**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        DC 20549**
 
 **FORM
        10-KSB**
 
 
 ANNUAL
        REPORT
 Under
        Section 13 or 15(d) of the Securities Act of 1934
 For
        the
        Fiscal Year Ended June 30 ,
        2003
 
 
 **DIGITAL
        CREATIVE DEVELOPMENT CORPORATION**
 (Formerly
        ARTHUR TREACHER’S, INC. )
 (Name
        of
        Small Business Issuer in Its Charter)
 
 
 UTAH
              34-1413104(State
                  or Other Jurisdiction of
                Incorporation
                  or Organization)
              I.R.S.
                  Employer
                Identification
                  No.)200
                  East 82nd Street, New York, NY
              10028(Address
                  of Principal Executive Offices)
              (Zip
                  Code)212-247-0581(Issuer's
                  Telephone Number)
 
 
 Securities
        registered under Section 12(b) of the Act:
 
 Title
                  of Each Class
              
              Name
                  of Each Exchange on Whichto
                  be so Registered
              
              Each
                  Class is to be Registered
 
 
 Securities
                  registered under Section 12(g) of the Act:
              Common
                  Stock, $.01 par value75
                  ,000,000shares
              (Title
                  of Class)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes | | No |x|
 
 
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will 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-KSB. |X|
 
 State
        issuer's revenues for its most recent fiscal year.  $6,100
 
 Shares
        outstanding: 51,689,165 at September 22, 2005
 
 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.) $7,236,000
 
 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.
  2
  PART
        I
 BACKGROUND
 
 Digital
        Creative Development Corporation (the “Company”) is principally involved in
        acquiring and investing in software and high technology companies, with a
        focus
        on acquiring controlling interests. Prior to February 28, 2002, the Company’s
        primary business was the operation, franchising, ownership and development
        of
        Arthur Treacher’s Fish & Chip’s (“Arthur Treacher’s”) and Pudgie’s Famous
        Chicken(“Pudgie's”) fast food restaurants. . However, we have since begun to
        search for candidates with which to enter into business combinations or
        strategic transactions. (See “Plan of Business”).Since the Spring 2002, the
        Company has been inactive , except for its interest in International
        Microcomputer Software Inc. (“IMSI”) (OTCBB- IMSI).
 
 On
        February 28, 2002, the Company sold its 80% interest in Arthur Treacher’s, Inc.
        (Delaware) (“ATI (Delaware)”) to PAT Services, Inc.(“PAT Services”), an entity
        controlled by Mr. Jeffery Bernstein, for the consideration of $100, assumption
        of liabilities and a waiver by Mr.Bernstein of his right to convert his shares
        of ATI (Delaware) into shares of common stock of the Company under the
        conversion agreement with the Company. ATI (Delaware) transferred certain
        property rights (including all its trademarks) and 100% of the stock of its
        subsidiaries, Arthur Treacher’s Franchise Systems, Inc. and Pudgie's Franchise
        Corp. to PAT Franchise Systems, Inc.(“PAT Franchise”), an entity controlled by
        Mr. Bernstein, in consideration for the assumption of certain liabilities
        of ATI
        (Delaware). The two subsidiaries of ATI (Delaware) are parties to the franchise
        agreements with the franchisees in the Arthur Treacher’s and Pudgie's restaurant
        systems.
 
 In
        conjunction with the sale of ATI (Delaware), the secured promissory note
        executed in December 2000 by the Company, ATI (Delaware) and its subsidiary,
        M.I.E. Hospitality, Inc. (“MIE”) in favor of DCDC (Delaware) was amended and
        restated. The amended promissory note had a principal balance of $1,071,310,
        which equaled the outstanding principal balance and accrued and unpaid interest
        on the original note as of February 28, 2002. The note was due on December
        1,
        2004 and bore interest at the rate of 12% per year, with the interest payable
        monthly commencing April 30, 2002. The Company sold the amended promissory
        note
        to KGS Holdings, Ltd for consideration of $107,131 on June 22, 2002 and used
        the
        proceeds for working capital purposes.
 
 In
        February 2000, the Company formed a subsidiary, Digital Creative Development
        Corporation, a Delaware corporation (“DCDC (Delaware)”), for the purpose of
        investing and acquiring entities engaged in creating and providing entertainment
        content to businesses and consumers through digital broadband and conventional
        distribution platforms. In August 2000, the Company, a Utah Corporation changed
        its name from Arthur Treacher’s, Inc. to Digital Creative Development
        Corporation.On August 31, 2001, the Company signed a merger agreement (the
        “Merger Agreement”) with IMSI. The Company was to merge into a wholly owned
        subsidiary of IMSI. Shareholders of the Company were to exchange shares of
        common stock of the Company for IMSI common stock constituting approximately
        51%
        of the issued and outstanding common stock of IMSI. Upon execution of the
        Merger
        Agreement, the Company purchased a promissory note in the principal amount
        of $
        3,580,000 for $2,500,000, owed by IMSI to Union Bank of California, which
        note
        was to have been cancelled upon consummation of the merger.
 
 3
 Upon
        signing of the Merger Agreement, Martin Wade, then the Company’s CEO, also
        became CEO of IMSI. In addition, as of the date of the Merger Agreement,
        the
        members of the Board replaced all but one of the members of the Board of
        Directors of IMSI.
 
 On
        February 28, 2002, the Company and IMSI entered into an agreement, which
        provided for the conversion of the promissory note purchased by the Company
        into
        9,000,000 shares of common stock of IMSI plus $250,000 in cash to be paid
        in 15
        monthly installments. The parties agreed to terminate the merger contemplated
        by
        the Merger Agreement. IMSI also agreed to prepare and file a registration
        statement registering 2,000,000 of common stock and to provide the Company
        with
        piggyback registration rights with respect to the remaining 7,000,000 shares.
        Effective January 31, 2002, certain members of the Boards of Directors of
        the
        Company and IMSI resigned, with no directors serving on the boards of both
        companies. As of September 22, 2005, the closing bid price of common stock
        of
        IMSI as quoted on the NASD Bulletin Board was $1.10 per share.
  Since
          1982, IMSI has 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. IMSI is a graphics and CAD (Computer-Aided-Design) software
          and
          Internet technology company headquartered in Novato, California. IMSI owns
          and
          operates three business divisions.
 Item
          1. Description of Business
 A.
              Overview
 
 Until
        February 28, 2002, the primary business of the Company was the operation
        and
        franchising of Arthur Treacher’s and Pudgie’s restaurant concepts, as well as
        the co-branding of these concepts with Nathan’s Famous, Inc. (“Nathan’s”), Miami
        Subs Corporation (“Miami Subs”) and Kenny Rogers Roasters (“Kenny Rogers”).
        Currently, the Company does not have any existing operations.
 
 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.
 
 4
 We
        cannot
        make assurances that we will make any acquisitions or business combinations
        or
        that we will be able to obtain additional financing for such acquisitions
        or
        combinations, if necessary. If any acquisitions or combinations are made,
        we
        cannot make assurances you that we will be able to successfully integrate
        the
        acquired or combined business into our 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 our 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.
 
 H.
        Employees
 
 As
        of
        June 30, 2003 and through the current date, the Company had no employees.
        Gary
        Herman, the Company’s Chairman, Chief Executive Officer, President and
        Secretary and Skuli Thorvaldsson the Company’s Chief Financial Officer serve on
        a management consulting basis.
 
 ENTERTAINMENT
        AND SOFTWARE BUSINESS
 
 This
        segment of the Company’s business, operating through its subsidiary, DCDC
        (Delaware), was established to invest and acquire entities, which develop,
        produce and distribute software and media content resulting in revenue
        generation from motion pictures; television; animation; product endorsement
        and
        sales; and licensing and syndication. Content is intended to be delivered
        to
        businesses and consumers through digital broadband and conventional distribution
        platforms. For the period through June 30, 2003, DCDC (Delaware) made the
        following investments in an effort to execute the plan above.
 
 Our
        Yearbook Corp. was a
        portal site for high school and college yearbooks on the Internet. DCDC
        (Delaware) invested $450,000 for 450,000 shares of preferred stock as well
        as
        three loans for an aggregate principal amount of $160,000. On August 3, 2000,
        Our Yearbook was forced into an involuntary proceeding under Chapter 11 of
        the
        U.S. Bankruptcy Code. In February, 2001 the matter was converted to Chapter
        7
        liquidation by the Court. DCDC (Delaware) has established allowances in the
        amount of $610,000 during the 2001 fiscal year.
 
 5
 Interactive
        Pager Media, Inc .
        (n/k/a
        Comstar Wireless Corp.) is a provider of wireless two-way paging services
        in the
        United States. DCDC (Delaware) invested $1,000,000 for 122,100 shares of
        preferred stock. DCDC (Delaware) has established an allowance for the full
        amount of the investment. The assets of Comstar were sold in May 2004
        and it is the Company’s position that a return on this investment will not
        be realized.
 
 Thinking
        Tools, Inc. (n/k/a
        GVI Security Solutions, Inc. (OTCBB: GVIS) was a provider of Internet services.
        DCDC (Delaware) invested $300,000 for 600,000 shares of common stock of Thinking
        Tools. DCDC (Delaware) has written down this investment to its market value
        at
        June 30, 2003, of $.01/share. From February to May 2004 the company sold
        its
        position in this investment for gross proceeds of approximately $ 69,000
        and
        realized a loss of $231,000.
 
 Liquor.com,
        Inc .
        was an
        Internet site for the purchase of wine, champagne, spirits, and accessories.
        DCDC (Delaware) loaned Liquor.com $250,000 under a promissory note
        which was convertible into 71,023 shares of common stock and a warrant
        exercisable for 35,511 shares of common stock. DCDC (Delaware) established
        an allowance for the full amount of the note since Liquor.com ceased operations
        in the fall of 2000.
 
 MadeMyWay.com,
        Inc .
        (n/k/a
        Datametrics Corporation) was a provider of Internet based digital printing
        services. DCDC (Delaware) invested $1,200,000 for 1,200,000 shares of common
        stock of MadeMyWay.com. DCDC (Delaware) established an allowance for
        the
        full amount of the investment since MadeMyWay.com ceased operations in April
        2001. In April 2002, in consideration of its investment, DCDC (Delaware)
        received 2,600,000 shares of common stock of DataMetrics Corporation (OTCBB:
        DMTI), the former parent of MadeMyWay. Subsequently, the stock of DMTI was
        subject to a 20:1 reverse stock split. At present, DCDC (Delaware) has 120,000
        shares of common stock of DMTI. The Company has written down this investment
        to
        its market value at June 30, 2003 of $.01 per share. On September
        22,
        2005, the common
        stock of DMTI was quoted at $.02 per share.
 
 Heavy.com,
        Inc. is a
        digital entertainment company with a focus on original content creation.
        DCDC
        (Delaware) extended a loan of $500,000 to the company in the summer of 2000.
        DCDC (Delaware) also has warrants to purchase 63,450 shares of common stock
        of
        Heavy.com at $7.47 per share. In the fall of 2000 this loan was converted
        to
        320,194 shares of Series B-2 Preferred Stock. DCDC (Delaware) established
        an allowance for the full amount of the investment since it is the Company’s
        position that this investment has no significant value that will be realized.
        In
        the summer of 2004, the Company sold its investment to the two principal
        shareholders of Heavy for the total consideration of $30,000.
 
 Acquisitions
 
 In
        September 2000, the Company, through DCDC (Delaware) invested or advanced
        approximately $1,841,100 in two entertainment concept companies. These companies
        were CineBlast, Inc., a wholly owned subsidiary, and EyeCandy, an affiliate
        of
        the Company. CineBlast was an independent movie production company.
        EyeCandy was a production company whose primary focus was the production
        and distribution of a television series, America in 60 Minutes, in China.
        At
        June 30, 2001 the Company wrote off its investments and advances and absorbed
        a
        charge for impairment loss, since it was determined that the respective
        operations of these entities were to be curtailed and that no significant
        value
        from these operations could be realized by the Company.
 
 6
 In
        December, 2001 the Company entered into an agreement with the principals
        of
        CineBlast!, Gil Holland, Michael Morley and Raymond DeMarco to transfer 100%
        of
        the shares of CineBlast for the consideration and reduction of sums of various
        consulting and employment agreements. In January, 2003 the principals of
        CineBlast, Raymond DeMarco, Michael Morley and Gil Holland filed an action
        in
        New York State Supreme Court, New York County (Index# 100192/03) against
        the
        Company and DCDC (Delaware) alleging among other things, breach of contract.
        In
        July, 2003 the parties executed a Settlement Agreement and a Stipulation
        of
        Discontinuance. (See, Legal Proceedings).
 
 In
        November 2001 the Company discontinued the operations of its affiliate,
        EyeCandy. In March 2001 the Company acquired Tuneinmovies.com, Inc. (“Tune-In”)
        through DCDC (Delaware). Tune-In was a creator and aggregator of new media
        content. At that time, DCDC also acquired Keynomics, Inc. (“Keynomics”), which
        provides software technology to industry, with emphasis on performance
        improvement and ergonomic education and training in the computer workstation
        environment. As of June 30, 2002, the Company had disposed of its investments
        in
        Tune-In and Keynomics.
 
 On
        November 29, 2001, the Company and IMSI executed a Stock Purchase Agreement,
        effective October 1, 2001, for the sale of Keynomics to IMSI. Keynomics was
        sold
        for the total consideration of $450,000. IMSI agreed to pay the purchase
        price
        as follows: (i) $50,000 paid in cash on the closing date; (ii) $150,000 in
        equal
        monthly installments of $25,000 per month for 6 months; (iii) $100,000 was
        paid
        by crediting against the purchase price the payments made to the Company
        in
        October and November 2001; and (iv) $150,000 paid by offsetting against the
        purchase price certain payments from the Company to IMSI made between the
        Effective Date and Closing. On November 5, 2001, after experiencing less
        than
        anticipated results from the operations of Tune-In, the Company entered into
        a
        memorandum agreement to sell certain assets and liabilities of Tune-In to
        its
        management team.
 
