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EX-31.1 - CERTIFICATION - Digital Development Partners, Inc.dgdm_ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the quarterly period ended September 30, 2012

o Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the transition period from __________ to __________

Commission File Number: 000-52828

DIGITAL DEVELOPMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)

NEVADA    98-0521119
(State or other jurisdiction of incorporation or organization)
 
                              (I.R.S. Employer Identification No.)

17800 Castleton St., Suite 300
City of Industry, CA  91748
 (Address of principal executive offices, including Zip Code)

(626) 581-3335
(Issuer’s telephone number, including area code)

 (Former name or former address if changed since last report)
 
Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act 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 þ    No o

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  þ No  o

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 the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   o Accelerated filer o
       
Non-accelerated filer o Smaller reporting company þ
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso No þ
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 86,402,665 shares of common stock as of November 2, 2012.
 


 
 

 

Balance Sheet
as of
 
             
   
September 30,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
       
ASSETS
           
Current Assets
           
Cash
  $ 15,776     $ 49,831  
                 
Total Assets
  $ 15,776     $ 49,831  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current Liabilities
               
Accounts Payable
  $ 48,049     $ 42,772  
                 
Long Term Liabilities
               
Loan Payable (Note 5)
    320,000       300,000  
                 
Total Liabilities
    368,049     $ 342,772  
Stockholders' Deficit                
Common Stock, $0.001 par value; authorized 225,000,000 shares; issued and outstanding 86,402,665 shares as at December 31, 2011, 86,402,665 shares as at  September 30, 2012     86,403       86,403  
 Additional Paid-In Capital                             8,281,164       8,281,164  
                 
  Deficit
    (8,719,840 )     (8,660,508 )
                 
Total Stockholders' Deficit
    (352,273 )     (292,941 )
                 
Total Liabilites and Stockholders' Deficit
  $ 15,776     $ 49,831  

 
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DIGITAL DEVELOPMENT PARTNERS, INC.
 
Statement of Operations
 
(Unaudited)
 
 
   
For the
   
For the
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Revenue
  $ -     $ 195,002       -       1,116,887  
                                 
Cost of Sales
    -       180,000       -       1,033,990  
                                 
Operating Income
    -       15,002       -       82,897  
                                 
General and Administrative Expenses:
                               
Advertising
    -       -       -       61,235  
Consulting
    -       7,500       -       56,250  
Professional Fees
    7,398       10,805       12,710       27,271  
Transfer Fees
    -       -       -       402  
Project Related Costs
    -       -       -       -  
Other Administrative Expenses
    12,811       10,570       35,364       45,447  
Total General and
                               
Administrative Expenses
    20,209       28,875       48,074       190,605  
                                 
Net Loss from Operations
    (20,209 )     (13,873 )     (48,074 )     (107,708 )
                                 
Other Income and Expense
                               
Interest Income
    1       -       5       -  
Interest Expense
    (3,885 )     (3,751 )     (11,263 )     (12,023 )
      (3,884 )     (3,751 )     (11,258 )     (12,023 )
                                 
Net Loss
  $ (24,093 )   $ (17,624 )     (59,332 )     (119,731 )
                                 
Loss Per Common Share:
                               
Basic and Diluted
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Weighted Average Shares Outstanding,
                         
Basic and Diluted:
    86,402,665       86,402,665       86,402,665       86,402,665  
 
 
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DIGITAL DEVELOPMENT PARTNERS, INC.
 Statement of Cash Flows
 (Unaudited)
 
   
For the
 
   
Nine Months Ended
 
   
September 30,
 
   
2012
   
2011
 
Cash flows from operating activities:
           
Net loss   $ (59,332 )   $ (119,731 )
Adjustments to reconcile     net loss to net cash used by operating activities:                
Change in operating assets and liabilities:                
      -       -  
Accounts payable, accrued liabilities
    5,277       15,682  
Deposits
    -       252,447  
Net cash provided (used) by operating  activities
    (54,055 )     148,398  
                 
                 
                 
Cash flows from financing activities:
               
Proceeds of loan     20,000       -  
Repayment of loans     -       (319,666 )
Proceeds of loan receivable     -       33,000  
Loan to related Party     -       (15,000 )
Net cash provided (used) by financing activities     20,000       (301,666 )
Non cash impairment of Goodwill     -       5,000  
Net increase (decrease) in cash
    (34,055 )     (148,268 )
Cash, beginning of the period
    49,831       196,676  
Cash, end of the period
  $ 15,776     $ 48,408  
Supplemental cash flow disclosure:
               
 Interest paid
  $ -     $ -  
 Taxes paid
  $ -     $ -  
 
 
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DIGITAL DEVELOPMENT PARTNERS INC.
 
NOTES TO FINANCIAL STATEMENTS
 
SEPTEMBER 30, 2012
 
(Unaudited)
 
1.
Basis of Presentation and Nature of Operations
 
These unaudited interim financial statements as of and for the nine months ended September 30, 2012 reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
 
These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end December 31, 2011 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine month period ended September 30, 2012 are not necessarily indicative of results for the entire year ending December 31, 2012.

