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Nevada
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000-29963
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88-0379462
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(State
or other jurisdiction
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(Commission
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(I.R.S.
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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11204
Davenport Street, Suite 100, Omaha, Nebraska
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68154
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(Address
of principal executive offices)
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(Zip
Code)
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Inventory
located at Parsons Technology’s BMG facility, and not included in the
Asset Purchase Agreement, was originally recorded in the 1999 consolidated
financial statements as a purchase of inventory and subsequent sale
back
to Parsons Technology. We discovered the error during our 2001 arbitration
proceedings with The Learning Company (“TLC”). We originally recorded the
error correction as an adjustment to the beginning retained earnings
of
the year ended December 31, 2000 reported on the Form 10-KSB for
the year
ended December 31, 2001. The revised consolidated statement of operations
for the year ended December 31, 1999 will reflect a decrease to revenue,
cost of sales, and provision for income taxes and will be reported
on Form
10-KSB/A for the year ended December 31,
2000.
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Rebates
payable to a third-party processor were overstated on the consolidated
financial statements for the year ended December 31, 2000. We discovered
the error during the preparation of our condensed consolidated financial
statements for the three months ended March 31, 2004. We originally
recorded the error correction as an adjustment to the beginning retained
earnings of the year ended December 31, 2003 on the 2004 quarterly
and
annual filings. The revised consolidated statement of operations
for the
year ended December 31, 2000 will reflect an adjustment to revenue
and
will be reported on Form 10-KSB/A for the year ended December 31,
2000.
Though rebates were originally recorded as an operating expense,
all
historical rebate activity will be reclassified to be presented as
an
adjustment to revenue in accordance with EITF Issue No.
01-09.
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During
the quarter ended June 30, 2002, we reached a tentative settlement
agreement in our arbitration with TLC. The tentative settlement agreement
resulted in the forgiveness of the final, unpaid installment due
on the
Software License Agreement (“SLA”) and extended the SLA term from 10 years
to 50 years. We originally recorded the final, unpaid installment
of the
SLA as an offset against the recorded historical cost of the SLA
and
recalculated the amortization based on this reduced amount and the
extension of the useful life to 50 years. The revised consolidated
statements of operations for the three months ended June 30, 2002
and
September 30, 2002 and the year ended December 31, 2002 will reflect
the
forgiven installment as debt extinguishment income and an increase
in
amortization expense from reducing the estimated useful life of the
SLA
from 50 years back to 10 years. These revisions will be reported
on Form
10-QSB/A for the three month periods ended June 30, 2002 and September
30,
2002 and on Form 10-KSB/A for the year ended December 31,
2002.
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During
the quarter ended December 31, 2003, we reached a final settlement
agreement in our dispute with The Zondervan Corporation (“Zondervan”) and
TLC. This final settlement extended the life of the SLA, and the
trademarks included therein, indefinitely. We originally reassessed
the
useful life of the SLA to be indefinite, based on the guidelines
of
Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets.
The revised condensed consolidated statements of operations for the
three
months ended March 31, 2003, June 30, 2003, September 30, 2003, March
31,
2004, June 30, 2004, September 30, 2004, and March 31, 2005, along
with
the consolidated statements of operations for the years ended December
31,
2003 and 2004 will reflect an increase in amortization expense from
reducing the estimated useful life of the SLA from indefinite to
10 years.
These revisions will be reported on Form 10-QSB/A for the three month
periods ended March 31, 2004, June 30, 2004, September 30, 2004,
and March
31, 2005 and on Form 10-KSB/A for the year ended December 31,
2004.
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During
the year ended December 31, 2003, we made the decision to no longer
provide support for certain of our products and destroyed all remaining
inventory of those products. We originally recorded this as a
non-recurring item in the “Other income (expense)” section of the
consolidated statements of operations. The revised consolidated statement
of operations for the year ended December 31, 2003 will reflect this
obsolete inventory in cost of sales and will be reported on Form
10-KSB/A
for the year ended December 31,
2004.
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During
the year ended December 31, 2003, we reached a final settlement agreement
in our dispute with Zondervan and TLC. As part of the settlement
process,
we conducted an internal audit (which was verified by an independent
auditor provided by TLC) of the accrued royalties owed Zondervan.
The
audit provided that accrued royalties were overstated due to the
2001 bad
debt recognition of the trade accounts receivable balance of TLC.
