Dolphin Entertainment (DLPN) 10-Q 20 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 20, 2015
Document And Entity Information
Entity Registrant Name	Dolphin Digital Media Inc
Entity Central Index Key	1,282,224
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		81,892,352
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,015

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 633,108	$ 198,470
Prepaid expenses	0	2,339
Receivables and other current assets	1,380,352	479,924
Total Current Assets	2,013,460	680,733
Captialized production costs	958,773	693,526
Property and equipment	61,275	77,690
Deposits	41,291	41,291
Total Assets	3,074,799	1,493,240
LIABILITIES
Accounts payable	257,124	240,736
Other current liabilities	2,726,411	1,547,580
Accrued Compensation	1,937,500	1,750,000
Debt	5,145,000	3,995,000
Loans from related party	3,979,267	2,451,767
Notes payable	300,000	300,000
Total Current Liabilities	14,345,302	10,285,083
STOCKHOLDERS' DEFICIT
Common stock, $0.015 par value, 200,000,000 shares authorized, 81,892,352 issued and outstanding at September 30, 2015 and December 31, 2014	1,228,385	1,228,385
Preferred stock $0.001 par value, 10,000,000 shares authorized 1,042,753 shares issued and outstanding, liquidation preference of $1,042,753 at September 30, 2015 and December 31, 2014	1,043	1,043
Additional paid in capital	25,544,174	25,544,174
Accumulated deficit	(41,024,102)	(38,560,694)
Total Dolphin Digital Media, Inc. Deficit	(14,250,500)	(11,787,092)
Non-controlling interest	2,979,997	2,995,249
Total Stockholders' Deficit	(11,270,503)	(8,791,843)
Total Liabilities and Stockholders' Deficit	$ 3,074,799	$ 1,493,240

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Stockholders' Equity
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, issued shares	1,042,753	1,042,753
Preferred stock, outstanding shares	1,042,753	1,042,753
Preferred stock, liquidation preference	$ 1,042,753	$ 1,042,753
Common stock, par value	$ 0.015	$ 0.015
Common stock, authorized	200,000,000	200,000,000
Common stock, issued	81,892,352	81,892,352
Common stock, Outstanding	81,892,352	81,892,352

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Production	$ 2,380,296	$ 0	$ 2,380,412	$ 51,192
Service	0	500,000	0	1,500,000
Membership	45,000	16,502	61,011	16,502
Total revenues	2,425,296	516,502	2,441,423	1,567,694
Expenses:
Direct costs	1,334,311	113,472	1,334,311	159,539
General and administrative	793,359	351,794	1,869,195	1,194,174
Payroll	375,161	414,703	1,028,836	1,216,108
Loss before other expenses	(77,535)	(363,467)	(1,790,919)	(1,002,127)
Other expenses
Interest expense	(263,784)	(172,132)	(657,237)	(478,112)
Total Other Income/(Expenses)	(263,784)	(172,132)	(657,237)	(478,112)
Net loss	(341,319)	(535,599)	(2,448,156)	(1,480,239)
Net Income attributable to non- controlling interest	11,250	4,126	15,253	4,126
Net Loss attributable to Dolphin Digital Media, Inc.	(352,569)	(539,725)	(2,463,409)	(1,484,365)
Net loss	$ (341,319)	$ (535,599)	$ (2,448,156)	$ (1,480,239)
Basic and Diluted Loss per Share	$ 0	$ (0.01)	$ (0.03)	$ (0.02)
Weighted average number of shares used in share calculation	81,892,352	81,892,352	81,892,352	81,892,352

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,448,156)	$ (1,480,239)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation	16,415	12,832
Amortization of capitalized production costs	1,334,311	37,897
Impairment of capitalized production costs	0	113,472
Changes in operating assets and liabilities:
Receivables and other current assets	(900,428)	(32,814)
Prepaid expenses	2,339	6,680
Capitalized production costs	(1,599,558)	(29,504)
Deposits	0	(32,338)
Accrued compensation	187,500	187,500
Accounts payable	16,388	(138,433)
Other Current Liabilities	1,148,327	488,986
Net Cash Used in Operating Activities	(2,242,862)	(865,961)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	0	(73,850)
Net Cash Used in Investing Activities	0	(73,850)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable	0	(35,000)
Advances from loan and security agreements	1,400,000	2,090,000
Repayment of Loan and Security agreement	(250,000)	0
Advances from related party	2,550,000	0
Repayment to related party	(1,022,500)	(1,376,856)
Repayment of debt	0	(35,000)
Net Cash Provided by Financing Activities	2,677,500	643,144
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	434,638	(296,667)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	198,470	706,641
CASH AND CASH EQUIVALENTS, END OF PERIOD	633,108	409,974
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$ 227,298	$ 15,750