Organization
 
The company was incorporated as Cyprium Resources, Inc. under the laws of the State of Nevada December 22, 2006.  The Company was originally formed for mineral exploration in the United States.  On May 19, 2009 the Company’s name was changed to Digital Development Partners, Inc.
 
Current Business of the Corporation
 
In January, 2007 the Company entered into a 20 year lease agreement with the owner of 10 mining claims situated in Utah, known as the King claims.  The lease was maintained current through September 30, 2008, however mining activities were limited.  The lease was terminated by mutual agreement in November 2008.
 
In a move to further the Company’s plans to market an on-line coupon system to merchants, the Company gained control of two private companies in 2009 involved in related enterprises; 4gDeals Inc. (later Yu Deal Inc.), and Top Floor Studio. These companies began to work together on the project.
 
 
 
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A reassessment of the Company’s direction resulted in a reorganization plan on February 17, 2010 which included:
 
1. Acquisition of a new line of technology through the acquisition of the worldwide distribution and servicing rights to a cell phone enterprise based in Hong Kong;
 
2. Change in management;
 
3. Sale of the Company’s option on Top Floor Studio;
 
4. Distribution of the Company’s shares in YuDeal, Inc. to the stockholders.
 
Pursuant to the plan, the Company’s interests in Top Floor Studio and YuDeal Inc. were disposed of in February, 2010.  The Company’s option on Top Floor was sold to YuDeal, Inc. for YuDeal common stock, which in turn was traded for 20,095,000 shares of Company stock.  These shares were returned to Treasury and cancelled.  A residual of YuDeal stock was distributed to Company stockholders in March and April, 2010.
 
 
In conjunction with the reorganization the management team of the Company resigned. The Company’s president, Isaac Roberts, was replaced by Jack Jie Quin, president of EFT Holdings Inc. f/k/a EFT Biotech Holdings, Inc. (“EFT”).
 
On February 17, 2010 an agreement was signed with the cell phone company, EFT ., which trades on the OTC Pink Sheets under the ticker symbol “EFTB”, and markets its “EFT-Phone” through direct marketing in China from Hong Kong.  EFT’s distribution and servicing rights were acquired by the Company in the agreement through the exchange of 79,265,000 shares of the Company’s common stock.
 
EFT thereby became the majority stockholder of Digital Development Partners Inc.  EFT placed orders for the EFT-Phone for its Chinese market through the fiscal year ended March, 2012.  There have been no new orders in the current fiscal year.  EFT has advised the company that due to a significant drop in demand for the EFT phone, no new orders will be placed and until sales increase.  The Company is investigating other sources of revenue.
 
2.  
Summary of Significant Accounting Policies
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period.  Actual results could differ materially from those estimates. Significant estimates made by management are, among others, reliability of long-lived assets and deferred taxes.
 
Cash and equivalents
 
Cash and equivalents include investments with initial maturities of six months or less.
 
 
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Fair Value of Financial Instruments
 
The Financial Accounting Standards Board issued ASC No. 820, “Fair Value Measurements and Disclosures.” ASC No. 820 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value.  The carrying amounts of the Company’s financial instruments as of September 30, 2011 approximate their respective fair values because of the short-term nature of these instruments.  Such instruments consist of cash, accounts payable and accrued expenses.  The fair value of related party payables is not determinable.
 
Income Taxes
 
The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
 
The Company generated a deferred tax credit through net operating loss carry-forward.  However, a valuation allowance of 100% has been established.
 
Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.
 
Recent Accounting Pronouncements
 
In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.
 
The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.
 
 
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Basic and Diluted Net Loss Per Share
 
Net loss per share is calculated in accordance with ASC 260, Earnings Per Share, for the period presented.  Basic net loss per share is based upon the weighted average number of common shares outstanding.  Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised.  Dilution is computed by applying the treasury stock method.  Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
As of September 30, 2012 the Company has potentially dilutive securities in outstanding warrants.  Since the Company is in a loss position the warrants are anti-dilutive and not considered in the calculation.
 
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the nine months ended September 30, 2012 and 2011:
 
    2012     2011  
Numerator:            
             
Basic and diluted net loss per share:            
Net Loss     $ (59,332   $ (119,731 )
                 
Denominator                
                 
Basic and diluted weighted average number of shares outstanding      86,402,665       86,402,665  
                 
Basic and Diluted Net Loss Per Share   $ (0.00 )      $ (0.00 )
 
3.  
Loans Payable
 
    September 30, 2012     December 31,2011  
             
Loan Payable – EFT         $ 320,000     $ 300,000  
 
 
A promissory note for $500,000 was issued May 13, 2010 to EFT   A series of advances was received from EFT during the fiscal year ended December 31, 2011 totaling $300,000. The note bears annual interest of 5%, requires no monthly payments, and matured November 13, 2010. The note was extended indefinitely. The note was paid down to $300,000 in January, 2011. A further $20,000 was advanced August 17, 2012, increasing the loan balance to 320,000.
 
