**
            
            
            247,533Cash
                flows from investing activities:Software
                development costs
            
            
            **(63,231**
            **)**
            
            (264,649
            )Other
                investing activities, net
            
            
            **(7,342**
            **)**
            
            (14,581
            )Net
                cash (used) by investing activities
            
            
            **(70,573**
            **)**
            
            (279,230
            )Cash
                flows from financing activities:Payments
                made on long-term notes payable
            
            
            **(2,197**
            **)**
            
            (26,521
            )Net
                cash (used) by financing activities
            
            
            **(2,197**
            **)**
            
            (26,521
            )Net
                (decrease) in cash and cash equivalents
            
            
            **(65,892**
            **)**
            
            (58,218
            )Cash
                and cash equivalents, beginning of year
            
            
            **119,560**
            
            
            341,359Cash
                and cash equivalents, end of period
            
            **$**
            **53,668**
            
            $
            283,141Reconciliation
                of net loss to cash flows from operating activities:Net
                loss
            
            **$**
            **(886,796**
            **)**
            $
            (114,072
            )Adjustments
                to reconcile net loss to net cashprovided
                by operating activities:Software
                development costs amortized
            
            
            **184,128**
            
            
            182,688Loss
                on fair value adjustment of derivatives
            
            
            **608,872**
            
            
            218,748Provision
                for bad debts
            
            
            **---**
            
            
            653Depreciation
                & amortization
            
            
            **145,883**
            
            
            145,768Loss
                on disposal of property, plant and equipment
            
            
            **---**
            
            
            1,715Change
                in assets and liabilities:Decrease
                in accounts receivable
            
            
            **65,357**
            
            
            48,924Decrease
                (increase) in inventories
            
            
            **52,554**
            
            
            (14,047
            )Decrease
                in refundable taxes
            
            
            **5,764**
            
            
            ---Decrease
                in prepaid expenses
            
            
            **62,241**
            
            
            51,841(Decrease)
                in accrued royalties
            
            
            **(19,841**
            **)**
            
            (33,770
            )(Decrease)
                in accounts payable
            
            
            **(134,771**
            **)**
            
            (114,952
            )Increase
                in income taxes payable
            
            
            **---**
            
            
            180Increase
                (decrease) in deferred taxes
            
            
            **30,808**
            
            
            (149,669
            )(Decrease)
                increase in other liabilities
            
            
            **(107,321**
            **)**
            
            23,526Net
                cash provided by operating activities
            
            **$**
            **6,878**
            
            $
            247,533*See
                accompanying notes.*


F-3
 Table
            of Contents




**Findex.com,
      Inc.**


**Notes
      to Condensed Consolidated Financial Statements**


**March
      31, 2006**


**(Unaudited)**





**NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**BASIS
      OF PRESENTATION**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with Generally Accepted Accounting Principles for interim
      financial information and with the instructions to Form 10-QSB and Item 310
      of
      Regulation S-B. Accordingly, they do not include all of the information and
      footnotes required by Generally Accepted Accounting Principles for complete
      financial statements. The accompanying unaudited condensed consolidated
      financial statements reflect all adjustments that, in the opinion of management,
      are considered necessary for a fair presentation of the financial position,
      results of operations, and cash flows for the periods presented. The results
      of
      operations for such periods are not necessarily indicative of the results
      expected for the full fiscal year or for any future period. The accompanying
      financial statements should be read in conjunction with the audited consolidated
      financial statements of Findex.com, Inc. included in our Form 10-KSB for the
      fiscal year ended December 31, 2005.





**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. Our 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 $2,624,274 ,
      less
      accumulated amortization of $2,038,104 at March
      31,
      2006 .





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 $52,232 and $37,080 for the
      three months ended March
      31,
      2006 and
      2005 ,
      respectively,
      included in General and administrative expenses.





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





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





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





Capitalized
      costs include those incurred to:





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





F-5
 Table
          of Contents


We
      amortize website development costs on a straight-line basis over the estimated
      life of the site, generally 36 months. Total cumulative website development
      costs, included in other assets on our condensed consolidated balance sheets,
      were $105,308 ,
      less
      accumulated amortization of $53,815 at March
      31,
      2006 .





**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 three months ended March
      31,
      2006 and
      2005 and
      maintain a reserve for rebate claims remaining unpaid from 2000 and
      2001.





F-6
 Table
          of Contents


***Service
      Revenue***





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





***Multiple
      Element Arrangements***





We
      also
      enter into certain revenue arrangements for which we are obligated to deliver
      multiple products or products and services (multiple elements). For these
      arrangements, which include software products, we allocate and defer revenue
      for
      the undelivered elements based on their vendor-specific objective evidence
      (“VSOE”) of fair value. VSOE is generally the price charged when that element is
      sold separately.





In
      situations where VSOE exists for all elements (delivered and undelivered),
      we
      allocate the total revenue to be earned under the arrangement among the various
      elements, based on their relative fair value. For transactions where VSOE exists
      only for the undelivered elements, we defer the full fair value of the
      undelivered elements and recognize the difference between the total arrangement
      fee and the amount deferred for the undelivered items as revenue (residual
      method). If VSOE does not exist for undelivered items that are services, we
      recognize the entire arrangement fee ratably over the remaining service period.
      If VSOE does not exist for undelivered elements that are specified products,
      we
      defer revenue until the earlier of the delivery of all elements or the point
      at
      which we determine VSOE for these undelivered elements.





We
      recognize revenue related to the delivered products or services only if (i)
      the
      above revenue recognition criteria are met, (ii) any undelivered products or
      services are not essential to the functionality of the delivered products and
      services, (iii) payment for the delivered products or services is not contingent
      upon delivery of the remaining products or services, and (iv) we have an
      enforceable claim to receive the amount due in the event that we do not deliver
      the undelivered products or services.





***Shipping
      and Handling Costs***





We
      record
      the amounts we charge our customers for the shipping and handling of our
      software products as product revenue and we record the related costs as cost
      of
      sales on our condensed consolidated statements of operations.





***Customer
      Service and Technical Support***





Customer
      service and technical support costs include the costs associated with performing
      order processing, answering customer inquiries by telephone and through
      websites, email and other electronic means, and providing technical support
      assistance to our customers. In connection with the sale of certain products,
      we
      provide a limited amount of free technical support assistance to customers.
      We
      do not defer the recognition of any revenue associated with sales of these
      products, since the cost of providing this free technical support is
      insignificant. The technical support is provided within one year after the
      associated revenue is recognized and free product enhancements (bug fixes)
      are
      minimal and infrequent. We accrue the estimated cost of providing this free
      support upon product shipment and include it in cost of sales.





