UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



FORM 10-K/A



ANNUAL REPORT

Under Section 13 or 15(d) of the Securities
Act of 1934



|þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        
        For the fiscal year ended June 30, 2011
|----------------------------------------------------------------------------------------------------------------------------------------------



|oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        
        For the transition period from ______ to
        ______
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





DIGITAL CREATIVE DEVELOPMENT CORPORATION

(Exact name of registrant is specified
in its Charter)



|UTAH                            |  | 34-1413104        
|------------------------------- |  | ------------------
|(State or Other Jurisdiction of |  | I.R.S. Employer   
|Incorporation or Organization)  |  | Identification No.



720 Fifth Avenue, New York, New York, 10019

10th Floor

(Address of principal executive offices)



(212) 247-0581



|Securities registered under Section 12(b) of the Act:
|-----------------------------------------------------



|Title of Each Class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     



|Securities registered under Section 12(g) of the Act:     Common Stock, $.01 par value
|--------------------------------------------------------------------------------------











Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.oYesxNo



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.oYesxNo



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.oYesxNo



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 during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).oYesxNo



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.o



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated
filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



|Large Accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyx
|------------------------ | ------------------ | ---------------------- | --------------------------



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).xYesoNo



State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).-----$414,600



Note: if determining whether a person is an affiliate will involve
an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates
on the basis of reasonable assumptions, if the assumptions are stated.



Shares outstanding: 53,864,165 at September 12, 2011











TABLE OF CONTENTS



|                                                                                                                        | Page
|----------------------------------------------------------------------------------------------------------------------- | ----
|PART I                                                                                                                  |     
|                                                                                                                        |     
|Item 1     Business                                                                                                     | 1   
|                                                                                                                        |     
|Item 2     Properties                                                                                                   | 3   
|                                                                                                                        |     
|Item 3     Legal Proceedings                                                                                            | 3   
|                                                                                                                        |     
|Item 4.    Executive Officers of the Registrant                                                                         | 3   
|                                                                                                                        |     
|PART II                                                                                                                 |     
|                                                                                                                        |     
|Item 5     Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 3   
|                                                                                                                        |     
|Item 7     Management's Discussion and Analysis of Financial Condition and Results of Operations                        | 4   
|                                                                                                                        |     
|Item 7A   Quantitative and Qualitative Disclosures About Market Risk                                                    | 5   
|                                                                                                                        |     
|Item 8     Financial Statements and Supplementary Data                                                                  | 6   
|                                                                                                                        |     
|Item 9A     Controls and Procedures                                                                                     | 6   
|                                                                                                                        |     
|PART III                                                                                                                |     
|                                                                                                                        |     
|Item 10    Directors, Executive Officers and Corporate Governance                                                       | 7   
|                                                                                                                        |     
|Item 11    Executive Compensation                                                                                       | 8   
|                                                                                                                        |     
|Item 12    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 9   
|                                                                                                                        |     
|Item 13    Certain Relationships and Related Transactions, and Director Independence                                    | 10  
|                                                                                                                        |     
|Item 14    Principal Accounting Fees and Services                                                                       | 10  
|                                                                                                                        |     
|PART IV                                                                                                                 |     
|                                                                                                                        |     
|Item 15    Exhibits, Financial Statement Schedules                                                                      | 15  
|                                                                                                                        |     
|Index to Financial Statement Schedules                                                                                  | F-  











PART I    BACKGROUND



Digital Creative Development Corporation (the
“Company”) is principally engaged in creating and providing media content to businesses and consumers as well as managing
its ownership interest in Broadcaster, Inc. (“Broadcaster”), formerly known as  International Microcomputer
Software, Inc. (“IMSI”). Prior to this, the Company’s primary business was the operation, franchising, ownership
and development of fast food restaurant concepts. Currently the Company does not have existing operations.



Item 1. Description of Business



Overview



Digital Creative Development Corporation (the
“Company”) is principally engaged in creating and providing media content to businesses and consumers as well as managing
its ownership interest in Broadcaster, Inc. (“Broadcaster”), formerly known as  International Microcomputer
Software, Inc. (“IMSI”).



Plan of Business



The Company intends to locate and enter into
a transaction with an existing, public or privately-held company that in management's view has growth potential (a "Target
Business"). A transaction with a Target Business may be structured as a merger, consolidation, exchange of the Company's common
stock for stock or assets of the Target Business or any other form which will result in the combined enterprise remaining a publicly-held
corporation. Acquisitions or business combinations may not be available at the times or on terms acceptable to us, or at all. In
addition, acquiring, or combining with, a business involves many risks, including:



| | · | unforeseen obligations or liabilities;
| | - | --------------------------------------



| | · | difficulty assimilating the acquired operations and personnel;                  
| | - | --------------------------------------------------------------------------------
| | · | risks of entering markets in which we have little or no direct prior experience;



| | · | potential impairment of relationships with employees or customers as a result of changes in management; and
| | - | -----------------------------------------------------------------------------------------------------------



| | · | potential dilutive issuances of equity, large and immediate write-offs, the incurrence of debt, and amortization of goodwill or other intangible assets.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



The Company cannot make assurances that it will make any acquisitions
or business combinations or that it will be able to obtain financing for such acquisitions or combinations. If any acquisitions
or combinations are made, the Company cannot make assurances that will be able to successfully integrate the acquired or combined
business into operations or that the acquired or combined business will perform as expected. Furthermore, Federal and state tax
laws and regulations have a significant impact upon the structuring of transactions. Management will evaluate the possible tax
consequences of any prospective transaction and will endeavor to structure a transaction so as to achieve the most favorable tax
treatment. There can be no assurance that the Internal Revenue Service or relevant state tax authorities will ultimately assent
to the tax treatment of a particular consummated transaction. To the extent the Internal Revenue Service or any relevant state
tax authorities ultimately prevail in recharacterizing the tax treatment of a transaction, there may be adverse tax consequences
to us, a target business and their respective stockholders. Tax considerations as well as other relevant factors will be evaluated
in determining the precise structure of a particular transaction, which could be effected through various forms of a merger, consolidation
or stock or asset acquisition. Pending negotiation and consummation of a transaction, the Company anticipates that it will have,
aside from carrying on its search for a transaction partner, no business activities, and, thus, no source of revenue. Should the
Company incur any significant liabilities prior to a combination with a Target Business, it may not be able to satisfy, without
additional financing, such liabilities as are incurred.





-1-





Employees



As of June 30, 2011 and through the present, the Company has no
employees. Gary Herman, the Company’s Chairman, Chief Executive Officer, President and Secretary and Vincent De Lorenzo the
Company’s Chief Financial Officer serve on a management consulting basis.



Mr. De Lorenzo became Chief Financial Officer upon the resignation
of Skuli Thorvaldsson, effective July 12, 2007.



Acquisitions



The Company has never held itself out as an investment company.
Its historical development has focused almost exclusively on restaurant, software and digital entertainment businesses. Although
the Company continues to search for candidates with which to enter into business combinations or strategic transactions, it does
not have an operating business except for its ownership interest in Broadcaster, Inc..  As of  September 22,
2011 the Company owns approximately 3,000,000 shares of common stock of Broadcaster, or approximately 9.0% of the total outstanding
shares of Broadcaster’s common stock. An additional 225,000 shares of common stock, or approximately 0.43% of Broadcaster,
Inc. is beneficially owned by Gary Herman, the Company’s Chairman, and 468,575 shares of common stock, or approximately 0.91%
of Broadcaster, Inc. is beneficially owned by Bruce Galloway, the Company’s principal shareholder. Mr. Galloway also owns
options to purchase, (i) 250,000 shares of Broadcaster, Inc.’s common stock at $1.62 per share; (ii) 50,000 shares at $1.80
per share; (iii) 32,500 shares at $3.80 per share; and (iv) 5,000 shares at $3.76 per share.



The Investment Company Act of 1940 (the “Act”) was primarily
meant to regulate “investment companies,” which generally include families of mutual funds of the type offered by the
Fidelity and Vanguard organizations (to pick two of many), closed-end investment companies that are traded on the public stock
markets, and certain non-managed pooled investment vehicles such as unit investment trusts. These entities are in the business
of investing, reinvesting and trading in securities and generally own relatively diversified portfolios of publicly traded securities
that are issued by companies not controlled by these entities. A company can, either deliberately or inadvertently, come to have
the defining characteristics of an investment company within the meaning of the Act without proclaiming that fact or being willing
to voluntarily submit itself to regulation as an acknowledged investment company. The Act and rules under it contain provisions
to differentiate “true” operating companies from companies that may be considered to have sufficient investment-company-like
characteristics to require regulation by the Act’s complex procedural and substantive requirements. These provisions apply
to companies that own or hold securities, as well as companies that invest, reinvest and trade in securities, and particularly
focus on determining the primary nature of a company’s activities, including whether an investing company controls and does
business through the entities in which it invests or, instead, holds its securities investments passively and not as part of an
operating business. For instance, under what is, for most purposes, the most liberal of the relevant tests, a company may become
subject to the Act’s registration requirements if it either holds more than 45% of its assets in, or derives more than 45%
of its income from, investments in companies that the investor does not primarily control or through which it does not actively
do business. In making these determinations the Act generally requires that a company’s assets be valued on a current fair
market value basis, determined on the basis of securities’ public trading price or, in the case of illiquid securities and
other assets, in good faith by the company’s board of directors.



