UNITED
STATESSECURITIES AND EXCHANGE COMMISSIONWashington,
D.C. 20549

_________________

FORM
10-K

_________________

þ     ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGEJune 30 2012___

or

o     TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

For
the transition period from: _____________ to _____________

_________________

DIGITAL CREATIVE
DEVELOPMENT CORPORATION

(Exact
name of registrant as specified in its charter)

_________________

|Utah                              | 000-22315    | 34-1413104         
|--------------------------------- | ------------ | -------------------
|(State or Other Jurisdiction      | (Commission  | (I.R.S. Employer   
|of Incorporation or Organization) | File Number) | Identification No.)

720 Fifth Avenue New York, NY 10019(Address
of Principal Executive Offices) (Zip Code)

(212) 247-0581(Registrant’s
telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:

Title
of each className of each exchange on which registered

Securities
registered pursuant to Section 12(g) of the Act:

Title
of each className of each exchange on which registered

_________________

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.     Yes  o     No  þ

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.     Yes  o     No  þ

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.     Yes  o     No  þ

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  o     No  þ

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     Yes  o     No  þ

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.

|Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  o | Smaller reporting company  þ
|-------------------------- | -------------------- | ------------------------ | ----------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).     Yes  o     No  þ

State
the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked price of such common equity, as of the last business
day of the registrant’s most recently completed second fiscal quarter.

Note.—If a determination
as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock
held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in the Form.

Shares
outstanding: 53,864,165 at October 12, 2012















TABLE
OF CONTENTS



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















PART
IBACKGROUND

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

Item
1. Description of Business

Overview

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

Plan
of Business

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



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



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



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



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



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

Employees

As
of June 30, 2012 and through the present, the Company has no employees. Gary Herman, the Company’s Chairman, Chief Executive
Officer, President and Secretary and Vincent De Lorenzo the Company’s Chief Financial Officer serve on a management consulting
basis.

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

Acquisitions

The
Company has never held itself out as an investment company. Its historical development has focused almost exclusively on restaurant,
software and digital entertainment businesses. Although the Company continues to search for candidates with which to enter into
business combinations or strategic transactions, it does not have an operating business except for its ownership interest in Broadcaster,
Inc.  As of October 12, 2012 the Company owns approximately 3,000,000 shares of common stock of Broadcaster, or
approximately 9.0% of the total outstanding shares.  An additional 225,000 shares of common stock, or approximately 0.43%
of Broadcaster, Inc. is beneficially owned by Gary Herman, the Company’s Chairman, and 1,378,975 shares of common stock,
or approximately 4.1% of Broadcaster, Inc. is beneficially owned by Bruce Galloway, the Company’s principal shareholder.
Furthermore, 2,871,527 shares of common stock, or approximately 8.5% are owned by Strategic Turnaround Equity Partners, LP (Cayman)
an investment fund co-managed by the Company’s chairman.

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

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

In
2012 Broadcaster withdrew its registration of securities under the Securities Exchange Act of 1934 with the Securities and Exchange
Commission.

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

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

Item
2.  Description of Property

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

Item
3.  Legal Proceedings

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

Item
4. Mine Safety Disclosures

None









PART
II

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

The
following table sets forth the high and low prices for the periods indicated as reported by the National Daily Quotation Service,
Inc. between dealers and do not include retail mark-ups, mark-downs, or commissions and do not necessarily represent actual transactions,
as reported by the National Association of Securities Dealers Composite Feed or other qualified inter-dealer quotation medium.
On October 12, 2012 the closing price of the Company’s shares was $.012/share.



|                 |  | High |     |  | Low |  
|---------------- |  | ---- | --- |  | --- | -
|2011 Fiscal Year |  |      |     |  |     |  
|First Quarter    |  | $    | .03 |  |     | $
|Second Quarter   |  | $    | .03 |  |     | $
|Third Quarter    |  | $    | .02 |  |     | $
|Fourth Quarter   |  | $    | .02 |  |     | $
|                 |  |      |     |  |     |  
|2012 Fiscal Year |  |      |     |  |     |  
|First Quarter    |  | $    | .02 |  |     |  
|Second Quarter   |  | $    | .02 |  |     |  
|Third Quarter    |  | $    | .02 |  |     |  
|Fourth Quarter   |  | $    | .01 |  |     |  



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

The stock
is now traded on the Pink Sheets. On October 12, 2012 the number of record holders of the Company's Common Stock was 484.

