Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For Quarterly Period Ended March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition period from _______________ to ______________
COMMISSION FILE NUMBER: 000-30999
30DC, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 16-1675285
-------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 BROAD STREET, 5TH FLOOR, NEW YORK, NY 10004
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 962-4400
-------------------------------------------------------
Registrant's telephone number, including area code
-------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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[__] No[_x_]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes[__] No[__]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[__] No[_X_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of September 2, 2011 the number of shares outstanding of the registrant's
class of common stock was 74,520,248.
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and
June 30, 2010 3
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months
and Nine Months Ended March 31, 2011 and 2010 4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended
March 31, 2011 and 2010 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
Item 4. Controls and Procedures 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 1A.Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
Item 3. Defaults upon Senior Securities 27
Item 4. Removed and Reserved 27
Item 5. Other Information 27
Item 6. Exhibits 28
Signatures 29
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
----------------------------
-2-
30DC, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
March June
31, 2011 30, 2010
----------- --------------
Unaudited
Assets
Current Assets
Cash and Cash Equivalents $ 56,897 $ 28,405
Accrued Commissions Receivable 44,072 66,705
Deferred Financing Costs - 7,500
Assets of Discontinued Operations 93,125 -
----------- --------------
Total Current Assets 194,094 102,610
Property and Equipment, Net 96,688 111,516
Goodwill 1,503,860 -
----------- --------------
Total Assets $1,794,642 $ 214,126
=========== ==============
Liabilities and Stockholders' Equity (Deficiency)
Current Liabilities
Accounts Payable $ 590,711 $ 272,438
Accrued Expenses and Refunds 293,832 248,319
Deferred Revenue 297,260 278,118
Private Placement Subscriptions Received - 501,590
Due to Related Parties 219,655 202,380
Liabilities of Discontinued Operations 375,599 -
----------- --------------
Total Current Liabilities 1,777,057 1,502,845
----------- --------------
Total Liabilities 1,777,057 1,502,845
----------- --------------
Stockholders' Equity (Deficiency)
Preferred Stock, Par Value $0.001, 10,000,000 Authorized, -0- Issued - -
Common Stock, Par Value $0.001, 100,000,000 authorized,
74,520,248 and 60,984,000 issued and outstanding respectively 74,520 60,984
Paid in Capital 2,697,478 -
Accumulated Deficiency (2,621,558) (1,327,911)
Accumulated Other Comprehensive Loss (132,855) (21,792)
----------- --------------
Total Stockholders' Equity (Deficiency) 17,585 (1,288,719)
----------- --------------
Total Liabilities and Stockholders' Equity (Deficiency) $1,794,642 $ 214,126
=========== ==============
The accompanying notes are an integral part of the
condensed consolidated financial statements.
-3-
30DC, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations and Comprehensive Loss
Unaudited
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
2011 2010 2011 2010
----------- ------------ ------------- --------------
Revenue
Commissions $ 117,583 $ 166,228 $ 368,256 $ 554,884
Subscription Revenue 170,453 190,716 495,887 609,403
Products and Services 43,128 55,702 116,649 60,227
Seminars and Mentoring 114,428 141,466 435,358 221,792
----------- ------------ ------------- --------------
Total Revenue 445,592 554,112 1,416,150 1,446,306
Operating Expenses 600,535 1,088,033 2,645,685 2,267,496
----------- ------------ ------------- --------------
Operating Loss (154,943) (533,921) (1,229,535) (821,190)
Other Income (Expense)
Foreign Currency Loss (10,809) (10,192) (24,320) (35,508)
Gain on Sale of Assets - - - 4,092
----------- ------------ ------------- --------------
Total Other Income (Expense) (10,809) (10,192) (24,320) (31,416)
----------- ------------ ------------- --------------
Loss From Continuing Operations Before Taxes (165,752) (544,113) (1,253,855) (852,606)
Income Tax (Benefit) - (41,000) - (41,000)
----------- ------------ ------------- --------------
Loss From Continuing Operations (165,752) (503,113) (1,253,855) (811,606)
Loss From Discontinued Operations (100,331) - (100,316) -
----------- ------------ ------------- --------------
Net Loss (266,083) (503,113) (1,354,171) (811,606)
Foreign Currency Translation Loss (11,647) (14,860) (111,063) (38,893)
----------- ------------ ------------- --------------
Comprehensive Loss $ (277,730) $ (517,973) $ (1,465,234) $ (850,499)
=========== ============ ============= ==============
Weighted Average Common Shares Outstanding
Basic 74,072,447 60,984,000 69,934,953 60,984,000
Diluted 74,072,447 60,984,000 69,934,953 60,984,000
Loss Per Common Share (Basic and Diluted)
Continuing Operations $ (0.00) $ (0.01) $ (0.02) $ (0.01)
Discontinued Operations (0.00) - (0.00) -
Net Loss Per Common Share $ (0.00) $ (0.01) $ (0.02) $ (0.01)
The accompanying notes are an integral part of the condensed
consolidated financial statements.
-4-
30DC, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31
Unaudited
2011 2010
------------ ---------------
Cash Flows from Operating Activities:
Loss From Continuing Operations $ (1,253,855) $ (811,606)
Adjustments to Reconcile Loss from Continuing Operations
to Net Cash Used In Operations
Depreciation and Amortization 52,457 45,568
Equity Based Payments To Non-Employees 475,988 52,750
Equity Based Payments To Employees 100,000 -
Gain on Sale of Property and Equipment - (4,092)
Changes in Operating Assets and Liabilities
Accrued Commissions Receivable 37,915 (52,985)
Deferred Tax Asset - (41,000)
Accounts Payable 36,583 (54,523)
Accrued Expenses and Refunds 111,519 59,491
Deferred Revenue (41,090) 288,024
Due to Related Parties 192,942 152,380
------------ ---------------
Net Cash Used in Operating Activities (287,541) (365,993)
------------ ---------------
Cash Flows from Investing Activities
Purchases of Property and Equipment (14,152) (85,972)
Proceeds From Sale of Property and Equipment - 23,771
Cash - Acquired In Acquisition of Infinity 3,350 -
------------ ---------------
Net Cash Used in Investing Activitities (10,802) (62,201)
------------ ---------------
Cash Flows from Financing Activities
Sale of common stock 367,250 -
Stock Subscriptions Receivable - 120
Deferred Financing Costs 7,500 -
Private Placement Subscriptions Received - 450,090
------------ ---------------
Net Cash Provided by Financing Activities 374,750 450,210
------------ ---------------
Cash Flows from Discontinued Operations
Cash Flows From Operating Activities (46,697) -
------------ ---------------
Net Cash Used in Discontinued Operations (46,697) -
------------ ---------------
Effect of Foreign Exchange Rate Changes on Cash (1,218) (6,785)
------------ ---------------
Increase in Cash and Cash Equivalents 28,492 15,231
Cash and Cash Equivalents - Beginning of Period 28,405 26,415
------------ ---------------
Cash and Cash Equivalents - End of Period $ 56,897 $ 41,646
============ ===============
Supplemental Disclosures of Non Cash Financing Activity
Private Placement Subscriptions Received Reclassified to Equity $ 501,590 $ -
Common Stock Issued to Settle Liabilities $ 279,125 $ -
The accompanying notes are an integral part of the
condensed consolidated financial statements.
