UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        DC 20549
  FORM
        10-KSB
   ANNUAL
        REPORT
 Under
        Section 13 or 15(d) of the Securities Act of 1934
 For
        the
        Fiscal Year Ended June 30, 2004
   DIGITAL
        CREATIVE DEVELOPMENT CORPORATION
 (Formerly
        ARTHUR TREACHER’S, INC.)
 (Name
        of
        Small Business Issuer in Its Charter)
 
 UTAH
                    34-1413104(State
                        or Other Jurisdiction of
                    I.R.S.
                        EmployerIncorporation
                        or Organization)
                    Identification
                        No.)200
                        East 82nd Street, New York, NY
                    10028(Address
                        of Principal Executive Offices)
                    (Zip
                        Code)212-247-0581(Issuer's
                        Telephone Number)Securities
                        registered under Section 12(b) of the Act:Title
                        of Each Class
                    Name
                        of Each Exchange on Whichto
                        be so Registered
                    Each
                        Class is to be RegisteredSecurities
                        registered under Section 12(g) of the Act:
                    Common
                        Stock, $.01 par value75,000,000
                        shares
                    (Title
                        of Class)
  Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes o   No x
  
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of registrant's knowledge, in definitive proxy or
        information statements incorporated by reference in Part III of this Form
        10-KSB. x
  State
        issuer's revenues for its most recent fiscal year. $-0-
  Shares
        outstanding: 51,689,165 at September 22, 2005
  State
        the
        aggregate market value of the voting stock held by non-affiliates computed
        by
        reference to the price at which the stock was sold, or the average bid and
        asked
        prices of such stock, as of a specified date within the past 60 days. (See
        definition of affiliate in Rule 12b-2 of the Exchange Act.) $7,236,000
  Note:
        if
        determining whether a person is an affiliate will involve an unreasonable
        effort
        and expense, the issuer may calculate the aggregate market value of the common
        equity held by non-affiliates on the basis of reasonable assumptions, if
        the
        assumptions are stated.
 
 2
   PART
        I
 BACKGROUND
  Digital
        Creative Development Corporation (the “Company”) is principally involved in
        acquiring and investing in software and high technology companies, with a
        focus
        on acquiring controlling interests. Prior to February 28, 2002, the Company’s
        primary business was the operation, franchising, ownership and development
        of
        Arthur Treacher’s Fish & Chip’s (“Arthur Treacher’s”) and Pudgie’s Famous
        Chicken(“Pudgie's”) fast food restaurants. . However, we have since begun to
        search for candidates with which to enter into business combinations or
        strategic transactions. (See “Plan of Business”).Since the Spring 2002, the
        Company has been inactive , except for its interest in International
        Microcomputer Software Inc. (“IMSI”) (OTCBB- IMSI).
  On
        February 28, 2002, the Company sold its 80% interest in Arthur Treacher’s, Inc.
        (Delaware) (“ATI (Delaware)”) to PAT Services, Inc.(“PAT Services”), an entity
        controlled by Mr. Jeffery Bernstein, for the consideration of $100, assumption
        of liabilities and a waiver by Mr.Bernstein of his right to convert his shares
        of ATI (Delaware) into shares of common stock of the Company under the
        conversion agreement with the Company, ATI (Delaware) transferred certain
        property rights (including all its trademarks) and 100% of the stock of its
        subsidiaries, Arthur Treacher’s Franchise Systems, Inc. and Pudgie's Franchise
        Corp. to PAT Franchise Systems, Inc.(“PAT Franchise”), an entity controlled by
        Mr. Bernstein, in consideration for the assumption of certain liabilities
        of ATI
        (Delaware). The two subsidiaries of ATI (Delaware) are parties to the franchise
        agreements with the franchisees in the Arthur Treacher’s and Pudgie's restaurant
        systems.
  In
        conjunction with the sale of ATI (Delaware), the secured promissory note
        executed in December 2000 by the Company, ATI (Delaware) and its subsidiary,
        M.I.E. Hospitality, Inc. (“MIE”) in favor of DCDC (Delaware) was amended and
        restated. The amended promissory note had a principal balance of $1,071,310,
        which equaled the outstanding principal balance and accrued and unpaid interest
        on the original note as of February 28, 2002. The note was due on December
        1,
        2004 and bore interest at the rate of 12% per year, with the interest payable
        monthly commencing April 30, 2002. The Company sold the amended promissory
        note
        to KGS Holdings, Ltd for consideration of $107,131 on June 22, 2002 and used
        the
        proceeds for working capital purposes.
  In
        February 2000, the Company formed a subsidiary, Digital Creative Development
        Corporation, a Delaware corporation (“DCDC (Delaware)”), for the purpose of
        investing and acquiring entities engaged in creating and providing entertainment
        content to businesses and consumers through digital broadband and conventional
        distribution platforms. In August 2000, the Company, a Utah Corporation changed
        its name from Arthur Treacher’s, Inc. to Digital Creative Development
        Corporation .
  On
        August
        31, 2001, the Company signed a merger agreement (the “Merger Agreement”) with
        IMSI. The Company was to merge into a wholly owned subsidiary of IMSI.
        Shareholders of the Company were to exchange shares of common stock of the
        Company for IMSI common stock constituting approximately 51% of the issued
        and
        outstanding common stock of IMSI. Upon execution of the Merger Agreement,
        the
        Company purchased a promissory note in the principal amount of $ 3,580,000
        for
        $2,500,000, owed by IMSI to Union Bank of California, which note was to have
        been cancelled upon consummation of the merger.
  3
 
 Upon
        signing of the Merger Agreement, Martin Wade, then the Company’s CEO, also
        became CEO of IMSI. In addition, as of the date of the Merger Agreement,
        the
        members of the Board replaced all but one of the members of the Board of
        Directors of IMSI.
  On
        February 28, 2002, the Company and IMSI entered into an agreement, which
        provided for the conversion of the promissory note purchased by the Company
        into
        9,000,000 shares of common stock of IMSI plus $250,000 in cash to be paid
        in 15
        monthly installments. The parties agreed to terminate the merger contemplated
        by
        the Merger Agreement. IMSI also agreed to prepare and file a registration
        statement registering 2,000,000 of common stock and to provide the Company
        with
        piggyback registration rights with respect to the remaining 7,000,000 shares.
