UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 24, 2011
30DC, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND 814-00708 16-1675285
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
80 BROAD STREET, 5TH FLOOR, NEW YORK, NY 10004
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (212) 962-4400
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS. The following is a complete list of financial
statements filed as part of this Report.
30DC, Inc. Audited Financial Statements for the Years Ended
June 30, 2010 and 2009
30DC, INC.
JUNE 30, 2010 FINANCIAL STATEMENTS
INDEX
PAGE 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PAGE 2 BALANCE SHEETS
PAGE 3 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
PAGE 4 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
PAGE 5 STATEMENTS OF CASH FLOWS
PAGE 6 NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of 30DC Inc.
We have audited the accompanying balance sheet of 30DC Inc. (the "Company") as
of June 30, 2010 and the related statements of operations and comprehensive
income (loss), changes in stockholders' deficiency and cash flows for the year
then ended. We have also audited the combined balance sheet of 30DC Inc., 30 Day
Challenge and Immediate Edge as of June 30, 2009 and the related combined
statements of operations and comprehensive income (loss), changes in
stockholders' deficiency and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 30DC Inc., as of June 30, 2010
and the results of its operations and its cash flows for the year then ended and
the combined financial position of 30DC Inc., 30 Day Challenge and Immediate
Edge as of June 30, 2009 and the combined results of their operations and their
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/Marcum LLP
New York, NY
June 24, 2011
-1-
30DC, INC.
Balance Sheets
June June
30, 2010 30, 2009
Combined
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Assets
Current Assets
Cash and Cash Equivalents $ 28,405 $ 26,415
Accrued Commissions Receivable 66,705 35,309
Stock Subscriptions Receivable - 120
Deferred Financing Costs 7,500 -
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Total Current Assets 102,610 61,844
Property and Equipment, Net 111,516 99,373
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Total Assets $ 214,126 $ 161,217
================ ====================
Liabilities and Stockholders' Deficiency
Current Liabilities
Accounts Payable $ 272,438 $ 305,023
Accrued Expenses and Refunds 248,319 36,527
Deferred Revenue 278,118 46,408
Private Placement Subscriptions Received 501,590 -
Due to Related Parties 202,380 -
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Total Current Liabilities 1,502,845 387,958
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Total Liabilities 1,502,845 387,958
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Stockholders' Deficiency
Preferred Stock, Par Value $0.0001, 5,000,000 authorized, -0- issued - -
Common Stock, Par Value $0.0001, 25,000,000 authorized, 4,620,000 462 120
and 1,200,000 issued and outstanding respectively
Accumulated Deficiency (1,267,389) (203,661)
Accumulated Other Comprehensive Loss (21,792) (23,200)
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Total Stockholders' Deficiency (1,288,719) (226,741)
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Total Liabilities and Stockholders' Deficiency $ 214,126 $ 161,217
================ ====================
The accompanying notes are an integral part of the financial statements.
-2-
30DC, INC.
Statements of Operations and Comprehensive Income (Loss)
Years Ended June 30,
2010 2009
Combined
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Revenue
Commissions $ 738,842 $ 692,601
Subscription Revenue 762,873 785,187
Products and Services 154,123 -
License Revenue 19,621 -
Seminars and Mentoring 327,097 193,352
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Total Revenue 2,002,556 1,671,140
Operating Expenses 3,030,052 1,243,178
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Operating Income (loss) (1,027,496) 427,962
Other Income (Expense)
Foreign Currency Transaction Loss (39,986) (17,232)
Gain on Sale of Property and Equipment 4,096 -
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Total Other Income (Expense) (35,890) (17,232)
Net (Loss) Income (1,063,386) 410,730
Foreign Currency Translation Income (Loss) 1,408 (35,218)
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Comprehensive (Loss) Income $ (1,061,978) $ 375,512
=============== =============
The accompanying notes are an integral part of the financial statements.
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30DC, INC.
Statements of Changes in Stockholders' Equity (Deficiency)
ACCUMULATED TOTAL
OTHER STOCKHOLDERS'
COMMON STOCK ADDITIONAL COMPREHENSIVE ACCUMULATED EQUITY
SHARES PAR VALUE PAID IN CAPITAL INCOME (LOSS) (DEFICIENCY) (DEFICIENCY)
------ --------- --------------- ------------- ------------ ------------
Balance - July 1, 2008 Combined - $ - $ - $ 12,018 $ 83,798 $ 95,816
Net Income - 410,730 410,730
Foreign currency translation (35,218) (35,218)
Distributions to Owners (698,189) (698,189)
Issuance of Common Stock 1,200,000 120 - 120
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Balance - June 30, 2009 Combined 1,200,000 $ 120 $ - $ (23,200) $ (203,661) $ (226,741)
Net Loss - (1,063,386) (1,063,386)
Foreign currency translation 1,408 1,408
Issuance of Common Stock 3,420,000 342 (342) -
------------- --------- --------------- --------------- -------------- ------------
Balance - June 30, 2010 4,620,000 $ 462 $ - $ (21,792) $(1,267,389) $(1,288,719)
============= ========= =============== =============== ============== ============
The accompanying notes are an integral part of the financial statements.