The
amount overstated had remained part of the dispute with Zondervan
and
remained in our liabilities until the final settlement was reached.
We
originally reported the adjustment as a non-recurring item in the
“Other
income (expense)” section of the consolidated statement of operations. The
revised consolidated statement of operations for the year ended December
31, 2003 will reflect the adjustment as “Other income” in the “Other
income (expense)” section. In addition, we will provide an expanded
footnote disclosure regarding this transaction. This revision will
be
reported on Form 10-KSB/A for the year ended December 31,
2004.
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During
the year ended December 31, 2003, we reclassified loan proceeds,
and the
corresponding accrued interest payable, that were previously recorded
as
an unsecured note payable. The proceeds were initially recorded as
an
unsecured note payable based on an oral understanding with an employee
of
a third-party consultant in 1999. We had historically accrued interest
on
the outstanding balance at 9%, the rate deemed reasonable by management
at
the time of the oral agreement. We continued to accrue interest on
the
proceeds until we made the determination to reclassify the proceeds
and
accumulated accrued interest. The determination to reclassify the
obligation, and related accrued interest, was made on the basis of
the
combined facts that (i) the obligation exists, if at all, solely
pursuant
to an oral loan agreement made in 1999 in the State of North Carolina
with
a representative of the party to whom the obligation was believed
to have
been owed, (ii) no party has ever made any demand for repayment thereof
despite the fact that no payments have ever been made on the obligation,
(iii) the party believed to be owed the obligation, upon inquiry,
claims
no record of any such obligation, and (iv) the State of North Carolina
Statute of Limitations applicable to oral agreements, believed to
govern
the continued enforceability of the obligation, had expired. We originally
reported the reclassification as a non-recurring item in the “Other income
(expense)” section of the consolidated statement of operations. The
revised consolidated statement of operations for the year ended December
31, 2003 will reflect the adjustment as “Other income” in the “Other
income (expense)” section and will be reported on Form 10-KSB/A for the
year ended December 31, 2004.
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During
the three months ended March 31, 2004, and as a direct result of
the
settlement with Zondervan and TLC, we wrote-off inventory containing
content from Zondervan. Though not technologically obsolete, we were
unable to sell the inventory under the terms of the settlement. We
originally recorded this as a non-recurring item in the “Other income
(expense)” section of the consolidated statement of operations. The
revised condensed consolidated statement of operations for the three
months ended March 31, 2004, June 30, 2004, September 30, 2004 and
for the
year ended December 31, 2004 will reflect this inventory adjustment
in
cost of sales. This revision will be reported on Form 10-QSB/A for
the
three month periods ended March 31, 2004, June 30, 2004, and September
30,
2004 and on Form 10-KSB/A for the year ended December 31,
2004.
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During
the three months ended September 30, 2004, we settled an agreement
with
Swartz Private Equity for early termination. In connection therewith,
we
issued 295,692 shares of common stock valued at $.10 per share and
paid a
cash lump sum of $125,000. We originally recorded this transaction
as
expenses incurred in a withdrawn public offering and reflected it
as a
non-recurring item in the consolidated statement of operations. The
revised condensed consolidated statement of operations for the three
months ended September 30, 2004 and the consolidated statement of
operations for the year ended December 31, 2004 will reflect this
transaction as “Other expenses” in the “Other income (expense)” section.
This transaction will be reported on Form 10-QSB/A for the three
month
period ended September 30, 2004 and on Form 10-KSB/A for the year
ended
December 31, 2004.
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During
the three months ended September 30, 2004, we negotiated settlement
with
several of our creditors. The debt extinguishment was originally
reported
as an extraordinary item, net of income tax effects, on the consolidated
statement of operations. The revised condensed consolidated statement
of
operations for the three months ended September 30, 2004 and the
consolidated statement of operations for the year ended December
31, 2004
will reflect this transaction as “Debt extinguishment income” in the
“Other income (expense)” section. This transaction will be reported on
Form 10-QSB/A for the three month period ended September 30, 2004
and on
Form 10-KSB/A for the year ended December 31,
2004.
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We
will enhance and clarify various 2003 and 2004 disclosures and correct
a
typographical error discovered in a 2004
disclosure.
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Date:
August 9, 2005
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FINDEX.COM,
INC.
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By:
/s/ Steven Malone
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Steven
Malone
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President
& Chief Executive Officer
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