**INCOME
      TAXES**





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





**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. A
      total
      of 25,730,000 and 25,315,000 dilutive potential securities for the three months
      endedMarch
      31,
      2006and2005,
      respectively, have been excluded from the computation of diluted earnings per
      common share, as their inclusion would be anti-dilutive.





**RECLASSIFICATIONS**





Certain
      accounts in our 2005 financial statements have been reclassified for comparative purposes to conform
      with the presentation in our 2006 financial statements.





**NOTE
      2 - INVENTORIES**





At March
      31,
      2006 ,
      inventories consisted of the following:





Raw
                materials
            
            $
            97,442Finished
                goods
            
            
            64,608Inventories
            
            $
            162,050





**NOTE
      3 - DERIVATIVES**





At March
      31,
      2006 ,
      the
      derivative liability consisted of the following:





Warrant
                A
            
            $
            59,820Warrant
                B
            
            
            1,337,215Warrant
                C
            
            
            1,274,299Derivatives
            
            **$**
            **2,671,334**





In
      May
      2004, we issued a 3-year warrant (Warrant A) to purchase up to 600,000 shares
      of
      our common stock to a consultant. This warrant may be exercised on a cashless
      basis at the option of the warrant holder at a price per share of $0.15. We
      will
      receive up to $90,000 from the warrant holder upon the exercise of this warrant.
      This warrant has been accounted for as a liability according to the guidance
      of
      EITF 00-19 and the fair value of the warrant has been determined using the
      Black-Scholes valuation method with the assumptions listed in the table
      below.





In
      November 2004, we issued two 5-year warrants to purchase up to an aggregate
      of
      21,875,000 shares of our common stock in connection with a certain Stock
      Purchase Agreement completed with a New York based private investment
      partnership on July 19, 2004. The first warrant (Warrant B) entitles the holder
      to purchase up to 10,937,500 shares of our common stock at a price of $0.18
      per
      share, and the second warrant (Warrant C) entitles the holder to purchase up
      to
      10,937,500 additional shares of our common stock at a price of $0.60 per share.
      Each warrant is subject to standard adjustment provisions and each provides
      for
      settlement in registered shares of our common stock and may, at the option
      of
      the holder, be settled in a cashless, net-share settlement. The warrant holder
      is prevented from electing a cashless exercise so long as there is an effective
      registration statement for the shares underlying these warrants. The maximum
      number of shares of our common stock to be received for each warrant in a
      net-share settlement would be 10,937,500 but the actual number of shares settled
      would likely be significantly less and would vary based on the last reported
      sale price (as reported by Bloomberg) of our common stock on the date
      immediately preceding the date of the exercise notice. These warrants are
      accounted for as a liability according to the guidance of EITF 00-19 and the
      fair value of each warrant has been determined using the Black-Scholes valuation
      method with the assumptions listed in the table below.





F-8
 Table
          of Contents


**Warrant
                A**
            
            
            
            **Warrant
                B**
            
            
            
            **Warrant
                C**Expected
                term - years
            
            
            1.08
            
            
            
            3.30
            
            
            
            3.30Stock
                price atMarch
                31, 2006
            
            $
            0.13
            
            
            $
            0.13
            
            
            $
            0.13Expected
                dividend yield
            
            
            0
            %
            
            
            0
            %
            
            
            0
            %Expected
                stock price volatility
            
            
            235
            %
            
            
            212
            %
            
            
            212
            %Risk-free
                interest rate
            
            
            4.77
            %
            
            
            4.71
            %
            
            
            4.71
            %





The
      warrants are revalued at each balance sheet date by using the parameters above,
      reducing the expected term to reflect the passing of time, and using the stock
      price at the balance sheet date. Net fair value adjustments of $608,872 and $218,748 have
      been included in other expenses on the consolidated statements of operations
      for
      the three months ended March
      31,
      2006 and
      2005 ,
      respectively.





**NOTE
      4 - INCOME TAXES**





The
      provision (benefit) for taxes on net income for the three months ended March
      31,
      2006 and 2005 consisted of the following:





**2006**
            
            
            2005Current:Federal
            
            **$**
            **-****--**
            
            $
            ---State
            
            
            **-****--**
            
            
            180**-****--**
            
            
            180Deferred:Federal
            
            
            **31,844**
            
            
            (141,093
            )State
            
            
            **(1,036**
            **)**
            
            (8,576
            )**30,808**
            
            
            (149,669
            )Total
                tax provision (benefit)
            
            **$**
            **30,808**
            
            $
            (149,489
            )





**NOTE
      5 - STOCKHOLDERS’ EQUITY**





**COMMON
      STOCK**





In
      March
      2006, we committed to issue a total of 145,154 restricted shares of common
      stock
      to each of our then outside directors (a total of 438,462 shares), at the
      closing price as of March 30, 2006 ($0.13), in lieu of cash payments of amounts
      accrued for their services as members of our board from the period of September
      1, 2004 through March 31, 2006. This issuance was valued at
      $57,000.





**COMMON
      STOCK WARRANTS**




In
      March
      2006, we committed to issue a 3-year warrant to purchase up to 300,000
      restricted shares of our common stock with, at a price per share of $0.13,
      to
      our legal counsel, in lieu of cash as payment for certain accrued legal fees.
      This warrant was valued at $7,958 based on the negotiated fair value of the
      services provided as prescribed by SFAS No. 123(R),*Share-Based
      Payments*,
      for
      share-based transactions with nonemployees.


**NOTE
      6 - EARNINGS PER COMMON SHARE**





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 our 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 March 31**
            
            
            **2006**
            
            
            2005Net
                Loss
            
            **$**
            **(886,796**
            **)**
            $
            (114,072
            )Preferred
                stock dividends
            
            
            **---**
            
            
            **---**Net
                loss available to common shareholders
            
            **$**
            **(886,796**
            **)**
            $
            (114,072
            )Basic
                weighted average shares outstanding
            
            
            **48,766,009**
            
            
            48,619,855Dilutive
                effect of:Stock
                options
            
            
            **---**
            
            
            ---Warrants
            
            
            **---**
            
            
            ---Diluted
                weighted average shares outstanding
            
            
            **48,766,009**
            
            
            48,619,855





A
      total
      of 25,730,000 and 25,315,000 dilutive potential securities for the three months
      ended March
      31,
      2006 and 2005 ,
      respectively, have been excluded from the computation of diluted earnings per
      common share, as their inclusion would be anti-dilutive.





**NOTE
      7 - COMMITMENTS AND CONTINGENCIES**





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





Our
      employment agreements with our management team each contain a provision for
      an
      annual bonus equal to 1% of our 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 ($8,488 included in Other current liabilities at March
      31,
      2006 ),
      bonuses ($44,384 included in other current liabilities at March
      31,
      2006 ),
      and
      any vested deferred vacation compensation ($36,826 included in other current
      liabilities at March
      31,
      2006 )
      for
      termination by reason of disability. The agreements also provide for severance
      compensation equal to the then base salary until the later of (i) the expiration
      of the term of the agreement as set forth therein or (ii) one year, when the
      termination is other than for cause (including termination by reason of
      disability). There is no severance compensation in the event of voluntary
      termination or termination for cause.