        Effective January 31, 2002, certain members of the Boards of Directors of
        the
        Company and IMSI resigned, with no directors serving on the boards of both
        companies. As of September 22, 2005, the closing bid price of common stock
        of
        IMSI as quoted on the NASD Bulletin Board was $1.10/share.
 Since
          1982, IMSI has been a developer and publisher of productivity software
          in
          precision design, graphics design and other related business applications,
          as
          well as graphics and CAD (Computer Aided Design) software and Internet
          technology. IMSI is a graphics and CAD (Computer-Aided-Design) software
          and
          Internet technology company headquartered in Novato, California. IMSI owns
          and
          operates three business divisions
  Item
        1. Description of Business
  A.  Overview
 Until
        February 28, 2002, the primary business of the Company was the operation
        and
        franchising of Arthur Treacher’s and Pudgie’s restaurant concepts, as well as
        the co-branding of these concepts with Nathan’s Famous, Inc. (“Nathan’s”), Miami
        Subs Corporation (“Miami Subs”) and Kenny Rogers Roasters (“Kenny Rogers”).
        Currently, the Company does not have any existing operations.
  Plan
        of
        Business
 The
        Company intends to locate and enter into a transaction with an existing,
        public
        or privately-held company that in management's view, has growth potential
        (a
        "Target Business"). A transaction with a Target Business may be structured
        as a
        merger, consolidation, exchange of the Company's common stock for stock or
        assets of the Target Business or any other form which will result in the
        combined enterprise remaining a publicly-held corporation. Acquisitions or
        business combinations may not be available at the times or on terms acceptable
        to us, or at all. In addition, acquiring, or combining with, a business involves
        many risks, including:
  • unforeseen
        obligations or liabilities;
 • difficulty
        assimilating the acquired operations and personnel;
 • risks
        of
        entering markets in which we have little or no direct prior
        experience;
 • potential
        impairment of relationships with employees or customers as a result of changes
        in management; and
 • Potential
        dilutive issuances of equity, large and immediate write-offs, the incurrence
        of
        debt, and amortization of goodwill or other
 intangible
        assets.
  4
  We
        cannot
        make assurances that we will make any acquisitions or business combinations
        or
        that we will be able to obtain additional financing for such acquisitions
        or
        combinations, if necessary. If any acquisitions or combinations are made,
        we
        cannot make assurances you that we will be able to successfully integrate
        the
        acquired or combined business into our operations or that the acquired or
        combined business will perform as expected. Furthermore, Federal and state
        tax
        laws and regulations have a significant impact upon the structuring of
        transactions. Management will evaluate the possible tax consequences of any
        prospective transaction and will endeavor to structure a transaction so as
        to
        achieve the most favorable tax treatment. There can be no assurance that
        the
        Internal Revenue Service or relevant state tax authorities will ultimately
        assent to our tax treatment of a particular consummated transaction. To the
        extent the Internal Revenue Service or any relevant state tax authorities
        ultimately prevail in recharacterizing the tax treatment of a transaction,
        there
        may be adverse tax consequences to us, a target business and their respective
        stockholders. Tax considerations as well as other relevant factors will be
        evaluated in determining the precise structure of a particular transaction,
        which could be effected through various forms of a merger, consolidation
        or
        stock or asset acquisition. Pending negotiation and consummation of a
        transaction, the Company anticipates that it will have, aside from carrying
        on
        its search for a transaction partner, no business activities, and, thus,
        no
        source of revenue. Should the Company incur any significant liabilities prior
        to
        a combination with a Target Business, it may not be able to satisfy, without
        additional financing, such liabilities as are incurred.
  H.
        Employees
  As
        of
        June 30, 2004 and through the current date, the Company had no employees.
        Gary
        Herman, the Company’s Chairman, Chief Executive Officer, President and
        Secretary and Skuli Thorvaldsson the Company’s Chief Financial Officer serve on
        a management consulting basis.
  ENTERTAINMENT
        AND SOFTWARE BUSINESS
  This
        segment of the Company’s business, operating through its subsidiary, DCDC
        (Delaware), was established to invest and acquire entities, which develop,
        produce and distribute software and media content resulting in revenue
        generation from motion pictures; television; animation; product endorsement
        and
        sales; and licensing and syndication. Content is intended to be delivered
        to
        businesses and consumers through digital broadband and conventional distribution
        platforms. For the period through June 30, 2004 DCDC (Delaware) made the
        following investments in an effort to execute the plan above.
  Our
        Yearbook Corp. was a portal site for high school and college yearbooks on
        the Internet. DCDC (Delaware) invested $450,000 for 450,000 shares of preferred
        stock as well as three loans for an aggregate principal amount of $160,000.
        On
        August 3, 2000, Our Yearbook was forced into an involuntary proceeding under
        Chapter 11 of the U.S. Bankruptcy Code. In February, 2001 the matter was
        converted to Chapter 7 liquidation by the Court. DCDC (Delaware) has established
        allowances in the amount of $610,000 during the 2001 fiscal year.
  5
  Interactive
        Pager Media, Inc. (n/k/a Comstar Wireless Corp.) is a provider of wireless
        two-way paging services in the United States. DCDC (Delaware) invested
        $1,000,000 for 122,100 shares of preferred stock. DCDC (Delaware) has
        established an allowance for the full amount of the investment. The assets
        of
        Comstar were sold in May 2004 and it is the Company’s position that a return on
        this investment will not be realized.
  Thinking
        Tools, Inc. (n/k/a GVI Security Solutions, Inc. (OTCBB: GVIS) was a provider
        of Internet services. DCDC (Delaware) invested $300,000 for 600,000 shares
        of
        common stock of Thinking Tools. DCDC (Delaware) has written down this investment
        to its market value at June 30, 2003, of $.01/share. From February to May
        2004
        the company sold its position in this investment for gross proceeds of
        approximately $ 69,000 and realized a loss of $231,000.
  Liquor.com,
        Inc. was an Internet site for the purchase of wine, champagne, spirits,
        and
        accessories. DCDC (Delaware) loaned Liquor.com $250,000 under a promissory
        note
        which was convertible into 71,023 shares of common stock and a warrant
        exercisable for 35,511 shares of common stock. DCDC (Delaware) established
        an
        allowance for the full amount of the note since Liquor.com ceased operations
        in
        the fall of 2000.
