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 December 31, 2012
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.
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(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
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(Address of principal executive offices) (Zip Code)
(212) 962-4400
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Registrant's telephone number, including area code
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(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[_x_] 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 October 14, 2013 the number of shares outstanding of the registrant's
class of common stock was 87,313,464.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Condensed Consolidated Balance Sheets as of December 31, 2012
(Unaudited) and June 30, 2012 3
Condensed Consolidated Statements of Operations (Unaudited)
for the Six Months and Three Months Ended December 31, 2012
and 2011 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended December 31, 2012 and 2011 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
Item 4. Controls and Procedures 26
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28
Item 3. Defaults upon Senior Securities 28
Item 4. Mine and Safety Disclosures 28
Item 5. Other Information 28
Item 6. Exhibits 29
Signatures 30
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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-2-
30DC, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
December June
31, 2012 30, 2012
---------------- -------------------
Unaudited
Assets
Current Assets
Cash and Cash Equivalents $ 274,112 $ 1,031,167
Accrued Commissions Receivable 11,154 15,805
Accounts Receivable 26,217 156,104
Assets of Discontinued Operations 94,792 95,625
---------------- -------------------
Total Current Assets 406,275 1,298,701
Property and Equipment, Net 29,870 34,100
Intangible Assets, Net 319,000 -
Goodwill 2,252,849 1,503,860
---------------- -------------------
Total Assets $ 3,007,994 $ 2,836,661
================ ===================
Liabilities and Stockholders' Equity (Deficiency)
Current Liabilities
Accounts Payable $ 662,683 $ 581,775
Accrued Expenses and Refunds 389,365 494,603
Accrued Commissions Expense - 699,592
Deferred Revenue 24,813 244,378
Due to Related Parties 743,863 606,827
Liabilities of Discontinued Operations 355,687 374,756
---------------- -------------------
Total Current Liabilities 2,176,411 3,001,931
---------------- -------------------
Total Liabilities 2,176,411 3,001,931
---------------- -------------------
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,
86,931,169 and 72,928,421 issued and outstanding respectively 86,931 72,928
Paid in Capital 3,816,496 2,600,410
Accumulated Deficit (2,968,986) (2,735,750)
Accumulated Other Comprehensive Loss (102,858) (102,858)
---------------- -------------------
Total Stockholders' Equity (Deficiency) 831,583 (165,270)
---------------- -------------------
Total Liabilities and Stockholders' Equity (Deficiency) $ 3,007,994 $ 2,836,661
================ ===================
The accompanying notes are an integral part of the unaudited 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 Six Months Ended
December 31, December 31,
2012 2011 2012 2011
------------- -------------- ---------------- ------------------
Revenue
Commissions $ 60,147 $ 41,349 $ 163,964 $ 143,849
Subscription Revenue 136,916 143,179 255,153 338,068
Products and Services 319,853 148,811 405,958 162,884
Seminars and Mentoring 85,504 174,534 227,084 278,330
------------- -------------- ---------------- ------------------
Total Revenue 602,420 507,873 1,052,159 923,131
Operating Expenses 794,249 545,853 1,285,136 1,187,210
------------- -------------- ---------------- ------------------
Operating Income (Loss) (191,829) (37,980) (232,977) (264,079)
Other Income (Expense)
Forgiveness of Debt 8,746 - 8,746 -
Foreign Currency Loss (1) (6,021) (31) (12,422)
------------- -------------- ---------------- ------------------
Total Other Income (Expense) 8,745 (6,021) 8,715 (12,422)
------------- -------------- ---------------- ------------------
Loss From Continuing Operations (183,084) (44,001) (224,262) (276,501)
Loss From Discontinued Operations (3,957) (3,613) (8,974) (6,169)
------------- -------------- ---------------- ------------------
Net Loss (187,041) (47,614) (233,236) (282,670)
Foreign Currency Translation Gain (Loss) - (34,495) - 23,620
------------- -------------- ---------------- ------------------
Comprehensive Loss $ (187,041) $ (82,109) $ (233,236) $ (259,050)
============= ============== ================ ==================
Weighted Average Common Shares Outstanding
Basic 83,550,967 74,520,248 78,451,650 74,520,248
Diluted 83,550,967 74,520,248 78,451,650 74,520,248
Loss Per Common Share (Basic and Diluted)
Continuing Operations $ $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Discontinued Operations (0.00) (0.00) (0.00) (0.00)
Net Loss Per Common Share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
-4-
30DC, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31
Unaudited
2012 2011
--------------- ---------------
Cash Flows from Operating Activities:
Net Loss $ (233,236) $ (282,670)
Loss From Discontinued Operations 8,974 6,169
Adjustments to Reconcile Loss from Continuing Operations
to Net Cash Provided By (Used In) Operations
Depreciation and Amortization 25,988 31,957
Equity Based Payments To Employees 52,050 -
Equity Based Payments To Non-Employees 99,050 -
Changes in Operating Assets and Liabilities
Accrued Commissions Receivable 4,651 19,804
Accounts Receivable 129,887 -
Prepaid Expenses - (58,872)
Accounts Payable 80,908 25,496
Accrued Expenses and Refunds (105,238) 4,881
Accrued Commissions Expense (699,592) -
Deferred Revenue (219,565) 48,945
Due to Related Parties 137,036 214,399
--------------- ---------------
Net Cash Provided By (Used in) Operating Activities (719,087) 10,109
--------------- ---------------
Cash Flows from Investing Activities
Purchases of Property and Equipment (10,758) (5,311)
--------------- ---------------
Net Cash Used in Investing Activitities (10,758) (5,311)
--------------- ---------------
Cash Flows from Discontinued Operations
Cash Flows From Operating Activities (27,210) (6,637)
--------------- ---------------
Net Cash Used in Discontinued Operations (27,210) (6,637)
--------------- ---------------
Effect of Foreign Exchange Rate Changes on Cash - 215
--------------- ---------------
Decrease in Cash and Cash Equivalents (757,055) (1,624)
Cash and Cash Equivalents - Beginning of Period 1,031,167 33,790
--------------- ---------------
Cash and Cash Equivalents - End of Period $ 274,112 $ 32,166
=============== ===============
Supplemental Disclosures of Non Cash Financing Activity
Common Stock Issued for Asset Acquisition:
Customer Lists $ 75,000 $ -
Software 255,000 -
Goodwill 748,989 -
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
-5-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(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.