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





**NOTE
      8 - 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
      9 - 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 March 31, 2006, we had a
      net
      loss of $886,796, and negative working capital of $3,319,649 and $3,025,697,
      and
      an accumulated deficit of $8,638,893 and $7,752,097 as of March 31, 2006 and
      December 31, 2005, respectively. Although these factors raise substantial doubt
      as to our ability to continue as a going concern through December 31, 2006,
      we
      have taken several measures to mitigate against this risk, including expanding
      our in-house telemarketing efforts to increase our direct-to-consumer revenue
      while at the same time reducing commissions paid to third-party telemarketing
      firms. In addition, we are focused on distilling both our sales and marketing,
      and general and administrative expenses to include only those providing the
      most
      return on investment. Finally, as indicated in Note 10, we have stopped the
      accrual of penalties associated with our registration statement and have
      negotiated extended payment terms for the penalties accrued.





F-10
 Table
          of Contents


**NOTE
      10 - SUBSEQUENT EVENTS**





On
      April
      3, 2006, we entered into a consulting agreement with a company for investor
      relations services. The agreement carries a twelve-month term with either party
      having the option to terminate at the six-month anniversary. The agreement
      provides for a monthly cash payment of $7,500 and 500,000 restricted shares
      of
      common stock to be delivered during the first thirty days of the agreement
      term.
      In the event that the consultant does not complete the full twelve-month term,
      a
      pro-rata portion of 360,000 restricted shares of common stock will be returned
      to us.





On
      April
      7, 2006, we signed a two-year, $336,000, 8% promissory note with the New York
      based institutional investor for payment of the unpaid registration rights
      penalties. The note agreement calls for monthly installments of $10,000,
      beginning May 1, 2006, for the first twelve months and $20,000 per month
      thereafter. Any overdue principal bears interest at 15% and is due on demand.
      The accrued, unpaid registration rights penalties at March 31, 2006 have been
      classified as long-term obligations.






































F-11
 Table
          of Contents


**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





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





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





*Investors
      and prospective investors are cautioned that any such forward-looking statements
      are not guarantees of future performance and involve risks and uncertainties,
      and that actual results may differ materially from those projected in the
      forward-looking statements as a result of various factors. Factors that might
      cause such differences include, among others, those set forth in Part I, Item
      2
      of this quarterly report on Form 10-QSB, entitled “Management’s Discussion and
      Analysis or Plan of Operation”, and including without limitation the ”Risk
      Factors” contained in the company’s annual report on Form 10-KSB for the period
      ending December 31, 2005. Except as required by law, we undertake no obligation
      to update any of the forward-looking statements in this Form 10-QSB after the
      date of this report.*





This
      information should be read in conjunction with our unaudited condensed
      consolidated financial statements and the notes thereto included in Item 1
      of
      Part I of this quarterly report, and our audited financial statements and the
      notes thereto and our Management’s Discussion and Analysis or Plan of Operation
      contained in our annual report on Form 10-KSB for the fiscal year ended December
      31, 2005.





**MANAGEMENT
      OVERVIEW**





During
      the first quarter of 2006, we released two new editions of our flagship product,
      QuickVerse ® .
      QuickVerse ® 2006
      Parable Edition, with a suggested retail price of $49.95, and
      QuickVerse ® Bible
      Suite, with a suggested retail price of $29.95. QuickVerse ® 2006
      Parable Edition is sold exclusively at Parable ® retail
      outlets and through Parable ® ’s website,
      at www.parable.com, and unlike other QuickVerse ® editions, QuickVerse ® 2006
      Parable contains exclusive Parable ® content
      such as *Books
      That Change Lives* and *Standing
      Firm Devotional* .
      QuickVerse ® Bible
      Suite is sold exclusively to the secular market and appeals to those customers
      seeking their first Bible study software. Comparatively, during the first
      quarter of 2005, we released an upgrade to our top-selling financial and data
      management software, Membership Plus ® .
      In
      addition, we introduced two new QuickVerse ® editions, QuickVerse ® 2005
      Essentials, with a suggested retail price of $49.95, and QuickVerse ® 2005
      Platinum, with a suggested retail price of $799.95. Although we did not release
      an upgrade version of Membership Plus ® during
      the first quarter of 2006, we do anticipate releasing one in late May or early
      June 2006. Despite our decreased gross revenues during the first quarter of
      2006, and although there can be no assurance, we anticipate that revenues will
      increase throughout the 2006 fiscal year based upon the recent expansion of
      our
      internal development team, our development schedule for the fiscal year, and
      the
      broadened content made available for our QuickVerse ® products.





-1-
 Table
          of Contents


***Results
      Of Operations for Quarters Ending March 31, 2006 and March 31,
      2005***





**Statement
                of Operations for Three Months Ended March 31**
            
            
            **2006**
            
            
            
            2005
            
            
            
            Change
            
            
            %Net
                revenues
            
            **$**
            **1,098,791**
            
            
            $
            1,677,414
            
            
            $
            (578,623
            )
            
            34
            %Cost
                of sales
            
            
            **463,612**
            
            
            
            508,785
            
            
            
            (45,173
            )
            
            9
            %Gross
                profit
            
            **$**
            **635,179**
            
            
            $
            1,168,629
            
            
            $
            (533,450
            )
            
            46
            %Total
                operating expenses
            
            
            **(831,049**
            **)**
            
            
            (1,209,586
            )
            
            
            378,537
            
            
            31
            %Registration
                rights penalties
            
            
            **(49,314**
            **)**
            
            
            ---
            
            
            
            (49,314
            )
            
            100
            %Loss
                on fair value adjustment of derivatives
            
            
            **(608,872**
            **)**
            
            
            (218,748
            )
            
            
            (390,124
            )
            
            178
            %Other
                income (expenses)
            
            
            **(1,932**
            **)**
            
            
            (3,856
            )
            
            
            1,924
            
            
            50
            %Loss
                before income taxes
            
            **$**
            **(855,988**
            **)**
            
            $
            (263,561
            )
            
            $
            (592,427
            )
            
            225
            %Provision
                for income taxes
            
            
            **(30,808**
            **)**
            
            
            149,489
            
            
            
            (180,297
            )
            
            121
            %Net
                loss
            
            **$**
            **(886,796**
            **)**
            
            $
            (114,072
            )
            
            $
            (772,724
            )
            
            677
            %





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
      approximately 29% of our annual sales.