  MadeMyWay.com,
        Inc. (N/K/A DataMetrics Corporation) was a provider of Internet based
        digital printing services. DCDC (Delaware) invested $1,200,000 for 1,200,000
        shares of common stock of MadeMyWay.com. DCDC (Delaware) has established
        an
        allowance for the full amount of the investment since MadeMyWay.com ceased
        operations in April 2001. In April 2002, in consideration of its investment,
        DCDC (Delaware) received 2,600,000 shares of common stock of DataMetrics
        Corporation (OTCBB: DMTI), the former parent of MadeMyWay. Subsequently,
        the
        stock of DMTI was subject to a 20:1 reverse stock split. At present, DCDC
        (Delaware) has 120,000 shares of common stock of DMTI. The Company has written
        down this investment to its market value at June 30, 2004 of $.01 per share.
        On
        September 22, 2005, the common stock of DMTI was quoted at $.02 per
        share.
  Heavy.com,
        Inc. is a digital entertainment company with a focus on original content
        creation. DCDC (Delaware) extended a loan of $500,000 to the company in the
        summer of 2000. DCDC (Delaware) also has warrants to purchase 63,450 shares
        of
        common stock of Heavy.com at $7.47 per share. In the fall of 2000 this loan
        was
        converted to 320,194 shares of Series B-2 Preferred Stock. DCDC (Delaware)
        has
        established an allowance for the full amount of the investment since it is
        the
        Company’s position that this investment has no significant value that will be
        realized. In the summer of 2004, the Company sold its investment to the two
        principal shareholders of Heavy for the total consideration of
        $30,000.
  Acquisitions
  In
        September 2000, the Company, through DCDC (Delaware) invested or advanced
        approximately $1,841,100 in two entertainment concept companies. These companies
        were CineBlast, Inc., a wholly owned subsidiary, and EyeCandy, an affiliate
        of
        the Company. CineBlast was an independent movie production company.
        EyeCandy was a production company whose primary focus was the production
        and
        distribution of a television series, America in 60 Minutes, in China. At
        June
        30, 2001 the Company wrote off its investments and advances and absorbed
        a
        charge for impairment loss, since it was determined that the respective
        operations of these entities were to be curtailed and that no significant
        value
        from these operations could be realized by the Company.
  6
 
 In
        December, 2001 the Company entered into an agreement with the principals
        of
        CineBlast!, Gil Holland, Michael Morley and Raymond DeMarco to transfer 100%
        of
        the shares of CineBlast for the consideration and reduction of sums of various
        consulting and employment agreements. In January, 2003 the principals of
        CineBlast, Raymond DeMarco, Michael Morley and Gil Holland filed an action
        in
        New York State Supreme Court, New York County (Index# 100192/03) against
        the
        Company and DCDC (Delaware) alleging among other things, breach of contract.
        In
        July, 2003 the parties executed a Settlement Agreement and a Stipulation
        of
        Discontinuance. (See, Legal Proceedings).
  In
        November 2001 the Company discontinued the operations of its affiliate,
        EyeCandy.
  In
        March
        2001 the Company acquired Tuneinmovies.com, Inc. (“Tune-In”) through DCDC
        (Delaware). Tune-In was a creator and aggregator of new media content. At
        that
        time, DCDC also acquired Keynomics, Inc. (“Keynomics”), which provides software
        technology to industry, with emphasis on performance improvement and ergonomic
        education and training in the computer workstation environment. As of June
        30,
        2002, the Company had disposed of its investments in Tune-In
        and
        Keynomics.
  On
        November 29, 2001, the Company and IMSI executed a Stock Purchase Agreement,
        effective October 1, 2001, for the sale of Keynomics to IMSI. Keynomics was
        sold
        for the total consideration of $450,000. IMSI agreed to pay the purchase
        price
        as follows: (i) $50,000 paid in cash on the closing date; (ii) $150,000 in
        equal
        monthly installments of $25,000 per month for 6 months; (iii) $100,000 was
        paid
        by crediting against the purchase price the payments made to the Company
        in
        October and November 2001; and (iv) $150,000 paid by offsetting against the
        purchase price certain payments from the Company to IMSI made between the
        Effective Date and Closing. On November 5, 2001, after experiencing less
        than
        anticipated results from the operations of Tune-In, the Company entered into
        a
        memorandum agreement to sell certain assets and liabilities of Tune-In to
        its
        management team.
  On
        August
        31, 2001, the Company signed a merger agreement (the “Merger Agreement”) with
        IMSI. The Company was to be merged into a wholly owned subsidiary of IMSI.
        Shareholders of the Company were to exchange shares of common stock of the
        Company for IMSI common stock constituting approximately 51% of the issued
        and
        outstanding common stock of IMSI. Upon execution of the Merger Agreement,
        the
        Company purchased a promissory note in the principal amount of $3,580,000
        owed
        by IMSI to Union Bank of California, which note was to have been cancelled
        upon
        consummation of the merger. Upon signing of the Merger Agreement, Martin
        Wade
        also became CEO of IMSI. In addition, as of the date of the Merger Agreement,
        the members of the Board replaced the members of the Board of Directors of
        IMSI,
        who resigned in their entirety with the exception of one person.On February
        28,
        2002, the Company and IMSI entered into an agreement which provided for the
        conversion of the promissory note purchased by the Company into 9,000,000
        shares
        of common stock of IMSI plus $250,000 in cash to be paid in monthly installments
        over 15 months. The parties agreed to terminate the merger contemplated by
        the
        Merger Agreement. IMSI also agreed to prepare and file a registration statement
        registering 2,000,000 of the shares of common stock and to provide the Company
        with piggyback registration rights with respect to the remaining 7,000,000
        shares. In addition, effective February 28, 2002, certain members of the
        Boards
        of Directors of the Company and IMSI resigned and no directors continue to
        serve
        as directors of both companies.
  7
  The
        Investment Company Act of 1940
 The
        Investment Company Act of 1940 (the “Act”) was primarily meant to regulate
“investment companies,” which generally include families of mutual funds of the
        type offered by the Fidelity and Vanguard organizations (to pick two of many),
        closed-end investment companies that are traded on the public stock markets,
        and
        certain non-managed pooled investment vehicles such as unit investment trusts.
        These entities are in the business of investing, reinvesting and trading
        in
        securities and generally own relatively diversified portfolios of publicly
        traded securities that are issued by companies not controlled by these entities.