The Company has a significant position in Broadcaster, Inc. and
believes that it has a minimum of one year after it no longer controls Broadcaster to comply with the provisions of the Act since
it no longer controls Broadcaster.



If the SEC takes the view that the Company has been operating and
continues to operate as an unregistered investment company in violation of the Act, and does not provide the Company with a sufficient
period to either register as an investment company or divest itself of investment securities and/or acquire non-investment securities,
the Company may be subject to significant potential penalties.



In the absence of exemptions granted by the SEC (which are discretionary
in nature and require the SEC to make certain findings), the Company would be required either to register as a closed-end investment
company or a business development company under the Act. If the Company elects to register as a closed-end investment company under
the Act, a number of significant requirements will be imposed upon the Company, including limits on the values of its investment
securities as a percentage of its total assets, the make up of its board of directors and transactions with affiliates. In order
to comply with the Act, the Company may need to acquire additional operating assets that would have a material effect on the Company’s
operations. There can be no assurance that the Company could identify such operating assets to acquire or could successfully acquire
such assets. Any such acquisition could result in the Company issuing additional shares that may dilute the equity of the Company’s
existing stockholders, and/or result in the Company incurring additional indebtedness, which could have a material impact on the
Company’s balance sheet and results of operations. Any of the above risks could result in a material adverse effect on the
Company’s results of operations and financial condition.





-2-





Item 2.  Description of Property.



The Company's principal executive offices are located at 720 Fifth
Avenue, 10th Floor New York, NY 10019. The Company is utilizing office space of its President at no cost to the Company until an
acquisition or business transaction is consummated. The amount of office space currently utilized by the Company is insignificant.



Item 3.  Legal Proceedings.



The Company and its subsidiaries are from time to time involved
in ordinary and routine litigation. At present, there is no litigation.



Item 4. (Removed and Reserved)



None



PART II



Item 5. Market for Registrants Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities.



The following table sets forth the high and
low prices for the periods indicated as reported by the National Daily Quotation Service, Inc. between dealers and do not include
retail mark-ups, mark-downs, or commissions and do not necessarily represent actual transactions, as reported by the National Association
of Securities Dealers Composite Feed or other qualified inter-dealer quotation medium. On June 14, 2011 the closing bid price was
$0.013/share.



|                 |  | High |       |  | Low |  
|---------------- |  | ---- | ----- |  | --- | -
|2010 Fiscal Year |  |      |       |  |     |  
|First Quarter    |  | $    | 0.017 |  |     | $
|Second Quarter   |  | $    | 0.014 |  |     | $
|Third Quarter    |  | $    | 0.03  |  |     | $
|Fourth Quarter   |  | $    | 0.03  |  |     | $
|                 |  |      |       |  |     |  
|2011 Fiscal Year |  |      |       |  |     |  
|First Quarter    |  | $    | .03   |  |     |  
|Second Quarter   |  | $    | .03   |  |     |  
|Third Quarter    |  | $    | .02   |  |     |  
|Fourth Quarter   |  | $    | .02   |  |     |  



The Common Stock was recorded on the OTC Bulletin Board with the
symbol DCDC.



In May 2009, the Company's stock was delisted from the OTC Bulletin
Board due to its failure to timely file its Form 10-QSB with the Securities and Exchange Commission.



The stock is now traded on the Pink Sheets. On September 12, 2011
the number of record holders of the Company's Common Stock was 484.





-3-







Dividends



In November and December 1997, the Company consummated a private
placement with respect to equity units consisting of shares of its Series C Preferred Stock and warrants to purchase shares of
common stock for aggregate proceeds of $990,000. The Company sold 9,900 shares of Series C Preferred Stock with warrants to purchase
148,500 shares of common stock attached. The preferred stock is not convertible, but may be redeemed at the option of the Company
at a redemption price of $100/share plus accrued and unpaid dividends, at any time. The holders of the preferred stock are entitled
to a cumulative dividend of 10% per annum, payable semi-annually, if and when the Board declares a dividend. On September 28, 1998,
the Company sold 4,000 shares of Series D Preferred Stock and Common Stock Purchase Warrants with gross proceeds of an aggregate
amount of $400,000. The preferred stock is convertible into 400,000 shares of common stock. The holders of the preferred stock
are entitled to a cumulative dividend of 15% per annum, payable semi annually, if and when the Board declares a dividend. To date,
the Company has not paid any dividends on its Common Stock or Preferred Stock. The payment of dividends, if any, in the future
is within the discretion of the Board of Directors and will depend upon the Company's earnings, its capital requirements and financial
condition, and other relevant factors. The Company does not intend to declare any dividends in the foreseeable future, but instead
intends to retain all earnings, if any, for use in the Company's business operations. No dividends may be distributed with respect
to the Common Stock so long as there are accrued and unpaid dividends on the Series A and Series C Preferred Stock. The amount
of accumulated and unpaid dividends on the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock was
approximately $1,943,900 as of June 30, 2011.



Item 6.  Selected Financial Data



The Company is a smaller reporting company and is not required to
provide information by this item.



Item 7.  Management's Discussion and Analysis of
Financial Condition and Results of Operations



This Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company should be read in conjunction with the Financial Statements and Notes thereto.



Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995.



The financial and business analysis below provides information that
the Company believes is relevant to an assessment and understanding of the Company's consolidated financial condition, changes
in financial condition, and results of operations. This financial and business analysis should be read in conjunction with the
consolidated financial statements and related notes.



"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995 Certain matters and statements made in this Annual Report on Form 10-K constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934. All such statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Wherever possible, the Company has identified these forward-looking
statements by words such as "anticipates," "may," "believes," "estimates," "projects,"
"expects" "intends," and words of similar import. In addition to the statements included in this Annual Report
on Form 10-K, the Company and its representatives may from time to time make other oral or written forward-looking statements.
All forward-looking statements involve certain assumptions, risks and uncertainties that could cause actual results to differ materially
from those included in or contemplated by the statements. These assumptions, risks, and uncertainties include, but are not limited
to, general business conditions, including the timing or extent of any recovery of the economy, the highly competitive nature of
the industry in which the Company operates and other risks and uncertainties. All such forward-looking statements may be affected
by inaccurate assumptions or by known or unknown risks and uncertainties, and therefore, those statements may turn out to be incorrect.
Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. All forward-looking statements
are made as of the date of filing or publication. We undertake no obligation to publicly update any forward looking statements,
whether as a result of new information, future events or otherwise. Investors are advised, however, to consult any further disclosures
the Company makes in future filings with the Securities and Exchange Commission or in any of its press releases. This report contains
certain statements of a forward-looking nature relating to future events or the future performance of the Company. Prospective
investors are cautioned that such statements are only predictions and those actual events or results may differ materially.



Results of Operations Fiscal 2011 and Fiscal 2010



The Company had no operating revenues in fiscal
years 2011 or 2010.  General and administrative expenses and other income and expenses were approximately the same in
the 2011 and 2010 fiscal years as interest on notes in default and certain administrative costs  resulted in a net loss
of $257,900 in the 2011 fiscal year compared to a $242,100 net loss for the 2010 fiscal year.





-4-





New Accounting Standards



There are no recently issued accounting pronouncements
that are not yet effective that are expected to have a material impacton the Company’s financial position, results of operations,
or disclosures in the consolidated financial statements



Item 7a. Liquidity and Capital Resources



The Company’s current liabilities exceeded
its current assets by $2,227,900 at June 30, 2011, compared to current liabilities exceeding its current assets by $1,910,100  at
June 30, 2010. The change in working capital is primarily the result of continuing operating losses.  As of June 30,
2011 and 2010, marketable securities—current portion, had a market value of approximately $150,400 and $180,600 respectively.
Current and Total Liabilities were $2.4 million and $2.1 million at June 30, 2011 and 2010, respectively.



In April 2003, the Company issued $345,000
of secured promissory notes with interest at 10% to a group of seven investors. The notes matured in August 2005 and are now delinquent
and due on demand.



In addition, for each $60,000 of notes issued,
the Company issued a warrant to purchase 1,000,000 shares of common stock at an exercise price of $0.01 per share. Approximately 373,845
shares of Broadcaster common stock currently held by the Company collateralize these promissory notes. The amount reflects the
1 for 2 reverse split of shares of Broadcaster on June 25, 2007. The proceeds of these notes were used to repay a loan to
Mr. Galloway and for the Company’s working capital requirements.



The warrants issued in 2003 were valued at
$392,500 and charged to interest expense over the term of the notes. The holders of promissory notes have exercised 4,750,000 of
the warrants associated with their notes at $0.01 per share. All of the $345,000 Secured Promissory Notes are now currently in
default beyond their extended due dates.  The Company's management is confident that future extensions can be obtained
if necessary, but there can be no assurance that the Company will be able to obtain such extensions.



