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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: June 30, 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
of incorporation or organization) Identification No.)
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 [X] 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: 9,690,812 shares as of June 30, 2000.
Transitional Small Business Format: No
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FindEx.com, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
1999 2000
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 147,272 $ 9,573
Accounts receivable, trade
(net of allowance of $11,000 and $20,000, respectively) 942,568 1,025,186
Inventories 545,348 713,063
Other current assets 13,603 317,805
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TOTAL CURRENT ASSETS 1,648,791 2,065,627
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PROPERTY AND EQUIPMENT, net 97,973 119,317
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OTHER ASSETS
Licenses, net 4,858,695 4,556,692
Other assets, net 9,108 15,190
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TOTAL OTHER ASSETS 4,867,803 4,571,882
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TOTAL ASSETS $6,614,567 $6,756,826
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,153,561 $1,039,511
Accrued royalties 754,825 903,185
Accrued income taxes 770,000 770,000
License fees payable 744,360 --
Other current liabilities 488,311 394,558
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TOTAL CURRENT LIABILITIES 3,911,057 3,107,254
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LONG TERM NOTE PAYABLE 200,000 650,000
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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, 9,072,312 and 9,828,312 shares issued and
outstanding, respectively 9,072 9,828
Paid-in capital 2,248,618 2,925,562
Retained earnings 245,732 64,094
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TOTAL STOCKHOLDERS' EQUITY 2,503,510 2,999,572
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,614,567 $6,756,826
========== ==========
</TABLE>
See accompanying notes.
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FindEx.com, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES, net of reserves and allowances $ -- $ 1,357,938 $ -- $ 3,398,229
COST OF SALES -- 337,870 -- 926,679
------------ ------------ ------------ ------------
GROSS PROFIT -- 1,020,068 -- 2,471,549
OPERATING EXPENSES
Sales -- 163,237 335,934
General and administrative 129,595 996,884 171,220 2,010,902
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 129,595 1,160,121 171,220 2,346,836
------------ ------------ ------------ ------------
EARNINGS (LOSS) BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION (129,595) (140,053) (171,220) 124,713
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES)
Interest income 37 1,924 37 3,405
Other income -- -- -- 1,500
Depreciation and amortization (60) (159,182) (60) (315,958)
Interest expense (1,000) (14,625) (4,000) (28,298)
------------ ------------ ------------ ------------
NET OTHER INCOME (EXPENSES) (1,023) (171,883) (4,023) (339,351)
------------ ------------ ------------ ------------
NET LOSS BEFORE INCOME TAXES (130,618) (311,936) (175,243) (214,638)
INCOME TAXES -- 74,000 -- 33,000
------------ ------------ ------------ ------------
NET LOSS $ (130,618) $ (237,936) $ (175,243) $ (181,638)
============ ============ ============ ============
NET LOSS PER SHARE
Basic $ (0.0202) $ (0.0255) $ (0.0271) $ (0.0194)
============ ============ ============ ============
Diluted $ (0.0195) $ (0.0233) $ (0.0261) $ (0.0178)
============ ============ ============ ============
WEIGHTED NUMBER OF SHARES OUTSTANDING
Basic 7,767,416 9,566,312 6,462,521 9,344,312
============ ============ ============ ============
Diluted 8,017,416 10,421,812 6,712,521 10,199,812
============ ============ ============ ============
</TABLE>
See accompanying notes.
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FindEx.com, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1999 2000
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (175,243) $ (181,638)
Adjustments to reconcile net loss
to cash provided (used) by operating activities:
Depreciation and amortization 60 315,958
Collection on accounts receivable - major customer -- 1,500,000
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable 1,376 (82,618)
Inventory (6,167) (167,715)
Prepaid expenses (38,149) 46,848
Accounts payable 84,478 (114,051)
Accrued royalties -- 148,360
License fees payable -- (744,360)
Other current liabilities (3,535) (93,753)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (137,180) 627,031
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (3,800) (33,588)
Website development costs (8,500) (6,843)
Cash from merger with Reagan Holdings, Inc. -- 701
Payment on business purchased (226,127) --
Payment on license agreements (1,000,000) (1,500,000)
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NET CASH USED BY INVESTING ACTIVITIES (1,238,427) (1,539,730)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Preferred Stock - Series B,
net of issuance costs 1,530,000 --
Proceeds from debt financing -- 450,000
Proceeds from issuance of common stock -- 325,000
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NET CASH PROVIDED BY INVESTING ACTIVITIES 1,530,000 775,000
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 154,393 (137,699)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 212 147,272
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 154,605 $ 9,573
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NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued to acquire Reagan Holdings, Inc.,
a Delaware corporation $ -- $ 150
Common stock issued to satisfy accounts payable -- 100,000
Common stock issued for future investor relations services -- 252,000
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ -- $ 1,423
Income taxes $ -- $ --
</TABLE>
See accompanying notes.