        A company can, either deliberately or inadvertently, come to have the defining
        characteristics of an investment company within the meaning of the Act without
        proclaiming that fact or being willing to voluntarily submit itself to
        regulation as an acknowledged investment company. The Act and rules under
        it
        contain provisions to differentiate “true” operating companies from companies
        that may be considered to have sufficient investment-company-like
        characteristics to require regulation by the Act’s complex procedural and
        substantive requirements. These provisions apply to companies that own or
        hold
        securities, as well as companies that invest, reinvest and trade in securities,
        and particularly focus on determining the primary nature of a company’s
        activities, including whether an investing company controls and does business
        through the entities in which it invests or, instead, holds its securities
        investments passively and not as part of an operating business. For instance,
        under what is, for most purposes, the most liberal of the relevant tests,
        a
        company may become subject to the Act’s registration requirements if it either
        holds more than 45% of its assets in, or derives more than 45% of its income
        from, investments in companies that the investor does not primarily control
        or
        through which it does not actively do business. In making these determinations
        the Act generally requires that a company’s assets be valued on a current fair
        market value basis, determined on the basis of securities’ public trading price
        or, in the case of illiquid securities and other assets, in good faith by
        the
        company’s board of directors. The Company views its investments in IMSI, as
        operating investments primarily intended to secure its strategic
        goals.
  The
        Company‘s investments that it held as of June 30, 2004 should be regarded as
        strategic deployments of Company assets to develop its digital entertainment
        and
        software business, rather than financial investments that generally are
        considered to constitute investment securities.
  The
        Company has never held itself out as an investment company; its historical
        development has focused almost exclusively restaurant, software and digital
        entertainment business; the activities of its officers and employees have
        been
        overwhelmingly addressed to achieving success in the restaurant, software
        and
        digital entertainment business; and prior to 2000, its income (and losses)
        have
        been derived almost exclusively from the restaurant and has more recently
        sought
        companies in the software and digital entertainment business. The Company
        is
        primarily engaged in a business other than investing, reinvesting, owning,
        holding or trading in securities. The Company’s only significant asset as
        of August 2, 2005 was its ownership interest of 6,835,758 shares of common
        stock
        of IMSI, constituting approximately 23% of the total outstanding shares of
        common stock of IMSI. An additional 450,000 shares of common stock, or
        approximately 2% of IMSI is beneficially owned by Gary Herman, the Company’s
        Chairman, and 337,000 shares of common stock, or approximately 2% of IMSI
        is
        beneficially owned by Bruce Galloway, the Company’s principal shareholder.Mr.
        Galloway also owns options to purchase 100,000 shares of IMSI stock at $
        1.10
        per share and 500,000 warrants at $ .81 per share. Although the Company and
        its
        affiliates do not act as a group, the Company believes that the Company controls
        IMSI within the meaning of the Act. No assurances can be given that the SEC
        will
        agree that the Company is not currently deemed to be an unregistered investment
        company in violation of the Act. If the SEC takes the view that the Company
        has
        been operating and continues to operate as an unregistered investment company
        in
        violation of the Act, and does not provide the Company with a sufficient
        period
        to either register as an investment company or divest itself of investment
        securities and/or acquire non-investment securities, the Company may be subject
        to significant potential penalties.
  8
 
 In
        the
        absence of exemptions granted by the SEC (which are discretionary in nature
        and
        require the SEC to make certain findings), the Company would be required
        either
        to register as a closed-end investment company or a business development
        company
        under the Act, or, in the alternative, to divest itself of sufficient investment
        securities and/or to acquire sufficient non-investment assets so as not to
        be
        regarded as an investment company under the Act. If the Company elects to
        register as a closed-end investment company under the Act, a number of
        significant requirements will be imposed upon the Company. These would include,
        but not be limited to, a requirement that at least 40% of the Company’s board of
        directors not be “interested persons” of the Company as defined in the Act ,
        that those directors be granted certain special rights with respect to the
        approval of certain kinds of transactions (particularly those that pose a
        possibility of giving rise to conflicts of interest); and broad prohibitions
        on
        affiliate transactions. While the Company could apply for individual exemptions
        from these restrictions, there could be no guarantee that such exemptions
        would
        be granted, or granted on terms that the Company would deem practical.
        Additionally, the Company would be required to report its financial results
        in a
        different form from that currently used by the Company, which would have
        the
        effect of turning the Company’s Statement of Operations “upside down” by
        requiring that the Company report any investment income that it may receive
        and
        the results of its investment activities, instead of its operations, as its
        primary sources of revenue. If the Company elects to divest itself of sufficient
        investment securities and/or to acquire sufficient non-investment assets
        so as
        not to be regarded as an investment company under the Act, the Company would
        need to ensure that the value of investment securities (excluding the value
        of
        U.S. Government securities and securities of certain majority-owned
        subsidiaries) does not exceed forty percent (40%) of the Company’s total assets
        (excluding the value of U.S. Government securities and cash items) on an
        unconsolidated basis. In seeking to meet this requirement, the Company might
        choose to divest itself of assets that it considers strategically significant
        for the conduct of its operations or to acquire additional operating assets
        that
        would have a material effect on the Company’s operations. There can be no
        assurance that the Company could identify such operating assets to acquire
        or
        could successfully acquire such assets. Any such acquisition could result
        in the
        Company issuing additional shares that may dilute the equity of the Company’s
        existing stockholders, and/or result in the Company incurring additional
        indebtedness, which could have a material impact on the Company’s balance sheet
        and results of operations. Were the Company to acquire any additional
        businesses, there would the additional risk that the Company’s acquired and
        previously-existing businesses could be disrupted while the Company attempted
        to
        integrate the acquired business, as well as risks associated with the Company
        attempting to manage a new business with which it was not familiar. Any of
        the
        above risks could result in a material adverse effect on the Company’s results
        of operations and financial condition.
  9
  Item
        2. Description of Property.
 Since
        January 2002 ,the Company's principal executive offices have been located
        at 200
        East 82nd Street, New York, NY 10028. The Company is charged a nominal amount
        for the use of these premises.
  Item
        3. Legal Proceedings.
 The
        Company and its various subsidiaries and operating units are from time to
        time
        involved in ordinary and routine litigation. The Company is also involved
        in the
        following litigation:
 ATAC
        Corporation and Patrick Cullen v. Arthur Treacher's, Inc. and James Cataland,
        Case No. 1:95CV 1032, in the U.S. District Court, Northern District, Ohio
        Eastern Division; filed May 9, 1995.
