<PAGE>

                                   FORM 10-QSB
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                   For the quarterly period ended June 30,2002
                                                  -------------

                                       OR

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

        For the transition period from _______________ to _______________

                         Commission file number 0-21384

                        Digital Descriptor Systems, Inc.
                  --------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                            23-2770048
-------------------------------                          ----------------------
(State or other jurisdiction of                           (I.R.S. employer
incorporation or organization)                           identification number)

                  446 Lincoln Highway, Fairless Hills, PA 19030
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's Telephone number, including area code: (267) 580-1075
                                                           --------------


  ----------------------------------------------------------------------------
  (former, name, address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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

State the number of shares  outstanding of each of the  Registrant's  classes of
common stock, as of the latest practicable date.

                                                            Outstanding at
                  Class of Common Stock                     August 13, 2002
                  ---------------------                    -------------------
                     $.001 par value                        58,156,490 shares

        Transitional Small Business Disclosure Format Yes ____ No __X__





<PAGE>


                                   FORM 10-QSB
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                        DIGITAL DESCRIPTOR SYSTEMS, INC.

                                      Index

PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Balance Sheets at June 30, 2002 (unaudited) and
                  December 31, 2001

                  Statements of Operations for the three and six months ended
                  June 30, 2002 and 2001 (Unaudited)

                  Statements of Cash Flows for the six months ended
                  June 30, 2002 and 2001 (Unaudited)

                  Notes to Financial Statements (Unaudited)

         Item 2.  Management's Discussion and Analysis of Financial Condition
                     and Results of Operations.


PART II. - OTHER INFORMATION

         Item 1.  Legal Proceedings

         Item 2.  Changes in Securities and Use of Proceeds

         Item 3.  Defaults Upon Senior Securities:

         Item 4.  Submission of Matters of a Vote to Security Holders

         Item 5.  Other Information

         Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES




                                      -2-
<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                    June 30             December 31
                                                                      2002                 2001
                                                                   ----------           ----------
                                                                  (Unaudited)
Assets
Current assets:
<S>                                                                <C>                  <C>
   Cash                                                            $   42,542           $  435,662
   Restricted cash                                                      1,044                5,969
   Investments                                                           --                   --
   Accounts receivable, less allowance for uncollectible
      account of $65,436 (unaudited) and $87,930 in
      2002 and 2001, respectively                                      10,487              107,948
   Inventory                                                           22,826                5,665
   Prepaid expenses                                                   346,620              267,534
   Advance - employees                                                110,066                 --
   Debt discount and deferred financing costs                         360,751              807,014
                                                                   ----------           ----------
Total current assets                                                  894,336            1,629,792

  Note receivable - Former officer, less allowance
      for uncollectible notes of $160,722 and $177,400
      in 2002 and 2001, respectively                                     --                   --
   Furniture and equipment, net                                        18,875               37,090
   Deposits and other assets                                           24,395               24,395
                                                                   ----------           ----------
Total assets                                                       $  937,606           $1,691,277
                                                                   ==========           ==========

Liabilities and Shareholders' Deficiency
Current liabilities:
   Accounts payable                                                $  337,735           $  418,764
   Accrued expenses                                                   157,463              175,742
   Accrued payroll and related withholdings                           173,929                 --
   Deferred income                                                    818,672              854,618
   Current portion of equipment loan                                    7,233                7,211
   Convertible debentures                                           1,006,731              965,000
                                                                   ----------           ----------
Total current liabilities                                           2,501,763            2,421,335

   Equipment Loan, net of current portion                              16,447               20,066
                                                                   ----------           ----------
Total liabilities                                                  $2,518,210           $2,441,401
                                                                   ==========           ==========
</TABLE>



                                      -3-

<PAGE>


                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                           BALANCE SHEETS (continued)

<TABLE>
<CAPTION>

                                                                                 June 30,                 December 31
                                                                                   2002                      2001
                                                                               ------------              ------------
                                                                                (Unaudited)
<S>                                                                             <C>                      <C>
Shareholders' equity (deficiency):
  Preferred Stock, $.01 par value, authorized shares -
    1,000,000; issued and  outstanding - none
  Common Stock, $.001 par value, authorized shares -
    150,000,000; issued and outstanding shares -
    58,156,490 (unaudited) and 48,045,612 at June 30, 2002
    and December 31, 2001, respectively                                              58,156                    48,045
  Additional paid-in capital                                                     16,782,748                16,726,819
  Accumulated deficit                                                           (18,421,508)              (17,524,988)
                                                                               ------------              ------------
Total shareholder's equity (deficiency)                                          (1,580,604)                 (750,124)
                                                                               ============              ============
Total liabilities and shareholders' equity (deficiency)                        $    937,606              $  1,691,277
                                                                               ============              ============

</TABLE>



























   The accompanying notes are an integral part of these financial statements.


