UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

X .

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2014

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

For the transition period __________ to __________

Commission File Number 000-53611

THE DIGITAL DEVELOPMENT GROUP CORP.

(Exact name of registrant as specified in its charter)


Nevada		98-0515726
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6630 West Sunset Blvd. Los Angeles, CA 90028 (Address of principal executive offices) 1-800-783-3128 (Registrant’s telephone number) N/A (Former name, former address and former fiscal year, if changed since last report)

1-800-783-3128 (Registrant’s telephone number)

N/A (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 X . No .

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 (§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 small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.


Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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: ~~August~~November 1410, 2014: ~~179~~208,~~524~~518,~~843~~852 common shares.

FORWARD-LOOKING STATEMENTS

This Current Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this document include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve assumptions, risks and uncertainties regarding, among others, the success of our business plan, availability of funds, government regulations, operating costs, our ability to achieve significant revenues, our business model and products and other factors. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties set forth in reports and other documents we have filed with or furnished to the Securities and Exchange Commission (the “SEC”). These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this document. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. The forward-looking statements in this document are made as of the date of this document and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

Number		Page
			Page Number
PART I.	FINANCIAL INFORMATION	4
ITEM 1.	Condensed Consolidated Financial Statements (unaudited)	4	4
	Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013	5
	Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013		5
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013	6
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013		6
	Condensed Consolidated Statement of Stockholders’ Deficit for the six months ended June 30, 2014	7
	Condensed Consolidated Statement of Stockholders’ Deficit for the nine months ended September 30, 2014		7
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	8
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013		8
	Notes to the Condensed Consolidated Financial Statements (unaudited)	9	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20	20
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	21	21
ITEM 4.	Controls and Procedures	21	21
PART II.	OTHER INFORMATION	22	23
ITEM 1.	Legal Proceedings	22	23
ITEM 1A.	Risk Factors	22	23
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32	33
ITEM 3.	Defaults Upon Senior Securities	34	40
ITEM 4.	Mine Safety Disclosures	34	40
ITEM 5.	Other Information	35	40
ITEM 6.	Exhibits	36	41
	SIGNATURES.	37	42

PART I¾ – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated balance sheet of The Digital Development Group Corp. at ~~June~~September 30, 2014, the unaudited condensed consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, and the unaudited condensed consolidated statements of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results and cash flows for the three and ~~six~~nine months ended ~~June~~September 30, 2014 are not necessarily indicative of the results that can be expected for the year ending December 31, 2014.

DIGITAL DEVELOPMENT GROUP CORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


		(unaudited)
		As of September 30, 2014		As of December 31, 2013
Assets:
Current assets:
Cash	$	452	$	6,371
Prepaid royalties		300,832		217,287
Prepaid expenses and other current assets		9,418		-
Total current assets		310,702		223,658

Property and equipment, net		36,456		−
Debt issuance costs		63,007		84,810
Total assets	$	410,165	$	308,468

Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable		341,202		340,864
Accrued liabilities (note 5)		553,231		720,745
Judgment and accrued contingent liabilities (note 8)		1,218,594		1,137,708
Factor payable (note 3)		282,824		84,407
Related party notes payable		−		126,160
Convertible notes payable, net of discount (note 6)		1,958,618		1,776,869
Note payable (note 7)		510,000		510,000
Derivative liabilities (note 7)		2,687,069		4,272,031
Total current liabilities		7,551,538		8,968,784
Total liabilities		7,551,538		8,968,784
Commitments and contingencies (note 8)
Stockholders' Deficit (note 9):
Common stock, 500,000,000 shares authorized, par value $0.001, 171,248,924 and 81,280,441 shares issued and outstanding, respectively		171,249		81,280
Common stock subscribed		280,000		45,000
Additional paid in capital		6,830,962		3,369,583
Accumulated deficit		(14,423,584)		(12,156,179)
Total stockholders' deficit		(7,141,373)		(8,660,316)
Total liabilities and stockholders' deficit	$	410,165	$	308,468

	As of June 30, 2014		As of December 31, 2013
Assets:
Current assets:
Cash	$	100	$	6,371
Prepaid royalties		245,132		217,287
Total current assets		245,232		223,658
Debt issuance costs		63,608		84,810
Total assets	$	308,840	$	308,468
Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable		320,993		340,864
Accrued liabilities (note 6)		521,395		720,745
Judgment and accrued liabilities (note 9)		1,143,678
Factor payable (note 3)		94,533		84,407
Related party notes payable		-		126,160
Convertible notes payable, net of discount (note 7)		1,460,728		1,776,869
Note payable (note 7)		510,000		510,000
Derivative liabilities (note 8)		2,558,785		4,272,031
Total current liabilities		6,610,112		7,831,076
Accrued contingencies		-		1,137,708
Total liabilities		6,610,112		8,968,784
Commitments and contingencies (note 9)		-		-
Stockholders’ Deficit (note 10):
Common stock, 500,000,000 shares authorized, par value $0.001, 152,411,771 and 81,280,441 shares issued and outstanding, respectively		152,412		81,280
Common stock subscribed		280,000		45,000
Additional paid-in capital		5,933,097		3,369,583
Accumulated deficit		(12,666,781)		(12,156,179)
Total stockholders’ deficit		(6,301,272)		(8,660,316)
Total liabilities and stockholders’ deficit	$	308,840	$	308,468

See accompanying notes

DIGITAL DEVELOPMENT GROUP CORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		For Three Months Ended June 30, 2014			For Three Months Ended June 30, 2013			For Six Months Ended June 30, 2014		For Six Months Ended June 30, 2013
		For Three Months Ended September 30, 2014		For Three Months Ended September 30, 2013		For Nine Months Ended September 30, 2014		For Nine Months Ended September 30, 2013
Net Revenue		$	32,328		$	22,597		$	58,165	$	27,353
Net revenue	$	23,456	$	25,529	$	81,621	$	52,223
Operating expenses-
General and administrative			769,397			1,121,886			1,343,089		3,409,817
Selling, general and administrative		842,015		425,019		2,185,104		3,834,177
Total operating expenses		842,015	~~769,397~~	425,019		12,~~121~~185,~~886~~104		3,834,177	~~1,343,089~~		~~3,409,817~~
Operating loss		(818,559)	~~(737,069)~~	(399,490)		(12,~~099~~103,~~289~~483)		(3,781,954)	~~(1,284,924)~~		~~(3,382,464)~~
Other (income) expense:
Interest expense		1,708,816	~~1,067,928~~	357,558		~~263~~3,~~779~~056,604		914,347	~~1,347,788~~		~~556,789~~
Change in the fair value of derivative liabilities			374,962			(226,191)			(2,122,110)		337,870
Loss on extinguishment and settlements		322,695		−		322,695		−
Total other (income) expense			1,442,890			37,588			(774,322)		894,659
Change in the fair value of derivative liabilities		(1,093,267)		(464,921)		(3,215,377)		(127,051)
Net loss		$	(2,179,959)		$	(1,136,877)		$	(510,602)	$	(4,277,123)
Total other (income) expense		938,244		(107,363)		163,922		787,296
Loss per share – basic and dilutive		$	(0.02)		$	(0.02)		$	(0.00)	$	(0.07)
Net loss	$	(1,756,803)	$	(292,127)	$	(2,267,405)	$	(4,569,250)
Weighted average shares outstanding – basic and dilutive			119,836,790			61,989,216			107,380,719		60,467,025
Loss per share - basic and dilutive	$	(0.01)	$	(0.00)	$	(0.02)	$	(0.07)
Weighted average shares outstanding - basic and dilutive		160,655,685		64,098,443		125,334,187		61,714,138

See accompanying notes

DIGITAL DEVELOPMENT GROUP CORP

~~CONDENSED~~STATEMENTS ~~CONSOLIDATED STATEMENT~~ OF ~~STOCKHOLDERS’ DEFICIT~~OPERATIONS

(Unaudited)

				Common		Additional				Total
		Nine Months Ended September 30, 2014		Nine Months Ended September 30, 2013
	Common Stock			Stock		Paid-In		Accumulated		Stockholders’
CASH FLOWS FROM OPERATING ACTIVITIES:
	Shares	Amount		Subscribed		Capital		Deficit		Deficit
Net loss	$	(2,267,405)	$	(4,569,250)
Balance, December 31, 2013	81,280,441	$	81,280	$	45,000	$	3,369,583	$	(12,156,179)	$	(8,660,316)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for conversion of debt	40,279,774		40,280		-		558,629		-		598,909
Depreciation & amortization expense		2,367		71,240
Cancellation of derivative liabilities upon debt conversion	-		-		-		869,753		-		869,753
Stock-based compensation		1,143,109		738,094
Stock-based compensation – options	-		-		-		146,388		-		146,388
Debt discount amortization		2,517,213		667,413
Common stock issued to Chief Executive Officer	20,095,000		20,095		-		584,323		-		604,418
Change in fair value of derivative liabilities		(3,215,377)		(127,051)
Common stock issued for cash	56,556		57		-		1,943		-		2,000
Shares issued for services		−		537,636
Common stock issued for services	10,700,000		10,700				402,478		-		413,178
Interest expense - noncash		−		18,001
Common stock subscribed	-		-		235,000		-		-		235,000
Interest expense- contingencies		−		846,093
Net loss	-		-		-		-		(510,602)		(510,602)
Amortization of debt issue costs		41,803		31,803
Balance, June 30, 2014	152,411,771	$	152,412	$	280,000	$	5,933,097	$	(12,666,781)	$	(6,301,272)
Loss on extinguishments and settlements		322,695		−
Changes in operating assets and liabilities:
Prepaid royalties		(83,545)		−
Prepaid expense		(9,418)		129,914
Accounts payable		127,772		71,299
Accrued liabilities		303,025		284,714
Judgment and accrued contingent liabilities		16,595		−
Cash flows used in operating activities		(1,101,166)		(1,300,094)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of intangible assets		-		(32,687)
Purchase of equipment		(38,823)		(17,419)
Net cash used in investing activities		(38,823)		(50,106)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		−		(1,616)
Proceeds from issuance of convertible notes payable		1,280,127		1,197,791
Payments on convertible notes payable		(236,897)		(72,445)
Net borrowings from related party note payable		(126,160)		87,696
Payment of debt issuance costs		(20,000)		−
Common stock subscribed		235,000		65,000
Common stock issued for cash		2,000		61,119
Net cash provided by financing activities		1,134,070		1,337,545
Change in cash during period		(5,919)		(12,655)
Cash, beginning of period		6,371		831
Cash, end of period	$	452	$	(11,824)

See accompanying notes

DIGITAL DEVELOPMENT GROUP CORP

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH~~STOCKHOLDERS' ~~FLOWS~~DEFICIT

For the Nine Months Ended September 30, 2014

(Unaudited)

	Six Months Ended June 30, 2014			Six Months Ended June 30, 2013
	Common Stock				Common Stock		Additonal Paid-In		Accumulated		Total Stockholder’s
CASH FLOWS FROM OPERATING ACTIVITIES:
	Shares		Amount		Subscribed		Capital		Deficit		Deficit
Net loss	$	(510,602)		$	(4,277,123)
Balance, December 31, 2013	81,280,441	$	81,280	$	45,000	$	3,369,583	$	(12,156,179)	$	(8,660,316)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for conversion of debt	54,210,677		54,211		−		692,911		−		747,122
Depreciation & amortization expense		-			46,844
Cancellation of derivative liabilities upon debt conversion	−		−		−		1,221,172		−		1,221,172
Stock-based compensation		726,040			983,503
Stock-based compensation - options	−		−		−		213,888		−		213,888
Debt discount amortization		1,002,101			481,776
Common stock issued to Chief Executive Officer	20,095,000		20,095		−		584,323		−		604,418
Change in fair value of derivative liabilities		(2,122,110)			337,870
Common stock issued for cash	56,556		57		−		1,943		−		2,000
Changes in operating assets and liabilities:
Common stock issued for services	15,606,250		15,606		−		747,142		−		762,748
Other		-			21,202
Common stock subscribed	−		−		235,000		−		−		235,000
Prepaid expense		(27,845)			130,631
Net loss	−		−		−		−		(2,267,405)		(2,267,405)
Accounts payable		(19,438)			67,342
Balance, September 30, 2014	171,248,924	$	171,249	$	280,000	$	6,830,962	$	(14,423,584)	$	(7,141,373)
Accrued liabilities		191,366			1,157,429
Cash flows used in operating activities		(760,488)			(1,050,526)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of intangible assets		-			(12,767)
Purchase of equipment		-			(14,075)
Net cash used in investing activities		-			(26,842)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		6,037			22,445
Factor payable		10,126			-
Proceeds from issuance of convertible notes payable		673,000			931,291
Payments on convertible notes payable		(117,608)			(72,445)
Net borrowings from related party note payable		(54,338)			89,246
Common stock subscribed		235,000			65,000
Common stock issued for cash		2,000			41,199
Net cash provided by financing activities		754,217			1,076,736
Change in cash during period		(6,271)			(632)
Cash, beginning of period		6,371			831
Cash, end of period	$	100		$	199

See accompanying notes

~~NOTES~~THE TODIGITAL ~~CONDENSED~~DEVELOPMENT ~~CONSOLIDATED~~GROUP ~~FINANCIAL STATEMENTS~~CORP.

CONDENSED NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS

September 30, 2014

(Unaudited)

1. ORGANIZATION AND BUSINESS

The Digital Development Group Corp. (the “Company”) (originally Regency Resources Inc.) was incorporated under the laws of the State of Nevada on December 11, 2006, with authorized capital stock of 500,000,000 shares at $0.001 par value. The Company was originally organized for the purpose of acquiring and developing mineral properties.

The Company offers internet subscriptions to consumers for a wide array of independent content with worldwide appeal. The Company has acquired access to over 5000 titles, and it is continuing to offer a broad mix of horror, cult classics, sci-fi, vintage TV and numerous other genres, as well as adult entertainment through The Movie and Music Network.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements primarily reflect the financial position, results of operations and cash flows of the Company (as discussed above). The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) ~~GAAP~~ for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, these interim condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014, or for any other period.

Principles of Consolidation

The condensed consolidated balance sheets include the accounts of the Company and its ~~subsidiaries~~subsidiary. All intercompany transactions and balances have been eliminated in consolidation.

Going Concern

~~The~~These ~~Company~~unaudited ~~has~~condensed ~~minimal~~consolidated ~~revenue~~financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The Company has incurred losses and has a significant capital deficiency due to significant indebtedness. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its from third parties and work on conversions of certain notes into common stock.