-5-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY
30DC, Inc., Delaware, ("30DC DE") 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 DE 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 30DC DE.
Immediate was acquired from Dan Raine of Cheshire, United Kingdom, in
consideration for the issuance of 600,000 shares of Common Stock of 30DC DE. 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 DE and in conjunction with
the acquisitions, Mr. Dale was named the Chief Executive Officer of 30DC DE. 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 three and nine months ended March 31,
2010 as if they occurred as of the beginning of the period.
On September 10, 2010, shareholders of 30DC DE exchanged 100% of their 30DC DE
shares for 60,984,000 shares of Infinity Capital Group, Inc. ("Infinity"), a
publicly traded company which trades over the counter ("OTC") on the OTC Pink
market operated by OTC Market Group, Inc 30DC DE became a wholly owned
subsidiary of Infinity Capital Group, Inc. which has subsequently changed its
name to 30DC, Inc. ("30DC" and together with its subsidiary "the Company").
After the share exchange, the former shareholders in 30DC DE held approximately
90% of the outstanding shares in Infinity and the officers of 30DC DE became the
officers of Infinity. 30DC DE was the accounting acquirer in the transaction and
its historical financial statements will be the historical financial statements
of 30DC. Infinity's operations were discontinued and subsequent to the share
exchange are accounted for as discontinued operations.
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 approximately 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 commerce 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 recorded and unrecorded assets consist primarily of property and
equipment goodwill and internally developed intangible property such as domain
names, websites, customer lists and copyrights.
The Company does not have sufficient capital to meet its needs and continues to
seek loans or equity placements to cover such cash needs. No commitments to
provide additional funds have been made and 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, issuance of
additional shares of the Company's stock to settle operating liabilities which
would dilute existing shareholders, 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.
-6-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
The Company had a cash balance of $56,897 at March 31, 2011 and current
liabilities exceeded current assets by $1,582,963. Since the start of the
Company's fiscal year in July 2010, the Company raised $382,300 in new capital
investment, less capital raising costs of $15,550, for net proceeds of $367,250
and settled approximately $850,000 expenses and liabilities by issuing shares of
the Company's common stock. To fund working capital for the next twelve months,
the Company expects to raise additional capital, to settle additional
liabilities using the Company's stock and to improve the results of operations
from increasing revenue and a reduction in operating costs which during the
current fiscal year has included significant non-recurring transaction costs. As
further discussed in note 12, the Company has signed an agreement with RivusTV
Ltd. pursuant to which the companies have initiated a joint capital raising
effort.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") and with instructions to Form-10Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information required by
GAAP for a complete set of financial statements. In the opinion of management,
all adjustments, (including normal recurring accruals) considered necessary for
a fair presentation have been included in the financial statements. Operating
results for the interim period are not necessarily indicative of the results
that may be expected for the fiscal year ended June 30, 2011 or any other
period. This Form 10-Q should be read in conjunction with the Audited Financial
Statements and accompanying notes to the Audited Financial Statements for the
year ended June 30, 2010 included on Form 8K which was filed on June 24, 2011.
The unaudited condensed consolidated financial statements include the accounts
of 30DC, Inc., (f/k/a Infinity Capital Group, Inc.) and its subsidiary 30DC DE
for the period beginning September 10, 2010, the date of the share exchange with
Infinity, and ending March 31, 2011. For the nine months ending March 31, 2010
and for the period beginning July 1, 2010 and ending September 10, 2010 only the
accounts of 30DC DE are included in the financial statements.
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.
GOODWILL AND INTANGIBLE ASSETS
The Company accounts for goodwill and intangible assets in accordance with ASC
350 "Intangibles-Goodwill and Other" ("ASC 350"). ASC 350 requires that goodwill
and other intangibles with indefinite lives be tested for impairment annually or
on an interim basis if events or circumstances indicate that the fair value of
an asset has decreased below its carrying value.
Goodwill represents the excess of the purchase price over the fair value of net
assets acquired in the Company's share exchange with Infinity which occurred on
September 10, 2010. ASC 350 requires that goodwill be tested for impairment at
the reporting unit level (operating segment or one level below an operating
segment) on an annual basis and between annual tests when circumstances indicate
that the recoverability of the carrying amount of goodwill may be in doubt.
-7-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
Application of the goodwill impairment test requires judgment, including the
identification of reporting units; assigning assets and liabilities to reporting
units, assigning goodwill to reporting units, and determining the fair value.
Significant judgments required to estimate the fair value of reporting units
include estimating future cash flows, determining appropriate discount rates and
other assumptions. Changes in these estimates and assumptions or the occurrence
of one or more confirming events in future periods could cause the actual
results or outcomes to materially differ from such estimates and could also
affect the determination of fair value and/or goodwill impairment at future
reporting dates.
LONG LIVED ASSETS
In accordance with ASC 360 "Property Plant and Equipment," the Company reviews
the carrying value of intangibles subject to amortization and long-lived assets
for impairment at least annually or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured by comparison of its carrying
amount to the undiscounted cash flows that the asset or asset group is expected
to generate. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the
property, if any, exceeds its fair market value.
ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated Other Comprehensive Loss consists of cumulative adjustments of
foreign currency translation which is further discussed in the foreign currency
translation and measurement below.
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 reasonable assured.
The Company generates revenues in four categories, (i) commissions, (ii)
seminars and mentoring (iii) subscriptions and (iv) products and services.
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 and the
course or tool is available to the customer. Deferred revenue consists of the
unearned portion of subscription payments, seminar fees and mentoring revenue as
of the financial statement date.
-8-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
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 ("AUD"). All other Company operations use the United States
dollar ("US 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 reported 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.
NET LOSS PER SHARE
The Company computes net loss per share in accordance with ASC 260 (formerly
SFAS No. 128, "Earnings Per Share.") Under ASC 260, basic net loss per share is
computed by dividing net loss per share available to common stockholders by the
weighted average number of shares outstanding for the period and excludes the
effects of any potentially dilutive securities. Diluted earnings per share, if
presented, would include the dilution that would occur upon the exercise or
conversion of all potentially dilutive securities into common stock using the
"treasury stock" and/or "if converted" methods as applicable. The computation of
basic loss per share for the three and nine months ended March 31, 2011 and 2010
excludes potentially dilutive securities consisting of 6,803,044 warrants and
600,000 options at March 31, 2011 because their inclusion would be
anti-dilutive. In computing net loss per share, warrants with an insignificant
exercise price are deemed to be outstanding common stock.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220):
Presentation of Comprehensive Income. This guidance improves the comparability,
consistency and transparency of financial reporting and increases the prominence
of items reported in other comprehensive income. The guidance provided by this
update becomes effective for interim and annual periods beginning on or after
December 15, 2011. Since this ASU will only change the format of financial
statements it is expected that the adoption of this ASU will not have a material
effect on a Company's condensed consolidated financial position and results of
operations.
