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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: March 31, 2000
Commission File No. 0-29963
FINDEX.COM, INC.
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(Exact name of small business issuer in its charter)
NEVADA 88-0379462
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
11640 ARBOR STREET, SUITE 201, OMAHA, NE 68144
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(Address of principal executive offices)
(402) 333-1900
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(Issuer's telephone number)
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 [ ] No [X]
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: 9,367,312 shares as of May 1, 2000.
Transitional Small Business Format: No
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Registrant's financial statements are filed herewith following the signature
page.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATIONS
The following discussion should be read together with the financial
statements of FindEx.com, Inc., which are included in this Form 10-QSB. The
following discussion contains certain forward-looking statements regarding
FindEx's expectations for its business and its capital resources. These
expectations are subject to various uncertainties and risks that may cause
actual results to differ significantly from these forward-looking statements.
GENERAL
FindEx.com, Inc ("the Company") was incorporated under the laws of the
State of Delaware on December 26,1995 as FinSource, Ltd. In April 1999 the
company merged with FINdex Acquisition Corporation, (FAC) a Delaware corporation
in a stock for stock transaction. Then on April 30, 1999 the Company was
acquired by EJH Entertainment, Inc.(EJH) a Nevada corporation in a stock for
stock transaction and the name of the Company was changed to FindEx.com, Inc.
Both the merger with FAC and the acquisition by EJH were treated as
reorganization mergers with the Company.
The Company is a retail, wholesale and internet supplier of software
products to business and religious organizations and individuals. In July of
1999 the Company completed an exclusive license agreement with Mattel
Corporation for the Parsons Church Division of Mattel. In so doing, FindEx.com
obtained the exclusive right to market, sell and continue to develop several
bible study software products. The Company develops and publishes church and
bible study software products designed to simplify biblical research, and
streamline church office tasks.
Pursuant to a Share Exchange Agreement dated March 07, 2000, FindEx.com,
Inc., a Nevada corporation, acquired all of the issued and outstanding capital
stock of Reagan Holdings, Inc. ("Reagan") from the shareholders of Reagan in a
pro rata exchange for an aggregate of 150,000 shares of FindEx.com's common
stock, par value $0.001 per share (the "Share Exchange"). As a result of the
Share Exchange, 100% of the outstanding capital stock of Reagan is owned by
FindEx.com and Reagan became a wholly-owned subsidiary of FindEx.com. Upon
effectiveness of the Share Exchange, pursuant to Rule 12g-3(a) of the General
Rules and Regulations of the Securities and Exchange Commission, FindEx.com
became the successor issuer to Reagan for reporting purposes under the
Securities Exchange Act of 1934.
RESULTS OF OPERATIONS
FindEx.com has material operations in only one division.
Revenues
Gross revenues were $2,135,481 in the three months ended March 31, 2000.
Since during the period of January 1, 1999 through March 31, 1999, FindEx was
still a development stage business, revenue comparisons to the prior year is not
meaningful; the generation of revenues for the quarter was from internal
operations and did not include revenue from any acquisitions. Net Revenue for
the three months ended March 31, 2000 were $2,040,291 which included $290 for
sales discounts and a separate reserve for potential returns of $94,900. This
return reserve is a based upon a percentage of total retail and direct sales for
the period and may increase or decrease as actual returns are processed.
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Cost of Sales
Costs of sales were $588,810 in the three months ended March 31, 2000.
Gross profit (revenues less cost of sales) was $1,451,481 for the three month
period ending March 31, 2000.
The Company had manufacturing and assembly costs of sales of $441,310. The
Company also had product royalties of $147,500 for the three month period ending
March 31, 2000.
Selling, General and Administrative Expenses
The selling, general and administrative expenses for FindEx were $1,186,716
for the three months ended March 31, 2000. These costs are primarily personnel,
advertising and professional service related expenses. The Company also recorded
one-time costs of $150,000 during the period which are included in the Selling,
General and Administrative expenses related to the acquisition of Reagan
Holdings, Inc. The Company as a result posted Net Ordinary Income (EBITDA) of
$264,766 for the three month period ending March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, FindEx had $1,525,548 in current assets, $3,140,745
in current liabilities and retained earnings of $302,029. The Company had a net
profit of $56,297 for the three months ended March 31, 2000.