1. GENERAL

1. GENERAL	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
1. GENERAL	Nature of Operations Dolphin Digital Media, Inc. (the “Company,” “Dolphin,” “we,” “us” or “our”) is a producer of original high-quality digital programming for online consumption and is committed to delivering premium, best-in-class entertainment and securing premiere distribution partners to maximize audience reach and commercial advertising potential. Dolphin is also partnering with certain non-profit organizations to develop online kids clubs. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin and all of its majority-owned and controlled subsidiaries, including Hiding Digital Productions, LLC, Dolphin Kids Clubs LLC, Cybergeddon Productions, LLC and Dolphin SB Productions LLC. The unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to quarterly report on Form 10-Q under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 . Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs for investment in digital projects; estimates of sales returns and other allowances and provisions for doubtful accounts and impairment assessments for investment in digital projects. Actual results could differ from such estimates. Recent Accounting Pronouncements In August 2014, the FASB issued an accounting standard update relating to management’s evaluation of conditions and events that, when considered in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements were issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued. When management identifies these relevant conditions or events, it should consider whether its plans will alleviate the substantial doubt. Management’s plans should be considered only to the extent that 1) it is probable that the plans will be effectively implemented and 2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Management should disclose to financial statement users a) principal conditions or events that raised substantial doubt b) Management’s evaluation of the significance of those conditions or events in relation to entity’s ability to meet its obligations and c) discussion of how Management’s plan, if already implemented, alleviated the substantial doubt about the entity’s ability to continue as a going concern or in the case, that the plan has not yet been implemented, how Management’s plans are intended to alleviate the substantial doubt about the entity’s ability to continue as a going concern. The guidance will be effective for our fiscal year beginning January 1, 2016. The Company is currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements. In May 2014, the FASB issued an accounting standard update relating to the recognition of revenue from contracts with customers, which will supersede most current U.S. GAAP revenue recognition guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance will be effective for the Company’s fiscal year beginning January 1, 2018, and can be applied either retrospectively or under a cumulative-effect transition method. The Company is currently evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

2. GOING CONCERN

2. GOING CONCERN	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
2. GOING CONCERN	The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. which contemplate the continuation of the Company as a going concern. The Company has incurred a net loss for the nine months ended September 30, 2015 of $2,448,156. As of September 30, 2015, the Company recorded an accumulated deficit of $41,024,102. Further, the Company has a working capital deficit of $12,331,842 and therefore does not have adequate capital to fund its obligations as they come due or to maintain or develop its operations. The Company is dependent upon funds from private investors and support of certain stockholders. If the Company is unable to obtain funding from these sources within the next 12 months, it could be forced to liquidate. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, management is planning to raise any necessary additional funds through loans and additional issuance of its common stock. There is no assurance that the Company will be successful in raising additional capital. The Company is currently working on producing a variety of digital projects which it intends to fund through private investors on a project basis. The Company expects to derive additional revenues from these digital productions in the fourth quarter of 2015. Subsequent to the third quarter end, the Company received $247,500 in loans from its CEO. It also received $8,750 from its kids club business and it expects to see an increase in these revenues during 2016. There can be no assurances that such income will be realized in future periods.

3. CAPITALIZED PRODUCTION COSTS

3. CAPITALIZED PRODUCTION COSTS, RECEIVABLES AND OTHER CURRENT ASSETS	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
3. CAPITALIZED PRODUCTION COSTS, RECEIVABLES AND OTHER CURRENT ASSETS	Capitalized production costs include the unamortized costs of completed web series which have been produced by the Company and costs of scripts for projects that have not been developed or produced. These costs include direct production costs and production overhead and are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the web series. For the three and nine months ended September 30, 2015, revenues earned from web series were $2,380,296 and $2,380,412, respectively, and for the three and nine months ended September 30, 2014 were $0 and $51,192, respectively. The Company amortized capitalized production costs during the three and nine months ended September 30, 2015 of $1,334,311 related to “ South Beach – Fever During the quarter ended September 30, 2015, the Company released its web series, “ South Beach-Fever” In addition, the Company entered into agreements with writers to develop scripts for other digital web series productions and has deferred $648,526 and $693,526 in capitalized production costs as of September 30, 2015 and December 31, 2014 associated with these scripts. These projects were not yet in production as of September 30, 2015. As of September 30, 2015 and December 31, 2014, respectively, the Company has total capitalized production costs of $958,773 and $693,526, net of accumulated amortization, tax incentives and impairment charges, recorded on its condensed consolidated balance sheets. The Company has assessed events and changes in circumstances that would indicate that the Company should assess whether the fair value of the productions are less than the unamortized costs capitalized and did not identify indicators of impairment. Receivables and Other Current Assets The Company recorded $1,380,352 and $479,924 in receivables and other current assets on its consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively. These amounts were primarily comprised of receivables from advertising revenue sharing from its production, the sale of licensing rights in foreign territories of its productions, a receivable from an agreement with a related party and amounts due for online memberships to kids clubs. During the nine months ended September 30, 2015, the Company received $467,000 from a related party in payment of the December 31, 2014 open receivable.