-9-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
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. DISCONTINUED OPERATIONS
INTRODUCTION
On September 10, 2010, immediately prior to the share exchange with 30DC DE,
Infinity withdrew its election to operate as a Business Development Company
("BDC") under the Investment Company Act of 1940 ("1940 Act"). Infinity
historically operated as a non-diversified, closed-end management investment
company and prepared its financial statements as required by the 1940 Act. 30DC
is no longer actively operating the BDC and the assets, liabilities and results
of operations of Infinity's former business are shown as discontinued operations
in the Company's financial statements subsequent to the share exchange with
30DC.
Results of Discontinued Operations for the
Three Months Ended Nine Months Ended
March 31, 2011 March 31, 2011
------------------ ------------------
Revenues $ - $ -
Operating expenses 4,175 11,410
Loss from operations (4,175) (11,410)
Realized loss on marketable securities (24,490) (24,490)
Unrealized loss on marketable securities (71,666) (64,416)
------------------ ------------------
Net loss $ (100,331) $ (100,316)
================== ==================
Assets and Liabilities of Discontinued Operations as of March 31, 2011
Assets
------------------
Marketable securities $ 93,125
===========
Total assets of discontinued operations $ 93,125
===========
Liabilities
------------------
Accounts payable $ 67,893
Accrued expenses 43,393
Notes payable 139,520
Due to related parties 124,793
-----------
Total liabilities of discontinued operations $ 375,599
===========
Notes Payable
Included in liabilities of discontinued operations at March 31, 2011 are
$193,612 (including $54,092 of notes payable included in due to related parties)
in notes payable plus related accrued interest of which are in default for lack
of repayment by their due date. For the period subsequent to the share exchange
with 30DC DE through March 31, 2011 the Company incurred interest expense on
notes payable of $9,911 which is included in the Statement of Operations under
income (loss) from discontinued operations.
-10-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 4. PRO FORMA FINANCIAL INFORMATION
The following unaudited consolidated pro forma information gives effect to the
share exchange with Infinity (discussed in Note 1) as if this transaction had
occurred at the beginning of each period presented. The following unaudited pro
forma information is presented for illustration purposes only and is not
necessarily indicative of the results that would have been attained had the
acquisition of this business been completed at the beginning of each period
presented, nor are they indicative of results that may occur in any future
periods.
Nine Months Ended Nine Months Ended
March 31, 2011 March 31, 2010
(Unaudited) (Unaudited)
------------------ ------------------
Revenues $ 1,416,151 $ 1,446,306
Operating Expenses 2,708,541 2,382,410
------------------ ------------------
Loss from Continuing Operations Before Taxes (1,292,390) (936,104)
Deferred Tax Benefit (41,000)
Loss from Continuing Operations (1,292,390) (895,104)
Loss from Discontinued Operations (127,604) (598,499)
------------------ ------------------
Net Loss (1,419,994) (1,493,603)
Foreign Currency Translation Loss (111,063) (38,893)
------------------ ------------------
Comprehensive Loss $ (1,531,057) $ (1,532,496)
================== ==================
Basic and Diluted Loss Per Share $ (.02) $ (.02)
Weighted Average Shares Outstanding - Basic
& Diluted 71,631,540 67,531,391
Three Months Ended
March 31, 2010
(Unaudited)
--------------------
Revenues $ 554,113
Operating Expenses 1,142,038
--------------------
Loss from Continuing Operations
Before Taxes (587,925)
Deferred Tax Benefit (41,000)
Loss from Continuing Operations (546,925)
Gain (Loss) from Discontinued Operations 105,764
--------------------
Net Loss (441,161)
Foreign Currency Translation Loss (14,860)
--------------------
Comprehensive Loss $ (456,021)
====================
Basic and Diluted Loss Per Share $ (.01)
Weighted Average Shares Outstanding - Basic &
Diluted 67,531,391
-11-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 5. PRIVATE PLACEMENT MEMORANDUM
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, the PPM ended March 15, 2011. Each
unit consists of one share of Common Stock of Infinity, a warrant exercisable
until March 15, 2011, 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. At June 30, 2010, the $501,590 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, less capital raising costs of $33,100 for net
proceeds of $630,990 which represents 2,554,205 units consisting of 2,554,205
shares of common stock and 2,554,205 of each of the two warrants. Second and
third closings were held in November and December 2010 which raised additional
net proceeds of $132,550. Fourth and fifth closings were held in February and
March 2011 which raised additional net proceeds of $80,300. The March 15, 2011
warrants have expired with none exercised.
NOTE 6. 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
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 Marillion, 23V 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 then a bonus equal to
50% of cash remuneration will be due in shares of 30DC, Inc. as additional
compensation. The bonus was not earned in the fiscal year ending June 30, 2010
and nothing has been accrued in the March 31, 2011 financial statements, since
the bonus was not earned for the fiscal year ending June 30, 2011.
During the term of the agreements, Marillion, Jesselton, 23V 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 pre existing
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
-12-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
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 and 23V 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 23V (succeeded by
Raine Ventures) based upon the net cash flow of the Company's Immediate Edge
division until such time as 30DC had completed a merger or public stock listing,
which occurred on September 10, 2010. For the nine month period ended March 31,
2011 the bonus for Marillion was $79,643, all earned prior to September 10, 2010
and total compensation was $277,064 and the bonus for Raine Ventures was $-0-
and total compensation was $187,500. For the nine month period ended March 31,
2010 the bonus for Marillion was $397,908 and total compensation was $585,408
and the bonus for 23V was $154,014 and total compensation was $341,514. For the
three month period ended March 31, 2011 total compensation earned by Marillion
was $68,391 and total compensation earned by Raine Ventures was $62,500,
Subsequent to the September 10, 2010 merger, Marillion and Raine Ventures are
being paid in accordance with their contracted amounts and bonuses based upon
net cash flow are no longer applicable. Amounts may vary from period to period
due to fluctuations in foreign currency exchange rates. For the three month
period ended March 31, 2010 the bonus for Marillion was $357,901 and total
compensation was $420,401 and the bonus for 23V was $37,085 and total
compensation was $99,585.
Jesselton earned $250,000 upon completion of the share exchange between 30DC and
Infinity on September 10, 2010. $125,000 of this amount was satisfied by
issuance of 480,770 of the Company's common shares. The remaining $125,000 is
included in due to related parties in the liability section of the balance
sheet. Jesselton also settled $200,000 of contract fees for the fiscal year
ending June 30, 2010 for an additional 769,231 common shares of the Company,
Due to related parties also includes $50,000 due to Theodore A. Greenberg,
30DC's CFO for compensation. On February 10, 2011 Mr. Greenberg received 480,770
common shares of the Company in settlement of $100,000 prior compensation and
$25,000 due for consulting work prior to Mr. Greenberg joining the Company,
NOTE 7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31, 2011 June 30, 2010
-------------- -------------
Computer and Audio Visual Equipment $ 432,605 $ 339,630
Office equipment and Improvements 69,483 53,129
-------------- -------------
502,088 392,759
Less accumulated depreciation and amortization (405,400) (281,243)
-------------- -------------
$ 96,688 $ 111,516
============== =============
Depreciation and amortization expense was $52,457 for the nine months ended
March 31, 2011 and $45,569 for the nine months ended March 31, 2010.