  On
        November 16, 1994, Arthur Treacher's terminated the agency agreement of a
        Regional Development Representative, ATAC Corporation, on the grounds that
        ATAC
        breached the agreement by assigning the agency agreement to a third party
        without the consent of Arthur Treacher's. ATAC claims that the Company was
        aware
        of and consented to the third-party assignment. The Company is unaware of
        any
        document signed by a properly authorized representative of the Company formally
        authorizing or consenting to the assignment. On May 9, 1995, ATAC filed the
        action and alleged that the Company terminated the contract without cause,
        tortuously interfered with other business relationships, committed wrongful
        conversion of the territory and committed restraint of trade and price-fixing,
        breach of contract, fraud, and violations of RICO. ATAC originally demanded
        a
        minimum of $2,750,000 in compensatory damages and $6,000,000 in punitive
        damages. In response to the original complaint, the Company filed a motion
        to
        dismiss all of the claims. In addition, the Company filed a counterclaim
        against
        ATAC seeking a Declaratory Judgment that ATAC does not have a service contract
        with the Company in certain areas which the Company does business, that ATAC
        has
        committed breach of contract and that the Company is entitled to indemnification
        for previous lawsuits which have occurred because of the actions of ATAC
        on
        behalf of the Company. ATAC has twice amended the claims and allegation of
        the
        original complaint. In the Third Amended Complaint, ATAC asserts claims against
        the Company and the Company's former President, James Cataland, for fraud,
        breach of contract, tortuous interference with contract, violations of the
        Ohio
        Business Opportunity Act, violations of the Ohio Consumer Sales Practices
        Act
        and breach of fiduciary duty. ATAC seeks in excess of $10,000,000 in and
        statutory damages from the Company. In response to the Third Amended Complaint,
        the Company in 1997 filed a Motion to Dismiss ATAC's claims for breach of
        fiduciary duty and under the Consumer Sales Practices and Business Opportunity
        Acts. The Company also requested that the district court dismiss the claim
        against the Company's former President. The Company in 1998 filed Motions
        for
        Summary Judgment on behalf of itself and the Company's former President with
        respect to all of ATAC's claims (except breach of contract) and requested
        that
        the court refer the remaining contract claim to binding arbitration. The
        Court
        granted the Company's Motion to Stay the lawsuit pending arbitration and
        the
        ruling is presently the subject of an appeal to the Sixth Circuit Court of
        Appeals. The parties submitted briefs to the Sixth Circuit between July and
        October of 1999 and a hearing was held in June 2000. The Sixth Circuit should
        hand down its decision within the next few months. The Company originally
        believed that the lawsuit was an attempt by plaintiffs to regain the territory
        by forcing the Company to defend expensive litigation at significant expense
        and
        that the plaintiffs' claims are without merit. The Company now understands
        that
        ATAC solely seeks damages from the Company. The Company still believes that
        ATAC's claims are meritless. The Company's attorneys have indicated that
        they
        intend to vigorously defend the Company from the claims made by ATAC and
        pursue
        any counterclaims. PAT Services, assumed any liability or award from this
        legal
        proceeding in connection with the sale of ATI (Delaware), the Company’s
        restaurant operations on February 28, 2002. The Company has received no notice
        of any further developments in this action since 2000.
  10
 
 Sorrentino
        v. Digital Creative Development Corporation
 Ralph
        Sorrentino, the former President and Chief Executive Officer of the Company
        commenced an action, entitled RJS Consulting Corp. and Ralph J. Sorrentino
        v.
        Digital Creative Development Corporation et. al., on or about May 9, 2001.
        The
        Demand for Arbitration alleged that the Executive Consulting Agreement between
        the Company and RJS Consulting Corp. was terminated without cause and that
        Mr.
        Sorrentino had “good reason” to terminate the agreement. The Demand for
        Arbitration sought monetary damages in an amount not less than $5,000,000
        arising out of the alleged breach of the Executive Consulting Agreement and
        compensatory and punitive damages in an amount to be proved at the arbitration
        arising out of the alleged defamation of Mr. Sorrentino by agents of the
        Company.
  The
        Company, DCDC (Delaware), Mr. Sorrentino, and RJS Consulting Corp., an affiliate
        of Mr. Sorrentino, executed the Executive Consulting Agreement in May 2000.
        Under the agreement, Mr. Sorrentino, acting through RJS Consulting Corp.,
        served
        as Chief Executive Officer and President of the Company and DCDC (Delaware).
        Mr.
        Sorrentino was to receive a base annual fee of $250,000 for an initial term
        of
        30 months. Mr. Sorrentino received options to purchase 5,000,000 shares of
        Common Stock at an exercise price of $.37/share, which exercise price was
        reduced to $.01 under certain circumstances. The Company had also agreed
        to
        assume and be primarily liable for and to indemnify Mr. Sorrentino against
        up to
        $2,500,000 of indebtedness incurred by Mr. Sorrentino for any legal purpose.
        The
        Company terminated Mr. Sorrentino on May 7, 2001. The Company, DCDC (Delaware),
        RJS Consulting Corp. and Mr. Sorrentino executed a Memorandum of Agreement
        on
        October 30, 2001. Pursuant to the Memorandum, the Company agreed to buy out
        Mr.
        Sorrentino’s interest under the Executive Consulting Agreement and related
        documents and Mr. Sorrentino agreed to surrender all of his options to purchase
        common stock of the Company, including the option for 5,000,000 shares of
        common
        stock issued in connection with the Executive Consulting Agreement. Under
        the
        Memorandum, the Company agreed to pay Mr. Sorrentino $270,000 and to assume
        an
        aggregate of $1,669,600 in indebtedness from Mr. Sorrentino, including two
        mortgages in favor of Wells Fargo for an aggregate of $570,600, a mortgage
        in
        favor of Fleet Mortgage Group in the principal amount of $1,000,000 and a
        lease
        in favor of Chase Automotive Finance in the principal amount of $99,792.
        Such
        payments are to be made over a period of fifteen (15) years in monthly
        installments, except for Chase Automotive, which is for a period of two (2)
        years. Upon satisfaction of the obligation to Chase Automotive Finance, the
        Company agreed to pay Mr. Sorrentino an aggregate of $4,653 payable
        in 36
        equal monthly installments. The Company agreed that upon the consummation
        of the
        merger with IMSI, the Company’s obligations to Mr. Sorrentino will be secured by
        the assets of IMSI, such security interest to be subordinated to existing
        secured bank debt and certain other creditors who had previously agreed to
        restructure their indebtedness in order to facilitate the merger with IMSI.
