10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Amendment No. 1

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

For the quarterly period ended June 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)

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 14, 2014: 179,524,843 common shares.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Quarterly Report of The Digital Development Group Corp. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2014, filed with the Securities and Exchange Commission on August 27, 2014 (the “Form 10-Q”), is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.  Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

Other than the aforementioned, no other changes have been made to the Form 10-Q.  This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

2

PART II – OTHER INFORMATION

ITEM 6.

EXHIBITS

Exhibit 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)
101**	XBRL (eXtensible Business Reporting Language)

*Previously filed with the SEC as an attachment for the Form 10-Q for the period ended June 30, 2014 on August 27, 2014.

**Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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 28, 2014	/s/ Martin W. Greenwald
	Martin W. Greenwald Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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Assumptions used to determine fair value of options at date of grant (Details)	6 Months Ended
	Jun. 30, 2014
Assumptions used to determine fair value of options at date of grant
Expected volatility (%) minimum	95.00%
Expected volatility (%) maximum	306.00%
Risk free rate minimum	0.27%
Risk free rate maximum	0.38%
Expected term	2-3 years
Dividend yield.	0.00%

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Asher Enterprises Note and Other Notes Payable (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Asher Enterprises Note and Other Notes Payable
Asher purchased a Convertible Promissory Note		$ 183,000
The Company recorded an increase in the principal balance	91,500
The Asher Notes accrues interest at the rate per annum		8.00%
Two additional notes with Asher Enterprises for a total		75,000
Asher Notes converted note into shares of shares of the Company's common stock		10,556,538
Asher converted note into shares of shares of the Company's common stock value		$ 197,750

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OTHER ASSETS (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Other Assets as Follows:
Recorded debt issuance cost as other assets	$ 127,214		$ 127,214
Convertible promissory note payable to Stuart Subotnik	240,000		240,000
Balance of debt issuance costs	63,608		84,810
Amortization expense	$ 21,202	$ 0

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Operating lease (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating lease
Operating expenses for the facility per month	$ 5,935
Rent expense	$ 41,335	$ 34,310

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ACCOUNTS RECEIVABLE FACTORING

6 Months Ended

Jun. 30, 2014

ACCOUNTS RECEIVABLE FACTORING

ACCOUNTS RECEIVABLE FACTORING

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 30, 2014 and December 31, 2013, the Company has payable related to this factoring agreement of $94,533 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.

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Stuart Subotnik Note (Details) (USD $)	Jun. 30, 2014	Sep. 10, 2012
Stuart Subotnik Note:
Convertible note payable to Stuart Subotnik		$ 240,000
Note issued with warrants and exercisable into common stock		800,000
Recorded a discount		118,619
Warrants have a term of years		3
Warrants exercise price		$ 0.30
Embedded conversion feature and additional debt discount		121,381
Note carry an interest rate per annum		8.00%
Conversion price per share		$ 0.30
Volume Weighted Average Pricing of common stock per share	$ 1.00
Additional Notes payabel to Mr.Subotnik	$ 140,000
Minimum accrued interest at rates due by November 2013.	8.00%
Maximum accrued interest at rates due by November 2013.	12.00%

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Coventry Capital, LLC Note (Details) (USD $)	Apr. 02, 2014	Jan. 27, 2014	Dec. 31, 2012
Coventry Capital, LLC Note:
Issued a total of convertible note payable			$ 950,000
Convertible notes carry an interest rate per month			1.00%
Convertible notes interest rate adjustment per year			3.00%
Debt conversion agreement with Cemblance LTD		300,000
Borrowed an additional from Coventry Capital, LLC	50,000
Recognized of interest expense for the amortization of the discount	178,819
Debt conversion agreement agreed to convert debt		$ 150,000
Debt conversion agreement agreed to convert debt shares of Company common stock		4,000,000

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Quick Loan Funding (Details) (USD $)	Jun. 30, 2014
Quick Loan Funding:
Lender paid upon execution	$ 110,000
Total principal sum	400,000
Original issue discount	10.00%
Total amount funded	360,000
Additional funding agreed upon	150,000
Additional funding received	$ 55,000
Conversion price per share as per the right of conversion	$ 0.20
Fixed percentage of the lowest trade price of the Company's common stock in the 25 trading days prior to the date of conversion.	60.00%

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Charlie Sheen Notes Payable (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Charlie Sheen Notes Payable
Prommissory notes payable	$ 150,000
Interest rate	6.00%
Interest payment per month	750
Additional borrowing from Mr.Sheen	390,000
Repayment during the period	$ 2,500

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 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 months ended June 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. All intercompany transactions and balances have been eliminated in consolidation.