4. DEBT

4. DEBT	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
4. DEBT	During February 2011, the Company entered into Revenue Participation Agreements with two parties for the development of a Dolphin Group Kids Club (“Group Kids Club”). Each party paid the Company $50,000 in return for the participation of future revenue related to the Group Kids Club. The amount will be repaid based on a pro-rata basis of the revenue generated by the Group Kids Club until the total investment is recouped. Thereafter, they will share in a percentage of the profit of that Group Kids Club. For the three and nine months ended September 30, 2015 and 2014, there were no significant revenues generated or costs incurred related to these Group Kids Clubs. The Company made payments totaling $0 and $35,000, respectively, to one of the parties to these agreements during the nine months ended September 30, 2015 and 2014, respectively. During the years ended December 31, 2012 and 2011, the Company entered into Equity Finance Agreements for the future production of web series and the option to participate in the production of future web series. The Investors contributed a total equity investment of $1,000,000 and will share in the future revenues of the web series, on a pro-rata basis, until the total equity investment is recouped and then will share at a lower percentage of the additional revenues. The agreements stated that prior to December 31, 2012, the Company may utilize all or any portion, of the total equity investment to fund any chosen production. On January 1, 2013, the production “cycle” ceased and the Investors were entitled to share in the future revenues of any productions for which the funds invested were used. Per the Equity Finance Agreements, the Company is entitled to a producer’s fee, not to exceed $250,000, for each web series that it produces before calculating the share of revenues owed to the investors. Based on the gross producer’s revenues for the productions to date and the amount of investor funds used to date, the Company is not required to pay the investors any amount in excess of the existing liability already recorded as of September 30, 2015 and December 31, 2014. The Company has invested these funds in eleven projects. Two of the productions were completed as of September 30, 2015 and there was immaterial producer gross revenue as defined in the Equity Finance Agreements as of September 30, 2015 and 2014. The costs of all productions not completed have been capitalized and included in the consolidated balance sheet as capitalized production costs. During the year ended December 31, 2014, the Company entered into various Loan and Security Agreements with individual investors totaling $2,940,000 which the Company is using to finance a current production. During the nine months ended September 30, 2015, the Company entered into additional Loan and Security Agreements for $1,400,000 and repaid an investor in the amount of $250,000. In connection with the execution of each of the Loan and Security Agreements, the Company granted each individual lender the right to participate, on a pro-rata basis based on their loan commitment as a percentage of the total loan commitments received to fund the specific series, in the future profit generated by such series (defined as the gross revenues of such series less the aggregate amount of principal and interest paid for the financing of such series). Per the agreements, the Company will pay up to 12% interest per annum payable monthly through August 31, 2015, with the exception of one agreement that pays interest through February 29, 2016. Pursuant to the terms of the agreement, the Company exercised its option to extend the maturity date of the loan to August 31, 2016 and accrue interest at 1.25% over the stated rate. As of September 30, 2015 and 2014, respectively, the Company recorded $53,811 and $12,923 as accrued interest on its consolidated balance sheets. The Company recorded $108,549 and $21,234 respectively, of interest expense for the three months ended September 30, 2015 and 2014 and $275,960 and $21,234 for the nine months ended September 30, 2015 and 2014 on the consolidated statement of operations related to these agreements. As of September 30, 2015 and December 31, 2014, $5,145,000 and $3,995,000, respectively, were outstanding related to these agreements. The Company accounts for the above agreements in accordance with Accounting Standards Codification (“ASC”) 470-10-25-2 which requires that cash received from an investor in exchange for the future payment of a specified percentage or amount of future revenue shall be classified as debt. The Company does not purport the arrangements to be a sale and the Company has significant continuing involvement in the generation of cash flows due to the investors.

