Business Context and Reporting Period
This Form 8-K Current Report was filed by Dolphin Digital Media, Inc. (also referenced as Dolphin Entertainment, Inc.) on February 24, 2011. The report discloses a change in the registrant's certifying accountant effective February 23, 2011.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity for the current period. However, it references historical financial conditions noted in prior audit reports.
- Going Concern Status: Audit reports for the years ended December 31, 2009, and 2008 contained an explanatory paragraph noting substantial doubt regarding the Company's ability to continue as a going concern.
- Cause of Doubt: The doubt was attributed to a deficit in working capital and the incurrence of significant losses.
- Audit Opinion: The prior reports did not contain an adverse opinion or disclaimer, nor were they qualified regarding uncertainty, audit scope, or accounting principles, aside from the going concern note.
Material Changes
The primary material change reported is the resignation of the previous independent registered public accounting firm, Jewett, Schwartz, Wolfe & Associates ("JSW"), and the engagement of a new firm, RBSM LLP.
- Resignation: JSW resigned on February 23, 2011, because its audit practice was acquired by RBSM LLP.
- Engagement: RBSM LLP was engaged on February 24, 2011, to serve as the independent registered public accounting firm for the fiscal year ended December 31, 2010.
- Disagreements: The Company reported no disagreements with JSW regarding accounting principles, practices, or auditing scope during the relevant periods. No reportable events occurred.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future operations, or specific risk factors beyond the historical context of the going concern warning.
- Contingencies: The Company confirmed no consultations with the new auditor (RBSM) regarding accounting principles or potential audit opinions prior to engagement.
- Unusual Items: The change in auditors was driven by an acquisition of the previous firm's practice rather than a dispute or financial irregularity.
Investor Verification Checklist
- Verify the status of the Company's working capital deficit and ongoing losses to assess the current "going concern" risk.
- Review the attached letter from Jewett, Schwartz, Wolfe & Associates (Exhibit 16.1) for any additional context on the resignation.
- Confirm the appointment of RBSM LLP for the fiscal year ending December 31, 2010, and monitor future filings for the initial audit opinion.
- Check for any subsequent filings regarding the resolution of the substantial doubt on the Company's ability to continue operations.