Going Concern

The Company has minimal revenue, has incurred losses and has a significant capital deficiency. 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 unaudited condensed consolidated 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 continuation of the Company as a going concern is dependent upon financial support from its stockholders and the ability of the Company to obtain necessary equity financing to continue operations.

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.

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.

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Tonaquint Convertible note (Details) (USD $)	Jun. 30, 2014	Apr. 03, 2013
Tonaquint Convertible note
Under the terms of the Financing Documents, the Buyer entered into the Secured Convertible Promissory Note in the principal amount		$ 340,000
The Note bears interest at the rate per annum		8.00%
Upon the occurrence of an event of default, interest shall accrue on the outstanding balance at the rate per annum		22.00%
The Note carries an original issue discount		30,000
In addition, the Company agreed to pay to the Buyer to cover the Buyer's legal fees, accounting costs		10,000
In consideration for the Note, the Buyer paid the Company	100,000
Issued to the Company two Buyer Deed of Trust Notes in the amount each consisting	100,000
Upon an event of default, the outstanding balance under the Note shall increase to and will be immediately due and payable	135.00%
Obligated to commence repayment of Note issuance date by making monthly installments	28,333
The Company also issued Buyer a warrant to purchase shares of Company common stock	1,400,000
Exercise price per share of common stock	$ 0.20
Tonaquint converted note into shares of shares of the Company's common stock	11,552,446
Tonaquint converted note into shares of shares of the Company's common stock value	$ 84,023

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Summary of stock option activity as follows (Details)	Options	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at Dec. 31, 2013	11,320,000	0.1	5.97	0
Granted	0
Exercised	0
Forfeited or expired	0
Exercisable at Jun. 30, 2014	6,774,167	0.1	6.50	0
Outstanding at Jun. 30, 2014	11,320,000	0.1	5.47	0

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2014	Dec. 31, 2013
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
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	0
Factor payable (note 3)	94,533	84,407
Related party notes payable	0	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
Total liabilities	6,610,112	8,968,784
Accrued contingencies		1,137,708
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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (510,602)	$ (4,277,123)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation & amortization expense	0	46,844
Stock-based compensation	726,040	983,503
Debt discount amortization	1,002,101	481,776
Change in the fair value of derivative liabilities	(2,122,110)	337,870
Changes in operating assets and liabilities:
Other	0	21,202
Prepaid expense	(27,845)	130,631
Accounts payable	(19,438)	67,342
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	0	(12,767)
Purchase of equipment	0	(14,075)
Net cash used in investing activities	0	(26,842)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft	6,037	22,445
Factor payable	10,126	0
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

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Derivative Liability conversion features and the warrants for the period (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Derivative Liability conversion features and the warrants for the period:
Derivative Liability balance, January 1, 2014	$ 4,272,031
Issuance of derivative financial instrument 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

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Assumptions were used to determine the fair value (Tables)

6 Months Ended

Jun. 30, 2014

Assumptions were used to determine the fair value

Assumptions were used to determine the fair value

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

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

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Commitments And Contingencies Consists of the following (Details) (USD $)	Jun. 30, 2014	Jul. 10, 2013	Jun. 16, 2012	Dec. 19, 2011
Commitments And Contingencies Consists of the following:
Issued two convertible promissory notes				$ 280,000
Aggregate principal amount received				118,000
Advance amount agreed				280,000
Accruing interest at the default rate per annum			29.00%
Contingent liability			194,678
Owes an additional plus accrued interest			162,000
Ironridge:
Agreement and Debenture dated November 6, 2012 (the "Financing Documents") with Ironridge Media Co., for the sale of up to	3,000,000
Attorney Fees and costs (Ironridge)	850,000
Additional attorney's fees and costs		110,168
Recorded an accrual under accrued expenses	960,000
Sheen Agreement:
Agreed to pay Charlie Sheen a fee payable in installments	$ 300,000
Options issued to Charlie Sheen	7,000,000
Options vest in equal installments of one million shares every six months aggregate	1,000,000
Exercise price per share (options)	$ 0.10

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Organization Consists of the following (Details)	Dec. 11, 2006
Organization Consists of the following:
Authorized capital stock shares	500,000,000
Capital stock shares par value	0.001

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ORGANIZATION

6 Months Ended

Jun. 30, 2014

ORGANIZATION

ORGANIZATION

1. ORGANIZATION

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.