 On
        August
        31, 2001, the Company signed a merger agreement (the “Merger Agreement”) with
        IMSI. The Company was to be merged into a wholly owned subsidiary of IMSI.
        Shareholders of the Company were to exchange shares of common stock of the
        Company for IMSI common stock constituting approximately 51% of the issued
        and
        outstanding common stock of IMSI. Upon execution of the Merger Agreement,
        the
        Company purchased a promissory note in the principal amount of $3,580,000
        owed
        by IMSI to Union Bank of California, which note was to have been cancelled
        upon
        consummation of the merger. Upon signing of the Merger Agreement, Martin
        Wade
        also became CEO of IMSI. In addition, as of the date of the Merger Agreement,
        the members of the Board replaced the members of the Board of Directors of
        IMSI,
        who resigned in their entirety with the exception of one person On February
        28,
        2002, the Company and IMSI entered into an agreement which provided for the
        conversion of the promissory note purchased by the Company into 9,000,000
        shares
        of common stock of IMSI plus $250,000 in cash to be paid in monthly installments
        over 15 months. The parties agreed to terminate the merger contemplated by
        the
        Merger Agreement. IMSI also agreed to prepare and file a registration statement
        registering 2,000,000 of the shares of common stock and to provide the Company
        with piggyback registration rights with respect to the remaining 7,000,000
        shares. In addition, effective February 28, 2002, certain members of the
        Boards
        of Directors of the Company and IMSI resigned and no directors continue to
        serve
        as directors of both companies.
 
 7
 The
        Investment Company Act of 1940
 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 views its investments in IMSI, as
        operating investments primarily intended to secure its strategic
        goals.
 
 The
        Company’s investments that it held as of June 30, 2003 should be regarded as
        strategic deployments of Company assets to develop its digital entertainment
        and
        software business, rather than financial investments that generally are
        considered to constitute investment securities. The Company has never held
        itself out as an investment company; its historical development has focused
        almost exclusively restaurant, software and digital entertainment business;
        the
        activities of its officers and employees have been overwhelmingly addressed
        to
        achieving success in the restaurant, software and digital entertainment
        business; and prior to 2000, its income (and losses) have been derived almost
        exclusively from the restaurant and has more recently sought companies in
        the
        software and digital entertainment business. The Company is primarily engaged
        in
        a business other than investing, reinvesting, owning, holding or trading
        in
        securities. The Company’s only significant asset as of August 2, 2005 was
        its ownership interest of 6,835,758 shares of common stock of IMSI, constituting
        approximately 23% of the total outstanding shares of common stock of IMSI.
        An
        additional 450,000 shares of common stock, or approximately 2% of IMSI is
        beneficially owned by Gary Herman, the Company’s Chairman, and 337,000 shares of
        common stock, or approximately 1% of IMSI is beneficially owned by Bruce
        Galloway, the Company’s principal shareholder.Mr. Galloway also owns options to
        purchase 100,000 shares of IMSI stock at $ 1.10 per share and 500,000 warrants
        at $ .81 per share. Although the Company and its affiliates do not act as
        a
        group, the Company believes that the Company controls IMSI within the meaning
        of
        the Act. No assurances can be given that the SEC will agree that the Company
        is
        not currently deemed to be an unregistered investment company in violation
        of
        the Act. 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.
 
 8
 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, or, in the alternative, to divest itself of sufficient investment
        securities and/or to acquire sufficient non-investment assets so as not to
        be
        regarded as an investment 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. These would include,
        but not be limited to, a requirement that at least 40% of the Company’s board of
        directors not be “interested persons” of the Company as defined in the Act ,
        that those directors be granted certain special rights with respect to the
        approval of certain kinds of transactions (particularly those that pose a
        possibility of giving rise to conflicts of interest); and broad prohibitions
        on
        affiliate transactions. While the Company could apply for individual exemptions
        from these restrictions, there could be no guarantee that such exemptions
        would
        be granted, or granted on terms that the Company would deem practical.
        Additionally, the Company would be required to report its financial results
        in a
        different form from that currently used by the Company, which would have
        the
        effect of turning the Company’s Statement of Operations “upside down” by
        requiring that the Company report any investment income that it may receive
        and
        the results of its investment activities, instead of its operations, as its
        primary sources of revenue. If the Company elects to divest itself of sufficient
        investment securities and/or to acquire sufficient non-investment assets
        so as
        not to be regarded as an investment company under the Act, the Company would
        need to ensure that the value of investment securities (excluding the value
        of
        U.S. Government securities and securities of certain majority-owned
        subsidiaries) does not exceed forty percent (40%) of the Company’s total assets
        (excluding the value of U.S. Government securities and cash items) on an
        unconsolidated basis. In seeking to meet this requirement, the Company might
        choose to divest itself of assets that it considers strategically significant
        for the conduct of its operations or 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. Were the Company to acquire any additional
        businesses, there would the additional risk that the Company’s acquired and
        previously-existing businesses could be disrupted while the Company attempted
        to
        integrate the acquired business, as well as risks associated with the Company
        attempting to manage a new business with which it was not familiar. Any of
        the
        above risks could result in a material adverse effect on the Company’s results
        of operations and financial condition.
  Item
        2. Description of Property.
 Since
        January 2002, the Company's principal executive offices have been located
        at 200
        East 82nd Street, New York, NY 10028. The Company is charged a nominal amount
        for the use of these premises.
 
 9
  Item
        3. Legal Proceedings.
 The
        Company and its various subsidiaries and operating units are from time to
        time
        involved in ordinary and routine litigation. The Company is also involved
        in the
        following litigation:
 ATAC
        Corporation and Patrick Cullen v. Arthur Treacher's, Inc. and James Cataland,
        Case No. 1:95CV 1032, in the U.S. District Court, Northern District, Ohio
        Eastern Division; filed May 9, 1995.
 
 On
        November 16, 1994, Arthur Treacher's terminated the agency agreement of a
        Regional Development Representative, ATAC Corporation, on the grounds that
        ATAC
        breached the agreement by assigning the agency agreement to a third party
        without the consent of Arthur Treacher's. ATAC claims that the Company was
        aware
        of and consented to the third-party assignment. The Company is unaware of
        any
        document signed by a properly authorized representative of the Company formally
        authorizing or consenting to the assignment. On May 9, 1995, ATAC filed the
        action and alleged that the Company terminated the contract without cause,
        tortuously interfered with other business relationships, committed wrongful
        conversion of the territory and committed restraint of trade and price-fixing,
        breach of contract, fraud, and violations of RICO. ATAC originally demanded
        a
        minimum of $2,750,000 in compensatory damages and $6,000,000 in punitive
        damages. In response to the original complaint, the Company filed a motion
        to
        dismiss all of the claims. In addition, the Company filed a counterclaim
        against
        ATAC seeking a Declaratory Judgment that ATAC does not have a service contract
        with the Company in certain areas which the Company does business, that ATAC
        has
        committed breach of contract and that the Company is entitled to indemnification
        for previous lawsuits which have occurred because of the actions of ATAC
        on
        behalf of the Company. ATAC has twice amended the claims and allegation of
        the
        original complaint. In the Third Amended Complaint, ATAC asserts claims against
        the Company and the Company's former President, James Cataland, for fraud,
        breach of contract, tortuous interference with contract, violations of the
        Ohio
        Business Opportunity Act, violations of the Ohio Consumer Sales Practices
        Act
        and breach of fiduciary duty. ATAC seeks in excess of $10,000,000 in and
        statutory damages from the Company. In response to the Third Amended Complaint,
        the Company in 1997 filed a Motion to Dismiss ATAC's claims for breach of
        fiduciary duty and under the Consumer Sales Practices and Business Opportunity
        Acts. The Company also requested that the district court dismiss the claim
        against the Company's former President. The Company in 1998 filed Motions
        for
        Summary Judgment on behalf of itself and the Company's former President with
        respect to all of ATAC's claims (except breach of contract) and requested
        that
        the court refer the remaining contract claim to binding arbitration. The
        Court
        granted the Company's Motion to Stay the lawsuit pending arbitration and
        the
        ruling is presently the subject of an appeal to the Sixth Circuit Court of
        Appeals. The parties submitted briefs to the Sixth Circuit between July and
        October of 1999 and a hearing was held in June 2000. The Sixth Circuit should
        hand down its decision within the next few months. The Company originally
        believed that the lawsuit was an attempt by plaintiffs to regain the territory
        by forcing the Company to defend expensive litigation at significant expense
        and
        that the plaintiffs' claims are without merit. The Company now understands
        that
        ATAC solely seeks damages from the Company. The Company still believes that
        ATAC's claims are meritless. The Company's attorneys have indicated that
        they
        intend to vigorously defend the Company from the claims made by ATAC and
        pursue
        any counterclaims. PAT Services, assumed any liability or award from this
        legal
        proceeding in connection with the sale of ATI (Delaware), the Company’s
        restaurant operations on February 28, 2002. The Company has received no notice
        of any further developments in this action since 2000.
 
 10
 Sorrentino
        v. Digital Creative Development Corporation
 Ralph
        Sorrentino, the former President and Chief Executive Officer of the Company
        commenced an action, entitled RJS Consulting Corp. and Ralph J. Sorrentino
        v.
        Digital Creative Development Corporation et. al., on or about May 9, 2001.
        The
        Demand for Arbitration alleged that the Executive Consulting Agreement between
        the Company and RJS Consulting Corp. was terminated without cause and that
        Mr.
        Sorrentino had “good reason” to terminate the agreement. The Demand for
        Arbitration sought monetary damages in an amount not less than $5,000,000
        arising out of the alleged breach of the Executive Consulting Agreement and
        compensatory and punitive damages in an amount to be proved at the arbitration
        arising out of the alleged defamation of Mr. Sorrentino by agents of the
        Company. The Company, DCDC (Delaware), Mr. Sorrentino, and RJS Consulting
        Corp.,
        an affiliate of Mr. Sorrentino, executed the Executive Consulting Agreement
        in
        May 2000. Under the agreement, Mr. Sorrentino, acting through RJS Consulting
        Corp., served as Chief Executive Officer and President of the Company and
        DCDC
        (Delaware). Mr. Sorrentino was to receive a base annual fee of $250,000 for
        an
        initial term of 30 months. Mr. Sorrentino received options to purchase 5,000,000
        shares of Common Stock at an exercise price of $.37/share, which exercise
        price
        was reduced to $.01 under certain circumstances. The Company had also agreed
        to
        assume and be primarily liable for and to indemnify Mr. Sorrentino against
        up to
        $2,500,000 of indebtedness incurred by Mr. Sorrentino for any legal purpose.
        The
        Company terminated Mr. Sorrentino on May 7, 2001. The Company, DCDC (Delaware),
        RJS Consulting Corp. and Mr. Sorrentino executed a Memorandum of Agreement
        on
        October 30, 2001. Pursuant to the Memorandum, the Company agreed to buy out
        Mr.
        Sorrentino’s interest under the Executive Consulting Agreement and related
        documents and Mr. Sorrentino agreed to surrender all of his options to purchase
        common stock of the Company, including the option for 5,000,000 shares of
        common
        stock issued in connection with the Executive Consulting Agreement. Under
        the
        Memorandum, the Company agreed to pay Mr. Sorrentino $270,000 and to assume
        an
        aggregate of $1,669,600 in indebtedness from Mr. Sorrentino, including two
        mortgages in favor of Wells Fargo for an aggregate of $570,600, a mortgage
        in
        favor of Fleet Mortgage Group in the principal amount of $1,000,000 and a
        lease
        in favor of Chase Automotive Finance in the principal amount of $99,792.
        Such
        payments are to be made over a period of fifteen (15) years in monthly
        installments, except for Chase Automotive, which is for a period of two (2)
        years. Upon satisfaction of the obligation to Chase Automotive Finance, the
        Company agreed to pay Mr. Sorrentino an aggregate of $4,653 payable in 36
        equal
        monthly installments. The Company agreed that upon the consummation of the
        merger with IMSI, the Company’s obligations to Mr. Sorrentino will be secured by
        the assets of IMSI, such security interest to be subordinated to existing
        secured bank debt and certain other creditors who had previously agreed to
        restructure their indebtedness in order to facilitate the merger with IMSI.
        In
        the event that the merger with IMSI was not consummated, the Company agreed
        under the Memorandum to enforce its rights under the promissory note, which
        the
        Company purchased from Union Bank of California in August 2001, and, upon
        foreclosure on the promissory notes, IMSI shall be obligated to make payments
        to
        the Company of $ 50,000 per month for 60 months, in turn, remitting payment
        to
        Sorrentino. The merger with IMSI was not consummated. On February 28, 2002,
        the
        Company and IMSI terminated the proposed merger agreement, and entered into
        an
        agreement which provides for the conversion of the promissory note purchased
        by
        the Company into 9,000,000 shares of common stock of IMSI plus $250,000 in
        cash
        to be paid in monthly installments over 15 months. The parties agreed to
        terminate the merger contemplated by the Merger Agreement. IMSI also agreed
        to
        prepare and file a registration statement registering 2,000,000 of the shares
        of
        common stock and to provide the Company with piggyback registration rights
        with
        respect to the remaining 7,000,000 shares. In addition, effective February
        28,
        2002, certain members of the Boards of Directors of the Company and IMSI
        resigned and no directors continue to serve as directors of both companies.
        Subsequently, on July 25, 2002, Mr. Sorrentino and RJS Consulting Corp.,
        filed
        an action in New York State Supreme Court, New York County (Index # 602399/02)
        against the Company, DCDC (Delaware), various officers and directors, alleging
        among other things, breach of contract and fraud. In February, 2003 the Parties
        entered into a settlement agreement and dismissal of the action. Under the
        settlement, the Company made a one time cash payment to Mr. Sorrentino of
        $300,000 and transferred 500,000 shares of stock, of its holdings in
        International Microcomputer Software, Inc valued at $565,000 for a total
        fair
        value of $865,000.
 