Depreciation and amortization expense was $17,807 for the three months ended
March 31, 2011 and $16,334 for the three months ended March 31, 2010.
Property and equipment, net are stated in the functional currency where located
and where applicable are translated to the reporting currency of the US Dollar
at each period end. Accordingly, property and equipment, net are subject to
change as a result of changes in foreign currency exchange rates.
-13-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 8. INCOME TAXES
As of June 30, 2010, 30DC DE had net operating loss carryovers for United States
income tax purposes of approximately $806,100, 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
as determined under the regulations. The Company has filed all federal tax
returns and is in the process of filing its state and local returns for Infinity
since 2005. The Company's net operating loss carryovers will only be available
to offset any future taxable income once the Company files its federal tax
returns. The Company has not provided a tax benefit for the three months ended
March 31, 2011 as it is not more likely than not that such benefit will be
realized. At March 31, 2010 the Company provided a tax benefit of $41,000
because at that time it was more likely than not that such benefit would be
realized. All unfiled income tax returns are subject to income tax examination
by tax authorities and the statute of limitations for tax examinations does not
begin to run until returns are filed.
As a corporation formed in the United States, the Company is subject to the
United States corporation income tax on worldwide 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 which for Infinity was from the
time of the share exchange discussed in Note 1. Corporate income taxes paid to
Australia will generally be available as a credit against United States
corporation income tax. Prior to the share exchange with Infinity, the Company
did not have nexus to any individual state in the United States and accordingly
no deferred tax provision has been recognized for state taxes for results of
operations prior to September 10, 2010. 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.
The Company applies the provisions of ASC 740, which provides clarification
related to the process associated with accounting for uncertain tax positions
recognized in the interim financial statements. ASC 740 prescribes a more likely
than not threshold for financial statement recognition and measurement of a tax
position taken, or expected to be taken, in a tax return. ASC 740 also provides
guidance related to, amongst other things, classification, accounting for
interest and penalties associated with tax positions, and disclosure
requirements.
The Company classifies interest and penalties, if any, related to tax
uncertainties as income tax expense. There have not been any material changes in
our liability for unrecognized tax benefits, including interest and penalties,
during the nine months ended March 31, 2011. The Company does not currently
anticipate that the total amount of unrecognized tax benefits will significantly
increase or decrease within the next twelve months.
NOTE 9. REVENUE CONCENTRATION
For the nine months ended March 31, 2010 the Company earned revenue from one
customer of approximately 13%. For the three months ended March 31, 2010 the
Company earned revenue from one customer of approximately 11%. No customers
exceeded 10% of revenue in the three and six month periods ending March 31,
2011.
-14-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 10. STOCKHOLDERS' EQUITY
COMMON STOCK
Prior to the share exchange with Infinity on September 10, 2010, 30DC DE
outstanding common shares were as follows:
Shares
---------
Common shares outstanding, July 1, 2009 1,200,000
Issuance of shares for acquisitions 3,420,000
---------
Common shares outstanding, September 10, 2010 4,620,000
=========
The share exchange ratio was 13.2:1 with 30DC DE shareholders receiving
60,984,000 of Infinity common shares for exchanging their 4,620,000 common
shares of 30DC DE. The share exchange resulted in 30DC DE becoming a
wholly-owned subsidiary of Infinity but for accounting purposes 30DC was deemed
the acquirer. In the financial statements, for comparison purposes, shares
outstanding at June 30, 2010 were restated to the 60,984,000 post-exchange
amount from the 4,620,000 which were actually outstanding on that date.
In August 2010, 30DC issued the private placement memorandum ("PPM") discussed
in note 5. A first closing was held on September 22, 2010 for which 2,554,205
units were issued consisting of 2,554,205 shares of common stock and 2,554,205
of each of the two warrants. Subsequent closings were held from November 2010 to
March 2011 for which 538,468 units were issued consisting of 538,468 shares of
common stock and 538,468 of each of the two warrants.
On September 30, 2010, the Company issued common shares to settle outstanding
liabilities and for shares due under services agreements as follows;
Cameron Associates, an investor relations firm, pursuant to a contract signed
December 8, 2009 under which Cameron was due 50,000 shares of the Company's
common stock which was adjusted to 660,000 shares under the exchange ratio.
Jesselton, Ltd, was issued a total of 1,250,001 common shares of the Company
(see Note 6).
Corholdings Pty Ltd., settled $125,000 AUD ($115,025 USD) of the $250,000 AUD
($231,050 USD) fee they were due for advising on the process which resulted in
completion of the share exchange for 444,327 common shares of the Company.
In February 2010, 30DC engaged Prestige Financial Center, Inc. ("Prestige") a
registered Broker Dealer to provide investment banking and advisory services to
the Company pursuant to which Prestige had the opportunity to earn fees for
various services. 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. The Company
entered into a release agreement dated October 28, 2010 with Prestige under
which Prestige was issued 675,314 shares of the Company's restricted common
stock and both parties released each other from any other claims.
Theodore A. Greenberg was issued 480,770 common shares of the Company (see note
6).
On February 10, 2011, Cameron Associates settled $20,000 of consulting fees due
for 76,923 common shares of the Company.
-15-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
Summary of Common Stock Outstanding;
Prior to the share exchange 4,620,000
Exchange Ratio 13.2
-------------
Shares Issued in the Exchange 60,984,000
Infinity Outstanding pre Exchange 6,547,391
PPM Closing September 2010 2,554,205
PPM Closings November 2010 - March 2011 847,317
Cameron Associates 736,923
Jesselton, Ltd. 1,250,001
Corholdings, Pty Ltd. 444,327
Prestige Financial Center, Inc. 675,314
Theodore A. Greenberg 480,770
-------------
Common Shares Outstanding March 31, 2011 74,520,248
=============
WARRANTS AND OPTIONS
The Company has 600,000 fully vested options outstanding as follows:
404,000 options exercisable at 80 cents per share expiring August 7, 2018
196,000 options exercisable at 50 cents per share expiring January 5, 2019
192,500 of these options are held by Pierce McNally a director of the Company
and the balance are held by a former employee and former directors of Infinity.
161,163 warrants (net of forfeitures) are due to Imperial Consulting Network
under an agreement signed in June 2010 at an exercise price of $0.0001 per
share. Such warrants are yet to be issued.
Pursuant to the PPM discussed in Note 5, a first closing was held on September
22, 2010 under which 2,554,205 warrants at 37 cents per share, expiring December
21, 2010 were issued along with 2,554,205 warrants at 50 cents per share
expiring September 22, 2015. The warrants expiring December 21, 2010 were
subsequently extended to March 15, 2011. From November 2010 through March 2011,
an additional 847,317 of 37 cent warrants expiring March 15, 2011 were issued
and 847,317 of the 50 cent warrants with an expiration five years from the date
of investment were issued. All of the warrants expiring March 15, 2011 expired
unexercised.