5. NOTES PAYABLE

5. NOTES PAYABLE	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
5. NOTES PAYABLE	Balance December 31, 2014 $ 300,000 Additions - Payments - Balance September 30, 2015 $ 300,000 On July 5, 2012, the Company signed an unsecured Promissory note in the amount of $300,000 bearing 10% interest per annum and payable on demand. No payments were made on the note during the three and nine months ended September 30, 2015. The Company has recorded accrued interest of $97,150 and $74,712 as of September 30, 2015 and December 31, 2014, respectively related to this note. The Company expensed $7,562 and $7,562 respectively for the quarters ended September 30, 2015 and 2014 and $22,438 and $22,438 respectively for the nine months ended September 30, 2015 and 2014 for interest related to this note.

6. LOANS FROM RELATED PARTY

6. LOANS FROM RELATED PARTY	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
6. LOANS FROM RELATED PARTY	The Company has an unsecured revolving promissory note (the “note”) with its CEO which at September 30, 2015 and December 31, 2014 had outstanding balances of $3,979,267 and $2,451,767, respectively. The note earns an interest rate of 10% per annum. The CEO has the right at any time to demand that all outstanding principal and accrued interest be repaid with a ten day notice to the Company. During the three and nine months ended September 30, 2015, respectively, the CEO loaned the Company $701,500 and $2,550,000 and was repaid $400,000 and $1,022,500 of principal. During the three and nine months ended September 30, 2015, $98,689 and $248,130 was expensed in interest and during the three and nine months ended September 30, 2014, $95,392 and $306,998 was expensed in interest. The Company recorded accrued interest of $1,034,671 and $786,007 in other current liabilities on its condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively.

7. LICENSING AGREEMENT - RELATE

7. LICENSING AGREEMENT - RELATED PARTY	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
7. LICENSING AGREEMENT - RELATED PARTY	In 2008, the Company entered into a ten year licensing agreement with Dolphin Entertainment Inc., a related party. Under the license, the Company is authorized to use Dolphin Entertainment’s brand properties in connection with the creation, promotion and operation of subscription based Internet social networking websites for children and young adults. The license requires that the Company pays to Dolphin Entertainment, Inc.(“Dolphin Entertainment”) royalties at the rate of fifteen percent of net sales from performance of the licensed activities. During the three and nine month periods ended September 30, 2015 and 2014, the Company did not use the brand properties of Dolphin Entertainment and, as such, no royalty expense was recorded related to the licensing agreement.

8. STOCKHOLDERS' DEFICIT

8. STOCKHOLDERS' DEFICIT	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
8. STOCKHOLDERS' DEFICIT	A) Preferred Stock The Company’s Articles of Incorporation authorize the issuance of 10,000,000 shares of $0.001 par value preferred stock. The Board of Directors has the power to designate the rights and preferences of the preferred stock and issue the preferred stock in one or more series. As of September 30, 2015 and December 31, 2014, the Company had 1,042,753 shares of preferred stock issued and outstanding which had no determinable market value. Each share of preferred stock is convertible into four shares of common stock and does not have any voting rights. B) Common Stock The Company’s Articles of Incorporation authorize the issuance of 200,000,000 shares of $0.015 par value common stock. 10,000,000 shares have been designated for an Employee Incentive Plan. As of September 30, 2015 and December 31, 2014, no awards were issued related to this plan. As of September 30, 2015 and December 31, 2014, the Company had 81,892,352, shares of common stock issued and outstanding. C) Noncontrolling Interest On May 21, 2012, Dolphin Digital Media, Inc. entered into an agreement with a note holder to form Dolphin Kids Club LLC. Under the terms of the agreement, Dolphin converted $1,500,000 of notes payable and received an additional $1,500,000 during the year ended December 31, 2012 for a 25% membership interest in the newly formed entity. Dolphin holds the remaining 75% and thus controlling interest in the entity. The purpose of this entity is to create and operate online kids clubs for selected charitable, educational and civic organizations. The agreement encompasses kids clubs created between January 1, 2012 and December 31, 2016. It is a “gross revenue agreement” and Dolphin will be responsible for paying all associated operating expenses. Revenues from the Dolphin Kids Clubs LLC attributable to the noncontrolling interest were $11,250 and $4,126 for the quarters ended September 30, 2015 and 2014 and $15,253 and $4,126 for the nine months ended September 30, 2015 and 2014, respectively. Per the terms of the operating agreement, the revenues of the kids clubs are distributed equally to the members until the noncontrolling member is paid $3,000,000. Based on the revenues earned from the kids clubs during the quarter ended September 30, 2015, the Company recorded in other current liabilities $28,631 attributable to the noncontrolling member. In accordance with ASC 810-20, Dolphin Kids Clubs LLC is consolidated in the Company’s financial statements. Amounts attributable to the noncontrolling interest will follow the provisions in the contractual arrangement. Noncontrolling interest is presented as a separate component of shareholders’ equity. As of September 30, 2015 and December 31, 2014, the Company recorded a noncontrolling interest of $2,979,997 and $2,995,249 respectively on its consolidated balance sheets for the 25% interest in Dolphin Kids Clubs LLC.

