##### Table of Contents



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 March 31, 2010
 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
    
    86-0787790(State of incorporation)
    
    (I.R.S. employer identification no.)
 
 
  Yes þ No o
 Yes o No 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
    
    
    12ITEM 4T. CONTROLS AND PROCEDURES
    
    
    15PART II  OTHER INFORMATION
    
    
    15ITEM 1. LEGAL PROCEEDINGS
    
    
    15ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
    
    
    16ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    17ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17ITEM 5. OTHER INFORMATION
    
    
    17ITEM 6. EXHIBITS
    
    
    17Exhibit 31.1Exhibit 32.1




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PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONSOLIDATED FINANCIAL STATEMENTS
 DOLPHIN DIGITAL MEDIA INC AND SUBSIDIARIES
Consolidated Balance Sheets
 March 31,
    
    
    December 31,2010
    
    
    2009(Audited)ASSETSCurrentCash
    
    $
    179,629
    
    
    $
    3,218Inventory
    
    
    88,420
    
    
    
    91,860Prepaid Expenses
    
    
    7,063
    
    
    
    211,128Other Current assets
    
    
    694
    
    
    
    635Total Current Assets
    
    
    275,806
    
    
    
    306,841Property, Plant and equipment
    
    
    
    
    
    
    Intangible Assets
    
    
    1,447,832
    
    
    
    1,208,268Total Assets
    
    $
    1,723,638
    
    
    $
    1,515,109LIABILITIESCurrentCash overdraft
    
    $
    
    
    
    $
    14,087Accounts payable
    
    
    1,491,387
    
    
    
    1,573,028Other current liabilities
    
    
    364,528
    
    
    
    315,350Advances from Related Parties
    
    
    1,124,000
    
    
    
    1,079,000Notes payable (Net of discount of $63,000 and $84,000, respectively
    
    
    237,000
    
    
    
    216,000Total Current Liabilities
    
    
    3,216,915
    
    
    
    3,197,465Long Term LiabilitiesNotes payable convertible (Net of discount of $69,857 and $73,032, respectively
    
    
    233,318
    
    
    
    230,143Total Liabilities
    
    
    3,450,233
    
    
    
    3,427,608STOCKHOLDERS DEFICITCommon Share Capital, $0.015 par value, 100,000,000 shares
authorized, 61,770,527 issued and outstanding as of March 31, 2010
and 56,959,454 issued and outstanding as of December 31 2009
    
    
    934,058
    
    
    
    897,141Preferred Share Capital $0.001 par value, 10,000,000
shares authorized, 500,000 shares issued and outstanding
    
    
    500
    
    
    
    500Additional Paid-In Capital
    
    
    26,721,137
    
    
    
    24,854,441Deferred Compensation
    
    
    
    
    
    
    Accumulated Deficit
    
    
    (29,120,227
    )
    
    
    (27,529,526
    )Comprehensive Loss / Income
    
    
    (262,063
    )
    
    
    (135,055
    )Total Stockholders Deficit
    
    
    (1,726,595
    )
    
    
    (1,912,499
    )Total Liabilities and Stockholders Deficit
    
    $
    1,723,638
    
    
    $
    1,515,109
   1




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DOLPHIN DIGITAL MEDIA INC AND SUBSIDIARIES
Consolidated Income Statements
For the Three Months Ended March 31, 2010 and 2009
 For the Three Months EndedMarch 31,2010
    
    
    2009Revenues
    
    $
    256
    
    
    $
    Cost of Sales
    
    
    240
    
    
    
    Gross Profit
    
    
    16
    
    
    
    Expenditures:General and Administrative
    
    
    370,223
    
    
    
    1,111,982Legal and Professional Fees
    
    
    216,002
    
    
    
    143,358Depreciation
    
    
    
    
    
    
    7,080Total Expense
    
    
    586,226
    
    
    
    1,262,420Loss from Operations
    
    
    (586,210
    )
    
    $
    (1,262,420
    )Other ExpensesFinance charges
    
    
    966,649
    
    
    
    Interest Expense
    
    
    38,108
    
    
    
    22,254Total Other Expenses
    
    
    1,004,757
    
    
    
    22,254Net (Loss) / Profit from operations
    
    $
    (1,590,967
    )
    
    $
    (1,284,674
    )Foreign Currency Adjustments
    
    
    266
    
    
    
    10,764Comprehensive (Loss) / Profit
    
    $
    (1,590,701
    )
    
    $
    (1,273,910
    )Basic and Diluted Loss per Share
    
    $
    (0.03
    )
    
    $
    (0.03
    )Basic and Diluted Weighted Average
Number of Shares Outstanding during
the Period
    
    
    59,997,836
    
    
    
    49,236,904
   2




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DOLPHIN DIGITAL MEDIA INC. AND SUBSIDIARIES

Consolidated Statements of Cashflows

For the Thee Months Ended March 31, 2010 and 2009
 For the Three Months Ended 
March 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,590,967
    )
    
    $
    (1,284,674
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation
    
    
    
    
    
    
    7,080Amortization of debt discount
    
    
    24,175
    
    
    
    Common Stock issued for compensation
    
    
    
    
    
    
    370,000Warrants issued for financing
    
    
    945,614Shares Issued  Services Rendered
    
    
    72,500
    
    
    
    Changes in operating assets and liabilities:Increase / (Decrease) in prepaid expenses
    
    
    204,065
    
    
    
    69Increase / (Decrease) in other current assets
    
    
    (59
    )
    