-16-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
NOTE 11. SUPPLEMENTAL SCHEDULE OF OPERATING EXPENSES
Nine Months Ended Nine Months Ended
March 31, 2011 March 31, 2010
------------------ -----------------
Related Party Contractor Fees Base Compensation (1) $ 537,374 $ 525,000
Related party Contractor Fees Bonus Compensation (1)(2) 79,643 551,922
Officer's Salary 150,000 -
Independent Contractors 430,050 415,158
Transaction Fees (3) 670,138 -
Professional Fees 319,225 311,411
Travel Expenses 131,199 178,727
Other Operating Costs 328,056 285,278
------------------ -----------------
Total Operating Expenses $ 2,645,685 $ 2,267,496
================== =================
-----------------------------------------------------
(1) Related party contractors include Marillion which provides services to the
Company including for Edward Dale to act as Chief Executive Officer of the
Company and 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. The amount
for the nine month period varies slightly from the contracted amount due to
fluctuation in exchange rates during the period.
(2) 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.
(3) Transaction fees were incurred upon completion of the 30DC/Infinity share
exchange for consulting services which resulted in completion of the share
exchange. $250,000 was due to Jesselton, Ltd., $250,000 AUD ($231,050) was
due to Corholdings Pty, Ltd. and Prestige was due 675,314 common shares
which were valued at $189,088.
-17-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
Three Months Ended Three Months Ended
March 31, 2011 March 31, 2010
------------------ -------------------
Related Party Contractor Fees Base Compensation (1) $ 183,345 $ 175,000
Related party Contractor Fees Bonus Compensation (1)(2) - 394,986
Officer's Salary 50,000 -
Independent Contractors 119,495 204,914
Professional Fees 87,698 160,222
Travel Expenses 32,032 38,443
Other Operating Costs 127,965 114,468
------------------ -------------------
Total Operating Expenses $ 600,535 $ 1,088,033
================== ===================
-----------------------------------------------------
(1) Related party contractors include Marillion which provides services to the
Company including for Edward Dale to act as Chief Executive Officer of the
Company and 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) 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 12. SUBSEQUENT EVENTS
On August 24, 2011 the Company entered into a Share Sale and Purchase Agreement
(the "Purchase") with RivusTV Ltd, ("Rivus") which was organized and exists in
Victoria, Australia. Rivus offers a solution to broadcast digital content across
the Internet on a revenue share basis. The purchase price for 100% of Rivus'
issued and outstanding shares is 45% of 30DC's adjusted issued and outstanding
shares immediately prior to closing which equates to 31% of the total
outstanding after closing without regards to the adjustment factor. The
adjustment factor to 30DC's outstanding shares accounts for 30DC's non-operating
liabilities and is expected to increase the deemed outstanding by approximately
four million shares which would increase Rivus post closing ownership by an
additional 1%. The Purchase is subject to both 30DC and Rivus completing
satisfactory due diligence on each other and a minimum capital raise of $5
million AUD (currently $5.32 million USD) by October 31, 2011 or such other that
date that the parties shall agree.
Management has evaluated subsequent events to determine if events or
transactions occurring through the date on which the financial statements were
available to be issued, require potential adjustment to or disclosure in the
Company's financial statements.
-18-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
OVERVIEW
30DC Inc. (Delaware) ("30DC DE") was incorporated on October 17, 2008 in the
state of Delaware and prior to July 15, 2009, 30DC DE had no active business
operations. On July 15, 2009, 30DC acquired the business of the "30 Day
Challenge" and "Immediate Edge" from two of 30DC's founding shareholders as part
of a plan to consolidate their business operations. 30DC DE was created to build
and manage international web-based sales and marketing companies. 30 Day
Challenge and Immediate Edge are 30DC DE's two business divisions. 30 Day
Challenge offers a free online ecommerce training program and an online
education subscription service. In addition, periodic premium live seminars are
produced which are intended to target experienced Internet business operators.
Immediate Edge is an online education program subscription service offering
high-end internet marketing instruction and strategies for experienced online
commerce practitioners.
On September 10, 2010, Infinity Capital Group, Inc., a Maryland Corporation,
("Infinity") entered into a Plan and Agreement of Reorganization (the
"Agreement") with 30DC DE, and the Shareholders of 30DC DE. ("30DC DE
Shareholders"). In exchange for 100% of the issued and outstanding shares of
30DC DE, Infinity issued 60,984,000 shares of its restricted common stock. The
shareholders of 30DC DE received 13.2 shares of common stock of Infinity for
every one share of 30DC DE. Upon closing Messrs. Edward Dale and Clinton Carey
were appointed to the Infinity Board of Directors and subsequently Infinity was
renamed 30DC, Inc. (Maryland) ("30DC"). Mr. Dale is the President, Chief
Executive Officer and a director of 30DC. In addition, he is the manager of the
former majority shareholder of 30DC DE, Marillion Partnership. Mr. Carey is the
Chief Operating Officer and a director of 30DC DE. Further, Mr. Dale was
appointed the Chief Executive Officer of Infinity and Mr. Carey was appointed
the Chief Operating Officer of Infinity.
Infinity, as a result of the transaction, became the sole outstanding
shareholder of 100% of the outstanding common stock of 30DC DE. For purposes of
accounting, 30DC DE was considered the accounting acquirer. As of the date of
the transaction, Infinity discontinued its historical operations and the
business of 30DC DE is now the business of 30DC.
On August 24, 2011 the Company entered into a Share Sale and Purchase Agreement
(the "Purchase") with RivusTV Ltd, ("Rivus") which was organized and exists in
Victoria, Australia. Rivus offers a solution to broadcast digital content across
the Internet on a revenue share basis. The purchase price for 100% of Rivus'
issued and outstanding shares is 45% of 30DC's adjusted issued and outstanding
shares immediately prior to closing which equates to 31% of the total
-19-
outstanding shares after closing without regards to the adjustment factor. The
adjustment factor to 30DC's outstanding shares accounts for 30DC's non-operating
liabilities, as defined and is expected to increase the deemed outstanding by
approximately four million shares which would increase Rivus post closing
ownership by an additional 1%. The Purchase is subject to both 30DC and Rivus
completing satisfactory due diligence on each other and a minimum capital raise
of $5 million AUD (currently $5.32 million USD) by October 31, 2011 or such
other that date that the parties shall agree.
The Company has no plans at this time for purchases or sales of fixed assets
which would occur in the next twelve months.
Other than the Purchase (as defined in Note 12 to the financial statements), the
Company has no expectation or anticipation of significant changes in number of
employees in the next twelve months.
RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2011 COMPARED TO THE THREE MONTH
PERIOD ENDED MARCH 31, 2010.
During the three months ended March 31, 2011, 30DC, Inc. recognized revenues of
$445,592 from its operations compared to $554,112 during the three months ended
March 31, 2010. Revenues of the Company were from the following sources during
the three months ended March 31, 2011 compared to March 31, 2010.
