Catagories - where stored?

Where in the Dolphin code are the catagories stored? I need to do a mass edit without going through admin 1 by 1...

They are in the database. In the table sys_categories

Are there any options or add-ons to be able to use sub-categories?  (did a search and didn't find)

RRWD

Not that i am aware of.

Some of Modzzz modules are using sub-categories (not all).

If you're lucky he has a module with sub categories for the type that you're interested in.