30DC, INC.

Generally, the Company offers customers the option to purchase its digital products for a single payment or for a higher price consisting of a down payment and additional payments over a period of time which can be as long as one year.  Pursuant to ASC 605 the Company has determined that revenue is realizable and the earnings process is complete and the four criteria for revenue recognition stated in SAB Topic 13 are met at the time of the initial purchase.  Accordingly, the Company deems the sale to have occurred at the time of initial purchase and records the full amount paid and/or due from a customer as revenue.  Typically customers are offered a period to review the product and request a refund and if a refund is requested the company reverses the revenue which was recorded at the time of the sale.   The Company records a liability for future refunds and reduces revenue by that amount.  If a customer defaults on an additional payment, the customer loses access to the digital product.  Based upon its past experience with extended payment plans, the Company has estimated the number of future defaulted payments and has reduced revenue and accounts receivable by that amount.  During the quarter ending March 31, 2016, the Company offered customers the opportunity to purchase a group package of 5 to 15 digital product licenses at a discounted price per license.  Customers do not receive access information to a license in their group packaged until they are ready to use the license.  The Company considers a license delivered when access information is sent to a customer, accordingly, unused licenses that are part of a group package are considered as nondelivered and receipts for these unused licenses are included in deferred revenue.

30DC is a digital media solution provider. The company's principal product, the MagCast Mobile Publishing Platform, is used for the creation of mobile magazine apps and facilitates the monetization of digital content through advanced marketing functions.  The MagCast platform is compatible with the dominant mobile architectures for mobile devices such as smart phones and tablet computers, Apple's iOS and Google's Android.  30DC delivers the MagCast platform to licensees as a software-as-a-service.  In October 2015, the Company held a pre-beta launch for its newest digital publishing product, ScrivCast which will be priced lower than MagCast and will be targeted to a broader audience.  In January 2016, the Company held a follow-up to the ScrivCast pre-beta launch.  A number of customers from the pre-beta launch have begun publishing utilizing the ScrivCast platform and the Company is working towards a public launch of ScrivCast planned for later this year. The Company's assets consist primarily of property and equipment, goodwill and internally developed intangible property such as domain names, websites, customer lists and copyrights.

common stock that each held.   The Marillion transaction included The Challenge, rights to the company's coaching and mentoring business and affiliate marketing rights. Consideration for the Marillion transaction was 10 million (10,000,000) common shares in 30DC.  The Netbloo transaction included Market Pro Max and a portfolio of e-commerce training courses.  Consideration for the Netbloo transaction was 6,743,681 common shares in 30DC.   The net book value of the assets being divested, which consisted primarily of intangible assets and goodwill, exceeded the fair market value of the shares redeemed on the date the transactions were approved by $212,563 which the Company recorded as a loss from divestiture.  As a result of the transactions the Company's issued and outstanding shares were reduced from 76,853,464 to 60,109,783.  Prior to the transactions Marillion held 23.67% and Netbloo held 17.55% of the Company's issued and outstanding common stock.  After the transactions, Marillion holds 13.62% and Netbloo holds 11.22% of the Company's issued and outstanding common stock.  

The $84,069 increase in products and services revenue resulted mainly from two sources.  In January, 2016, the Company held a follow-up to the pre-beta launch for its newest digital publishing product, ScrivCast which will be priced lower than MagCast and will be targeted to a broader audience.  For the pre-beta launch follow-up, revenue totaled $52,185 and customers received a lifetime license which resulted in all revenue being recognized at the time of purchase.   In July 2015 the Company ran a promotion which was for an annual MagCast license which resulted in revenue being recognized ratably over the one-year license term.  During the three months ended March 31, 2016 the Company recognized $27,714 from the July promotion.

During the nine month period ended March 31, 2016, operating activities provided the Company with  $49,713. During the nine month period ended March 31, 2015, operating activities provided the Company with $50,210. The amounts provided from operating activities reflect an increase in due to related parties of $154,391 and $251,202 for the 2016 and 2015 periods respectively.  Discontinued operations provided the Company with approximately $27,000 during the nine months ended March 31, 2016 and discontinued operations used approximately $103,000 during the nine months ended March 31, 2015.  The Company has continued to receive revenue from existing subscriptions for some of the products that were divested in July 2015 without responsibility for related expenses, as these subscriptions have ended the revenue received has reduced.