On September 18, 2003, the Company entered
into a 15% one-year note (the “Note”) with IMSI (n/k/a Broadcaster) whereby the Company borrowed $350,000. On January
5, 2005, Broadcaster sold and assigned the Note, which then had a principal amount of $325,000, to Multi-Mag Corporation ("Multi-Mag").



The Company and Multi Mag by way of various
extension amendments and interest payments, had agreed to extend the Note through December 31, 2007. The Note with Multi Mag is
currently in default and due on demand.



The Company's management is confident that
future extensions can be obtained. Although extensions were obtained in the past, there can be no assurance that the Company will
be able to obtain these extensions, if needed.



The Company believes that it will need additional
financing and working capital to finance its activities. Without additional financing, the Company will be unable to continue.
Although the Company has obtained additional financing in the past and believes it could meet its needs through either additional
borrowings or the sale of additional equity; however, there can be no assurance that the Company would succeed in obtaining any
such financing, or that the terms of such transactions could be effected, or that such strategy will be successful.



From time to time, the Company has sold and
may sell a certain amount of its holdings in Broadcaster, Inc.



The proceeds of any such sales are anticipated to be principally
used by the Company for general working capital purposes.



The Company sold 150,000 shares of Broadcaster, Inc. from July 1,
2008 to June 30, 2011 and has used the proceeds of approximately $22,400 for general working capital purposes.



The amount of proceeds available to the Company from the sale of
shares of Broadcaster depends upon the market for Broadcaster, which is subject to volatility in price and market volume.



The proceeds of any such sales are anticipated to be principally
used by the Company for general working capital purposes. The Company anticipates that its working capital needs will be financed
by sales of Broadcaster shares until and unless the Company acquires a profitable operating business or makes other investments.





-5-





Quantitative and Qualitative Disclosures about Market Risk



The Company’s equity investments are concentrated in Broadcaster,
Inc. At June 30, 2011, 100% of the total fair value of equity investments was concentrated in Broadcaster, Inc. The Company’s
present preferred strategy is to hold equity investments for trading purposes and for long-term strategic purposes. Thus, the Company’s
management is not necessarily troubled by short term equity price volatility with respect to its investments provided that the
underlying business, economic and management characteristics of the investees remain favorable. The carrying values of investments
subject to equity price risks are based on quoted market prices or management’s estimates of fair value as of the balance
sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment
may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived
changes in the underlying economic characteristics of the investee, the relative price of alternative investments and general market
conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the
security being sold. Insofar as the Company’s liabilities are concerned, all loans to the Company have been made with fixed
interest rates, and, accordingly, the market risk to the Company prior to the maturity of those instruments is minimal.



Item 8.  Financial Statements and Supplementary
Data



The financial statements are filed as part of this Annual Report
on Form 10-K.



Item 9. Changes in and Disagreements with Accountants.



None



Item 9A. Controls and Procedures



(a) Disclosure Controls and Procedures. Under the supervision
and with the participation of our management, including our principal executive and financial officers, we have evaluated the effectiveness
of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or Rule 15d-15(e)
under the U.S. Securities Exchange Act of 1934, as amended) within 90 days of the filing date of this quarterly report and, based
on their evaluation, our principal executive and financial officers have concluded that these controls and procedures are not effective
and do not meet the requirements thereof. We are, however, working diligently on having these requirements met. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed
by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding
required disclosure.



(b) Changes in Internal Control Over Financial Reporting.
There were no significant changes in our internal control over financial reporting identified in connection with the evaluation
required by Exchange Act Rule 13a-15(d) or Rule 15d-15(d) that occurred during the period covered by this quarterly report, or
to our knowledge in other factors, that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.





-6-





Management Report on Internal Control Over Financial Reporting



The management of Digital Creative Development Corporation is responsible
for establishing and maintaining adequate internal control over financial reporting. The Company's internal control system was
designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair
presentation of published financial statements.



All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation.



Digital Creative Development Corporation's management assessed the
effectiveness of the Company's internal control over financial reporting as of June 30, 2011. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-integrated
Framework. Based on that assessment management believes that, as of June 30, 2011, the Company's internal control over financial
reporting is effective based on those criteria.



PART III



Item 10.  Directors, Executive Officers, Promoters
and Control Persons.



|Name               |  | Age |  | Position                                                              
|------------------ |  | --- |  | ----------------------------------------------------------------------
|                   |  |     |  |                                                                       
|Gary Herman        |  | 47  |  | Chairman of the Board, Chief Executive Officer, and Secretary         
|                   |  |     |  |                                                                       
|Skuli Thorvaldsson |  | 69  |  | Director, Former Chief Financial Officer, Treasurer Resigned July 2007
|                   |  |     |  |                                                                       
|Vincent De Lorenzo |  | 65  |  | Chief Financial Officer, Treasurer                                    



Directors



Gary Herman. Mr. Herman was elected to the Board of Directors
in May 2001 and became Chairman and Chief Executive officer in January 2002. Mr. Herman is also a Managing Member of Galloway Capital
Management, LLC. as well as a Managing Director with Arcadia Securities LLC., a FINRA registered broker -dealer based in New York.
Prior to this, from 1997 to 2002, he was an investment banker with Burnham Securities, Inc. Prior to joining Burnham, he was the
managing partner of Kingshill Group, Inc., a merchant banking and financial firm with offices in New York and Tokyo. Mr. Herman
has a B.S. from the State University of New York at Albany.



Skuli Thorvaldsson. Mr. Thorvaldsson has been a member of
the Board of Directors since May 1996. From February 2002 to July 2007, Mr. Thorvaldsson was the Company’s Chief Financial
Officer. Mr. Thorvaldsson is a private entrepreneur/investor. From 1980 to 2003, Mr. Thorvaldsson was the Chief Executive Officer
of the Hotel Holt in Reykjavík, Iceland. He is a director of Holt Holdings s.a., a Luxembourg-based investment company.
Mr. Thorvaldsson graduated from the Commercial College of Iceland and the University of Barcelona and holds a law degree from the
University of Iceland.



Vincent DeLorenzo  Mr. De Lorenzo was appointed Chief
Financial Officer in July 2007. Mr. DeLorenzois a Certified Public Accountant and Financial Analyst with extensive
experience in various industries and corporate and SEC accounting.Mr. De Lorenzo, following his graduation from college
in 1967, was an accountant with Price Waterhouse & Co. from July 1967 to April 1971. From April 1971 to December 1988, Mr.
DeLorenzo worked at Kidde, Inc., where he served as Vice President of Finance. From 1989 to 1993, Mr. De Lorenzo served as Chief
Financial Officer and Deputy CEO of a privately held vertically integrated retail automotive company. From October 1993 to February
2000, Mr. De Lorenzo owned and operated three retail automotive franchises.   From 1993 to 2000, a large New Jersey
law firm specializing in bankruptcies engaged Mr. De Lorenzo as a consultant. Since 2000, Mr. DeLorenzo has been engaged as a sole
practitioner in finance and accounting, focused on litigation support; business planning & strategies; SEC compliance; financial
analysis, and business restructuring.Since 2005, Mr. De Lorenzo has served as a consultant to the Registrant, principally
satisfying SEC compliance and financial analysis for the Registrant.





-7-





Each Director is elected to serve until the Company's next annual
meeting of shareholders and until his successor is duly elected and qualified.



There are no agreements with respect to the election of directors.
Executive officers are appointed annually by the Board of Directors and each executive officer serves at the discretion of the
Board of Directors.



The Company has adopted a Code of Ethics, which is administered
by the Board of Directors. A copy is available upon request from the Company. Beneficial Ownership Reporting Compliance



Section 16 A (a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors and persons who own more than ten percent of the Company's common shares to file reports of ownership
with the SEC and to furnish the Company with copies of these reports. Based solely upon its review of reports received by it, or
upon written representations from certain reporting persons that no reports were required, the Company believes that during fiscal
year ended June 30, 2011 all filing requirements were met.



Item 11.  Executive Compensation.