                                      -4-

<PAGE>


                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                Three Months Ended                      Six Months Ended
                                                     June 30                                  June 30
                                            2002                 2001                 2002                  2001
                                        ------------         ------------         ------------         ------------
Revenues:
<S>                                     <C>                  <C>                  <C>                  <C>
   Software                             $     13,350         $    180,997         $     52,941         $    341,311
   Hardware                                   14,858               42,599               27,962               48,574
   Maintenance                               157,415              138,194              314,590              268,918
   Consulting                                   --                 34,500                 --                 34,500
   Other                                       4,373               18,920               18,665               31,955
                                        ------------         ------------         ------------         ------------
                                             189,996              415,210              414,158              725,258

Costs and expenses:
   Cost of revenues                           13,688              140,774               82,013              269,788
   General and administrative                239,265              580,014              510,565              917,244
   Sales and marketing                        33,392               70,951               57,238              306,561
   Research and development                   74,582               62,712              151,375              140,094
   Depreciation and amortization               8,304               70,173               18,214              120,666
   Interest and amortization of
      deferred debt costs                    255,805              231,809              515,569              288,934
   Other (income) expense, net                (3,353)              (7,945)             (24,296)             (14,391)
                                        ------------         ------------         ------------         ------------
                                             621,683            1,148,488            1,310,678            2,028,896
                                        ------------         ------------         ------------         ------------
         Net loss                       $   (431,687)        $   (733,278)        $   (896,520)        $ (1,303,638)
                                        ============         ============         ============         ============
Net loss per common share
   (basic and diluted)                  $      (0.01)        $      (0.03)        $      (0.02)        $      (0.06)
                                        ============         ============         ============         ============

Weighted average number of
   common shares outstanding
   (basic and diluted)                    56,724,007           21,279,612           53,844,741           21,174,779
                                        ============         ============         ============         ============


</TABLE>




    The accompanying notes are an integral part of these financial statements


                                      -5-

<PAGE>


                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                               Six Months Ended
                                                                   June 30
                                                              2002           2001
                                                          -----------    -----------
Cash flows from operating activities:
<S>                                                       <C>            <C>
Net loss                                                  $  (896,520)   $(1,303,638)
Adjustments to reconcile net loss to net cash
   used in operating activities:
      Depreciation and amortization                            18,215        120,666
      Compensation expense in connection with issuance         14,400        186,530
          of  common stock
     Amortization of debt discount                            456,513        284,259
   Changes in operating assets and liabilities:
      Accounts receivable                                      97,462         (4,627)
      Inventory                                               (17,161)       (20,301)
      Prepaid expenses, deposits and other assets             (79,086)      (169,736)
      Advances - employees                                   (110,066)          --
      Accounts payable                                        (81,029)       101,530
      Accrued expenses                                             92       (142,741)
      Accrued payroll and related withholdings                173,929           --
      Deferred income                                         (35,946)       587,945
                                                          -----------    -----------
Net cash used in operating activities                        (459,197)      (360,113)
                                                          -----------    -----------

Cash flows from investing activities:
   Purchase of furniture and equipment                           --           (3,496)
   Increase in officer note receivable                           --           (5,937)
   Decrease in restricted cash                                  4,925           --
                                                          -----------    -----------
Net cash provided by (used in) investing activities             4,925         (9,433)

Cash flows from financing activities:
   Proceeds from issuance of convertible debentures            75,000        355,000
   Deferred financing costs                                   (10,250)       (31,000)
   Repayment of equipment loan                                 (3,597)        (3,565)
                                                          -----------    -----------
Net cash provided by financing activities                      61,153        320,435
                                                          -----------    -----------
Net (decrease) increase in cash                              (393,119)       (49,111)

Cash at beginning of period                                   435,661        202,877
                                                          -----------    -----------
Cash at end of period                                     $    42,542    $   153,766
                                                          ===========    ===========