Three Months Ended Three Months Ended Increase or
March 31, 2011 March 31, 2010 (Decrease)
------------------- ------------------- ------------
Revenue
Commissions $117,583 $166,228 ($48,645)
Subscription Revenue 170,453 190,716 (20,263)
Products and Services 43,128 55,702 (12,574)
Seminars and Mentoring 114,428 141,466 (27,038)
------------------- ------------------- ------------
Total Revenues $445,592 $554,112 $108,520
------------------- ------------------- ------------
The $48,645 decrease in commissions was the result of fewer new participants in
the Company's Challenge program in 2010 and a large payer of affiliate
commissions revising their policy to only pay commissions for the first year of
a subscription product rather than paying commissions over the life of the
subscription. Commissions earned from affiliate programs typically generate the
majority of commissions from new participants.
The $20,263 decrease in subscription revenue was due to a net decrease in active
subscribers. For the three months ended March 31, 2011 the active subscriber
base averaged 1,024 per month and for the three months ended March 31, 2010 the
active subscriber base averaged 1,182 per month. The decrease in subscribers was
from the Company's Challenge Plus subscription product which was started in 2009
and had a large initial subscriber base which leveled off over the balance of
the fiscal year ending June 30, 2010.
The $12,574 decrease in products and services revenue resulted from the Company
having a large initial sale of a new internet based software plug-in tool in the
March 2010 quarter.
The $27,038 decrease in seminars and mentoring income resulted from a decrease
of approximately $47,000 in seminar income offset by an approximately $20,000
increase in mentoring income. The Company had not held a seminar in Australia
for a few years and the seminar held in the March 2010 quarter was well attended
resulting in income greater than for a similar seminar held in the March 2011
quarter. The increase in mentoring income resulted from an increase in the
number of customers participating in the Company's mentoring program which is
-20-
priced from $5,000 to $10,000 per year and the revenue from which is recognized
ratably over the one year term. For the three months ended March 31, 2011 there
was an average of 82 mentoring students per month and for the three months ended
March 31, 2010 there was an average of 45 mentoring students.
During the three months ended March 31, 2011, the Company incurred $600,535 in
operational expenses compared to $1,088,033 during the three months ended March
31, 2010. Operational expenses during the three months ended March 31, 2011 and
2010, include the following categories:
THREE MONTHS ENDED THREE MONTHS ENDED INCREASE OR
MARCH 31, 2011 MARCH 31, 2010 DECREASE
-------------- -------------- -----------
Accounting Fees $ 77,533 $ 160,222 $ (82,689)
Paypal Fees 11,150 15,954 (4,804)
Commissions 25,540 15,600 9,940
Independent Contractors 119,495 204,914 (85,419)
Depreciation 17,807 16,334 1,473
Internet Expenses 15,476 13,555 1,921
Legal Fees 10,164 - 10,164
Officer's Salaries 50,000 - 50,000
Payroll Taxes 10,256 20,114 (9,858)
Related Party Contractors 183,345 569,986 (386,641)
Telephone 14,308 16,140 (1,832)
Transaction Fees - - -
Travel & Entertainment 32,032 38,443 (6,411)
Other Operating Expenses 33,429 16,771 16,658
-------------- -------------- -----------
Total Operating Expenses $ 600,535 $ 1,088,033 $(487,498)
============== ============== ===========
The decrease of $82,689 in accounting fees was primarily related to a
decrease in auditing fees from the March 2010 quarter when the Company was
having audits of prior periods performed.
The increase of $9,940 in commissions resulted from additional affiliate
commissions due to the increase in products sold in the March 2011 quarter
compared to the March 2010 quarter.
The decrease of $85,419 in independent contractors is primarily due to the
approximately $67,000 cost of investor relations consultants in the March 2010
quarter of which approximately $52,000 was paid in shares of the Company's
common stock.
The increase of $10,164 in legal fees resulted from ongoing compliance after the
share exchange and requirements of operating as a publicly traded company.
The increase of $50,000 in officer's salaries was for the Company's CFO,
Theodore A. Greenberg which was necessitated by the share exchange and
requirements for the Company's public filings.
Related Party Contractor Fees consist of payments to Marillion Partnership, 23V
Industries, Ltd. which was succeeded by Raine Ventures, LLC and Jesselton, Ltd.
under contracts for services which include Ed Dale acting as 30DC's Chief
Executive Officer, Dan Raine acting as 30DC's Vice President of Business
Development and Clinton Carey acting as 30DC's Chief Operating Officer
respectively. The $386,641decrease results from bonus payments to Marillion and
23V in the March 2010 quarter based on the net cash flow of the 30 Day Challenge
and Immediate Edge divisions which were no longer applicable after the share
transaction with Infinity in September 2010.
-21-
During the three months ended March 31, 2011, the Company recognized a net loss
from continuing operations of ($165,752) compared to a net loss of ($503,113)
during the three months ended March 31, 2010. The decreased loss of $337,361 was
due to the decrease in operating expenses of $487,498 offset by the decrease in
revenues of $108,520 and $41,000 decrease in deferred tax benefit.
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 2011 COMPARED TO THE NINE MONTH PERIOD
ENDED MARCH 31, 2010.
During the nine months ended March 31, 2011, the Company recognized revenues of
$1,416,150 from its operations compared to $1,446,306 during the nine months
ended March 31, 2010. Revenues of the Company were from the following sources
during the nine months ended March 31, 2011 compared to March 31, 2010.
Nine Months Ended Nine Months Ended Increase or
March 31, 2011 March 31, 2010 (Decrease)
------------------ ----------------- -------------
Revenue
Commissions $ 368,256 $ 554,884 $ ( 186,628)
Subscription Revenue 495,887 609,403 (113,516)
Products and Services 116,649 60,227 56,422
Seminars and Mentoring 435,358 221,792 213,566
------------------ ----------------- -------------
Total Revenues $ 1,416,150 $ 1,446,306 $ (30,156)
------------------ ----------------- -------------
The $186,628 decrease in commissions was a result of a number of factors. During
the nine month period ended March 31, 2010, the Company promoted some new
affiliate programs which attracted purchases from all active participants
resulting in additional commissions. Existing affiliate programs typically
generate the majority of commissions from new participants. Other factors
included fewer new participants in the Company's Challenge program in 2010 and a
large payer of affiliate commissions revised their policy to only pay
commissions for the first year of a subscription product rather than paying
commissions over the life of the subscription. During the nine month period
ended March 31, 2011, there were no material amounts earned from new affiliate
programs but the Company began selling more of its own products and services
such as video recordings of the Company's live seminars to its full list of
active participants.
The $113,516 decrease in subscription revenue was due to a net decrease in
active subscribers. For the nine months ended March 31, 2011 the active
subscriber base averaged 979 per month and for the nine months ended March 31,
2010 the active subscriber base averaged 1,363 per month. The decrease in
subscribers was almost entirely from the Company's Challenge Plus subscription
product which was started in 2009 and had a large initial subscriber base which
leveled off over the balance of the fiscal year ending June 30, 2010. A few
times a year the Company will run promotions aimed at increasing the
subscription base and this was partially delayed in the 2010 year due to the
longer duration of the Company's Challenge program which ended nearly a month
later in 2010.