9. WARRANTS

9. WARRANTS	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
9. WARRANTS	A summary of warrants issued, exercised and expired during the nine months ended September 30, 2015 is as follows: Weighted Avg. Exercise Warrants: Shares Price Balance at December 31, 2014 21,000,000 $ 0.17 Issued — — Exercised — — Expired — — Balance at September 30, 2015 21,000,000 $ 0.17 On March 10, 2010, T Squared Investments, LLC was issued Warrant “E” for 7,000,000 shares of Dolphin Digital Media, Inc. at an exercise price of $0.25 per share with an expiration date of December 31, 2012. T Squared Investments LLC can continually pay the Company an amount of money to reduce the exercise price of Warrant “E” until such time as the exercise price of Warrant “E” is effectively $0.0001 per share. Each time a payment by T Squared Investments LLC is made to Dolphin, a side letter will be executed by both parties that states the new effective exercise price of Warrant “E” at that time. At such time when T Squared Investments LLC has paid down Warrant “E” to an exercise price of $0.0001 per share or less, T Squared Investments LLC shall have the right to exercise Warrant “E” via a cashless provision and hold for six months to remove the legend under Rule 144 of the Securities Act of 1933 (the “Securities Act”). During the years ended December 31, 2010 and 2011, T Squared Investments LLC paid down a total of $1,625,000 and the current exercise price is $0.0179. During the year ended December 31, 2012, T Squared Investments LLC agreed to amend a provision in the Preferred Stock Purchase agreement dated May 2011 that required the Company to obtain consent from T Squared Investments LLC before issuing any common stock below the existing conversion price as defined in the agreement. As a result, the Company has extended the expiration date of Warrant “E” (described above) to September 13, 2015 and on September 13, 2012, the Company issued 7,000,000 warrants to T Squared Investments LLC (Warrant “F”) with an exercise price of $0.25 per share. T Squared Investments LLC can continually pay the Company an amount of money to reduce the exercise price of Warrant “F” until such time as the exercise price of Warrant “F” is effectively $0.0001 per share. At such time, T Squared Investments LLC will have the right to exercise Warrant ‘F” via a cashless provision and hold for six months to remove the legend under Rule 144 of the Securities Act. The Company agreed to extend the warrants until December 31, 2018 with substantially the same terms as herein discussed. T Squared Investments LLC did not make any payments during the quarter ended September 30, 2015 to reduce the exercise price of the warrants. On September 13, 2012, the Company sold 7,000,000 warrants to an unrelated party with an exercise price of $0.25 per share and an expiration date of September 13, 2015 for $35,000. The holder can continually pay the Company an amount of money to reduce the exercise price of the warrants until such time as the exercise price is effectively $0.0001 per share. At such time, the holder will have the right to exercise the warrants via a cashless provision and hold for six months to remove the legend under Rule 144 of the Securities Act. The Company recorded the $35,000 as Additional paid in capital. The Company agreed to extend the warrants for a period of three years until September 13, 2018 with substantially the same terms as herein discussed. The holder of the warrants did not make any payments during the quarter ended September 30, 2015 to reduce the exercise price of the warrants. None of the warrants were included in computing diluted earnings per share because the effect was anti-dilutive.