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 100,000 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.
In May of 2012 the Company signed a joint venture agreement ("JV Agreement")
with Netbloo Media, Ltd. ("Netbloo") for the MagCast Publishing Platform
("MagCast") which was jointly developed. MagCast provides customers access to a
cloud-based service to create an application ("App") to publish a digital
magazine on Apple Corporation's online marketplace Apple Newsstand and includes
executive training modules as well as a three-month trial subscription to the
Company's Immediate Edge subscription product and other bonus products. Under
the terms of the JV Agreement the Company was responsible for marketing, sales
and administration and Netbloo was responsible for product development. MagCast
was launched in May 2012 and a majority of sales were the result of affiliate
marketing relationships which result in commission of 50% of gross revenue for
those sales to the affiliate responsible for the sale. Pursuant to ASC 808-10
the joint operating activity with Netbloo is considered a collaborative
arrangement. The Company was deemed the principal participant and recorded all
-6-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
revenue under the JV Agreement on a gross basis with the 50% of revenue due
Netbloo, net of affiliate commissions and other allowable costs, recorded as
commission expense.
In October 2012 the Company reached an agreement for the Company to purchase
Netbloo's 50% interest in the MagCast JV Agreement and Market Pro Max an online
marketing platform that allows anyone to create digital products and quickly
build a variety of eCommerce marketing websites for a purchase price of
13,487,363 shares of the Company's common stock. Netbloo received a three year
contractor agreement with annual compensation of $300,000 which is payable in
monthly installments of $25,000 and may be terminated after two years subject to
a six month termination payment. The contractor agreement was effective October
1, 2012 and final documents were signed on December 31, 2012. Please see Note 3
for further details on the acquisition.
GOING CONCERN
The condensed consolidated financial statements have been prepared using
accounting principles generally accepted in the United States of America
applicable for a going concern which assumes that the Company will realize its
assets and discharge its liabilities in the ordinary course of business. As of
December 31, 2012, the Company had a working capital deficit of approximately
$1,770,000 and had accumulated losses of approximately $2,969,000 since its
inception. At July 31, 2013 the Company had a working capital deficit of
approximately $1,880,000. Subsequent to December 31, 2012 the Company received
$105,000 in cash from the sale of 300,000 shares of Strategic Environmental and
Energy Resources, Inc. which were included in Assets of Discontinued Operations.
The Company's ability to continue as a going concern is dependent upon its
ability to obtain the necessary financing or to earn profits from its business
operations to meet its obligations and pay its liabilities arising from normal
business operations when they come due. In May 2012, the Company launched
MagCast which the Company expects to be an integral part of its businesses on an
ongoing basis. MagCast is being sold through an affiliate network which expands
the Company's selling capability and has a broad target market beyond the
Company's traditional customer base. Until the Company achieves sustained
profitability it 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. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. These condensed consolidated financial statements do not include any
adjustments to the amounts and classification of assets and liabilities that may
be necessary should the Company be unable to continue as a going concern.
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, 2013 or any other
period. In addition, the balance sheet data at June 30, 2012 was derived from
the audited financial statements but does not include all disclosures required
-7-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
by GAAP. This Form 10-Q should be read in conjunction with the Audited Financial
Statements for the year ended June 30, 2012 included in the Company's annual
report on Form 10-K which was filed on June 3, 2013.
The Company has determined that the acquisition date for the Netbloo asset
acquisition (see Note 3) was October 24, 2012. All operating activity starting
October 1, 2012 is included in these financial statements, the Company believes
the operating activity for the period October 1 through October 23, 2012 does
not have a material impact on these financial statements.
The unaudited condensed consolidated financial statements include the accounts
of 30DC, Inc., (f/k/a Infinity Capital Group, Inc.) and its subsidiary 30DC DE.
FOREIGN CURRENCY TRANSLATION AND REMEASUREMENT
The functional currency of the Company's 30 Day Challenge division switched to
the United States dollar from the Australian dollar on July 1, 2012. All other
Company operations have and continue to use the United States dollar as their
functional currency. For all accounting periods prior to July 1, 2012, the
Company followed ASC 830 "Foreign Currency Matters", under which 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. The historical foreign currency
translation loss remains on the Balance Sheet at $(102,858) which was the
balance at June 30, 2012.
NET LOSS PER SHARE
The Company computes net loss per share in accordance with ASC 260 "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
excludes potentially dilutive securities consisting of 3,401,522 warrants and
3,600,000 options 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
Management does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
Company's financial statements.
NOTE 3. ACQUISITION
-------------------
In October 2012 the Company reached an agreement for the Company to purchase
Netbloo's 50% interest in the MagCast JV Agreement and Market Pro Max an online
marketing platform that allows anyone to create digital products and quickly
build a variety of eCommerce marketing websites for a purchase price of
13,487,363 shares of the Company's common stock. Netbloo received a three year
contractor agreement with annual compensation of $300,000 which is payable in
monthly installments of $25,000 and may be terminated after two years subject to
a six month termination payment. The contractor agreement was effective October
1, 2012 and final documents were signed on December 31, 2012. The Company has
determined that control of the acquired assets changed hands on October 24,
2012, in accordance with ASC 805-10-25-6 the 13,487,363 shares were valued using
the $0.08 per share closing price on that date for total purchase price
-8-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
consideration of $1,078,989. In accordance with purchase acquisition accounting,
the company initially allocated the consideration to the net tangible and
identifiable intangible assets, based on their estimated fair values as of the
date of acquisition. Goodwill represents the excess of the purchase price over
the fair value of the underlying net tangible and identifiable intangible
assets.
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the acquisition date. The company has finalized its
purchase price allocation.
Tangible Assets $ -
Customer Lists 75,000
Software 255,000
Goodwill 748,989
----------
Total purchase price $1,078,989
==========
NOTE 4. PRO FORMA FINANCIAL INFORMATION
---------------------------------------
The following unaudited consolidated pro forma information gives effect to the
Netbloo asset acquisition (see Note 3) 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.
