FIND Findex Com Inc (CE)

During the period June 6-12, 2019, Findex.com, Inc. (the “Company”) entered into a series of related Securities Exchange Agreements and Securities Purchase Agreements with then Company debtholders by which it effectively restructured what had been an aggregate of $3,714,485 in outstanding debt on its balance sheet and leaving in its stead only a combination of a newly authorized series of convertible preferred stock and warrants to acquire two separate but also recently authorized series’ of convertible preferred stock. These transactions represented a deliberate and carefully planned initiative by the Company aimed at significantly increasing the strength of its balance sheet by eliminating 81% of its previously existing debt and relief from the resulting and mounting financial vulnerability and stress to which the Company had become increasingly exposed in recent years.

As of June 12, 2019, Findex.com, Inc. had total liabilities of $4,577,859 on its balance sheet, and had been facing increasing financial pressures for years, and challenges in raising much-needed working capital, because of it. Through a carefully structured and negotiated series of related transactions constituting a major recapitalization of the company as of June 12, 2019, however, that figure, not yet audited but confirmed by the company’s internal accounting representatives, has been reduced to $863,374. Further, all ongoing interest expense relating to the subject debt has also been eliminated and will no longer be a factor in calculating the net income of the company.

The aggregate $3,714,485 that had existed as outstanding debt obligations on the Company’s balance sheet as of the beginning of the restructuring period consisted of a combination of the following:

Through the afore-referenced series of transactions, and as more fully detailed below, all of such previously existing debt has been, as of June 12, 2019, exchanged for, and effectively converted to, either shares of preferred stock or warrants to acquire shares of preferred stock. On a combined basis, these transactions resulted in the removal of $3,714,485 in otherwise repayable debt obligations of the Company.

The Series RX-1 Preferred Stock Transactions

Between June 6 and 12, 2019, pursuant to certain securities exchange agreements and securities purchase agreements between the Company and various private investors, and in exchange for an aggregate $1,826,180 in debt owed to such parties as of such dates, inclusive of accrued interest, (a portion of which debt had been convertible into Company common stock in accordance with its stated terms and the remainder of which had not), the Company issued to such private investors a total of 1,418,615 shares of Company Series RX-1 preferred stock (the “Series RX-1 Preferred Stock”). As previously disclosed in the Company’s current report on Form 8-K filed with the SEC on May 31, 2019, 1,500,000 shares of the Series RX-1 Preferred Stock, par value $0.001 per share, had been previously authorized by the Company’s board of directors on May 24, 2019 pursuant to its authority to designate serial preferred stock from time to time under Article V Section B of the Company’s Articles of Incorporation (as amended to date, the “Company Articles”), and a certificate of designations amending the Company Articles and reflecting the Series RX-1 was duly filed with the Nevada Secretary of State on May 24, 2019 (as included as Exhibit 3.1 to the Company’s current report on Form 8-K filed with the SEC on May 31, 2019, the “Series RX-1 Certificate of Designations”). Also as previously disclosed in the Company’s current report on Form 8-K filed with the SEC on May 31, 2019, the Series RX-1 Preferred Stock carries the following rights, preferences and privileges:

All of the foregoing notwithstanding, the Series RX-1 Preferred Stock is redeemable by the Company at any time prior to conversion at a price of $1.00 per share.

Though subject to the corresponding documents annexed hereto as Exhibit 10.1, the following table summarizes the Series RX-1 Preferred Stock Transactions:

The Series RX-2 Preferred Stock Warrant Transactions

Between June 6 and 12, 2019, pursuant to certain securities exchange agreements and securities purchase agreements between the Company and certain of its directors and current and former employees, and in exchange for an aggregate $490,658 in debt owed to such parties as of such dates, inclusive of accrued interest, (a portion of which debt had been convertible into Company common stock in accordance with its stated terms and the remainder of which had not), the Company issued to such individuals warrants to purchase a total of 981,316 shares of Company Series RX-2 preferred stock (the “Series RX-2 Preferred Stock”) at a price per share of $0.50 (collectively, the “Series RX-2 Warrants”). As previously disclosed in the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, 1,000,000 shares of the Series RX-2 Preferred Stock, par value $0.001 per share, had been previously authorized by the Company’s board of directors on May 31, 2019 pursuant to its authority to designate serial preferred stock from time to time under Article V Section B of the Company Articles, and a certificate of designations amending the Company Articles and reflecting the Series RX-2 was duly filed with the Nevada Secretary of State on June 3, 2019 (as included as Exhibit 3.1 to the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, the “Series RX-1 Certificate of Designations”).