 
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4. 
Income Taxes
 
 
No provision was made for federal income tax, since the Company had an operating loss. The Company has accumulated net operating loss carry-forwards of approximately $8,799,000, which may be used to reduce taxable income through the year 2025, unless utilized beforehand. The net operating losses generated a deferred tax credit of $2,639,700, however a 100% valuation allowance has been recorded since it is more likely than not that some or all of the deferred tax credit will not be realized.
 
5.  
Capital Stock
 
 
No stock was issued in the nine months ended September 30, 2012.
 
As at September 30, 2012, the Company was authorized to issue 225,000,000 common shares, of which 86,402,665 shares were issued and outstanding.
 
 
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
The Company was incorporated in December 2006.

In January 2007 the Company leased ten mining claims from an unrelated third party.  These claims were located in Piute County, Utah.  The mining lease was for a twenty-year term and required the Company to pay a royalty to the lessor equal to 2.5% of the net smelter returns from the sale of any minerals extracted from the claims.  Minimum royalty payments of $4,500 were also required each year during the term of the lease.

On November 1, 2008 the mining lease was terminated by the mutual agreement of the Company and the lessor.

Between November 2008 and August 2009 the Company was inactive.

On August 3, 2009 the Company acquired all of the outstanding shares of 4gDeals for 15,495,000 shares of the Company’s common stock.

On December 18, 2009 4gDeal’s articles of incorporation were amended to change the name of 4gDeals to YuDeal.

In February 2010 the Company determined that its existing capital structure would impair its ability to raise the capital required to further the development of YuDeal’s network.  Accordingly, the Company adopted a reorganization plan which:

  
involved the distribution of its shares in YuDeal to the Company’s shareholders; and
  
the acquisition of new line of technology which has the prospect of being the core of a commercially viable business.

Consistent with its reorganization plan, on February 18, 2010 the Company’s directors approved an agreement between the Company and EFT Biotech Holdings, Inc., now named EFT Holdings, Inc., (“EFT”), whereby EFT agreed to assign its worldwide distribution and servicing rights to a product known as the “EFT-Phone” in exchange for 79,265,000 shares of the Company’s common stock.

EFT markets its products through a direct sales organization.  Once a customer of EFT’s makes a minimum purchase of $600 (plus $60 for shipping and handling fees), the customer becomes an “affiliate”.  As of September 30, 2012, EFT had approximately 1,246,000 affiliates, a majority of which are located in China and Hong Kong.

The EFT-Phone is a cell phone which uses the Android Operating System.  The phone is manufactured by an unrelated third party.  The EFT-Phone has an application that allows EFT’s affiliate base to access all of their back office sites including their Funds Management Account where the affiliate is able to deposit, withdraw and transfer money to another EFT account or to another EFT Affiliate at no cost for the transfer.  The EFT-Phone has educational applications and PowerPoint presentation capability for training new affiliates anywhere in the world.
 
 
10

 
 
The worldwide distribution and servicing rights to the EFT-Phone include the right to sell the EFT-Phone to EFT’s affiliates and others.  Servicing includes the collection of service fees for all EFT-Phones worldwide, including monthly fees, usage fees, as well as call forwarding, call waiting, text messaging and video fees.  The Company also acquired the rights to distribute all EFT-Phone accessories.

The Company has not received any orders for the EFT phone during the nine months ended September 30, 2012.   The Company has been advised by EFT that due to a significant drop in demand for the EFT phone, EFT has not placed any new orders with the Company.  It is the Company’s understanding that EFT has inventory previously purchased from the Company and until sales increase, EFT will not be placing any new orders from the Company.  The Company is very concerned regarding this news and is investigating other sources of revenue to mitigate the significant drop in revenue.

Other than the foregoing, the Company does not know of any trends, events or uncertainties that will have, or are reasonably expected to have, a material impact on sales, revenues, expenses or results of operations.

The Company does not have any firm commitments from any person to provide the Company with any additional capital.

See Note 2 to the financial statements included as part of this report for a description of the Company’s accounting policies.

ITEM 4.  CONTROLS AND PROCEDURES.
 
(a)           The Company maintains a system of controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (“1934 Act”), is recorded, processed, summarized and reported, within time periods specified in the SEC's rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act, is accumulated and communicated to the Company’s management, including its Principal Executive and Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  As of September 30, 2012, the Company’s Principal Executive and Financial Officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based on that evaluation, the Principal Executive and Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

(b)           Changes in Internal Controls.  There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2012, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
 
 
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PART II
ITEM 6.  EXHIBITS

Exhibits

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

 
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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.
 
 
  DIGITAL DEVELOPMENT PARTNERS, INC.  
       
Date : November 9, 2012    
By:
/s/ Jack Jie Qin  
    Jack Jie Qin, Principal Executive Officer  
       
 
By:
/s/ William E. Sluss  
    William E. Sluss, Principal Financial and Accounting Officer  

 
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