Six Months Ended Six Months Ended
December 31, 2012 December 31, 2011
(Unaudited) (Unaudited)
------------------- --------------------
Revenues $ 1,067,917 $ 929,709
Operating Expenses 1,354,688 1,187,628
Other Income (Expense) 8,715 (12,422)
------------------- --------------------
Loss from Continuing Operations (278,056) (270,341)
Loss from Discontinued Operations (8,974) (6,169)
------------------- --------------------
Net Loss (287,030) (276,510)
Foreign Currency Translation Gain - 23,620
------------------- --------------------
Comprehensive Loss $ (287,030) $ (252,890)
=================== ====================
Basic and Diluted Loss Per Share $ (0.00) $ (0.00)
Weighted Average Shares Outstanding - Basic
& Diluted 86,881,252 88,007,611
-9-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
Three Months Ended
December 31, 2011
(Unaudited)
-------------------
Revenues $ 514,451
Operating Expenses 546,271
Other Expense (6,021)
-------------------
Loss from Continuing Operations (37,841)
Loss from Discontinued Operations (3,613)
-------------------
Net Loss (41,454)
Foreign Currency Translation Loss (34,495)
-------------------
Comprehensive Loss $ (75,949)
===================
Basic and Diluted Loss Per Share $ (0.00)
Weighted Average Shares Outstanding - Basic
& Diluted 88,007,611
NOTE 5. COLLABORATIVE ARRANGEMENT
---------------------------------
Pursuant to ASC 808-10, prior to the Company's purchase of Netbloo's 50%
interest in the MagCast JV Agreement (discussed in Note 3) the joint operating
activity was considered a collaborative arrangement.
In May of 2012 the Company signed a joint venture agreement ("JV Agreement")
with Netbloo for the MagCast Publishing Platform ("MagCast") which was jointly
developed. MagCast provides customers access to a cloud-based service to create
an application ("App") to publish a digital magazine on Apple Corporation's
online marketplace Apple Newsstand and includes executive training modules as
well as a three-month trial subscription to the Company's Immediate Edge
subscription product and other bonus products. Under the terms of the JV
Agreement the Company was responsible for marketing, sales and administration
and Netbloo was responsible for product development. MagCast was launched in May
2012 and a majority of sales were the result of affiliate marketing
relationships which result in commission of 50% of gross revenue for those sales
to the affiliate responsible for the sale. Pursuant to ASC 808-10 the joint
operating activity with Netbloo was considered a collaborative arrangement. The
Company was deemed the principal participant and recorded all transactions under
the JV Agreement on a gross basis with the 50% amount net of affiliate
commissions and other allowable costs due Netbloo recorded as commission
expense.
The following revenue and expense amounts from transactions under the JV
Agreement are included in the Statement of Operations for the Six months ended
December 31, 2012;
Sales of MagCast Publishing Platform $ 76,457
Affiliate Commission Expense 4,291
Transaction Fees 5,956
Independent Contractors 5,449
Internet Expenses 2,895
Netbloo Commissions 28,933
------------
Net Profit $ 28,933
============
The Company has acquired Netbloo's 50% share of the MagCast JV (see Note 3),
accordingly there is no longer a collaborative arrangement to report on
subsequent to September 30, 2012.
-10-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
NOTE 6. DISCONTINUED OPERATIONS
-------------------------------
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
Six Months Ended Six Months Ended
December 31, 2012 December 31, 2011
------------------ ------------------
Revenues $ - $ -
Operating expenses 8,141 9,919
Loss from operations (8,141) (9,919)
Unrealized gain (loss) on marketable securities (833) 3,750
------------------ ------------------
Net (loss) income $ (8,974) $ (6,169)
================== ==================
Three Months Ended Three Months Ended
December 31, 2012 December 31, 2011
------------------ ------------------
Revenues $ - $ -
Operating expenses 3,957 4,863
Loss from operations (3,957) (4,863)
Unrealized gain (loss) on marketable securities - 1,250
------------------ ------------------
Net (loss) income $ (3,957) $ (3,613)
================== ==================
Assets and Liabilities of Discontinued Operations as of
December 31, 2012 June 30, 2012
------------------ -----------------
ASSETS
Marketable securities $ 94,792 $ 95,625
------------------ -----------------
Total assets of discontinued operations $ 94,792 $ 95,625
================== =================
LIABILITIES
Accounts payable $ 94,595 $ 94,428
Accrued expenses 63,509 58,138
Notes payable 124,020 124,770
Due to related parties 73,563 97,420
------------------ -----------------
Total liabilities of discontinued operations $ 355,687 $ 374,756
================== =================
-11-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
Notes Payable
Included in liabilities of discontinued operations at December 31, 2012 and June
30, 2012 are $144,051 and $169,801 respectively (including $20,031 and $45,031
in due to related parties respectively) in notes payable plus related accrued
interest of which are all in default for lack of repayment by their due date.
For the six months ended December 31, 2012 and December 31, 2011 the Company
incurred interest expense on notes payable of $7,013 and $8,700 respectively
which is included in the Statement of Operations under income (loss) from
discontinued operations.
NOTE 7. RELATED PARTY TRANSACTIONS
-----------------------------------
The Company entered into three-year Contract For Services Agreements commencing
July 2009 ("Commencement Date") 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 were 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 Mr. Raine are both beneficial owners 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. Jesselton
voluntarily withdrew from its contract with the Company effective March 1, 2012
and Mr. Carey has continued as a director of the Company. The Marillion and
Raine Ventures contracts expired June 30, 2012 and have continued on a month to
month basis under the same terms.
Cash remuneration under the Marillion, 23V and Raine Ventures agreements was
initially $250,000 per year and $200,000 under the Jesselton agreement. On
December 12, 2011 cash remuneration for the Marillion and Jesselton agreements
was amended for the year ended June 30, 2012 to the Australian Dollar equivalent
of the originally contracted amounts at the exchange rate on the contract start
date of July 15, 2009. The Marillion original annual contract amount of $250,000
was amended to $317,825 AUD Dollars and the Jesselton original annual contract
amount of $200,000 was amended to $254,260 AUD. 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, 2012
and nothing has been accrued in the December 31, 2012 financial statements,
since the proportionate amount to reach the bonus for the fiscal year ending
June 30, 2013 was not earned.
During the term of the agreements, Marillion, Jesselton and Raine Ventures were
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
-12-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
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.
Beginning July 1, 2011, the Company paid Marillion $2,500 AUD ($2,598 USD at
December 31, 2012) per month to cover office related expenses which is included
in operating expenses.