</TABLE>



                                      -6-
<PAGE>


<TABLE>
<CAPTION>

Supplemental disclosure of cash flow information:
<S>                                                                       <C>          <C>
  Cash paid during the year for:
     Interest                                                             $    1,937   $   4,675
                                                                          ==========   =========
     Income Tax                                                           $     --     $    --
                                                                          ==========   =========

Supplemental disclosure of non-cash investing and
     Financial activities:

     Conversion of 33,269 of debentures and 18,371
         Of accrued interest into common stock                            $   51,640   $    --
                                                                          ==========   =========

</TABLE>

































The accompanying notes are an integral part of these financial statements




                                      -7-


<PAGE>


                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)
                                  June 30, 2002

1.  BUSINESS

Digital Descriptor Systems, Inc. incorporated in Delaware in 1994, develops,
assembles and markets computer installations consisting of hardware and
software, which capture video and scanned images, link the digitized images to
text and store the images and text on a computer database and transmit this
information to remote locations. The principal product of the Company is the
Compu-Capture Law Enforcement Program, which is marketed to law enforcement
agencies and jail facilities and generated the majority of the Company's
revenues during the quarters ended June 2002 and 2001. Substantially all of the
Company's revenues are derived principally from U.S. government agencies.

2.  BASIS OF PRESENTATION

The financial statements and disclosures included herein for the three and six
months ended June 30, 2002 and 2001 are unaudited. These financial statements
and disclosures have been prepared by the Company in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of adjustments of a normal and
recurring nature) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended June 30,
2002 and 2001 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2002.

3.  ACCOUNTING POLICIES

Use of Estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Revenue Recognition

The Company derives revenue from the sale of hardware, software, post customer
support (PCS), and other related services. PCS includes telephone support, bug
fixes, and rights to upgrades on a when-and-if-available basis. Other related
services include basic consulting and training. Included with the hardware is
software that is not considered to be incidental. Revenue from transactions with
customers where the software component is not considered to be incidental is
allocated between the hardware and software components based on the relative
fair value of the respective components.

The Company also derives revenue from the sale of software without a related
hardware component. Revenue allocable to software components is further
allocated to the individual deliverable elements of the software portion of the
arrangement such as PCS and other services. In arrangements that include rights
to PCS for the software and/or other services, the software component
arrangement fee is allocated among each deliverable based on the relative fair
value of each of the deliverables determined using vendor-specific objective
evidence, which has been established by the separate sales of these
deliverables.

                                      -8-

<PAGE>

The Company recognizes the revenue allocable to hardware and software licenses
upon delivery of the product to the end-user, unless the fee is not fixed or
determinable or collectibility is not probable. If collectibility is not
considered probable, revenue is recognized when the fee is collected. Revenue
allocable to PCS is recognized on a straight-line basis over the period the PCS
is provided. Revenue allocable to other services is recognized as the services
are provided.

Software Development Costs

The Company capitalizes software development costs after technological
feasibility of the software is established and through the product's
availability for general release to the Company's customers. Technological
feasibility of the Company's software development costs is determined when the
planning, designing, coding, and testing activities are completed, and the
Company has established that the product can be produced to meet its design
specifications. All costs incurred in the research and development of new
software products and costs incurred prior to the establishment of technological
feasibility are expensed as incurred. During 1999, $413,604 was capitalized as
software development costs in connection with the Company's new product entitled
Compu-Scan, a computerized inkless fingerprint device. The Company awarded a
contract to Titan Systems Corporation's DBA division for technical assistance in
achieving final compliance with the FBI certification process. During December
2001, DDSI revised its anticipated certification date for its Compu-Scan product
indefinitely after its submission was not accepted by the FBI. Additionally,
there are no assurances that the FBI will ever certify the technology. As such,
and since DDSI is unable to forecast any revenues from the product, DDSI wrote
off the investment in Software Development of $413,604 in the fourth quarter of
2001.

Net Loss Per Common Share

Basic loss per share is calculated by dividing the net loss by the weighted
average common shares outstanding for the period. Diluted loss per share is
calculated by dividing the net loss by the weighted average common shares
outstanding of the period plus the dilutive effect of common stock equivalents.
No exercise of common stock equivalents were assumed during any period because
the assumed exercise of these securities would be antidilutive.