~~These~~There ~~unaudited~~are ~~condensed~~no ~~consolidated~~assurances ~~financial~~that ~~statements~~management ~~have~~will ~~been~~be ~~prepared~~able onto anegotiate ~~going~~through ~~concern~~its ~~basis~~debts, ~~which~~and ~~implies~~achieve ~~the~~profitable ~~Company~~operations. ~~will~~The ~~continue~~unaudited tocondensed ~~meet~~consolidated ~~its~~financial ~~obligations~~statements ~~and~~do ~~continue~~not ~~its~~include ~~operations~~any ~~for~~adjustments ~~the~~to ~~next~~reflect ~~fiscal~~the ~~year.~~possible ~~The~~future ~~continuation~~effects ofon the ~~Company~~recoverability asand aclassification ~~going~~of ~~concern~~assets isor ~~dependent~~the ~~upon~~amounts ~~financial~~and ~~support~~classifications ~~from~~of ~~its~~liabilities ~~stockholders~~that ~~and~~may ~~the~~result ~~ability~~should of the Company tobe ~~obtain~~unable ~~necessary~~to ~~equity~~continue ~~financing~~as toa ~~continue~~going ~~operations~~concern.

There is no assurance that the Company will ever be profitable. The unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Use of Estimates

In preparing these unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s condensed consolidated financial statements relate to the valuation assumptions related to stock-based compensation and the derivative liabilities related to the certain embedded conversion features in notes payable.

Per Share Information

The Company computes per share information in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings (loss) per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. As of June 30, 2014, diluted EPS does not give effect to all dilutive potential common shares outstanding as their effects are anti-dilutive due to losses incurred by the Company.

Per Share Information

The Company computes per share information in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings (loss) per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. As of September 30, 2014, diluted EPS does not give effect to all dilutive potential common shares outstanding as their effects are anti-dilutive due to losses incurred by the Company.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for periods beginning after December 15, 2014.

Other recent pronouncements issued by FASB (including its Emerging Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

3. ACCOUNTS RECEIVABLE FACTORING

On October 1, 2013, the Company entered into an accounts receivable purchase agreement (the “Agreement”) with Summit Capital Investors, LLC (“Summit”), with an initial term of five years and renewing annually thereafter. The Company may obtain advances up to $300,000 from Summit and shall establish a separate merchant bank account in the name of Summit (the “Lockbox”) into which all of the Company’s monthly membership or accounts receivable shall be deposited. The funds in the lockbox account will be used to pay 120% of each advance received from Summit plus any other fees or costs. As of ~~June~~September 30, 2014 and December 31, 2013, the Company has payable related to this factoring agreement of $94282,~~533~~824, and $84,407, respectively, which was calculated based on 120% of advances received reduced by total accounts receivable deposited into the lockbox. All revenue from the Company will be paid directly into this bank account which is not under the Company’s ownership until the advances are paid off. Substantially all of the Company’s assets are secured by the loan.

4. PREPAID ~~EXPENSES~~ROYALTIES

The Company incurs costs associated with licensing content from independent producers. Initially, costs may be prepaid in advance. Pre-payments are capitalized and amortized over the period under the terms of the contracts, based on ~~a per-used basis~~usage. In the event management believes the Company will not recover the royalties advanced, such amounts are charged to expense.

5. ~~OTHER~~ACCRUED ~~ASSETS~~LIABILITIES

The Company recorded an amount of $127,214 debt issuance cost from the issuance of a convertible promissory note payable to Stuart Subotnick of $240,000 which has been be amortized over the term of the note to interest expense. Amortization expense for the six months ended June 30, 2014 and 2013 amounted to $21,202 and $0, respectively. The balance of debt issuance costs as of June 30, 2014 and December 31, 2013 are $63,608 and $84,810, respectively.

6. ACCRUED LIABILITIES

The components of accrued liabilities were as follows:

		June 30, 2014			December 31, 2013
		September 30, 2014		December 31, 2013
Interest	$	$355,884	~~301,055~~$	152,350	$	~~152,350~~
Payroll		77,757	~~101,603~~	455,193		~~455,193~~
Payroll taxes - delinquent		93,584	~~93,584~~	93,584		~~93,584~~
Other		26,006	~~25,153~~	19,618		~~19,618~~
Total accrued liabilities	$	$553,231	~~521,395~~$	720,745	$	~~720,745~~

76. CONVERTIBLE NOTES PAYABLE, NET

Convertible notes payable consisted of the following:

		June 30,			December 31,
		September 30, 2014		December 31, 2013
		2014			2013
Convertible notes payable to Coventry Capital, LLC, net of discount of $3,490,
Convertible notes payable to Coventry Capital, LLC, net of discount of $42,980, and $0, respectively		$	810,000		$	960,000
and $0, respectively	$	856,510		960,000
Convertible note payable to Stuart Subotnick, net of discount of $99,599 and $132,799, respectively			280,401			247,201
Convertible note payable to Stuart Subotnik, net of discount of $83,000 and $132,799,
Convertible notes payable to Asher Enterprises – In default			111,421			183,000
respectively		297,000		247,201
Convertible note payable to Tonaquint, net of discount of $0 and $26,906, respectively			17,393			81,614
Convertible notes payable to Asher Enterprises		-		183,000
Convertible note payable to Vista Capital Investments, net of discount of $50,000, and $0, respectively			-			-
Convertible notes payable to Tonaquint, net of discount of $219,640 and $26,906,
Convertible notes payable to LG Capital, net of discount of $76,609 and $0, respectively			20,141			25,000
respectively		253,909		81,614
Convertible notes payable to Union Capital, net of discount of $41,857 and $0, respectively			18,413			25,000
Convertible note payable to Vista Capital Investments, net of discount of $52,966
Other notes payable, net of discount of $200,661 and $41,602, respectively			202,959			255,054
and $0, respectively		47,034		-
Total convertible notes payable, net of discount		$	1,460,728		$	1,776,869
Convertible notes payable to LG Capital, net of discount of $44,472 and $0,
Note payable consists of the following -Note payable to Charlie Sheen		$	510,000		$	510,000
respectively		82,028		25,000
Convertible notes payable to Union Capital, net of discount of $31,708 and $0,
respectively		43,792		25,000
Other notes payable, net of discount of $192,002 and $41,602, respectively		378,345		255,054
Total convertible notes payable, net of discount	$	1,958,618		1,776,869
Note payable consists of the following -
Note payable to Charlie Sheen	$	510,000	$	510,000

Coventry Capital, LLC Notes

During 2012, the Company issued a total of $950,000 convertible notes payable to Coventry Capital, LLC. These convertible promissory notes are payable on demand and carried an interest rate of 1% per month (simple interest), until the closing of the voluntary share exchange transaction contemplated under the letter of intent. Thereafter, the interest rate shall adjust to 3% per year, simple interest. Upon closing of the voluntary share exchange transaction contemplated under the letter of intent, the unpaid principal and any accrued and unpaid interest shall be immediately due and payable upon written demand by the holder at any time.

At any time on or before the maturity date, the holder, at its sole discretion may elect to have all or part of the principal and the accrued and unpaid interest thereon, converted into a number of shares of common stock of the Company determined by dividing (i) the unpaid principal and any accrued and unpaid interest thereon, as of the conversion date, by (ii) the lower of (a) the price per share at which shares of capital stock of the Company are sold in any financing, or (b) $0.50 per share. A "financing" means the sale of shares of capital stock of the Company occurring within twenty four (24) months after the closing. The embedded conversion feature of these notes was recorded as a derivative liability due to the down-round protection of the conversion price.

On June 17, 2013, the terms of the notes were amended to extend the maturity date to January 31, 2018 and set a floor to the conversion price at $0.08 per share. The Coventry notes were ultimately sold or assigned to other parties. On January 27, 2014, the Company entered into a debt conversion agreement with Cemblance LTD (“Cemblance”), holder of $300,000 of outstanding Coventry notes, for conversion of $150,000 of principal and interest into 4,000,000 shares of the Company’s common stock.

On April 2, 2014, the Company entered into an additional convertible note with Coventry for $50,000. The note accrues interest at the rate of 10% per annum (default rate of 16%, per annum); is due and payable in one year; and may be converted by Coventry at any time after 180 days. The notes are convertible into shares of Company common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock over the prior 20 trading days calculated at the time of conversion. The note also contain certain representations, warranties, covenants and events of default.

Coventry Enterprises, LLC Note

On April 2, 2014, the Company entered into a convertible note with Coventry Enterprises, LLC for $50,000. The note accrues interest at the rate of 10% per annum (default rate of 16%, per annum); is due and payable in one year; and may be converted by Coventry Enterprises at any time after 180 days. The notes are convertible into shares of Company common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock over the prior 20 trading days calculated at the time of conversion. The notes also contain certain representations, warranties, covenants and events of default. The Company has reserved 8,865,000 shares in connection with this Note, 6,023,473 of which have been issued leaving a balance of 2,841,527 reserved shares.

Stuart Subotnick Notes

On September 10, 2012, the Company issued a $240,000 convertible note payable to Stuart Subotnick. This note was issued with 800,000 warrants and exercisable into the Company’s common stock. The warrants have a three-year term and the exercise price is $0.30. At any time on or before the maturity date, the note holder, at its sole discretion, may elect to have all or part of the principal and the accrued and unpaid interest thereon, converted into a number of shares of common stock of the Company. The conversion price is $0.30 per share, subject to adjustment for issuances or sales of securities at a lower price per share. This convertible promissory note, and accrued and unpaid interest, are payable upon the earlier of i) at any time after three-year anniversary of the issue date of this note at the written request of the holder to the Company or ii) when, upon or after the occurrence of an event of default. The note carries an interest rate of 8% per annum (simple interest).

The embedded conversion feature of this note was recorded as a derivative liability due to the down-round protection of the conversion prices. The Company also recorded a debt discount of $121,381 for the fair value of the warrants. On December 17, 2013, the holder of the note and the Company agreed to fix the conversion price of the note at $0.0261 per share or 9.9 million shares.

During October and November 2012, the Company issued additional notes payable to Mr. Subotnick in the aggregate amount of $140,000. These notes accrue interest at rates ranging from 8% to 12% and are due by November 2013. The Company is currently in default of these $140,000 notes payable because the principal balance and accrued interest were not paid on the due date.

QuickLoan Funding

On March 13, 2013, ~~The~~the Company, entered into a ~~Convertible~~convertible ~~Promissory~~promissory ~~Note~~note ~~(the “Convertible Promissory Note”)~~ with QuickLoan Funding, an accredited lender ~~(the “Lender”)~~. Under the terms of the ~~Promissory Note~~note, the ~~Lender~~lender ~~paid~~advanced $110,000 to the Company upon execution of the Convertible Promissory Note, and the Lender may fund additional amounts in such amounts and at such dates as the Lender may choose in its sole discretion, up to an additional $150,000 above the initial $110,000 funded. ~~Thereafter,~~The ~~the Lender may provide additional~~ amounts ~~only by mutual agreement with the Company, up to a total principal sum of $400,000. All amounts~~ advanced by ~~Lender~~lender ~~are~~were subject to a 20% original issue discount. ~~such~~In ~~that~~ the ~~total~~nine ~~amount~~months ~~funded~~ended toSeptember 30, 2014, the Company ~~would~~received beadditional $~~360~~55,000 ~~if the Lender advances all funds under the Convertible Promissory Note. The maturity date is one year~~ from the ~~effective date of each payment by the Lender~~lender, ~~and~~less ~~all~~discounts ~~outstanding principal~~ and ~~interest is due and payable by the Company on the maturity date~~fees. IfDuring the ~~Company~~nine ~~repays~~months ~~the~~ended ~~Note~~September in30, ~~full~~2014, ~~within~~QuickLoan ~~the~~Funding ~~first~~converted 90$55,160 ~~days~~of ~~after~~their ~~the~~notes ~~effective~~into ~~date~~3,233,333 ~~then~~shares ~~the~~of ~~interest rate is zero percent. If~~ the Company’s ~~does~~common ~~not~~stock ~~repay~~and the ~~Note in full within the first 90 days after the effective date~~balance, ~~then~~plus aaccrued ~~one-time~~ interest, ~~charge~~was ofpaid 12in ~~percent~~cash ~~shall~~totaling ~~be applied to the unpaid principal~~$124,934.

During the six months ended June 30, 2014, QuickLoan Funding converted $55,160 of their notes into 3,233,333 shares of the Company’s common stock. In addition, the Company used the proceeds it received from the sale of shares of its common stock to pay $68,879 in principal due to QuickLoan Funding.

In the six months ended June 30, 2014, the Company received additional $55,000 from the lender, less discounts and fees. The Lender has the right, at any time from 180 days after the effective date, at its election, to convert all or part of the outstanding and unpaid principal and accrued interest under the Convertible Promissory Note into shares of Company common stock at the conversion price. The conversion price is the lesser of $0.20 per share, or 60% of the lowest trade price of the Company’s common stock in the 25 trading days prior to the date of conversion. The Lender also has piggyback registration rights to have the shares it would receive upon conversion of the Promissory Note included within the next registration statement which the Company may file with the Securities and Exchange Commission. The Company recorded a full discount related to the derivative liability embedded in the note. The excess of $21,734 was recorded as the change in fair value of the derivative liability.

Charlie Sheen

On April 16, 2013, the Company executed a Promissory Note (the “Promissory Note”) in favor of celebrity actor, Charlie Sheen, pursuant to which Charlie Sheen has loaned the Company $150,000. Under the terms of the Promissory Note, the principal accrues interest at the rate of 6% per annum and is due and payable on April 10, 2015, with interest only payments of $750 per month to commence on November 1, 2013. During the prior year, the Company borrowed an additional $~~390~~360,000 from Mr. Sheen ~~and repaid $2,500 to Mr. Sheen~~ under the same terms as the Promissory Note.

