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Item 1.01.
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Entry into a Material Definitive Agreement.
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Acquisition of Previously Non-Owned Interest
in Advanced Cement Sciences LLC
On December 24, 2018, and in a series of separate
but related taxable transactions, Findex.com, Inc. (“Findex,” the “Company,” “we,” “us”)
acquired the 68.95% economic – and 68.42% voting – interests not previously owned by it in Advanced Cement Sciences
LLC (formerly Advanced Nanofibers LLC, and referred to hereinafter as “Advanced”), resulting in the Company owning
100% of Advanced as of the date hereof. Prior to the consummation of these transactions, effected separately with each of the other
four holders of membership interests in Advanced, we had owned a 31.05% economic – and 31.58% minority voting – interest
in Advanced. In exchange for the acquisition by the Company of such combined membership interests, the Company issued to the holders
thereof a combined total of 175,000,000 shares of Company common stock, including 57,458,335 shares, indirectly and through beneficial
ownership, to our president and chief executive officer, Steven Malone, and 57,458,333, also indirectly and through beneficial
ownership, to our corporate and securities legal counsel, Michael Membrado. The agreements pursuant to which this series of transactions
were consummated are included as exhibits 10.50 – 10.53 to this Current Report on Form 8-K.
In connection with the acquisition of this remaining
percentage interest in Advanced, each of the three incumbent managers of Advanced resigned, effective immediately, and the Company
designated itself as the manager of that entity, which now exists as our wholly-owned subsidiary.
In order to enable the issuance by us of the
175,000,0000 shares of Company common stock, which would have otherwise been unavailable in its entirety to be issuable from our
authorized shares due to shares of Company common stock having been previously reserved for issuance in connection with currently
outstanding debt of the Company convertible in accordance with its terms, each of Steven Malone, Michael Membrado, and Micki Malone,
our controller, agreed pursuant to written instruments on December 24, 2018 to relinquish their respective rights of conversion
on Company promissory notes held by them. The agreements pursuant to which these rights were surrendered are included as exhibits
10.54 – 10.56 to this Current Report on Form 8-K.
About Advanced Cement Sciences LLC
Advanced is a Florida-based, development-stage
company that acquired and owns certain intellectual property aimed at the production of advanced concrete and stucco admixtures
and that consists principally of a combination of unique, proprietary formulations and production processes. Advanced is in the
process of developing and commercializing an array of application-specific products that rely on this technology, each of which
are at a different stage of research and development, on the one hand, or very early commercialization, on the other. The technology
was acquired via irrevocable assignment by Advanced in February of 2018 from the individual responsible for its development, Matthew
Piazza, who has been independently consulting for Advanced and is expected to continue to do so for the foreseeable future, though
there is not currently an agreement in place relating to Mr. Piazza’s services going forward. Pursuant to the terms of the
agreement by which Advanced acquired the subject technology from Mr. Piazza, Advanced is obligated to pay to Mr. Piazza a percentage
of all annually distributable income of Advanced based on the gross profit margins of products sold by or for the account of Advanced,
and actually realized by Advanced and not at any time recouped, in accordance with the following schedule:
Gross Margin Actually Realized By
Advanced
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Percentage
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Up To 35%
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0
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%
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35-45%
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1
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%
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45.01-55%
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2
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%
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55.10-65%
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3
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%
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65.01-75%
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4
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%
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75.01% or More
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5
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%
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Individually and indirectly through his interest
in one of the former members of Advanced as well as a controlled entity, Mr. Piazza received 28,729,166 shares of Company common
stock in exchange for the membership interest in Advanced we acquired in the series of transactions consummated on December 24,
2018.