4.  CONVERTIBLE DEBENTURES

During March 2001, the Company issued $200,000 of convertible debentures to two
investors. These debentures matured on March 4, 2002; however, the parties have
entered into an agreement to extend the maturity date for another year, and
accrue interest at 12% per annum. The holder has the right to convert the
debentures to common shares at any time through maturity at the conversion price
as described in the note agreement. The debenture holders received warrants to
purchase 200,000 common shares at an exercise price the lesser of: $0.036 per
share or the average of the lowest three trading prices during the 20 days
preceding the exercise date. Such warrants expire March 4, 2004. The debentures
are collateralized by substantially all of the Company's assets.

During April 2001, the Company issued two convertible notes for $100,000 and
$15,000, and one convertible note in May 2001 for $40,000 respectively, with
interest at 10% per annum. Interest on these Notes shall be payable quarterly
commencing June 30, 2001. The holder has the right to convert the debentures and
interest accrued into shares of the Company's Common Stock at a conversion price
per share that shall be an amount equal to 50% of the mean average price of the
Common Stock for the ten (10) trading days prior to notice of conversion per
share. The intrinsic value of the beneficial conversion features relating to the
convertible notes issued in 2001 of $155,000 has been allocated to paid in
capital. This resulting debt discount will be amortized over the term of the
debentures

                                      -9-

<PAGE>

During September 2001, the Company issued $400,000 of convertible debentures to
the same investors under the same terms as the debentures issued in March 2001.
However, there were no warrants attached to these debentures. The intrinsic
value of the beneficial conversion feature relating to these debentures of
$350,000 has been allocated to paid in capital. This resulting debt discount
will be amortized over the life of the debentures.

During September 2001, $35,000 of the convertible debentures issued in December
2000 were converted into Common Stock. The debentures were converted in
accordance with the terms of the agreements. Subsequent to September 30, 2001,
an additional $35,000 of the convertible debentures issued in December 2000 were
converted into 1,232,396 shares of Common Stock. The investors also converted
interest accrued into 1,012,494 shares of Common Stock.

During September 2001, the holder of the $100,000 note issued in April 2001
converted the note into 1,428,571 shares of free trading Common Stock and
1,252,069 shares of restricted stock. The conversion price was valued at $.03895
per share in accordance with the agreement terms.

During September 2001, the $15,000 note issued in April 2001 was also converted
into 214,286 shares of free trading Common Stock and 246,471 shares of
restricted stock. The conversion price for this transaction was valued at $.034
per share in accordance with the agreement terms

During October through December 2001, the remaining $165,000 of the convertible
debentures issued in December 2000, as well as $160,000 of the convertible
debentures issued in March 2001 were converted into 10,551,280 shares of Common
Stock. Additionally, accrued interest relating to these notes was converted into
an additional 1,012,49 shares of Common Stock. The underlying shares were
registered August 29, 2001 file number 33359888.

On December 31, 2001, DDSI issued three convertible debentures for an aggregate
amount of $500,000, with simple interest accruing at the annual rate of 12%. A
$125,000 note was issued to New Millennium Capital Partners II, LLC, a $125,000
note to AJW Partners, LLC and a $250,000 note to Bristol Investment Fund, Ltd.
These debentures are due December 31, 2002. Interest payable on the Debentures
shall be paid quarterly commencing March 31, 2002. The holders shall have the
right to convert the principal amount and interest due under the debentures into
shares of DDSI's Common Stock. The conversion price in effect on any Conversion
Date shall be the lesser of (1) $.043 and (2) 50% of the average of the lowest
three inter-day sales prices of the Common Stock during the twenty Trading Days
immediately preceding the applicable Conversion Date. The shares that will be
issued upon conversion of these debentures are being registered for resale
purposes by this registration statement. DDSI also issued common stock purchase
warrants for the right to purchase 1,500,000 shares of Common Stock of DDSI at
an exercise price per share equal to the lesser of (i) $.02 and (ii) the average
of the lowest three inter-day sales prices during the twenty (20) Trading Days
immediately prior to exercise.

During January through March 2002, $14,000 of the convertible debentures issued
in March 2001 were converted into 2,456,140 shares of Common Stock.
Additionally, accrued interest of $18,371 relating to these notes was converted
into an additional 2,203,828 shares of Common Stock.

In April 2002, the Company entered into an agreement to extend the maturity date
of the convertible debenture issued in March 2001 in the amount of $200,000 with
a maturity date of March 4, 2002 for an additional year.

                                      -10-
<PAGE>

During April through June 2002, $19,269 of the convertible debentures issued in
March 2001 were converted into 5,090,912 shares of Common Stock.