-4-
30DC, INC.
Statements of Cash Flows
Years Ended June 30,
2010 2009
Combined
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Cash Flows from Operating Activities:
Net (Loss) Income $ (1,063,386) $ 410,730
Adjustments to Reconcile (Loss) Net Income
to Net Cash (Used In) Proviced By Operations
Depreciation 61,669 42,688
Gain on Sale of Property and Equipment (4,096) -
Changes in Operating Assets and Liabilities
Accrued Commissions Receivable (29,686) (19,787)
Accounts Payable (47,378) 305,022
Accrued Expenses and Refunds 210,020 36,527
Deferred Revenue 230,561 36,006
Due to Related Parties 202,380 -
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Net Cash (Used in) Provided by Operating Activities (439,916) 811,186
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Cash Flows from Investing Activities
Purchases of Property and Equipment (89,043) (74,542)
Proceeds From Sale of Property and Equipment 23,795 -
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Net Cash Used in Investing Activitities (65,248) (74,542)
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Cash Flows from Financing Activities
Sale of common stock - 120
Stock Subscriptions Receivable 120 (120)
Payment of Deferred Financing Costs (7,500) -
Private Placement Subscriptions Received 501,590 -
Distributions to Owner - (698,190)
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Net Cash Provided by (Used in) Financing Activities 494,210 (698,190)
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Effect of Foreign Exchange Rate Changes on Cash 12,944 (22,617)
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Increase in Cash 1,990 15,837
Cash - Beginning of Year 26,415 10,578
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Cash - End of Year $ 28,405 $ 26,415
================ ====================
The accompanying notes are an integral part of the financial statements.
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30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
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30DC, Inc. ("30DC" or "the Company") was incorporated on October 17, 2008 in the
state of Delaware, as a holding company, for the purpose of building, acquiring
and managing international web-based sales and marketing companies. On July 15,
2009, 30DC completed the acquisitions of the Business and Assets of 30 Day
Challenge ("30 Day") and Immediate Edge ("Immediate"). 30 Day was acquired from
the Marillion Partnership and Edward Wells Dale, both of Victoria, Australia, in
consideration for the issuance of 2,820,000 shares of Common Stock of the
Company. Immediate was acquired from Dan Raine of Cheshire, United Kingdom, in
consideration for the issuance of 600,000 shares of Common Stock of the Company.
The acquired businesses were sold subject to specific liabilities which included
accounts payable, accrued expenses and deferred revenue. The acquisitions were
pursuant to an agreement dated November 14, 2008. Mr. Dale and Mr. Raine were
part of the founding group of shareholders of 30DC and in conjunction with the
acquisitions, Mr. Dale was named the Chief Executive Officer of 30DC.
30DC offers Internet marketing services and related training that help Internet
companies in operating their businesses. 30DC's core business units are 30 Day
and Immediate. 30 Day, with more than 90,000 active online participants, offers
a free e-commerce training program year round along with an online education
subscription service and periodic premium live seminars that are targeted to
experienced Internet business operators. Immediate is an online educational
program subscription service offering high-end Internet marketing instruction
and strategies for experienced online ecommerce practitioners. Other revenue
streams include sales of instructional courses and software tools related to
Internet marketing and from commissions on third party products sold via
introduction to the 30DC customer base of active online participants and
subscribers which are referred to as affiliate marketing commissions. The
Company's assets consist primarily of property and equipment and internally
developed intangible property such as domain names, websites, customer lists,
trademarks, copyrights and goodwill.
In accordance with the provisions of Accounting Standards Codification ("ASC")
805, "Business Combinations", the acquisitions of 30 Day and Immediate were
accounted for as transactions between entities under common control, whereby the
acquired assets and liabilities of 30 Day and Immediate were recognized in the
financial statements at their carrying amounts and the acquisitions are
reflected in the accompanying financial statements for the year ended June 30,
2010 as if they occurred as of the beginning of the period. In addition, the
financial statements presented for the comparative period ending June 30, 2009,
labeled "Combined", represent the combined financial statements of 30DC, 30 Day
and Immediate, with the elimination of all significant inter-entity balances and
transactions, including commission revenue earned by 30 Day from Immediate of
approximately $21,000. 30 Day and Immediate were unincorporated entities and as
such their owners received distributions rather than compensation from these
entities and these entities did not have liability for entity level taxes.
LIQUIDITY
During the year ended June 30, 2010, the Company used $439,916 in cash for
operations which included payments for bonuses to Marillion, 23V and Raine
Ventures as further described in Note 10 plus costs related to preparing the
Company's financial records along with travel and professional fees in
preparation for the transaction with Infinity Capital Group, Inc. ("Infinity")
which resulted in the Company becoming publicly traded. This cash used in
operations was funded by subscriptions received from the Company's private
placement ("PPM").