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CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $)	Jun. 30, 2014	Dec. 31, 2013
Parentheticals
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	500,000,000	500,000,000
Common Stock, shares issued	152,411,771	81,280,441
Common Stock, shares outstanding	152,411,771	81,280,441

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2014

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 11—SUBSEQUENT EVENTS

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.

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

Under the terms of the Financing Documents, the Buyer entered into the Convertible Promissory Note in the principal amount of $115,000 (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.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 14, 2014
Document and Entity Information
Entity Registrant Name	Digital Development Group Corp
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Entity Central Index Key	0001379699
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		179,524,843
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2014

ACCOUNTING POLICIES

Basis of Presentation

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 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 months ended June 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

Principles of Consolidation

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

Going Concern

Going Concern

The Company has minimal revenue, has incurred losses and has a significant capital deficiency. 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 unaudited condensed consolidated 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 continuation of the Company as a going concern is dependent upon financial support from its stockholders and the ability of the Company to obtain necessary equity financing to continue operations.

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

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 Policy

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.

Recent Accounting Pronouncements

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.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Net Revenue	$ 32,328	$ 22,597	$ 58,165	$ 27,353
Operating expenses-
General and administrative	769,397	1,121,886	1,343,089	3,409,817
Total operating expenses	769,397	1,121,886	1,343,089	3,409,817
Operating loss	(737,069)	(1,099,289)	(1,284,924)	(3,382,464)
Other (income) expense:
Interest expense	1,067,928	263,779	1,347,788	556,789
Change in the fair value of derivative liabilities	374,962	(226,191)	(2,122,110)	337,870
Total other (income) expense	1,442,890	37,588	(774,322)	894,659
Net loss	$ (2,179,959)	$ (1,136,877)	$ (510,602)	$ (4,277,123)
Loss per share - basic and dilutive	$ (0.02)	$ (0.02)	$ 0.00	$ (0.07)
Weighted average shares outstanding - basic and dilutive	119,836,790	61,989,216	107,380,719	60,467,025

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ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2014

ACCRUED LIABILITIES

ACCRUED LIABILITIES

6. ACCRUED LIABILITIES

The components of accrued liabilities were as follows:

	June 30, 2014		December 31, 2013
Interest	$	301,055	$	152,350
Payroll		101,603		455,193
Payroll taxes - delinquent		93,584		93,584
Other		25,153		19,618
Total accrued liabilities	$	521,395	$	720,745

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OTHER ASSETS

6 Months Ended

Jun. 30, 2014

OTHER ASSETS

OTHER ASSETS

5. OTHER ASSETS

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.

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A summary of stock option activity is as follows (Tables)

6 Months Ended

Jun. 30, 2014

Summary of stock option activity as follows

A summary of stock option activity is as follows

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	$	-

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ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2014

ACCRUED LIABILITIES

ACCRUED LIABILITIES

The components of accrued liabilities were as follows:

	June 30, 2014		December 31, 2013
Interest	$	301,055	$	152,350
Payroll		101,603		455,193
Payroll taxes - delinquent		93,584		93,584
Other		25,153		19,618
Total accrued liabilities	$	521,395	$	720,745

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2014

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 9 – 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.

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 30, 2014 and December 31, 2013 related to this case, as well as accrued interest on the outstanding balance of $96,000 as of June 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 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 30, 2014 and 2013 amounted to $41,335 and $34,310, respectively.

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NOTES PAYABLE, NET

6 Months Ended

Jun. 30, 2014

NOTES PAYABLE, NET

NOTES PAYABLE, NET

7. NOTES PAYABLE, NET

Convertible notes payable consisted of the following:

	June 30,		December 31,
	2014		2013
Convertible notes payable to Coventry Capital, LLC, net of discount of $42,980, and $0, respectively	$	810,000	$	960,000
Convertible note payable to Stuart Subotnick, net of discount of $99,599 and $132,799,  respectively		280,401		247,201
Convertible notes payable to Asher Enterprises – In default		111,421		183,000
Convertible note payable to Tonaquint, net of discount of $0 and $26,906,  respectively		17,393		81,614
Convertible note payable to Vista Capital Investments, net of discount of $50,000, and $0, respectively		-		-
Convertible notes payable to LG Capital, net of discount of $76,609 and $0,  respectively		20,141		25,000
Convertible notes payable to Union Capital, net of discount of $41,857 and $0, respectively		18,413		25,000
Other notes payable, net of discount of $200,661 and $41,602, respectively		202,959		255,054
Total convertible notes payable, net of discount	$	1,460,728	$	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.