Tonaquint Convertible note

On April 3, 2013, the Company, entered into a Securities Purchase Agreement, Secured Convertible Promissory Note, Security Agreement, Warrant, Deed of Trust, Deed of Trust Notes, Confession of Judgment and ancillary agreements (the “Financing Documents”) with Tonaquint, Inc., (the “Buyer”). Under the terms of the Financing Documents, the Buyer entered into the Secured Convertible Promissory Note in the principal amount of $340,000 (the “Note”). Initially, $100,000 was advanced under the first $140,000 of the Note, net of an original issue discount (OID) of $30,000 and noteholders costs of $10,000. The Company is obligated to commence repayment of the Note on the 180th day after the Note issuance date by making monthly installments of $28,333. Provided certain equity conditions are met, the Company may repay the monthly installment payments through the issuance of Company common stock at the market price (the “Market Price”) defined as 90% of the arithmetic average of the three (3) lowest volume weighted average pricing “VWAP” of the shares of Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of repayment. Additionally, if the Company pays the installment payment in Company common stock, then 23 days following the installment payment date the noteolder shall receive additional shares of Company common stock if the Market Price on the 23rd day is less than the Market Price on the installment payment date. The entire outstanding balance under the Note is due and payable 17 months after the date of issuance. The Note bears interest at the rate of eight percent (8%) per annum, provided that upon the occurrence of an event of default, interest shall accrue on the outstanding balance both before and after judgment at the rate of twenty-two percent (22%) per annum.

~~Under~~In ~~the~~July ~~terms~~and ofAugust ~~the Financing Documents~~2014, the ~~Buyer~~remaining ~~entered~~advances ~~into~~were ~~the~~made ~~Secured~~under ~~Convertible~~the ~~Promissory~~note ~~Note~~at in$100,000, ~~the~~each, ~~principal~~net ~~amount~~of OID of $~~340~~15,000, ~~(the “Note”)~~each. The ~~Company~~Note is ~~obligated~~secured toby ~~commence~~a ~~repayment~~Security ofAgreement ~~the~~executed ~~Note~~by on the ~~180~~Company thand ~~day~~listing ~~after~~ the ~~Note~~Buyer ~~issuance~~Deed ~~date~~of byTrust ~~making~~Notes ~~monthly~~as ~~installments~~security offor ~~$28,333.~~the ~~Provided~~Company’s ~~certain~~obligations ~~equity~~under ~~conditions are met,~~ the ~~Company~~Financing ~~may~~Documents ~~repay~~ (the ~~monthly~~“Security ~~installment~~Agreement”). ~~payments~~Each ~~through~~of the ~~issuance~~Buyer Deed of ~~Company~~Trust ~~common~~Notes ~~stock~~is atsecured ~~the~~by ~~market~~a ~~price~~Deed of Trust (the “~~Market~~Deed ~~Price~~of Trust”). ~~defined~~The asoutstanding ~~90%~~balance ofunder the ~~arithmetic~~Note ~~average~~may ofbe ~~the~~converted ~~three~~by ~~(3)~~the ~~lowest~~Buyer ~~volume~~at ~~weighted~~any ~~average~~time ~~pricing~~into ~~“VWAP”~~shares of Company common stock at the ~~shares~~rate of ~~Common~~$0.105 ~~Stock~~per ~~during~~share (the ~~twenty~~“Conversion ~~(20~~Price”), ~~consecutive~~subject ~~trading~~to ~~day~~adjustment ~~period~~in ~~immediately preceding~~ the ~~date~~event of ~~repayment.~~certain ~~Additionally,~~issuances ifof ~~the~~variable ~~Company~~price ~~pays~~or ~~the~~unrestricted ~~installment~~securities ~~payment~~by inthe Company ~~common~~after ~~stock,~~the ~~then~~date 23of ~~days~~the ~~following~~Note. ~~the~~In ~~installment~~addition, ~~payment~~beginning ~~date~~on the ~~Buyer~~date ~~shall~~that ~~receive~~is ~~additional~~six ~~shares~~months ofafter ~~Company~~the ~~common~~date ~~stock if~~ the ~~Market~~advance ~~Price~~was onmade and the ~~23rd~~same day isof ~~less~~each ~~than~~month ~~the~~thereafter ~~Market~~until ~~Price~~the onmaturity ~~the~~date, an installment ~~payment~~amount ~~date.~~will ~~The~~be ~~entire~~due. ~~outstanding~~This ~~balance~~installment ~~under~~amount ~~the~~can ~~Note~~be ispaid ~~due~~in ~~and~~cash ~~payable~~or 17converted ~~months~~into ~~after~~shares of the ~~date~~Company's ofcommon ~~issuance.~~stock ~~The~~at ~~Note~~a ~~bears~~conversion ~~interest~~price atequal ~~the~~to ~~rate~~60% of ~~eight~~the ~~percent~~market price (~~8%)~~as ~~per~~determined ~~annum,~~in ~~provided~~the ~~that~~Note) ~~upon~~calculated at the ~~occurrence~~time of conversion. Upon an event of default, ~~interest shall accrue on~~ the outstanding balance ~~both~~under ~~before and after judgment at~~ the ~~rate~~Note ofshall ~~twenty-two~~increase ~~percent~~to ~~(22~~135%) ~~per~~and ~~annum.~~will ~~The~~be ~~Note~~immediately ~~carries~~due anand ~~original issue discount of $30~~payable,~~000.~~ Inand ~~addition,~~ the ~~Company agreed to pay $10,000 to the~~ Buyer tomay ~~cover~~convert the ~~Buyer’s~~outstanding ~~legal~~balance ~~fees,~~into ~~accounting~~shares ~~costs,~~of ~~due~~Company ~~diligence,~~common ~~monitoring~~stock ~~and~~at ~~other~~the ~~transaction~~lower ~~costs, all~~ of ~~which~~the ~~amount~~Conversion isPrice ~~included~~then in ~~the~~effect ~~initial~~and ~~principal balance of~~ the ~~Note~~Market Price.

InThe ~~consideration for the Note, the Buyer paid the~~ Company ~~(i)~~also ~~$100,000,~~issued ~~and~~noteholder ~~(ii)~~a ~~issued~~warrant to ~~the~~purchase ~~Company~~up ~~two~~to ~~Buyer Deed of Trust Notes in the amount of $100~~1,400,000 each, one which will be prepaid by Buyer within 2 months and 4 months, respectively, of April 3, 2013 provided that an equity conditions failure has not occurred under the Note. The Note is secured by a Security Agreement executed by the Company and listing the Buyer Deed of Trust Notes as security for the Company’s obligations under the Financing Documents (the “Security Agreement”). Each of the Buyer Deed of Trust Notes is secured by a Deed of Trust (the “Deed of Trust”). The outstanding balance under the Note may be converted by the Buyer at any time into shares of Company common stock at ~~the~~an ~~rate~~exercise price of $0.20 per share ~~(the “Conversion Price”)~~, subject to adjustment in the event of certain issuances of variable price orand unrestricted securities by the Company after the date of the Note. ~~Upon~~See anbelow ~~event~~for ofWarrant ~~default,~~extinguishment. ~~the~~The ~~outstanding~~Warrants ~~balance~~could ~~under~~have ~~the~~been ~~Note~~exercised ~~shall~~for ~~increase~~a toterm ~~135%~~of ~~and~~five ~~will~~(5) beyears ~~immediately~~and ~~due~~have ~~and~~a ~~payable,~~“cashless ~~and~~exercise” ~~the~~provision. ~~Buyer~~The ~~may~~embedded ~~convert~~conversion ~~the~~feature ~~outstanding~~of ~~balance~~this ~~into~~note ~~shares~~and ofrelated ~~Company~~warrants ~~common~~have ~~stock~~been atrecorded ~~the~~as ~~lower~~a ofderivative ~~the~~liability ~~Conversion~~due ~~Price~~to ~~then~~the indown-round ~~effect~~protection ~~and~~of the ~~Market~~conversion ~~Price~~prices.

~~The~~During ~~Company~~the ~~also~~nine ~~issued~~months ~~Buyer~~ended aSeptember ~~warrant~~30, to2014, ~~purchase~~Tonaquint upconverted ~~to 1~~$94,~~400,000~~928 ~~shares~~ of ~~Company~~their ~~common~~notes ~~stock~~along atwith ~~an exercise price of~~ $~~0.20 per share~~9,451 ~~subject to adjustment~~ in ~~the~~accrued ~~event~~interest ofinto ~~certain~~12,144,866 ~~issuances~~shares of ~~variable price and unrestricted securities by~~ the Company’s ~~after~~common ~~the date of the Note~~stock. The Warrants may be exercised for a term of 5 years and have a “cashless exercise” provision. The embedded conversion feature of this note and related warrants was recorded as a derivative liability due to the down-round protection of the conversion prices.

During the ~~six~~nine months ended ~~June~~September 30, 2014, Tonaquint and the Company agreed to cancel the Warrant in exchange for the issuance of a convertible note totaling $285,000. The Note accrues interest at the rate of 8% per annum; is due and payable 17 months after the date of issuance; and may be converted by Tonaquint at any time into shares of Company common stock at a conversion price equal to 90% of the market price (as determined in the Note) calculated at the time of conversion. The Note also contains certain representations, warranties, covenants and events of default. In connection therewith, the Company recorded as loss on the exchange in the amount of $84259,~~023~~000. The note was recorded at approximately $27,000 with the balance allocated to conversion features classified as a derivative liability, in the amount of ~~their~~$258,000. ~~notes~~During the nine months ended September 30, 2014, Tonaquint converted approximately $41,000 of the principal balance of this note into 111,~~552~~614,~~446~~402 shares of the Company’'s common stock. The Company has reserved a total of 108,250,000 shares in connection with these Notes, 23,954,543 of which have been issued leaving a balance of 84,295,457 reserved shares.

Asher Enterprises Notes

During 2013, the Company entered into several Note Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. pursuant to which Asher purchased a $183,000 Convertible Promissory Note (the “Asher Notes”). The Asher Notes accrue interest at the rate of 8% per annum (default rate of 22%, per annum); is due and payable in several dates in 2014; and may be converted by Asher at any time after 180 days. The notes are convertible into shares of Company common stock at a conversion price equal to 60% of the market price (as determined in the Asher Note) calculated at the time of conversion. The Asher Note Purchase Agreement and Note also contain certain representations, warranties, covenants and events of default. In the event of default, the notes will increase 150% of the debt balance as of the date of default.

In addition, during the ~~six~~nine months ended ~~June~~September 30, 2014, the Company entered into two additional notes with Asher Enterprises for a total of $75,000. The notes have the same terms and conditions as previously issued notes to Asher. The Company iswas in default inof this note because the Company did not file the 10-Q on time according to SEC filing requirements. The Company recorded an increase in the principal balance of $91,500 during the ~~three~~nine months ended ~~June~~September 30, 2014.

During the ~~six~~nine months ended ~~June~~September 30, 2014, Asher Notes in the amount of $~~197~~252,~~750~~019 in principal and accrued interest, ~~where~~were converted into 1015,~~556~~886,~~538~~433 shares of the Company’s common stock.

Vista Capital Investments

On May 7, 2014, the Company entered into a Convertible Promissory Note with Vista Capital Investments, LLC (“Vista”) in the original principal amount of $150,000 (the “Note”), pursuant to which Vista funded $50,000. On September 26, 2014, Vista funded an additional $50,000 under the Note agreement. The Note has a one-time interest charge of 12%; is due and payable one year after the date of issuance; and may be converted by Vista at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the market price (as determined in the Note) calculated at the time of conversion. The Note also contains certain representations, warranties, covenants and events of default, and is collateralized by the issuance of 20,000,000 shares of Company common stock. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor. The Company has reserved 75,000,000 shares in connection with this Note, zero of which have been issued leaving the entire balance as reserved shares.

LG Capital Funding

On December 10, 2013, the Company entered into Securities Purchase Agreement with LG Capital Funding (“LG”) pursuant to which the Company issued two convertible promissory notes in the aggregate principal amount of $50,000 (the “Notes”), pursuant to which LG funded $25,000 at that date and an additional $25,000 on June 10, 2014, less discounts and fees, The Notes bears interest at the rate of 10% per annum; are due and payable twelve months after the date of issuance; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in the Note) calculated at the time of conversion.

On March 4, 2014, May 9, 2014, ~~and~~ June 24, 2014, and August 12, 2014, the Company entered into Convertible Promissory Notes with LG in the original principal amounts of $32,000, $26,500, ~~and~~ $36,750, and $47,250, respectively, less discounts and fees (the “Notes”). The Notes bears interest at the rate of 8% or 10% per annum; are due and payable twelve months after the date of issuance; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in the Note) calculated at the time of conversion.

The foregoing is only a brief description of the material terms of the Notes, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

During the six months ended June 30, 2014, LG converted a total balance of note principal and accrued interest of $51,062 into 5,825,642 shares of the Company's common stock.

During the nine months ended September 30, 2014, LG converted a total balance of note principal and accrued interest of $67,925 into 8,541,191 shares of the Company's common stock. The Company has reserved a total of 51,945,000 shares in connection with this Note, 7,782,252 of which have been issued leaving a balance of 44,162,748 reserved shares.

Union Capital

On March 4, 2014, the Company entered into Securities Purchase Agreement with Union Capital LLC (“Union”) pursuant to which the Company issued three convertible promissory notes in the aggregate principal amount of $90,000 (the “Notes”), pursuant to which Union funded $30,000 at that date and an additional $30,000 on May 12, 2014, less discounts and fees. On July 28, 2014, the Company issued an additional convertible promissory note in the principal balance of $40,000, less discounts and fees. The Notes accrue interest at the rate of 10% per annum; are due and payable 12 months after their date of issuance; and may be converted by Union at any time into shares of Company common stock at a conversion price equal to 5655% of the market price (as determined in the Note) calculated at the time of conversion. The Securities Purchase Agreement and Notes also contain certain representations, warranties, covenants and events of default. The foregoing is only a brief description of the material terms of the Securities Purchase Agreement and Notes, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

During the nine months ended September 30, 2014, Union converted a total balance of note principal and accrued interest of $25,775 into 3,678,637 shares of the Company's common stock. The Company has reserved 16,938,000 shares in connection with this Note, zero of which have been issued leaving a balance of 16,938,000 reserved shares.

Gel Properties

On December 10, 2013, the Company entered into Securities Purchase Agreement with Gel Properties, Inc. (“Gel”) pursuant to which the Company issued two convertible promissory notes in the aggregate principal amount of $50,000 (the “Notes”), pursuant to which Gel funded $25,000 at that date and an additional $25,000 on June 11, 2014, less discounts and fees, The Notes bears interest at the rate of 10% per annum; is due and payable twelve months after the date of issuance; and may be converted by Gel at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in the Note) calculated at the time of conversion.

The foregoing is only a brief description of the material terms of the Securities Purchase Agreement and Notes, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

~~During the six months ended June 30, 2014, Gel converted a total balance of note principal and accrued interest of $51,362 into 5,111,815 shares of the Company's common stock.~~15

During the nine months ended September 30, 2014, Gel converted a total balance of note principal and accrued interest of $51,362 into 5,111,815 shares of the Company's common stock. The Company has reserved 9,892,000 shares in connection with this Note, 6,973,504 of which have been issued leaving a balance of 2,918,496 reserved shares.