-6-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
For the year ending June 30, 2011, the bonus amounts to Marillion and Raine
Ventures will be significantly lower since they are to be compensated by their
contractual amounts subsequent to the September 10, 2010 transaction with
Infinity (further described in Note 11) which will result in less cash being
required for operations. Additionally, $200,000 of the amount reflected as due
to related parties at June 30, 2010 was subsequently settled in full for common
shares of the Company. As also described in Note 11, the Company raised an
additional $382,800 in subscriptions from the PPM to fund cash required for
operations and corporate expenses. We anticipate these actions as well as
continued operations will provide the Company with continued cash flows to
sustain operations for the near future.
However, as the Company continues to seek additional funds, there can be no
assurance that any additional funds will be available to cover expenses as they
may be incurred. If the Company is unable to raise additional capital or
encounters unforeseen circumstances, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing its operations, suspending the pursuit of its business
plan and controlling overhead expenses. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if
at all.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------
PROPERTY AND EQUIPMENT
Equipment is recorded at cost less accumulated depreciation and amortization.
Maintenance and repairs are charged to operations as incurred. Asset and related
accumulated depreciation amounts are relieved from the accounts for retirements
or dispositions. Depreciation on equipment is computed using the straight-line
method. Estimated useful lives of three to ten years are used for equipment,
while leasehold improvements are amortized, using the straight line method, over
the shorter of either their economic useful lives or the term of the leases.
REVENUE RECOGNITION
The Company generally applies revenue recognition principles in accordance with
ASC 605, "Revenue Recognition". Accordingly, revenue is generally recognized
when persuasive evidence of an agreement exists, services have been rendered or
product delivery has occurred, the selling price to the customer is fixed or
determinable and collectability is reasonably assured.
The Company generates revenues in five categories, (i) commissions, (ii)
seminars and mentoring (iii) subscriptions (iv) products and services and (v)
licensing. Commissions are all affiliate marketing commissions generated when a
customer is referred to a third-party via the Internet and the customer makes a
purchase, which is paid for at the time of purchase. Revenue from commissions is
recognized when the customer purchase is made from the third-party. Seminars and
mentoring are educational in nature. Seminars are live events held in different
cities throughout the world where customers will pay a fee to attend what is
typically a three-day event. Seminar fees are paid in advance and classified as
deferred revenue until the seminar is held. Mentoring services are offered over
a period of time, typically a one-year period. Fees for mentoring are paid in
advance and mentoring revenue is recognized ratably over the period of service.
All subscription revenue is from monthly online subscriptions for information on
Internet marketing. All subscriptions are paid in advance and subscription
revenue is recognized ratably over the term of the subscription. Products and
services revenues are from sales of online educational courses and productivity
tools which customers use in their Internet marketing businesses. Revenue from
products and services is recognized when the customer purchase is made. License
revenue is generated when the Company sells a vendor's product without taking
ownership or title to the product. License revenue is recorded net of any
payments to the related vendors. Deferred revenue consists of the unearned
-7-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
portion of subscription payments, seminar fees and mentoring revenue as of the
financial statement date. Deferred revenue was $278,118 and $46,408 at June 30,
2010 and 2009, respectively.
EQUITY-BASED PAYMENTS TO NON-EMPLOYEES
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of ASC 505-50, "Equity-Based Payments to
Non-Employees", which requires that such equity instruments are recorded at
their fair value on the measurement date, with the measurement of such
compensation being subject to periodic adjustment as the underlying equity
instruments vest.
FOREIGN CURRENCY TRANSLATION AND REMEASUREMENT
The functional currency of the Company's 30 Day Challenge division is the
Australian dollar. All other Company operations use the United States dollar as
their functional currency. Under ASC 830 "Foreign Currency Matters", functional
currency assets and liabilities are translated into the reporting currency, US
Dollars, using period end rates of exchange and the related translation
adjustments are recorded as a separate component of accumulated other
comprehensive income. Functional statements of operations amounts expressed in
functional currencies are translated using average exchange rates for the
respective periods. Re-measurement adjustments and gains or losses resulting
from foreign currency transactions are recorded as foreign exchange gains or
losses in the Statement of Operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and use assumptions that affect certain reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of income and expenses
during the reporting period. Significant estimates in these financial statements
are the estimated useful lives used to calculate depreciation of property and
equipment and the estimate of the Company's future taxable income used to
calculate the Company's deferred tax valuation allowance. The Company evaluates
all of its estimates on an on-going basis.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855) -
Amendments to Certain Recognition and Disclosure Requirements." ASU 2010-09
requires an entity that is an SEC filer to evaluate subsequent events through
the date that the financial statements are issued and removes the requirement
that an SEC filer disclose the date through which subsequent events have been
evaluated. ASC 2010-09 was effective upon issuance.