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 Company, entered into a Convertible Promissory Note (the “Convertible Promissory Note”) with QuickLoan Funding, an accredited lender (the “Lender”). Under the terms of the Promissory Note, the Lender paid $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 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 are subject to a 20% original issue discount such that the total amount funded to the Company would be $360,000 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, and all outstanding principal and interest is due and payable by the Company on the maturity date. If the Company repays the Note in full within the first 90 days after the effective date, then the interest rate is zero percent. If the Company does not repay the Note in full within the first 90 days after the effective date, then a one-time interest charge of 12 percent shall be applied to the unpaid principal.

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 $390,000 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”). The Company is obligated to commence repayment of the Note on the 180 ^th 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 Buyer shall receive additional shares of Company common stock if the Market Price on the 23^rd 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. The Note carries an original issue discount of $30,000. In addition, the Company agreed to pay $10,000 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 (i) $100,000, and (ii) issued to the Company two Buyer Deed of Trust Notes in the amount of $100,000 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 rate of $0.20 per share (the “Conversion Price”), subject to adjustment in the event of certain issuances of variable price or unrestricted securities by the Company after the date of the Note. Upon an event of default, the outstanding balance under the Note shall increase to 135% and will be immediately due and payable, and the Buyer may convert the outstanding balance into shares of Company common stock at the lower of the Conversion Price then in effect and the Market Price.

The Company also issued Buyer a warrant to purchase up to 1,400,000 shares of Company common stock at an exercise price of $0.20 per share, subject to adjustment in the event of certain issuances of variable price and unrestricted securities by the Company after the date of the Note. 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 months ended June 30, 2014, Tonaquint converted $84,023 of their notes into 11,552,446 shares of the Company’s common stock.

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 months ended June 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 is in default in 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 months ended June 30, 2014.

During the six months ended June 30, 2014, Asher Notes in the amount of $197,750 in principal and accrued interest, where converted into 10,556,538 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. 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.

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, the Company entered into Convertible Promissory Notes with LG in the original principal amounts of $32,000, $26,500 and $36,750, 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.

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,. 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 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.

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.

Other Convertible Notes Payable

Not including notes described above, the Company has entered into notes with balances as of June 30, 2014 of $202,959, net of discounts and fees. These notes are a mix of non-convertible and convertible notes, with interest rates between 6%-9% and maturity dates between June 30, 2014 and June 24, 2015. The convertible notes are convertible at rates between 55%-60% of the market value of the Company's common stock over a range of preceding dates.

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 months ended June 30, 2014 totaling approximately $54,000. The balance due, including accrued salaries, was settled through the issuance of common stock as discussed in Note 10. No amounts are due at June 30, 2014.

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DERIVATIVE LIABILITY

6 Months Ended

Jun. 30, 2014

DERIVATIVE LIABILITY

DERIVATIVE LIABILITY

NOTE 8 – DERIVATIVE LIABILITIES

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		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

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STOCKHOLDERS' DEFICIT

6 Months Ended

Jun. 30, 2014

STOCKHOLDERS' DEFICIT

STOCKHOLDERS' DEFICIT

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.

In addition, the Company 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.

During 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.

As of June 30, 2014, the Company has notes payable which are convertible into approximately 56 million shares common stock under various convertible note agreements, as well as approximately 10 million 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 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 and have a 5 year term. This Agreement has also been mutually terminated by the Parties.

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%
Risk free rate	0.27%-0.38%
Expected term	2-3 years
Dividend yield	0%

The expected volatility has increased to 306% during the six months ended June 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 30, 2014 was $146,388 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	$	-

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Related Party Note Payable (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Related Party Note Payable
Greenwald has agreed to loan	$ 250,000
Advance funds up to the amount	250,000
Outstanding under loan agreement	$ 54,000	$ 126,160
Accrued Interest Rate Per Annum	3.00%

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Derivative liability activity (Tables)

6 Months Ended

Jun. 30, 2014

Derivative liability activity

Derivative liability activity

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		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

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ACCRUED LIABILITIES (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Components of accrued liabilities
Interest	$ 301,055	$ 152,350
Payroll	101,603	455,193
Payroll taxes - delinquent	93,584	93,584
Other	25,153	19,618
Total accrued liabilities	$ 521,395	$ 720,745