5.  EQUITY TRANSACTIONS

See Note 4.

6.  SUBSEQUENT EVENTS

Mr.  Garrett U. Cohn resigned as  Co-Chairman  and Director of the DDSI Board of
Directors  effective July 23, 2002 for personal reasons. A Form 8-K was filed on
July 26, 2002.






                                      -11-

<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

Plan of Operations

The short-term objectives of DDSI are the following:

1.       The short-term objective of DDSI is to continue to expand the sale and
         acceptance of its core solutions by offering new and synergistic
         biometric (a measurable, physical characteristic or personal behavioral
         trait used to recognize the identity, or verify the claimed identity,
         of an individual) (i.e. FMS) security products to its installed base in
         the criminal justice market. The Company's objective is to expand with
         these, and additional products, into much larger commercial and federal
         markets.


DDSI's long-term objectives are as follows:

1.       To seek additional products to sell into its basic business
         market--Criminal Justice -- so that DDSI can generate sales adequate
         enough to allow for profits. New products include FMS (Fingerprint
         Matching System), and Identify on Demand.

2.       Continue pursuing the FBI certification of the Compu-Scan 3000
         fingerprint capturing device. This would include redesigning the slap
         unit of the Compu-Scan to capture a palm print as well as a
         fingerprint. In addition consideration will be given to the creation of
         a contactless single digit reader that would not require FBI
         certification. There is no guarantee that the company will be able to
         raise sufficient funding to complete this project or that it will ever
         be able to meet FBI certification

DDSI believes that it will not reach profitability until the year 2003. Over the
next twelve months, management is of the opinion that sufficient working capital
will be obtained from operations and external financing to meet the Company's
liabilities and commitments as they become payable. DDSI has in the past
successfully relied on private placements of common stock securities, bank debt,
loans from private investors and the exercise of common stock warrants in order
to sustain operations. If DDSI is unable to obtain additional funding in the
future, it may be forced to curtail or terminate operations.

 DDSI is doing the following in its effort to reach profitability:

         o  Cut costs in areas that add the least value to DDSI.

         o  Derive funds through  investigating  business  alliances  with other
            companies who may wish to license the Compu-Scan device or the FMS
            SDK (software developers kit).

         o  Increase revenues through the introduction of Compu-Capture,
            specifically towards kindergarden through twelfth grades, for the
            creation of ID cards.

         o  Increase revenues through the introduction of a scaled down version
            of our Compu-Capture product.

Results of Operations

Six Months June 30, 2002 Compared to the Six Months Ended June 30, 2001
-----------------------------------------------------------------------

Revenues for the six months ended June 30, 2002 of $414,158 decreased $311,100
or 43% from the six months ended June 30, 2001. DDSI generates its revenues
through software licenses, hardware, post customer support arrangements and
other services. The decrease in DDSI's revenue is attributed to discontinued
sales of the SI-3000 product line at the end of the first quarter in 2001.
SI-3000 products' largest revenue impact was in software sales. These revenues
are included in deferred revenue until the job has been completed and
"signed-off" by the client. Once that job is completed, revenue is then
recognized on the income statement. During the first six months of 2002, DDSI
recognized revenue of $5,307 from software maintenance agreements from previous
installations of SI-3000. Maintenance revenues increased $45,672 or 16.7% from
the six months ended June 30, 2001 primarily due to an increase in DDSI's
customer's service and additional stations being purchased by customers which
include software maintenance agreements.


                                      -12-

<PAGE>

Cost of goods for the period ended June 30, 2002 was $82,013, a decrease of
$187,775 or 70% from the same period, prior year. The decrease was attributable
to the decrease in SI-3000 projects. Cost of goods sold as a percentage of
revenue for the period ended June 30, 2002 was 20% of total revenues, versus 37%
in the same period a year earlier, a decrease of 17%.

Costs and expenses decreased $644,721 or 47% during the six months ended June
30, 2002 versus the six months ended June 30, 2001. The decrease is due
primarily to the cost containment efforts of the Company. This decrease was
offset by an increase in interest and amortization of deferred debt cost of
$226,635 in connection with the convertible debentures issued in 2001. All other
expenses of the Company experienced decreases with the exception of the
development department that increased $11,281 or 8% for the six months ended
June 30, 2002 versus the six months ended June 30, 2001. Expenses for research
and development for the six months ended June 30, 2002 increased $55,677 while
the other expenses such as payroll, benefits, travel declined by $44,396
compared to the same time period in 2001.