The following table provides certain summary information concerning
the compensation paid or accrued by the Company to or on behalf of its Chief Executive Officer and the other named executive officers
of the Company for services rendered in all capacities to the Company and its subsidiaries for the fiscal years ended June 30,
2011; 2010; and 2009.



|(a) | Summary Compensation Table
|--- | --------------------------



|Name and           |  |      |  |              |       |  |       |   |   |              |  |   | Restricted |  |  | Securities |   |  |         |   |   |              | 
|------------------ |  | ---- |  | ------------ | ----- |  | ----- | - | - | ------------ |  | - | ---------- |  |  | ---------- | - |  | ------- | - | - | ------------ | 
|Principal          |  |      |  |              |       |  |       |   |   | Other Annual |  |   | Stock      |  |  | Underlying |   |  | LTIP    |   |   | All Other    | 
|Position           |  | Year |  | Compensation |       |  | Bonus |   |   | Compensation |  |   | Awards     |  |  | Options    |   |  | Payouts |   |   | Compensation | 
|                   |  |      |  |              |       |  |       |   |   |              |  |   |            |  |  |            |   |  |         |   |   |              | 
|Gary Herman        |  | 2011 |  | $            | -     |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 
|President          |  | 2010 |  | $            | -     |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 
|                   |  | 2009 |  | $            | 8,900 |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 
|                   |  |      |  |              |       |  |       |   |   |              |  |   |            |  |  |            |   |  |         |   |   |              | 
|Vincent De Lorenzo |  | 2011 |  | $            | -     |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 
|CFO                |  | 2010 |  | $            | -     |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 
|                   |  | 2009 |  | $            | 5,750 |  |       | $ | - |              |  | $ | -          |  |  | $          | - |  |         | $ | - |              | 



|* The compensation listed above is in the form of consulting payments to GH Ventures, LLC Gary Herman or a related entity ; VDL Associates LLC, and Vincent De Lorenzo.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------





-8-





Executive Compensation



GH Ventures LLC, an entity of which Gary Herman is the sole member,
provides services as the Company's Chairman, Chief Executive Officer, Secretary and Management Consultant. Due to the limited available
working capital of the Company, he has received minor compensation since taking office in January 2002. Although Mr. Herman does
not receive any recurring compensation, he is compensated from time to time for his services and as funds are available..



VDL Associates LLC, an entity of which Vincent DeLorenzo is the
sole member, provides services as the Company's Chief Financial Officer



In October, 2005, the Company made a contingent award to each
of its current directors, Gary Herman and Skuli Thorvaldsson, as well as an award to a former director and significant shareholder,
Bruce Galloway, options to purchase 7,440,000 shares of common stock at exercise prices ranging from of $.0732 per share to $0.1385
and expiring through June 2015. These options, awarded for services rendered in connection with past services, including the restructuring
of the Company in fiscal year 2002; director services; and other services, were valued at approximately $798,500.



The Company’s Board of Directors has approved this compensation
for services rendered to the Company by Messrs. Herman and Thorvaldsson contingent upon the receipt of a fairness opinion
from an independent advisory firm and approval of such fairness opinion by the Board of Directors. That fairness opinion has been
received and approved by the Board on February 2, 2011.  The value of the related awards will approximate $798,500. Further,
the Company finalized compensation agreements for Messrs. Herman and Thorvaldsson which include amounts to be paid for past services
to the Company for the calendar years 2002, 2003, 2004, 2005 and 2006.



Although the Board approved the plan on February 2, 1011, the Board
may revise this plan in light of the Company’s current financial situation.



Item 12. Security Ownership of Certain Beneficial Owners and
Management



The following table sets forth information as of September
23, 2011 with respect to officers, directors and persons who are known by the Company to be beneficial owners of more than 5% of
the Company's Common Stock. Except as otherwise indicated, the Company believes that the beneficial owners of the Common Stock
listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable.



|Shareholder                       |  | Shares |            |  | Percentage | 
|--------------------------------- |  | ------ | ---------- |  | ---------- | 
|Bruce R. Galloway (1)             |  |        | 14,809,407 |  |            | 
|Skuli Thorvaldsson (2)            |  |        | 1,435,125  |  |            | 
|Gary Herman (3)                   |  |        | 3,845,275  |  |            | 
|James and Alexander Goren         |  |        | 3,619,750  |  |            | 
|Officers and Directors as a group |  |        | 5,280,400  |  |            | 
|Total Outstanding shares          |  |        | 53,864,165 |  |            | 



(1) Includes 3,320,375 shares held by an investment fund, Strategic
Turnaround Equity Partners, LP (Cayman) (“STEP”) which is managed by Galloway Capital Management, LLC. Mr. Galloway,
a managing member of Galloway Capital Management, LLC disclaims beneficial ownership of the shares held by STEP except to the extent
of being a limited partner in STEP.  Mr. Galloway, along with Mr.  Herman, also a member of Galloway Capital
Management, LLC, has the discretion to vote and sell all of these shares; 6,699,812 shares of common stock 940,404 shares owned
by Jacombs Investments, Ltd for which Mr. Galloway has the power to vote and dispose such shares; 47,500 shares of common stock
held by Rexon Galloway Capital Growth, LLC an investment company in which Mr. Galloway is a member and retains investment and voting
discretion; and 523,600 shares held by Mr. Galloway’s children for which he has the power to vote and dispose.



(2) Includes 1,435,125 shares as well as giving effect to the conversion
of 4,000 shares of Series D Preferred Stock into 400,000 shares of Common Stock for no additional consideration.



(3) Includes options to purchase 1,750,000 shares of Common Stock
at an exercise price of $.01 per share through June 2015. Also includes 3,320,375 shares held by an investment fund Strategic Turnaround
Equity Partners, LP (Cayman) (“STEP”) which is managed by Galloway Capital Management, LLC. Mr. Herman, a managing
member of Galloway Capital Management, LLC disclaims beneficial ownership of the shares held by STEP except to the extent of being
a limited partner in STEP.   Mr. Herman, along with Mr. Bruce Galloway, also a member of Galloway Capital Management,
LLC, has the discretion to vote and sell all of these shares.





-9-





Item 13. Certain Relationships and Related Transactions.



None



Item 14. Principal Accountant Fees and Services.



The following table presents fees for professional audit services
rendered by Rosen Seymour Shapss Martin & Company LLP for the audit of our annual financial statements and fees for other services
for the years ended June 30, 2011 and 2010.



|                        |  | 2011 |       |  | 2010 |  
|----------------------- |  | ---- | ----- |  | ---- | -
|                        |  |      |       |  |      |  
|Audit fees: (1)         |  | $    | 7,500 |  |      | $
|                        |  |      |       |  |      |  
|Audit related fees: (2) |  |      |       |  |      |  
|                        |  |      |       |  |      |  
|Tax fees: (3)           |  | None |       |  | None |  
|                        |  |      |       |  |      |  
|All other fees: (4)     |  | None |       |  | None |  
|                        |  |      |       |  |      |  
|Total                   |  | $    | 7,500 |  |      | $



Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-audit Services of Independent Auditors



We do not currently have an Audit Committee and all actions that
would otherwise be handled by the Audit Committee are undertaken by our full Board of Directors. If and when we find a suitable
merger candidate and we successfully enter into a merger transaction whereby a company with assets and operations survives, we
intend to establish an Audit Committee that fulfills the independent and other requirements promulgated by the SEC. However, recognizing
the SEC policies regarding auditor independence, our Board of Directors has responsibility for appointing, setting compensation
and overseeing the work of the independent auditor. In recognition of this responsibility, our Board of Directors has established
a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.



Prior to engagement of the independent auditor for the next year’s
audit, management will submit an aggregate of services expected to be rendered during that year for each of the following four
categories of services to our Board of Directors for approval.



1.    Audit
services include audit work performed in the preparation of financial statements, as well as work that generally only the independent
auditor can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation
regarding financial accounting and/or reporting standards.



2.    Audit-Related services are for
assurance and related services that are traditionally performed by the independent auditor, including due diligence related to
mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.





-10-





3.    Tax services include all services
performed by the independent auditor’s tax personnel except those services specifically related to the audit of the financial
statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.



4.    Other Fees are those associated
with services not captured in the other categories.



Prior to engagement, our Board of Directors pre-approves these services
by category of service. The fees are budgeted and our Board of Directors requires the independent auditor and management to report
actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise
when it may become necessary to engage the independent auditor for additional services not contemplated in the original pre-approval.
In those instances, our Board of Directors requires specific pre-approval before engaging the independent auditor.



Our Board of Directors may delegate pre-approval authority to one
or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval
decisions to our Board of Directors at its next scheduled meeting.



Our Board of Directors has accepted the resignation of Miller, Ellin
& Company, LLP for all audit, audit-related and tax services for 2009 and engaged the firm of Rosen Seymour Shapss Martin &
Company LLP.  Our former auditors effectively merged with the firm of Rosen Seymour Shapss Martin & Company LLP on
January 1, 2009.