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Subsequent transactions (Details) (USD $)	Aug. 19, 2014	Jul. 18, 2014
Subsequent transactions
Convertible Promissory Note in the principal amount	$ 115,000	$ 115,000
Note bears interest at the rate	8.00%	8.00%
Note carries an original issue discount	11,500
Company agreed to pay to the Buyer to cover the Buyer's legal fees	3,500
In consideration for the Note, the Buyer paid the Company	$ 100,000

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (USD $)	Common Stock Shares	Common Stock Amount USD ($)	Common Stock Subscribed USD ($)	Additional Paid-In Capital USD ($)	Accumulated Deficit USD ($)	Total Stockholders' Deficit. USD ($)
Balance at Dec. 31, 2013	81,280,441	81,280	45,000	3,369,583	(12,156,179)	(8,660,316)
Common stock issued for conversion of debt	40,279,774	40,280	0	558,629	0	598,909
Cancellation of derivative liabilities upon debt conversion		$ 0	$ 0	$ 869,753	$ 0	$ 869,753
Stock-based compensation - options		0	0	146,388	0	146,388
Common stock issued to Chief Executive Officer	20,095,000	20,095	0	584,323	0	604,418
Common stock issued for cash	56,556	57	0	1,943	0	2,000
Common stock issued for services	10,700,000	10,700	0	402,478	0	413,178
Common stock subscribed		0	235,000	0	0	235,000
Net loss		$ 0	$ 0	$ 0	$ (510,602)	$ (510,602)
Balance at Jun. 30, 2014	152,411,771	152,412	280,000	5,933,097	(12,666,781)	(6,301,272)

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PREPAID EXPENSES

6 Months Ended

Jun. 30, 2014

PREPAID EXPENSES

PREPAID EXPENSES

4. PREPAID EXPENSES

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 on a per-used basis. In the event management believes the Company will not recover the royalties advanced, such amounts are charged to expense.

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NOTES PAYABLE, NET (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Notes payable consisted of the following
Convertible notes payable to Coventry Capital, LLC, net of discount	$ 810,000	$ 960,000
Convertible note payable to Stuart Subotnik, net of discount	280,401	247,201
Convertible notes payable to Asher Enterprises - In default	111,421	183,000
Convertible note payable to Tonaquint, net of discount	17,393	81,614
Convertible note payable to Vista Capital Investments, net of discount	0	0
Convertible notes payable to LG Capital, net of discount	20,141	25,000
Convertible notes payable to Union Capital, net of discount	18,413	25,000
Other notes payable, net of discount	202,959	255,054
Total convertible notes payable, net of discount	1,460,728	1,776,869
Total notes payable, net of discount	$ 510,000	$ 510,000

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CAPITAL STOCK TRANSACTIONS (Details) (USD $)	Jun. 30, 2014
CAPITAL STOCK TRANSACTIONS
Common shares for services provided	10,700,000
Common shares for services provided valued	$ 413,178
Common shares issued	20,095,000
Common shares issued valued for unpaid salary	604,418
Shares issued valued for advances totaling	455,193
Additional compensation to Chief Executive Officer totaling	149,445
Stock based compensation	56,556
Common shares for cash valued	2,000
Common shares upon conversion of notes payable	40,279,774
Common shares upon conversion of notes payable valued	598,909
Stock options previously granted	146,388
Unrecognized compensation cost related to unvested stock options	$ 303,200

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NOTES PAYABLE (Tables)

6 Months Ended

Jun. 30, 2014

NOTES PAYABLE

NOTES PAYABLE

Convertible notes payable consisted of the following:

	June 30,		December 31,
	2014		2013
Convertible notes payable to Coventry Capital, LLC, net of discount of $42,980, and $0, respectively	$	810,000	$	960,000
Convertible note payable to Stuart Subotnick, net of discount of $99,599 and $132,799,  respectively		280,401		247,201
Convertible notes payable to Asher Enterprises – In default		111,421		183,000
Convertible note payable to Tonaquint, net of discount of $0 and $26,906,  respectively		17,393		81,614
Convertible note payable to Vista Capital Investments, net of discount of $50,000, and $0, respectively		-		-
Convertible notes payable to LG Capital, net of discount of $76,609 and $0,  respectively		20,141		25,000
Convertible notes payable to Union Capital, net of discount of $41,857 and $0, respectively		18,413		25,000
Other notes payable, net of discount of $200,661 and $41,602, respectively		202,959		255,054
Total convertible notes payable, net of discount	$	1,460,728	$	1,776,869
Note payable consists of the following -Note payable to Charlie Sheen	$	510,000	$	510,000