The net loss for the Company decreased 31% for the six months ending June 30,
2002 to ($896,520) from ($1,303,638) for the six months ending June 30, 2001.
This was principally due to the decrease in expenses during the period.

Three Months June 30, 2002 Compared to the Three Months Ended June 30, 2001
---------------------------------------------------------------------------

Revenues for the three months ended June 30, 2002 of $189,996 decreased $225,214
or 54% from the three months ended June 30, 2001. As indicated above, the
Company generates its revenues through software licenses, hardware, post
customer support arrangements and other services. The decrease in the Company's
revenue is attributed to the fact that the Company no longer sold the SI-3000
product line and associated hardware during the three months ended June 30,
2002. Maintenance revenues increased $19,221 or 14% from the three months ended
June 30, 2001 primarily due to an increase in the Company's customer's entering
into such arrangements and the revenue sharing agreement with Itx on maintenance
of the SI-3000 product. Other revenues consist of sales of supplies that the
Company makes available to its customers, such as wristbands, ID cards and print
packs. More customers ordered such items in the three months ended June 30, 2002
versus 2001. However, SI-3000 products were included in the other revenues for
2001 unlike that for 2002, which accounted for the modest decrease. Cost of
goods decreased $127,086 or 90% due to the elimination of the SI-3000 sales.
Cost of goods consisted of 7% of total revenues for 2002; whereas cost of goods
in 2001 consisted of 34% of the revenues.

Costs and expenses decreased $366,438 or 51% during the three months ended June
30, 2002 versus the three months ended June 30, 2001. The decrease is due to
reduction of general and administrative related expenses such as stock for
services $(242,900), accounting fees $(64,800), salaries $(28,000), insurance
$(14,500). The remaining decrease of $16,238 was a result of lower costs for the
sales department.


                                      -13-
<PAGE>

The net loss for the Company decreased 41% for the three months ending June 30,
2002 to ($431,687) from ($733,728) for the three months ending June 30, 2001.
This was principally due to the decrease in cost of goods and overall operating
costs during the period.

Liquidity and Capital Resources

The Company's revenues have been insufficient to cover the cost of revenues and
operating expenses. Therefore, the Company has been dependent on private
placements of its common stock and issuance of convertible notes in order to
sustain operations. In addition, there can be no assurances that the proceeds
from private or other capital will continue to be available, or that revenues
will increase to meet the Company's cash needs, or that a sufficient amount of
the Company's common stock or other securities can or will be sold or that any
common stock purchase options/warrants will be exercised to fund the operating
needs of the Company.

Over the next twelve months, management is of the opinion that sufficient
working capital will be obtained from operations and external financing to meet
the Company's liabilities and commitments as they become payable. DDSI has in
the past relied on private placements of common stock securities, and loans from
private investors to sustain operations. However, if DDSI is unable to obtain
additional funding in the future, it may be forced to curtail or terminate
operations.

DDSI is doing the following in its effort to reach profitability and positive
cash flow:

         o  Cut costs in areas that add the least value to DDSI.
         o  Derive funds through  investigating  business  alliances  with other
            companies who may wish to license the  Compu-Scan  device or the FMS
            SDK (software developers kit).
         o  Increase   revenues  through  the  introduction  of   Compu-Capture,
            specifically  towards  kindergarten  through twelfth grades, for the
            creation of ID cards.
         o  Increase  revenues through the introduction of a scaled down version
            of our Compu-Capture product.

Net cash used in operating activities for the six months ended June 30, 2002 and
2001 was $(459,197) and $(360,113), respectively. The change in cash from
operating activities in 2002 versus 2001 of $99,084 was principally due to the
increases in prepaid, inventory and accrued payroll expenses; decreases in
accounts payable and deferred income.

Net cash provided by (used in) investing activities was $4,925 and $(9,433) for
the six months ended June 30, 2002 and 2001, respectively, reflecting a change
of $14,358. This change is due to no purchase of fixed assets and reducing the
balance of the restricted cash in the six months ended June 30, 2002.

Net cash provided by financing activities was $61,153 and $320,435 for the six
months ended June 30, 2002 and 2001, respectively, reflecting a change of
$259,282. This was principally due to less proceeds received from the issuance
of the Company's common stock in the first six months of 2002 versus the first
six months of 2001.