-11-





PART IV



Item 15. Exhibits and Report



|(a)    |  | Exhibits                                                                                                                                                               
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1.1  |  | Certificate of Incorporation. (1)                                                                                                                                      
|3.1.2  |  | Agreement and Plan of Reorganization and First Addendum dated December 5, 1983. (1)                                                                                    
|3.1.3  |  | Certificate of Merger dated January 23, 1984. (1)                                                                                                                      
|3.1.4  |  | Articles of Merger dated January 27, 1984. (1)                                                                                                                         
|3.1.5  |  | Articles of Amendment to Articles of Incorporation dated January 27, 1984. (1)                                                                                         
|3.1.6  |  | Amendment to Articles of Incorporation dated January 27, 1986. (1)                                                                                                     
|3.1.7  |  | Articles of Amendment to Articles of Incorporation dated June 28, 1996. (1)                                                                                            
|3.1.8  |  | Articles of Amendment to Articles of Incorporation dated July 31, 2000. (3)                                                                                            
|3.2    |  | Bylaws. (1)                                                                                                                                                            
|4.2    |  | Certificate of Designation of Series A Preferred Stock. (1)                                                                                                            
|4.10   |  | Certificate of Designation of Series B Preferred Stock. (1)                                                                                                            
|4.4    |  | Certificate of Designation of Series C Preferred Stock of Warrant to Burnham Securities Inc. (1)                                                                       
|4.5    |  | Certificate of Designation of Series D Preferred Stock. (1)                                                                                                            
|10.11  |  | Form of Warrant exercisable at $1.51 per share. (1)                                                                                                                    
|10.12  |  | Form of Warrant to Burnham Securities Inc. (1)                                                                                                                         
|10.13  |  | Form of Stock Option to Employees. (1)                                                                                                                                 
|10.18  |  | Form of agreement with holders of Series a Preferred Stock. (1)                                                                                                        
|10.25. |  | Agreement and Plan of Merger between the Company and International Microcomputer Software, Inc. (n/k/a BCAS). dated August 31, 2001.(4)                                
|10.26  |  | Loan Purchase Agreement between the Company and Union Bank of California dated August 22, 2001. (4)                                                                    
|10.29  |  | Option Agreement with Martin Wade dated June 1, 2001.                                                                                                                  
|10.30  |  | Memorandum of Agreement between the Company, Ralph Sorrentino and RJS Consulting Corp. dated October 30, 2001.                                                         
|10.31  |  | Purchase Agreement between ATI (Delaware) and PAT Franchise dated February 28, 2002. (5)                                                                               
|10.32  |  | Common Stock Purchase Agreement among the Company, DCDC (Delaware) and PAT Services, dated February 28, 2002. (4)                                                      
|10.33  |  | Guaranty and security Agreement between PAT Franchise and the Company dated February 28, 2002. (5)                                                                     
|10.34  |  | Pledge Agreement between PAT Services and the Company dated February 28, 2002. (5)                                                                                     
|10.35  |  | Amended and Restated Senior Secured Promissory Note in favor of the Company dated February 28, 2002. (5)                                                               
|10.36  |  | Promissory Note Conversion and General Release dated February 28, 2002 between the Company and IMSI (n/k/a BCAS) (5)                                                   
|10.37  |  | Sale Agreement between International Microcomputer Software, Inc. and the Company dated November, 2001_for the sale of Keynomics, Inc. (7)                             
|10.38  |  | Note Purchase Agreement between the Company and KGS Holdings, Ltd. dated June, 2002.                                                                                   
|10.39  |  | Settlement Agreement between the Company and Ralph Sorrentino dated January, 2003. (7)                                                                                 
|10.40  |  | Settlement Agreement between the Company and Raymond DeMarco, Michael Morley and Gil Holland dated March, 2003. (7)                                                    
|10.42  |  | Promissory Note in favor of IMSI (n/k/a BCAS) dated September 18, 2003. (6)                                                                                            
|10.43  |  | Promissory Note issued by Access Propeller, LLC in favor of the Company dated September, 2003. (6)                                                                     
|10.44  |  | Amendment No.1 to the Promissory Note in favor of IMSI (n/k/a BCAS) dated September 18, 2004. (6)                                                                      
|10.45  |  | Assignment Agreement of the Promissory Note between the Company, International Microcomputer Software, Inc. and Multi Mag Corporation dated as of February 3, 2005. (7)
|10.46  |  | Amendment No.2 to the Promissory Note in favor of Multi Mag dated June 5, 2005. (7)                                                                                    
|10.47  |  | Code of Ethics (8)                                                                                                                                                     
|10.48  |  | Amendment No. 3 to the Promissory Note in favor of Multi Mag dated December 14, 2005.                                                                                  
|10.49  |  | Amendment No. 4 to the Promissory Note in favor of Multi Mag dated May 31, 2006.                                                                                       
|10.50  |  | Amendment No. 5 to the Promissory Note in favor of Multi Mag dated May 30, 2007.(9)                                                                                    



List of Subsidiaries (3)



|1 |  | Previously Filed with Form 10-SB Declared Effective on August 12, 1997
|- |  | ----------------------------------------------------------------------
|2 |  | Previously filed with Form 10-KSB for the year ended June 30, 1999    
|3 |  | Previously filed with Form 10-KSB for the year ended June 30, 2000    
|4 |  | Previously filed with Form 8-K filed on September 19, 2001            
|5 |  | Previously filed with Form 8-K filed on March 15, 2002                
|6 |  | Previously filed with Form 8-K filed on October 20, 2004              
|7 |  | Previously filed with Form 10-KSB for the year ended June 30, 2002    
|8 |  | Previously filed with Form 10-KSB for the year ended June 30, 2004    
|9 |  | Previously filed with Form 10-KSB for the year ended June 30, 2005    







-12-







SIGNATURES



In accordance with the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|DIGITAL CREATIVE DEVELOPMENT CORPORATION (Registrant)
|-----------------------------------------------------
|                                                     
|Date: September 30, 2011                             
|                                                     



|By:  /s/ Gary Herman                                                        
|----------------------------------------------------------------------------
|Gary Herman, Chief Executive Officer
        Date: September 30, 2011       
|                                                                            
|By:  /s/ Vincent De Lorenzo                                                 
|Vincent De Lorenzo, Chief Financial Officer
        Date: September 30, 2011







-13-







DIGITAL CREATIVE DEVELOPMENT CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





|Report of Independent Registered Public Accounting Firm          | F-1       
|---------------------------------------------------------------- | ----------
|                                                                 |           
|Consolidated Balance Sheets                                      | F-2       
|                                                                 |           
|Consolidated Statements of Operations and Comprehensive Net Loss | F-3       
|                                                                 |           
|Consolidated Statements of Stockholders' Equity (Deficiency)     | F-4       
|                                                                 |           
|Consolidated Statements of Cash Flows                            | F-5       
|                                                                 |           
|Notes to Consolidated Financial Statements                       | F-6 - F-15

















REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders Digital Creative Development Corporation and
Subsidiary



We have audited the accompanying consolidated balance sheets of
Digital Creative Development Corporation and  Subsidiary as of June 30, 2011 and 2010, and the related consolidated statements
of operations and comprehensive income, stockholders' equity (deficiency), and cash flows for the years then ended. The consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audits.



We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Digital Creative Development Corporation and Subsidiary
as of June 30, 2011 and 2010, and the result of their operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States.



The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring
losses from operations and a net capital and equity deficiency of $ 2,227,900 that raise substantial doubt about the Company’s
ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ ROSEN SEYMOUR SHAPSS MARTIN & COMPANY LLP

CERTIFIED PUBLIC ACCOUNTANTS

New York, New York

September 28, 2011







F-1





|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                             | 
|----------------------------------------------------------------------------------- | 
|CONDENSED CONSOLIDATED BALANCE SHEETS                                               | 
|                                                                                    | 
|ASSETS                                                                              | 
|                                                                                    | 
|                                                                                    | 
|                                                                                    | 
|CURRENT ASSETS                                                                      | 
|Cash and cash equivalents                                                           | 
|Marketable securities                                                               | 
|TOTAL CURRENT ASSETS                                                                | 
|                                                                                    | 
|                                                                                    | 
|TOTAL ASSETS                                                                        | 
|                                                                                    | 
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      | 
|                                                                                    | 
|CURRENT LIABILITIES                                                                 | 
|Accrued expenses and other liabilities                                              | 
|Accrued interest                                                                    | 
|Notes payable--related parties                                                      | 
|TOTAL CURRENT LIABILITIES                                                           | 
|                                                                                    | 
|                                                                                    | 
|STOCKHOLDERS' EQUITY (DEFICIT)                                                      | 
|Preferred Stock 2,000,000 Shares Authorized                                         | 
|Series A Convertible, Par Value $1 ; 2,200 Shares Issued and                        | 
|Outstanding; Involuntary Liquidation Preference of $ 1 Per Share                    | 
|Plus Accrued and Unpaid Dividends                                                   | 
|Series C, Par Value $100 ; 9,900 Shares Issued and                                  | 
|Outstanding; Involuntary Liquidation Preference of $100 Per Share                   | 
|Plus Accrued and Unpaid Dividends                                                   | 
|Series D, Par Value $100 ; 4,000 Shares Issued and                                  | 
|Outstanding; Involuntary Liquidation Preference of $100 Per Share                   | 
|Plus Accrued and Unpaid Dividends                                                   | 
|Common Stock, Par Value $.01; Authorized 75,000,000 Shares; Issued and Outstanding: | 
|53,864,165 Shares at June 30, 2011 and June 30 , 2010                               | 
|Additional paid in capital                                                          | 
|Accumulated other comprehensive loss                                                | 
|Accumulated deficit                                                                 | 
|TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                                | 
|                                                                                    | 
|TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY (DEFICIT)                               | 