Pursuant to a note originally issued to a management company in December
1999, the Company received additional funds in January of 2000, in order to fund
the continued development and sales of its software products and services.
FindEx received $300,000 of additional financing under the note agreement, which
is due in the form of a note payable in December of 2001. This note is unsecured
and bears an annual interest of 9%.
On April 20, 2000, the Company entered into a Corporate Development
Consulting Agreement with Ardt Investment Management, Inc. ("AIM") to provide
support for the Company's further development and growth. The Agreement provides
for a retainer fee of 50,000 shares of Common Stock and a monthly payment of
$2,000 for a period of twelve months commencing one month from the date of
execution of the agreement. The Agreement further provides that delinquent
monthly installments may be paid in cash or by transferring an appropriate
number of free-trading common stock shares valued at a 50% discount to the
market Bid price to AIM per month, upon the due date, in lieu of cash, at AIM's
option. The 50,000 shares are due and paid in two installments of 25,000 shares,
commencing with the execution of the Agreement and the second payment of 25,000
due upon completion of term negotiation and documentation. The Agreement further
provides for 100,000 warrants on the Common Stock shares which were due and
vested immediately upon execution of the agreement. The exercise price is fixed
at $3.00 per share with each warrant being convertible upon exercise into one
share of common stock for a period of one year from the effective date of the
agreement. AIM may, at the time for each payment and at its sole option, elect
to receive all or a portion of said fees in the form of securities, equity, or
financing instruments issued by FindEx to AIM on terms agreed to in writing. In
addition, FindEx agrees to pay AIM various finder fees and/or placement agent
commissions ranging from 2% - 10% according to industry standards.
On April 27, 2000, FindEx signed a Term Sheet with AIM Securities, Inc. to
seek Bridge Financing in the amount of $1M - $5,000,000 through the issuance of
Convertible Debentures with interest accruing on the unpaid principal at a rate
of up to 12%.
The Company received $300,000 from a stock subscription agreement dated
April 28, 2000. This agreement is for 150,000 restricted shares of FindEx.com,
Inc Common Stock at a price of $2.00 per share. These shares do carry piggyback
registration rights.
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FindEx has not entered into any arrangements with any financial
institutions or third parties to provide additional financing. If FindEx is
unable to obtain additional financing or raise adequate working capital in the
amounts desired and on acceptable terms, FindEx may be required to reduce the
scope of its presently anticipated activities.
Management believes that the net proceeds of future anticipated securities
offerings and the on-going results of revenues, which are projected to be
realized from operations, should be sufficient to fund ongoing operations and
its business plan. However, there is no assurance that anticipated offerings
will be undertaken, and if undertaken, in fact, will be successful or the
proceeds derived from such offerings will, in fact, be sufficient to fund
operations and meet the needs of the Company's business plans.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-QSB includes "forward-looking statements"
within the meaning of SECTION 27A of the Securities Act of 1933 and SECTION 21E
of the Securities Exchange Act of 1934. These forward-looking statements may
relate to such matters as anticipated financial performance, future revenues or
earnings, business prospects, projected ventures, new products and services,
anticipated market performance and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. To comply with the terms of the safe harbor, we caution readers that
a variety of factors could cause our actual results to differ materially from
the anticipated results or other expressed in our forward-looking statements.
These risks and uncertainties, many of which are beyond our control, include (i)
the sufficiency of our existing capital resources and our ability to raise
additional capital to fund cash requirements for future operations, (ii)
uncertainties involved in the rate of growth and acceptance of the Internet,
(iii) adoption by the Christian community of electronic technology for gathering
information, facilitating e-commerce transactions, and providing new products,
websites, and services, (iv) volatility of the stock market, particularly within
the technology sector, and the ability to use our capital stock as a currency
for acquisitions, and (v) general economic conditions. Although we believe that
the expectations reflected in these forward-looking statements are reasonable,
we cannot give any assurance that such expectations reflected in these
forward-looking statements will prove to have been correct.
We cannot guarantee any future results, levels of activity, performance or
achievements. 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
quarterly report.
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
On March 4, 2000, the Company ("FindEx") entered into a Service Agreement
("Agreement") with TM Capital Partners LLC ("TM Capital") to effect transactions
intended to merge or otherwise combine FindEx with a United States reporting
company and for related matters. The Agreement calls for FindEx to pay TM
Capital $150,000 for its services.