 11
 CineBlast
        Litigation
 In
        January, 2003 the principals of CineBlast, Raymond DeMarco, Michael Morley
        and
        Gil Holland field an action in New York State Supreme Court, New York County
        (Index # 100192/03) against the Company and DCDC (Delaware). In July, 2003
        the
        parties executed a Settlement Agreement and a Stipulation of Discontinuance.
        The
        settlement agreement provided for the following: 1) the payment by the Company
        of $5,000 each to mssrs. DeMarco, Morley and Holland; 2) 80,000 shares of
        stock
        of IMSI owned by the Company to each of mssrs. DeMarco, Morley and Holland;
        3)
        three (3) Promissory Notes (totaling $175,000.00), requiring the Company
        to pay
        mssrs. Holland, DeMarco and Morley $58,333.33 each, two (2) years from the
        date
        in which this Settlement Agreement is executed. If the IMSI Stock referred
        to
        above is unrestricted and able to be traded on the open market, and is above
        $2.00 on the date the Notes become due, DCDC shall have no obligation to
        pay the
        Notes, and said Notes shall become null and void. Further, DCDC’s obligations on
        the Notes shall be proportionately reduced if the IMSI Stock is below $2.00.
        (For example, if the stock price is $1.90 on said date, the $175,000.00
        obligation shall be reduced by $151,000.00 leaving an obligation of $24,000.00,
        requiring DCDC to pay Holland, DeMarco and Morley $8,000.00 each. If the
        stock
        price is $1.80 on said date, the Notes shall be reduced by $127,000.00 leaving
        an obligation due of $48,000.00, requiring DCDC to pay Holland, DeMarco and
        Morley $16,000.00 each, etc. On April 21, 2005 the Notes related to the
        CineBlast settlement became due and payable, since on that date, shares of
        IMSI
        did not trade above $2.00/share. Based on the above formula in the settlement
        agreement the total obligation due the principals of CineBlast is $153,600.
        Management of the Company has negotiated a payout of this obligation under
        which
        the amount of $ 153,600 will be paid over six months, beginning July 2005,
        without interest, as follows: $ 15,000 at July 1 and August 1; $ 30,000 at September
        1, October 1 and November 1; and $ 33,600 at December 1.
  In
        April
        21, 2005 the Notes related to the CineBlast settlement became due and payable,
        since on that date, shares of IMSI did not trade above $2.00/share during
        the
        previous two (2) years.  Based on the above formula in the
        settlement
        agreement the total obligation due the principals of CineBlast is
        $153,600.  Management of the Company has negotiated a payout of this
        obligation under which the amount of $153,600 will be paid over six months,
        beginning July 2005, without interest, as follows: $15,000 at July 1 and
        August
        1; $30,000 at September 1, October 1 and November 1; and $33,600 at December
        1,
        2005.
  Pyramid
        Litigation
  During
        the fiscal year ended June 30, 2002, M.I.E. Hospitality Inc., a wholly
        owned subsidiary of ATI (Delaware), was a party to six actions in New York
        State
        that have been consolidated for discovery purposes in New York State Supreme
        Court in Albany County, New York. Each of these actions arises out of M.I.E.'s
        lease of certain food court premises at five Pyramid Malls across New York
        State, and Pyramid's eviction of M.I.E. in December 2000. M.I.E. commenced
        the
        action entitled M.I.E. v. Fred Woods, et al., in December 2000. M.I.E.
        asserts four substantively identical causes of action with respect to each
        of
        the five mall locations. These causes of action are for breach of lease,
        conversion, wrongful eviction, and trespass. M.I.E. is in the process of
        calculating its claim for damages, which claim is anticipated to be in excess
        of
        $2,200,000, and may be awarded treble damages if it succeeds under its wrongful
        eviction claim under RPAPLss.853. In each of its five actions, which were
        commenced on January 3, 2001, Pyramid seeks pre-eviction rent and additional
        rent arrears, post eviction accelerated rent and additional rent, and attorney's
        fees. Pyramid's damage claims exceed $2,400,000. The actions are in the
        discovery phase. Documents have been produced, but depositions have not
        occurred. The Company's attorneys intend to vigorously defend the Company
        against the claims made by the plaintiffs but cannot estimate the outcome
        at
        this time. The award of substantial damages to Pyramid would have an adverse
        impact on the operations of M.I.E. and the Company. M.I.E. does not own or
        operate any of the Company's Pudgie's restaurants. PAT Services, assumed
        any
        liability or award from this legal proceeding in connection with the sale
        of ATI
        (Delaware), the Company's restaurant operations on February 28, 2002. The
        Company has received no notice of any further developments in this action
        since
        2002.
 
 12
 PAT
        Services assumed any liability or award from this legal proceeding, in
        connection with the sale of ATI (Delaware) on February 28, 2002. The Company
        is
        involved in various other 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.
 
 Item
        4.
        Submission of Matters to a Vote of Security Holders.
 None.
 
 PART
        II
 
 Item
        5.
        Market for Common Equity and Related Stockholder Matters.
 
 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 September 22, 2005 the closing bid price was $.14/share.
 
 2001
                  Fiscal YearFirst
                  Quarter
              1.31
              2.50Second
                  Quarter
              .320
              1.37Third
                  Quarter
              .320
              .900Fourth
                  Quarter
              .250
              .4202002
                  Fiscal YearFirst
                  Quarter
              .110
              .270Second
                  Quarter
              .100
              .110Third
                  Quarter
              .070
              .200Fourth
                  Quarter
              .150
              .2502003
                  Fiscal YearFirst
                  Quarter
              .130
              .160Second
                  Quarter
              .040
              .130Third
                  Quarter
              .030
              .050Fourth
                  Quarter
              .031
              .143
 
 13
 
 The
        Common Stock was recorded on the NASD Bulletin Board with the symbol DCDC.
        On
        September 22, 2005, the number of record holders of the Company's Common
        Stock
        was 500. In November 2001, the Company's stock was delisted from the NASD
        Bulletin Board due to its failure to timely file its Form 10-KSB with the
        Securities and Exchange Commission. The stock is traded on the Pink
        Sheets.
 
 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 $780,000 as of June 30, 2003.
 
 
 Item
        6.
        Management's Discussion and Analysis or Plan of Operation.
 
 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.
 
 14
 "Safe
        Harbor" Statement under the Private Securities Litigation Reform Act of 1995
        Certain matters and statements made in this Annual Report on Form 10-KSB
        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-KSB, 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, the continued
        involvement of military forces in the war on terrorism, the speed with which
        consumers regain confidence in the safety of air transportation 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.
 
 Overview
 Prior
        to
        February, 2002 the Company's principal sources of revenues were from the
        operations of Company owned restaurants and the receipt of royalties from
        franchisees. The Company's cost of sales included food, supplies and occupancy
        costs (rent and utilities at Company owned stores). Operating expenses include
        labor costs at the Company owned stores and advertising, marketing and
        maintenance costs. Franchise services and selling expenses included fees
        payable
        to regional representatives and their expenses and the salary of the Company's
        Director of Franchise Services. General and administrative expenses include
        costs incurred for corporate support and administration, including the salaries
        and related expenses of personnel at the Company's headquarters (except the
        Director of Franchise Services), the costs of operating the headquarters
        offices
        (rent and utilities) and certain related costs (travel and entertainment).
        Since
        the spring of 2002, the Company has been inactive , except for its interest
        in
        International Microcomputer Software Inc. , the evaluation of potential
        acquisitions and the settlement of pending disputes and litigation.
  15
 Results
        of Operations
 
 Fiscal
        2003 and Fiscal 2002
 The
        Company reported total revenues of $ 6,100 for the year ended June 30, 2003
        (“Fiscal 2002”), reflecting a decrease of $ 186,600 or 97%. These revenues were
        basically comprised of interest and contract fee income and reflect the fact
        that the Company has only one business segment , which is the investment
        in
        IMSI. General and administrative expenses declined 71%
        or $
        1,051,800 to $ 425,500 reflecting the reduction of corporate overhead, including
        personnel and rental office space. Other expenses of $ 803,900 are primarily
        the
        result of stock based compensation of $ 430,200 and a settlement with the
        former
        principals of CineBlast of $
        359,600. The foregoing resulted in a net loss from continuing operations
        of $
        1,223,300 for the fiscal 2003 year as compared with income from continuing
        operations of $ 163,300 in 2002. The gains on the disposal of discontinued
        operations resulted in a gain of $3.7 million in the 2002 fiscal
        year.
  Fiscal
        2002 and Fiscal 2001
 After
        reclassifying its results for the year ended June 30,2001 to reflect the
        effect
        of operations sold or discontinued, the Company reported total revenues of
        $
        192,700 for the year ended June 30, 2002 (“Fiscal 2002”), reflecting a decrease
        of $ 213,300 or 53%, compared to $ 406,000 for year ended June 30, 2001 (“Fiscal
        2001”). These revenues were basically comprised of interest and dividend income
        and management fees and the decrease was primarily attributable to the Company’s
        decrease in cash and dividend producing marketable securities. Since the
        sale by
        the Company of its restaurant operations and the cessation of all of the
        Company’s operating subsidiaries, the Company’s operations for the fiscal year
        2002 are not comparable to the prior year’s results. The operations for the
        current year reflect the Company’s management of its investment in IMSI, its
        only significant investment, which resulted in a transaction gain of $ 1.6
        million, upon conversion of a note receivable into 9,000,000 shares of common
        stock.  The sale of discontinued operations resulted in a gain of
        $ 3.7
        million and a related loss of $ 1.0 million from the sale of a note receivable
        from that discontinued entity. Additionally, a settlement with the Company’s
        former executive officer resulted in a gain of $ 933,400. The foregoing resulted
        in net income of $ 3.9 million for the fiscal 2002 year as compared with
        a net
        loss of $ 20.5 million in the prior year.
  LIQUIDITY
        AND CAPITAL RESOURCES
 
 The
        Company’s current assets exceeded its current liabilities by $700,000 at June
        30, 2003, compared to current assets exceeding its current liabilities by
        $900,000 at June 30, 2002. The Company had no cash or cash equivalents at
        June
        30, 2003 or 2002. However, its marketable securities had a market value of
        $1.1
        million and $1.2 million at June 30, 2003 and June 30, 2002, respectively.
        The
        principal reason for the decrease in net current assets is primarily the
        decline
        in market value of the Company’s holdings in IMSI.
 
  16
 In
        January 2003, the Company borrowed the sum of $300,000 from its former chairman,
        Bruce Galloway. The term of the loan was three months with a 12% coupon.
        In
        addition, Mr. Galloway received 1,000,000 warrants with an exercise price
        of
        $.01 per share and his lender, AFC Enterprises, Inc., received a warrant
        to
        purchase 1,000,000 shares of common stock at $.01/share. The loan was repaid
        in
        April, 2003. Mr. Galloway and AFC Enterprises exercised the respective
        warrants.
 
 In
        April
        2003 the Company issued $ 345,000, of secured promissory notes to a group
        of
        investors. The notes mature in August 2005 and bear 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 $.01/share. The
        notes
        are collateralized by 2,000,000 shares of IMSI stock currently held by the
        Company. The proceeds of this offering were used to repay the 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.
 
 The
        holders of promissory notes, have exercised all 4,750,000 of the warrants
        associated with their notes at $0.01 per share. The
        number of shares of IMSI Common Stock pledged
        as collateral for the $ 345,000 promissory notes, are subject to adjustment
        one
        year after the initial closing date of the issuance of the promissory notes
        based on the 30-day trailing average of the bid prices  of
        shares
        of Common Stock of IMSI 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, 2004 are 747,869 shares .
  17
 In
        the
        Fall of 2004, all but two of the note holders granted extensions to the Company
        through December 31, 2005 with respect to the notes due in August, 2004.
        The
        principal amount of the notes subject to such extension is $ 225, 000.
        The
        Company is attempting to negotiate  an
        extension of the maturity dates with the
        two remaining note holders, holding promissory notes in the aggregate principal
        amount of $ 120,000 .
        The
        Company's management is confident that such extensions can be obtained,
        but  there
        can
        be no assurances that this will occur.
 
 On
        September 10, 2003 the Company extended a bridge loan to Access Propeller,
        LLC
        ("Access") in the sum of $300,000. This loan is secured against all the assets
        of Access. Access owns 81% of Jippii (USA), n/k/a as DownPlay, Inc. DownPlay
        is
        in the business of providing downloadable mobile entertainment to cell phones
        and wireless devices. The loan bears interest at 10% and matures on February
        4,
        2004. In addition, the loan allows the Company the option to make a further
        investment of $900,000 in the form of preferred stock to acquire a total
        of
        50.1% of the outstanding stock of Access. On October 31, 2003 the Company
        converted its loan to 304,250 shares of Preferred Series A stock. In December
        2003, the Company decided not to make a further investment in Access or its
        subsidiary, DownPlay, giving the Company an ownership stake in Access of
        approximately 12%. Due to subsequent finaning by Access, it is estimated
        that
        the C Company's ownership stake has been reduced to approximately
        9%.
 