See accompanying Notes to Consolidated Financial
Statements



F-2





|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY            | 
|------------------------------------------------------------------ | 
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS | 
|FOR THE YEARS ENDED JUNE 30,                                       | 
|                                                                   | 
|                                                                   | 
|                                                                   | 
|                                                                   | 
|REVENUE                                                            | 
|                                                                   | 
|                                                                   | 
|OPERATING EXPENSES                                                 | 
|General and administrative expenses                                | 
|                                                                   | 
|(LOSS) FROM OPERATIONS                                             | 
|                                                                   | 
|                                                                   | 
|OTHER INCOME (EXPENSE)                                             | 
|Interest expense, net and other                                    | 
|Realized losses on investments                                     | 
|                                                                   | 
|TOTAL OTHER INCOME (EXPENSE)                                       | 
|                                                                   | 
|NET LOSS                                                           | 
|                                                                   | 
|UNDECLARED PREFERRED STOCK DIVIDENDS                               | 
|                                                                   | 
|Net Loss applicable to common shareholders                         | 
|                                                                   | 
|                                                                   | 
|WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES FOR                  | 
|BASIC AND DILUTED EARNINGS PER SHARE                               | 
|                                                                   | 
|BASIC AND DILUTED LOSS PER SHARE                                   | 
|                                                                   | 
|NET INCOME  (LOSS)                                                 | 
|Other comprehensive income (loss)                                  | 
|Unrealized gain (loss) on marketable securities                    | 
|Comprehensive income (loss)                                        | 



See accompanying Notes to Consolidated Financial
Statements



F-3





|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY   | 
|--------------------------------------------------------- | 
|CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | 
|FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010       | 
|(in thousands)                                            | 
|                                                          | 
|                                                          | 
|                                                          | 
|                                                          | 
|                                                          | 
|                                                          | 
|Balance at June 30, 2009                                  | 
|                                                          | 
|Unrealized gain on investments                            | 
|                                                          | 
|Net loss                                                  | 
|                                                          | 
|Balance at June 30, 2010                                  | 
|                                                          | 
|Unrealized loss on investments                            | 
|                                                          | 
|Net loss                                                  | 
|                                                          | 
|Balance at June 30, 2011                                  | 



See accompanying Notes to Consolidated Financial
Statements



F-4





|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                     | 
|--------------------------------------------------------------------------- | 
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             | 
|FOR THE YEARS ENDED JUNE 30,2011 AND JUNE 30, 2010                          | 
|                                                                            | 
|                                                                            | 
|                                                                            | 
|                                                                            | 
|                                                                            | 
|CASH FLOWS FROM OPERATING ACTIVITES:                                        | 
|Net loss                                                                    | 
|Adjustments to reconcile net loss to net cash used in operating activities: | 
|Net realized  losses  on marketable securities                              | 
|                                                                            | 
|Changes in assets and liabilities:                                          | 
|Increase in accounts payable, accrued expenses and other liabilities        | 
|                                                                            | 
|NET CASH USED IN OPERATING ACTIVITIES                                       | 
|                                                                            | 
|CASH FLOWS FROM INVESTING ACTIVITES:                                        | 
|Proceeds from sale of investments, net of purchases                         | 
|                                                                            | 
|NET CASH PROVIDED BY INVESTING ACTIVITIES                                   | 
|                                                                            | 
|CASH FLOWS FROM FINANCING ACTIVITES:                                        | 
|Proceeds from issuance of notes payable--related parties                    | 
|                                                                            | 
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                   | 
|                                                                            | 
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                     | 
|                                                                            | 
|CASH AND EQUIVALENTS, beginning of period                                   | 
|                                                                            | 
|CASH AND EQUIVALENTS, end of period                                         | 
|                                                                            | 
|CASH PAYMENTS FOR:                                                          | 
|Interest expense                                                            | 
|Income taxes                                                                | 
|                                                                            | 



See accompanying Notes to Consolidated Financial
Statements



F-5







DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



PRINCIPLES OF CONSOLIDATION



The consolidated financial statements include the accounts of Digital
Creative Development Corporation and its wholly owned subsidiary, (collectively the "Company"), Digital Creative Development
Company (Delaware). All significant inter-company accounts and transactions have been eliminated in consolidation.



ORGANIZATION



Digital Creative Development Corporation (the "Company"
or "Digital") was originally founded in 1969 as Arthur Treacher's Fish & Chips, Inc., a Delaware corporation. Since
then, the Company has purchased several businesses and has changed its corporate identity by merging into other corporate entities.



The Company sold its interest in Arthur Treacher's Fish & Chips,
Inc. in 2002 and currently has no active business. In 2001 and 2002, the Company acquired a controlling interest in International
Microcomputer Software, Inc. ("IMSI"), (n/k/a Broadcaster, Inc.,--{“Broadcaster”}) which had been a developer
and publisher of productivity software in precision design, graphics design and other related business applications, as well as
graphics and CAD (Computer Aided Design) software and internet technology. On June 2, 2006 Broadcaster closed on its acquisition
of AccessMedia Networks, Inc. The combined company operated an Internet entertainment network under the name Broadcaster. Since
its original investment, the Company's ownership interest in Broadcaster, Inc. has decreased to approximately 9 % as of  September
23, 2011.



STOCK-BASED COMPENSATION



The Company measures  for stock-based compensation using
a fair value based method, whereby the grant date fair value of the share-based awards is charged to expenses over their vesting
period.



CASH AND CASH EQUIVALENTS



The Company considers all short-term investments in interest bearing
accounts, securities and other investments with an original maturity of three months or less to be a cash equivalent.



FAIR VALUE OF FINANCIAL INSTRUMENTS



In determining the fair value of its financial instruments, the
Company uses a variety of methods and assumptions that are based on market conditions and risks existing as of each balance sheet
date. The Company’s financial instruments include debt and stock options and have been valued using standard market conventions
and techniques, such as discounted cash flow analysis and option pricing models. All methods of measuring fair value result in
a general approximation of value since valuations are inherently not precise.



USE OF ESTIMATES



The preparation of financial statements in conformity with generally
accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates
include the allowance for impairment of investment assets and the valuation allowance against deferred tax assets.







F-6







DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





INVESTMENTS



Investments in marketable securities are carried at fair market
value and classified as available for sale. Investments in non-marketable debt securities are carried at cost or fair value as
determined by management.



INCOME TAXES



The Company utilizes the asset and liability method of accounting
for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
In addition, the method requires the recognition of future tax benefits, such as net operating loss carry forwards, to the extent
that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.



PER SHARE DATA



Net income or loss per share of common stock is computed based upon
the weighted-average number of common shares and potential common shares outstanding during the year.



CONCENTRATIONS AND CREDIT RISK



The Company maintains cash balances in banks and money market accounts,
which, at times, may exceed the limits of amounts insured by the Federal Deposit Insurance Corporation (FDIC); however, because
deposits are maintained at high quality financial institutions, management does not believe that there is a significant risk of
loss of uninsured amounts.



2. DOUBT AS TO CONTINUING AS A GOING CONCERN



Our condensed consolidated unaudited financial statements were prepared
on the assumption that we will continue as a going concern. We currently have a working capital and equity deficit of $ 2,227,900
and are in default of our notes payable. Our ability to obtain resources sufficient to continue to meet our obligations as they
come due is dependent on raising cash through the sale of shares of Broadcaster; and/or raising additional equity; and obtaining
forbearance of our debt holders. We intend to use our cash as well as other funds in the event that they shall be available on
commercially reasonable terms, to finance our activities, although we can provide no assurance that these additional funds will
be available in the amounts or at the times we may require. Management believes that it can obtain the additional funds necessary
to continue its operations.





F-7





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





3. INVESTMENTS IN MARKETABLE SECURITIES AND NONMARKETABLE
SECURITIES



The Company had investments and advances in certain marketable and
non-marketable securities at June 30, 2011 and 2010, as follows:



|                                          |  | June 30, |         
|----------------------------------------- |  | -------- | --------
|                                          |  | 2011     |         
|                                          |  |          |         
|Broadcaster, Inc., - at cost              |  | $        | 2,724.0 
|Unrealized loss on marketable securities  |  |          | (2,603.3
|Realized losses on marketable securities  |  |          | (0.5)   
|Access Propeller Holdings, Inc. - at cost |  |          | 300.0   
|Less: allowance for impairment            |  |          | (300.0  
|                                          |  |          |         
|                                          |  | $        | 120.2   



Until August 2007 the shares of Broadcaster, Inc. owned were "restricted
securities" as defined in Rule 144 under the Securities Act of 1933. Under Rule 144, the Company could publicly sell, within
any three month period, a number of shares not to exceed one percent of Broadcaster, Inc.'s then outstanding shares of common stock.
In the event that Broadcaster, Inc. became listed on the NASDAQ or on a national securities exchange, the maximum amount that
could be sold was the greater of one percent of the outstanding shares and the average weekly trading volume of Broadcaster, Inc.'s
common stock for the four weeks preceding the Company's filing of a notice of sale with the SEC. Since these shares were restricted, the
shares, which could be sold within one year, were classified as a current asset and the balance of the shares were classified
in other assets, as non-current, on the balance sheet.



In August 2007, that restriction was removed after the departure
of Bruce Galloway in May 2007, a former director and significant shareholder of the Company from the Board of Directors of Broadcaster.
Accordingly, the restriction as to the balance sheet classification of these shares was also removed and classified as current
assets.