        In
        the event that the merger with IMSI was not consummated, the Company agreed
        under the Memorandum to enforce its rights under the promissory note, which
        the
        Company purchased from Union Bank of California in August 2001, and, upon
        foreclosure on the promissory notes, IMSI shall be obligated to make payments
        to
        the Company of $ 50,000 per month for 60 months, in turn, remitting payment
        to
        Sorrentino. The merger with IMSI was not consummated. On February 28, 2002,
        the
        Company and IMSI terminated the proposed merger agreement, and entered into
        an
        agreement which provides for the conversion of the promissory note purchased
        by
        the Company into 9,000,000 shares of common stock of IMSI plus $250,000 in
        cash
        to be paid in monthly installments over 15 months. The parties agreed to
        terminate the merger contemplated by the Merger Agreement. IMSI also agreed
        to
        prepare and file a registration statement registering 2,000,000 of the shares
        of
        common stock and to provide the Company with piggyback registration rights
        with
        respect to the remaining 7,000,000 shares. In addition, effective February
        28,
        2002, certain members of the Boards of Directors of the Company and IMSI
        resigned and no directors continue to serve as directors of both companies.
        Subsequently, on July 25, 2002, Mr. Sorrentino and RJS Consulting Corp.,
        filed
        an action in New York State Supreme Court, New York County (Index # 602399/02)
        against the Company, DCDC (Delaware), various officers and directors, alleging
        among other things, breach of contract and fraud. In February, 2003 the Parties
        entered into a settlement agreement and dismissal of the action. Under the
        settlement, the Company made a one time cash payment to Mr. Sorrentino of
        $300,000 and transferred 500,000 shares of stock of its holdings in
        International Microcomputer Software, Inc. valued at $565,000 for
        a total
        fair value of  $865,000.
  11
  CineBlast
        Litigation
 In
        January, 2003 the principals of CineBlast, Raymond DeMarco, Michael Morley
        and
        Gil Holland field an action in New York State Supreme Court, New York County
        (Index # 100192/03) against the Company and DCDC (Delaware). In July, 2003
        the
        parties executed a Settlement Agreement and a Stipulation of Discontinuance.
        The
        settlement agreement provided for the following: 1) the payment by the Company
        of $5,000 each to mssrs. DeMarco, Morley and Holland; 2) 80,000 shares of
        stock
        of IMSI owned by the Company to each of mssrs. DeMarco, Morley and Holland;
        3)
        three (3) Promissory Notes (totaling $175,000.00), requiring the Company
        to pay
        mssrs. Holland, DeMarco and Morley $58,333.33 each, two (2) years from the
        date
        in which this Settlement Agreement is executed. If the IMSI Stock referred
        to
        above is unrestricted and able to be traded on the open market, and is above
        $2.00 on the date the Notes become due, DCDC shall have no obligation to
        pay the
        Notes, and said Notes shall become null and void. Further, DCDC’s obligations on
        the Notes shall be proportionately reduced if the IMSI Stock is below $2.00.
        (For example, if the stock price is $1.90 on said date, the $175,000.00
        obligation shall be reduced by $151,000.00 leaving an obligation of $24,000.00,
        requiring DCDC to pay Holland, DeMarco and Morley $8,000.00 each. If the
        stock
        price is $1.80 on said date, the Notes shall be reduced by $127,000.00 leaving
        an obligation due of $48,000.00, requiring DCDC to pay Holland, DeMarco and
        Morley $16,000.00 each, etc. On April 21, 2005 the Notes related to the
        CineBlast settlement became due and payable, since on that date, shares of
        IMSI
        did not trade above $2.00/share during the previous 2 years. Based on the
        above
        formula in the settlement agreement the total obligation due the principals
        of
        CineBlast is $153,600. Management of the company has negotiated a payout
        of this
        obligation under which the amount of $ 153,600 will be paid over six months,
        beginning July 2005, without interest, as follows: $ 15,000 at July 1 and
        August
        1; $ 30,000 at September 1, October 1 and November 1; and $ 33,600 at December
        1, 2005.
  In
        April
        21, 2005 the Notes related to the CineBlast settlement became due and payable,
        since on that date, shares of IMSI did not trade above $2.00/share during
        the
        previous two (2) years.  Based on the above formula in the
        settlement
        agreement the total obligation due the principals of CineBlast is
        $153,600.  Management of the Company has negotiated a payout of this
        obligation under which the amount of $153,600 will be paid over six months,
        beginning July 2005, without interest, as follows: $15,000 at July 1 and
        August
        1; $30,000 at September 1, October 1 and November 1; and $33,600 at December
        1,
        2005.
  Pyramid
        Litigation
  During
        the fiscal year ended June 30, 2002, M.I.E. Hospitality Inc., a wholly
        owned subsidiary of ATI (Delaware), was a party to six actions in New York
        State
        that have been consolidated for discovery purposes in New York State Supreme
        Court in Albany County, New York. Each of these actions arises out of M.I.E.'s
        lease of certain food court premises at five Pyramid Malls across New York
        State, and Pyramid's eviction of M.I.E. in December 2000. M.I.E. commenced
        the
        action entitled M.I.E. v. Fred Woods, et al., in December 2000. M.I.E.
        asserts four substantively identical causes of action with respect to each
        of
        the five mall locations. These causes of action are for breach of lease,
        conversion, wrongful eviction, and trespass. M.I.E. is in the process of
        calculating its claim for damages, which claim is anticipated to be in excess
        of
        $2,200,000, and may be awarded treble damages if it succeeds under its wrongful
        eviction claim under RPAPLss.853. In each of its five actions, which were
        commenced on January 3, 2001, Pyramid seeks pre-eviction rent and additional
        rent arrears, post eviction accelerated rent and additional rent, and attorney's
        fees. Pyramid's damage claims exceed $2,400,000. The actions are in the
        discovery phase. Documents have been produced, but depositions have not
        occurred. The Company's attorneys intend to vigorously defend the Company
        against the claims made by the plaintiffs but cannot estimate the outcome
        at
        this time. The award of substantial damages to Pyramid would have an adverse
        impact on the operations of M.I.E. and the Company. M.I.E. does not own or
        operate any of the Company's Pudgie's restaurants. PAT Services, assumed
        any
        liability or award from this legal proceeding in connection with the sale
        of ATI
        (Delaware), the Company's restaurant operations on February 28, 2002. 