In June 2009 the FASB issued ASC 860, formerly SFAS 166, "Accounting for
Transfers of financial Assets -- an amendment of FASB Statement No. 140". ASC
860 eliminates the concept of a qualifying special-purpose entity, creates more
stringent conditions for reporting a transfer of a portion of a financial asset
as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferor's interest in transferred financial assets. ASC 860
became effective April 1, 2010. The adoption of this pronouncement did not have
a material impact on the Company's financial position and results of operations.
-8-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
In June 2009 the FASB issued ASC 810, formerly SFAS 167, "Amendments to FASB
Interpretation No. 46(R)" (ASC 810). ASC 810 eliminates Interpretation 46(R)'s
exceptions to consolidating qualifying special-purpose entities, contains new
criteria for determining the primary beneficiary, and increases the frequency of
required reassessments to determine whether a company is the primary beneficiary
of a variable interest entity. ASC 810 also contains a new requirement that any
term, transaction, or arrangement that does not have a substantive effect on an
entity's status as a variable interest entity, a company's power over a variable
interest entity, or a company's obligation to absorb losses or its right to
receive benefits of an entity must be disregarded in applying Interpretation
46(R)'s provisions. The elimination of the qualifying special-purpose entity
concept and its consolidation exceptions means more entities will be subject to
consolidation assessments and reassessments. ASC 810 became effective April 1,
2010. The adoption of this pronouncement did not have a material impact on the
Company's financial position and results of operations.
In August 2009, the FASB issued Accounting Standards Update 2009-05 which
includes amendments to Subtopic 820-10, Fair Value Measurements and Disclosures,
Measuring Liabilities at Fair Value, which applies to liabilities measured at
fair value. The update provides clarification that in circumstances in which a
quoted price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more of the
techniques provided for in this update. The amendments in this update clarify
that a reporting entity is not required to include a separate input or
adjustment to other inputs relating to the existence of a restriction that
prevents the transfer of the liability and also clarifies that both a quoted
price in an active market for the identical liability at the measurement date
and the quoted price for the identical liability when traded as an asset in an
active market when no adjustments to the quoted price of the asset are required
are Level 1 fair value measurements. The adoption of this standard did not have
a material impact on the Company's financial position and results of operations.
The FASB has published FASB Accounting Standards Update 2009-13, Revenue
Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements, which
addresses the accounting for multiple-deliverable arrangements to enable vendors
to account for products or services (deliverables) separately rather than as a
combined unit. Specifically, this guidance amends the criteria in Subtopic
605-25, Revenue Recognition-Multiple-Element Arrangements, for separating
consideration in multiple-deliverable arrangements. This guidance establishes a
selling price hierarchy for determining the selling price of a deliverable,
which is based on: (a) vendor-specific objective evidence; (b) third-party
evidence; or (c) estimates. This guidance also eliminates the residual method of
allocation and requires that arrangement consideration be allocated at the
inception of the arrangement to all deliverables using the relative selling
price method and also requires expanded disclosures. FASB Accounting Standards
Update 2009-13 is effective prospectively for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010.
Early adoption is permitted. The adoption of this standard is not expected to
have a material impact on the Company's financial position and results of
operations.
The FASB has issued Accounting Standards Update (ASU) No. 2010-06, Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. This ASU requires some new disclosures and clarifies some existing
disclosure requirements about fair value measurement as set forth in
Codification Subtopic 820-10. ASU 2010-06 amends Codification Subtopic 820-10
and now requires a reporting entity to use judgment in determining the
appropriate classes of assets and liabilities and to provide disclosures about
the valuation techniques and inputs used to measure fair value for both
recurring and nonrecurring fair value measurements. As this standard relates
specifically to disclosures, the adoption did not have an impact on the
Company's financial position and results of operations.
-9-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
In March 2010, the FASB issued ASU No. 2010-17, Revenue Recognition-- Milestone
Method (Topic 605): Milestone Method of Revenue Recognition. This standard
provides that the milestone method is a valid application of the proportional
performance model for revenue recognition if the milestones are substantive and
there is substantive uncertainty about whether the milestones will be achieved.
Determining whether a milestone is substantive requires judgment that should be
made at the inception of the arrangement. To meet the definition of a
substantive milestone, the consideration earned by achieving the milestone (1)
would have to be commensurate with either the level of effort required to
achieve the milestone or the enhancement in the value of the item delivered, (2)
would have to relate solely to past performance, and (3) should be reasonable
relative to all deliverables and payment terms in the arrangement. No
bifurcation of an individual milestone is allowed and there can be more than one
milestone in an arrangement. The new standard became effective for interim and
annual periods beginning on or after June 15, 2010. The adoption of this
standard did not have a material impact on the Company's financial position and
results of operations.