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FindEx.com, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
FindEx.com, Inc. (the "Company") has elected to omit substantially all
footnotes to the financial statements for the three and six months ended
June 30, 2000, since there have been no material changes (other than
indicated in other footnotes) to the information previously reported by the
Company in their Annual Report filed on Form 8-K/A for the Fiscal year
ended December 31, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of
the Company without audit. However, such information reflects all
adjustments which are, in the opinion of management, necessary to properly
reflect the results of the period presented. The information presented is
not necessarily indicative of the results from operations expected for the
full fiscal year.
ACQUISITION OF REAGAN HOLDINGS, INC.
On March 7, 2000, the Company acquired Reagan Holdings, Inc., ("Reagan") a
Delaware corporation. The Company issued 150,000 shares of common stock for
all the outstanding stock of Reagan. The purchase was recorded at a value
of $700. Reagan had assets of $700 and no liabilities at December 31, 1999.
The operating history of Reagan is included in the consolidated numbers of
the Company effective January 1, 2000. The acquisition was recorded using
the purchase method of a business combination.
SUBSEQUENT EVENTS
On July 14, 2000, the Company signed a letter of intent to merge with and
acquire 100% of the outstanding capital stock of 711.NET, Inc., a North
Carolina corporation ("711"). Consumation of the proposed merger will
result in the Company receiving all of the outstanding capital stock of
711. The shareholders of 711 will receive a set number of FindEx shares
according to a formula yet to be agreed upon.
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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 $1,420,938 for the three months ended June 30, 2000
and $3,556,438 for the six months then ended. Since during the period of March
1, 1999 through June 30, 1999, FindEx was still a development stage business,
revenue comparison 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 June 30, 2000 were $1,357,938 which
included $201 for sales discounts and a separate reserve for potential returns
of $62,800. For the six months ended June 30, 2000 the net revenue was
$3,398,229 which included $510 for sales discounts and a separate reserve for
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potential returns of $157,700. 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.
Cost of Sales
Costs of sales were $337,870 in the three months ended June 30, 2000 and
$926,679 for the six months then ended. Gross profit (revenues less cost of
sales) was $1,020,068 for the three month period ending June 30, 2000 and
$2,471,549 for the six months then ended.
The Company's Cost of Sales were comprised of manufacturing and assembly
costs of $224,870 and the Company also had product royalties of $113,000 for
the three month period ending June 30, 2000. The costs of manufacturing and
assembly for the six months ended June 30, 2000 were $666,179 and the cost of
product royalties were $260,500 for the same period.
Selling, General and Administrative Expenses
The selling, general and administrative expenses for FindEx were $996,884
for the three months ended June 30, 2000 and $2,010,902 for the six months then
ended. These costs are primarily personnel, advertising and professional service
related expenses. The Company as a result posted Net Ordinary Income (EBITDA) of
$(140,053) for the three month period ending June 30, 2000 and $124,713 for the
six months then ended.
LIQUIDITY AND CAPITAL RESOURCES
As of the period ending June 30, 2000, FindEx had $6,756,826 in total
assets, $3,757,254 in total liabilities and retained earnings of $64,094. The
Company had a net profit(loss) of $(237,936) for the three months ended June 30,
2000 and $(181,638) for the six months then ended.
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.
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 $325,000 from a stock subscription agreement dated
April 28, 2000. This agreement is for 162,500 restricted shares of FindEx.com,
Inc Common Stock at a price of $2.00 per share. These shares do carry piggyback
registration rights.
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.
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FORWARDING-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.
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PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
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.
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 $325,000 from a stock subscription agreement dated
April 28, 2000.The agreement is for 162,500 restricted shares of FindEx.com,
Inc. Common Stock at a price of $2.00 per share. These shares do carry piggyback
registration rights.
On July 14, 2000 FindEx signed a letter of intent to merge with and acquire
100% of the outstanding capital stock of 711.NET, Inc., a North Carolina
corporation. 711.NET, Inc., creates, aggregates and delivers filtered Internet
content and content management solutions for homes, businesses, and educational
applications through a national network. 711.NET, Inc, was founded in 1996 whose
brands and products include 711 Online, Rated-G Online, Via Family Online,
Netcomply, ISP Brand, The Learning Center, 711 Web Cafe and the Online
Mega-Mall. The agreement is subject to successful negotiation of a Definitive
Agreement in form acceptable to both parties.
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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
June 30, 2000:
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.
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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
August 14, 2000
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