                                      -14-
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.         Legal Proceedings

Robert Martin - Shareholder Threatened Lawsuit

On January 19, 2002, DDSI's Board of Directors received a letter threatening
legal action from Mr. Robert P. Martin who purchased shares pursuant to a
private placement offering in October 2001. The letter alleged false and
misleading representations made to Mr. Robert Martin by Mr. Garrett Cohn and Mr.
Scott Gallagher (About Face Communications) involving convertible debenture
funding.

The shareholder has threatened a direct and derivative action suggesting the
convertible debt was not legally authorized.

Upon receipt of the threatened complaint, DDSI's Board of Directors had a
discussion with Mr. Martin where DDSI represented that it was in compliance with
the Company Bylaws, state and federal securities laws and that the current Board
of Directors were unaware of any fraudulent representations.


Therefore, DDSI disputes the allegations made in the complaint for the following
reasons, 1) the Company is unaware of any false and misleading misrepresentation
made by Mr. Garrett Cohn, 2) the threatened complaints received contained
insufficient information to make a determination of any wrong doing and 3) the
convertible debt was legally authorized by DDSI Board of Directors. Concerning
the legality of the convertible debt, there were three members on the Board of
Directors at the time this issue was voted on. Two board members were present
and voted on behalf of accepting the convertible debenture. In addition,
corporate counsel was contacted prior to the vote and after review of the
corporate bylaws indicated that pursuant to DDSI bylaws there was a quorum
present, therefore the business transacted by the Board would be legal and
binding. Thus, DDSI would vigorously defend itself against the allegations if
such actions were pursued. Currently there has been no action filed.

AccuSoft - Action to Terminate Product Licenses

On July 16, 2001, AccuSoft Corporation filed a complaint against DDSI in the
United States District Court for the Central District of Massachusetts, Civil
Action No. 0140132-NMG. AccuSoft sought the following relief:

         A. The termination of the following license agreements: ImageGear 6.0,
            95 and 98.

         B. A preliminary injunction enjoining DDSI from using the above
            licenses in the sales of their products.

Since the initial filing of the action by AccuSoft Corporation, DDSI has stopped
using AccuSoft's ImageGear 6.0, 95 and 98 software and have replaced AccuSoft's
controls. The parties are in discussions and are close to reaching a settlement.

Should this matter go to court and DDSI receive an unfavorable ruling for
failing to terminate the use of the licenses, there may be some monetary
damages. Assuming the damages would be based on the generic royalty agreement,
the amount of damages would be minimal, or approximately $5,000 to $7,500.



                                      -15-
<PAGE>


Item 2.        Changes in Securities and Use of Proceeds

During January through March 2002, $14,000 of the convertible debentures issued
in March 2001 were converted into 2,456,140 shares of Common Stock.
Additionally, accrued interest of $18,371 relating to these notes was converted
into an additional 2,203,828 shares of Common Stock.

In April 2002, the Company entered into an agreement to extend the maturity date
of the convertible debenture issued in March 2001 in the amount of $200,000 with
a maturity date of March 4, 2002 for an additional year.

During April through June 2002, $19,269 of the convertible debentures issued in
March 2001 were converted into 5,090,912 shares of Common Stock.

Item 3.        Defaults Upon Senior Securities:

None.

Item 4.        Submission of Matters of a Vote to Security Holders

None


Item 5.        Other Information

None

Item 6.        Exhibits and Reports on Form 8-K:

Reports on Form 8-K:

July 29, 2002     Item 6
                  Resignation of Garrett U. Cohn for personal reasons.



                                      -16-
<PAGE>




                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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 DESCRIPTOR SYSTEMS, INC.
                                (Registrant)



Date:  August 14, 2002          By:  /s/ MICHAEL J. PELLEGRINO
                                     -------------------------------------------
                                         Michael J. Pellegrino
                                         (President, Chief Operating Officer
                                          & Chief Financial Officer)


Date:  August 14, 2002          By:  /s/ ROBERT GOWELL.
                                     -------------------------------------------
                                         Robert Gowell
                                         (Chief Executive Officer and
                                         Co-Chairman of the Board of Directors)


Date:  August 14, 2002          By:  /s/ VINCENT MORENO
                                     -------------------------------------------
                                         Vincent Moreno.


Date:  August 14, 2002          By:  /s/ ANTHONY SHUPIN
                                     -------------------------------------------
                                         Anthony Shupin




                                      -17-