The Series RX-2 Warrants are exercisable at any time prior to the earlier of (i) the effectiveness of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company, or other similar occurrence involving the Company, or (ii) December 31, 2021.

As previously disclosed in the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, the Series RX-2 Preferred Stock carries the following rights, preferences and privileges:

Though subject to the corresponding documents annexed hereto as Exhibits 10.2, 10.3 and 10.4, the following table summarizes the Series RX-2 Preferred Stock Warrant Transactions:

The Series RX-3 Preferred Stock Warrant Transactions

Between June 6 and 12, 2019, pursuant to certain securities exchange agreements and securities purchase agreements between the Company and certain of its outside professional consultants and employees, and in exchange for an aggregate $1,397,647 in debt owed to such parties as of such dates, inclusive of accrued interest, (a portion of which debt had at one point in time been convertible into Company common stock in accordance with its stated terms and the remainder of which had not), the Company issued to such individuals warrants to purchase a total of 481,212 shares of Company Series RX-3 preferred stock (the “Series RX-3 Preferred Stock”) at a price per share of $5.00 (collectively, the “Series RX-3 Warrants”). ”). As previously disclosed in the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, 500,000 shares of the Series RX-3 Preferred Stock, par value $0.001 per share, had been previously authorized by the Company’s board of directors on May 31, 2019 pursuant to its authority to designate serial preferred stock from time to time under Article V Section B of the Company Articles, and a certificate of designations amending the Company Articles and reflecting the Series RX-3 was duly filed with the Nevada Secretary of State on June 3, 2019 (as included as Exhibit 3.2 to the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, the “Series RX-1 Certificate of Designations”).

Except in the event that certain intervening corporate events trigger acceleration, the rights of the recipients of Series RX-3 Warrants shall only vest and become exercisable as follows:

(i)       until such time following the date of any Series RX-3 Warrant, if at all, that the gross profit of the Company as reported in the Company’s consolidated and audited financial statements contained within its Annual Report on Form 10-K (the “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”) for any then preceding fiscal year during which such Series RX-3 Warrant is outstanding (“Reported Annual Gross Profit”), equals or exceeds $1,000,000, such Series RX-3 Warrants shall not be exercisable for any shares of Series RX-3 Preferred Stock;

(ii)       upon achievement for the first time following the date of any Series RX-3 Warrant, if at all, of a Reported Annual Gross Profit equal to or exceeding $1,000,000, then such Series RX-3 Warrant shall become exercisable for twenty-five percent (25%) of the number of shares of Series RX-3 Preferred Stock for which it is stated to be exercisable in the aggregate as of the date of the filing of the Form 10-K in which the corresponding financial statements have been included;

(iii)       upon achievement for the first time following the date of any Series RX-3 Warrant, if at all, of a Reported Annual Gross Profit equal to or exceeding $2,000,000, then such Series RX-3 Warrant shall become exercisable for twenty-five percent (25%) of the number of shares of Series RX-3 Preferred Stock for which it is stated to be exercisable in the aggregate as of the date of the filing of the Form 10-K in which the corresponding financial statements have been included; provided, however , that, if the achievement of the Reported Annual Gross Profit hurdle set forth in subsection (ii) above shall occur concurrently with the achievement of the Reported Annual Gross Profit hurdle set forth in this subsection (iii), then and in such event, the vesting of the exercise rights relative to shares of Series RX-3 Preferred Stock under such Series RX-3 warrant shall be cumulative (i.e. fifty percent [50%]);