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 $2,089,400 as of June 30, 2012.

Item
6.  Selected Financial Data

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

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

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

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

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

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

Results
of Operations Fiscal 2012 and Fiscal 2011

The
Company had no operating revenues in fiscal years 2012 or 2011.  General and administrative expenses and other income
and expenses were approximately the same in the 2012 and 2011 fiscal years as interest on notes in default and certain administrative
costs resulted in a net loss of $308,700 in the 2012 fiscal year compared to a $257,900 net loss for the 2011 fiscal year.
The Company continues to search for a business it deems suitable for acquisition or similar transaction.

The
management of Broadcaster continues to search for suitable companies for a business transaction.  There can be no assurance
that the respective management teams of the Company and Broadcaster will be able to identify and consummate a transaction with
a suitable business candidate.

New
Accounting Standards

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









Item
7a. Liquidity and Capital Resources

The
Company’s current liabilities exceeded its current assets by $2,656,300 at June 30, 2012, compared to current liabilities
exceeding its current assets by $2,227,900 at June 30, 2011. The change in working capital is primarily the result of continuing
operating losses and the reduction in value of the Company’s investment in Broadcaster, Inc.  As of June 30, 2012
and 2011, the current potion of our marketable securities had a market value of approximately $-0- and $120,800 respectively.
Current and Total Liabilities were $2.7 million and $2.3 million at June 30, 2012 and 2011, respectively.

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

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

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

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

The
Company and Multi Mag by way of various extension amendments and interest payments agreed to extend the Note through December
31, 2007. The Note with Multi Mag is currently in default and due on demand. The Company's management is confident that future
extensions can be obtained. Although extensions were obtained in the past, there can be no assurance that the Company will be
able to obtain these extensions, if needed.

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

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

The
proceeds of any such sales are anticipated to be principally used by the Company for general working capital purposes. From July
1, 2008 to June 30, 2012 the Company sold 150,500 shares of Broadcaster, Inc. and used the proceeds of approximately $22,400 for
general working capital purposes. Since the de-registration of the shares of Broadcaster, the Company cannot solely rely on the
sale of these shares to fund its future working capital requirements. The amount of proceeds available to the Company from the
sale of shares of Broadcaster will depend upon the market for Broadcaster, which is subject to volatility in price and market
volume.

Quantitative
and Qualitative Disclosures about Market Risk

The
Company’s equity investments are concentrated in Broadcaster, Inc. At June 30, 2012, 100% of the total fair value of equity
investments was concentrated in Broadcaster, Inc. The Company’s present preferred strategy is to hold equity investments
for trading purposes and for long-term strategic purposes. Thus, the Company’s management is not necessarily troubled by
short term equity price volatility with respect to its investments provided that the underlying business, economic and management
characteristics of the investees remain favorable. The carrying values of investments subject to equity price risks are based
on quoted market prices or management’s estimates of fair value as of the balance sheet dates. Market prices are subject
to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the
reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic
characteristics of the investee, the relative price of alternative investments and general market conditions. Furthermore, amounts
realized in the sale of a particular security may be affected by the relative quantity of the security being sold. Insofar as
the Company’s liabilities are concerned, all loans to the Company have been made with fixed interest rates, and, accordingly,
the market risk to the Company prior to the maturity of those instruments is minimal.

Item
8.  Financial Statements and Supplementary Data

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

Item
9. Changes in and Disagreements with Accountants

None

Item
9A. Controls and Procedures



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



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



Management
Report on Internal Controls Over Financial Reporting

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

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

Digital
Creative Development Corporation's management assessed the effectiveness of the Company's internal control over financial reporting
as of June 30, 2012. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control-integrated Framework. Based on that assessment management believes that,
as of June 30, 2012, the Company's internal control over financial reporting is effective based on those criteria.