Other Convertible Notes Payable

Not including notes described above, the Company has entered into notes with balances as of ~~June~~September 30, 2014 of $~~202~~378,~~959~~345, net of discounts and fees. These notes ~~are~~consist aprimarily ~~mix~~ of ~~non-~~convertible ~~and convertible~~ notes, with interest rates between 6%-910% and maturity dates between June 30, 2014 and June 24, 2015. The convertible notes are convertible at rates between 5550%-60% of the market value of the Company's common stock ~~over~~after asix ~~range~~months of ~~preceding dates~~issuance. The Company has reserved shares under these notes.

Related Party Note Payable

Effective January 30, 2013, the Company entered into a Promissory Note with Martin W. Greenwald, the Company’s Chief Executive Officer, pursuant to which Mr. Greenwald has agreed to loan the Company up to $250,000 to fund Company operations. The Promissory Note provides that Mr. Greenwald may advance funds to the Company from to time to time, up to the amount of $250,000. The amounts advanced shall be due within one year from the date of the promissory note and shall accrue interest at 3% per annum. The Company had $126,160 outstanding under the loan agreement as of December 31, 2013. Amounts were repaid during the ~~six~~nine months ended ~~June~~September 30, 2014 totaling approximately $54,000. The balance due, including accrued salaries, was settled through the issuance of common stock as discussed in Note 109. No amounts are due at ~~June~~September 30, 2014.

15NOTE 7 – DERIVATIVE LIABILITIES

~~NOTE~~The 8following –table ~~DERIVATIVE~~represents ~~LIABILITIES~~the Company’s derivative liabilities activity, classified as level 3 financial instruments, for both the embedded conversion features and the warrants for the nine months ended September 30, 2014:

The following table represents the Company’s derivative liabilities activity, classified as level 3 financial instruments, for both the embedded conversion features and the warrants for the six months ended June 30, 2014:


		Amount

Derivative liabilities balance, January 1, 2014	$	4,272,031

Issuance of derivative financial instruments in 2014		2,851,587

Cancellation - conversions of notes in 2014		(1,221,172)

Change in fair value of derivative liabilities		(3,215,377)

Derivative liabilities balance, September 30, 2014	$	2,687,069

	Amount
Derivative liabilities balance, January 1, 2014	$	4,272,031
Issuance of derivative financial instruments in 2014		1,278,618
Cancellation - conversions of notes in 2014		(869,754)
Change in fair value of derivative liabilities		(2,122,110)
Derivative liabilities balance, June 30, 2014	$	2,558,785

The accompanying consolidated statement of operations includes $841,428 related to effects from the excess of fair value of the derivatives embedded in convertible notes at the time of issuance, which is included in interest expense.

NOTE 98 – COMMITMENTS AND CONTINGENCIES

Contingent liability

On December 19, 2011, the Company entered into two promissory notes with an accredited investor pursuant to which the Company issued two 14% convertible promissory notes (the "Notes") to advance of up to $280,000 to the Company. As of this date, the Company has only received $118,000 of the agreed upon $280,000.

The Notes were offered and sold in reliance on the exemption from registration afforded by Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. The Notes have a six-month term due June 16, 2012, and are convertible by the holder into Common Stock of a contemplated merger or acquisition and a subsequent newly formed company ("Acquireco") at a price of $0.10 per share. The Company may prepay all or a portion of the outstanding principal and interest under the Notes upon 10 days' written notice without penalty. The amount due under the Notes will become immediately due and payable if the Company fails to pay unpaid principal on the maturity date of June 16, 2012, any representation or warranty made by the Company is false, incorrect, incomplete or misleading, or the Company dissolves, liquidates, ceases operations, is unable to pay its debts when due, a receiver or trustee is appointed or bankruptcy proceedings are instituted. While any amount of the Note is outstanding, the borrower is obligated to the covenants of (i) paying no dividends.

The Company is in default of these notes because it did not repay principal and accrued interest on the maturity date of June 16, 2012. Due to the default provisions of the Note, the Company accrued interest at the default rate of 29% per annum from the maturity date going forward. In July 2012, the Company tried to begin negotiations with the investor; however, it has been unsuccessful in contacting the investor to date. The Company has recorded a contingent liability of $194,678 as of June 30, 2014, to reflect the obligation that it believes it owes to investor. The investor is claiming that the Company owes an additional $162,000 plus accrued interest but the Company never received the additional funds as described under the Notes and intends to defend against any position that the investor takes pertaining to the additional $162,000. The Company has treated this matter as a contingent liability because at this time the Company is uncertain as to how and when this matter will be resolved. The Company believes it has accrued its estimate in the condensed consolidated financial statements of the most likely amount to be settled with the investor.

Settlements

From time to time, the Company is involved in disputes. During the nine months ended September 30, 2014, the Company settled matters aggregating approximately $65,000.

Judgment liability

Effective December 19, 2012, the Company terminated the Securities Purchase Agreement, Registration Rights Agreement and Debenture dated November 6, 2012 (the “Financing Documents”) with Ironridge Media Co., a division of Ironridge Global IV, Ltd. (“Ironridge”), for the sale of up to $3,000,000 of Convertible Subordinated Debentures and Series A Preferred Stock. On January 11, 2013, Ironridge submitted a claim with JAMS, Inc. in Santa Monica, California for binding arbitration under the Financing Documents and requested that it be awarded damages relating to the termination of the Financing Documents. The Company submitted counter-claims in the JAMS arbitration claiming that it was fraudulently induced to enter into the Financing Documents, and that a fully performed oral stock purchase agreement caused the Financing Documents to be abandoned by the parties, justifying rescission of the financing documents. In May 2013, the Arbitrator in the JAMS arbitration announced an interim award to Ironridge shall recover from the Company in the amount of $850,000 plus attorney fees and costs. On July 10, 2013, the Arbitrator made the interim award final, and awarded Ironridge an additional $110,168 in attorneys’ fees and costs. The Company does not have adequate cash to pay the final arbitration award. The judgment resulting from the arbitration award would adversely affect the business, future operations and the financial condition of the Company, and may cause the Company to default under its existing loan obligations which would provide the lenders with the right for immediate repayment. The Company recorded an accrual of $960,000 under contingent liability in the accompanying condensed consolidated balance sheet as of ~~June~~September 30, 2014 and December 31, 2013 related to this case, as well as accrued interest on the outstanding balance of $96120,000 as of ~~June~~September 30, 2014.

Sheen Agreement

On March 25, 2013, the Company entered into an Agreement with celebrity actor, Charlie Sheen, pursuant to which he has agreed to work with the Company to develop and promote his own channel and original content, and to promote and endorse the Company and its channels through various media. Under the terms of the Agreement, Mr. Sheen’s involvement with the Company is to include his creation of original content; his promotion and endorsement of the Company’s channels and the creation and promotion of the Charlie Sheen Channel; his personal appearances; the use of Mr. Sheen’s name, voice and likeness for promotional purposes; and the promotion of the Company and its channels across social media, including postings on Facebook and Twitter. The Agreement has a term of 12 months, unless extended as provided in the Agreement.

In consideration for his services, the Company has agreed to pay Charlie Sheen a $300,000 fee payable in installments. In addition, the Company has agreed to pay Mr. Sheen a percentage of Company gross revenues generated by the distribution and sale of original programming featuring Mr. Sheen and his affiliates, including gross revenues from the Charlie Sheen Channel and other pay per view events and episodes. In consideration of Mr. Sheen’s obligations, the Company has also agreed to issue to Mr. Sheen options to purchase up to seven million shares of the Company’s common stock as follows: options to purchase one million shares of the Company’s common stock vested upon the date of the Agreement, and options to purchase the remaining six million shares of the Company’s common stock shall vest in equal installments of one million shares every six months after the date of the Agreement, each exercisable at an exercise price of $0.10 per share. The Company has continued to record the compensation costs associated with the vesting of these options (see Note 10). The Company and Charlie Sheen are in mutual dispute with regards to this agreement.

The Parties to the Agreement have agreed to void the Agreement as neither Party performed. This obligation has not been recorded on the Company’s financial statements. No shares have been earned by Charlie Sheen nor issued to Charlie Sheen or any entity connected with Charlie Sheen relating to this Agreement.

Operating lease

The Company leases office space under an operating lease, which began on July 1, 2012, expired on November 15, 2013 and is now month to month. The average rental payment including utilities and operating expenses for the facility is approximately $5,935 per month. Rent expense for the periods ended ~~June~~September 30, 2014 and 2013 amounted to $4152,~~335~~835 and $3447,~~310~~505, respectively.

NOTE 10 – STOCKHOLDERS’ DEFICIT

Common Stock

From January 1, 2014 to June 30, 2014, the Company issued 10,700,000 common shares for services provided valued at $413,178 to various service providers, of which $11,250 reduced accounts payable and the balance of $401,928 charged to expense. The Company issued 20,095,000 shares valued at $604,418 for unpaid salary and advances totaling $455,193, and additional compensation to its Chief Executive Officer totaling $149,445 and charged to expense.

InNOTE ~~addition,~~9 ~~the~~– ~~Company~~STOCKHOLDERS’ ~~issued 56,556 common shares for cash of $2,000, and issued 40,279,774 common shares upon conversion of notes payable of $598,909.~~DEFICIT

~~During~~Common ~~the six months ended June 30, 2014, the Company has received $235,000 in stock subscription for the purchase of 13,421,053 of its common stock.~~Stock

AsFrom ofJanuary ~~June~~1, 2014 to September 30, 2014, the Company ~~has~~issued ~~notes~~15,606,250 ~~payable~~common shares for services provided valued at $762,748 to various service providers, of which ~~are~~$11,250 ~~convertible~~reduced ~~into~~accounts ~~approximately~~payable 56and ~~million~~the balance of $751,498 charged to expense. The Company issued 20,095,000 shares ~~common~~valued ~~stock~~at ~~under~~$604,418 ~~various~~for ~~convertible~~unpaid ~~note~~salary ~~agreements~~and advances totaling $455,193, asand ~~well~~additional ascompensation ~~approximately~~to 10its ~~million~~Chief ~~shares~~Executive ~~under~~Officer ~~various~~totaling ~~options~~$149,225 and ~~warrants~~charged to expense.

In addition, the Company issued 56,556 common shares for cash of $2,000, and issued 54,210,677 common shares upon conversion of notes payable of $747,122.

During the nine months ended September 30, 2014, the Company has received $235,000 in stock subscription for the purchase of 13,421,053 of its common stock. The shares are expected to be issued in the fourth quarter of 2014.

As of September 30, 2014, the Company has notes payable which are convertible into approximately 231,000,000 shares common stock under various convertible note agreements, as well as approximately 9,000,000 common shares under various options and warrants.

Stock Options

On January 3, 2013, our board of directors approved the adoption of The Digital Development Group Corp. 2013 Equity Incentive Plan (the "2013 Plan”). The 2013 Plan is intended to aid the Company in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the granting of awards of stock options or other stock-based awards. The 2013 Plan is administered by the board of directors. Directors, officers, employees and consultants of the Company and its affiliates are eligible to participate under the 2013 Plan.

On March 25, 2013 and in connection with the Sheen Agreement, the Company ~~has~~ agreed to issue to Mr. Sheen options to purchase up to ~~seven~~7,000,000 ~~million~~ shares of the Company’s common stock as follows: options to purchase ~~one~~1,000,000 ~~million~~ shares of the Company’s common stock vested upon the date of the Agreement, and options to purchase the remaining ~~six~~6,000,000 ~~million~~ shares of the Company’s common stock shall vest in equal installments of ~~one~~1,000,000 ~~million~~ shares every six months after the date of the Agreement, each exercisable at an exercise price of $0.10 per share and have a five (5) year term. ~~This~~These ~~Agreement~~options ~~has~~have ~~also~~ been ~~mutually~~ terminated byand recalled as a result of Mr. Sheen’s inability to comply with the ~~Parties~~Sheen Agreement.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model and the assumptions in the following table. The expected volatility is based on the daily historical volatility of comparative companies, measured over the expected term of the option. The risk-free rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The dividend yield reflects that the Company has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future.

The following assumptions were used to determine the fair value of the options at date of grant:

Expected volatility (%)	~~95%-306%~~	95%-315%
Risk free rate	~~0.27%-0.38%~~	0.27%-0.38%
Expected term	~~2-3 years~~	2-3 years
Dividend yield	0%	0%

The expected volatility has increased to ~~306~~315% during the ~~six~~nine months ended ~~June~~September 30, 2014. Such volatility and other assumptions were used in 2014 since the Sheen options vest over a period of three years and are valued at each vesting date. Total stock-based compensation expense included in general and administrative expense for the period from January 1, 2014 to ~~June~~September 30, 2014 was $~~146~~213,~~388~~888 related to all stock options previously granted.

As of June 30, 2014, there was $303,200 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 7.96 years. The Company’s current practice is to issue new shares to satisfy option exercises. Compensation expense for all stock-based compensation awards is recognized using the straight-line method.

		Weighted-		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Options	Price		Life (Years)	Value
Outstanding at December 31, 2013	11,320,000	$	0.1	5.97	$	−
Granted	−		−	−		−
Exercised	−		−	−		−
Forfeited or expired	−		−	−		−
Outstanding at June 30, 2014	11,320,000	$	0.1	5.47	$	−
Exercisable at June 30, 2014	6,774,167	$	0.1	6.5	$	−

~~NOTE~~Compensation ~~11—SUBSEQUENT~~expense ~~EVENTS~~for all stock-based compensation awards is recognized using the straight-line method. A summary of stock option activity is as follows:

On July 18, 2014, the Company entered into an Exchange Agreement with Tonaquint, Inc. (“Tonaquint”) pursuant to which the Company exchanged a previously issued warrant for a Convertible Promissory Note in the principal amount of $115,000 (the “Note”). The Note accrues interest at the rate of 8% per annum; is due and payable 17 months after the date of issuance; and may be converted by Tonaquint at any time into shares of Company common stock at a conversion price equal to 90% of the market price (as determined in the Note) calculated at the time of conversion, up to $28,000 per month. The Note Purchase Agreement and Note also contain certain representations, warranties, covenants and events of default. The foregoing is only a brief description of the material terms of the Exchange Agreement and Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.