As a result of the Service Agreement, on March 7, 2000, FindEx entered into
a Share Exchange Agreement with the shareholders ("Shareholders") of all of the
issued and outstanding stock of Reagan Holdings, Inc., a Delaware corporation
("Reagan") whereby the Company agreed to purchase the Reagan Shares from the
Shareholders in exchange for 150,000 shares of FindEx common stock. As a result
of this exchange, Reagan became a wholly-owned subsidiary of FindEx.
On April 20, 2000, the Company entered into a Corporate Development
Consulting Agreement with Ardt Investment Management, Inc. ("AIM") to provide
support for the Company's further development and growth. The Agreement provides
for a retainer fee of 50,000 shares of Common Stock and a monthly payment of
$2,000 for a period of twelve months commencing one month from the date of
execution of the agreement. The Agreement further provides that delinquent
monthly installments may be paid in cash or by transferring an appropriate
number of free-trading common stock shares valued at a 50% discount to the
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market Bid price to AIM per month, upon the due date, in lieu of cash, at AIM's
option. The 50,000 shares are due and paid in two installments of 25,000 shares,
commencing with the execution of the Agreement and the second payment of 25,000
due upon completion of term negotiation and documentation. The Agreement further
provides for 100,000 warrants on the Common Stock shares which were due and
vested immediately upon execution of the agreement. The exercise price is fixed
at $3.00 per share with each warrant being convertible upon exercise into one
share of common stock for a period of one year from the effective date of the
agreement. AIM may, at the time for each payment and at its sole option, elect
to receive all or a portion of said fees in the form of securities, equity, or
financing instruments issued by FindEx to AIM on terms agreed to in writing. In
addition, FindEx agrees to pay AIM various finder fees and/or placement agent
commissions ranging from 2% - 10% according to industry standards.
On April 27, 2000, FindEx signed a Term Sheet with AIM Securities, Inc. to
seek Bridge Financing in the amount of $1M - $5,000,000 through the issuance of
Convertible Debentures with interest accruing on the unpaid principal at a rate
of up to 12%.
The Company received $300,000 from a stock subscription agreement dated
April 28, 2000. The agreement is for 150,000 restricted shares of FindEx.com,
Inc. Common Stock at a price of $2.00 per share. These shares do carry piggyback
registration rights.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBITS
*27.1 Financial Data Schedule
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*Filed herewith
(b) Reports on Form 8-K and Form 8-K/A filed during the three months ended
March 31, 2000:
Form 8-K12G3 dated March 15, 2000 reporting (i) the acquisition by FindEx.com,
Inc of Reagan Holdings, Inc. a Delaware corporation in the development stage of
funding and acquiring companies related to industries in the service, high
technology, product development and financial resources and (ii) the financial
statements and pro forma financial information of the acquired company.
Form 8-K dated April 18, 2000, reporting the change in independent auditors by
the Company from Grant Thorton, LLP to the new accounting firm Crouch, Bierwolf
& Chisholm.
Form 8-K/A dated May 18, 2000, the Company files the audited financial
statements which were not filed with Form 8-K dated March 15, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINDEX.COM, INC.