The FASB has issued ASU 2010-29, BUSINESS COMBINATIONS (TOPIC 805): DISCLOSURE
OF SUPPLEMENTARY PRO FORMA INFORMATION FOR BUSINESS COMBINATIONS. This amendment
affects any public entity as defined by Topic 805, Business Combinations that
enters into business combinations that are material on an individual or
aggregate basis. The comparative financial statements should present and
disclose revenue and earnings of the combined entity as though the business
combination(s) that occurred during the current year had occurred as of the
beginning of the comparable prior annual reporting period only. The amendments
also expand the supplemental pro forma disclosures to include a description of
the nature and amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination included in the reported pro forma
revenue and earnings. The amendments are effective prospectively for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2010. The
adoption of this standard did (did not) have a material impact on the Company's
financial position and results of operations (describe material impact).
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820):
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs. The new guidance results in a consistent definition of
fair value and common requirements for measurement of and disclosure about fair
value between U.S. GAAP and International Financial Reporting Standards. While
many of the amendments to U.S. GAAP are not expected to have a significant
effect on practice, the new guidance changes some fair value measurement
principles and disclosure requirements. Adoption of ASU 2011-04 is not expected
to have a significant impact on the Company's financial statements.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on our financial statements upon
adoption.
NOTE 3. PRIVATE PLACEMENT SUBSCRIPTIONS RECEIVED
-------------------------------------------------
Beginning in July 2009, 30DC received $501,590 under a Private Placement
Memorandum ("PPM") for which a closing did not occur and the funds were
considered to be interest free loans pending closing. This amount is included as
Private Placement Subscriptions Received in the liability section of the Balance
Sheet at June 30, 2010. Pursuant to an agreement with the subscribers, the
$501,590 became part of 30DC's August 2010 PPM and was including in the first
closing on September 22, 2010 (see note 11).
-10-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 4. RELATED PARTY TRANSACTIONS
-----------------------------------
The Company entered into three-year Contract For Services Agreements commencing
July 2009 with the Marillion Partnership ("Marillion") for services which
includes Mr. Edward Dale acting as the Company's Chief Executive Officer, with
23V Industries, Ltd. ("23V") for services which include Mr. Dan Raine acting as
the Company's Vice President of Business Development and with Jesselton, Ltd.
("Jesselton") for services which include Mr. Clinton Carey acting as the
Company's Chief Operating Officer. Effective April 1, 2010, Raine Ventures, LLC
("Raine Ventures") replaced 23V Industries, Ltd in providing consulting services
to the Company which include Mr. Raine acting as the Company's Vice President of
Business Development. These agreements are non-cancelable by either party for
the initial two years and then with six months' notice by either party for the
duration of the contract. Mr. Dale and Mr. Carey are directors of the Company,
Mr. Dale and Marillion hold majority interest in the Company's outstanding
common stock and Mr. Raine is the beneficial owner of greater than 10% of the
Company's outstanding common stock. Marillion Partnership is owned by affiliates
of Mr. Dale. 23V and Raine Ventures are owned 100% by Mr. Raine.
Cash remuneration under The Marillion and Raine Ventures agreements is $250,000
per year and $200,000 under the Jesselton agreement. If in any year starting
from the commencement date, revenues of 30DC, Inc. doubles, compared to the
preceding year, then a bonus equal to 50% of cash remuneration will be due in
shares of 30DC, Inc. as additional compensation. This threshold was not achieved
for the fiscal year ending June 30, 2010.
During the term of the agreements, Marillion, Jesselton and Raine Ventures are
prohibited from engaging in any other business activity that competes with 30DC,
Inc. without written consent of the 30DC, Inc. Board of Directors.
In July, 2009 when 30DC acquired 30 Day and Immediate, Messrs. Dale and Carey
signed executive services agreements with the Company and Mr. Raine signed a
consulting services agreement with the Company. Pursuant to the agreements with
Marillion, Jesselton and 23V (effective April 1, 2010 Raine Ventures replaced
23V), the contract for services agreements memorialized the preexisting
contractual relationship and formally set the terms and conditions between the
parties from July 1, 2009 and all prior understandings and agreements - oral or
written were merged therein, including the respective executive services and
consulting services agreements. All compensation under the contract for services
agreements is identical with the respective executive services and consulting
agreements. Where applicable under local law, all payroll and other taxes are
the responsibility of Marillion, Jesselton, 23V and Raine Ventures and they have
provided the Company with indemnification of such taxes which under the prior
contracts may have been a liability of the Company. The parties acknowledged
that the effective date of the agreements relates back to the contractual
relationship between the parties.
30DC's Board of Directors approved a bonus to Marillion based upon the net cash
flow of the Company's 30 Day Challenge division and a bonus to Raine Ventures
based upon the net cash flow of the Company's Immediate Edge division (formerly
Immediate) until such time as 30DC had completed a merger or public stock
listing, which occurred on September 10, 2010 (see Note 11). For the year ended
June 30, 2010 the bonus for Marillion was $496,714 and total compensation was
$746,714, the bonus for 23V was $154,014 and total compensation was $341,514 and
the bonus for Raine Ventures (successor to 23V) was $57,941 and total
compensation was $120,411, all of which were included in Operating Expenses in
the Statement of Operations. Subsequent to the September 10, 2010 merger,
Marillion and Raine Ventures will be paid in accordance with their contracted
amounts.