 On
        September 18, 2003, the Company entered into a 15% one-year note (the “Note”)
        with IMSI whereby we borrowed $350,000. The note is due, with interest, on
        September 18, 2004. The note is secured by 400,000 shares of IMSI stock
        currently owned by DCDC. The agreement required that DCDC not
        to sell
        any other IMSI common stock, which it holds, with the exception of private
        sales
        of IMSI common stock, until February 15, 2004. Concurrent with this note,
        DCDC
        repaid the entire principal portion of a $50,000 note, made in favor of IMSI
        on
        February 25, 2003. That note, due on February 25, 2004 was unsecured and
        carried
        a 4% interest rate. The interest payable, amounting to $1,162, is outstanding
        as
        of the filing and is due and payable on February 18, 2004. On September 18,
        2004, the Company and IMSI entered into an amendment to the Note. The Amendment
        provides for the extension of the maturity date to May 31, 2005 as well as
        the
        payment of accrued interest by October 31, 2004 in the sum of $52,000. In
        addition, the Company provided to IMSI as additional collateral, its ownership
        stake in Access Propeller, LLC.
  On
        January 5, 2005, IMSI sold and assigned the Note to Multi-Mag
        Corporation ("Multi-Mag"). On June 5, 2005, the Company and Multi-Mag executed
        Amendment #2 to the promissory note.  This amendment provides that DCDC
        shall pay all accrued interest due from September 19, 2004 through June 17,
        2005
        under the promissory note to MULTI-MAG no later than June 30, 2005. Additionally,
        interest will be paid on the Note from June 18, 2005 through the payment
        date,
        which will be no later than June 30, 2005 at the rate of $135 per day.
  On
        June
        17, 2005,  the Company remitted a payment of $38,979.45. MULTI-MAG
        agreed
        to extend the due date for the principal and the remaining accrued interest
        on
        the note from May 31, 2005 to December 31, 2005.
  18
 On
        September 30, 2004, the Company sold 200,000 shares of IMSI for gross proceeds
        of $200,000. The Company used $77,500 of this amount to pay certain indebtedness
        owed IMSI in the form of accrued interest and a reduction of
        principal.
 
 On
        May
        25, 2005 the Company sold 250,000 shares of IMSI for gross proceeds of $277,000.
        The Company used approximately $ 38,979.45 of this amount to pay accrued
        interest to Multi-Mag and the remainder for general working capital
        purposes.
 
 The
        Company believes that it will need additional financing and working capital
        to
        finance its operations. Without additional financing, the Company
        will be
        unable to continue its operations. 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, 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 .
  The
          shares of IMSI owned by the Company are "restricted securities" as defined
          in
          Rule 144 under the Securities Act of 1933. Under Rule 144, the Company
          can
          publicly sell, within any three month period, a number of shares not to
          exceed
          one percent of IMSI's then outstanding shares of common stock. In the event
          that
          IMSI becomes listed on the NASDAQ or on a national securities exchange,
          the
          maximum amount that can be sold will be the greater of one percent of the
          outstanding shares and the average weekly trading volume of IMSI's common
          stock
          for the four weeks preceding the Company's filing of a notice of sale with
          the
          SEC.
  Item
        7.
        Financial Statements.
 
 The
        financial statements are filed as part of this Annual Report on Form
        10-KSB.
 
 Item
        8. Changes in and Disagreements with Accountants .
 
 Effective
        June 23, 2004, the company engaged the services of Miller Ellin & Co., LLP
        to replace the Company’s former auditor as the Company’s independent certifying
        public accountant. The Company notified its former auditor, Goldstein Golub
        & Kessler, LLP (the "Former Auditor") that the client-auditor relationship
        had ceased. The Former Auditor had served as the Company's independent public
        accountant prior to its resignation. The Former Auditor's report on the
        financial statements for the past two years did not contain an adverse opinion
        or a disclaimer of opinion. There were no disagreements with the Former Auditor
        on any matter of accounting principles or practices, financial statement
        disclosures or auditing scope or procedure.
 
 Item
        8A. CONTROLS AND PROCEDURES
 
 (a)
        Disclosure Controls and Procedures. Under the supervision and with the
        participation of our management, including our principal executive and financial
        officer, 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 officer 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 officer, 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.
 
 19
 PART
        III
 
 Item
        9.  Directors,
        Executive Officers, Promoters and Control Persons.
 
 Name
              Age
              PositionGary
                  Herman
              41
              Chairman
                  of the Board, Chief Executive Officer, andSecretarySkuli
                  Thorvaldsson
              64
              Director,
                  Chief Financial Officer, TreasurerSigurdur
                  Jon Bjornsson
              38
  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 the Managing
        Partner
        of Galloway Capital Management, LLC. Prior to this, he was an investment
        banker
        with Burnham Securities from 1997 to 2002 as well as a Managing Director
        with
        Arcadia Securites LLC. 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 is currently Chairman of the Board of DataMetrics
        Corporation and a director of Shells Seafood Restaurant Corp. Mr. Herman
        has a
        B.S. from the State University of New York at Albany. Mr. Herman became a
        director of IMSI in August 2001 pursuant to the merger agreement between
        the
        Company and IMSI. Mr. Herman resigned as a director of IMSI on January 25,
        2002.
 
 Skuli
        Thorvaldsson .
        Mr.
        Thorvaldsson has been a member of the Board of Directors since May 1996.
        He
        became Chief Financial Officer in February 2002. 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
        Allied Resource Corporation, an advanced technologies industrial service
        company
        based in Wayne, PA; as well as a director of Holt Holdings s.a., a
        Luxembourg-based investment company. Mr. Thorvaldsson graduated from the
        Commercial Collage of Iceland and the University of Barcelona and holds a
        law
        degree from the University of Iceland. He became a director
        of IMSI in August 2001 pursuant to the merger agreement between the Company
        and
        IMSI. Mr. Thorvaldsson resigned as a director of IMSI on February 26,
        2002.
 
 20
 Sigurdur
        Jon Bjornsson .
        Mr.
        Bjornsson had been a director of the Company since March 2000. Until recently,
        Mr. Bjornsson served as the President and CEO of Framtak Investment Bank,
        Inc.,
        an Icelandic based firm specializing in venture investments. Mr. Bjornsson
        also
        serves on the boards of several European companies including: Icebird Airline,
        Scandinavian Pizza Company "DOMINOS", New Industries, and Betware.com
        (chairman), Ltd. Mr. Bjornsson is a graduate of the University of Iceland
        with a
        BS in Business Finance. Mr. Bjornsson became a director of IMSI in August
        2001
        pursuant to the merger agreement between the Company and IMSI. Mr. Bjornsson
        resigned as a director of IMSI on February 26, 2002. Mr. Bjornsson resigned
        from
        the board of the Company in April 2005.
  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.
 
 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,
        2003
        all filing requirements were met.
 
 Item
        10.
        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, 2003; 2002; 2001.
  21
  (a) Summary
            Compensation Table
 AwardsPayouts
                
                PayoutsLong
                    term CompensationName
                      And Principal Position
                
                Year
                
                Salary
                
                Bonus
                
                OtherAnnualCompensation
                
                RestrictedStockAwards
                
                SecuritiesUnderlyingOptions
                    /SARs
                
                LTIPPayouts
                
                All
                      OtherCompensationBruce
                      Galloway
                
                2003
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -Former
                    Chairman & CFO
                
                
                2002
                
                $
                
                
                $
                -
                
                $
                -
                
                
                -
                
                
                10,000
                
                $
                -
                
                $
                -2001
                
                $
                14,000
                
                $
                -
                
                $
                -
                
                
                -
                
                
                311,329
                
                $
                -
                
                $
                -Martin
                      Wade III
                
                
                2003Former
                    Chairman
                
                
                2002
                
                $
                108,000
                
                $
                -
                
                $
                -
                
                
                -
                
                
                100,000
                
                $
                -
                
                $
                -2001
                
                $
                216,667
                
                $
                -
                
                $
                -
                
                
                -
                
                
                1,000,000
                
                $
                -
                
                $
                -Vincent
                    De Lorenzo
                
                
                2003
                
                $
                -
                
                $
                -
                
                $
                -
                
                
                -
                
                
                -
                
                $
                -
                
                $
                -Former
                    CFO
                
                
                2002
                
                $
                87,500
                
                $
                -
                
                $
                -
                
                
                -
                
                
                137,500
                
                $
                -
                
                $
                -2001
                
                $
                108,285
                
                $
                -
                
                $
                -
                
                
                -
                
                
                -
                
                $
                -
                
                $
                -Jeffrey
                      Bernstein
                
                
                2003President
                    & CEO of Arthur
                
                
                2002
                
                $
                73,000
                
                $
                -
                
                $
                -
                
                
                -
                
                
                -
                
                $
                -
                
                $
                -Treacher's
                
                
                2001
                
                $
                146,154
                
                $
                -
                
                $
                -
                
                
                -
                
                
                -
                
                $
                -
                
                $
                -Ralph
                      Sorrentini
                
                
                2003Former
                    President & CFO
                
                
                2002
                
                $
                -
                
                $
                -
                
                $
                -
                
                
                -
                
                
                -
                
                $
                -
                
                $
                225,262(Terminated)
                
                
                2001
                
                $
                75,000
                
                $
                -
                
                $
                -
                
                
                -
                
                
                5,000,000
                
                $
                -
                
                $
                -Gary
                      Herman
                
                
                2003
                
                
                21,700
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Chairman
                    & CEO
                
                
                2002
                
                
                32,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -2001
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
 
 22
 (b)    Option/SAR
            Grants in Last Fiscal Year
 Number
                                  of
                              
                              
                              Percentage
                                  ofSecuritiesUnderlying
                              
                              
                              Total
                                  Options/SARsOptions/SARs
                              
                              
                              Granted
                                  to Employees
                              
                              
                              Exercise
                                  or
                              
                              
                              ExpirationName
                              
                              
                              Granted
                              
                              
                              In
                                  Fiscal Year
                              
                              
                              Base
                                  Price
                              
                              
                              Date
 Bruce
                                  Galloway
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -Martin
                                  Wade III
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -Gary
                                  Herman
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -SkuliThorvaldsson
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
  (
                            c
                            )    Aggregate Options/SAR
                            Exercises in Last Fiscal Year and
                            Fiscal YE None
 Name
                                
                                
                                Shares
                                    AcquiredOn Exercise
                                
                                
                                Value
                                    Realized
                                
                                
                                No.
                                      Of UnexercisedOptions/SARsat
                                    June 30,2003
                                
                                
                                In
                                    the MoneyOptions/SARsat June 30,2003
 Bruce
                                    Galloway
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -Martin
                                    Wade III
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -Gary
                                    Herman
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -SkuliThorvaldsson
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
  
 23
 Executive
        Compensation
 
 Gary
        Herman and an affiliate, 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 Consultant. Due to the limited available working capital
        of the Company, he has received minor compensation since taking office in
        January 2002.
  Skuli
        Thorvaldsson is the Company's Chief Financial Officer. He has received no
        cash
        compensation for his services as Chief Finaincial Officer or as a consultant
        to
        the Company, since taking office in February 2002 due to the Company’s lack of
        working capital.
  In
          June,
          2005, the Company awarded both Mr. Herman and Mr. Thorvaldsson options
          to
          purchase 1,250,000 shares of common stock at an exercise price of $.01
          per share
          and expiring in June 2015.  These options were awarded for past
          services to
          the Company during the fiscal year ended June 30, 2002.  The options
          were
          valued at approximately $290,000 and charged to earnings in the fiscal
          year
          ended June 30, 2005.
 
 Further,
          the Company intends to grant Messrs. Herman and Thorvaldsson additional
          compensation in the form of cash and /or stock options in connection with
          their
          services as Directors and for management services to the Company for the
          fiscal
          years commencing July 1, 2001. However, the amount and nature of such additional
          compensation is subject to an evaluation by an independent third party
          consultant engaged by the Company.
  Item
        11.
        Security Ownership of Certain Beneficial Owners and Management
 
 The
        following table sets forth information as of September 22, 2005, 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.
 
 24
 
 Shareholder
              
              Shares
              
              PercentageBruce
                  R. Galloway (1)
              
              
              9,412,177
              
              
              18.0Skuli
                Thorvaldsson (2)
              
              
              1,650,000
              
              
              3.1Gary
                Herman (3)
              
              
              2,355,000
              
              
              4.4Officers
                  and Directors as a Group
              
              
              4,005,000
              
              
              7.27Total
                  Outstanding Shares
              
              
              51,689,165
 
 (1)
        Bruce
        R. Galloway was the Chairman of the Board of the Company until January 2002.
        Includes i) options to purchase 500,000 shares of Common Stock, which are
        exercisable at an exercise price of $.01/share through June 2015; (ii) 1,040,404
        shares of common stock held by Jacombs Trading, Inc. and 544,100 shares of
        common stock owned by his wife and children. Excludes 2,000,000 shares owned
        by
        Burnham International, Inc. Bruce Galloway is a managing director of Burnham
        Securities Inc., which previously owned 49% of Burnham International,
        Inc.
  (2)
          Gives
          effect to the conversion of 400,000 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 $.01 through
          June 30, 2015.
 
 
 The
          Company intends to grant Messrs. Herman and Throvaldsson additional compensation
          in the form of cash and/or stock options in connection with their services
          as
          Directors and for management services to the Company for the fiscal years
          commencing July 1, 2001, but the amount and nature of such compensation
          is
          subject to an evaluation by an independent third party consultant engaged
          by the
          Company.
   Item
        12.
        Certain Relationships and Related Transactions.
  In
        May
        2004, Gary Herman and Bruce Galloway satisfied an obligation to a former
        officer
        totaling approximately $ 36,000 and are negotiating to extend the terms of
        the
        note with the Company.
 
 On
          September 18, 2003, the Company entered into a 15% one-year note with IMSI
          whereby the company borrowed $350,000. The note was due, with interest,
          on
          September 18, 2004 and is secured by 400,000 shares of IMSI stock currently
          owned by DCDC. The agreement also required DCDC not to sell any other IMSI
          common stock, which it holds, with the exception of private sales of IMSI
          common
          stock, until February 15, 2004. Concurrent with this note, DCDC prepaid
          the
          entire principal portion of a $50,000 note, made in favor of IMSI on February
          25, 2003. That note, due on February 25, 2004 was unsecured and carried
          a 4%
          interest rate. The interest payable, amounting to $1,712 was paid on June
          29,
          2004.
 
 On
          September 18, 2004, the Company and IMSI entered into an amendment to the
          Note.
          The Amendment provides for the extension of the maturity date to May 31,
          2005 as
          well as the payment of accrued interest by October 31, 2004 in the sum
          of
          $52,000. In addition, the Company provided to IMSI as additional collateral,
          its
          ownership stake in Access Propeller, LLC. On October 18, 2004, the accrued
          interest payment was made to IMSI as well as an additional payment of $25,000
          credited towards a reduction of principal.
 