By: /s/ JOSEPH V. SZCZEPANIAK
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Joseph V. Szczepaniak
President & CEO
May 23, 2000
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FINDEX.COM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,777 $ 147,272
Accounts receivable, trade
(net of allowance of $9,277 and $11,000, respectively) 903,694 942,568
Inventories 602,993 545,348
Other current assets 2,084 13,603
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TOTAL CURRENT ASSETS 1,525,548 1,648,791
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PROPERTY AND EQUIPMENT, net 108,903 97,973
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OTHER ASSETS
Licenses, net 4,707,694 4,858,695
Other assets 9,108 9,108
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TOTAL OTHER ASSETS 4,716,802 4,867,803
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TOTAL ASSETS $6,351,253 $6,614,567
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 993,306 $1,153,561
Accrued royalties 833,643 754,825
Accrued income taxes 811,000 770,000
License fees payable -- 744,360
Other current liabilities 502,796 488,311
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TOTAL CURRENT LIABILITIES 3,140,745 3,911,057
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LONG TERM NOTE PAYABLE 650,000 200,000
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STOCKHOLDERS' EQUITY
Preferred stock, Series A, $.001 par value, 5,000,000
shares authorized, 20,000 shares issued and outstanding 20 20
Preferred stock, Series B, $.001 par value, 5,000,000
shares authorized, 67,500 shares issued and outstanding 68 68
Common stock, $.001 par value, 50,000,000 shares
authorized, 9,222,312 and 9,072,312 shares issued and
outstanding, respectively 9,222 9,072
Paid-in capital 2,249,169 2,248,618
Retained earnings 302,029 245,732
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TOTAL STOCKHOLDERS' EQUITY 2,560,508 2,503,510
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,351,$53 $6,614,567
========== ==========
</TABLE>
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FINDEX.COM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
REVENUES, net of reserves and allowances $2,040,291 $ --
COST OF SALES 588,810 --
---------- ---------
GROSS PROFIT 1,451,481 --
OPERATING EXPENSES
Sales 172,696 --
General and administrative 1,014,020 44,625
---------- ---------
TOTAL OPERATING EXPENSES 1,186,716 44,625
---------- ---------
EARNINGS (LOSS) BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION 264,765 (44,625)
---------- ---------
OTHER INCOME (EXPENSES)
Interest income 1,482 --
Other income 1,500 --
Depreciation and amortization (156,777) --
Interest expense (13,673) --
---------- ---------
NET OTHER INCOME (EXPENSES) (167,468) --
---------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES 97,297 (44,625)
INCOME TAXES (41,000) --
---------- ---------
NET INCOME (LOSS) $ 56,297 $ (44,625)
========== =========
NET EARNINGS (LOSS) PER SHARE
Basic $ 0.0062 $ (0.0087)
========== =========
Diluted $ 0.0056 $ (0.0087)
========== =========
WEIGHTED NUMBER OF SHARES OUTSTANDING
Basic 9,122,312 5,157,625
========== =========
Diluted 9,977,812 5,157,625
========== =========
</TABLE>
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FINDEX.COM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 56,297 $ (44,625)
Adjustments to reconcile net income (loss)
to cash provided (used) by operating activities:
Depreciation and amortization 156,777 --
Collection on accounts receivable - major customer 1,500,000 --
Changes in assets and liabilities, net of
effects of acquisition:
Accounts receivable 38,874 1,376
Inventory (57,645) --
Prepaid expenses 11,519 8,249
Accounts payable (160,255) (11,677)
Accrued royalties 78,818 --
Accrued income taxes 41,000 --
License fees payable (744,360) --
Other current liabilities 14,485 (3,535)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 935,510 (50,212)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (16,705) --
Cash from merger with Reagan Holdings, Inc. 700 --
Payment on license agreements (1,500,000) --
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NET CASH USED BY INVESTING ACTIVITIES (1,516,005) --
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt financing 450,000 --
Proceeds from issuance of Preferred stock -- 140,460
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NET CASH PROVIDED BY INVESTING ACTIVITIES 450,000 140,460
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (130,495) 90,248
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 147,272 212
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,777 $ 90,460
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued to acquire Reagan Holdings, Inc.,
a Delaware corporation $ 150 $ --
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 1,423 $ --
Income taxes $ -- $ --
</TABLE>
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,777
<SECURITIES> 0
<RECEIVABLES> 912,971
<ALLOWANCES> (9,277)
<INVENTORY> 602,993
<CURRENT-ASSETS> 1,525,548
<PP&E> 123,105
<DEPRECIATION> (14,202)
<TOTAL-ASSETS> 6,351,253
<CURRENT-LIABILITIES> 3,140,745
<BONDS> 650,000
0
88
<COMMON> 9,222
<OTHER-SE> 2,551,198
<TOTAL-LIABILITY-AND-EQUITY> 6,351,253
<SALES> 2,135,481
<TOTAL-REVENUES> 2,040,291
<CGS> 588,810
<TOTAL-COSTS> 1,186,716
<OTHER-EXPENSES> (156,777)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13,673)
<INCOME-PRETAX> 97,297
<INCOME-TAX> 41,000
<INCOME-CONTINUING> 56,297
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,297
<EPS-BASIC> .006
<EPS-DILUTED> .006
</TABLE>