-11-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
Due to related party of $202,380 includes $200,000 due to Jesselton under their
contract for services agreement. Jesselton has agreed to receive this amount in
restricted common shares of the Company.
30 Day earned commissions of $21,000 from Immediate during the year ended June
30, 2009 which has been eliminated in the 30 Day and Immediate combined
Statement of Operations.
During the year ended June 30, 2009 Mr. Dale and entities affiliated with him
were paid $272,787 in owner's distributions by 30 Day and Mr. Raine was paid
$425,402 in owner's distributions by Immediate.
NOTE 5. PROPERTY AND EQUIPMENT
-------------------------------
Property and equipment consists of the following at June 30, 2010 and 2009:
2010 2009
----------- ----------
Computer and Audio Visual Equipment $ 339,630 264,461
Office equipment and Improvements 53,129 50,671
----------- ----------
392,759 315,132
Less: Accumulated Depreciation
and Amortization (281,243) (215,759)
----------- ----------
$ 111,516 $ 99,373
Depreciation and amortization expense was $61,669 for the year ended June 30,
2010 and $42,688 for the year ended June 30, 2009.
Property and equipment, net are stated in the functional currency of each branch
of the Company and where applicable are translated to the reporting currency of
the US Dollar at each period end. Accordingly, property and equipment, net is
subject to change as a result of changes in foreign currency exchange rates.
NOTE 6. INCOME TAXES
---------------------
The Company's income tax provision (benefit) consists of the following:
Year Ended
June 30, 2010
--------------
Federal
Current $ -
Deferred (359,800)
State and local
Current -
Deferred -
Change in valuation allowance (359,800)
--------------
Income tax provision (benefit) $ -
==============
-12-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
Deferred taxes are provided for the tax effects of temporary differences between
the financial reporting basis and the tax basis of assets and liabilities.
Significant temporary differences at June 30, 2010 are as follows:
Year Ended
June 30, 2010
---------------
Deferred tax asset:
Net operating loss carryforward $ 274,100
Depreciation 17,700
Accrued related party contractor fees 68,000
---------------
Total Deferred Tax Asset 359,800
Less valuation allowance (359,800)
---------------
Total net deferred tax asset $ -
===============
The following is a reconciliation of the U.S. tax statutory income tax rate to
the effective tax rate from continuing operations:
Year Ended
June 30, 2010
U.S. statutory rate (34.0%)
State and local taxes net of federal benefit 0.0
Change in valuation allowance 32.0
Unincorporated Entities - Not Subject To Entity Level Tax 0.0
Other Permanent differences 2.0
--------------
Effective income tax rate (0.0%)
==============
The Company applies the provisions of ASC 740, which prescribes the recognition
and measurement criteria related to tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by taxing authorities. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible. The Company considers projected future taxable income and tax
planning strategies in making this assessment. The Company has concluded that it
is more likely than not that the Company will not be able to realize all of its
tax benefits and therefore a valuation allowance of approximately $359,800 has
been established. For the year ended June 30, 2010 and June 30, 2009, the change
in valuation allowance was $359,800 and $0 respectively.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements and prescribes a recognition threshold
and measurement process for financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. ASC 740 also provides guidance on
derecoginition, classification, interest and penalties, accounting in interim
period, disclosure and transition. The Company is required to file income tax
returns in the United States (federal) and in various state and local and
foreign jurisdictions. Based on the Company's evaluation, it has been concluded
that there are no significant uncertain tax positions requiring recognition in
the Company's financial statements. The evaluation was performed for the 2008,
2009 and 2010 tax years, which are subject to examination. The Company believes
that its income tax positions and deductions would be sustained on audit and
does not anticipate any adjustments that would result in a material changes to
its financial position.
-13-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
The Company's policy for recording interest and penalties associated with
uncertain tax positions is to record such expense as a component of income tax
expense. There were no amounts accrued for penalties or interest as of or years
ended June 30, 2010 and 2009. Management is currently unaware of any issues
under review that could result in significant payments, accruals or material
deviations from its position.
As a corporation formed in the United States, the Company is subject to the
United States corporation income tax on worldwide net income. Since majority
ownership of the Company's shares are held by Australian residents, the Company
is deemed to be an Australian resident corporation and is subject to Australian
corporate income tax on worldwide net income. Corporate income taxes paid to
Australia will generally be available as a credit against United States
corporation income tax. The Company did not have nexus to any individual state
in the United States and accordingly no deferred tax asset has been recognized
for state taxes. Australia does not have any state corporation income tax.