The $56,422 increase in products and services revenue was primarily due to an
increase in the number of the Company's own products being offered for sale
which started early in 2010. Previously the Company had been offering more third
party products for which affiliate commissions were earned. The Company's own
products include video recordings of the Company's live seminars and tools to
aid in operating internet-based businesses.
The $213,566 increase in seminars and mentoring income is primarily from an
increase in the number of customers participating in the mentoring program which
is priced from $5,000 to $10,000 per year and the revenue from which is
recognized ratably over the one year term. For the nine months ended March 31,
2011 there was an average of 99 mentoring students per month and for the nine
months ended March 31, 2010 there was an average of 19 mentoring students per
month.
-22-
During the nine months ended March 31, 2011, the Company incurred $2,645,685 in
operational expenses compared to $2,267,496 during the nine months ended March
31, 2010. Operational expenses during the nine months ended March 31, 2011 and
2010, include the following categories:
NINE MONTHS ENDED NINE MONTHS ENDED INCREASE OR
MARCH 31, 2011 MARCH 31, 2010 DECREASE
-------------- -------------- -------------
Accounting Fees $ 262,151 $ 258,537 $ 3,614
Paypal Fees 32,526 41,651 (9,125)
Commissions 63,159 26,874 36,285
Independent Contractors 430,050 415,158 14,892
Depreciation 52,457 45,569 6,888
Internet Expenses 47,694 45,681 2,013
Legal Fees 57,074 52,874 4,200
Officer's Salaries 150,000 - 150,000
Payroll Taxes 29,890 26,939 2,951
Related Party Contractors 617,017 1,076,922 (459,905)
Telephone 26,758 30,080 (3,322)
Transaction Fees 670,138 - 670,138
Travel & Entertainment 131,199 178,727 (47,528)
Other Operating Expenses 75,572 68,484 7,088
-------------- -------------- -------------
Total Operating Expenses $ 2,645,685 $ 2,267,496 $ 378,189
============== ============== =============
The increase of $36,285 in commissions is almost entirely from affiliate
commissions incurred on the increased sales of products and services.
The increase of $150,000 in officer's salaries was for the Company's CFO,
Theodore A. Greenberg which was necessitated by the share exchange and
requirements for the Company's public filings.
Related Party Contractor Fees consist of payments to Marillion Partnership, 23V
Industries, Ltd. which was succeeded by Raine Ventures, LLC and Jesselton, Ltd.
under contracts for services which include Ed Dale acting as 30DC's Chief
Executive Officer, Dan Raine acting as 30DC's Vice President of Business
Development and Clinton Carey acting as 30DC's Chief Operating Officer
respectively. The $459,905 decrease results from larger bonus payments to
Marillion and 23V during the nine months ended March 31, 2010 based on the net
cash flow of the 30 Day Challenge and Immediate Edge divisions. The bonuses were
no longer applicable after the share transaction with Infinity in September
2010.
The increase of $670,138 in transaction fees was due to consultants advising on
the process which resulted in completion of the share exchange including
$250,000 to Jesselton, Ltd., $231,050 ($250,000 AUD) to Corholdings Pty Ltd and
$189,088 to Prestige Financial Center, Inc.
The decrease of $47,528 in travel and entertainment reflects a reduction in
overseas trips during the nine months ended March 31 2010.
During the nine months ended March 31, 2011, the Company recognized a net loss
from continuing operations of ($1,253,855) compared to a net loss of ($811,606)
during the nine months ended March 31, 2010. The increased loss of $442,249 was
a result of the $378,189 increase in operational expense the $30,156 decrease in
revenues during the period shown above and the $41,000 decrease in deferred tax
benefit.
-23-
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $56,897 at March 31, 2011 and the Company had
a working capital deficit of $1,582,963. Since the start of the Company's fiscal
year in July 2010, the Company raised $382,300 in new capital investment, less
capital raising costs of $15,500 for net proceeds of $367,250 and settled
approximately $850,000 of expenses and liabilities by issuing shares of the
Company's common stock. To fund working capital for the next twelve months, the
Company expects to raise additional capital, to settle additional liabilities
using the Company's stock and to improve the results of operations from
increasing revenue and a reduction in operating costs which during the current
year has included significant non-recurring transaction costs. As further
discussed in Note 12, the Company has signed an agreement with RivusTV Ltd.
pursuant to which the companies have initiated a joint capital raising effort.
Included in liabilities of discontinued operations at March 31, 2011 is $193,612
(including $54,092 included in due to related parties) in notes payable plus
related accrued interest that are in default for lack of repayment by their due
date.
During the nine month period ended March 31, 2011, the Company used $287, 541 in
operating activities. During the nine month period ended March 31, 2010, the
Company used $365,993 in operating activities. The decreased use of funds of
$78,452 was due to expenses paid or settled with shares of the Company's common
stock and accrued but unpaid expenses offsetting an increased operating loss.
During the nine month period ended March 31, 2011, the Company used $10,802 in
investing activities. During the nine month period ended March 31, 2010, the
Company used $62,201 in investing activities. The decrease in investment of
$51,399 was due to a decrease in the amount of computer and audio visual
equipment purchased by the Company.
During the nine month period ended March 31, 2011, financing activities provided
the Company with $374,750. During the nine month period ended March 31, 2010,
financing activities provided the Company with $450,210. In each period receipts
from the Company's private placement memorandum provided the bulk of these funds
with the 2010 period raising a larger sum of capital.
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 (subsequently amended to expire March 15, 2011), 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. At June 30, 2010, the
$501,590 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, less capital
raising costs of $33,100 for net proceeds of $630,990 which represents 2,554,205
units consisting of 2,554,205 shares of common stock and 2,554,205 of each of
the two warrants. Second and third closings were held in November and December
2010 which raised additional net proceeds of $132,550. Fourth and fifth closings
were held in February and March 2011 which raised additional net proceeds of
$80,300. The March 15, 2011 warrants have expired with none exercised.
-24-
NEED FOR ADDITIONAL FINANCING
The Company does not have sufficient capital to meet its needs and will have to
seek loans or equity placements to cover such cash needs.
No commitments to provide additional funds have been made and 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, issuance of additional shares of the Company's stock to settle
operating liabilities which would dilute existing shareholders, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
-------------------------------------------------------------------
The Company earns the majority of its revenue in United States dollars ("USD")
and pays a significant amount of its expense in Australian dollars ("AUD").
Material fluctuations in the exchange rate between USD and AUD may have material
impact on the Company's results of operations.
ITEM 4. CONTROLS AND PROCEDURES
--------------------------------
DISCLOSURES CONTROLS AND PROCEDURES
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Principal Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b) for the quarter ended March 31, 2011, our
Chief Executive Officer and Chief Financial Officer, carried out an evaluation
under the supervision and with the participation of our management, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, they have concluded
that our disclosure controls and procedures are not effective in timely alerting
them to material information required to be included in our periodic SEC filings
and to ensure that information required to be disclosed in our periodic SEC
filings is accumulated and communicated to our management, including our Chief
Executive Officer, to allow timely decisions regarding required disclosure as a
result of the deficiency in our internal control over financial reporting
discussed below.