10. RELATED PARTY TRANSACTIONS

10. RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
10. RELATED PARTY TRANSACTIONS	On September 7, 2012, the Company entered into an employment agreement with its CEO. The employment agreement was effective January 1, 2012 and continued for an initial term of three years, renewable at the option of the CEO for another two years. Pursuant to the terms of the agreement, the CEO informed the Company on December 31, 2014, that he would renew his employment agreement for a period of two years commencing January 1, 2015. The agreement states that the CEO will receive annual compensation of $250,000 plus bonus. In addition, the CEO is entitled to an annual discretionary bonus as determined by the Company’s Board of Directors. The CEO is eligible to participate in all of the Company’s benefit plans offered to its employees. As part of his agreement, he received a $1,000,000 signing bonus in 2012 that is recorded in accrued compensation on the condensed consolidated balance sheets. Any unpaid and accrued compensation due to the CEO under this agreement will accrue interest on the principal amount at a rate of 10% per annum from the date of this agreement until it is paid. The agreement includes provisions for disability, termination for cause and without cause by the Company, voluntary termination by executive and a non-compete clause. The Company accrued $1,875,000 and $1,937,500 of compensation as accrued compensation and $473,784 and $336,633 of interest in other current liabilities on its consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively, in relation to this agreement. For the quarters ended September 30, 2015 and 2014, the Company expensed as interest $47,780 and $41,478, respectively, and $137,152 and $118,453, respectively during the nine months ended September 30, 2015 and 2014, related to this agreement. The Company entered into an agreement with a related party to provide services of its management team and back office. The Company provided the related party with a development team to source new projects, production executives to develop scripts, approve budgets and hire and liaise with the production team on individual projects during the production and post-production phases, an accounting and finance team to provide accounting services and tax compliance, legal support and domestic and international sales and sales support. The Company also provided office space in Los Angeles and Miami. The arrangement was for a term of April 1, 2013 through December 31, 2014 at an annual fee of $2,000,000. The agreement was not renewed as the related party no longer required these services. For the three and nine months ended September 30, 2014, the Company recorded revenues in the amount of $500,000 and $1,500,000 related to this agreement. The Company has 14,000,000 warrants outstanding with T-Squared Investments LLC, a related party which owns 23% of the fully diluted common shares. The warrants have an exercise price of $0.25 and expire December 31, 2018. T-Squared Investments, LLC paid down a total of $1,625,000 to reduce the exercise price on the warrants and as a result 7,000,000 warrants have an exercise price of $.0179. Note 9 details the terms of these warrants. During the first quarter of 2015, the Company started production of “South Beach-Fever”

11. COMMITMENTS AND CONTINGENCI

11. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
11. COMMITMENTS AND CONTINGENCIES	Litigation On or about January 25, 2010, an action was filed by Tom David against Winterman Group Limited, Dolphin Digital Media (Canada) Ltd., Malcolm Stockdale and Sara Stockdale in the Superior Court of Justice in Ontario (Canada) alleging breach of a commercial lease and breach of a personal guaranty. On or about March 18, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Statement of Defense and Crossclaim. In the Statement of Defense, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale denied any liability under the lease and guaranty. In the Crossclaim filed against Dolphin Digital Media (Canada) Ltd., Winterman Group Limited, Malcolm Stockdale and Sara Stockdale seek contribution or indemnity against Dolphin Digital Media (Canada) Ltd. alleging that Dolphin Digital Media (Canada) agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. On or about March 19, 2010, Winterman Group Limited, Malcolm Stockdale and Sara Stockdale filed a Third Party Claim against the Company seeking contribution or indemnity against the Company, formerly known as Logica Holdings, Inc., alleging that the Company agreed to relieve Winterman Group Limited, Malcolm Stockdale and Sara Stockdale from any and all liability with respect to the lease or the guaranty. The Third Party Claim was served on the Company on April 6, 2010. On or about April 1, 2010, Dolphin Digital Media (Canada) filed a Statement of Defense and Crossclaim. In the Statement of Defense, Dolphin Digital Media (Canada) denied any liability under the lease and in the Crossclaim against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale, Dolphin Digital Media (Canada) seeks contribution or indemnity against Winterman Group Limited, Malcolm Stockdale and Sara Stockdale alleging that the leased premises were used by Winterman Group Limited, Malcolm Stockdale and Sara Stockdale for their own use. On or about April 1, 2010, Dolphin Digital Media (Canada) also filed a Statement of Defense to the Crossclaim denying any liability to indemnify Winterman Group Limited, Malcolm Stockdale and Sara Stockdale. The ultimate results of these proceedings against the Company cannot be predicted with certainty. On or about March 12, 2012, the Court served a Status Notice on all the parties indicating that since more than (2) years had passed since a defense in the action had been filed, the case had not been set for trial and the case had not been terminated, the case would be dismissed for delay unless action was taken within ninety (90) days of the date of service of the notice. The Company has not filed for a motion to dismiss and no further action has been taken in the case. The ultimate results of these proceedings against the Company could result in a loss ranging from 0 to $325,000. On March 23, 2012, Dolphin Digital Media (Canada) Ltd filed for bankruptcy in Canada. The bankruptcy will not protect the Company from the Third Party Claim filed against it. However, the Company has not accrued for this loss because it believes that the claims against it are without substance and it is not probable that they will result in loss. As of September 30, 2015, the Company has not received any other notifications related to this action. Tax Filings For the year ended December 31, 2011, the Company accrued $120,000 for estimated penalties associated with not filing certain information returns. The penalties per return are $10,000 per entity per year. We received notification from the Internal Revenue Service concerning information returns for the year ended December 31, 2009. The Company responded with a letter stating reasonable cause for the noncompliance and requested that penalties be abated. During 2012, we received a notice stating that the reasonable cause had been denied. The Company decided to pay the penalties and not appeal the decision for the 2009 Internal Revenue Service notification. There is no associated interest expense as the tax filings are for information purposes only and would not result in further income taxes to be paid by the Company. The Company made payments in the amount of $40,000 during the year ended December 31, 2012 related to these penalties. At September 30, 2015, and December 31, 2014, the Company had a remainder of $40,000 in accruals related to these late filing penalties and is presented as a component of other current liabilities. Kids Club In February 2012, the Company entered into a five year agreement with US Youth Soccer Association, Inc. to create, design and host the US Youth Soccer Clubhouse website. During 2012, the Company hired a third party to begin building the US Soccer Clubhouse website at a cost of $125,000. The first two installments of $25,000 each were paid during 2012 and remaining payments were made monthly over a two year period once the website was delivered. The Company expensed the payments since it cannot reasonably estimate future cash flows or revenues from the website development. In January 2013, the Company entered into an agreement with a worldwide philanthropic organization to create an online kids club to promote the organizations philanthropic philosophy and encourage literacy programs. The contract is for an initial five year term and is automatically renewable with successive terms of three years. Either party can terminate the agreement with written notice of at least 180 days prior to the expiration of initial term or subsequent terms. Additionally, the organization may terminate the agreement with a 60 day written notice for any year that certain royalty milestones are not met as stipulated in the agreement. The Company is responsible for the creation and marketing of the website and has agreed to pay the organization a license fee of $58,000 and $5.00 for each membership card sold. During the year ended December 31, 2013, the Company hired a third party to build the website at a cost of $90,000 payable pro rata over a twelve month period. The Company has expensed the payments since it cannot reasonably estimate future cash flows or revenues from the website development. The Company recorded revenues of $45,000 and $16,502 during the quarters ended September 30, 2015 and 2014, respectively, and $61,011 and $16,502for the nine months ended September 30, 2015 and 2014, respectively, related to these agreements. Incentive Compensation Plan During the year ended December 31, 2012, the Company’s Board of Directors approved an Incentive Compensation Plan. The plan was enacted as a way of attracting and retaining exceptional employees and consultants by enabling them to share in the long term growth and financial success of the Company. The plan will be administered by the Board of Directors or a committee designated by the board. As part of an increase in authorized shares approved by the Board of Directors in 2012, 10,000,000 common shares were designated for this plan. No awards have been issued and, as such, the Company has not recorded any liability or equity related to this plan as of September 30, 2015 and December 31, 2014.

12. SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2015
Subsequent Events [Abstract]
12. SUBSEQUENT EVENTS	Subsequent to quarter end, the Company received $247,500 in advances from its CEO. On October 14, 2015, the Company and DDM Merger Sub, Inc. ("Merger Subsidiary"), a wholly owned subsidiary of the Company, entered into a merger agreement with Dolphin Films, Inc. and Dolphin Entertainment, Inc. both entities owned by a related party. Pursuant to the Merger Agreement, Merger Subsidiary agreed to merge with and into Dolphin Films (the “Merger”) with Dolphin Films surviving the Merger. As a result of the Merger, the Company will acquire Dolphin Films. As consideration for the Merger, the Company will issue 2,300,000 shares of Series B Convertible Preferred Stock, par value $0.10 per share, and 1,000,000 shares of Series C Convertible Preferred Stock, par value $0.001 per share (the “Merger Consideration”) to Dolphin Entertainment. The Series C Convertible Preferred Stock will be a new designation of preferred shares effectuated by an amendment to the Company’s Articles of Incorporation. The Merger is contingent on shareholder approval that the Company expects will take place in the first quarter of 2016. In connection with the Merger, on October 16, 2015, the Company and T Squared Partners LP (“T Squared”) entered into a Preferred Stock Exchange Agreement pursuant to which the Company agreed to issue 1,000,000 shares of Series B Convertible Preferred Stock to T Squared in exchange for 1,042,753 shares of Series A Convertible Preferred Stock, previously issued to T Squared. The exchange of shares of Series B Convertible Preferred Stock for shares of Series A Convertible Preferred Stock will take place at the effective time of the Merger, which is when the plan of merger to be filed by the parties with the Secretary of State of the State of Florida becomes effective. On October 19, 2015, the Company filed Articles of Amendment to its Articles of Incorporation to designate its Series B Convertible Preferred Stock, par value $0.10 per share. Each share of Series B Convertible Preferred Stock is exercisable into nineteen shares of common stock of the Company. The Series B Convertible Preferred Stock has a liquidation value of $0.10 per share, has dividend rights on parity with the Company’s common stock and has no voting rights.