	Options		Weighted-Average Exercise Price	Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2013	11,320,000	$	0.10	5.97	$	−
Granted	−		−	−		−
Exercised	−		−	−		−
Forfeited or cancelled	(7,000,000)		(0.10)	(4.00)		−
Outstanding at September 30, 2014	4,320,000	$	0.10	6.47	$	−
Exercisable at September 30, 2014	4,320,000	$	0.10	6.47	$	−

OnNOTE ~~August~~10—SUBSEQUENT ~~19, 2014, the Company entered into a Securities Purchase Agreement, Convertible Promissory Note and ancillary agreements (the “Financing Documents”) with Tonaquint (the “Buyer”).~~EVENTS

~~Under~~On ~~the~~September ~~terms~~17, ~~of the Financing Documents~~2014, the ~~Buyer~~Company entered into ~~the~~an ~~Convertible~~a ~~Promissory~~convertible ~~Note~~note inKBM ~~the principal amount of $115~~Worldwide,~~000~~ ~~(the~~Inc. (“KMB Note”). ~~The~~amounting ~~Company~~to is$53,000, ~~obligated~~interest toat ~~commence~~the ~~repayment~~rate of ~~the~~8% ~~Note~~per ~~six~~annum (6)default ~~months~~rate ~~after the date~~ of ~~payment~~22%, ofper ~~the Purchase Price (as defined below~~annum), indue ~~monthly~~and ~~installments~~payable inprior ~~an amount equal~~ to ~~the~~July ~~greater of (i) $~~19,~~166.67~~ ~~plus accrued and unpaid interest and late charges~~2015, ~~if any~~ and ~~(ii)~~may ~~the~~be ~~then~~converted ~~outstanding principal amount divided~~ by ~~the~~KBM ~~number~~at ofany ~~monthly~~time ~~installment~~after ~~dates~~such ~~remaining prior to the Maturity Date~~date. ~~Provided~~The ~~certain~~notes ~~equity conditions~~ are ~~met,~~convertible ~~the~~into ~~Company~~shares ~~may repay the monthly installment payments through the issuance~~ of Company common stock ~~(the “Conversion Shares”)~~ at ~~the~~a ~~market~~conversion price ~~(the~~equal ~~“Installment~~to ~~Conversion~~50% ~~Price”) which means the lesser~~ of ~~(i)~~ the ~~Buyer~~market ~~Conversion~~price ~~Price~~ (as ~~defined~~determined ~~below)~~in ~~and (ii) 60% (~~the ~~“Conversion~~KBM ~~Factor”~~Note) ofcalculated ~~the~~at ~~arithmetic average of~~ the ~~three (3) lowest closing bid prices of Company common stock during the twenty (20) consecutive trading day period immediately preceding the date of repayment, provided that if at any~~ time ~~the average~~ of ~~the three (3) lowest closing bid prices of the Company’s common stock immediately preceding the date of repayment is below $0~~conversion.~~02,~~ ~~then the then current Conversion Factor shall be reduced to 55% for all future conversions.~~ The ~~entire~~KBM ~~outstanding balance under the~~ Note isalso ~~due~~contains ~~and~~certain payable eleven (11) months after the date of payment of the Purchase Price (the “Maturity Date”). The Company may elect to pay to the buyer the monthly installment payment partly in cash and partly in Conversion Sharesrepresentations, ~~provided that if the Company elects to pay more than half of monthly installment payment in cash~~warranties, ~~the~~covenants ~~Company~~and ~~shall~~events ~~pay to the Buyer 125%~~ of ~~the cash portion of such payment~~default. ~~The~~In ~~Note bears interest at~~ the ~~rate~~event of ~~ten percent (10%) per annum~~default, ~~provided that upon~~ the ~~occurrence~~notes ofwill anincrease ~~event~~200% of ~~default, interest shall accrue on~~ the ~~outstanding~~debt balance ~~both~~as ~~before~~of ~~and after judgment at~~ the ~~rate~~date of ~~twenty-two percent (22%) per annum~~default. The KBM Note ~~carries~~was anfunded ~~original~~by ~~issue~~KBM ~~discount~~on ofor ~~$11,500.00.~~about InOctober ~~addition~~2, ~~the Company agreed to pay $3~~2014,~~500.00~~ tothus ~~the~~recorded ~~Buyer~~on tosuch ~~cover the Buyer’s legal fees, accounting costs, due diligence, monitoring and other transaction costs, all of which amount is included in the initial principal balance of the Note~~date.

InOn ~~consideration~~October ~~for~~23, ~~the Note~~2014, the ~~Buyer~~Company ~~paid~~entered ~~the~~into ~~Company~~a convertible note KBM (“KMB Note 2”) amounting to $~~100~~28,000~~.00~~, (interest at the ~~“Purchase~~rate ~~Price”~~of 8% per annum (default rate of 22%, per annum), due and payable prior to 180 days, and may be converted by KBM at any time after 180 days. The notes are convertible into shares of Company ~~delivered~~common stock at a conversion price equal to 50% of the ~~Transfer~~market ~~Agent~~price an(as ~~irrevocable~~determined ~~letter~~in ofthe ~~instructions~~KBM toNote) ~~provide~~calculated ~~for~~at the ~~issuance~~time of ~~shares~~conversion. toThe ~~the~~KBM ~~Buyer~~Note in2 also contains certain representations, warranties, covenants and events of default. In the event of default, ~~and~~the ~~conversion~~notes will increase 200% of the ~~Note~~debt balance as of the date of default.

~~The~~On ~~outstanding~~November ~~balance under the Note may be converted by the Buyer following the date which is six (~~6), ~~months~~2014, ~~after~~ the ~~Effective Date into shares of~~ Company ~~common~~raised ~~stock~~an atadditional ~~the rate of~~ $~~0.03~~26,500 ~~per~~under ~~share~~convertible ~~(the~~notes ~~“Buyer~~under ~~Conversion~~similar ~~Price”),~~conditions ~~subject~~ to ~~adjustment in~~ the ~~event~~notes ofdescribed ~~certain~~for ~~subdivisions~~LG orNote ~~combinations of Company common stock~~above.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the financial statements of The Digital Development Group Corp. (“Digital” or the “Company”) and the notes which form an integral part of the financial statements which are attached hereto. The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.

Overview of Business

The Company develops technologies that provide content owners distribution capabilities across multiple platforms using existing internet protocol (“IP”) services. The Company’s technology and assets are focused on the opportunity presented by over-the-top (“OTT”) home entertainment media, which targets DVD players, video game consoles, Smart TVs and stand-alone internet connected devices which delivers content such as Video-on-Demand services by connecting to users’ IP services. The Company’s technology is intended to help content owners distribute and monetize their products by delivery to OTT devices. As of the date of this report, the Company has launched 30 channels on the Roku Channel Store, including Media Blasters, Cinema Libre Studio, Kontakt TV, Something Weird, Synapse Films, Sci-Fi Station, Silent Era Films, and G2R Media. The Company plans to launch additional channels. Our business is based in Hollywood, California.

The Company commenced generating revenues from monthly subscribers during March 2013. As of the date of this report, the Company has approximately 3,~~100~~765 monthly subscribers.

Overview of Business Prior to July 31, 2012

The Company was originally incorporated under the laws of the State of Nevada on December 11, 2006 under the name of Regency Resources Inc. (“Regency”). The Company amended its Articles of Incorporation to change its name from Regency Resources, Inc. to The Digital Development Group Corp. effective May 2, 2012. Our fiscal year end is December 31. Our executive offices are located at 6630 West Sunset Blvd. Los Angeles, CA, 90028.

The Company was a pre-exploration stage company engaged in the acquisition and exploration of mineral properties. On July 31, 2012 (the “Closing Date”), the Company closed a voluntary share exchange transaction with DDAC and the shareholders of DDAC (the “Selling Shareholders”) pursuant to a Share Exchange Agreement dated July 31, 2012 (the “Exchange Agreement”) by and among the Company, DDAC, and the Selling Shareholders. In accordance with the terms of Exchange Agreement, on the Closing Date, the Company issued 20,000,000 shares of its common stock to the Selling Shareholders in exchange for 100% of the issued and outstanding capital stock of DDAC (the “Exchange Transaction”). As a result of the Exchange Transaction, the Selling Shareholders acquired 21.93% of the Company’s issued and outstanding common stock, DDAC became a wholly-owned subsidiary of the Company, and the Company acquired the business and operations of DDAC.

Results For The ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013

Net revenue for the ~~six~~nine months ended ~~June~~September 30, 2014 and ~~June~~September 30, 2013 was $5881,~~165~~621 and $2752,~~353~~223 respectively. We have attempted to increase our product offerings to enable us to increase our revenues.

Selling, general and ~~operating~~administrative expenses (S,G&A)

S,G&A for the ~~six~~nine months ended ~~June~~September 30, 2014 was $12,~~343~~185,~~089~~104, compared to $3,~~409~~834,~~817~~177 for the ~~six~~nine months ended ~~June~~September 30, 2013. S,G&A for the ~~six~~nine months ended ~~June~~September 30, 2014 declined mainly ~~consisted~~due ofdecreases ~~approximately $726,040 for share based compensation, $106,836~~ in ~~professional~~certain ~~and legal fees, $93,852 in~~ salaries and ~~wages,~~marketing ~~$93~~expenses,~~886~~ inoffset ~~product~~by ~~development,~~an ~~$41,335~~increase ~~for~~in ~~rent~~stock-based ~~expense and the remainder for daily operating expense for the Company~~compensation.

Interest expense

Interest expense totaled $13,~~347~~056,~~788~~604 during the ~~six~~nine months ended ~~June~~September 30, 2014, compared to $~~556~~914,~~789~~347 during the ~~six~~nine months ended ~~June~~September 30, 2013. Interest expense was primarily the result of amortization and accretion of debt issuance discounts totaling $12,~~002~~517,~~101~~213 under convertible notes payable, some of which were accelerated due to conversions and defaults.

Change in derivative liabilities

The derivative liability gain totaled $2.1 million during the six months ended June 30, 2014. The change was mainly related to the decrease in fair value of the derivative liability which was the result of the reduction in our stock prices since December 31, 2013.

Change in fair value of derivative liabilities

The derivative liability gain totaled $3.2 million during the nine months ended September 30, 2014. The change was mainly related to the decrease in fair value of the derivative liability which was the result of the fluctuation in our stock prices since December 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~June~~September 30, 2014, we had cash of $~~100~~452 and working capital deficit of $67.32 million. For the ~~six~~nine months ended ~~June~~September 30, 2014, net cash used in operations was $~~760~~1,~~488~~101,166 versus $1,~~050~~300,~~526~~094 in the prior ~~period~~year. To date, we have financed our operations through the issuance of common stock and securities convertible into common stock. Given estimates of our Company’s future operating results, we are currently forecasting that we will need to secure additional financing to obtain adequate financial resources to reach profitability. As of the date of this report, we estimate that the cash necessary to implement our current business plan for the next twelve months is approximately $1,200,000. However, we cannot provide any assurances that we will be able to raise additional funds to meet our cash needs; that the cash required to implement our current plan will not exceed our estimated amount of cash necessary; or that we can achieve profitability with the estimated amounts we determined above, or that we will ever achieve profitability. We also cannot provide any assurances that we will be able to receive additional funds under our production line of credit.

Based on our need to raise additional funds to implement our business plans for the next twelve months, we have included a discussion concerning the presentation of our financial statements on a going concern basis in the notes to our financial statements and our independent public accountants have included a similar discussion, including substantial doubt about the Company’s ability to continue as a going concern in their opinion on our financial statements through December 31, 2013. We will be required in the near future to issue debt or sell our Company’s equity securities in order to raise additional cash, although there are no firm arrangements in place for any such financing at this time. We cannot provide any assurances as to whether we will be able to secure the necessary financing, or the terms of any such financing transaction if one were to occur. The failure to secure such financing could severely curtail our plans for future growth or in more severe scenarios, the continued operations of our Company.

Off-balance Sheet Arrangements

We have no off-balance sheet.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (who is our Principal Executive Officer) who is also our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of ~~June~~September 30, 2014, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer who is also our Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of ~~June~~September 30, 2014 in ensuring that information required to be disclosed by us in 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 (the “SEC”) rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.

In performing the above-referenced assessment, our management identified the following material weaknesses:

As of ~~June~~September 30, 2014, the Company did not have a separate functioning audit committee.

ii)

Due to the significant number and magnitude of out-of-period adjustments identified during the year- end closing process, management has concluded that the controls over the period-end financial reporting process were not operating effectively. A material weakness in the period-end financial reporting process could result in us not being able to meet our regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.

iii)

There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, to allow timely decisions regarding required disclosure.

Our management feels the weaknesses identified above have not had any material effect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the near term, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.

Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified above, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the period ended ~~June~~September 30, 2014 fairly present our financial condition, results of operations and cash flows in all material respects.

Changes in Internal Controls Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting during the period ended ~~June~~September 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~PART II¾OTHER INFORMATION~~22

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Effective December 19, 2012, the Company terminated the Securities Purchase Agreement, Registration Rights Agreement and Debenture dated November 6, 2012 (the “Financing Documents”) with Ironridge Media Co., a division of Ironridge Global IV, Ltd. (“Ironridge”), for the sale of up to $3,000,000 of Convertible Subordinated Debentures and Series A Preferred Stock. Subsequent to the termination, Ironridge submitted a claim with JAMS, Inc. in Santa Monica, California for binding arbitration under the Financing Documents and requested that it be awarded damages relating to the termination of the Financing Documents. The Company submitted counter-claims in the JAMS arbitration claiming that it was fraudulently induced to enter into the Financing Documents, and that a fully performed oral stock purchase agreement caused the Financing Documents to be abandoned by the parties, justifying rescission of the financing documents. On May 24, 2013, the Arbitrator in the JAMS arbitration announced an interim award to Ironridge in the amount of $850,000 plus attorney fees and costs. On July 10, 2013, the Arbitrator ruled the interim award to be final, awarded Ironridge an additional $110,168 in attorneys’ fees and costs. On April 1,2014, the Los Angeles Superior Court reduced such award to a judgment in that amount (including the attorney’s fees and costs). The Company does not have adequate cash to pay the judgment. The judgment will adversely affect the business, future operations and the financial condition of the Company, and may cause the Company to default under its existing loan obligations which would provide the lenders with the right for immediate repayment.

On February 25, 2014, John Knight obtained a Small Claims judgment against the Company for $10,000. Mr. Knight has commenced collection procedures which have been wholly ineffective as to this date. The Company will attempt to resolve such judgment with Mr. Knight.

ITEM 1A. RISK FACTORS

This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See "Forward-Looking Statements," above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially.

