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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-50621
 DOLPHIN DIGITAL MEDIA INC.
  Nevada
(State of incorporation)
    
    86-0787790
(I.R.S. employer identification no.)
 
 
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PART I FINANCIAL INFORMATION
    
    
    1ITEM
1.CONSOLIDATED FINANCIAL STATEMENTS
    
    
    1ITEM 2.MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    10ITEM 4T.CONTROLS AND PROCEDURES
    
    
    12PART II OTHER INFORMATION
    
    
    13ITEM 1.LEGAL PROCEEDINGS
    
    
    13ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    13ITEM 3.DEFAULTS UPON SENIOR SECURITIES
    
    
    14ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    14ITEM 5.OTHER INFORMATION
    
    
    14ITEM 6.EXHIBITS
    
    
    14Exhibit 31.1Exhibit 32.1




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PART I   FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)ASSETSCurrentCash
    
    $
    238,994
    
    
    $
    51,014Inventory
    
    
    58,498
    
    
    
    94,048Prepaid Expenses
    
    
    57,196
    
    
    
    69Other Current assets
    
    
    599
    
    
    
    678Total Current Assets
    
    
    355,287
    
    
    
    145,809Property, Plant and equipment
    
    
    47,363
    
    
    
    64,789Intangible Assets
    
    
    1,205,015
    
    
    
    654,538Total Assets
    
    $
    1,607,665
    
    
    $
    865,136LIABILITIESCurrentAccounts payable
    
    $
    1,700,388
    
    
    $
    862,742Payroll Liabilities
    
    
    
    
    
    
    10,375Other current liabilities
    
    
    33,592
    
    
    
    64,532Advances from Related Parties
    
    
    1,287,200
    
    
    
    578,381Notes payable (Net of discount of $105,000)
    
    
    195,000
    
    
    
    Total Current Liabilities
    
    
    3,216,180
    
    
    
    1,516,030Long Term LiabilitiesNotes payable convertible (Net of discount of $73,032)
    
    
    226,968
    
    
    
    Total Long Term Liabilities
    
    
    226,968
    
    
    
    Total Liabilities
    
    $
    3,443,148
    
    
    $
    1,516,030STOCKHOLDERS DEFICITCommon Share Capital, $0.015 par value, 100,000,000 shares authorized, 56,959,454 issued and outstanding as of September
30, 2009 and 49,236,904 issued and outstanding as of December 31 2008
    
    
    854,391
    
    
    
    738,553Preferred Share Capital $0.001 par value, 10,000,000
shares authorized, 500,000 shares issued and outstanding
    
    
    500
    
    
    
    500Additional Paid-In Capital
    
    
    12,635,445
    
    
    
    10,001,754Accumulated Deficit
    
    
    (15,201,257
    )
    
    
    (11,251,009
    )Comprehensive Loss / Income
    
    
    (124,562
    )
    
    
    (140,692
    )Total Stockholders Deficit
    
    
    (1,835,483
    )
    
    
    (650,894
    )Total Liabilities and Stockholders Deficit
    
    $
    1,607,665
    
    
    $
    865,136
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Income Statements
For the three and nine months ended September 30, 2009 and 2008
 For the three months ended
    
    
    For the nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    
    
    
    $
    267,020
    
    
    $
    
    
    
    $
    601,919Cost of Sales
    
    
    
    
    
    
    101,468
    
    
    
    
    
    
    
    227,509Gross Profit
    
    
    
    
    
    
    165,552
    
    
    
    
    
    
    
    374,410Expenditures:General and Administrative
    
    
    1,701,461
    
    
    
    462,193
    
    
    
    3,415,503
    
    
    
    1,424,333Legal and Professional Fees
    
    
    149,832
    
    
    
    266,382
    
    
    
    353,539
    
    
    
    871,983Depreciation
    
    
    8,080
    
    
    
    9,176
    
    
    
    22,691
    
    
    
    26,011Amortization of Stock Compensation
    
    
    
    
    
    
    74,421
    
    
    
    
    
    
    
    223,264Total Expense
    
    
    1,859,373
    
    
    
    812,172
    
    
    
    3,791,733
    
    
    
    2,545,591Loss from Operations
    
    $
    (1,859,373
    )
    
    $
    (646,620
    )
    
    $
    (3,791,733
    )
    
    $
    (2,171,181
    )Other ExpensesInterest Income
    
    
    
    
    
    
    (492
    )
    
    
    (3
    )
    
    
    (641
    )Interest Expense
    
    
    113,327
    
    
    
    4,806
    
    
    
    158,518
    
    
    
    20,830Liquidated Damages
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262,500Total Other Expenses
    
    $
    113,327
    
    
    $
    4,314
    
    
    $
    158,515
    
    
    $
    282,689Net (Loss) / Profit from operations
    
    $
    (1,972,700
    )
    
    $
    (650,934
    )
    