 On
          January 5, 2005, IMSI sold and assigned the Note to Multo-Mag
          Corporation ("Mulit-Mag"). On June 5, 2005 the Company and Multi-Mag executed
          Amendment #2 to the Promissory Note.  This amendment provides that
          DCDC pay
          all accrued interest due from September 19, 2004 through May 31, 2005 of
          $
          38,900 no later than June 30, 2005. On June 17, 2005, the Company remitted
          the
          interest payment. Additionally, interest will be paid on the Note from
          June 1,
          2005 through the payment date, which will be no later than June 30, 2005
          at the
          rate of $135 per day.  The entire principal and the remaining
          interest
          on the Note is due on December 31, 2005.
 25
 Item
        13.
        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)
 10.9
        Uniform Franchise Offering Circular dated January 1, 1997.(1)
 10.10
        Form of Franchise Agreement dated January 1, 1997.(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
        *Uniform Franchise Offering Circular dated January 1, 1997.
 10.14
        *Form of Franchise Agreement dated January 1, 1997.
 10.15
        *Form of Warrant exercisable at $1.51 per share.
 10.16
        *Form of Warrant to Burnham Securities Inc.
 10.13
        Form of Stock Option to Employees.(1)
 10.18
        Form of agreement with holders of Series A Preferred Stock.(1)
  26
 10.20
        Co-Branding Agreement between the Company and Miami Subs Corp. dated August
        13,
        1998.(2)
 10.21
        Letter Agreement to co-brand between the Company and Miami Subs Corp. dated
        April 30, 1999.(3)
 10.24
        Purchase Agreement among the Company, TI (Delaware) and Jeffrey Bernstein,
        dated
        October 2, 2000.(3)
 10.25.
        Agreement and Plan of Merger between the Company and IMSI 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.(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 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 dated September18,
        2003.(6)
 10.45
        Assignment Agreement of the Promissory Note between the Company, International
        MicrocomputerSoftware, 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 September
        ,
        2003 (7)
 21.
        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
 
 27
  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: November
                17, 2005
              By:
              /s/ Gary
                HermanGary
                HermanChairman
                and Chief Executive Officer
  By:
              /s/ Skuli
                ThorvaldssonSkuli
                ThorvaldssonChief
                Financial Officer
 
 Name
                
                Title
                Date/s/ Gary
                    Herman,
                
                Chairman
                    and CEO
                November 
                    __, 2005Gary
                    Herman/s/ Skuli
                    Thorvaldsson,
                
                Director
                November 
                    __, 2005Skuli
                    Thorvaldsson




28


Digital
                Creative Development CorporationIndex
                to Consolidated Financial StatementsReport
                  of independent accounting firm
              F-2Consolidated
                  Balance Sheets
              F-3Consolidated
                  Statements of Operations
              F-4Consolidated
                  Statements of Stockholders' Equity (Deficiency)
              F-5Consolidated
                  Statements of Cash Flows
              F-6Notes
                  to Consolidated Financial Statements
              F-7
                  to F-24
 
 F-1


**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
        & Subsidiary as of June 30, 2003 and 2002, and the related consolidated
        statements of
        operations, stockholders' equity, 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 audit 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
        Subsidiaries as of June
        30,
        2003 and 2002, and the result of its operations and its cash flows for the
        years
        then ended, in conformity with U.S. generally accepted accounting
        principles.
   /s/
        MILLER, ELLIN & COMPANY, LLP
 CERTIFIED
        PUBLIC ACCOUNTANTS
 
 New
        York,
        New York
 July
        13,
        2005






F-2




DIGITAL
                    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                    BALANCE SHEETSJUNE
                    30, 2003 AND 2002ASSETS2003
                
                2002(in
                    thousands)CURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                1.0
                
                $
                -Marketable
                    securities
                
                
                1,072.6
                
                
                1,212.0Accounts
                    and notes receivable, net
                
                
                -
                
                
                250.1TOTAL
                    CURRENT ASSETS
                
                
                1,073.6
                
                
                1,462.1OTHER
                    ASSETSMarketable
                    and non-marketable securities and advances net of allowance of
                    $ 3,560,000
                    in both years
                
                
                4,391.9
                
                
                5,600.0TOTAL
                    ASSETS
                
                $
                5,465.5
                
                $
                7,062.1LIABILITIES
                    AND STOCKHOLDERS' EQUITYCURRENT
                    LIABILITIESAccounts
                    payable, accrued expenses and other liabilities
                
                $
                227.7
                
                $
                232.0Current
                    portion of notes payable - related parties
                
                
                175.0
                
                
                341.2TOTAL
                    CURRENT LIABILITIES
                
                
                402.7
                
                
                573.2NOTES
                    PAYABLE-RELATED PARTIES, NET OFCURRENT
                    MATURITIES
                
                
                335.4
                
                
                123.0TOTAL
                    LIABILITIES
                
                
                738.1
                
                
                696.2STOCKHOLDERS'
                    EQUITYPreferred
                    Stock 2,000,000 Shares AuthorizedSeries
                    A Convertible, Par Value $ 1; 2,200 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 1 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                2.2
                
                
                2.2Series
                    C, Par Value $ 100; 9,900 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 100 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                852.7
                
                
                852.7Series
                    D, Par Value $ 100; 4,000 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 100 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                400.0
                
                
                400.0Common
                    Stock, Par Value $ .01; Authorized 75,000,000 Shares;
                    Issuedand
                    Outstanding:47,649,165 Shares at June 30,2003; 44,399,165
                    Sharesat
                    June 30,2002
                
                
                476.5
                
                
                444.0Additional
                    paid in capital
                
                
                37,916.9
                
                
                37,380.2Accumulated
                    other comprehensive income
                
                
                1,929.0
                
                
                2,913.4Accumulated
                    deficit
                
                
                (36,849.9
                )
                
                (35,626.6
                )TOTAL
                    STOCKHOLDERS' EQUITY
                
                
                4,727.4
                
                
                6,365.9TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                5,465.5
                
                $
                7,062.1
  See
                    accompanying Notes to Consolidated Financial
                    Statements




F-3




DIGITAL
                    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                    STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR
                    THE YEARS ENDED JUNE 30, 2003 AND
                    2002
  2003
                
                2002(in
                    thousands)TOTAL
                    REVENUEDividend,
                    interest, and other income
                
                $
                6.1
                
                $
                102.9Management
                    fee income
                
                
                -
                
                
                89.86.1
                
                
                192.7OPERATING
                    EXPENSESGeneral
                    and administrative expenses
                
                
                425.5
                
                
                1,477.3LOSS
                    FROM OPERATIONS
                
                
                (419.4
                )
                
                (1,284.6
                )OTHER
                    INCOME (EXPENSE)Interest
                    expense, net and other
                
                
                (446.3
                )
                
                (53.5
                )Net
                    realized gain (loss) on investments and notes receivable
                
                
                2.0
                
                
                568.0Settlement
                    of litigation with former executive
                
                
                -
                
                
                933.4Settlement
                    of litigation with former employees
                
                
                (359.6
                )
                
                -TOTAL
                    OTHER INCOME (EXPENSES)
                
                
                (803.9
                )
                
                1,447.9INCOME
                    (LOSS) FROM CONTINUING OPERATIONS
                
                
                (1,223.3
                )
                
                163.3DISCONTINUED
                    OPERATIONSGain
                    on disposal of discontinued operations
                
                
                -
                
                
                3,730.7NET
                    INCOME (LOSS)
                
                
                (1,223.3
                )
                
                3,894.0UNDECLARED
                    PREFERRED STOCK DIVIDENDS
                
                
                (145.5
                )
                
                (145.5
                )Net
                  income (loss) attributable to common shareholders
                
                $
                (1,368.8
                )
                $
                3,748.5WEIGHTED
                    AVERAGE NUMBER OF OUTSTANDING SHARESFOR
                    BASIC EARNINGS PER SHARE
                
                
                45,128.3
                
                
                38,965.5WEIGHTED
                    AVERAGE NUMBER OF OUTSTANDING SHARESFOR
                    DILUTED EARNINGS PER SHARE
                
                
                45,128.3
                
                
                41,184.5BASIC
                    INCOME (LOSS) PER SHARECONTINUING
                    OPERATIONS
                
                $
                (0.03
                )
                $
                -DISCONTINUED
                    OPERATIONS
                
                
                -
                
                
                0.10$
                (0.03
                )
                $
                0.10DILUTED
                    INCOME (LOSS) PER SHARECONTINUING
                    OPERATIONS
                
                $
                (0.03
                )
                $
                -DISCONTINUED
                    OPERATIONS
                
                
                -
                
                
                0.09$
                (0.03
                )
                $
                0.09NET
                    INCOME (LOSS)
                
                $
                (1,223.3
                )
                $
                3,894.0Other
                    comprehensive operationsUnrealized
                    gain (loss) on marketable securities
                
                
                (984.4
                )
                
                3,153.4Comprehensive
                    net income (loss)
                
                $
                (2,207.7
                )
                $
                7,047.4




F-4




DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' EQUITYFOR
                  THE YEARS ENDED JUNE 30, 2003 AND 2002(in
                  thousands)AccumulatedAdditional
              
              OtherPreferred
                  Stock
              
              Common
              
              Paid-in
              
              Comprehensive
              
              Accumulated
              
              DeferredSeries
                  A
              
              Series
                  C
              
              Series
                  D
              
              Stock
              
              Capital
              
              Income
              
              Deficit
              
              Compensation
              
              TotalBalance
                  at June 30, 2001
              
              $
              2.2
              
              $
              852.7
              
              $
              400.0
              
              $
              325.1
              
              $
              35,923.3
              
              $
              (240.0
              )
              $
              (39,520.6
              )
              $
              (1,488.3
              )
              $
              (3,745.6
              )Issuance
                    of common stock in connection with conversion of long term
                    debt
              
              
              
              
              
              
              
              
              
              
              
              35.9
              
              
              782.3
              
              
              
              
              
              
              
              
              
              
              
              818.2Sale
                  of common stock and warrants
              
              
              
              
              
              
              
              
              
              
              
              69.7
              
              
              200.3
              
              
              
              
              
              
              
              
              
              
              
              270.0Issuance
                  of common stock for services
              
              
              
              
              
              
              
              
              
              
              
              1.0
              
              
              14.0
              
              
              
              
              
              -
              
              
              
              
              
              15.0Exercise
                  of common stock options
              
              
              
              
              
              
              
              
              
              
              
              12.3
              
              
              135.3
              
              
              
              
              
              
              
              
              
              
              
              147.6Interest
                  and compensation charges for issuanceof
                  stock options and warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              325.0
              
              
              
              
              
              
              
              
              
              
              
              325.0Unrealized
                  gain on investments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,153.4
              
              
              
              
              
              
              
              
              3,153.4Stock
                  based compensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,488.3
              
              
              1,488.3Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,894.0
              
              
              
              
              
              3,894.0Balance
                  at June 30, 2002
              
              
              2.2
              
              
              852.7
              
              
              400.0
              
              
              444.0
              
              
              37,380.2
              
              
              2,913.4
              
              
              (35,626.6
              )
              
              -
              
              
              6,365.9Issuance
                    of common stock in connection with debt
                  issuance
              
              
              
              
              
              
              
              
              
              
              
              5.0
              
              
              15.0
              
              
              
              
              
              
              
              
              
              
              
              20.0Interest
                    and compensation charges for issuance of stock options and
                    warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              521.7
              
              
              
              
              
              
              
              
              
              
              
              521.7Exercise
                  of common stock warrants
              
              
              
              
              
              
              
              
              
              
              
              27.5
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              27.5Unrealized
                  loss on investments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (984.4
              )
              
              
              
              
              
              
              
              (984.4
              )Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,223.3
              )
              
              
              
              
              (1,223.3
              )Balance
                  at June 30, 2003
              
              $
              2.2
              
              $
              852.7
              
              $
              400.0
              
              $
              476.5
              
              $
              37,916.9
              
              $
              1,929.0
              
              $
              (36,849.9
              )
              $
              
              
              $
              4,727.4See
                  accompanying Notes to Consolidated Financial
                  Statements




F-5




DIGITAL
                      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                      STATEMENTS OF CASH FLOWSFOR
                      THE YEARS ENDED JUNE 30, 2003 AND
                      2002
  2003
                  
                  2002(in
                      thousands)CASH
                      FLOWS FROM OPERATING ACTIVITIES:Income
                      (loss) from continuing operations
                  
                  $
                  (1,223.3
                  )
                  $
                  163.3Adjustments
                      to reconcile income (loss) from continuing operationsto
                      net cash used in operating activities:Amortization
                      of options and warrants issued
                  
                  
                  392.5
                  
                  
                  325.0Amortization
                      of debt discount
                  
                  
                  16.1
                  
                  
                  -Gain
                      on conversion of notes receivable
                  
                  
                  -
                  
                  
                  (1,498.6
                  )Loss
                      on abandonment of furniture and fixtures
                  
                  
                  -
                  
                  
                  26.4Bad
                      debt expense
                  
                  
                  -
                  
                  
                  6.0Stock
                      based compensation
                  
                  
                  -
                  
                  
                  15.0Noncash
                      payment for services
                  
                  
                  254.4
                  
                  
                  -Issuance
                      of compensatory stock options and warrants
                  
                  
                  -
                  
                  
                  147.6Gain
                      realized on settlement with former executive
                  
                  
                  -
                  
                  
                  (933.4
                  )Loss
                      realized on settlement with former employees
                  
                  
                  283.7
                  
                  
                  -Changes
                      in assets and liabilities:Decrease
                      in prepaid expenses and other
                  
                  
                  -
                  
                  
                  6.5Increase
                      (decrease) in accrued expenses
                  
                  
                  (4.2
                  )
                  