Under  GAAP  fair value is the price that would
be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement
date. GAAP requires the Company to assume that the portfolio investment is sold in principal market to market participants, or
in the absence of a principal market, the most advantageous market, which may be a hypothetical market.



Market participants are defined as buyers and sellers in the principal
or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with GAAP,
the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest
volume and level of activity. GAAP has established a framework for measuring fair value which specifies a hierarchy of valuation
techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with GAAP, these
inputs are summarized in the three broad levels listed below:



Level 1 – Valuations based on quoted prices in active markets
for identical assets or liabilities that the Company has the ability to access.



Level 2 – Valuations based on quoted prices in markets that
are not active or for which all significant inputs are observable, either directly or indirectly.



Level 3 – Valuations based on inputs that are unobservable
and significant in the overall fair value measurement.





F-8





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





In addition to using the above inputs in investment valuations,
we continue to employ the valuation policy approved by our board of directors that is consistent with GAAP (see Note 1).  Consistent
with our valuation policy, we

evaluate the source of inputs, including any
markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining
fair value.



Our valuation policy considers the fact that  because
there is not a readily available market value for most of the investments in our portfolio, the fair value of the investments must
typically be determined using unobservable inputs.



Due to the inherent uncertainty of determining
the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate
from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have
been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize.
  Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid
than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may
realize significantly less than the value at which we have previously recorded it.



In addition, changes in the market environment
and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments
to be different than the valuations currently assigned.



The following table presents fair value measurements
of investments as of June 30, 2011 (dollars in thousands):



|            |  |       |       |  | Fair Value Measurements Using |  
|----------- |  | ----- | ----- |  | ----------------------------- | -
|            |  | Total |       |  | Level 1                       |  
|Investments |  | $     | 120.2 |  |                               | $
|            |  |       |       |  |                               |  



The following table’s present changes in investments that
use Level 2 inputs for the year ended June  30, 2010:



|                                       |  | Year ended
        June 30, 2011
        (in thousands) |       
|-------------------------------------- |  | ------------------------------------------------------- | ------
|Balance as of June 30, 2009            |  | $                                                       | 180.6 
|Net unrealized losses                  |  |                                                         | (59.9)
|Net purchases, sales or redemptions    |  |                                                         | (.5)  
|Net transfers in and/or out of Level 2 |  |                                                         | -     
|Balance as of  June 30, 2010           |  | $                                                       | 120.2 



As of June 30, 2011, the net unrealized loss on the investments
that use Level 2 inputs was $2,603,300



Several of the officers, directors and significant shareholders
of Broadcaster were defendants in an action captionedPaul Goodman v. Spelling, et al in New York State Supreme Court. On
January 16, 2008, Mr. Goodman commenced an action in New York State Supreme Court against Broadcaster and certain of its officers,
directors, and shareholders, seeking monetary damages “in an amount to be determined but not less than $10 million plus other
special, punitive and compensatory damages” for alleged defamation contained in a Company filing with the SEC. Mr. Goodman
sought and obtained an ex parte temporary restraining order, which was vacated by the Court upon hearing argument from the defendants. This
action had been removed and transferred to the Federal District





F-9







DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010



Court for the Southern District of New York
and then transferred to United States District Court for the Central District of California. Management of Broadcaster believes
that the action is without merit.



On December 14, 2009 Broadcaster,. announced  the
settlement, of the derivative lawsuit brought by Baytree Capital Associates, LLC in February 2008. Broadcaster and Baytree agreed
to a dismissal of the lawsuit with prejudice with no payment being made by either the plaintiff or any of the defendants. As is
required when a derivative action is settled and dismissed, the Court found that the settlement was fair, adequate and reasonable
to Broadcaster and its shareholders and not a product of collusion.



At the same time, Nolan Quan, a Broadcaster
shareholder and former officer, and Michael Gardner, the owner of Baytree Capital Associates, both agreed to surrender for cancellation
their shares of Broadcaster Common Stock that they own or control and that had been issued as "earnout" shares in connection
with the Broadcaster—Access Media transaction completed in 2006. The total number of shares surrendered and cancelled was
18,375,000,  representing approximately 32.93% of the outstanding shares of common stock of Broadcaster, computed
immediately prior to the surrender of the shares.



The result of the surrender and cancellation
of these shares increases the Company’s ownership in  Broadcaster from 5.4% to 9.0 %.



A total of  200,000 shares of Broadcaster.
common stock secures the Company's 15% $325,000 Promissory Note to Multi Mag Corporation and approximately 373,845 shares of Broadcaster,
Inc. common stock secures the $345,000 Notes to investors.. Due to the recent decline in the price of shares of Broadcaster,
the Notes are now under-collateralized.



The Company has sold 149,500 shares of Broadcaster.
from July 1, 2008 through June 30, 2011. The proceeds of approximately $22,400 have been used for general working capital purposes.



From time to time, the Company may continue
to sell a certain amount of its holdings in Broadcaster The proceeds of these sales are anticipated to be principally used by the
Company for general working capital purposes.



4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES



Accrued expenses primarily consist of accrued
legal and other professional fees and general administrative expenses.



5. NOTES PAYABLE -RELATED PARTIES



At June 30, 2010 and 2009, the Company’s
long term debt consisted of the following:



|                                                                     |  | June 30,
        2011 |         |  | June 30,
        2010 |  
|-------------------------------------------------------------------- |  | --------------------- | ------- |  | --------------------- | -
|Secured Promissory Note with Interest at 15%, due December 31, 2007  |  | $                     | 325,000 |  |                       | $
|Secured Promissory Notes with Interest at 10%, due December 31, 2008 |  |                       | 345,000 |  |                       |  
|Notes payable to certain former executives                           |  |                       | 138,100 |  |                       |  
|                                                                     |  |                       |         |  |                       |  
|                                                                     |  |                       |         |  |                       |  
|Total                                                                |  |                       | 808,100 |  |                       |  
|Less: Current portion                                                |  |                       | 808,100 |  |                       |  
|                                                                     |  | $                     | -0-     |  |                       | $





F-10





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





In December 2001, , the Company borrowed $50,000 from its former
CEO, Martin Wade, bearing interest at 12%, and due on December 31, 2001. As additional consideration for the loan, Mr. Wade was
issued warrants to purchase 500,000 shares of common stock of the Company at $0.01 per share, which were valued at $53,900 and
included as interest expense. On July 1, 2005, the maturity date of this loan was extended to December 31, 2005. On January 23,
2007, Mr. Wade agreed to further extend the maturity date of this note to May 31, 2007. Subsequently, on June 14,

2007 Mr. Wade agreed to extend the maturity date of this note to
December 31, 2007, and further extended the maturity date to December 31, 2008. The Company's management is confident that future
extensions, if necessary can be obtained, but there can be no assurance that the Company will be able to obtain these extensions,
if needed.



Throughout the period from July 1, 2001 through June 30, 2010, Mr.
Bruce Galloway, the Company's former chairman, Gary Herman and a related entity had advanced monies with interest rates up to 10%
to allow the Company to satisfy operating expenses and occasional cash shortfalls. The amounts outstanding to both Mr. Galloway
and Mr. Herman totaled $75,600 at June 30, 2010 and 2009, respectively, before accrued interest.



The due dates of all of these related party notes to current and
former directors have been extended to December 31, 2008. The Company's management is confident that future extensions, if necessary,
can be obtained, but there can be no assurance of this. All the related party notes are currently due.



The Company and Multi-Mag , the holder of the $325,000 Secured Promissory
Note have executed various amendments  all of which extended the due date of the Note upon payment of accrued interest
to December 31, 2008 The Company and Multi-Mag are currently in negotiations to extend the due date of the note. The Company’s
management is confident that future extensions can be obtained. And although extensions were obtained in the past, there can be
no assurance that the Company will be able to obtain these extensions, if needed.



In April 2003 the Company issued $345,000 of secured promissory
notes to a group of seven investors. The notes matured in August 2005 and bore interest at 10%. In addition, for each $60,000 of
notes issued, the Company issued a warrant to purchase 1,000,000 shares of stock at an exercise price of $0.01 per share. A total
of 5,750,000 warrants were exercised at a price of $0.01 per share. These warrants were valued at $392,500 and charged to interest
expense. The notes are collateralized by 373,845 shares of Broadcaster, Inc. common stock currently held by the Company. The
proceeds of this offering were used to repay a $300,000 loan that was due to Mr. Galloway and for the Company’s working capital
requirements. The shares reflect the 1 for 2 reverse stock split of Broadcaster's shares effected June 25, 2007.



The number of shares of Broadcaster. Common Stock pledged as Collateral
was subject to adjustment one year after the initial closing date based on the 30-day trailing average of the bid prices of shares
of Common Stock of Broadcaster  as listed on the OTC Bulletin Board or such other exchange as such shares are then listed
upon. As such, the number of shares that are subject to the pledge agreement as of June 2010 and June 2009 are 373,845 shares.
The shares reflect the 1 for 2 reverse stock split of Broadcaster's shares effected June 25, 2007.