Our
      gross
      profit decreased approximately $533,000 from a gross profit of approximately
      $1,168,000 for the three months ended March 31, 2005 to a gross profit of
      approximately $635,000 for the three months ended March 31, 2006. Further,
      we
      incurred a net loss of approximately $887,000 for the three months ended March
      31, 2006, representing an increase of approximately $773,000 in our net loss
      from approximately $114,000 for the three months ended March 31, 2005. These
      negative results of operations are primarily attributable to the
      following:





For
      the
      three months ended March 31, 2006:





▪
            our
                gross revenues decreased approximately $802,000 to approximately
                $
                1,182,000 for the three months ended March 31, 2006 from approximately
                $1,984,000 for the three months ended March 31, 2005. This decrease
                is
                primarily attributable to the following:▪
            the
                lack of product releases during the three months ended March 31,
                2006
                compared to the three months ended March 31, 2005;▪
            a
                delay in our annual release of Membership Plus®,
                which typically is released in the month of February, but due to
                the
                unexpected loss of our primary developer for Membership Plus®,
                is anticipated for releasein
                May or June 2006; and▪
            the
                early release of an upgrade to our flagship product,
                QuickVerse®,
                which was released in September 2005 (nine months following the release
                of
                our 2004 upgrade);▪
            we
                incurred liquidated damage penalties of approximately $49,000 in
                connection with our failure to meet certain contractual registration
                obligations; and▪
            we
                recognized a loss of approximately $609,000 related to the fair value
                adjustment of derivatives.





Offsetting
      to some degree the negative results of operations detailed above were two
      positive developments during the three months ended March 31, 2006. First,
      our
      registration statement filed on Form SB-2, originally filed on November 22,
      2004, was declared effective by the SEC on February 1, 2006, and therefore,
      the
      liquidated damage penalties have stopped accruing. Second, we were able to
      remain cash positive despite our decrease in gross revenues for the three months
      ended March 31, 2006.





-2-
 Table
          of Contents


***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 products or product and
      service packages, we allocate and defer revenue for the undelivered products
      or
      product and service packages based on their vendor-specific objective evidence
      of fair value, which is generally the price charged when that product or product
      and service package is sold separately.





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 61% of our 2005 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 months ended March 31, 2005 and 2006, 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, price protections or price 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 anticipate implementing a price protection program within the third
      quarter of 2006 on our current QuickVerse ® 2006
      titles within the Christian Booksellers Association retail channel in order
      to
      prepare for our next updated release of QuickVerse ® 2007.
      QuickVerse ® 2007 is
      anticipated to be released in September 2006.





Software
      products are sold separately, without an obligation of 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 March 31**
            
            
            **2006**
            
            **%
                to Sales**
            
            
            
            2005
            
            %
                to Sales
            
            
            
            Change
            
            %Gross
                revenues
            
            **$**
            **1,182,071**
            
            **100**
            **%**
            
            $
            1,984,036
            
            100
            %
            
            $
            (801,965
            )
            40
            %Less
                reserve for sales returns and allowances
            
            
            **(83,280**
            **)**
            **-7**
            **%**
            
            
            (306,622
            )
            -15
            %
            
            
            223,342
            
            73
            %Net
                revenues
            
            **$**
            **1,098,791**
            
            **93**
            **%**
            
            $
            1,677,414
            
            85
            %
            
            $
            (578,623
            )
            34
            %





Gross
      revenues decreased approximately $802,000 from approximately $1,984,000 for
      the
      three months ended March 31, 2005 to approximately $1,182,000 for the three
      months ended March 31, 2006. We believe that this decrease was primarily
      attributable to the lack of product releases during the three months ended
      March
      31, 2006 as compared to the three months ended March 31, 2005. The following
      products were released during our corresponding first quarters:





First
      Quarter 2005





▪
            an
                enhanced version of our top financial and data management product,
                Membership Plus®,
                including Membership Plus®Standard Edition, with a suggested retail price of $149.95, and Membership
                Plus®Deluxe Edition, with a suggested retail price of
                $349.95;▪
            an
                enhanced version of QuickVerse®2005 Essentials, with a suggested retail price of $49.95; and▪
            QuickVerse®2005 Platinum Edition, with a suggested retail price of
                $799.95.





First
      Quarter 2006





▪
            QuickVerse®2006 Parable Edition, with a suggested retail price of $49.95;
                and▪
            QuickVerse®2006 Bible Suite, with a suggested retail price of
                $29.95.





Of
      note,
      and generally, the retail price points for our products released during the
      three months ended March 31, 2006 were significantly less than those released
      during the three months ending March 31, 2005. Furthermore, due to the
      unexpected loss of our primary developer for Membership Plus ® in May
      2005, we have experienced a delay in our annual release of Membership
      Plus ® ,
      which
      typically is released in the month of February. Membership Plus ® 2006 is
      anticipated to be released at the end of May or early June 2006. Finally, we
      believe we experienced a decrease in gross revenues due to the early release
      of
      an upgrade to our flagship product, QuickVerse ® .
      QuickVerse ® 2006 was
      released in September 2005 nine months following our 2004 upgrade release of
      this product. In the past, we have experienced greater sales within the first
      quarter of the calendar year due to the then recent upgrade releases of our
      two
      main product lines, QuickVerse ® and
      Membership Plus ® .





During
      each of the quarters ending March 31, 2005 and 2006, our sales efforts were
      focused on directly targeting end-users through telemarketing and Internet
      sales. Due to the consistency in our development schedule and the annual
      releases of our flagship product, QuickVerse ® ,
      upgrade
      sales are not increasing at a rapid rate. However, we anticipate that revenues
      will increase through 2006 as we continue to expand the content available for
      our QuickVerse ® products, develop new products for multiple platforms, and offer our products
      at
      a range of price points intended to appeal to various market sub-segments.





Sales
      returns and allowances decreased approximately $224,000 from approximately
      $307,000 for the three months ended March 31, 2005 to approximately $83,000
      for
      the three months ended March 31, 2006, and decreased as a percentage of gross
      sales from approximately 15% for the three months ended March 31, 2005 to
      approximately 7% for the three months ended March 31, 2006. This decrease is
      again mainly attributable to our lack of product releases during the three
      months ended March 31, 2006. Typically after a new product release, sales
      returns and allowances trend upward as distributors and retail stores will
      return old product in exchange for the new product release. With
      QuickVerse ® 2006
      shipping in September 2005 as compared to QuickVerse ® 2005 in
      December 2004, just nine months earlier, we experienced a greater increase
      in
      sales returns and allowances during the fourth quarter of 2005. During the
      three
      months ended March 31, 2005 the following items contributed to the sales returns
      and allowances:





-4-
 Table
          of Contents


▪
            price
                protections afforded to consumers and retailers who had purchased
                prior
                versions of Membership Plus®and
                QuickVerse®within
                one year or less of our release of upgraded versions of each of Membership
                Plus®,
                in February 2005, and QuickVerse®,
                in September 2005. Historically, our product upgrades have extended
                over
                two to three years and therefore, price protections were not issued;
                and▪
            increased
                price points associated with products
                introduced.