Effective July 15, 2012, the Company entered into a six-month Consulting
Services Agreement with GHL Group, Ltd., whose President, Gregory H. Laborde is
a Director. Pursuant to the Consulting Services Agreement, GHL Group received
500,000 shares of the Company's restricted common stock and payments of $3,000
monthly for services including but not limited to evaluation of financial
forecasts, assisting in the development of business and financial plans and
assisting in the identification of potential acquisitions and financial sources.
The 500,000 shares were valued at the $0.09 per share price on July 15, 2012 and
$45,000 was recorded as related party contractor fees on that date. The contract
expired January 15, 2013 and has continued on a month to month basis under the
terms of the expired agreement.
Effective October 1, 2012, the Company entered into a three year contractor
agreement with Netbloo Media, Ltd., joint developer of the MagCast Publishing
Platform, with annual compensation of $300,000 which is payable in monthly
installments of $25,000 and which may be terminated after two years subject to a
six-month termination payment.
Marillion was awarded a $40,000 bonus upon completion of the asset acquisition
of the 50% of the MagCast JV which had been owned by Netbloo and Market Pro Max.
On October 11, 2012, Henry Pinskier, a Director of the Company received an
option to purchase 1,500,000 of the Company's common shares details of which are
in Note 12. During the three and six month periods ending December 31, 2012, the
Company recorded $52,050 in expense for the option which is reflected as
Directors' Fees in the supplemental schedule of operating expenses (see Note
12).
On October 11, 2012, Theodore A. Greenberg, Chief Financial Officer and a
Director of the Company received an option to purchase 1,500,000 of the
Company's common shares details of which are in Note 12. During the three and
six month periods ending December 31, 2012, the Company recorded $52,050 in
expense for the option which is included in Officer's Salary in the supplemental
schedule of operating expenses (see Note 12).
At June 30, 2012, due to related parties mainly includes $275,317 due to
Jesselton, which consists of $167,317 for contractor fees and $108,000 for fees
related to the share exchange between 30DC DE and Infinity, $9,815 due to Raine
Ventures under its contractor agreement and $321,000 due to Theodore A.
Greenberg for compensation.
At December 31, 2012, due to related parties mainly included $266,721 due to
Jesselton, which consists of $158,721 for contractor fees and $108,000 for fees
related to the share exchange between 30DC DE and Infinity, $25,000 due to
Netbloo under its contractor agreement, $17,977 due to Marillion under its
contractor agreement, $5,860 due to Raine Ventures under its contractor
agreement and $421,000 due to Theodore A. Greenberg for compensation.
-13-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
NOTE 8. PROPERTY AND EQUIPMENT
------------------------------
Property and equipment consists of the following:
December 31, 2012 June 30, 2012
----------------- -------------
Computer and Audio Visual Equipment $ 448,417 $ 437,659
Office equipment and Improvements 68,859 68,859
----------------- -------------
517,276 506,518
Less accumulated depreciation and amortization (487,406) (472,418)
----------------- -------------
$ 29,870 $ 34,100
================= =============
Depreciation expense was $14,988 for the six months ended December 31, 2012 and
$31,957 for the six months ended December 31, 2011. Depreciation expense was
$5,807 for the three months ended December 31, 2012 and $14,579 for the three
months ended December 31, 2011.
Effective July 1, 2012, US dollar is the functional currency for the entire
Company. Prior to July 1, 2012 property and equipment, net were stated in the
functional currency where located and where applicable were translated to the
reporting currency of the US Dollar at each period end. Accordingly, property
and equipment, net were subject to change as a result of changes in foreign
currency exchange rates.
NOTE 9. INTANGIBLE ASSETS
-------------------------
Intangible assets consists of the following:
December 31, 2012
--------------------
Customer Lists $ 75,000
Software 255,000
--------------------
330,000
Less accumulated amortization (11,000)
--------------------
$ 319,000
====================
Customer lists and software were acquired as part of the MagCast and Market Pro
Max asset acquisitions in October 2012 and are being amortized over their
estimated useful lives of five years. Amortization expense was $11,000 for the
three and six months ended December 31, 2012 and none for the three and six
months ended December 31, 2011.
NOTE 10. INCOME TAXES
---------------------
As of June 30, 2012, the Company had net operating loss carryovers for United
States income tax purposes of approximately $1,130,600, which begin to expire in
2030. 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 U.S.
federal tax returns and has filed state and local tax returns due since the
share transaction. The Company is in the process of filing State and local tax
returns for Infinity from 2005-2009. The Company believes no material tax
balance is due for all tax returns which have not yet been filed. The Company
has not provided a tax benefit for the six months ended December 31, 2012 and
December 31, 2011 as it is not more likely than not that such benefit will 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. Filed tax returns are subject to
examination beginning with the period ended December 31, 2009.
-14-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
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. 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 "Income Taxes", 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 six months ended December 31, 2012. 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 11. STOCKHOLDERS' EQUITY
-----------------------------
COMMON STOCK
During the six months ended December 31, 2012, the Company issued common stock
as follows:
500,000 shares with a fair value of $45,000 of common stock to GHL Group, Ltd.
for consulting services detailed in Note 7,
15,385 shares of common stock to a consultant as partial payment for services
for $2,000,
13,487,363 shares with a fair value of $1,078,989 of common stock to Netbloo
Media, Ltd. as consideration for purchase of 50% of the MagCast JV and Market
Pro Max.
No common stock was issued during the six months ended December 31, 2011.
WARRANTS AND OPTIONS
At June 30, 2012, the Company had 600,000 fully vested options outstanding as
follows:
404,000 options exercisable at 80 cents per share expiring August 7, 2018,
156,000 of these options are held by Pierce McNally a director of the Company,
196,000 options exercisable at 50 cents per share expiring January 5, 2019,
36,500 of these options are held by Pierce McNally a director of the Company,
The balance of these options were held by a former employee and former directors
of Infinity.
-15-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
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 a private placement memorandum ("PPM") issued in August 2010 the
Company offered units consisting of one share of common stock, one warrant at 37
cents per share exercisable until March 15, 2011 ("37-Cent Warrant") and one
warrant at 50 cents per share exercisable five years from the date of issuance
("50-Cent Warrant") for a price of 26 cents per unit. A first closing was held
on September 22, 2010 under which 2,554,205 37-Cent Warrants were issued along
with 2,554,205 50-Cent Warrants expiring September 22, 2015. From November 2010
through March 2011, an additional 847,317 37-Cent Warrants were issued and
847,317 50-Cent Warrants were issued. All of the 37-Cent Warrants expired March
15, 2011 unexercised.