PART
III

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



|Name               |  | Age |  | Position                                                                  
|------------------ |  | --- |  | --------------------------------------------------------------------------
|                   |  |     |  |                                                                           
|Gary Herman        |  | 48  |  | Chairman of the Board, Chief Executive
    Officer, and Secretary         
|                   |  |     |  |                                                                           
|Skuli Thorvaldsson |  | 70  |  | Director, Former Chief Financial Officer,
    Treasurer Resigned July 2007
|                   |  |     |  |                                                                           
|Vincent DeLorenzo  |  | 66  |  | Chief Financial Officer, Treasurer                                        



Directors

Gary
Herman

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

Skuli
Thorvaldsson

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

Vincent
DeLorenzo

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

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

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

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

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

Item
11.  Executive Compensation

The
following table provides certain summary information concerning the compensation paid or accrued by the Company to or on behalf
of its Chief Executive Officer and the other named executive officers of the Company for services rendered in all capacities to
the Company and its subsidiaries for the fiscal years ended June 30, 2012; 2011; and 2010.



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



|Name and           |  |      |  |              |   |  |       |   |   |                  |  |   | Restricted |  |  | Securities |   |  |         |   |   |               | 
|------------------ |  | ---- |  | ------------ | - |  | ----- | - | - | ---------------- |  | - | ---------- |  |  | ---------- | - |  | ------- | - | - | ------------- | 
|Principal          |  |      |  |              |   |  |       |   |   | Other
    Annual |  |   | Stock      |  |  | Underlying |   |  | LTIP    |   |   | All
    Other | 
|Position           |  | Year |  | Compensation |   |  | Bonus |   |   | Compensation     |  |   | Awards     |  |  | Options    |   |  | Payouts |   |   | Compensation  | 
|                   |  |      |  |              |   |  |       |   |   |                  |  |   |            |  |  |            |   |  |         |   |   |               | 
|Gary Herman        |  | 2012 |  | $            | - |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 
|President          |  | 2011 |  | $            | - |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 
|                   |  | 2010 |  | $            | - |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 
|                   |  |      |  |              |   |  |       |   |   |                  |  |   |            |  |  |            |   |  |         |   |   |               | 
|Vincent De Lorenzo |  | 2012 |  | $            | - |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 
|CFO                |  | 2011 |  | $            | - |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 
|                   |  | 2010 |  | $            | 0 |  |       | $ | - |                  |  | $ | -          |  |  | $          | - |  |         | $ | - |               | 



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



Executive
Compensation

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

VDL
Associates LLC, an entity of which Vincent De Lorenzo is the sole member, provides services as the Company's Chief Financial Officer.
Although the Company has accrued his compensation, Mr. De Lorenzo has not received any recurring compensation, he is compensated
from time to time for his services and as funds are available.

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

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

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









Item
12. Security Ownership of Certain Beneficial Owners and Management

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



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



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

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

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



Item
13. Certain Relationships and Related Transactions

None

Item
14. Principal Accountant Fees and Services

The
following table presents fees for professional audit services rendered by Rosen Seymour Shapss Martin & Company LLP for the
audit of our annual financial statements and fees for other services for the years ended June 30, 2012 and 2011.



|                        |  | 2012 |  |  | 2011 |  
|----------------------- |  | ---- |  |  | ---- | -
|                        |  |      |  |  |      |  
|Audit fees: (1)         |  | $    |  |  |      | $
|                        |  |      |  |  |      |  
|Audit related fees: (2) |  |      |  |  |      |  
|                        |  |      |  |  |      |  
|Tax fees: (3)           |  | None |  |  | None |  
|                        |  |      |  |  |      |  
|All other fees: (4)     |  | None |  |  | None |  
|                        |  |      |  |  |      |  
|Total                   |  | $    |  |  |      | $



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

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

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

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

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

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

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

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

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









PART
IV



Item
15. Exhibits and Report



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



List
of Subsidiaries (3)



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















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.















|Date:October 15, 2012 | Digital Creative Development Corporation
|--------------------- | ----------------------------------------
|                      | By                                      
|                      |                                         





|Date:October 15, 2012 | Digital Creative Development Corporation
|--------------------- | ----------------------------------------
|                      | By                                      
|                      |                                         











DIGITAL
CREATIVE DEVELOPMENT CORPORATION

INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





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











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Stockholders Digital Creative Development Corporation and Subsidiary



We
have audited the accompanying consolidated balance sheets of Digital Creative Development Corporation and Subsidiary as of
June 30, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, stockholders' equity (deficiency),
and cash flows for the years then ended. The consolidated financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based on our audits.