Overall,
      we expect to release enhanced versions of our biggest-selling products on an
      annual basis generally going forward, and anticipate sales returns and
      allowances as a percentage of gross revenues to decrease over time as a result
      of increased stability in the functionality of our products, decreasing reliance
      on retail sales and increasing reliance on direct sales, which have historically
      resulted in fewer returns, and improved planning in the timing of new product
      version releases.





***Cost
      of Sales***





**Cost
                of Sales for Three Months Ended March 31**
            
            
            **2006**
            
            **%
                to Sales**
            
            
            
            2005
            
            %
                to Sales
            
            
            
            Change
            
            %Direct
                costs
            
            **$**
            **139,634**
            
            **12**
            **%**
            
            $
            172,036
            
            9
            %
            
            $
            (32,402
            )
            19
            %Less
                reserve for sales returns and allowances
            
            
            **(12,420**
            **)**
            **-1**
            **%**
            
            
            (46,605
            )
            -2
            %
            
            
            34,185
            
            73
            %Amortization
                of software development costs
            
            
            **184,128**
            
            **16**
            **%**
            
            
            182,688
            
            9
            %
            
            
            1,440
            
            1
            %Royalties
            
            
            **106,745**
            
            **9**
            **%**
            
            
            135,000
            
            7
            %
            
            
            (28,255
            )
            21
            %Freight-out
            
            
            **30,995**
            
            **3**
            **%**
            
            
            50,387
            
            3
            %
            
            
            (19,392
            )
            38
            %Fulfillment
            
            
            **14,530**
            
            **1**
            **%**
            
            
            15,279
            
            1
            %
            
            
            (749
            )
            5
            %Cost
                of sales
            
            **$**
            **463,612**
            
            **39**
            **%**
            
            $
            508,785
            
            26
            %
            
            $
            (45,173
            )
            9
            %





Cost
      of
      sales consists primarily of royalties paid to third party providers of
      intellectual property and the direct costs and manufacturing overhead required
      to reproduce, package, fulfill and ship our software products. Direct costs
      and
      manufacturing overhead also include amortized software development costs and
      non-capitalized technical support wages. The direct costs and manufacturing
      overhead decreased approximately $17,000 from approximately $374,000 for the
      three months ended March 31, 2005 to approximately $357,000 for the three months
      ended March 31, 2006 and increased as a percentage of gross revenues
      approximately 11% for the three months ended March 31, 2006. The overall
      percentage increase resulted directly from amortization of software development
      costs. The amortization recognized during the three months ended March 31,
      2006
      resulted from several new software releases in 2005 and 2006 including
      Membership Plus ® 2005,
      QuickVerse ® Macintosh, Sermon Builder ® 4.0,
      QuickVerse ® 2006,
      QuickVerse ® 2006
      Mobile and QuickVerse 2006 ® Bible
      Suite. The shorter timeframes between our product upgrades along with the
      increased amount of product releases led to the increased amount of amortization
      recognized. During the three months ended March 31, 2005 we continued to
      amortize the December 2004 release of QuickVerse ® 2005 and
      the February 2005 release of Membership Plus ® 2005.
      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.





Fulfillment
      costs from a third-party warehouse and included in the manufacturing overhead
      costs noted above remained steady at approximately $15,000 for the three months
      ended March 31, 2005 and 2006. Our fulfillment center continues to improve
      its
      efficiency which has led to the steady rate in fulfillment costs, as well as
      a
      decrease in freight costs.





-5-
 Table
          of Contents


Royalties
      paid to third party providers of intellectual property decreased approximately
      $28,000 from approximately $135,000 for the three months ended March 31, 2005
      to
      approximately $107,000 for the three months ended March 31, 2006 and increased
      approximately 2% as a percentage of gross revenues for the three months ended
      March 31, 2006. The overall percentage increase in royalties paid for the three
      months ended March 31, 2006 reflects the following:





▪
            sales
                of QuickVerse®2005 editions to a liquidator in the first quarter of 2006 and no
                sales to
                a liquidator in the first quarter of 2005;▪
            our
                increased sales focus on the QuickVerse®product line which have associated royalty fees; and▪
            our
                decreased sales focus on the Membership Plus®product line, which has no associated royalty fees. We have experienced
                a
                delay in our annual upgrade release of Membership Plus®for the first quarter of 2006 and during the first quarter of 2005,
                we
                released an upgrade to Membership Plus®in
                February 2005.





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, 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.





Software
      development costs are expensed as incurred as research and development until
      technological feasibility and marketability have been established, at which
      time
      development costs are capitalized until the software title is available for
      general release to customers. Software development is segregated by title and
      technology platform. Once a product has been successfully released, subsequent
      revisions and upgrades are deemed to constitute development, and, accordingly,
      the costs of the revision and upgrade are capitalized. Capitalized costs are
      amortized on a product-by-product basis using the greater of (i) straight-line
      amortization over the estimated life of the product 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.





Our
      software development costs for the three months ending March 31, 2005 and 2006
      are summarized in the table below. These costs, consisting primarily of direct
      and indirect labor and related overhead charges, capitalized during the three
      months ended March 31, 2005 and 2006, were approximately $265,000 and
      approximately $63,000, respectively. Accumulated amortization of these
      development costs, which were included in cost of sales, totaled approximately
      $183,000 and approximately $184,000 for the three months ended March 31, 2005
      and 2006, respectively. The increase in the amortization is a result of the
      shorter timeframes between our product upgrades along with the increased amount
      of product releases. Furthermore, the decrease in the capitalized costs reflects
      that during the three months ended March 31, 2005 we were capitalizing the
      development costs related to our QuickVerse ® Macintosh product line which was our first product for the Macintosh ® platform.