Risks Related to Our Business and Industry

We have a limited operating history on which to evaluate our business or base an investment decision.

Our business prospects are difficult to predict because of our limited operating history, early stage of development, unproven business strategy and unproven product. We just started generating revenues during March 2013. We face numerous risks and uncertainties in the competitive markets. In particular, we have not proven that we can: develop our product offering in a manner that enables us to be profitable and meet our customers’ requirements; develop and maintain relationships with key customers and strategic partners that will be necessary to optimize the market value of our products; raise sufficient capital in the public and/or private markets; or respond effectively to competitive pressures. If we are unable to accomplish these goals, our business is unlikely to succeed and you should consider our prospects in light of these risks, challenges and uncertainties.

If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.

We have limited capital resources. To date, our operations have been funded entirely from the proceeds from equity and debt financings. We expect to require substantial additional capital in the near future to develop and market new products, services and technologies. If we are unable to raise capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.

If we are unable to compete effectively, our business will be adversely affected.

The market for content distribution is intensely competitive and subject to rapid change. New technologies and evolving business models for delivery of entertainment video continue to develop at a fast pace. The growth of Internet-connected devices, including TV’s, computers and mobile devices has increased the consumer acceptance of Internet delivery of entertainment video. Through these new and existing distribution channels, consumers are afforded various means for consuming entertainment video. The various economic models underlying these differing means of entertainment video delivery include subscription, pay-per-view, ad-supported and piracy-based models. All of these have the potential to capture meaningful segments of the entertainment video market. Most of our competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do. They may secure better terms from suppliers, adopt more aggressive pricing and devote more resources to technology, fulfillment, and marketing. New entrants may enter the market with unique service offerings or approaches to providing entertainment video and other companies also may enter into business combinations or alliances that strengthen their competitive positions. If we are unable to successfully or profitably compete with current and new competitors, programs and technologies, our business will be adversely affected, and we may not be able to increase or maintain market share, revenues or profitability.

Changes in consumer viewing habits, including more widespread usage of video-on-demand or other similar on demand methods of entertainment video consumption could adversely affect our business.

The manner in which consumers view entertainment video is changing rapidly. Digital cable, wireless and Internet content providers are continuing to improve technologies, content offerings, user interface, and business models that allow consumers to access entertainment video-on-demand with interactive capabilities including start, stop and rewind. The devices through which entertainment video can be consumed are also changing rapidly. Today, content from cable service providers may be viewed on laptops and content from Internet content providers may be viewed on TVs. Although we will provide our own Internet-based delivery of content allowing our customers to stream certain programs and movies to their Internet-connected televisions and other devices, if other providers of entertainment video address the changes in consumer viewing habits in a manner that is better able to meet content distributor and consumer needs and expectations, our business could be adversely affected.

If we are not able to manage our growth, our business could be adversely affected.

We are currently engaged in an effort to expand our operations both domestically and internationally, as well as grow our content base and develop our technology platform across more devices. Many of our systems and operational practices implemented now at our earlier stage with limited resources will require undertaking efforts to migrate the vast majority of our systems to cloud-based processors. As we undertake all these changes, if we are not able to manage the growing complexity of our business, including improving, refining or revising our systems and operational practices, our business may be adversely affected.

If the market segment for consumer paid commercial free Internet streaming of programs and movies saturates, our business will be adversely affected.

The market segment for consumer paid commercial free Internet streaming of programs and movies has grown significantly. Much of the increasing growth can be attributed to the ability of consumers to stream TV shows and movies on their TVs, computers and mobile devices. A decline in the rate of growth could indicate that the market segment for online subscription-based entertainment video is beginning to saturate. While we believe that this segment will continue to grow for the foreseeable future, if this market segment were to saturate, our business would be adversely affected.

If our efforts to build strong brand identity and improve customer satisfaction and loyalty are not successful, we may not be able to attract or retain customers, and our operating results may be adversely affected.

We must continue to build and maintain strong brand identity. We believe that strong brand identity will be important in attracting customers and content providers who may have a number of choices from which to obtain services we provide. If our efforts to promote and maintain our brand are not successful, our operating results and our ability to attract customers or content providers may be adversely affected. To the extent dissatisfaction with our service is widespread or not adequately addressed, our brand may be adversely impacted and our ability to attract and retain customers or content providers may be adversely affected. With respect to our planned international expansion, we will also need to establish our brand and to the extent we are not successful, our business in new markets would be adversely impacted.

The increasingly long-term and fixed-cost nature of our content acquisition licenses may adversely affect our financial condition and future financial results.

In connection with obtaining content, particularly for streaming content, we will typically enter into multi-year, fixed-fee licenses with content providers, studios and distributors. Furthermore, we plan on increasing the level of committed content licensing in anticipation of our service and customer base growing. To the extent customer and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of these content licensing commitments and our flexibility in planning for, or reacting to changes in our business and the market segments in which we operate could be limited.

If we become subject to liability for content that we distribute through our service, our results of operations would be adversely affected.

As a distributor of content, we face potential liability for negligence, copyright, patent or trademark infringement or other claims based on the nature and content of materials that we distribute. If we become liable, then our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our results of operations. We cannot assure that we are insured or indemnified to cover claims of these types or liability that may be imposed on us.

If we do not respond effectively and on a timely basis to rapid technological change, our business could suffer.

Our industry is characterized by rapidly changing technologies, industry standards, customer needs and competition, as well as by frequent new product and service introductions. We must respond to technological changes affecting both our customers and content providers. We may not be successful in developing and marketing, on a timely and cost-effective basis, new services that respond to technological changes, evolving industry standards or changing customer requirements. Our success will depend, in part, on our ability to accomplish all of the following in a timely and cost-effective manner:

Effectively developing, using and integrating new technologies;

Continuing to develop our technical expertise;

Enhancing our engineering and system designs;

Developing products that meet changing customer needs;

Advertising and marketing our products; and

Influencing and responding to emerging industry standards and other changes.

Growth of internal operations and business may strain our financial resources.

We intend to significantly expand the scope of our operating and financial systems in order to build and expand our business. Our growth rate may place a significant strain on our financial resources for a number of reasons, including, but not limited to, the following:

The need for continued development of our financial and information management systems;

The need to manage strategic relationships and agreements with content providers; and

Difficulties in hiring and retaining skilled management, technical and other personnel necessary to support and manage our business.

We cannot give you any assurance that we will adequately address these risks and, if we do not, our ability to successfully expand our business could be adversely affected.

If we are not able to adequately protect our intellectual property, we may not be able to compete effectively.

Our ability to compete depends in part upon the strength of our proprietary rights in our technologies, brands and content. We expect to rely on a combination of U.S. and foreign patents, copyrights, trademark, trade secret laws and license agreements to establish and protect our intellectual property and proprietary rights. The efforts we have taken and expect to take to protect our intellectual property and proprietary rights may not be sufficient or effective at stopping unauthorized use of our intellectual property and proprietary rights. In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which our products are made available. There may be instances where we are not able to fully protect or utilize our intellectual property in a manner that maximizes competitive advantage. If we are unable to protect our intellectual property and proprietary rights from unauthorized use, the value of our products may be reduced, which could negatively impact our business. Our inability to obtain appropriate protections for our intellectual property may also allow competitors to enter our markets and produce or sell the same or similar products and services. In addition, protecting our intellectual property and other proprietary rights is expensive and diverts critical managerial resources. If we are otherwise unable to protect our intellectual property and proprietary rights, our business and financial results could be adversely affected.

If we are forced to resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome and expensive. In addition, our proprietary rights could be at risk if we are unsuccessful in, or cannot afford to pursue, those proceedings. In addition, the possibility of extensive delays in the patent issuance process could effectively reduce the term during which a marketed product is protected by patents.

We may also need to obtain licenses to patents or other proprietary rights from third parties. We may not be able to obtain the licenses required under any patents or proprietary rights or they may not be available on acceptable terms. If we do not obtain required licenses, we may encounter delays in development or find that the development, manufacture or sale of products and services requiring licenses could be foreclosed. We may, from time to time, support and collaborate in research conducted by universities and governmental research organizations. We may not be able to acquire exclusive rights to the inventions or technical information derived from these collaborations, and disputes may arise over rights in derivative or related research programs conducted by us or our collaborators.

Assertions against us by third parties for infringement of their intellectual property rights could result in significant costs and cause our operating results to suffer.

Our industry is characterized by vigorous protection and pursuit of intellectual property rights and positions, which results in protracted and expensive litigation for many companies. Other companies with greater financial and other resources than us have gone out of business from costs related to patent litigation and from losing a patent litigation. We may be exposed to future litigation by third parties based on claims that our technologies or activities infringe the intellectual property rights of others. Although we try to avoid infringement, there is the risk that we will use a patented technology owned or licensed by another person or entity and be sued for patent infringement or infringement of another party’s intellectual property or proprietary rights. If we or our products and services are found to infringe the intellectual property or proprietary rights of others, we may have to pay significant damages or be prevented from making, using, selling, and offering for sale or importing such products or services or from practicing methods that employ such intellectual property or proprietary rights.

Further, we may receive notices of infringement of third-party intellectual property rights. Specifically, we may receive claims from various industry participants alleging infringement of their patents, trade secrets or other intellectual property rights in the future. Any lawsuit resulting from such allegations could subject us to significant liability for damages and invalidate our proprietary rights. These lawsuits, regardless of their success, would likely be time-consuming and expensive to resolve and would divert management time and attention. Any potential intellectual property litigation also could force us to do one or more of the following:

stop selling content or services or using technology that contain the allegedly infringing intellectual property;

pay damages to the party claiming infringement;

attempt to obtain a license for the relevant intellectual property, which may not be available on commercially reasonable terms or at all; and

attempt to redesign those products or services that contain the allegedly infringing intellectual property with non-infringing intellectual property, which may not be possible.

The outcome of a dispute may result in our need to develop non-infringing technology or enter into royalty or licensing agreements. We may agree to indemnify certain customers for certain claims of infringement arising out of the sale of our products. Any intellectual property litigation could have a material adverse effect on our business, operating results or financial condition.

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information.

Our success depends upon the skills, knowledge and experience of our technical personnel, our consultants and advisors as well as our licensors and contractors. Because we operate in a highly competitive field, we rely almost wholly on trade secrets to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties confidential information developed by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.

If studios and other content owners or distributors refuse to license content to us upon acceptable terms, our business could be adversely affected.

Our ability to distribute content or provide our customers with content they can watch instantly depends on studios and other content owners or distributors licensing us content specifically for Internet delivery. The license periods and the terms and conditions of such licenses vary. If the studios and other content distributors change their terms and conditions or are no longer willing or able to license us content, our ability to distribute content or stream content to our customers will be adversely affected. Streaming content is not subject to the First Sale Doctrine. As such, we are completely dependent on the studio or other content distributor to license us content in order to access, distribute, sublicense and stream content. Many of the licenses provide for the studios or other content distributor to withdraw content from our service relatively quickly. Because of these provisions as well as other actions we may take, content available through our service can be withdrawn on short notice. In addition, the studios and other content distributors have great flexibility in licensing content. They may elect to license content exclusively to a particular provider or otherwise limit the types of services that can deliver streaming content. If we are unable to secure and maintain rights to streaming content or if we cannot otherwise obtain such content upon terms that are acceptable to us, our ability to distribute content will be adversely impacted, and our customer acquisition and retention could also be adversely impacted. As streaming content license agreements expire, we must renegotiate new terms which may not be favorable to us. If this happens, the cost of obtaining content could increase and our margins may be adversely affected. As we grow, we will have to spend an increasingly larger amount for the licensing of streaming content. Any failure to secure content will manifest in lower customer acquisition and retention. Given the multiple-year duration and largely fixed nature of content licenses, if we do not experience customer acquisition and retention as forecasted, our margins may be impacted by these fixed content licensing costs. To the extent that we are unable to resolve any of these issues in an amicable manner, our relationship with the studios and other content distributors or our access to content may be adversely impacted.

Any significant disruption in our technology platform or those of third-parties that we utilize in our operations could result in a loss or degradation of service and could adversely impact our business.

Customers and potential customers access our service through our Web site or their TVs, computers, game consoles or mobile devices. Our reputation and ability to attract, retain and serve our customers is dependent upon the reliable performance of our technology platform and those of third-parties that we utilize in our operations. Interruptions in our ability to deliver content, or with the Internet in general, including discriminatory network management practices, could make our service unavailable or degraded or otherwise hinder our ability to deliver streaming content. Much of our software is proprietary, and we rely on the expertise of our engineering and software development teams for the continued performance of our software and computer systems. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our service to existing and potential customers.

Our servers and those of third-parties we use in our operations are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions and delays in our service and operations as well as loss, misuse or theft of data. Our Web site may periodically experience directed attacks intended to cause a disruption in service. Any attempts by hackers to disrupt our service or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation. We do not have insurance to cover expenses related to attacks on our Web site or internal systems. Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the functionality of our services. Any significant disruption to our service or internal computer systems could result in a loss of customers and adversely affect our business and results of operations.

If government regulations relating to the Internet or other areas of our business change, we may need to alter the manner in which we conduct our business, or incur greater operating expenses.

The adoption or modification of laws or regulations relating to the Internet or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. In addition, the growth and development of the market for online commerce may lead to more stringent consumer protection laws, which may impose additional burdens on us. If we are required to comply with new regulations or legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur additional expenses or alter our business model.

The adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, including laws limiting Internet neutrality, could decrease the demand for our services and increase our cost of doing business. For example, in late 2010, the Federal Communications Commission adopted so-called net neutrality rules intended, in part, to prevent network operators from discriminating against legal traffic that transverse their networks. The rules are currently subject to legal challenge. To the extent that these rules are interpreted to enable network operators to engage in discriminatory practices or are overturned by legal challenge, our business could be adversely impacted. As we expand internationally, government regulation concerning the Internet, and in particular, network neutrality, may be nascent or non-existent. Within such a regulatory environment, coupled with potentially significant political and economic power of local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business.

Our reputation and relationships with customers would be harmed if our customer data, particularly billing data, were to be accessed by unauthorized persons.

We will maintain personal data regarding our customers, including names and, in many cases, mailing addresses. With respect to billing data, such as credit card numbers, we will rely on licensed encryption and authentication technology to secure such information. We will take measures to protect against unauthorized intrusion into our customers’ data. If, despite these measures, we, or our payment processing services, experience any unauthorized intrusion into our customers’ data, current and potential customers may become unwilling to provide the information to us necessary for them to become customers, we could face legal claims, and our business could be adversely affected. Similarly, if a well-publicized breach of the consumer data security of any other major consumer Web site were to occur, there could be a general public loss of confidence in the use of the Internet for commerce transactions which could adversely affect our business.