    $
    (3,950,248
    )
    
    $
    (2,453,870
    )Foreign Currency Adjustments
    
    $
    (5,737
    )
    
    $
    (13,753
    )
    
    $
    16,130
    
    
    $
    (35,864
    )Comprehensive (Loss) / Profit
    
    $
    (1,978,437
    )
    
    $
    (664,687
    )
    
    $
    (3,934,118
    )
    
    $
    (2,489,734
    )Basic and Diluted Loss per Share
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    (0.08
    )
    
    $
    (0.08
    )Basic and Diluted Weighted Average Number of Shares Outstanding during
the Period
    
    
    53,855,596
    
    
    
    47,183,793
    
    
    
    52,322,109
    
    
    
    30,937,314
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES
Unaudited Statements of Cashflow
For the period ended September 30 2009 and 2008
 For the nine months EndedSeptember 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,950,248
    )
    
    $
    (2,489,734
    )Adjustments to reconcile net loss to net cash
used in
operating activities:Depreciation
    
    
    22,691
    
    
    
    26,011Amortization of debt discount
    
    
    66,175
    
    
    
    Impairment of web-site costs
    
    
    323,591
    
    
    
    Amortization of common stock compensation
    
    
    
    
    
    
    223,211Common Stock issued for compensation
    
    
    
    
    
    
    230,272Equity Issued  Liquidated Damages
    
    
    
    
    
    
    262,500Equity Issued  Services Rendered
    
    
    994,870
    
    
    
    Changes in operating assets and liabilitiesIncrease / (Decrease) in prepaid expenses
    
    
    (57,127
    )
    
    
    399Increase / (Decrease) in other current assets
    
    
    79
    
    
    
    11,160Increase / (Decrease) in Inventory
    
    
    35,550
    
    
    
    (99,932
    )Increase / (Decrease) in accounts payable
    
    
    837,644
    
    
    
    1,176Increase / (Decrease) in other current liabilities
    
    
    (10,375
    )
    
    
    Increase / (Decrease) in accrued expenses
    
    
    (30,940
    )
    
    
    104,094Net Cash Used In Operating Activities
    
    
    (1,768,090
    )
    
    
    (1,730,843
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of computers
    
    
    (5,264
    )
    
    
    (3,784
    )Purchase of intangible assets
    
    
    (874,068
    )
    
    
    (3,448
    )Net Cash From (Used In) Investing Activities
    
    
    (879,332
    )
    
    
    (7,232
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from convertible notes payable
    
    
    300,000
    
    
    
    1,674,409Proceeds from sale of common stock
    
    
    1,510,452
    
    
    
    30,000Advances from Related Parties
    
    
    708,819
    
    
    
    70,000Proceeds from note payable
    
    
    300,000
    
    
    
    Net Cash Provided By Financing Activities
    
    
    2,819,271
    
    
    
    1,774,409EXCHANGE RATE LOSS
    
    
    16,131
    
    
    
    35,864NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    187,980
    
    
    
    72,198CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    51,014
    
    
    
    37,150CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    238,994
    
    
    $
    109,348SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:Interest paid
    
    $
    95,512
    
    
    $
    15,883Conversion of accounts payable to equity
    
    $
    994,870
    
    
    $
    1,674,409
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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September 30, 2009Note Amount
    
    $
    300,000Discount
    
    
    (105,000
    )Net
    
    $
    195,000
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September 30, 2009Note Amount
    
    $
    300,000Discount
    
    
    (73,032
    )Net
    
    $
    226,968
    7




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Dolphin Digital Media, Inc., et alv. Mark Peikin, et al.- Case No. 09-CIV-22964-KING/BANDSTRA
  Malcolm Stockdale, et al.v. William ODowd, et al., Case No. 09-23338-CIV-JORDAN
 Dolphin Digital Media, Inc., et al. v. Mark Peikin, et al.
  Common Stock
  8




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Common stock issued for services
    9




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Settlement agreement
       
 ITEM 2.
    
    MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Results for the three months ended September 30, 2009.
      10




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Results for the nine months ended September 30, 2009.
       LIQUIDITY AND CAPITAL RESOURCES
   11




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ITEM 4T.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
   Changes in Internal Control over Financial Reporting.
   12




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PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
 Dolphin Digital Media, Inc., et alv. Mark Peikin, et al.- Case No. 09-CIV-22964-KING/BANDSTRA
  Malcolm Stockdale, et al.v. William ODowd, et al., Case No. 09-23338-CIV-JORDAN
 Dolphin Digital Media, Inc., et al. v. Mark Peikin, et al.
 
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     13




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ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 No.31.1
    
    
    Certification of the Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 200232.1
    
    
    Certification of the Chief Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
  14




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Dolphin Digital Media Inc.By:
    /s/ William ODowd IVName:
    William ODowd IVChief Executive Officer  15