**Software
                Development Costs For Three Months Ended March 31**
            
            
            **2006**
            
            
            2005Beginning
                balance
            
            **$**
            **707,067**
            
            $
            701,289Capitalized
            
            
            **63,231**
            
            
            264,649Amortized
                (Cost of sales)
            
            
            **184,128**
            
            
            182,688Ending
                balance
            
            **$**
            **586,170**
            
            $
            783,250Research
                and development expense (General and administrative)
            
            **$**
            **52,232**
            
            $
            37,080





-6-
 Table
          of Contents


***Sales,
      General and Administrative***





**Sales,
                General and Administrative Costs for Three Months Ended March
                31**
            
            
            **2006**
            
            **%
                to Sales**
            
            
            
            2005
            
            %
                to Sales
            
            
            
            Change
            
            %***Selected
                expenses:***Commissions
            
            **$**
            **60,365**
            
            **5**
            **%**
            
            $
            270,815
            
            14
            %
            
            $
            (210,450
            )
            78
            %Advertising
                and direct marketing
            
            
            **38,246**
            
            **3**
            **%**
            
            
            156,632
            
            8
            %
            
            
            (118,386
            )
            76
            %**Total
                sales and marketing**
            
            **$**
            **98,611**
            
            **8**
            **%**
            
            $
            427,447
            
            22
            %
            
            $
            (328,836
            )
            77
            %Research
                and development
            
            
            **52,232**
            
            **4**
            **%**
            
            
            37,080
            
            2
            %
            
            
            15,152
            
            41
            %Personnel
                costs
            
            
            **330,006**
            
            **28**
            **%**
            
            
            344,301
            
            17
            %
            
            
            (14,295
            )
            4
            %Legal
            
            
            **24,499**
            
            **2**
            **%**
            
            
            35,018
            
            2
            %
            
            
            (10,519
            )
            30
            %Accounting
            
            
            **34,423**
            
            **3**
            **%**
            
            
            7,901
            
            0
            %
            
            
            26,522
            
            336
            %Rent
            
            
            **23,925**
            
            **2**
            **%**
            
            
            20,167
            
            1
            %
            
            
            3,758
            
            19
            %Telecommunications
            
            
            **10,547**
            
            **1**
            **%**
            
            
            21,165
            
            1
            %
            
            
            (10,618
            )
            50
            %Corporate
                services
            
            
            **18,000**
            
            **2**
            **%**
            
            
            32,979
            
            2
            %
            
            
            (14,979
            )
            45
            %Other
                general and administrative costs
            
            
            **92,923**
            
            **8**
            **%**
            
            
            137,107
            
            7
            %
            
            
            (44,184
            )
            32
            %**Total
                general and administrative**
            
            **$**
            **586,555**
            
            **50**
            **%**
            
            $
            635,718
            
            32
            %
            
            $
            (49,163
            )
            8
            %





With
      gross revenues decreasing approximately $802,000 from our three months ended
      March 31, 2005 to our three months ended March 31, 2006, total sales, general
      and administrative costs also decreased approximately $378,000 from
      approximately $1,063,000 for the three months ended March 31, 2005 to
      approximately $685,000 for the three months ended March 31, 2006. Of the total
      sales, general and administrative costs, sales and marketing expenses decreased
      approximately $329,000 from approximately $428,000 for the three months ended
      March 31, 2005 to approximately $99,000 for the three months ended March 31,
      2006. Included in sales expenses, third-party telemarketing commissions
      decreased approximately $211,000 from approximately $271,000 for the three
      months ended March 31, 2005 to approximately $60,000 for the three months ended
      March 31, 2006, and decreased as a percentage of gross revenues from
      approximately 14% to approximately 5% for the three months ended March 31,
      2005
      and 2006, respectively. This decrease is attributed to the use of our own
      in-house direct telemarketing sales team which was developed specifically to
      reduce our reliance on third-party telemarketing services. Advertising and
      direct marketing costs decreased approximately $118,000 from approximately
      $156,000 for the three months ended March 31, 2005 to approximately $38,000
      for
      the three months ended March 31, 2006 and decreased as a percentage of gross
      revenues at from approximately 8% to approximately 3% for the three months
      ended
      March 31, 2005 and 2006, respectively. The decrease in advertising and direct
      marketing costs reflect that there was no upgrade release to the Membership
      Plus ® product
      line in the three months ended March 31, 2006 as compared to the Membership
      Plus ® 2005
      release in February of 2005. Advertising and direct marketing costs are expected
      to increase in future periods as we continue to enhance our product visibility
      online, increase and focus more on our direct marketing efforts, and increase
      the scope and frequency of our print advertising campaigns in order to maximize
      sales associated with new products and product enhancements throughout the
      coming year.





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 $37,000 for the
      three months ended March 31, 2005 compared to approximately $52,000 incurred
      for
      the three months ended March 31, 2006. The increase in 2006 reflects less
      research and development costs that were capitalized for the three months ended
      March 31, 2006 as compared to the three months ended March 31, 2005. During
      the
      three months ended March 31, 2005, we were capitalizing the development costs
      related to our QuickVerse ® Macintosh product line, which was our first product for the
      Macintosh ® platform. Research and development expenses are expected to increase in future
      periods as we continue to expand our internal development team, add new products
      and product versions, and as we continue to expand the array of platforms upon
      which our products are made available.





-7-
 Table
          of Contents


Total
      personnel costs decreased approximately $14,000, from approximately $344,000
      for
      the three months ended March 31, 2005, to approximately $330,000 for the three
      months ended March 31, 2006. Direct salaries and wages also decreased
      approximately $49,000, from approximately $420,000 to approximately $371,000,
      over the same period. The decrease in direct salaries and wages was a direct
      result of losing our main developer for our Membership Plus ® product
      line as well as the loss of our marketing manager. However, we are still focused
      on expanding our sales and marketing team, including additions to our own
      telemarketing sales team, and expanding our product development staff. As a
      percentage of gross revenues, direct salaries and wages increased approximately
      10% from approximately 21% for the three months ended March 31, 2005 to
      approximately 31% for the three months ended March 31, 2006. As a result of
      having restructured our health benefits plans in October 2005, our
      employment-related health care costs remained steady at approximately $32,000
      for the three months ended March 31, 2005 and 2006. In July 2005, we initiated
      a
      Simple IRA retirement plan for our employees and for those who participated
      we
      decided to match up to 3% of the employee’s annual gross pay. Therefore, we
      anticipate that our costs related to this benefit will increase in future
      periods as more employees take advantage of the retirement plan. The
      capitalization of direct and indirect labor and related overhead charges as
      software development costs (see “Cost of Sales” above) decreased by
      approximately $61,000 from approximately $99,000 for the three months ended
      March 31, 2005 to approximately $38,000 for the three months ended March 31,
      2006. This decrease reflects the development of our QuickVerse ® Macintosh product line during the three months ended March 31, 2005, which
      was
      our first product for the Macintosh ® platform. It is anticipated that personnel costs will continue to increase
      in
      future periods as operating capital is available and deployed to further fund
      the staffing requirements of our product development, marketing and direct
      sales
      teams.





Direct
      legal costs decreased approximately $10,000 for the three months ended March
      31,
      2006 as a result of our registration statement on Form SB-2, originally filed
      on
      November 22, 2004, having been declared effective by the SEC on February 1,
      2006. It is anticipated that legal costs will increase in future periods as
      we
      continue to meet our ongoing SEC reporting and corporate governance obligations,
      hold our first annual meeting of shareholders in over five years, possibly
      raise
      additional capital, and pursue our business plan for growth by potentially
      acquiring other companies or product lines.