If we are unable to protect our domain names, our reputation and brand could be adversely affected.

We currently hold various domain names relating to our brand, including www.digidev.com. Failure to protect our domain names could adversely affect our reputation and brand and make it more difficult for users to find our Web site and our service. The acquisition and maintenance of domain names generally are regulated by governmental agencies and their designees. The regulation of domain names in the United States may change in the near future. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may be unable to acquire or maintain relevant domain names. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. We may be unable, without significant cost or at all, to prevent third-parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.

In the event of an earthquake or other natural or man-made disaster, our operations could be adversely affected.

Our executive offices and data centers are located in the Los Angeles area, an earthquake sensitive area. Our business and operations could be adversely affected in the event of an earthquake or other natural disaster, as well as from electrical blackouts, fires, floods, power losses, telecommunications failures, break-ins or similar events. We may not be able to effectively shift our operations to handle disruptions in service arising from these events. Because Los Angeles is located in an earthquake-sensitive area, we are particularly susceptible to the risk of damage to, or total destruction of, our executive offices and data centers. We are not insured against any losses or expenses that arise from a disruption to our business due to earthquakes and may not have adequate insurance to cover losses and expenses from other natural disasters.

We may lose key employees or may be unable to hire qualified employees.

We rely on the continued service of our senior management, including our Chief Executive Officer and Chairman, Martin Greenwald, President, Joe Bretz and members of our executive team and other key employees and the hiring of new qualified employees. In our industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. We may not be successful in recruiting new personnel and in retaining and motivating existing personnel, which may be disruptive to our operations.

Risks Relating to our Securities and our Status as a Public Company

The relative lack of public company experience of certain members of our management team may put us at a competitive disadvantage.

Certain members of our management team lack public company experience and are generally unfamiliar with the requirements of the United States securities laws and U.S. Generally Accepted Accounting Principles, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Some of these individuals who now constitute our senior management team have never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately responds to such increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.

Shares of our common stock that have not been registered under the Securities Act of 1933, as amended, regardless of whether such shares are restricted or unrestricted, are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a “shell company.” In addition, any shares of our common stock that are held by affiliates, including any received in a registered offering, will be subject to the resale restrictions of Rule 144(i).

Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, we may be deemed a “shell company” pursuant to Rule 144 prior to the Exchange, and as such, sales of our securities pursuant to Rule 144 are not able to be made until a period of at least twelve months has elapsed from the date on which our Current Report on Form 8-K is filed with the Commission reflecting our status as a non- “shell company.” Therefore, any restricted securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after the date of the filing of our Current Report on Form 8-K and we have otherwise complied with the other requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay our employees and consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our previous status as a “shell company” could prevent us from raising additional funds, engaging employees and consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless. Lastly, any shares held by affiliates, including shares received in any registered offering, will be subject to the resale restrictions of Rule 144(i).

We will be required to incur significant costs and require significant management resources to evaluate our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse effect on our stock price.

As a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include an internal control report with the Annual Report on Form 10-K. This report must include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our equity securities. Management believes that its internal controls and procedures are currently not effective to detect the inappropriate application of U.S. GAAP rules. Management realize there are deficiencies in the design or operation of our internal control that adversely affect our internal controls which management considers to be material weaknesses including those described below:

As of ~~June~~September 30, 2014, the Company did not have a separate functioning audit committee.

ii)

iii)

Achieving continued compliance with Section 404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you that we will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to conclude that our internal control over financial reporting is effective at fiscal year-end. As a result, investors could lose confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting firm may not agree with our management’s assessment or conclude that our internal control over financial reporting is operating effectively.

If we lose our key management personnel, we may not be able to successfully manage our business or achieve our objectives, and such loss could adversely affect our business, future operations and financial condition.

Our future success depends in large part upon the leadership and performance of our executive management team and key consultants. If we lose the services of one or more of our executive officers or key consultants, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to successfully manage our business or achieve our business objectives. We do not have “Key-Man” life insurance policies on our key executives. If we lose the services of any of our key consultants, we may not be able to replace them with similarly qualified personnel, which could harm our business. The loss of our key executives or our inability to attract and retain additional highly skilled employees may adversely affect our business, future operations, and financial condition.

The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.

Our Articles of Incorporation contain a provision permitting us to eliminate the personal liability of our directors to our company and shareholders for damages for breach of fiduciary duty as a director or officer to the extent provided by Nevada law. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.

Our stock is categorized as a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell our stock.

Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than US$5.00 per share or an exercise price of less than US$5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

To date, we have not paid any cash dividends and no cash dividends will be paid in the foreseeable future.

We do not anticipate paying cash dividends on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends. Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We presently intend to retain all earnings for our operations.

A limited public trading market exists for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets.

Our common stock is currently traded under the symbol “DIDG” but currently with low volume, based on quotations on the “OTC Markets,” meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our stock until such time as we became more viable. Additionally, many brokerage firms may not be willing to effect transactions in the securities. As a consequence, there may be periods of several days or more when trading activity in our stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to ~~500~~850,000,000 shares of common stock with a par value of $0.001 per share. Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating requirements. The issuance of any such shares may reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

We did not obtain shareholder approval for our amendment increasing the number of authorized shares.

On September 24, 2014, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to increase the authorized shares of the Company from 500,000,000 to 850,000,000. The Company did not yet receive shareholder approval for the Amendment as required by Nevada law. The Company plans to seek ratification from the Company’s shareholders to approve the filing of the Amendment. If the Company does not receive shareholder approval for the Amendment, the Company may have to rescind the Amendment in which event it may not have an adequate number of authorized shares to meet the Company’s commitments under its convertible notes, options and warrants, which may cause the Company to default under its convertible notes.

We may not qualify to meet listing standards to list our stock on an exchange.

The SEC approved listing standards for companies using reverse acquisitions to list on an exchange may limit our ability to become listed on an exchange. We would be considered a reverse acquisition company (i.e., an operating company that becomes an Exchange Act reporting company by combining with a shell Exchange Act reporting company) that cannot apply to list on NYSE, NYSE Amex or Nasdaq until our stock has traded for at least one year on the U.S. OTC market, a regulated foreign exchange or another U.S. national securities market following the filing with the SEC or other regulatory authority of all required information about the merger, including audited financial statements. We would be required to maintain a minimum $4 share price ($2 or $3 for Amex) for at least thirty (30) of the ~~sixty~~ninety (60) trading days before our application and the exchange’s decision to list. We would be required to have timely filed all required reports with the SEC (or other regulatory authority), including at least one annual report with audited financials for a full fiscal year commencing after filing of the above information. Although there is an exception for a firm underwritten IPO with proceeds of at least $40 million, we do not anticipate being in a position to conduct an IPO in the foreseeable future. To the extent that we cannot qualify for a listing on an exchange, our ability to raise capital will be diminished.

We may not have the ability to pay our promissory notes when due.

The Company has issued convertible and other promissory notes in the amount of $13,~~990~~095,~~326~~895 as of ~~June~~September 30, 2014. The Company does not have sufficient capital to repay the notes as of the date of this report, and may not have sufficient capital to repay the notes when due. The Company’s inability to repay the notes when due would permit the note holders to exercise their default remedies against the Company which could have a material adverse effect on the Company. Additionally, many of the note holders have the right to declare entire amount of the outstanding debt immediately due and payable upon the occurrence of events of default, which include events such as our late filing of this Quarterly Report on Form 10-Q.

Conversion of our convertible notes into common stock will result in additional dilution to our stockholders.

We have issued numerous convertible notes which are convertible into shares of our common stock at conversion prices which are at a discount to the then current trading price of our common stock. Additionally, upon the occurrence of certain events of default (including conditions outside of our control) the note holders are entitled to increased repayment and interest rates, as well as other remedies. For example, our late filing of this Quarterly Report on Form 10Q entitled several of the note holders to increased repayment amounts and interest rates. Also, some of the note holders have anti-dilution and conversion reset provisions which are triggered by the issuance of lower priced securities. As shares of our common stock are issued due to conversion of some or all of the convertible notes, the ownership interests of existing stockholders are being diluted. As of ~~June~~December 3031, 2013, there were 6181,~~989~~280,~~216~~441 shares outstanding, and this amount increased to ~~152~~171,~~411~~248,~~771~~924 shares outstanding as of ~~June~~September 30, 2014, and increased to ~~179~~216,~~524~~664,~~843~~780 shares outstanding as of ~~August~~November 1513, 2014, which was partly as the result of the issuance of shares of Company common stock resulting from the conversion of convertible notes outstanding. The Company expects that note holders will continue to convert and the number of outstanding shares to continue to increase significantly.

We do not have the ability to pay the Ironridge judgment.

On May 24, 2013, the Arbitrator in the JAMS arbitration announced an interim award to Ironridge in the amount of $850,000 plus attorney fees and costs, and on July 10, 2013 the Arbitrator ruled the interim award to be final, and awarded Ironridge an additional $110,168 in attorneys’ fees and costs. That award was reduced to a Judgment by the Los Angeles Superior Court on April 1, 2014. The Company does not have adequate cash to pay the judgment. Such judgment will adversely affect the business, future operations and the financial condition of the Company, and may cause the Company to default under its existing loan obligations which would provide the lenders with the right for immediate repayment, and/or cause the Company to file for protection under the United States Bankruptcy Code or similar proceedings which could cause all the shareholders to lose the entire value of their investment in the Company.

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

Conversions of Previously Issued Notes:

On April 8, 2014, the Company issued 719,508 shares of common stock to Tonaquint Inc. in consideration of their conversion of $12,500 under the terms of their convertible promissory note dated April 2, 2013;

On May 7, 2014, the Company issued 1,912,568 shares of common stock to Asher Enterprises II in consideration of their conversion of $35,000 under the terms of their convertible promissory note dated October 1, 2013;

On May 8, 2014, the Company issued 1,058,201 shares of common stock to Asher Enterprises II in consideration of their conversion of $20,000 under the terms of their convertible promissory note dated October 1, 2013;

On May 9, 2014, the Company issued 1,159,193 shares of common stock to Tonaquint Inc. in consideration of their conversion of $12,500 under the terms of their convertible promissory note dated April 2, 2013;

On May 9, 2014, the Company issued 1,470,718 shares of common stock to Asher Enterprises II in consideration of their conversion of $26,620 under the terms of their convertible promissory note dated October 1, 2013;

On May 13, 2014, the Company issued 2,767,974 shares of common stock to Asher Enterprises II in consideration of their conversion of $42,350 under the terms of their convertible promissory note dated October 31, 2013;

On June 6, 2014, the Company issued 1,725,781 shares of common stock to Tonaquint Inc. in consideration of their conversion of $12,500 under the terms of their convertible promissory note dated April 2, 2013;

On June 12, 2014, the Company issued 877,193 shares of common stock to Gel Properties in consideration of their conversion of $7,500 under the terms of their convertible promissory note dated December 10, 2013;

On June 16, 2014, the Company issued 2,087,577 shares of common stock to Gel Properties in consideration of their conversion of $18,788 under the terms of their convertible promissory note dated December 10, 2013;

On June 17, 2014, the Company issued 3,042,537 shares of common stock to LG Capital in consideration of their conversion of $26,014 under the terms of their convertible promissory note dated December 10, 2013;

On June 20, 2014, the Company issued 2,783,105 shares of common stock to LG Capital in consideration of their conversion of $25,048 under the terms of their convertible promissory note dated December 10, 2013;

On June 20, 2014, the Company issued 1,125,541 shares of common stock to Gel Properties in consideration of their conversion of $13,000 under the terms of their convertible promissory note dated December 10, 2013;

On June 25, 2014, the Company issued 423,012 shares of common stock to Gel Properties in consideration of their conversion of $5,000 under the terms of their convertible promissory note dated December 10, 2013;

On June 26, 2014, the Company issued 598,492 shares of common stock to Gel Properties in consideration of their conversion of $7,074 under the terms of their convertible promissory note dated December 10, 2013;

On July 9, 2014, the Company issued 1,064,736 shares of common stock to Tonaquint, Inc. in consideration of their conversion of $28,000.00 under the terms of their convertible promissory note dated April 2, 2013;

On July 21, 2014, the Company issued 549,666 shares of common stock to Tonaquint, Inc. in consideration of their conversion of $28,000.00 under the terms of their convertible promissory note dated April 2, 2013;

On August 6, 2014, the Company issued 592,420 shares of common stock to Tonaquing, Inc. in consideration of their conversion of $15,023.76 under the terms of their convertible promissory note dated April 2, 2013;

On September 8, 2014, the Company issued 1,470,588 shares of common stock to Asher Enterprises, Inc.in consideration of their conversion of $15,000.00 under the terms of their convertible promissory note dated February 27,2014;

On September 10, 2014, the Company issued 2,424,242 shares of common stock to Asher Enterprises, Inc. in consideration of their conversion of $24,0000.00 under the terms of their convertible promissory note dated February 27, 2014;

On September 12, 2014, the Company issued 557,543 shares of common stock to Union Capital, LLC in consideration of their conversion of $5,252.05 under the terms of their convertible promissory note dated March 7, 2014;

On September 15, 2014, the Company issued 1,435,065 shares of common stock to Asher Enterprises, Inc. in consideration of their conversion of $11,050.00 under the terms of their convertible promissory note dated February 27, 2014;

On September 16, 2014, the Company issued 1,086,550 shares of common stock to Union Capital, LLC in consideration of their conversion of $7,888.36 under the terms of their convertible promissory note dated March 7, 2014;

On September 23, 2014, the Company issued 2,034,544 shares of common stock to Union Capital, LLC in consideration of their conversion of $12,634.52 under the terms of their convertible promissory note dated March 7, 2014;

On September 23, 2014, the Company issued 2,715,549 shares of common stock to LG Capital Funding in consideration of their conversion of $16,863.56 under the terms of their convertible promissory note dated March 4, 2014;

On October 10, 2014, the Company issued 1,083,416 shares of common stock to Union Capital in consideration of their conversion of $5,817.95 under the terms of their convertible promissory note dated March 7, 2014;

On October 17, 2014, the Company issued 3,660,131 shares of common stock to Tonaquint, Inc. in consideration of their conversion of $28,000.00 under the terms of their convertible promissory note dated April 2, 2013;

On October 23, 2014, the Company issued 1,020,408 shares of common stock to Coventry Enterprises in consideration of their conversion of $5,000.00 under the terms of their convertible promissory note dated April 2, 2014;

On October 23, 2014, the Company issued 1,697,427 shares of common stock to LG Capital funding in consideration of their conversion of $8,504.11 under the terms of their convertible promissory note dated March 4, 2014;

On October 29, 2014, the Company issued 2,222,222 shares of common stock to Coventry Enterprises in consideration of their conversion of $10,000.00 under the terms of their convertible promissory note dated April 2, 2014;

On October 31, 2014, the Company issued 2,222,222 shares of common stock to Coventry Enterprises in consideration of their conversion of $10,000.00 under the terms of their convertible promissory note dated April 2, 2014;

On November 7, 2014, the Company issued 2,564,102 shares of common stock to Coventry Enterprises in consideration of their conversion of $10,000.00 under the terms of their convertible promissory note dated April 2, 2014;

Each of the above issuances of shares was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering.