1. GENERAL (Policies)

1. GENERAL (Policies)	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin and all of its majority-owned and controlled subsidiaries, including Hiding Digital Productions, LLC, Dolphin Kids Clubs LLC, Cybergeddon Productions, LLC and Dolphin SB Productions LLC. The unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to quarterly report on Form 10-Q under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
Use of Estimates	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs for investment in digital projects; estimates of sales returns and other allowances and provisions for doubtful accounts and impairment assessments for investment in digital projects. Actual results could differ from such estimates.
Recent Acounting Pronouncements	In August 2014, the FASB issued an accounting standard update relating to management’s evaluation of conditions and events that, when considered in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements were issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued. When management identifies these relevant conditions or events, it should consider whether its plans will alleviate the substantial doubt. Management’s plans should be considered only to the extent that 1) it is probable that the plans will be effectively implemented and 2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Management should disclose to financial statement users a) principal conditions or events that raised substantial doubt b) Management’s evaluation of the significance of those conditions or events in relation to entity’s ability to meet its obligations and c) discussion of how Management’s plan, if already implemented, alleviated the substantial doubt about the entity’s ability to continue as a going concern or in the case, that the plan has not yet been implemented, how Management’s plans are intended to alleviate the substantial doubt about the entity’s ability to continue as a going concern. The guidance will be effective for our fiscal year beginning January 1, 2016. The Company is currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements. In May 2014, the FASB issued an accounting standard update relating to the recognition of revenue from contracts with customers, which will supersede most current U.S. GAAP revenue recognition guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance will be effective for the Company’s fiscal year beginning January 1, 2018, and can be applied either retrospectively or under a cumulative-effect transition method. The Company is currently evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

5. Notes Payable (Tables)

5. Notes Payable (Tables)	9 Months Ended
	Sep. 30, 2015
Notes Payable Tables
Notes Payable	Balance December 31, 2014 $ 300,000 Additions - Payments - Balance September 30, 2015 $ 300,000

9. Warrants (Tables)

9. Warrants (Tables)	9 Months Ended
	Sep. 30, 2015
Warrants Tables
Warrants	Weighted Avg. Exercise Warrants: Shares Price Balance at December 31, 2014 21,000,000 $ 0.17 Issued — — Exercised — — Expired — — Balance at September 30, 2015 21,000,000 $ 0.17

2. Going Concern (Details Narra

2. Going Concern (Details Narrative) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Going Concern Narrative Details
Accumulated deficit	$ (41,024,102)	$ (38,560,694)

3. Capitalized Production Cos22

3. Capitalized Production Costs (Details Narrative) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
5. CAPITALIZED PRODUCTION COSTS , OTHER CURRENT ASSETS
Capitalized production costs	$ 958,773	$ 693,526

5. Notes Payable (Details)

5. Notes Payable (Details)	9 Months Ended
	Sep. 30, 2015USD ($)
Notes Payable Details
Balance beginning of year	$ 300,000
Additions	0
Payments	0
Balance end of year	$ 300,000

6. Loans from Related Party (De

6. Loans from Related Party (Details Narrative) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Loans From Related Party Narrative Details
Accrued Interest	$ 1,034,671	$ 786,007

9. Warrants (Details)

9. Warrants (Details)	9 Months Ended
	Sep. 30, 2015$ / sharesshares
Warrants Details
Number of Warrants, Beginning	21,000,000
Number of Warrants, Issued	0
Number of Warrants, Exercised	0
Number of Warrants, Expired	0
Number of Warrants, Ending	21,000,000
Weighted Average Exercise Price, Beginning | $ / shares	$ 0.17
Weighted Average Exercise Price, Issued | $ / shares	0
Weighted Average Exercise Price, Exercised | $ / shares	0
Weighted Average Exercise Price, Expired | $ / shares	0
Weighted Average Exercise Price, Ending | $ / shares	$ 0.17

10. Related Party (Details Narr

10. Related Party (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Related Party Narrative Details
Officer compensation expense accrued			$ 1,875,000		$ 1,937,500
Interest accrued in other current liabilities	$ 473,784		473,784		$ 336,633
Interest expense	$ 47,780	$ 41,478	$ 137,152	$ 118,453