MANAGEMENT'S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
With the participation of our Chief Executive Officer and Chief Accounting
Officer, we have evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the " Exchange Act ")), as of the
end of the period covered by this report. Based upon such evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of such periods, our disclosure controls and procedures were not effective due
to the material weaknesses noted below, in ensuring that (i) information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms
and (ii) information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is accumulated and communicated to our
-25-
management, including our principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(1) Due to the small size of its staff, the Company did not have
sufficient segregation of duties to support its internal control over
financial reporting.
(2) The Company has installed software that does not prevent erroneous or
unauthorized changes to previous reporting periods and does not
provide an adequate audit trail or entries made in the accounting
software.
REMEDIATION OF MATERIAL WEAKNESS
As our current financial condition allows, we are in the process of analyzing
and developing our processes for the establishment of formal policies and
procedures with necessary segregation of duties, which will establish mitigating
controls to compensate for the risk due to lack of segregation of duties.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended March 31, 2011, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
None.
ITEM 1A. RISK FACTORS
---------------------
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
-------------------------------------------------------------------
During the period January 1, 2011 through March 31, 2011 the Company issued the
following equity securities;
On February 10, 2011, the Company issued common shares to settle some
outstanding liabilities and for shares owed under services agreements as
follows;
Cameron Associates, an investor relations firm pursuant to a contract
signed December 8, 2009 under which Cameron was due $5,000 per month in
cash compensation settled $20,000 for 76,923 shares of the Company's
common stock,
Theodore A. Greenberg, CFO of the Company, settled $100,000 in accrued
salary and $25,000 due to him for services prior to joining the Company
for 480,770 common shares of the Company.
-26-
EXEMPTION FROM REGISTRATION CLAIMED
ALL OF THE ABOVE SALES BY THE COMPANY OF ITS UNREGISTERED SECURITIES WERE MADE
BY THE COMPANY IN RELIANCE UPON SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). ALL OF THE INDIVIDUALS AND/OR ENTITIES THAT PURCHASED
THE UNREGISTERED SECURITIES WERE KNOWN TO THE COMPANY AND ITS MANAGEMENT,
THROUGH PRE-EXISTING BUSINESS RELATIONSHIPS. ALL PURCHASERS WERE PROVIDED ACCESS
TO ALL MATERIAL INFORMATION, WHICH THEY REQUESTED, AND ALL INFORMATION NECESSARY
TO VERIFY SUCH INFORMATION AND WERE AFFORDED ACCESS TO MANAGEMENT OF THE COMPANY
IN CONNECTION WITH THEIR PURCHASES. ALL PURCHASERS OF THE UNREGISTERED
SECURITIES ACQUIRED SUCH SECURITIES FOR INVESTMENT AND NOT WITH A VIEW TOWARD
DISTRIBUTION, ACKNOWLEDGING SUCH INTENT TO THE COMPANY. ALL CERTIFICATES OR
AGREEMENTS REPRESENTING SUCH SECURITIES THAT WERE ISSUED CONTAINED RESTRICTIVE
LEGENDS, PROHIBITING FURTHER TRANSFER OF THE CERTIFICATES OR AGREEMENTS
REPRESENTING SUCH SECURITIES, WITHOUT SUCH SECURITIES EITHER BEING FIRST
REGISTERED OR OTHERWISE EXEMPT FROM REGISTRATION IN ANY FURTHER RESALE OR
DISPOSITION.
On February 14, 2011 155,001 shares of common stock were issued for the sixth
closing of the Company's private placement memorandum unit offering which was
issued in August 2010. In addition to the common stock, the units closed
included 155,001 warrants to purchase the Company's stock at 50 cents per share
which expire February 14, 2016 and 155,001 warrants to purchase the Company's
stock at 37 cents per share which expired March 15, 2011 without exercise.
On March 9, 2011 153,848 shares of common stock were issued for the seventh
closing of the Company's private placement memorandum unit offering which was
issued in August 2010. In addition to the common stock, the units closed
included 153,848 warrants to purchase the Company's stock at 50 cents per share
which expire March 9, 2016 and 153,848 warrants to purchase the Company's stock
at 37 cents per share which expired March 15, 2011 without exercise.
EXEMPTION FROM REGISTRATION CLAIMED
ALL OF THE ABOVE SALES BY THE COMPANY OF ITS UNREGISTERED SECURITIES WERE MADE
BY THE COMPANY IN RELIANCE UPON RULE 506 OF REGULATION D OF THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"). ALL OF THE INDIVIDUALS AND/OR ENTITIES
THAT PURCHASED THE UNREGISTERED SECURITIES WERE PRIMARILY EXISTING SHAREHOLDERS,
KNOWN TO THE COMPANY AND ITS MANAGEMENT, THROUGH PRE-EXISTING BUSINESS
RELATIONSHIPS, AS LONG STANDING BUSINESS ASSOCIATES. ALL PURCHASERS WERE
PROVIDED ACCESS TO ALL MATERIAL INFORMATION, WHICH THEY REQUESTED, AND ALL
INFORMATION NECESSARY TO VERIFY SUCH INFORMATION AND WERE AFFORDED ACCESS TO
MANAGEMENT OF THE COMPANY IN CONNECTION WITH THEIR PURCHASES. ALL PURCHASERS OF
THE UNREGISTERED SECURITIES ACQUIRED SUCH SECURITIES FOR INVESTMENT AND NOT WITH
A VIEW TOWARD DISTRIBUTION, ACKNOWLEDGING SUCH INTENT TO THE COMPANY. ALL
CERTIFICATES OR AGREEMENTS REPRESENTING SUCH SECURITIES THAT WERE ISSUED
CONTAINED RESTRICTIVE LEGENDS, PROHIBITING FURTHER TRANSFER OF THE CERTIFICATES
OR AGREEMENTS REPRESENTING SUCH SECURITIES, WITHOUT SUCH SECURITIES EITHER BEING
FIRST REGISTERED OR OTHERWISE EXEMPT FROM REGISTRATION IN ANY FURTHER RESALE OR
DISPOSITION.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
---------------------------------------
Included in liabilities of discontinued operations at March 31, 2011 is $193,612
(including $54,092 included in due to related parties) in notes payable plus
related accrued interest that are in default for lack of repayment by their due
date.
ITEM 4. REMOVED AND RESERVED
----------------------------
ITEM 5. OTHER INFORMATION
-------------------------
None.
-27-
ITEM 6. EXHIBITS
----------------
The following is a complete list of exhibits filed as part of this Form 10-Q.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT NO. DESCRIPTION
------------------ -----------------------------------------------------
31.1 Section 302 Certification - CEO
31.2 Section 302 Certification - CFO
32.1 Section 906 Certification - CEO
32.2 Section 906 Certification - CFO
-28-
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
30DC, INC.
Registrant
--------------------------------
Dated: September 19, 2011 By:/s/ Edward Dale
--------------------------------
Edward Dale
Principal Executive Officer
Chief Executive Officer
President
Dated: September 19, 2011 By:/s/ Theodore A. Greenberg
--------------------------------
Theodore A. Greenberg,
Principal Accounting Officer
Chief Financial Officer
-29