                  (32.1
                  )NET
                      CASH USED IN OPERATING ACTIVITIES
                  
                  
                  (280.8
                  )
                  
                  (1,774.3
                  )CASH
                      FLOWS FROM INVESTING ACTIVITIES:Purchases
                      of investments
                  
                  
                  -
                  
                  
                  (2,500.0
                  )Proceeds
                      from sale of subsidiary and merger termination settlement
                  
                  
                  250.1
                  
                  
                  200.0Net
                      cash used in investing activities
                  
                  
                  250.1
                  
                  
                  (2,300.0
                  )CASH
                      FLOWS FROM FINANCING ACTIVITIES:Proceeds
                      from issuance of common stock
                  
                  
                  47.5
                  
                  
                  270.0Proceeds
                      from issuance notes payable - related parties
                  
                  
                  645.0
                  
                  
                  123.0Payments
                      of amounts due to former executive
                  
                  
                  (341.2
                  )
                  
                  (435.0
                  )Payments
                      of notes payable
                  
                  
                  (319.6
                  )
                  
                  -NET
                      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                  
                  
                  31.7
                  
                  
                  (42.0
                  )NET
                      CHANGE IN CASH AND CASH EQUIVALENTSFROM
                      CONTINUTING OPERATIONS
                  
                  $
                  1.0
                  
                  $
                  (4,116.3
                  )CASH
                      PROVIDED BY DISCONTINUED OPERATIONS
                  
                  
                  -
                  
                  
                  873.6CASH
                      AND EQUIVALENTS, beginning of year
                  
                  
                  -
                  
                  
                  3,242.7CASH
                      AND EQUIVALENTS, end of year
                  
                  $
                  1.0
                  
                  $
                  -
 Supplemental
                        disclosure of noncash transactions:Services
                        settled in exchange for shares of marketable securities held
                    
                    $
                    249.2
                    
                    $
                    -Issuance
                        of common stock in connection with the conversion oflong
                        term debt
                    
                    $
                    -
                    
                    $
                    818.2Issuance
                        of common stock for services
                    
                    $
                    -
                    
                    $
                    15.0
  See
              accompanying Notes to Consolidated Financial Statements
  F-6
 DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
  NOTES
                  TO
                  CONSOLIDATED FINANCIAL STATEMENTS
 June
                  30,
                  2003 and 2002




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"). The wholly owned subsidiary at June 30, 2003 and June 30, 2002
        is
        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. In 1979, Mrs. Paul's, Inc, ("Mrs. Paul's")
        purchased Arthur Treacher’s Fish & Chips,
        Inc. In 1982, Lumara Foods of America, Inc. ("Lumara") acquired the assets
        of
        Arthur Treacher's Fish & Chips,
        Inc. from Mrs. Paul's. Lumara sought bankruptcy protection in 1983. In December
        1983, Arthur Treacher's Inc., an Ohio corporation, entered into an agreement
        to
        purchase the assets of Lumara, during Chapter XI bankruptcy proceedings.
        In
        February 1984, Arthur Treacher's Inc., merged into El Charro, Inc., a Utah
        corporation, which consummated the acquisition of the assets of Lumara and
        changed its name to Arthur Treacher's, Inc. On May 31, 1996, an investor
        group
        organized by Mr. Bruce Galloway, the former chairman of the board, acquired
        control of the Company. In February 2000, the Company formed a subsidiary,
        Digital Creative Development Corporation, a Delaware corporation ("DCDC
        (Delaware)"), for the purpose of acquiring and investing in entities engaged
        in
        the creation of software and traditional entertainment content. In March
        2000,
        Digital formed the subsidiary, Arthur Treacher's, Inc., a Delaware corporation
        ("ATI (Delaware)") to own and operate the restaurant business. In August
        2000,
        Digital, a Utah corporation, changed its name from Arthur Treacher's, Inc.
        to
        Digital Creative Development Corporation.
  The
        Company owned, operated and franchised quick-service restaurants under the
        names
        "Arthur Treacher's Fish & Chips"
        and "'Pudgie's Famous Chicken." In addition, the Company acquired and made
        investments in traditional entertainment content entities and invested and
        formed joint ventures with Web design, Web consulting and other companies
        that
        create and transmit digital broadband content.
 
 On
        December 28, 2000, the Company filed Form 10-SB with
        the
        Securities and Exchange Commission. The purpose of this registration statement
        was the distribution of common stock to separate the restaurant business
        from
        the Company's entertainment business, in order (i) to allow the restaurant
        business to focus on its core strengths and (ii) to permit customers,
        stockholders and other constituencies to better evaluate the respective
        businesses. The Company and its restaurant subsidiary had entered into a
        series
        of agreements, contingent on the completion of the distribution, relating
        to the
        distribution and the relationship of the entities thereafter. This registration
        statement was not declared effective and the proposed spin-off did not occur.
 
 F-7
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  On
        February 28, 2002, the Company sold its 80% interest in ATI (Delaware). (See
        “Discontinued Operations”).
 
 The
        Company currently has no active business. However, the Company is involved
        in
        acquiring and investing in software and high technology companies, with a
        focus
        on acquiring controlling interests and has entered into the software technology
        industry through the investment of International Microcomputer Software,
        Inc.
        ("IMSI"). Since 1982, IMSI has 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.
 
 IMPAIRMENT
        OF LONG-LIVED ASSETS
 
 In
        accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
        Long-lived Assets, the Company continually evaluates the fair value of
        long-lived assets for impairment whenever events or changes in circumstances
        indicate that the carrying amount of an asset may not be recoverable.
 
 STOCK-BASED
        COMPENSATION
 
 Since
        July 1, 2002, the Company has accounted for stock-based compensation in
        accordance with the provisions of SFAS No. 123, "Accounting for Stock-Based
        Compensation," which provided guidance for the recognition of compensation
        expense as it related to the issuance of stock options and warrants. In
        addition, the Company adopted the provisions of SFAS No. 148, "Accounting
        for
        Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS
        No.
        123." SFAS No. 148 amended SFAS No. 123 to provide alternative methods of
        transition for a voluntary change to the fair value based method of accounting
        for stock-based employee compensation provided by SFAS No. 123. In addition,
        SFAS No. 148 amended the disclosure requirements of SFAS No. 123 to require
        prominent disclosures in both annual and interim financial statements about
        the
        method of accounting for stock-based employee compensation and the effect
        of the
        method used on reported results. SFAS No. 148 also amended the manner by
        which a
        company accounts for the transition to the fair value based method recommended
        by SFAS No. 123. As permitted by SFAS No. 148, the Company has adopted the
        fair
        value method recommended by SFAS No. 123 to effect a change in accounting
        for
        stock-based employee compensation. Prior to July 1, 2002, the Company accounted
        for stock-based employee compensation under the recognition and measurement
        provisions of Accounting Principles Board Opinion No. 25, "Accounting for
        Stock
        Issued to Employees," and related Interpretations.
 
 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.
 
 F-8
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
 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. For the majority of financial
        instruments, including receivables, long-term debt, and stock options and
        warrants, standard market conventions and techniques, such as discounted
        cash
        flow analysis, option pricing models, replacement cost and termination cost,
        are
        used to determine fair value. All methods of assessing fair value result
        in a
        general approximation of value, and such value may never be actually
        realized.
 
 USE
        OF
        ESTIMATES
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles in the United States 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.
 
 NEW
        ACCOUNTING PRONOUNCEMENTS
 
 In
        2004
        and 2003, the FASB issued the following new statements and
        interpretations:
 
 Statement
        No. 132 (revised 2003), Employers' Disclosures about Pensions and Other
        Postretirement Benefits--an amendment of FASB Statements No. 87, 88, and
        106.
  Statement
        No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
        Statement No. 13, and Technical Corrections
  Statement
        No. 146, Accounting for Costs Associated with Exit or Disposal
        Activities.
  Statement
        No. 147, Acquisitions of Certain Financial Institutions—an amendment of FASB
        Statements No. 72 and 144 and FASB Interpretation No. 9.
  Statement
        No. 148, Accounting of Stock-Based Compensation - Transition and Disclosure,
        an
        amendment of FASB Statement No. 123.
  Statement
        No. 149, Amendment of Statement No. 133 on Derivative Instruments and Hedging
        Activities.
  Statement
        No. 150, Accounting for Certain Financial Instruments with Characteristics
        of
        Both Liabilities and Equity.
  Statement
        No. 151, Inventory Costs--an amendment of ARB No. 43, Chapter 4.
  Statement
        No.152, Accounting for Real Estate Time-Sharing Transactions.
  Statement
        No. 153, Exchanges of Nonmonetary Assets
  Statement
        No. 154, Accounting
        Changes and Error Corrections
  F-9
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  FASB
        Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure
        Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
        of
        Others--an interpretation of FASB Statements No. 5, 57, and 107 and rescission
        of FASB Interpretation No. 34.
  FASB
        Interpretation 46, Consolidation of Variable Interest Entities--an
        interpretation of ARB No. 51.
  FASB
        Interpretation 46(R), Consolidation of Variable Interest Entities (revised
        December 2003)--an interpretation of ARB No. 51.
  None
        of
        these pronouncements had or are expected to have a material impact on the
        Company's financial position and results of operations.
 
 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.


F-10
 DIGITAL
                CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
                TO
                CONSOLIDATED FINANCIAL STATEMENTS
 June
                30,
                2003 and 2002
  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. 
        DISCONTINUED OPERATIONS
 
 During
        the year ended June 30, 2002, the Company sold ATI (Delaware) and discontinued
        or sold its operating subsidiaries, Keynomics, Inc.; Tune-In Media; and
        CineBlast. Accordingly, the related results of operations and cash flows
        have
        been reflected as discontinued operations in the accompanying consolidated
        financial statements.
 
 On
        February 28, 2002, the Company sold its 80% interest in ATI (Delaware) to
        PAT
        Services, Inc. (“PAT Services”) for the consideration of $100, assumption of
        liabilities and a waiver by Mr. Jeff Bernstein (the then president of ATI
        (Delaware) of his right to convert his shares of ATI (Delaware) into shares
        of
        common stock of the Company under the conversion agreement with the Company,
        ATI
        (Delaware) and Mr. Bernstein executed in connection with the acquisition
        of
        Pudgie's in October 2000. Contemporaneously with the sale of ATI (Delaware),
        ATI
        (Delaware) transferred certain property rights (including all its trademarks)
        and 100% of the stock of its subsidiaries, Arthur Treacher’s Franchise Systems,
        Inc. and Pudgie's Franchise Corp. to PAT Franchise Systems, Inc. (“PAT
        Franchise”), an entity controlled by Mr. Bernstein, in consideration for the
        assumption of certain liabilities of ATI (Delaware). The two subsidiaries
        of ATI
        (Delaware) are parties to the franchise agreements with the franchisees in
        the
        Arthur Treacher’s and Pudgie's restaurant systems.
 
 In
        conjunction with the sale of ATI (Delaware), the secured promissory note
        executed in December 2000 by the Company, ATI (Delaware) and its subsidiary,
        M.I.E. Hospitality, Inc. (“MIE”) in favor of DCDC (Delaware) was amended and
        restated. The amended promissory note had a principal balance of $1,071,310,
        which equaled the outstanding principal balance and accrued and unpaid interest
        on the original note as of February 28, 2002. PAT Services became a party
        to the
        note and pledged its 80% interest in ATI (Delaware) as collateral to secure
        the
        note. PAT Franchise became a guarantor of the note and provided DCDC (Delaware)
        with a first security interest in the proprietary rights transferred by ATI
        (Delaware) to PAT Franchise and in the franchise agreements to which Arthur
        Treacher’s and Pudgie's are parties. The note was due on December 1, 2004 with
        interest at the rate of 12% per year, with the interest payable monthly
        commencing April 30, 2002. The Company and PAT Services executed interest
        payment waivers for the months of April, May and June 2002.
 
 F-11
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  On
        June
        22, 2002, to meet various working capital needs, the Company sold the amended
        promissory note to KGS Holdings, Ltd for the total consideration of $107,000,
        resulting in a loss of $1 million.
 
 Effective
        October 1, 2001, the Company sold its Keynomics subsidiary to IMSI. The total
        aggregate purchase price of Keynomics was $450,000. The purchase price was
        payable as follows: (i) $50,000 paid at closing; (ii) $150,000 paid in equal
        monthly installments of $25,000 commencing 35 days after closing: (iii) $100,000
        was deemed paid by crediting against the Purchase Price the payments made
        by
        IMSI to the Company in October and November 2001; and (iv) $150,000 was paid
        by
        offsetting amounts the Company owed to Keynomics. Additionally, the sales
        contract included certain provisions for the Company to receive additional
        compensation based upon Keynomics financial results.
 
 On
        July
        30, 2004, IMSI announced the sale of Keynomics, resulting in a termination
        of
        the additional compensation provisions of the sale.
 
 On
        November 5, 2001, after experiencing less than anticipated results from the
        operations of Tune-In Media, the Company entered into a memorandum agreement
        to
        transfer certain assets and liabilities of Tune-In to its management
        team.
 
 In
        December 2001 the Company entered into an agreement with the principals of
        CineBlast! to transfer 100% of the shares of CineBlast to the principals
        for the
        reduction of sums of their various consulting and employment agreements.
        In
        January, 2003 the principals of CineBlast filed an action against the Company
        and DCDC (Delaware) alleging among other things, breach of contract. In July
        2003 the parties executed a Settlement Agreement and a Stipulation of
        Discontinuance. On
        April
        21, 2005 the Notes Payable related to the CineBlast settlement of $175,000
        became due and payable. And based upon the formula in the settlement agreement
        the total obligation due the principals of CineBlast is $153,600. 
        (See
“Settlement With Former Employees”)
 
 Additionally,
        in November 2001 the Company discontinued the operations of its affiliate,
        EyeCandy.
 
 The
        resultant gain on the disposal or discontinuance of the aforementioned entities
        totaled $ 3.7 million.
 