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



In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Digital Creative Development Corporation and Subsidiary as of June 30, 2012 and 2011, and the result of their operations and
their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company has recurring losses from operations and a net capital and equity deficiency
of $2,656,300 that raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.





|October 15, 2012 | Digital Creative Development Corporation                                 
|---------------- | -------------------------------------------------------------------------
|                 | By: /s/ Rosen Seymour Shapss Martin & Company LLP                        
|                 | Rosen Seymour Shapss Martin & Company
    LLPCertified Public Accountants









F-1










|DIGITAL
    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                            
|---------------------------------------------------------------------------------------
|CONDENSED
    CONSOLIDATED BALANCE SHEETS                                              
|ASSETS                                                                                 
|                                                                                       
|                                                                                       
|                                                                                       
|CURRENT ASSETS                                                                         
|Cash and
    cash equivalents                                                          
|Marketable
    securities                                                              
|TOTAL
    CURRENT ASSETS                                                               
|                                                                                       
|TOTAL
    ASSETS                                                                       
|                                                                                       
|LIABILITIES
    AND STOCKHOLDERS' EQUITY (DEFICIT)                                     
|                                                                                       
|CURRENT LIABILITIES                                                                    
|Accrued expenses and
    other liabilities                                             
|Accrued interest                                                                       
|Notes
    payable--related parties                                                     
|TOTAL
    CURRENT LIABILITIES                                                          
|                                                                                       
|                                                                                       
|STOCKHOLDERS' EQUITY
    (DEFICIT)                                                     
|Preferred Stock 2,000,000
    Shares Authorized                                        
|Series A Convertible,
    Par Value $1 ; 2,200 Shares Issued and                       
|Outstanding;
    Involuntary Liquidation Preference of $ 1 Per Share                   
|Plus
    Accrued and Unpaid Dividends                                                  
|Series C, Par Value $100 ; 9,900
    Shares Issued and                                 
|Outstanding;     Involuntary Liquidation Preference of $100 Per Share                  
|Plus
    Accrued and Unpaid Dividends                                                  
|Series D, Par Value $100 ; 4,000
    Shares Issued and                                 
|Outstanding;
    Involuntary Liquidation Preference of $100 Per Share                  
|Plus
    Accrued and Unpaid Dividends                                                  
|Common Stock, Par
    Value $.01; Authorized 75,000,000 Shares; Issued and Outstanding:
|53,864,165 Shares
    at June 30, 2012 and June 30 , 2011                              
|Additional paid in
    capital                                                         
|Accumulated other
    comprehensive loss                                               
|Accumulated
    deficit                                                                
|TOTAL
    STOCKHOLDERS' EQUITY (DEFICIT)                                               
|                                                                                       
|TOTAL
    LIABILITIES AND  STOCKHOLDERS' EQUITY (DEFICIT)                              
|                                                                                       
|                                                                                       
|See accompanying
    Notes to  Consolidated Financial Statements                       













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















|DIGITAL
    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY     
|----------------------------------------------------------------
|CONDENSED
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY   
|FOR
    THE YEARS ENDED JUNE 30, 2012 AND JUNE 30, 2011         
|(in
    thousands)                                              
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Balance
    at June 30, 2010                                    
|                                                                
|Unrealized
    gain on investments                              
|                                                                
|Net
    loss                                                    
|                                                                
|Balance
    at June 30, 2011                                    
|                                                                
|Unrealized
    loss on investments                              
|                                                                
|Net
    loss                                                    
|                                                                
|Balance
    at June 30, 2012                                    
|                                                                
|                                                                
|                                                                
|                                                                
|See
    accompanying Notes to  Consolidated Financial Statements

















|DIGITAL
    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                    
|-------------------------------------------------------------------------------
|CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS                            
|FOR
    THE YEARS ENDED JUNE 30, 2012 AND JUNE 30, 2011                        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|CASH FLOWS FROM OPERATING ACTIVITES:                                           
|Net loss                                                                       
|Adjustments to reconcile net loss to
    net cash used in operating activities:
|Net
    realized  losses  on marketable securities                             
|                                                                               
|Changes in assets and liabilities:                                             
|Increase in accounts payable, accrued
    expenses and other liabilities       
|                                                                               
|NET CASH USED IN
    OPERATING ACTIVITIES                                      
|                                                                               
|CASH FLOWS FROM INVESTING ACTIVITES:                                           
|Proceeds
    from sale of investments, net of purchases                        
|                                                                               
|NET CASH PROVIDED
    BY INVESTING ACTIVITIES                                  
|                                                                               
|CASH FLOWS FROM FINANCING ACTIVITES:                                           
|Proceeds
    from issuance of notes payable--related parties                   
|                                                                               
|NET CASH PROVIDED
    BY FINANCING ACTIVITIES                                  
|                                                                               
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                        
|                                                                               
|CASH AND EQUIVALENTS,
    beginning of period                                  
|                                                                               
|CASH AND EQUIVALENTS,
    end of period                                        
|                                                                               
|CASH PAYMENTS FOR:                                                             
|Interest expense                                                               
|Income taxes                                                                   
|                                                                               
|                                                                               
|See accompanying
    Notes to  Consolidated Financial Statements               