Of the $345,000 Secured Promissory Notes, all but three of these
noteholders whose notes total $195,000 have extended their notes to December 31, 2008. The Company's management is confident that
future extensions can be obtained if necessary, but there can be no assurance that the Company will be able to obtain such extensions.
The notes payable to the three remaining noteholders who have not agreed to extend are currently in default. All the Promissory
Notes are currently due.



The Company considers the carrying value of its notes payable to
be a reasonable estimation of its fair value based on the current market rates available to the Company for debt of the same remaining
maturities.



Related interest expense was approximately $197,400 and $179,100
for the years ended June 30, 2011and 2010, respectively.







F-11





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010







6. INCOME TAXES



For the years ended June 30, 2011 and 2010, a reconciliation of
income taxes computed at the United States federal statutory income tax rate to the provision for income taxes reflected in the
Statements of Operations is presented below:



|                                                                                    |  | 2011 |     |   | 2010 | 
|----------------------------------------------------------------------------------- |  | ---- | --- | - | ---- | 
|Federal statutory rate                                                              |  |      | 34  | % |      | 
|Valuation allowance on net operating loss carryforwards, and investment write-downs |  |      | 34  | % |      | 
|Effective income tax rate                                                           |  |      | -0- |   |      | 



Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Deferred tax assets result primarily from net operating loss carry-forwards. The components of the Company’s deferred tax
assets and liabilities at June 30, 2011 and 2010 are as follows:



|                             |  | 2011 |            |   | 2010 |  
|---------------------------- |  | ---- | ---------- | - | ---- | -
|Deferred tax assets:         |  |      |            |   |      |  
|Operating loss carryforwards |  | $    | 4,316,000  |   |      | $
|Write-down of investments    |  |      | 1,544,000  |   |      |  
|Total Deferred Tax Asset     |  |      | 5,860,000  |   |      |  
|Valuation Allowance          |  |      | (5,860,000 | ) |      |  
|                             |  | $    | -0-        |   |      | $



A full valuation allowance is provided against all deferred tax
assets due to the uncertainty as to the future realization of any benefits.



Deferred taxes have not been provided on accumulated other
comprehensive income (loss) as management expects that the NOL will be sufficient to offset future gains.



GAAP requires that, in applying the liability method, the financial
statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under
this criterion the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the
outcome that will likely be sustained under examination. The Company has no uncertain tax positions as of June 30, 2011.



Digital Creative Development Corporation and subsidiary have not
filed an income tax return since the year ended June 30, 2000. As of June 30, 2011 the Company had a net operating loss carryforward
of approximately $10,789,000.  The current tax laws as they pertain to the disposal of subsidiaries that generate net
operating loss carryforwards ("NOL") essentially eliminate the NOL carryforward and do not allow a company to recognize
a loss on disposition of the subsidiary for tax purposes. However, laws do provide for the parent to reallocate the NOL based upon
their basis in the companies being disposed of.



As of June 30, 2011, the Company had net operating loss carry forwards
of approximately $10,789,000 available to offset future federal taxable income. The federal net operating loss carry-forwards
will expire in varying amounts through 2030.  The Company is in the process of filing its tax returns for the current
and all applicable prior years.







F-12





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010





7. PER SHARE INFORMATION



In accordance with GAAP, "Earnings Per Share", basic net
income (loss) per common share ("Basic EPS") is computed by dividing the net income (loss) attributable to common shareholders
by the weighted-average number of common shares outstanding. Diluted net income (loss) per common share ("Diluted EPS")
is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares
and dilutive common share equivalents on convertible securities, options, and warrants then outstanding. GAAP requires the presentation
of both Basic EPS and Diluted EPS on the face of the Company's Consolidated Statements of Operations. There were 750,000 stock
options and 500,000 warrants excluded from the computation of Diluted EPS for the years ended June 30, 2011 and 2010 as their effect
on the computation of Diluted EPS would have been anti-dilutive.



The following table sets forth the computation of basic and diluted
per share information:



|                                                                       |  | June 30,       |         
|---------------------------------------------------------------------- |  | -------------- | --------
|                                                                       |  | 2011           |         
|Basic and Diluted                                                      |  | (in thousands) |         
|Numerator                                                              |  |                |         
|Loss attributable to common shareholders                               |  | $              | (402.9  
|Denominator:                                                           |  |                |         
|Weighted average common shares outstanding for basic and full dilution |  |                | 53,864.2
|Basic and Diluted Per Share Information:                               |  |                |         
|Net loss per share                                                     |  | $              | (.01    
|Anti-dilutive instruments excluded from the above computation:         |  |                |         
|Common stock options – shares                                          |  |                | 750,000 
|Common stock warrants – shares                                         |  |                | 500,000 



8. STOCK OPTIONS



In October, 2005, the Company made a contingent award to
each of its current directors, Gary Herman and Skuli Thorvaldsson, as well as an award to a former director and significant shareholder,
Bruce Galloway. The award consisted of options granted to purchase 7,440,000 shares of common stock at exercise prices ranging
from $0.0732 per share to $0.1385 and expiring through June 2015. These options, awarded for services rendered in connection with
past services, including the restructuring of the Company in fiscal year 2002; director services; and other services, were valued
at approximately $798,500, using the Black-Scholes model.



The Company’s Board of Directors has approved this compensation
for services rendered to the Company by Messrs. Herman and Thorvaldsson contingent upon the receipt of a fairness opinion
from an independent advisory firm and approval of such fairness opinion by the Board of Directors. That fairness opinion has been
received and approved by the Board on February 2, 2011. The value of the related awards will approximate $798,500. Further, the
Company finalized compensation agreements for Messrs. Herman and Thorvaldsson which include amounts to be paid for past services
to the Company for the calendar years 2002, 2003, 2004, 2005 and 2006.



Although the Board approved the plan on February 2, 1011, the Board
may revise the plan in light of  the current financial situation of the Company.





F-13





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010



These options were granted as compensation
and the number of options granted was determined based on specific individual circumstances. The shares issuable under these option
grants are non-registered shares and the Company has no requirement to register such shares.



In November 2000, the Company adopted a Stock
Purchase and Option Plan (the "Plan") that permits the issuance of options to selected employees and directors of, and
consultants to, the Company. The Plan reserves 15,000,000 shares of Common Stock for issuance underlying the grants of stock options
and warrants. Options general1y become exercisable over vesting periods of up to three years and expire five years from the date
of grant.



A summary of the options issued under the Plan
is presented in the table below:



|                           |  | OPTIONS |         |  | WEIGHTED
        AVERAGE
        EXERCISE
        PRICE |  
|-------------------------- |  | ------- | ------- |  | ------------------------------------------------------- | -
|Outstanding -June 30, 2009 |  |         | 750,000 |  |                                                         | $
|Expired                    |  |         | -0-     |  |                                                         |  
|Exercised                  |  |         |         |  |                                                         |  
|Issued                     |  |         | -0-     |  |                                                         |  
|Outstanding -June 30, 2010 |  |         | 750,000 |  |                                                         | $
|Expired                    |  |         | -0-     |  |                                                         |  
|Exercised                  |  |         | -0-     |  |                                                         |  
|Issued                     |  |         | -0-     |  |                                                         | $
|Outstanding -June 30, 2011 |  |         | 750,000 |  |                                                         | $



9. COMMITMENTS AND CONTINGENCIES



The Company is involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's consolidated results of operations or financial position.



10. STOCKHOLDERS' EQUITY



The holders of the Series A Preferred Stock are entitled to a cumulative
dividend of $0.10 per share per annum. Such dividends accrue annually but are payable if and when the Company declares a dividend.
The Company has never paid any dividends with respect to the Series A Preferred Stock. The 2,200 outstanding shares of Series A
Preferred Stock are convertible into 3,300 shares of Common Stock for no additional consideration at the option of the holder of
the stock. The Series A Preferred Stock is entitled to a liquidation preference of $1.00 per share, plus any accrued and unpaid
dividends. The Series A Preferred Stock may be redeemed by the Company at a redemption price of $1.00 per share plus all accrued
and unpaid dividends. The amount of accumulated and unpaid dividends was approximately $26,200 and $26,000 at June 30, 2011 and
2010, respectively.





F-14





DIGITAL CREATIVE DEVELOPMENT CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010



The Series C Preferred stock is not convertible, but may be redeemed
at the option of the Company at a redemption price of $100 per share plus accrued and unpaid dividends, at any time after October
31, 1999. The holders of the preferred stock are entitled to a cumulative dividend of 10% per annum, payable semiannually, if and
when the board declares a dividend. At June 30, 2010 and 2009, the Company had accumulated and unpaid dividends of approximately
$1,152,700 and $1,067,400, respectively, on this series of preferred stock..



The holders of the Series D Preferred Stock are entitled to a cumulative
dividend of 15% per share per annum. Such dividends accrue annually but are payable if and when the Company declares a dividend.
The Company has never paid any dividend with respect to the Series D Preferred Stock. The 4,000 outstanding shares of Series D
Preferred Stock are convertible into 400,000 shares of Common Stock for no additional consideration at the option of the holder
of the stock. The amount of accumulated and unpaid dividends was approximately $765,000 and $705,000 at June 30, 2010 and 2009,
respectively.







F-15