The Company has entered
into a ten year licensing agreement between Dolphin Entertainment Inc. and Dolphin Digital Media Inc. Under the license, the Company
is authorized to use Dolphin Entertainments brand properties in connection with the creation, promotion and operation of
subscription based Internet social networking websites for children and young adults. The license requires that the Company pays
to Dolphin Entertainment, Inc. royalties at the rate of fifteen percent of net sales from performance of the licensed activities.
The Company did not use any brand properties during the years ended December 31, 2011 and 2010 and as such
did not record any royalty expense for the years then ended.