        The
        Company has received no notice of any further developments in this action
        since
        2002.
  12
  PAT
        Services assumed any liability or award from this legal proceeding, in
        connection with the sale of ATI (Delaware) on February 28, 2002. The Company
        is
        involved in various other claims and legal actions arising in the ordinary
        course of business. In the opinion of management, the ultimate disposition
        of
        these matters will not have a material adverse effect on the Company's
        consolidated results of operations or financial position.
  Item
        4.
        Submission of Matters to a Vote of Security Holders.
 None.
   PART
        II
  Item
        5.
        Market for Common Equity and Related Stockholder Matters.
  The
        following table sets forth the high and low prices for the periods indicated
        as
        reported by the National Daily Quotation Service, Inc. between dealers and
        do
        not include retail mark-ups, mark-downs, or commissions and do not necessarily
        represent actual transactions, as reported by the National Association of
        Securities Dealers Composite Feed or other qualified inter-dealer quotation
        medium. On September 22, 2005 the closing bid price was $.14/share.
  2002
        Fiscal Year
 First
                    Quarter
                .110
                .270Second
                    Quarter
                .100
                .110Third
                    Quarter
                .070
                .200Fourth
                    Quarter
                .150
                .250
   13
 2003
          Fiscal Year
  First
                    Quarter
                .130
                .160Second
                    Quarter
                .040
                .130Third
                    Quarter
                .030
                .050Fourth
                    Quarter
                .031
                .1432004
                  Fiscal YearFirst
                  Quarter
                .08
                .22Second Quarter
                .10
                **.18**Third
                  Quarter
                .105
                .20Fourth Quarter
                .15
                .24


The
        Common Stock was recorded on the NASD Bulletin Board with the symbol DCDC.
        On
        September 22, 2005, the number of record holders of the Company's Common
        Stock
        was 500. In November 2001, the Company's stock was delisted from the NASD
        Bulletin Board due to its failure to timely file its Form 10-KSB with the
        Securities and Exchange Commission. The stock is traded on the Pink
        Sheets.
  Dividends
 In
        November and December 1997, the Company consummated a private placement with
        respect to equity units consisting of shares of its Series C Preferred Stock
        and
        warrants to purchase shares of common stock for aggregate proceeds of $990,000.
        The Company sold 9,900 shares of Series C Preferred Stock with warrants to
        purchase 148,500 shares of common stock attached. The preferred stock is
        not
        convertible, but may be redeemed at the option of the Company at a redemption
        price of $100/share plus accrued and unpaid dividends, at any time. The holders
        of the preferred stock are entitled to a cumulative dividend of 10% per annum,
        payable semi-annually, if and when the Board declares a dividend. On September
        28, 1998, the Company sold 4,000 shares of Series D Preferred Stock and Common
        Stock Purchase Warrants with gross proceeds of an aggregate amount of $400,000.
        The preferred stock is convertible into 400,000 shares of common stock. The
        holders of the preferred stock are entitled to a cumulative dividend of 15%
        per
        annum, payable semi annually, if and when the Board declares a dividend.
        To
        date, the Company has not paid any dividends on its Common Stock or Preferred
        Stock. The payment of dividends, if any, in the future is within the discretion
        of the Board of Directors and will depend upon the Company's earnings, its
        capital requirements and financial condition, and other relevant factors.
        The
        Company does not intend to declare any dividends in the foreseeable future,
        but
        instead intends to retain all earnings, if any, for use in the Company's
        business operations. No dividends may be distributed with respect to the
        Common
        Stock so long as there are accrued and unpaid dividends on the Series A and
        Series C Preferred Stock. The amount of accumulated and unpaid dividends
        on the
        Series A Preferred Stock, Series C Preferred Stock and Series D Preferred
        Stock
        was approximately $925,500 as of June 30, 2004.
   Item
        6.
        Management's Discussion and Analysis or Plan of Operation.
  This
        Management's Discussion and Analysis of Financial Condition and Results of
        Operations of the Company should be read in conjunction with the Financial
        Statements and Notes thereto.
  Safe
        Harbor Statement Under the Private Securities Litigation Reform Act of
        1995.
  14
  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-KSB
        constitute forward-looking statements within the meaning of Section 21E of
        the
        Securities Exchange Act of 1934. All such statements are made pursuant to
        the
        safe harbor provisions of the Private Securities Litigation Reform Act of
        1995.
        Wherever possible, the Company has identified these forward-looking statements
        by words such as "anticipates," "may," "believes," "estimates," "projects,"
        "expects" "intends," and words of similar import. In addition to the statements
        included in this Annual Report on Form 10-KSB, the Company and its
        representatives may from time to time make other oral or written forward-looking
        statements. All forward-looking statements involve certain assumptions, risks
        and uncertainties that could cause actual results to differ materially from
        those included in or contemplated by the statements. These assumptions, risks,
        and uncertainties include, but are not limited to, general business conditions,
        including the timing or extent of any recovery of the economy, the highly
        competitive nature of the industry in which the Company operates, the continued
        involvement of military forces in the war on terrorism, the speed with which
        consumers regain confidence in the safety of air transportation and other
        risks
        and uncertainties. All such forward-looking statements may be affected by
        inaccurate assumptions or by known or unknown risks and uncertainties, and
        therefore, those statements may turn out to be incorrect. Consequently, no
        forward-looking statement can be guaranteed. Actual future results may vary
        materially. All forward-looking statements are made as of the date of filing
        or
        publication. We undertake no obligation to publicly update any forward looking
        statements, whether as a result of new information, future events or otherwise.
        Investors are advised, however, to consult any further disclosures the Company
        makes in future filings with the Securities and Exchange Commission or in
        any of
        its press releases. This report contains certain statements of a forward-looking
        nature relating to future events or the future performance of the Company.
        Prospective investors are cautioned that such statements are only predictions
        and those actual events or results may differ materially.
  15
  Results
        of Operations
 Fiscal
        2004 and Fiscal 2003
  The
        Company had no revenues in fiscal year 2004 compared to $ 6,100 in fiscal
        2003.
        General and administrative expenses declined $ 271,200 or 64% to $ 154,300
        as
        management continued to reduce overhead, including legal and other professional
        expenses. Other, Net Expenses declined $ 646,700 from fiscal 2003 to $157,200,
        principally due to a non- recurring charge of $ 359,600 in 2003
        related to a settlement with former employees and also due to reduced interest
        charges related to stock warrants issued in the 2003 fiscal period. The net
        effect of the aforementioned resulted in a net loss of $ 311,500 for the
        2004
        fiscal year as compared to a net loss of $ 1,223,300 in the prior
        year.