Advanced has not, to date, generated anything
beyond nominal revenues from any developed product lines, though:
(a)
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sales have begun to a company with which Advanced had been affiliated (through common
ownership with one of the beneficial owners from whom we acquired the remaining interest in the subject series of transactions),
United Stone, LLC, and that is currently selling precast decorative lightweight “manufactured stone” product using
one of Advanced’s premier proprietary admixes to Lennar Corporation, a very large homebuilder operating throughout the U.S.;
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(b)
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one product line (a high-performance stucco admix) is believed by us to be ready at
this time for commercialization and market introduction, subject to a variety of questions that remain unresolved, particularly
those associated with continuing uncertainties surrounding (i) the long-term performance characteristics and durability of the
products, (ii) the lack to date of having completed industry-standard testing of such products, (iii) market sizes, (iv) market
receptivity, (v) market penetration rates, (vi) the attainability and sustainability of targeted market price points for such
products in order to achieve established benchmark minimum gross margin thresholds, and (vii) the degree to which stockpiling
speculative inventory will be necessary during the early-going sales period to meet customer demand if and when it materializes
and develops; and
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(c)
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several other cement admix product lines remain (at varying stages) under continuing
research, development and testing for which the potentially definable construction markets are worldwide and very large by any
standard, including ultra-lightweight, ultra-high-strength, and fire-resistant concrete blocks, hollow-core panels, and other
pre-cast construction panels and materials.
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The only material asset of Advanced existing
as of the date hereof is the intellectual property to which it obtained the above-referenced assignment, the value of which remains
highly speculative as of the date hereof, but the prospects for which offer potentially desirable returns for each of at least
several applications in the event of successful product commercialization and market penetration/adoption at targeted price points.
Although there can be no assurances as to the discounted present or future value of Advanced or the technology it owns, and despite
our having been unable as a practical matter - due to prohibitive cost considerations given our current financial condition and
unavailability of allocable cash - to obtain a professional, independent third-party valuation and/or fairness opinion, we have
concluded based on our unique (though necessarily incomplete) knowledge of the relevant facts as a member since inception that
Advanced represents a uniquely worthy investment opportunity for us given the potential revenue-generating value of the intellectual
property that it owns.
Our Historical Involvement With Advanced
The Company was one of three founding members
in Advanced in September 2016. Following an equity restructuring of Advanced that occurred in May 2017 that arose out of the agreed-upon
departure from the enterprise of one of the founding technology firms and the addition of a new member that occurred in July 2017,
until the series of transactions consummated on December 24, 2018, the venture was owned and controlled approximately 93% by its
remaining two founding members, the Company and Nanotech Fibers, LLC, each of which have been actively involved in its development
to date. Although Advanced had been in a purely pre-revenue stage of development, our management team had been devoting a very
significant percentage of its time to the business of this enterprise.
Since September 14, 2016, and for accounting
purposes under FASB guidelines, Advanced has constituted a variable interest entity of which the Company until recently owned a
minority 31.05% economic interest and for which it has been considered the primary beneficiary among the equity participants based
on qualitative and quantitative criteria. For this reason, we have been auditing and consolidating the financial statements of
Advanced together with our own since September 14, 2016.
Pursuant to an unwritten understanding among
the then-members of Advanced, we, as a significant stakeholder in Advanced, began making expenditures on behalf of Advanced in
late 2016 because, as a practical matter, we had available funds to allocate and Advanced was without other sources of available
financing. Although it was never formally agreed to, the basic understanding among the members was that we would make expenditures
on behalf of Advanced that would be treated as a loan (though no interest rate was at any time specified). The reason it was never
reduced to a formal written agreement was that working out the precise and definitive details of such agreement proved ultimately
to be too challenging to be meaningfully effective on a prospective basis given the variety of materials, personnel services, facilities
and other resources involved (shared and/or crossing over between the Company and Advanced), coupled with the reality that the
composition of such expenses was evolving continuously and rapidly. As of December 24, 2018, the date on which the series of transactions
were consummated causing Advanced to have become our wholly-owned subsidiary, Advanced owed us $240,677 for expenditures we had
incurred on behalf of Advanced since September 14, 2016.