Accounting
      and audit related expenses increased approximately $27,000 for the three months
      ended March 31, 2006 as a result of engaging a new principal accounting firm
      for
      our year end 2005 audit. It is anticipated that accounting costs will continue
      to increase in the future as we expect that our fees payable to the new
      principal accounting firm, which we expect to utilize on an ongoing basis,
      will
      generally be higher than those payable to our former accounting
      firm.





Rent
      costs increased approximately $4,000 for the three months ended March 31, 2006
      as a result of periodic percentage increase provisions in our leases agreements.





Telecommunications
      costs decreased approximately $11,000 for the three months ended March 31,
      2006
      as a result of our having switched our local and long-distance carriers
      beginning in February 2005. Our call volume enabled us to change our service
      to
      dedicated T-1 lines which in turn reduced our long-distance charges. We also
      invested in internet protocol phones for our remote locations which reduced
      the
      overall local and long distance charges in our Illinois and Iowa locations.
      Furthermore, we experienced a decrease in call volume in the technical support
      and customer service departments for the three months ended March 31, 2006
      due
      to the delayed Membership Plus ® upgrade
      release.





Finally,
      corporate service fees decreased approximately $15,000 for the three months
      ended March 31, 2006 resulting from the expiration of an independent consulting
      agreement and the resultant ability on our part to cease carrying the associated
      expense for a 2004 issuance to such consultant of a warrant to purchase 600,000
      shares of common stock which had been allocated over the term of the agreement.
      We currently engage the services of an independent consultant and an investor
      relations firm and therefore, we expect these fees to increase in future
      periods.





-8-
 Table
          of Contents


***Registration
      Rights Penalties***





As
      of
      March 31, 2006, and in connection with a July 19, 2004 private placement with
      Barron Partners, LP and a certain Registration Rights Agreement, as amended,
      we
      have accrued a total of approximately $490,000 (284 days at $1,726 per day)
      in
      penalties under the terms of the Registration Rights Agreement, of which we
      have
      paid $150,000. On April 7, 2006, we signed a two-year promissory note for
      $336,000 together with simple interest at the rate of 8% per annum with Barron
      Partners for the unpaid registration rights penalties. The note agreement calls
      for monthly installments for the first twelve months of $10,000, beginning
      May
      1, 2006 and $20,000 per month thereafter. The accrual and payment on the
      registration rights penalties has had 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
      net
      loss for the quarter.





***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 shall continue to be, until each is either fully
      exercised or expires, adjusted to fair value at each balance sheet date and
      is
      accordingly reassessed at each such time 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 March 31, 2005
      and 2006, the fair value of the derivative liability was approximately
      $2,188,000 and $2,671,000, respectively, and a fair value adjustment of
      approximately $219,000 and $609,000, respectively, has been included in other
      expenses for the quarters then ended.





***Amortization***





Amortization
      expenses remained steady at approximately $133,000 for the three months ended
      March 31, 2005 and 2006. The software license acquired from TLC in July of
      1999
      (the “1999 license”) is amortized over a 10 year useful life. Amortization
      expenses for 2005 and 2006 reflects the continual amortization of the software
      license as well as the amortization of our website, www.quickverse.com, which
      we
      launched 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 an 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 March 31, 2006, management adjusted the amount of
      valuation allowance based on the assessment that we will produce sufficient
      income in the future to realize our net deferred tax asset. The resulting
      deferred tax liability reflects income taxes payable in future periods on the
      net deductible differences related to the 1999 license. We currently have net
      operating loss carryforwards, for income tax purposes, of approximately
      $8,462,000. The carryforwards are the result of income tax losses generated
      in
      2000 ($2,338,000 expiring in 2020), 2001 ($5,168,000 expiring in 2021) and
      2005
      ($956,000 expiring in 2025). We will need to achieve a minimum annual taxable
      income, before deduction of operating loss carryforwards, of approximately
      $527,000 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.





-9-
 Table
          of Contents


***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 is not limited to the exercise of
      outstanding warrants and pursuit of other financing options such as commercial
      loans, common stock and/or preferred stock issuances and convertible notes.
      At
      this time, we have no legally committed funds for future capital expenditures
      including software development.





**Working
                Capital at March 31**
            
            
            **2006**Current
                assets
            
            **$**
            **687,051**Current
                liabilities
            
            **$**
            **4,006,700**Retained
                deficit
            
            **$**
            **(8,638,893**
            **)**





As
      of
      March 31, 2006, we had approximately $687,000 in current assets, approximately
      $4,007,000 in current liabilities and a retained deficit of approximately
      $8,639,000. We had a loss before income taxes of approximately $856,000 and
      a
      net loss after income taxes of approximately $887,000 for the three months
      ended
      March 31, 2006. For the three months ended March 31, 2006, we had registration
      rights penalties of approximately $49,000 and a related loss of approximately
      $609,000 from the fair value adjustment of derivatives. See “Results Of
      Operations” above.





**Cash
                Flows for Three Months Ended March 31**
            
            
            **2006**
            
            
            
            2005
            
            
            
            Change
            
            %Cash
                flows provided by operating activities
            
            **$**
            **6,878**
            
            
            $
            247,533
            
            
            $
            (240,655
            )
            97
            %Cash
                flows (used) by investing activities
            
            **$**
            **(70,573**
            **)**
            
            $
            (279,230
            )
            
            $
            208,657
            
            75
            %Cash
                flows (used) by financing activities
            
            **$**
            **(2,197**
            **)**
            
            $
            (26,521
            )
            
            $
            24,324
            
            92
            %





Net
      cash
      provided by operating activities was approximately $248,000 for the three months
      ended March 31, 2005, and approximately $7,000 for the three months ended March
      31, 2006. The decrease was primarily due to a decrease in the amounts received
      from customers resulting from decreased sales.





Net
      cash
      used in investing activities was approximately $279,000 for the three months
      ended March 31, 2005 and approximately $71,000 for the three months ended March
      31, 2006. The decrease was mainly the result of our having capitalized fewer
      costs associated with software development.





Net
      cash
      used by financing activities was approximately $27,000 for the three months
      ended March 31, 2005, and approximately $2,000 for the three months ended March
      31, 2006. The decrease reflects payments made on long-term note payables as
      well
      as the decreased balance for long-term note payables.





As
      part
      of the July 19, 2004 financing transaction with Barron Partners, LP, we 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 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. On February 1, 2006, the SEC declared such registration statement
      effective. Due to 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),
      and
      in accordance with the Registration Rights Agreement, we accrued a total of
      approximately $490,000 (284 days at $1,726 per day) in penalties, of which,
      as
      of March 31, 2006, we had paid $150,000. On April 7, 2006, we signed a two-year
      promissory note for $336,000 together with simple interest at the rate of 8%
      per
      annum with Barron Partners for the unpaid registration rights penalties. The
      note agreement calls for monthly installments for the first twelve months of
      $10,000, beginning May 1, 2006 and $20,000 per month thereafter. The accrual
      and
      payment on the registration rights penalties has had 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 net loss for the quarter.