(iv)       upon achievement for the first time following the date of any Series RX-3 Warrant, if at all, of a Reported Annual Gross Profit equal to or exceeding $4,000,000, then such Series RX-3 Warrant shall become exercisable for twenty-five percent (25%) of the number of shares of Series RX-3 Preferred Stock for which it is stated to be exercisable in the aggregate as of the date of the filing of the Form 10-K in which the corresponding financial statements have been included; provided, however , that, if the achievement of the Reported Annual Gross Profit hurdle set forth in subsection (ii) and/or (iii) above shall occur concurrently with the achievement of the Reported Annual Gross Profit hurdle set forth in subsection (iv), then and in such event, the vesting of the exercise rights relative to shares of Series RX-3 Preferred Stock under such Series RX-3 Warrant shall be cumulative (i.e. either fifty percent [50%] or seventy-five percent [75%], as applicable);

(v)       upon achievement for the first time following the date of any Series RX-3 Warrant, if at all, of a Reported Annual Gross Profit equal to or exceeding $8,000,000, then such Series RX-3 Warrant shall become exercisable for twenty-five percent (25%) of the number of shares of Series RX-3 Preferred Stock for which it is stated to be exercisable in the aggregate as of the date of the filing of the Form 10-K in which the corresponding financial statements have been included; provided, however , that, if the achievement of the Reported Annual Gross Profit hurdle set forth in subsection (ii), (iii), and/or (iv) above shall occur concurrently with the achievement of the Reported Annual Gross Profit hurdle set forth in this subsection (v), then and in such event, the vesting of the exercise rights relative to shares of Series RX-3 Preferred Stock under such Series RX-3 Warrant shall be cumulative (i.e. either fifty percent [50%], seventy-five percent [75%], or one hundred percent [100%], as applicable).

Once vested pursuant to the foregoing schedule, the Series RX-3 Warrants are exercisable in accordance with their terms at any time prior to the earlier of (i) the effectiveness of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company, or other similar occurrence involving the Company, or (ii) December 31, 2029.

As previously disclosed in the Company’s current report on Form 8-K filed with the SEC on June 7, 2019, the Series RX-3 Preferred Stock carries the following rights, preferences and privileges:

Though subject to the corresponding documents annexed hereto as Exhibits 10.5, 10.6 and 10.7, the following table summarizes the Series RX-3 Preferred Stock Warrant Transactions:

The Combined Transactions

In total, and as a result of these transactions, 1,418,615 shares of preferred stock, which, in the aggregate, are convertible into 141,861,500 shares of Company common stock, and warrants to purchase an additional 1,462,528 shares of preferred stock, convertible in the aggregate into 579,343,600 shares of Company common stock, were issued. Combined, the aggregate amount of cash potentially realizable by the Company upon exercise of the warrants issued in this series of related restructuring transactions is $2,896,718.

At this time, the subject transactions are not expected by management to carry any adverse tax implications for the Company.

Collectively, the issuances of securities comprising the series of transactions described in this Item 1.01 can be summarized as follows:”

The foregoing description of the Series RX-1 Securities Exchange Agreements, Series RX-2 Securities Exchange Agreements, Series RX-2 Securities Purchase Agreements, Series RX-2 Preferred Stock Purchase Warrant, Series RX-3 Securities Exchange Agreements, Series RX-3 Securities Purchase Agreements, Series RX-3 Preferred Stock Purchase Warrant, and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of each of the Series RX-1 Certificate of Designations (previously included as an exhibit in the Company’s current report on Form 8-K filed with the SEC on May 31, 2019), Series RX-2 and Series RX-3 Certificate of Designations (each previously included as exhibits in the Company’s current report on Form 8-K filed with the SEC on June 7, 2019), Series RX-1 Securities Exchange Agreements, Series RX-2 Securities Exchange Agreements, Series RX-2 Securities Purchase Agreements, Series RX-2 Preferred Stock Purchase Warrant, Series RX-3 Securities Exchange Agreements, Series RX-3 Securities Purchase Agreements, Series RX-3 Preferred Stock Purchase Warrant, which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7, respectively.