 F-12
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
 
 3. 
        NOTES RECEIVABLE—RELATED PARTY
 
 At
        June
        30, 2002 , the
        Company had two notes receivable from IMSI in an amount totaling $250,100,
        resulting, primarily, from the termination agreement discussed in Note 2
        and
        also from the sale of Keynomics to that entity. These receivables were satisfied
        in the 2003 fiscal year.
 
 Notes
        receivable at June 30, 2003 and 2002 are as follows:
  2003
              
              2002Note
                  receivable from IMSI from termination agreement
              
              $
              -0-
              
              $
              200,000Note
                  receivable from IMSI from sale of Keynomics
              
              
              -0-
              
              
              50,100Total
              
              $
              -0-
              
              $
              250,100
  4. 
        INVESTMENTS IN MARKETABLE SECURITIES AND NONMARKETABLE
        SECURITIES
 
 On
        August
        31, 2001, the Company signed a merger agreement (the “Merger Agreement”) with
        IMSI. The Company was to merge into a wholly owned subsidiary of IMSI.
        Shareholders of the Company were to exchange shares of common stock of the
        Company for IMSI common stock constituting approximately 51% of the issued
        and
        outstanding common stock of IMSI. Upon execution of the Merger Agreement,
        the
        Company purchased a promissory note in the principal amount of $3,580,000
        for
        $2,500,000, owed by IMSI to Union Bank of California, which note was to have
        been cancelled upon consummation of the merger.
 
 In
        January 2002, the parties agreed to terminate the merger contemplated by
        the
        Merger Agreement. IMSI also agreed to prepare and file a registration statement
        registering 2,000,000 shares of common stock and to provide the Company with
        piggyback registration rights with respect to the remaining 7,000,000 shares.
        Effective January 31, 2002, certain members of the Boards of Directors of
        the
        Company and IMSI resigned, with no directors serving on the boards of both
        companies.
 
 On
        February 28, 2002, the Company and IMSI entered into an agreement, which
        provided for the conversion of the promissory note purchased by the Company
        into
        9,000,000 shares of common stock of IMSI plus $250,000 in cash to be paid
        in 15
        monthly installments. Based upon the share price of IMSI at February 28,
        2002,
        the date of the exchange of the note for IMSI shares, the Company realized
        a
        gain of $ 1,575,000.
  The
        Company had investments and advances in certain marketable and non-marketable
        securities at June 30, 2003 and 2002, as follows:
  F-13
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
 
 June
                    30, 2003
                
                June
                    30, 2002Securities
                  not readily marketable, Nonmarketable Securities and
                  AdvancesIMSI
                
                $
                2,880,900
                
                $
                3,169,600MadeMyWay.com,
                    Inc.
                
                
                1,200,000
                
                
                1,200,000Interactive
                    Pager Media, Inc
                
                
                1,000,000
                
                
                1,000,000Our
                    Yearbook Corporation
                
                
                610,000
                
                
                610,000Heavy.com
                
                
                500,000
                
                
                500,000Liquor.com
                
                
                250,000
                
                
                250,000Sub
                    total
                
                
                6,360,900
                
                
                6,929,600Unrealized
                  gain on non-marketable securities
                
                
                1,561,000
                
                
                2,430,400Less
                    allowance for impairment loss
                
                
                (3,560,000
                )
                
                (3,560,000
                )Total
                
                $
                4,391,900
                
                $
                5,600,000Marketable
                  Securities:IMSI
                
                $
                679,200
                
                $
                679,200Thinking
                    Tools, Inc.
                
                
                300,000
                
                
                300,000Unrealized
                    gain on marketable securities
                
                
                93,400
                
                
                232,800Total
                
                $
                1,072,600
                
                $
                1,212,000
  An
        impairment loss of non-marketable securities has been recorded because the
        Company has concluded that recoverability of its investments in such entities
        is
        unlikely and improbable based upon its review of the current financial status
        of
        each entity.
  The
        shares of IMSI owned by the Company are "restricted securities" as defined
        in
        Rule 144 under the Securities Act of 1933.  Under Rule 144, the Company
        can
        publicly sell, within any three month period, a number of shares not to exceed
        one percent of IMSI's then outstanding shares of common stock.  In
        the
        event that IMSI becomes listed on the NASDAQ or on a national securities
        exchange, the maximum amount that can be sold will be the greater of one
        percent
        of the outstanding shares and the average weekley trading volume of IMSI's
        common stock for the four weeks preceeding the Company's filing of a notice
        of
        sale with the SEC. Since these shares are restricted, the shares which can
        be
        sold within one year are shown as a current asset and the balance of the
        shares
        are shown in other assets on the balance sheet.
  A
        total
        of 400,000 shares of IMSI stock secures the Company's 15% 350,000 Promissory
        Note to Multi Mag Corporation and 747,869 shares of IMSI stock secure the
        $345,000 note to investors. See Note 5 - "Notes Payable - Related
        Parties."
  4.
        ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
 Accrued
        expenses consist basically of accrued legal and other professional fees and
        general administrative expenses of the Company.
 5.
        NOTES PAYABLE -
        RELATED PARTIES
  At
          June
          30, 2003 and 2002, the Company’s long term debt consisted of the
          following:
  2003
                  
                  2002Debt
                      due to former executive in conjunction with settlement agreements.
                      Non-interest bearing at June 30, 2002; at June 30, 2001, interest
                      rates
                      range from 7.75% to 10.6% (See “Settlement With Officer”)
                  
                  $
                  -0-
                  
                  $
                  341,200$345,000
                      Secured Promissory Notes with Interest at 10%, net of
                      discount
                  
                  
                  231,900
                  
                  
                  -0-Notes
                      payable to certain former executives
                  
                  
                  103,500
                  
                  
                  123,000Debt
                      due to former employees in conjunction with settlement agreement
                      (See”Settlement With Former Employees”)
                  
                  
                  175,000
                  
                  
                  -0-Total
                  
                  $
                  510,400
                  
                  $
                  464,200Less
                      : Current portion
                  
                  
                  175,000
                  
                  
                  341,200Net
                      Long term debt
                  
                  $
                  335,400
                  
                  $
                  123,000
 In
          December 2001, Martin Wade, the Company’s former CEO, lent the Company $50,000
          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 was 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.
 
 In
        November 2001, Mr. Bernstein, the former President of the Company's Restaurant
        Division advanced the Company $50,000 bearing interest at 12%.  The
        Company
        made periodic payments on this debt, totaling approximately $ 21,500 leaving
        approximately $36,000, which included certain other indebtedness. 
        In May
        2004, Gary Herman and Bruce Galloway satisfied the remaining obligation to
        Mr.
        Bernstein on behalf of the Company. Mr. Herman and Mr. Galloway have equally
        assumed the balance of the note and the Company and Messrs. Galloway and
        Herman
        are negotiating to extend the note. The Company's management is confident
        that
        such extension can be obtained.
 
 F-14
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  Throughout
        the period from July 1, 2001 through June 30, 2004, Mr. Bruce Galloway the
        Company's former chairman, had advanced monies at 12% to allow the Company
        to
        satisfy operating expenses, the amounts outstanding to Mr. Galloway totaled
        $
        25,000 and $ 23,000 at June 30, 2003 and 2002, respectively.
  In
        January 2003, the Company borrowed the sum of $300,000 from its former chairman,
        Bruce Galloway to satisfy certain obligations of the Company. The term of
        the
        loan was three months with interest at 12%. In addition, Mr. Galloway received
        a
        warrant to purchase 1,000,000 shares of common stock of the Company with
        an
        exercise price of $.01 per share. Mr. Galloway borrowed the funds advanced
        to
        the Company from AFC Enterprises, Inc. (“AFC”). In addition, AFC received a
        warrant to purchase 1,000,000 shares of common stock at $.01 per share. As
        an
        inducement to advance the funds to Mr. Galloway, the loan was repaid in April
        2003. Mr. Galloway and AFC Enterprises have exercised their respective warrants.
  In
        April
        2003, the Company issued $ 345,000, of secured promissory notes to a group
        of
        investors. The notes mature in August 2005 and bear interest at 10%. In
        addition, each for $ 60,000 of notes issued, the Company issued a warrant
        to
        purchase 1,000,000 shares of stock at an exercise price of $.01/share. A
        total
        of 5,750,000 warrants were exercised at a price of $.01/share. These warrants
        were valued at $392,500 and charged to interest expense. These notes were
        collateralized by 2,053,571 shares of IMSI stock currently held by the Company.
        The proceeds of this offering were used to repay the loan to Mr. Galloway
        and
        for the Company’s working capital requirements.
  The
        number of shares of IMSI Common Stock pledged as Collateral shall be 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 IMSI 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
        2004, are 747,869 shares.
 
 F-15
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  In
        the
        fall of 2004 all but two of the note holders granted extensions to the Company
        through December 31, 2005. The Company is attempting to negotiate  an
        extension of the maturity dates with the
        two remaining note holders in respect to all
        of the promissory notes.
 
 The
        Company's management is confident that such extensions can be obtained,
        but  there
        can
        be no assurances that this will occur.
 
 In
        connection with the issuance of the notes to Martin Wade, Bruce Galloway
        and the
        secured promissory notes, the Company also issued detachable stock purchase
        warrants to purchase 8,250,000 shares of common stock at $.01 per share.
        The
        warrants expires in 2011 and 2012. Based on the relative fair values, the
        Company has attributed $230,000 of the total proceeds to the warrants and
        has
        recorded the warrants as additional paid-in capital and as a discount to
        the
        notes. The resulting discount on the notes is being amortized over the notes
        initial term as a charge to interest expense.
  The
        Company considers the carrying value of its long-term debt 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, including those costs associated with the issuance of common
        stock warrants, approximated $ 436,300 and $53,500 for the years ended June
        30,
        2003and 2002, respectively.
  Long
        term debt matures during the subsequent years as follows:
 
 June
                  30, 2004
              $
                  175,000June
                  30,2005
              $
                  120,000 , including amortization of debt discountJune
                  30,2006
              $
                  328,500 , including amortization of debt discountJune
                  30,2007
              $
                  -0-June
                  30,2008
              $
                  -0-
  6.
        INCOME TAXES
 
 For
        the
        years ended June 30, 2003 and 2002, 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:
  2003
              
              2002Federal
                  statutory rate
              
              34%
              
              34%Valuation
                  allowance on net operating loss carryforwards, and investment
                  write-downs
              
              34%
              
              34%Effective
                  income tax rate
              
              0%
              
              0%
 
 F-16
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  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, 2003 and 2002 are as
        follows:
 
 2003
                
                2002Deferred
                    tax assets:Operating
                    loss carryforwards
                
                $
                2,568,000
                
                $
                2,085,000Reserve
                    accounts
                
                
                -
                
                
                -Write-down
                    of investments
                
                
                1,424,000
                
                
                1,424,000Total
                    Deferred Tax Asset
                
                $
                3,992,000
                
                $
                3,509,000Valuation
                    Allowance
                
                
                (3,992,000
                )
                
                (3,509,000
                )$
                -
                
                $
                -
  A
        full
        valuation allowance is provided against all deferred tax assets due to the
        uncertainty as to their future realization.


Deferred
      taxes were not provided on accumulated other comprehensive income as management
      expects that the NOL will be sufficient to offset
      future gains.




Digital
        Creative Development Corporation and subsidiaries have not filed an income
        tax
        return since the year ended June 30, 2000. The draft financial statements
        for
        the year ended June 30, 2001 disclose a net operating loss carryforward of
        approxmately $32,748,000. The current tax laws as it pertains to disposal
        of
        subsidiaries that generate net operating loss carryforwards ("NOL") essentially
        eliminate the NOL carryforward and do not provide for a company to recognize
        a
        loss on dispositon of the subsidiary for tax purposes. However, the laws
        do
        provide for the parent to reallocate the NOL based upon their basis in the
        Companies being disposed of. We have obtained the consolidating worksheets
        for
        the fiscal year ended June 30, 2001 and have determined that the Company's
        investment in its subsidiaries is as follows:
  Cineblast
                
                $
                3,241,250Tune-in
                
                
                679,041Keynomics
                
                
                679,042ATI-Delaware
                
                
                1,101,008$
                5,700,341
 
 Therefore,
        the NOL for reporting purposes will be assumed to be the $5.7 million and
        will
        be finalized when all of the corporate tax returns are completed.
  7.
        PER
        SHARE INFORMATION
 
 In
        accordance with SFAS No. 128, "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. SFAS No. 128 requires the presentation of both Basic EPS and
        Diluted EPS on the face of the Company's Consolidated Statements of Operations.
        There were 16,360,496 and 11,918,732 stock options and warrants excluded
        from
        the computation of Diluted EPS for the years ended June 30, 2003 and 2002,
        respectively, as their effect on the computation of Diluted EPS would have
        been
        anti-dilutive.
 
 F-17
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  The
        following table sets forth the computation of basic and diluted per share
        information:
  June
                    30,2003
                
                2002(in
                    thousands)Numerator:*Basic
                    and Diluted:*Income
                    (loss) attributable to common shareholders
                
                $
                (1,223.3
                )
                $
                (163.3
                )Income
                    (loss) from discontinued operations
                
                
                -0-
                
                
                3,730.7Net
                    income (loss) attributable to common shareholders
                
                $
                (1,223.3
                )
                $
                3,894.0Denominator:Weighted
                    average common shares outstanding
                
                
                45,128.3
                
                
                38,965.5Dilutive
                    effect of stock options and warrants
                
                
                -0-
                
                
                2,219.0Weighted
                    average common shares outstanding, assuming dilution
                
                
                45,128.3
                
                
                41,184.5Basic
                    Per Share Information:Income
                    (loss) from continuing operations
                
                
                ($.03
                )
                $
                -0-Income
                    (loss) from discontinued operations
                
                
                -0-
                
                $
                0.10Net
                    income (loss)
                
                
                ($.03
                )
                $
                0.10Diluted
                    Per Share InformationIncome
                    (loss) from continuing operations
                
                
                ($.03
                )
                $
                -0-Income
                    (loss) from discontinued operations
                
                $
                -0-
                
                $
                0.09Net
                    income (loss)
                
                
                ($.03
                )
                $
                0.09
  8.
        STOCK OPTIONS AND
        STOCK WARRANTS
  During 2003
        and
        2002, the Company granted 7,750,000 and 3,050,000 warrants at an exercise
        price
        of $0.01 per share, respectively, to lenders in conjunction with the issuance
        of
        debt by the Company.  These warrants were valued at $ 392,500 and
        $
        325,000, respectively, and were amortized to interest expense over the terms
        of
        the loans .
 