-10-
 Table
          of Contents


***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 2007. We are responsible for all insurance
      expenses associated with this lease.





At
      March
      31, 2006, the future minimum rental payments required under these leases are
      as
      follows:





2006
            
            $
            60,9982007
            
            
            31,248Total
                future minimum rental payments
            
            $
            92,246





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 March 31, 2006 for each of
      the
      next five years and in the aggregate are:





2006
            
            $
            10,2942007
            
            
            13,7262008
            
            
            13,7262009
            
            
            12,5822010
            
            
            ---Total
                minimum lease payments
            
            
            50,328Less:
                Amount representing interest
            
            
            9,554Total
                obligations under capital lease
            
            
            40,774Less:
                Current installments of obligations under capital lease
            
            
            9,456Long-term
                obligation under capital lease
            
            $
            31,318





***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
      became effective for us this first quarter of fiscal 2006.




-11-
 Table
          of Contents


**ITEM
      3. CONTROLS AND PROCEDURES**





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





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





**Disclosure
      Controls and Procedures**





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





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





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





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





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





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





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





-12-
 Table
          of Contents


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





No
      changes in our disclosure controls and procedures, internal control over
      financial reporting or other factors have occurred during the fiscal quarter
      covered by this report that would materially affect or be reasonably likely
      to
      materially affect our disclosure controls and procedures or internal control
      over financial reporting.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS.**





As
      of the
      date of this quarterly report on Form 10-QSB for the period ended March 31,
      2006, there were no pending material legal proceedings to which we were a party
      and we were not aware that any were contemplated. There can be no assurance,
      however, that we will not be made a party to litigation in the future. Moreover,
      there can be no assurance that our insurance coverage will prove adequate to
      cover all liabilities arising out of any claims that may be initiated against
      us
      in the future. Any finding of liability imposed against us coupled with a lack
      of corresponding insurance coverage is likely to have an adverse effect on
      our
      business, our financial condition, and including liquidity and profitability,
      and our results of operations.





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





**Date
                Securities Issued**
            
            
            **Securities
                Title**
            
            
            **Issued
                to**
            
            
            **Number
                of Securities Issued**
            
            
            **Consideration****Common
                Stock Issuances****Issued
                for compensation to board of directors**3/31/2006
            
            
            Common
                Stock
            
            
            Independent
                Board of Directors
            
            
            438,462
            
            $
            57,000**Common
                Stock Warrant Issuances****Issued
                for compensation for legal services**3/31/2006
            
            
            Common
                Stock
            
            
            Michael
                Membrado
            
            
            300,000
            
            $
            7,958**
                Consideration is based on the negotiated fair value of the services
                received.





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





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





There
      were no reportable events under this Item 3 during the quarterly period ended
      March 31, 2006.





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





No
      matters were submitted to a vote of our stockholders during the quarterly period
      ended March 31, 2006.





-13-
 Table
          of Contents


**ITEM
      5. OTHER INFORMATION.**


The
        Annual Meeting of the Stockholders of Findex.com, Inc. will be held on September
        14, 2006. Stockholders of record who wish to submit a proposal at the 2006
        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
        July 17, 2006, and no later than August 16, 2006.
 
 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)
            Restated
                Articles of Incorporation of Findex.com, Inc. dated June 1999 incorporated
                by reference to Exhibit 3.1 on Form 8-K filed March 15, 2000.3(i)(2)
            Amendment
                to Articles of Incorporation of Findex.com, Inc. dated November 10,
                2004
                incorporated by reference to Exhibit 3.1(ii) on Form 10-QSB filed
                November
                10, 2004.3(ii)
            Restated
                By-Laws of Findex.com, Inc., incorporated by reference to Exhibit
                3.3 on
                Form 8-K filed March 15, 2000.10.1
            Stock
                Incentive Plan of Findex.com, Inc. dated May 7, 1999, incorporated
                by
                reference to Exhibit 10.1 on Form 10-KSB/A filed May 13,
                2004.10.2
            Share
                Exchange Agreement between Findex.com, Inc. and the stockholders
                of Reagan
                Holdings Inc., dated March 7, 2000, incorporated by reference to
                Exhibit
                2.1 on Form 8-K filed March 15, 2000.10.3
            License
                Agreement between Findex.com, Inc. and Parsons Technology, Inc. dated
                June
                30, 1999, incorporated by reference to Exhibit 10.3 on Form 10-KSB/A
                filed
                May 13, 2004.10.4
            Employment
                Agreement between Findex.com, Inc. and Steven Malone dated July 25,
                2003,
                incorporated by reference to Exhibit 10.4 on Form 10-KSB/A filed
                May 13,
                2004.10.5
            Employment
                Agreement between Findex.com, Inc. and Kirk Rowland dated July 25,
                2003,
                incorporated by reference to Exhibit 10.5 on Form 10-KSB/A filed
                May 13,
                2004.10.6
            Employment
                Agreement between Findex.com, Inc. and William Terrill dated June
                7, 2002,
                incorporated by reference to Exhibit 10.6 on Form 10-KSB/A filed
                May 13,
                2004.10.7
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and John A.
                Kuehne
                dated July 25, 2003, incorporated by reference to Exhibit 10.7 on
                Form
                10-KSB/A filed May 13, 2004.10.8
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and Henry M.
                Washington dated July 25, 2003, incorporated by reference to Exhibit
                10.8
                on Form 10-KSB/A filed May 13, 2004.10.9
            Restricted
                Stock Compensation Agreement between Findex.com, Inc. and William
                Terrill
                dated July 25, 2003, incorporated by reference to Exhibit 10.9 on
                Form
                10-KSB/A filed May 13, 2004.10.10
            Stock
                Purchase Agreement, including the form of warrant agreement, between
                Findex.com, Inc. and Barron Partners, LP dated July 19, 2004, incorporated
                by reference to Exhibit 10.1 on Form 8-K filed July 28,
                2004.10.11
            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.




-14-
 Table
          of Contents




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, 2000.31.1
            Certification
                of Findex.com, Inc. Chief Executive Officer, Steven Malone, required
                by
                Rule 13a-14(a) or Rule 15d-14(a), and dated May 22, 2006. 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 May 22, 2006. 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 May 22,
                2006.
                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 May 22,
                2006.
                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:
                May 22, 2006
            By
            /s/
                Steven MaloneSteven
                MalonePresident
                and Chief Executive Officer





Date:
                May 22, 2006
            By
            /s/
                Kirk R. RowlandKirk
                R. Rowland, CPAChief
                Financial Officer




-15-
 Table
          of Contents