    
    97Increase / (Decrease) in Inventory
    
    
    3,440
    
    
    
    Increase / (Decrease) in accounts payable
    
    
    (81,915
    )
    
    
    335,178Increase / (Decrease) in other current liabilities
    
    
    49,717
    
    
    
    (15,152
    )Net Cash (Used In) Operating Activities
    
    
    (373,430
    )
    
    
    (587,402
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of intangible assets
    
    
    (239,564
    )
    
    
    (60,631
    )Net Cash (Used In) Investing Activities
    
    
    (239,564
    )
    
    
    (60,631
    )CASH FLOWS FROM FINANCING ACTIVITIES:Decrease in cash overdraft
    
    
    (14,087
    )
    
    
    Proceeds from sale of common stock
    
    
    685,500
    
    
    
    Advances from Related Parties
    
    
    45,000
    
    
    
    366,000Proceeds from exercise of warrants
    
    
    200,000
    
    
    
    Proceeds from note payable
    
    
    
    
    
    
    300,000Net Cash Provided By Financing Activities
    
    
    916,413
    
    
    
    666,000Foreign Currency Adjustments
    
    
    (127,008
    )
    
    
    10,764NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    176,411
    
    
    
    28,731CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    3,218
    
    
    
    51,014CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    179,629
    
    
    $
    79,745SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:Interest paid
    
    $
    
    
    
    $
    798Income taxes
    
    $
    
    
    
    
    SUPPLEMENTAL DISCLOSURES OF NON CASH FLOWS
INVESTING AND FINANCING ACTIVITIES:Conversion of debt to equity
    
    $
    
    
    
    $
    300,000
   3




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Basis of Presentation and Organization
           4




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Principles of Consolidation
  Use of Estimates
  Reclassification
  Revenue Recognition
  Cash and Cash Equivalents
  Inventories
  Property and Equipment
  Depreciation/AmortizationAsset Category
    
    PeriodFurniture and Fixture
    
    5 YearsComputer equipment
    
    3 YearsLeasehold improvements
    
    5 Years
 Goodwill and Intangible Assets
   5




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Impairment of Long-Lived Assets
  Comprehensive Income
   Foreign Currency Translation
  Loss per share
  Business Segments
  1)
    
    Dolphin Digital Media (USA): The Companys primary
business model is monthly and annual membership fees in
the US for subscription to Dolphinsecure.com.2)
    
    Dolphin Digital Media (Canada): The Companys primary
business model is monthly and annual membership fees in
Canada for subscription to Dolphinsecure.com.
 Fair Value of Financial Instruments
    6




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Concentration of Credit Risk
  Recent Accounting Pronouncements
       March 31,
    
    
    December 31,2010
    
    
    2009Property, plant and equipment
    
    $
    122,042
    
    
    $
    122,042Accumulated depreciation
    
    
    (122,042
    )
    
    
    (122,042
    )Total
    
    $
    
    
    
    $
    
  7




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March 31,
    
    
    December 31,2010
    
    
    2009Other intangible assets
    
    $
    29,924
    
    
    $
    29,924Dolphin Secure Websites
    
    
    1,417,908
    
    
    
    1,178,344Total
    
    $
    1,447,832
    
    
    $
    1,208,268
  March 31,
    
    
    December 31,2010
    
    
    2009Note Amount
    
    $
    300,000
    
    
    $
    300,000Discount
    
    
    (63,000
    )
    
    
    (84,000
    )Net
    
    $
    237,000
    
    
    $
    216,000
       March 31,
    
    
    December 31,2010
    
    
    2009Note Amount
    
    $
    300,000
    
    
    $
    300,000Discount
    
    
    (66,682
    )
    
    
    (69,857
    )Net
    
    $
    233,318
    
    
    $
    230,143
  8




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a)
    
    650,000 shares of common stock exercisable at $0.72 per share.b)
    
    1,500,000 shares of common stock exercisable at $1.00 per share.c)
    
    1,500,000 shares of common stock exercisable at $2.00 per share.
  
    
    Warrant A for 650,000 shares;
 
    
    Warrant B for 1,500,000 shares;
 
    
    Warrant C for 1,500,000 shares; and,
 
    
    Warrant 4 for 384,615 shares.
      9




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New Warrant E:
    
    Amount:
Exercise price:
Expiration Date:
    
    7,000,000 shares
$0.2214 per share
12/31/2012New Warrant D:
    
    Amount:
Exercise price:
Expiration Date:
    
    231,000 shares
$0.0001 per share
2/31/2012
         Common stock issued for services
          10




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11




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ITEM 2.
    
    MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Business Summary
  Our Signature Product
  How Dolphin Secure Works: Fingerprint Log-In
     Dolphin Surf
   12




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Dolphin Groups
       Pricing & Availability
   Approach to Market
    13




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Results for the three months ended March 31, 2010 compared to the three months ended March 31,
2009
       Liquidity and Capital Resources
   14




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ITEM 4T.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
   15




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ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
      16




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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.4.1
    
    
    Letter Agreement with T Squared Investments LLC (1)4.2
    
    
    Common Stock Purchase Warrant E (1)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
 (1)
    
    Incorporated by reference to the exhibits filed with the Companys Form 10-K for the
fiscal year ending December 31, 2009, as filed with the Securities and Exchange Commission
on April 15, 2010.  17




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Dolphin Digital Media Inc.By:
    /s/ William ODowd IVName:
    William ODowd IVChief Executive Officer  18