On October 11, 2012, the Company's board of directors approved the Company's
2012 stock option plan (see Note 12) and grants of 3,000,000 options to purchase
the Company's common stock with an exercise price of $0.08 per share expiring on
October 10, 2022. 1,500,000 of these options were granted to Theodore A.
Greenberg, the Company's Chief Financial Officer and a Director of the Company
and 1,500,000 of these options were granted to Henry Pinskier who joined the
Company as a Director in October 2012.
NOTE 12 - STOCK BASED COMPENSATION PLANS
----------------------------------------
The Company follows FASB Accounting Standards Codification No. 718 -
Compensation - Stock Compensation for share based payments to employees. The
Company follows FASB Accounting Standards Codification No. 505 for share based
payments to Non-Employees.
The Company recognized expense in the amount of $104,100 for the six months
ended December 31, 2012. 3,000,000 options were granted in the period of which
1,000,000 vested January 1, 2013, 1,000,000 vest January 1, 2014 and 1,000,000
vest on January 1, 2015. The cost of options vesting January 1, 2013 was
recorded in the period and the cost of options vesting in the future is being
recorded on a straight-line basis over the vesting period. There was no impact
on the Company's cash flow.
The Company's stock incentive plan is the 30DC, Inc. 2012 Stock Option and Award
Plan (the "Plan"). The Plan provides for the grant of non-qualified stock
options to selected employees and directors. The Plan is administered by the
Board and authorizes the grant of options 7,500,000. The Board determines which
eligible individuals are to receive options or other awards under the Plan, the
terms and conditions of those awards, the applicable vesting schedule, the
option price and term for any granted options, and all other terms and
conditions governing the option grants and other awards made under the Plans.
The fair value of each option award was estimated on the date of grant using the
Black-Scholes option valuation model using the assumptions noted as follows:
expected volatility was based on historical trading in the company's stock from
the September 10, 2010 date of the Infinity/30DC transaction through the October
11, 2012 date the options were issued. The expected term of options granted was
determined using the simplified method under SAB 107 and represents one-half the
exercise period. The risk-free rate is calculated using the U.S. Treasury yield
curve, and is based on the expected term of the option. The Company has
estimated there will be no forfeitures.
-16-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
During the six months ended December 31, 2012, Henry Pinskier, a Director of the
Company was issued an option exercisable for 1,500,000 shares of the Company's
common stock and Theodore A. Greenberg, the Company's Chief Financial Officer
and a Director, was issued an option exercisable for 1,500,000 shares of the
Company's common stock. The Black-Scholes option pricing model was used with the
following weighted-average assumptions for options granted during the six months
ended December 31, 2012:
Risk-free interest rate 0.67-0.88 %
Expected option life 5.1-6.1 years
Expected volatility 526.82-576.16 %
Expected dividend yield 0.0 %
Further information relating to stock options is as follows:
WEIGHTED
WEIGHTED AVERAGE
NUMBER AVERAGE REMAINING
OF EXERCISE CONTRACT
SHARES PRICE LIFE (YEARS
------------------------------------------
Outstanding options at 06/30/12 600,000 0.70 6.22
Granted 3,000,000 0.08 9.75
Exercised - - -
Forfeited/expired - - -
Outstanding options at 12/31/12 3,600,000 $ 0.18 9.08
Exercisable on 12/31/12 600,000 0.70 5.72
The options have a contractual term of ten years. The aggregate intrinsic value
of shares outstanding and exercisable was $0 at December 31, 2012. Total
intrinsic value of options exercised was $0 for the six months ended December
31, 2012 as no options were exercised during this period.
At December 31, 2012, shares available for future stock option grants to
employees and directors under the 2012 Stock Option Plan were 4,500,000.
-17-
30DC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
(UNAUDITED)
NOTE 13. SUPPLEMENTAL SCHEDULE OF OPERATING EXPENSES
----------------------------------------------------
Six Months Ended Six Months Ended
December 31, 2012 December 31, 2011
-------------------- --------------------
Related Party Contractor Fees (1) $ 470,899 $ 420,342
Officer's Salary 152,050 100,000
Directors' Fees 52,050 -
Independent Contractors 193,096 211,322
Commission Expense 119,147 41,141
Professional Fees 95,441 208,929
Travel Expenses 22,361 20,264
Telephone and Data Lines 52,204 56,143
Other Operating Costs 127,888 129,069
-------------------- --------------------
Total Operating Expenses $ 1,285,136 $ 1,187,210
==================== ====================
------------------------------------
(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, Raine Ventures which provides services to the Company
including for Dan Raine to act as Vice President for Business
Development, GHL Group, Ltd., whose President, Gregory H. Laborde is a
Director, Netbloo which was the joint developer of the MagCast
Publishing Platform and through March 1, 2012 included Jesselton, Ltd.
which provided services to the Company including Clinton Carey serving
as Chief Operating Officer of the Company.
Three Months Ended Three Months Ended
December 31, 2012 December 31, 2011
-------------------- --------------------
Related Party Contractor Fees (1) $ 270,202 $ 207,290
Officer's Salary 102,050 50,000
Directors' Fees 52,050 -
Independent Contractors 108,544 96,963
Commission Expense 91,601 27,219
Professional Fees 66,332 72,153
Travel Expenses 10,064 10,828
Telephone and Data Lines 24,647 21,599
Other Operating Costs 68,759 59,801
-------------------- --------------------
Total Operating Expenses $ 794,249 $ 545,853
==================== ====================
--------------------------------------
(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, Raine Ventures which provides services to the Company
including for Dan Raine to act as Vice President for Business
Development, GHL Group, Ltd., whose President, Gregory H. Laborde is a
-18-
Director, Netbloo which was the joint developer of the MagCast
Publishing Platform and through March 1, 2012 included Jesselton, Ltd.
which provided services to the Company including Clinton Carey serving
as Chief Operating Officer of the Company.