Future changes in Company operations might impact the geographic mix which could
affect the Company's overall effective tax rate.
For the years ended June 30, 2010 and June 30, 2009, the Company had
approximately $806,100 and $0 of U.S. federal net operating loss carryovers,
respectively which expire in 2031. The U.S. net operating loss carryovers may be
subject to limitation under Internal Revenue Code Section 382 should there be a
greater than 50% change in ownership in the future as determined under the
regulations.
As noted above, the year ended June 30, 2009 represents the combined financial
statements of 30DC, 30 Day and Immediate. During 2009, 30DC had limited
operations and 30 Day and Immediate were unincorporated entities which were not
subject to tax provision; accordingly no provision for income taxes is reflected
for that period.
The Company is in the process of filing all U.S. tax returns since its inception
in 2008. The Company believes no material tax balance is due for all tax returns
which have not yet been filed.
NOTE 7. REVENUE CONCENTRATION
------------------------------
For the year ended June 30, 2010, the Company earned revenue from one customer
representing approximately 12% of total revenues. For the year ended June 30,
2009 two customers exceeded 10% of combined total revenues with the individual
totals of approximately 12% and 11% for a total of approximately 23%.
NOTE 8. STOCKHOLDERS' EQUITY
----------------------------
COMMON STOCK
In July 2009 the Company issued 2,820,000 shares for the asset acquisition of 30
Day and 600,000 shares for the asset acquisition of Immediate.
-14-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
Details of common shares outstanding at June 30, 2010 are as follows:
Shares
---------
Common shares outstanding, July 1, 2009 1,200,000
Issuance of shares for acquisitions 3,420,000
---------
Common shares outstanding, June 30, 2010 4,620,000
=========
The asset acquisitions were accounted for as common control transactions and the
historical accounting of each of the acquired businesses were merged as of July
2009. The stockholders' equity of the Company includes the historical deficits
of 30Day and Immediate.
NOTE 9. COMMITMENTS AND CONTINGENCIES
--------------------------------------
On December 8, 2009, the Company signed a contract with Cameron Associates, an
investor relations firm, effective January 1, 2010, with a term of one year,
which calls for $5,000 per month of cash compensation and the issuance of a
total of 50,000 shares of the Company's Common Stock, to be adjusted for any
recapitalization that may occur during the period of the contract, based on a
schedule that also equates to the vesting pattern of the shares. Subsequent to
the Infinity transaction (see Note 11), the total number of shares due adjusted
to 660,000. As of June 30, 2010, 37,500 of the shares were vested and due to
Cameron and the $79,125 value of the shares is included in Operating Expenses in
the Statement of Operations and Accrued Expenses and Refunds in the Balance
Sheet.
In February 2010, 30DC engaged Prestige Financial Center, Inc. ("Prestige") a
registered Broker Dealer to provide investment banking and advisory services to
the Company. Upon execution of the contract, the Company paid Prestige a $25,000
nonrefundable due diligence and retainer fee. Under terms of the contract as
revised in June 2010, Prestige is due a reverse merger fee of an option to
purchase at least 1% of the Company's outstanding common shares at the
completion of a reverse merger with a publicly-traded company at an exercise
price of $0.001 per share. Other terms include a 10% cash financing fee and
warrants equal to 7% for capital (as defined under the agreement to exclude
certain funding sources) raised during the term of the agreement along with a 5%
acquisition fee for any completed acquisitions which Prestige introduced to the
Company. The Prestige agreement had an initial term of six months and was
automatically renewable, however, the agreement can be canceled at any time
after the initial six months. The Company and Prestige entered into a release
agreement dated October 28, 2010 under which Prestige will receive 675,314
shares of the Company's restricted stock and both parties released each other
from any other claims.
In June 2010, the Company signed a contract with Imperial Consulting Network
("ICN") for ICN to provide the Company with services to include ongoing research
coverage, update reports, corporate profiles, coverage announcements for
newswires as well as inclusion in a direct mail magazine and corporate profile
television program. Compensation to ICN under the agreement was to include up to
a maximum of approximately 2,200,000 warrants to purchase common shares of the
Company at exercise prices ranging from $0.0001 to $0.93 per share. Pursuant to
the agreement, because certain milestones were not met, the Company had the
right, which it exercised, to repurchase most of the warrants for $0.0001 per
warrant with the net effect that ICN will have 161,163 warrants with an exercise
price of $0.0001 per share as full and complete compensation under the contract.