F-5








DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011





1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES
OF CONSOLIDATION

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

ORGANIZATION

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

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

STOCK-BASED
COMPENSATION

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

CASH
AND CASH EQUIVALENTS

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

FAIR
VALUE OF FINANCIAL INSTRUMENTS

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

USE
OF ESTIMATES

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









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2012 and 2011

INVESTMENTS

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

INCOME
TAXES

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

PER
SHARE DATA

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

CONCENTRATIONS
AND CREDIT RISK

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

2.
DOUBT AS TO CONTINUING AS A GOING CONCERN

Our
condensed consolidated unaudited financial statements were prepared on the assumption that we will continue as a going concern.
We currently have a working capital and equity deficit of $2,656,300 and are in default of our notes payable. Our ability to obtain
resources sufficient to continue to meet our obligations as they come due is dependent on raising cash through the sale of shares
of Broadcaster; and/or raising additional equity; and obtaining forbearance of our debt holders. We intend to use our cash as
well as other funds in the event that they shall be available on commercially reasonable terms, to finance our activities, although
we can provide no assurance that these additional funds will be available in the amounts or at the times we may require. Management
believes that it can obtain the additional funds necessary to continue its operations.









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2012 and 2011



3.
INVESTMENTS IN MARKETABLE SECURITIES AND NONMARKETABLE SECURITIES

The
Company had investments and advances in certain marketable and non-marketable securities at June 30, 2012 and 2011, as follows:



2012

|2011
|----

|Broadcaster,
        Inc at cost
|--------------------------------

|2,723.4
|-------

|$
|-

|
|

|2,724.0
|-------

|$
|-

|
|

|Unrealized
        loss on marketable securities
|------------------------------------------------

|(2,723.0
|--------

|
|

|
|

|(2,603.3)
|---------

|
|

|
|

|Realized
        losses on marketable securities
|------------------------------------------------

|(0.4)
|-----

|
|

|
|

|(0.5)
|-----

|
|

|
|

|Access
        Propeller Holdings, Inc.--at cost
|------------------------------------------------

|300.0
|-----

|
|

|
|

|300.0
|-----

|
|

|
|

|Less: allowance for impairment
|------------------------------

|(300.0)
|-------

|
|

|
|

|(300.0)
|-------

|
|

|
|

|102.4
|-----

|$
|-

|
|

|120.2
|-----

|$
|-

|
|

|June
        30,
|----------------



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

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

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

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

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

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

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









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2012 and 2011

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

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

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

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

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

The
following table presents fair value measurements of investments as of June 30, 2012 (dollars in thousands):



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



The
following table’s present changes in investments that use Level 2 inputs for the year ended June  30, 2012:



|                                           |  | Year
                                                             ended
        June
        30, 2012
        (in
        thousands) |         
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------ | --------
|Balance as of June 30, 2011                |  | $                                                                                                                                    | 120.2   
|Net unrealized losses                      |  |                                                                                                                                      | (-119.7)
|Net purchases, sales or redemptions        |  |                                                                                                                                      | (.5)    
|Net transfers in and/or out of Level
    2 |  |                                                                                                                                      | -       
|Balance as of  June 30, 2012               |  | $                                                                                                                                    | -0-     



As
of June 30, 2012, the net unrealized loss on the investments that use Level 2 inputs was $2,723,000

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









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011



Court
for the Southern District of New York and then transferred to United States District Court for the Central District of California.
On August 8, 2008 the Court denied a motion for a Preliminary Injunction and Contempt against all except
Mr. Wade. A hearing later determined that the civil contempt charge would be settled for $18,000.