Issuances of Convertible Promissory Notes:

On May 7, 2014, the Company entered into a Convertible Promissory Note with Vista Capital Investments, LLC (“Vista”) in the original principal amount of $150,000 (the “Note”), pursuant to which Vista funded $50,000. The Note has a one time interest charge of 12%; is due and payable one year after the date of issuance; and may be converted by Vista at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the market price (as determined in the Note) calculated at the time of conversion. The Note also contains certain representations, warranties, covenants and events of default, and is collateralized by the issuance of 20,000,000 shares of Company common stock. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on June 4, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On May 9, 2014, the Company entered into a Convertible Promissory Note with LG Capital Funding LLC (“LG”) in the original principal amount of $26,500 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on June 4, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

33On May 12, 2014, the Company entered into Securities Purchase Agreement with Union Capital LLC (“Union”) pursuant to which the Company issued three convertible promissory notes in the aggregate principal amount of $90,000 (the “Notes”), pursuant to which Union funded $30,000 (less discounts and fees). The Notes accrue interest at the rate of 10% per annum; are due and payable 12 months after their date of issuance; and may be converted by Union at any time into shares of Company common stock at a conversion price equal to 56% of the market price (as determined in the Note) calculated at the time of conversion. The Securities Purchase Agreement and Notes also contain certain representations, warranties, covenants and events of default. The foregoing is only a brief description of the material terms of the Securities Purchase Agreement and Notes, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report on June 4, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On March 4, 2014, the Company entered into Securities Purchase Agreement with Union Capital LLC (“Union”) pursuant to which the Company issued three convertible promissory notes in the aggregate principal amount of $90,000 (the “Notes”), pursuant to which Union funded $30,000 (less discounts and fees). The Notes accrue interest at the rate of 10% per annum; are due and payable 12 months after their date of issuance; and may be converted by Union at any time into shares of Company common stock at a conversion price equal to 56% of the market price (as determined in the Note) calculated at the time of conversion. The Securities Purchase Agreement and Notes also contain certain representations, warranties, covenants and events of default. The foregoing is only a brief description of the material terms of the Securities Purchase Agreement and Notes, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report on June 4, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.35

On May 12, 2014, the Company entered into an Exchange Agreement with Tonaquint, Inc. (“Tonaquint”) pursuant to which the Company exchanged a previously issued warrant for a Convertible Promissory Note in the principal amount of $285,000 (the “Note”). The Note accrues interest at the rate of 8% per annum; is due and payable 17 months after the date of issuance; and may be converted by Tonaquint at any time into shares of Company common stock at a conversion price equal to 90% of the market price (as determined in the Note) calculated at the time of conversion, up to $28,000 per month. The Note Purchase Agreement and Note also contain certain representations, warranties, covenants and events of default. The foregoing is only a brief description of the material terms of the Exchange Agreement and Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report on June 4, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On May 21, 2014, the Company entered into a Common Stock Purchase Agreement with St. George Investments, LLC pursuant to which the Company sold 8,421,053 shares of Company common stock for $160,000. The issuance of the shares was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the shares was an accredited investor.

On May 30, 2014, the Company entered into a Convertible Promissory Note with Blue Citi, LLC (“BC”) in the original principal amount of $50,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable twelve months after the date of issuance; and may be converted by BC at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion or as of May 30, 2014. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On June 10, 2014, LG Capital Funding, LLC (“LG”) funded a Back End Promissory Note with the Company in the principal amount of $25,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable December 10, 2014; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On June 11, 2014, GEL Properties, LLC (“GEL”) funded a Back End Promissory Note with the Company in the principal amount of $25,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable December 10, 2014; and may be converted by GEL at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On June 19, 2014, the Company entered into a Convertible Promissory Note with Adar Bays, LLC (“AB”) in the original principal amount of $50,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by AB at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to --% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The Company also signed a Back End Promissory Note with AB in the amount of $50,000.00 upon the same terms. -- The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On June 23, 2014, the Company entered into a Convertible Promissory Note with KBM Worldwide, Inc. (“KBM”) in the original principal amount of $52,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by KBM at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the three lowest closing bid prices for the previous 10 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On June 24, 2014, the Company entered into a Convertible Promissory Note with LG Capital Funding, LLC (“LG”) in the original principal amount of $36,750.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as an exhibit to our Quarterly Report filed on on August 27, 2014. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On July 18, 2014, the Company entered into a Convertible Promissory Note with Tonaquint, Inc. (“Tonaquint”) in the original principal amount of $115,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable nine months after the date of issuance; and may be converted by Tonaquint at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to $0.105 per share. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On July 28, 2014, the Company entered into a Convertible Promissory Note with Union Capital, LLC (“UC”) in the original principal amount of $40,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable twelve months after the date of issuance; and may be converted by UC at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The Company also signed a Back End Promissory Note with UC in the amount of $40,000.00 upon the same terms. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On July 30, 2014, the Company entered into a Convertible Promissory Note with Toledo Advisors, LLC (“TA”) in the original principal amount of $52,500.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable twelve months after the date of issuance; and may be converted by TA at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The Company also signed a Back End Promissory Note with TA in the amount of $52,500.00 upon the same terms. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On August 12, 2014, the Company entered into a Convertible Promissory Note with LG Capital Funding (“LG”) in the original principal amount of $47,250.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The Company also signed a Back End Promissory Note with LG in the amount of $47,250.00 upon the same terms. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On August 18, 2014, the Company entered into a Convertible Promissory Note with Tonaquint, Inc (“Tonaquint”) in the original principal amount of $115,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable eleventh months after the date of issuance; and may be converted by Tonaquint at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to $0.03 per share. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On August 26, 2014, the Company entered into a Convertible Promissory Note with Tangiers Investment Group, LLC (“TIG”) in the original principal amount of $55,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by TIG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On September 10, 2014, the Company entered into a Convertible Promissory Note with JSJ Investments, Inc. (“JSJ”) in the original principal amount of $100,000.00 (the “Note”). The Note bears interest at the rate of 10% per annum; is due and payable twelve months after the date of issuance; and may be converted by JSJ at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On September 17, 2014, the Company entered into a Convertible Promissory Note with KBM Worldwide, Inc. (“KBM”) in the original principal amount of $53,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable July 19, 2015; and may be converted by KBM at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 50% of the average of the three lowest closing bid prices for the previous 10 days (as determined in the Note) calculated at the time of conversion or as of May 30, 2014. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On September 26, 2014, Vista Capital Investments, LLC (“VCI”) funded an additional $50,000.00 from the Jay 7, 2014 Promissory Note (the “Note”). The Note bears interest at the rate of 12% per annum; is due and payable twenty-four months after the date of funding; and may be converted by VCI at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the average of the lowest closing bid price for the previous 25 days (as determined in the Note) calculated at the time of conversion or as of May 30, 2014. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On October 23, 2014, the Company entered into a Convertible Promissory Note with KBM Worldwide, Inc. (“KBM”) in the original principal amount of $28,000.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable twelve months after the date of issuance; and may be converted by KBM at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the three lowest closing bid prices for the previous 10 days (as determined in the Note) calculated at the time of conversion or as of May 30, 2014. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

On November 6, 2014, LG Capital Funding (“LG”) funded a Back End Promissory Note with the Company in the principal amount of $26,500.00 (the “Note”). The Note bears interest at the rate of 8% per annum; is due and payable May 9, 2015; and may be converted by LG at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 55% of the average of the lowest closing bid prices for the previous 20 days (as determined in the Note) calculated at the time of conversion or as of May 30, 2014. The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On ~~July~~September 1824, 2014, the Company ~~entered~~filed ~~into an Exchange Agreement with Tonaquint, Inc. (“Tonaquint”) pursuant to which the Company exchanged~~ a ~~previously~~certificate ~~issued warrant for a Convertible Promissory Note in the principal amount~~ of ~~$115,000~~amendment (the “~~Note~~Amendment”). ~~The~~to ~~Note accrues interest at~~ the ~~rate of 8% per annum; is due and payable 17 months after the date of issuance; and may be converted by Tonaquint at any time into shares of~~ Company’s ~~common~~Articles ~~stock at a conversion price equal to 90%~~ of ~~the~~Incorporation ~~market~~with ~~price (as determined in~~ the ~~Note)~~Secretary ~~calculated at the time~~ of ~~conversion,~~State ~~up to $28,000 per month. The Note Purchase Agreement and Note also contain certain representations, warranties, covenants and events~~ of ~~default. The foregoing is only a brief description of~~ the ~~material~~State ~~terms~~ of ~~the~~Nevada ~~Exchange Agreement and Note, and does not purport~~ to beincrease ~~a complete description of~~ the ~~rights~~authorized ~~and~~shares ~~obligations~~ of the ~~parties~~Company ~~thereunder~~from ~~and~~500,000,000 ~~such descriptions are qualified in their entirety by reference~~ to the agreements and their exhibits which are filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933850, ~~as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering~~000, ~~and Regulation D promulgated under the Securities Act~~000. The Company’s ~~reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which~~ did not ~~involve~~receive ashareholder ~~public~~approval ~~offering;~~for ~~(b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of~~ the ~~securities~~Amendment. byThe ~~the~~ Company; ~~(d)~~intends ~~the~~to ~~securities~~obtain ~~were~~ratification ~~not~~from ~~broken down into smaller denominations; (e)~~ the ~~negotiations for the issuance of the securities took place directly between the individual and the~~ Company;’s ~~and~~shareholder ~~(f)~~approving ~~the recipient~~ of the ~~Note was an accredited investor~~Amendment.

Subsequent Events: On August 19, 2014, The Digital Development Group Corp., a Nevada corporation (the “Company”), entered into a Securities Purchase Agreement, Convertible Promissory Note and ancillary agreements (the “Financing Documents”) with Tonaquint, Inc., (the “Buyer”).40

Under the terms of the Financing Documents, the Buyer entered into the Convertible Promissory Note in the principal amount of $115,000.00 (the “Note”). The Company is obligated to commence repayment of the Note six (6) months after the date of payment of the Purchase Price (as defined below) in monthly installments in an amount equal to the greater of (i) $19,166.67 plus accrued and unpaid interest and late charges, if any and (ii) the then outstanding principal amount divided by the number of monthly installment dates remaining prior to the Maturity Date. Provided certain equity conditions are met, the Company may repay the monthly installment payments through the issuance of Company common stock (the “Conversion Shares”) at the market price (the “Installment Conversion Price”) which means the lesser of (i) the Buyer Conversion Price (as defined below) and (ii) 60% (the “Conversion Factor”) of the arithmetic average of the three (3) lowest closing bid prices of Company common stock during the twenty (20) consecutive trading day period immediately preceding the date of repayment, provided that if at any time the average of the three (3) lowest closing bid prices of the Company’s common stock immediately preceding the date of repayment is below $0.02, then the then current Conversion Factor shall be reduced to 55% for all future conversions. The entire outstanding balance under the Note is due and payable eleven (11) months after the date of payment of the Purchase Price (the “Maturity Date”). The Company may elect to pay to the buyer the monthly installment payment partly in cash and partly in Conversion Shares, provided that if the Company elects to pay more than half of monthly installment payment in cash, the Company shall pay to the Buyer 125% of the cash portion of such payment. The Note bears interest at the rate of ten percent (10%) per annum, provided that upon the occurrence of an event of default, interest shall accrue on the outstanding balance both before and after judgment at the rate of twenty-two percent (22%) per annum. The Note carries an original issue discount of $11,500.00. In addition, the Company agreed to pay $3,500.00 to the Buyer to cover the Buyer’s legal fees, accounting costs, due diligence, monitoring and other transaction costs, all of which amount is included in the initial principal balance of the Note.

In consideration for the Note, the Buyer paid the Company $100,000.00 (the “Purchase Price”). The Company delivered to the Transfer Agent an irrevocable letter of instructions to provide for the issuance of shares to the Buyer in the event of default and conversion of the Note.

The outstanding balance under the Note may be converted by the Buyer following the date which is six (6) months after the Effective Date into shares of Company common stock at the rate of $0.03 per share (the “Buyer Conversion Price”), subject to adjustment in the event of certain subdivisions or combinations of Company common stock.

The Financing Documents also contains certain representations, warranties, covenants and events of default, and increases in the amount of principal and the interest rate under the Note in the event of such defaults. The foregoing is only a brief description of the material terms of the Financing Documents, and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the agreements and their exhibits which are filed as exhibits to this Current Report.

The securities described above were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended (“Securities Act”), and Rule 506 of Regulation D promulgated thereunder. The offering was made to an “accredited investor” (as defined by Rule 501 under the Securities Act). In addition, the issuance did not involve any public offering; the Company made no solicitation in connection with the sale other than communications with the investor; the Company obtained representations from the investor regarding its investment intent, experience and sophistication; and the investor either received or had access to adequate information about the Company in order to make an informed investment decision.

ITEM 6. EXHIBITS

Exhibit
Exhibit Number		Description
Number		Description
31		Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, for Chief Executive Officer and Chief Financial Officer (1)
32		Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, for Chief Financial Officer and Chief Financial Officer (1)
3.6		Certificate of Amendment to Articles of Incorporation dated December 6, 2013
3.7		Certificate of Amendment to Articles of Incorporation dated September 24, 2014

3641

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE DIGITAL DEVELOPMENT GROUP CORP.
	(Registrant)
Date: August 26, 2014	/s/ Martin W. Greenwald
Date: November 13, 2014	/s/ Martin W. Greenwald
	Martin W. Greenwald
	Martin W. Greenwald Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
	Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

3742

Filing Compare · Digital Development Group Corp