-15-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 10. OPERATING EXPENSES
----------------------------
Operating Expenses consist of the following:
Year Ended Year Ended
June 30, 2010 June 30, 2009
============= =============
Related Party Contractor Fees Base
Compensation (1) (2) $ 700,000 $ -
Related Party Contractor Fees Bonus
Compensation (1) (3) 708,669
Independent Contractors 600,521 344,989
Professional Fees 387,003 346,732
Travel Expenses 240,283 253,559
Other Operating Costs 393,576 297,998
============ =============
Total Operating Expenses $ 3,030,052 $ 1,243,178
============ =============
------------------------
(1) Related party contractors include Marillion which provides services to
the Company including Edward Dale to act as Chief Executive Officer of
the Company, 23V and Raine Ventures which provides services to the
Company including for Dan Raine to act as Vice President for Business
Development and Jesselton, Ltd. which provides services to the Company
including Clinton Carey serving as Chief Operating Officer of the
Company.
(2) During the period ended June 30, 2009, 30 Day and Immediate operated as
non-incorporated entities and did not pay compensation to their owners.
The owners received distributions of $698,189.
(3) 30DC's Board of Directors approved a bonus to Marillion based upon the
net cash flow of the Company's 30 Day Challenge division (formerly 30
Day) and a bonus to 23V and Raine Ventures based upon the net cash flow
of the Company's Immediate Edge division (formerly Immediate) until
such time as 30DC had completed a merger or public stock listing which
occurred on September 10, 2010.
NOTE 11. SUBSEQUENT EVENTS
---------------------------
On September 10, 2010, shareholders of 30DC exchanged 100% of their 30DC shares
for 60,984,000 shares of Infinity Capital Group, Inc. ("Infinity"), a publicly
traded company which trades over the counter ("OTC") on the OTCQB market
operated by Pink OTC Markets, Inc. The OTCQB is a relatively new market for
companies registered and reporting with the U.S. Securities and Exchange
Commission or a U.S. banking or insurance regulator. 30DC, Inc. became a wholly
owned subsidiary of Infinity Capital Group, Inc. which has subsequently changed
its name to 30DC, Inc. After the share exchange, the former shareholders in
30DC, Inc. held approximately 90% of the outstanding shares in Infinity and the
officers of 30DC, Inc. became the officers of Infinity. 30DC was the accounting
acquirer in the transaction and its historical financial statements will be the
historical financial statements. Infinity's operations were discontinued and
subsequent to the transaction will be accounted for as discontinued operations.
-16-
30DC, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
In August 2008, 30DC, Inc. had contracted with two consultants to advise on the
process which resulted in completion of the share exchange. Compensation to the
consultants was contingent on completion of the share exchange or a similar
transaction. With completion of the share exchange, $250,000 was owned to
Jesselton, Ltd, a consulting firm which Mr. Clinton Carey, Chief Operating
Officer of 30DC is associated with, and $250,000 Australian Dollars, equivalent
to $231,050, was owed to the other consultant. The Company paid half of these
amounts with a total of 925,097 restricted shares of the Company's common stock
and will pay the remaining amount due in cash funds over a period of time. Both
are considered success fees, and as such are contingent consideration until the
closing of the Share Exchange in September, 2010.
In August 2010, 30DC issued a private placement memorandum ("PPM") seeking to
raise a maximum of $3,000,000 at a price of 26 cents per unit or 11,538,462
units if the $3,000,000 maximum is raised. Each unit consists of one share of
Common Stock of Infinity, a warrant exercisable for 90 days from the date of
issuance, to purchase one share of Common Stock of Infinity with an exercise
price of 37 cents, and a warrant exercisable for five years from the date of
issuance, to purchase one share of Common Stock of Infinity for 50 cents. 30DC
received $501,590 between July 2009 and June 2010 under a prior PPM for which a
closing did not occur and the funds were considered to be interest free loans
pending closing. This amount is included as private placement subscriptions
received in the liability section of the Balance Sheet. Pursuant to an agreement
with the subscribers, the $501,590 became part of the August 2010 PPM. A first
closing of the August 2010 PPM was held on September 22, 2010 consisting of the
$501,590 received under the prior PPM and $162,500 in new investment funds, for
total proceeds of $664,090 which represents 2,554,193 units consisting of
2,554,193 shares of common stock and 2,554,193 of each of the two warrants.
Subsequent closings through March 2011 have resulted in $220,300 in new
investment funds which represents an additional 847,317 units consisting of
847,317 shares of common stock and 847,317 of each of the two warrants. The
August 2010 PPM was extended to March 15, 2011 and in place of the warrant
exercisable for 90 days from the date of issuance, all subscribers to the PPM
received a warrant exercisable through March 15, 2011 at an exercise price of 37
cents per warrant which has now expired with none of these warrants exercised.
In February 2011, Theodore A. Greenberg, CFO of 30DC, agreed to accept 480,770
shares of the Company's restricted common stock as settlement of $125,000 owed
to him by the Company.
Management has evaluated subsequent events to determine if events or
transactions occurring through June 24, 2011, the date on which the financial
statements were available to be issued, require potential adjustment to or
disclosure in the Company's financial statements.
-17-
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.
30DC, INC.
By: /s/Theodore A. Greenberg
--------------------------------------------------
Theodore A. Greenberg, Chief Financial Officer
Date: June 24, 2011
-18