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

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

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

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

From
July 1, 2008 to June 30, 2012 the Company sold 150,500 shares of Broadcaster for approximate gross proceeds of $22,400 which were
used for general working capital purposes. Since the de-registration of the shares of Broadcaster, the Company cannot solely rely
on the sale of these shares to fund its future working capital requirements. The amount of proceeds available to the Company from
the sale of shares of Broadcaster will depend upon the market for Broadcaster, which is subject to volatility in price and market
volume.

4.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

5.
NOTES PAYABLE -RELATED PARTIES

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

|                                                                         |  | June
                                                                                    30,
        2012 |         |  | June
                                                             30,
        2011 |  
|------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------- | ------- |  | ---------------------------------------------------------------------------------- | -
|Secured Promissory Note with
    Interest at 15%, due December 31, 2007  |  | $                                                                                                         | 325,000 |  |                                                                                    | $
|Secured Promissory Notes with Interest
    at 10%, due December 31, 2008 |  |                                                                                                           | 345,000 |  |                                                                                    |  
|Notes payable to certain former executives                               |  |                                                                                                           | 138,100 |  |                                                                                    |  
|                                                                         |  |                                                                                                           |         |  |                                                                                    |  
|                                                                         |  |                                                                                                           |         |  |                                                                                    |  
|Total                                                                    |  |                                                                                                           | 808,100 |  |                                                                                    |  
|Less: Current portion                                                    |  |                                                                                                           | 808,100 |  |                                                                                    |  
|                                                                         |  | $                                                                                                         | -0-     |  |                                                                                    | $











DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011



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

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

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

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

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

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

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

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

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

Related
interest expense was approximately $208,300 and $197,400 for the years ended June 30, 2011and 2010, respectively.









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011





6.
INCOME TAXES

For
the years ended June 30, 2012 and 2011, 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:



|                                                                                        |  | 2012 |     |   | 2011 | 
|--------------------------------------------------------------------------------------- |  | ---- | --- | - | ---- | 
|Federal statutory rate                                                                  |  |      | 34  | % |      | 
|Valuation allowance on net operating
    loss carryforwards, and investment write-downs |  |      | 34  | % |      | 
|Effective income tax rate                                                               |  |      | -0- |   |      | 



Deferred
income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax assets result primarily from net operating loss
carry-forwards. The components of the Company’s deferred tax assets and liabilities at June 30, 2012 and 2011 are as follows:



|                             |  | 2012 |            |   | 2011 |  
|---------------------------- |  | ---- | ---------- | - | ---- | -
|Deferred tax assets:         |  |      |            |   |      |  
|Operating loss carryforwards |  | $    | 4,447,000  |   |      | $
|Write-down of investments    |  |      | 1,544,000  |   |      |  
|Total Deferred Tax Asset     |  |      | 5,991,000  |   |      |  
|Valuation Allowance          |  |      | (5,991,000 | ) |      |  
|                             |  | $    | -0-        |   |      | $



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

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

GAAP
requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based
on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax position
should be analyzed based on technical merits and on the outcome that will likely be sustained under examination. The Company has
no uncertain tax positions as of June 30, 2012.

Digital
Creative Development Corporation and subsidiary have not filed an income tax return since the year ended June 30, 2000. As of
June 30, 2012 the Company had a net operating loss carryforward of approximately $11,118,500.  The current tax laws
as they pertain to the disposal of subsidiaries that generate net operating loss carryforwards ("NOL") essentially eliminate
the NOL carryforward and do not allow a company to recognize a loss on disposition of the subsidiary for tax purposes. However,
laws do provide for the parent to reallocate the NOL based upon their basis in the companies being disposed of.

As
of June 30, 2012, the Company had net operating loss carry forwards of approximately $11,118,500 available to offset future
federal taxable income. The federal net operating loss carry-forwards will expire in varying amounts through 2030.  The
Company is in the process of filing its tax returns for the current and all applicable prior years.











DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011





7.
PER SHARE INFORMATION

In
accordance with GAAP, "Earnings Per Share", basic net income (loss) per common share ("Basic EPS") is computed
by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding.
Diluted net income (loss) per common share ("Diluted EPS") is computed by dividing the net income (loss) attributable
to common shareholders by the weighted-average number of common shares and dilutive common share equivalents on convertible securities,
options, and warrants then outstanding. GAAP requires the presentation of both Basic EPS and Diluted EPS on the face of the Company's
Consolidated Statements of Operations. There were 750,000 stock options and 500,000 warrants excluded from the computation of
Diluted EPS for the years ended June 30, 2012 and 2011 as their effect on the computation of Diluted EPS would have been anti-dilutive.