NOTE 14. SUBSEQUENT EVENTS
--------------------------
On June 26, 2013, the Company issued 55,770 shares to Michael A. Littman as
payment for $14,500 included in accounts payable. On September 9, 2013, the
Company issued an additional 300,000 shares to Mr. Littman as payment for
$78,000 included in accounts payable. Mr. Littman is an attorney who has
provided services to the Company and who provided services to Infinity prior to
the share exchange.
On September 24, 2013, the Company issued 26,525 shares to a creditor as full
payment for a note payable and accrued interest totaling $6,896.
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.
-19-
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.
The Company has been developing and selling more of its own products and has
been reducing operating costs. As part of the cost reduction efforts, effective
February 1, 2012 the Company consolidated its two subscription products; the
Immediate Edge and Challenge Plus. Resources and marketing efforts for
subscriptions are now exclusively for the Immediate Edge. The Company expects
-20-
future growth to come from new products which are developed internally or
through joint venture arrangements. There can be no assurance new products will
be developed and if developed there can be no assurance that new products will
produce significant revenue.
In May of 2012 the Company signed a JV Agreement with Netbloo for the MagCast
Publishing Platform ("MagCast") which was jointly developed. MagCast provides
customers access to a cloud-based service to create an application ("App") to
publish a digital magazine on Apple Corporation's online marketplace Apple
Newsstand and includes executive training modules as well as a three-month trial
subscription to the Company's Immediate Edge subscription product and other
bonus products. Under the terms of the JV Agreement the Company was responsible
for marketing, sales and administration and Netbloo was responsible for product
development. MagCast was launched in May 2012 and a majority of sales were the
result of affiliate marketing relationships which resulted in commissions of 50%
of gross revenue for those sales to the affiliate responsible for the sale. All
MagCast sales revenue was recorded gross by the Company and commission expense
was recorded for the amount due to Netbloo which was 50% of revenue reduced by
affiliate commissions and other allowable costs.
In October 2012 the Company reached an agreement to purchase Netbloo's 50%
interest in the MagCast JV Agreement and Market Pro Max, a product which helps
companies run online information businesses for a purchase price of 13,487,368
shares of the Company's common stock. Netbloo received a three year contractor
agreement with annual compensation of $300,000 which is payable in monthly
installments of $25,000 and may be terminated after two years subject to a six
month termination payment. The contractor agreement was effective October 1,
2012 and final documents were signed on December 31, 2012.
The Company has no plans at this time for purchases or sales of fixed assets
which would occur in the next twelve months.
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 DECEMBER 31, 2012 COMPARED TO THE THREE MONTH
PERIOD ENDED DECEMBER 31, 2011.
During the three months ended December 31, 2012, 30DC, Inc. recognized revenues
of $602,420 from its operations compared to $507,873 during the three months
ended December 31, 2011. Revenues of the Company were from the following sources
during the three months ended December 31, 2012 compared to December 31, 2011.
Three Months Ended Three Months Ended Increase or
December 31, 2012 December 31, 2011 (Decrease)
------------------- -------------------- ------------
Revenue
Commissions $ 60,147 $ 41,349 $ 18,798
Subscription Revenue 136,916 143,179 (6,263)
Products and Services 319,853 148,811 171,042
Seminars and Mentoring 85,504 174,534 (80,030)
------------------- -------------------- ------------
Total Revenues $ 602,420 $ 507,873 $ 94,547
------------------- -------------------- ------------
The Company earns commissions for products sold by third parties to customers
referred by the Company. The $18,798 increase in commission income during the
three months ended December 31, 2012 compared to the six months ending December
31, 2011 was the result of commissions earned from a successful third party
product which was new in 2012.
-21-
The $6,263 decrease in subscription revenue was due to discontinuation of the
Challenge Plus which had revenue of $24,532 in the three month period ended
December 31, 2011 offset by a net increase in active subscribers for the
Immediate Edge some of whom remained customers after receiving a trial Immediate
Edge subscription when they purchased a license for the MagCast Publishing
System. For the three months ended December 31, 2012 the Immediate Edge active
subscriber base averaged 458 per month and for the three months ended December
31, 2011 the Immediate Edge active subscriber base averaged 387 per month.
The $172,042 increase in products and services revenue was due to $315,457 in
sales of the MagCast Publishing Platform during the quarter ended December 31,
2012, which was not yet launched in the quarter ended December 31, 2011, offset
by $139,617 of products and services revenue in the quarter ended December 31,
2011 from products that have been discontinued.
The $80,030 decrease in seminars and mentoring income resulted primarily from a
decrease in the number of mentoring students as the program wound down and was
phased out at the end of December 2012. The average number of active mentoring
students for the three months ended December 31, 2012 was 44 and for the three
months ended December 31, 2011 there was an average of 81 mentoring students.
The Company discontinued its historical mentoring program as of December 31,
2012 to redirect Company resources toward products and services sales growth
which management believes has more potential for long-term growth than mentoring
which is labor intensive and does have the ability to leverage and scale.
During the three months ended December 31, 2012, the Company incurred $794,249
in operational expenses compared to $545,853 during the three months ended
December 31, 2011. Operational expenses during the three months ended December
31, 2012 and 2011, include the following categories:
Three Months Ended Three Months Ended Increase or
December 31, 2012 December 31, 2011 Decrease
------------------ ------------------ -----------
Accounting Fees $ 47,285 $ 50,923 $ (3,638)
Credit Card Processing Fees 14,246 11,618 2,628
Commissions 91,601 27,219 64,382
Independent Contractors 108,544 96,963 11,581
Depreciation and Amortization 16,806 14,579 2,227
Directors Fees 52,050 - 52,050
Internet Expenses 17,003 12,029 4,974
Legal Fees 19,047 21,230 (2,183)
Officer's Salaries 102,050 50,000 52,050
Related Party Contractors 270,202 207,290 62,912
Telephone and Data Lines 24,647 21,599 3,048
Travel & Entertainment 10,064 11,058 (994)
Other Operating Expenses 20,704 21,345 (641)
------------------ ------------------ -----------
Total Operating Expenses $ 794,249 $ 545,853 $ 248,396
================== ================== ===========
The increase of $64,382 in commissions resulted from affiliate commissions due
to the increase in products sold including the MagCast Publishing Platform in
the December 2012 quarter compared to the December 2011 quarter.