 F-18
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  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 nonregistered 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 and warrants issued under the Plan is presented in the table
        below:
  Options
                
                WeightedAverageExercisePrice
                
                Warrants
                
                WeightedAverageExercisePriceOutstanding
                    , June 30,2001(unaudited)
                
                
                10,577,230
                
                $
                0.45
                
                
                2,874,893
                
                $
                0.81Expired
                
                
                (2,632,000
                )
                $
                0.33
                
                
                (721,391
                )
                $
                2.01Exercised
                
                
                (1,230,000
                )
                $
                0.01
                
                
                -0-
                
                $
                -0-Issued
                
                
                2,550,000
                
                $
                0.01
                
                
                7,750,000
                
                $
                0.01Outstanding
                    , June 30,2002
                
                
                9,265,230
                
                $
                0.42
                
                
                2,653,502
                
                $
                0.33Expired
                
                
                (409,736
                )
                $
                0.50
                
                
                (148,500
                )
                $
                1.00Exercised
                
                
                -0-
                
                
                
                
                
                (2,750,000
                )
                $
                0.01Issued
                
                
                -0-
                
                
                
                
                
                7,750,000
                
                $
                0.01Outstanding
                    , June 30, 2003
                
                
                8,855,494
                
                $
                0.42
                
                
                7,505,002
                
                $
                0.10
 
 Stock-based
        compensation cost of approximately $275,000 is reflected in the accompanying
        Statement of Operations for the year ended June 30,2002. Prior to July 1,2002,
        the Company accounted for stock-based employee compensation under the
        recognition and measurement provisions of Accounting Principles Board Opinion
        No. 25, "Accounting for Stock Issued to Employees," and related Interpretations.
 
 All
        of
        the options exercised in the 2002 period were exercised by the principals
        of a
        discontinued subsidiary, CineBlast!. The warrants of 500,000 were issued
        to
        Martin Wade, the Company’s former CEO, in consideration for his $ 50,000 loan to
        the Company (See Long Term Debt). Current officers and directors received
        1,000,000 of the 2,550,000 options issued during the 2002 period.
 
 F-19
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  At
        June
        30,2003, current officers and directors were the beneficial owners of 20,000
        options.
  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
 
 DCDC
        (Delaware) (the”Subsidiary”) was formed in February 2000. Approximately
        12,000,000 common shares or approximately 45% of the outstanding common stock
        of
        the Subsidiary were sold to third parties. Under the terms of the stock sale,
        the Subsidiary's common stock may be converted into the Company's stock,
        in
        whole or in part, at any time, at the option of the holder. The Company may
        elect at any time to convert the Subsidiary's common stock into the Company’s
        common stock provided that, certain conditions related to market listing
        and
        reporting are met. Effective January 25, 2001 *,* the
        Company notified holders of common shares of the Subsidiary that it was
        converting 11,869,957 shares of common stock outstanding into shares of the
        Company's common stock on a one-for-one basis.
  In
        November and December 1997, the Company consummated a private placement to
        investors with respect to equity units consisting of shares of its Series
        C
        Preferred Stock, with warrants to purchase shares of common stock attached,
        for
        aggregate proceeds of $990,000, On November 25, 1997, the Company sold 8,100
        shares of Series C Preferred Stock, with warrants to purchase 121,500 shares
        of
        common stock attached. On December 23, 1997, the Company sold 1,800 shares
        of
        Series C Preferred Stock, with warrants to purchase 27,000 shares of common
        stock attached. The Company allocated approximately $137,000 of
        the
        proceeds to the value of the warrants and approximately $853,000 to the value
        of
        the preferred stock. The 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, 2003 and 2002, the Company had
        accumulated and unpaid dividends of approximately $470,500 and $385,300,
        respectively, on this series of preferred stock. The warrants entitle the
        holder
        to purchase one share of common stock at an exercise price of $3.125 per
        share
        of common stock. The Company utilized the proceeds for working capital needs.
  The
        holders of the Series A Preferred Stock are entitled to a cumulative dividend
        of $0.1 0
        per
        share per annum. Such dividends accrue annually but are payable if and when
        the
        Company declares a dividend. The Company has not 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 $ 24,400 and $24,200 for the years ended
        June
        30, 2003 and 2002, respectively.
  F-20
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
 
 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 not paid any dividend with respect
        to the Series D Preferred Stock. The 4,000 outstanding shares of Series D
        Preferred Stock arc 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 $ 285,000 and $
        225 ,000
        at
        June 30, 2003 and 2002, respectively.
  For
        the
        years ended June 30, 2003 and 2002, the Company issued the following common
        shares:
  June
                  30,2003
              
              2002Exercise
                  of stock warrants
              
              
              2,750,000
              
              
              3,590,000Exercise
                  of stock warrants
              
              
              -0-
              
              
              100,000Exercise
                  of common stock options
              
              
              -0-
              
              
              1,230,000Sale
                  of common stock
              
              
              -0-
              
              
              6,970,000Other
                  issuance in connection with
                debt
                  issuance
              
              
              500,000Total
              
              
              3,250,000
              
              
              11,890,000
  11.
        SETTLEMENT WITH OFFICER
 
 On
        or
        about May 9, 2001, Ralph Sorrentino, the former President and Chief Executive
        Officer of the Company commenced an action, RJS
        Consulting Corp. and Ralph J. Sorrentino v. Digital Creative Development
        Corporation, et. al. The
        Demand for Arbitration alleged that the Executive Consulting Agreement between
        the Company and RJS Consulting Corp. was terminated without cause and that
        Mr.
        Sorrentino had “good reason” to terminate the agreement. The Demand for
        Arbitration sought monetary damages in an amount not less than $5,000,000
        arising out of the alleged breach of the Executive Consulting Agreement and
        compensatory and punitive damages in an amount to be proved at the arbitration
        arising out of the alleged defamation of Mr. Sorrentino by agents of the
        Company.
 
 The
        Company, DCDC (Delaware), RJS Consulting Corp. and Mr. Sorrentino executed
        a
        Memorandum of Agreement on October 30, 2001. Pursuant to the Memorandum,
        the
        Company agreed to buy out Mr. Sorrentino’s interest under the Executive
        Consulting Agreement and related documents and Mr. Sorrentino agreed to
        surrender all of his options to purchase common stock of the Company, including
        the option for 5,000,000 shares of common stock issued in connection with
        the
        Executive Consulting Agreement. Under the Memorandum, the Company agreed
        to pay
        Mr. Sorrentino $270,000 and to assume an aggregate of $1,669,600 in indebtedness
        from Mr. Sorrentino, including two mortgages in favor of Wells Fargo for
        an
        aggregate of $570,600, a mortgage in favor of Fleet Mortgage Group in the
        principal amount of $1,000,000 and lease in favor of Chase Automotive Finance
        in
        the principal amount of $99,792. Such payments were to be made over a period
        of
        fifteen (15) years in monthly installments, except for Chase Automotive Finance,
        which was for a period of two (2) years. Upon satisfaction of the obligation
        to
        Chase Automotive Finance, the Company has agreed to pay Mr. Sorrentino an
        aggregate of $4,653 payable in 36 equal monthly installments. The Company
        agreed
        that upon the consummation of the merger with IMSI, the Company’s obligations to
        Mr. Sorrentino would be secured by the assets of IMSI, such security interest
        to
        be subordinated to existing secured bank debt and certain other creditors
        who
        had previously agreed to restructure their indebtedness in order to facilitate
        the merger with IMSI. This resulted in the Company recording a loss of
        approximately $ 2.5 million as of June 30, 2001.
 
 F-21
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  In
        the
        event that the merger with IMSI was not consummated, the Company agreed under
        the Memorandum to enforce its rights under the promissory note, which the
        Company purchased from Union Bank of California in August 2001, and, upon
        foreclosure on the promissory notes, IMSI shall be obligated to make payments
        to
        the Company of $50,000 per month for 60 months, in turn, remitting payment
        to
        Sorrentino.
 
 Subsequently,
        on July 25, 2002, Mr. Sorrentino and RJS Consulting Corp., filed an action
        in
        New York State Supreme Court, New York County (Index # 602399/02) against
        the
        Company, DCDC (Delaware), various officers and directors, alleging among
        other
        things, breach of contract and fraud. On February, 2003 the Parties entered
        into
        a settlement agreement and dismissal of the action. The settlement provided
        for
        general mutual releases between the parties, a payment of $300,000 to Mr.
        Sorrentino, plus 500,000 restricted common shares of IMSI stock valued
        at $565,000 for a total fair value of $865,000. The aforementioned
        resulted
        in a gain of $ 933,400.
  12.
        SETTLEMENT WITH FORMER EMPLOYEES
 
 In
        January 2003 the principals of CineBlast, Raymond DeMarco, Michael Morley
        and
        Gil Holland entered an action in New York State Supreme Court, New York County
        (Index# 100192/03) against the Company and DCDC (Delaware), alleging among
        other
        things, breach of contract and fraud. On March 31, 2003 the parties executed
        a
        Settlement Agreement, which provided for a, Mutual General Release and a
        Stipulation of Discontinuance. In addition, mssrs. DeMarco, Morley and Holland
        each received a payment of $5,000, 80,000 restricted shares of IMSI and a
        promissory note for $58,333.33, with a two year maturity. The terms of the
        Note
        provide that if on the date of maturity, the shares of IMSI transferred to
        mssrs. DeMarco, Morley and Holland are unrestricted and trading above $2.00
        per
        share, the Company shall have no obligation to pay the notes, which shall
        become
        null and void. If on the date of maturity, the price of IMSI
        is
        below $2.00/share, the balance of the Note shall be proportionately reduced.
 
 F-22
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  In
        April
        21, 2005 the Notes Payable related to the CineBlast settlement of $175,000
        became due and payable. Based upon the formula in the settlement agreement
        the
        total obligation due the principals of CineBlast is $153,600.  Management
        of the Company has negotiated a payout of this obligation under which the
        amount
        of $ 153,600 will be paid over six months, beginning July 2005, without
        interest, as follows: $ 15,000 at July 1 and August 1; $ 30,000 at September
        1,
        October 1 and November 1; and $ 33,600 at December 1, 2005.
  13.
        SUBSEQUENT EVENTS
 
 On
        September 18, 2003, the Company entered into a 15% one-year note with IMSI
        whereby the company borrowed $350,000. The note was due, with interest, on
        September 18, 2004 and is secured by 400,000 shares of IMSI stock currently
        owned by the Company. The agreement provided that the Company cannot sell
        any
        other IMSI common stock, which it holds, with the exception of private sales
        of
        IMSI common stock, until February 15, 2004. Concurrent with this note, DCDC
        prepaid the entire principal portion of a $50,000 note, made in favor of
        IMSI on
        February 25, 2003.
  On
        September 18, 2004, the Company and IMSI entered into an amendment to the
        note
        described above. The Amendment provides for the extension of the maturity
        date
        to May 31, 2005 as well as the payment of accrued interest by October 31,
        2004
        in the sum of $52,000. In addition, the Company provided to IMSI as additional
        collateral, its ownership stake in Access Propeller, LLC. On October 18,
        2004
        the accrued interest payment was made to IMSI as well as an additional payment
        of $25,000 credited towards a reduction of principal.
 
 On
        January 5, 2005, IMSI sold and assigned the $350,000 note to Multi-Mag
        Corporation ("Multi-Mag").  The note was amended on June 5, 2005 and
        required DCDC to pay $38,900 of accrued interest. The Company remitted the
        interest payment on June 16, 2005. Additionally, interest will be paid on
        the
        Note from June 1, 2005 through the payment date, which will be no later than
        June 30, 2005 at the rate of $135 per day.  The entire principal and
        the
        remaining interest on the Note is due on December 31, 2005.
 
 On
        September 18, 2003 the company extended a $300,000 bridge loan to Access
        Propeller, LLC (“Access”). This loan is secured by all of the assets of Access.
        Access owns 81% of Jippii (USA), n/k/a as DownPlay, Inc. DownPlay, Inc. is
        in
        the business of providing downloadable mobile entertainment to cell phones
        and
        wireless devices. In addition, the loan granted the Company the option to
        convert to and make a further investment of $900,000 in preferred stock,
        and to
        acquire a total of 51.1% of Access. In December 2003, the Company elected
        not to
        make a further investment in Access Propeller or its subsidiary, DownPlay.
        As of
        the date of this filing the ownership stake in Access is approximately
        13%.
 
 F-23
 DIGITAL
              CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 June
              30,
              2003 and 2002
  On
        September 30, 2004, the Company sold 200,000 shares of IMSI for gross proceeds
        of $200,000. The Company used $ 77,500 of this amount to pay certain
        indebtedness owed IMSI
        in
        the form of accrued interest and a reduction of principal.
 
 On
        May
        25, 2005 the Company sold 250,000 shares of IMSI for gross proceeds of
        approximately $ 277,000. The company will use approximately $35,000 of this
        amount to, pay accrued interest to Multi-Mag and the remainder for general
        working capital purposes.
  In
          June,
          2005, the Company awarded to each of its current directors, Gary Herman
          and
          Skuli Thorvaldsson, options to purchase 1,250,000 shares of common stock
          at an
          exercise price of $.01 per share and expiring in June 2015. These options,
          awarded for past services to the Company, were valued at approximately
          $290,000
          and charged to earnings in the fiscal year ended June 30,
          2005.
  F-24