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



|                                                                           |  | June
    30,   |         
|-------------------------------------------------------------------------- |  | -------------- | --------
|                                                                           |  | 2012           |         
|Basic and Diluted                                                          |  | (in thousands) |         
|Numerator                                                                  |  |                |         
|Loss attributable to common
    shareholders                               |  | $              | (454.2  
|Denominator:                                                               |  |                |         
|Weighted average common shares outstanding
    for basic and full dilution |  |                | 53,864.2
|Basic and Diluted Per Share Information:                                   |  |                |         
|Net loss per share                                                         |  | $              | (.01    
|Anti-dilutive instruments excluded from
    the above computation:         |  |                |         
|Common stock options – shares                                              |  |                | 750,000 
|Common stock warrants – shares                                             |  |                | 500,000 



8.
STOCK OPTIONS

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

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

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





F-13










DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011



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



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



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



|                           |  | OPTIONS |         |  | WEIGHTED
        AVERAGE
        EXERCISE
        PRICE |  
|-------------------------- |  | ------- | ------- |  | ------------------------------------------------------- | -
|Outstanding -June 30, 2010 |  |         | 750,000 |  |                                                         | $
|Expired                    |  |         | -0-     |  |                                                         |  
|Exercised                  |  |         |         |  |                                                         |  
|Issued                     |  |         | -0-     |  |                                                         |  
|Outstanding -June 30, 2011 |  |         | 750,000 |  |                                                         | $
|Expired                    |  |         | -0-     |  |                                                         |  
|Exercised                  |  |         | -0-     |  |                                                         |  
|Issued                     |  |         | -0-     |  |                                                         | $
|Outstanding -June 30, 2012 |  |         | 750,000 |  |                                                         | $



9.
COMMITMENTS AND CONTINGENCIES

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

10.
STOCKHOLDERS' EQUITY

On
December 13, 2011 the Company filed a 14C Information Statement with the Securities and Exchange Commission for the purpose of
increasing its authorized shares. A majority of the shareholders of the Company approved the increase in the Company’s authorized
number of shares from 85,000,000 shares (75 million common shares and 10 million preferred shares) to 615,000,000 shares (600
million common shares and 15 million preferred shares) by Written Consent.

The
holders of the Series A Preferred Stock are entitled to a cumulative dividend of $0.10 per share per annum. Such dividends accrue
annually but are payable if and when the Company declares a dividend. The Company has never paid any dividends with respect to
the Series A Preferred Stock. The 2,200 outstanding shares of Series A Preferred Stock are convertible into 3,300 shares of Common
Stock for no additional consideration at the option of the holder of the stock. The Series A Preferred Stock is entitled to a
liquidation preference of $1.00 per share, plus any accrued and unpaid dividends. The Series A Preferred Stock may be redeemed
by the Company at a redemption price of $1.00 per share plus all accrued and unpaid dividends. The amount of accumulated and unpaid
dividends was approximately $26,400 and $26,200 at June 30, 2012 and 2011, respectively.










DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

June
30, 2012 and 2011



The
Series C Preferred stock is not convertible, but may be redeemed at the option of the Company at a redemption price of $100 per
share plus accrued and unpaid dividends, at any time after October 31, 1999. The holders of the preferred stock are entitled to
a cumulative dividend of 10% per annum, payable semiannually, if and when the board declares a dividend. At June 30, 2012 and
2010, the Company had accumulated and unpaid dividends of approximately $1,212,700 and $1,152,700, respectively, on this series
of preferred stock.

The
holders of the Series D Preferred Stock are entitled to a cumulative dividend of 15% per share per annum. Such dividends accrue
annually but are payable if and when the Company declares a dividend. The Company has never paid any dividend with respect to
the Series D Preferred Stock. The 4,000 outstanding shares of Series D Preferred Stock are convertible into 400,000 shares of
Common Stock for no additional consideration at the option of the holder of the stock. The amount of accumulated and unpaid dividends
was approximately $825,000 and $765,000 at June 30, 2012 and 2010, respectively.





F-15