The increase of $11,581 in independent contractors is primarily due to the
approximately $25,000 increased cost for contractors for maintenance and support
of the MagCast Publishing Platform offset by the reduction of two contractors in
the 30 Day division who were paid a total of approximately $18,000 in the
December 2011 quarter one of whom was strictly related to the Challenge Plus
subscription product which has been discontinued.
-22-
The increase of $52,050 in directors' fees is for the value of stock options
issued to Henry Pinskier, a director of the Company a portion of which was
expensed in the December 2012 quarter.
The increase of $52,050 in officer's salaries is for the value of stock options
issued to Theodore A. Greenberg, chief financial officer and a director of the
Company a portion of which was expensed in the December 2012 quarter.
Related Party Contractor Fees consist of payments to Marillion Partnership,
Raine Ventures, LLC and through March 1, 2012, 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 as well as the consulting
contract with GHL Group, Ltd. whose President, Gregory H. Laborde is a Director
of the Company and a services contract with Netbloo Media, Ltd. which was the
joint developer of the MagCast Publishing Platform. The $62,912 net increase
results from $75,000 for Netboo which started in October 2012, a $40,000
one-time bonus awarded to the Marillion Partnership upon completion of the asset
acquisition which included the remaining 50% of the MagCast Publishing Platform,
$9,000 paid to GHL, Group, Ltd. in the December 2012 quarter offset by a
decrease of $64,351 for Jesselton which is no longer a contractor to the
Company.
During the three months ended December 31, 2012, the Company recognized a net
loss from continuing operations of ($183,084) compared to a net loss of
($44,001) during the three months ended December 31, 2011. The increased loss of
$139,083 was primarily due to the increase in operating expenses of $248,396
offset by the increase in revenues of $94,547.
FOR THE SIX MONTH PERIOD ENDED DECEMBER 31, 2012 COMPARED TO THE SIX MONTH
PERIOD ENDED DECEMBER 31, 2011.
During the six months ended December 31, 2012, 30DC, Inc. recognized revenues of
$1,052,159 from its operations compared to $923,131 during the six months ended
December 31, 2011. Revenues of the Company were from the following sources
during the six months ended December 31, 2012 compared to December 31, 2011.
Six Months Ended Six Months Ended Increase or
December 31, 2012 December 31, 2011 (Decrease)
----------------- ----------------- -----------
Revenue
Commissions $ 163,964 $ 143,849 $ 20,115
Subscription Revenue 255,153 338,068 (82,915)
Products and Services 405,958 162,884 243,074
Seminars and Mentoring 227,084 278,330 (51,246)
----------------- ----------------- -----------
Total Revenues $ 1,052,159 $ 923,131 $ 129,028
----------------- ----------------- -----------
The Company earns commissions for products sold by third parties to customers
referred by the Company. The $20,115 increase in commission income during the
six months ended December 31, 2012 compared to the six months ending December
31, 2011 was the result of commissions earned from a successful third party
product which was new in 2012.
The 82,915 decrease in subscription revenue was primarily due to discontinuation
of the Challenge Plus which had revenue of $54,105 in the six month period ended
December 31, 2011, a decrease in the Immediate Edge average monthly subscriber
base to 454 from 467 for the six months ended December 31, 2012 and 2011
respectively and a decrease in average monthly subscription revenue for
Immediate Edge due to a promotion when Challenge Plus was discontinued.
The $243,074 increase in products and services revenue was due to $391,752 in
sales of the MagCast Publishing Platform during the six months ended December
31, 2012, which was not yet launched in the six months ended December 31, 2011,
-23-
offset by $150,449 of products and services revenue during the six months ended
December 31, 2011 from products that have been discontinued.
The $51,246 decrease in seminars and mentoring income resulted primarily from a
decrease in the number of mentoring students as the program wound down and was
phased out at the end of December 2012. The average number of active mentoring
students for the six months ended December 31, 2012 was 56 and for the six
months ended December 31, 2011 was an average of 79 mentoring students. The
Company discontinued its historical mentoring program as of December 31, 2012 to
redirect Company resources toward products and services sales growth which
management believes has more potential for long-term growth than mentoring which
is labor intensive and does have the ability to leverage and scale.
During the six months ended December 31, 2012, the Company incurred $1,285,136
in operational expenses compared to $1,187,210 during the six months ended
December 31, 2011. Operational expenses during the six months ended December 31,
2012 and 2011, include the following categories:
Six Months Ended Six Months Ended Increase or
December 31, 2012 December 31, 2011 Decrease
----------------- ----------------- -----------
Accounting Fees $ 67,285 $ 166,311 $ (99,026)
Credit Card Processing Fees 26,551 24,514 2,037
Commissions 119,147 41,141 78,006
Independent Contractors 193,096 211,322 (18,226)
Depreciation and Amortization 25,988 31,957 (5,969)
Directors Fees 52,050 - 52,050
Internet Expenses 37,645 28,487 9,158
Legal Fees 28,156 42,618 (14,462)
Officer's Salaries 152,050 100,000 52,050
Related Party Contractors 470,899 420,342 50,557
Telephone and Data Lines 52,204 56,143 (3,939)
Travel & Entertainment 22,361 20,763 1,598
Other Operating Expenses 37,704 43,612 (5,908)
----------------- ----------------- -----------
Total Operating Expenses $ 1,285,136 $ 1,187,210 $ 97,926
================= ================= ===========
The decrease of $99,026 in accounting fees was due to a delay in the audit for
the Company's June 30, 2012 year-end and an increase in fees due to multiple
filings during the six months ended December 2011 covering a number of prior
periods.
The increase of $78,006 in commissions resulted from affiliate commissions due
to the increase in products sold including the MagCast Publishing Platform
during the six months ended December 2012 compared to the six months ended
December 2011.
The decrease of $18,226 in independent contractors is primarily due to the
reduction of one contractor in the IE division who was paid approximately
$17,000 during the six months ended December 2012 and the reduction of two
contractors in the 30 Day division who were paid a total of approximately
$37,000 during the six months ended December 2011 offset by approximately
$34,000 increased cost for contractors for maintenance and support of the
MagCast Publishing Platform which was launched in 2012.
-24-
The increase of $52,050 in directors' fees is for the value of stock options
issued to Henry Pinskier, a director of the Company a portion of which was
expensed during the six months ended December 2012.
The increase of $9,158 in Internet expenses is due to an increase in storage and
hosting fees related to the MagCast Publishing Platform which was launched in
2012.
The decrease in legal fees of $14,462 was from a decrease in SEC counsel costs
due a delay in the Company filing its 10K for the year ended June 30, 2012 and
multiple filings during the six months ended December 2011.
The increase of $52,050 in officer's salaries is for the value of stock options
issued to Theodore A. Greenberg, chief financial officer and a director of the
Company a portion of which was expensed during the six months ended December
2012.
Related Party Contractor Fees consist of payments to Marillion Partnership,
Raine Ventures, LLC and through March 1, 2012, 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 as well as the consulting
contract with GHL Group, Ltd. whose President, Gregory H. Laborde is a Director
of the Company and a services contract with Netbloo Media, Ltd. which was the
joint developer of the MagCast Publishing Platform. The $50,557 net increase
primarily results from $75,000 for Netboo which started in October 2012, a
$40,000 one-time bonus awarded to the Marillion Partnership upon completion of
the asset acquisition which included the remaining 50% of the MagCast Publishing
Platform, $16,500 paid to GHL, Group, Ltd. during the six months ended December
2012 and 500,000 shares of common stock issued to GHL Group, Ltd. valued at
$45,000 offset by a decrease of $131,263 for Jesselton which is no longer a
contractor to the Company.
During the six months ended December 31, 2012, the Company recognized a net loss
from continuing operations of ($224,262) compared to a net loss of ($276,501)
during the six months ended December 31, 2011. The decreased loss of $52,239 was
primarily due to the increase in revenues of $129,028 and a reduction in foreign
exchange loss of $12,391 offset by the increase in operating expenses of
$97,926.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $274,112 at December 31, 2012 and the Company
had a working capital deficit of $1,770,140. At July 31, 2013 the Company had a
working capital deficit of approximately $1,880,000; the approximately $110,000
additional working capital deficit was funded by an increase in the amount due
to related parties. Subsequent to December 31, 2012 the Company received
$105,000 in cash from the sale of 300,000 shares of Strategic Environmental and
Energy Resources, Inc. which were included in Assets of Discontinued Operations.
To fund working capital in the year ending June 30, 2014, the Company expects to
raise capital and to improve the results of operations from increasing revenue
as well as a reduction in operating costs. Increased revenue is expected to come
from further sales of MagCast Publishing Platform, through a product re-launch
which was just completed in August 2013 and an increase in monthly license
subscriptions, Market Pro Max which has not been extensively marketed and
introduction of new products some of which will be extensions of existing
product lines. During the year ended June 30, 2012 operating costs included
significant amounts due to Netbloo under the collaborative arrangement which
subsequent to the Company's acquisition of the other 50% of the collaborative
arrangement from Netbloo are no longer owed.
Included in liabilities of discontinued operations at December 31, 2012 is
$144,051 (including $20,031 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. Approximately $50,000 of this amount has been repaid subsequent to
December 31, 2012.
During the six month period ended December 31, 2012, the Company used $719,087
in operating activities. During the six month period ended December 31, 2011,
operating activities provided the Company with $10,109. The increased use of
funds of $729,195 was due to payments of accrued affiliate commissions and
accrued collaborative arrangement commissions offset by collection of accounts
-25-
receivable and the decreased operating loss. Certain amounts which were in
accrued expenses at June 30, 2012 are included in accounts payable at December
31, 2012 which is reflected in the change in accounts payable.
GOING CONCERN
The condensed consolidated financial statements have been prepared using
accounting principles generally accepted in the United States of America
applicable for a going concern which assumes that the Company will realize its
assets and discharge its liabilities in the ordinary course of business. As of
December 31, 2012, the Company has a working capital deficit of approximately
$1,770,000 and has accumulated losses of approximately $2,969,000 since its
inception. At July 31, 2013 the Company had a working capital deficit of
approximately $1,880,000; the approximately $110,000 additional working capital
deficit was funded by an increase in the amount due to related parties.
Subsequent to December 31, 2012 the Company received $105,000 in cash from the
sale of 300,000 shares of Strategic Environmental and Energy Resources, Inc.
which were included in Assets of Discontinued Operations. The Company's ability
to continue as a going concern is dependent upon the ability of the Company to
obtain the necessary financing or to earn profits from its business operations
to meet its obligations and pay its liabilities arising from normal business
operations when they come due. In May 2012 the Company launched MagCast which
the Company expects to be an integral part of its businesses on an ongoing
basis. MagCast is being sold through an affiliate network which expands the
Company's selling capability and has a broad target market beyond the Company's
traditional customer base. Until the Company achieves sustained profitability it
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. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern.
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.
-26-
As required by SEC Rule 15d-15(b) for the quarter ended December 31, 2012, 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
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 accounting software which is not
comprehensive and which 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 December 31, 2012, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
-27-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
-------------------------------------------------------------------
During the period October 1, 2012 through December 31, 2012 the Company issued
the following equity securities;
On November 20, 2012, the Company issued 15,385 common shares to a consultant
who provides services to the Company.
On December 31, 2012, the Company issued 13,487,363 common shares to Netbloo
Media, Ltd. as consideration for acquiring the remaining 50% of the MagCast
Joint Venture and Market Pro Max.
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 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 December 31, 2012 is
$144,051 (including $20,031 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. MINE AND SAFETY DISCLOSURES
-----------------------------------
ITEM 5. OTHER INFORMATION
-------------------------
None.
-28-
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
----------------- -- -----------------------------------------------------------
101.INS XBRL Instance Document (1)
----------------- -- -----------------------------------------------------------
101.SCH XBRL Taxonomy Extension Schema Document (1)
----------------- -- -----------------------------------------------------------
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
----------------- -- -----------------------------------------------------------
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
----------------- -- -----------------------------------------------------------
101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
----------------- -- -----------------------------------------------------------
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (1)
--------------------------------------------------------------------------------
(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is
not subject to liability under these sections.
--------------------------------------------------------------------------------
-29-
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: October 14, 2013 By:/s/ Edward Dale
------------------------------
Edward Dale,
Principal Executive Officer
Chief Executive Officer
President
Dated: October 14, 2013 By:/s/ Theodore A. Greenberg
------------------------------
Theodore A. Greenberg,
Principal Accounting Officer
Chief Financial Officer
-30