  Fiscal
        2003 and Fiscal 2002
 The
        Company reported total revenues of $ 6,100 for the year ended June 30, 2003
        (“Fiscal 2002”), reflecting a decrease of $186,600 or 97%. These revenues were
        basically comprised of interest and contract fee income and reflect the fact
        that the Company has only one business segment , which is the investment
        in
        IMSI. General and administrative expenses declined $ 1,051,800 or 71% to
        $
        425,500 reflecting the reduction of corporate overhead, including
        personnel
        and rental office space. Other expenses of $ 803,900 are primarily the result
        of
        stock based compensation of $ 430,200 and a settlement with the former
        principals of CineBlast of  $ 359,600. The foregoing resulted in a
        net loss
        from continuing operations of $ 1,223,300 for the fiscal 2003 year as compared
        with a income from continuing operations of $ 163,300
        in 2002.
        The sale of discontinued operations resulted in a gain of $3.7 million in
        the
        2002 fiscal year.
  LIQUIDITY
        AND CAPITAL RESOURCES
  The
        Company’s current assets exceeded its current liabilities by $ 1.4 million at
        June 30, 2004, compared to current assets exceeding its current liabilities
        by
        $.7 million at June 30, 2003. The Company had cash or cash equivalents of
        $5,100
        and $1,000 at June 30, 2004 or 2003, respectively. Marketable securities
        had a
        market value of $1.9 million and $1.1 million at June 30,2004 and June 30,2003,
        respectively. The principal reason for the increase in both net current assets
        and other assets is the increase in market value of the Company’s holdings in
        IMSI.
  16
  In
        April
        2003 the Company issued $ 345,000, in the form of secured promissory
        notes
        to a group of investors. The notes mature in August 2005 and
        bear interest at 10%. In addition, for each $60,000 of notes
        issued,
        the company issued a warrant to purchase 1,000,000 shares of stock at an
        exercise price of $.01/share. The promissory notes are collateralized
        by 2,000,000 shares of IMSI stock currently held by the Company. The
        proceeds of this offering were used to repay the loan to Mr. Galloway and
        for
        the company’s working capital requirements.
  The
        warrants issued in 2003 were valued at $392,500 and charged to interest
        expense.
  The
        holders of promissory notes have exercised 4,750,000 of the warrants
        associated with their notes at $ 0.01 per share. The number of shares of
        IMSI
        Common Stock pledged as collateral for the $345,000 of promissory notes,
        are subject to adjustment one year after the initial closing date
        of the
        issuance of the promissory notes based on the 30-day trailing average of
        the bid
        prices of shares of Common Stock of IMSI as listed on the OTC Bulletin Board
        or
        such other exchange as such shares are then listed upon. As such, the number
        of
        shares that are subject to the pledge agreement as of June, 2004 are 747,869
        shares.
  17
  In
        the
        Fall of 2004, all but two of the note holders granted extensions to the Company
        through December 31, 2005 with respect to the notes due in August, 2004.
        The
        principal amount of the notes subject to such extension is $ 225,000. The
        Company is attempting to negotiate an extension of the maturity dates
        with  the two remaining note holders, holding promissory notes
        in the
        aggregate principal amount of $120,000. The Company's management is confident
        that such extensions can be obtained, but  there can be no assurances
        that
        this will occur.
  On
        September 10, 2003 the Company extended a bridge loan to Access Propeller,
        LLC
        ("Access") in the sum of $300,000. This loan is secured against all the assets
        of Access. Access owns 81% of Jippii (USA), n/k/a as DownPlay, Inc. DownPlay
        is
        in the business of providing downloadable mobile entertainment to cell phones
        and wireless devices. The loan bears interest at 10% and matures on February
        4,
        2004. In addition, the loan allows the Company the option to make a further
        investment of $900,000 in the form of preferred stock to acquire a total
        of
        50.1% of the outstanding stock of Access. On October 31, 2003 the Company
        converted its loan to 304,250 shares of Preferred Series A stock. In December
        2003, the Company decided not to make a further investment in Access or its
        subsidiary, DownPlay, giving the Company an ownership stake in Access of
        approximately 12%. Due to subsequent financings by Access, it is estimated
        that
        the Company's ownership stake has been reduced to approximately 9%.
  On
        September 18, 2003, the Company entered into a 15% one-year
        note (the
“Note”) with IMSI whereby we borrowed $350,000. The note is due, with interest,
        on September 18, 2004. The note is secured by 400,000 shares of IMSI stock
        currently owned by DCDC. The agreement required that DCDC not
        to sell
        any other IMSI common stock, which it holds, with the exception of private
        sales
        of IMSI common stock, until February 15, 2004. Concurrent with this note,
        DCDC
        repaid the entire principal portion of a $50,000 note, made in favor of IMSI
        on
        February 25, 2003. That note, due on February 25, 2004 was unsecured and
        carried
        a 4% interest rate. The interest payable, amounting to $1,162, is outstanding
        as
        of the filing and is due and payable on February 18, 2004. On September 18,
        2004, the Company and IMSI entered into an amendment to the Note. The Amendment
        provides for the extension of the maturity date to May 31, 2005 as well as
        the
        payment of accrued interest by October 31, 2004 in the sum of $52,000. In
        addition, the Company provided to IMSI as additional collateral, its ownership
        stake in Access Propeller, LLC.
  On
        January 5, 2005, IMSI sold and assigned the Note to Multi-Mag
        Corporation ("Multi-Mag").On June 5, 2005, the Company and Multi-Mag executed
        Amendment #2 to the promissory note.  This amendment provides that
        DCDC
        shall pay all accrued interest due from September 19, 2004 through June 17,
        2005
        under the promissory note to MULTI-MAG no later than June 30, 2005. The Company
        remitted the interest payment on June 16, 2005. Additionally, interest will
        be
        paid on the Note from June 18, 2005 through the payment date, which will
        be no
        later than June 30, 2005 at the rate of $135 per day.
  MULTI-MAG
        agreed to extend the due date for the principal and the remaining accrued
        interest on the note from May 31, 2005 to December 31, 2005. On June 17,
        2005,
        the Company remitted a payment of $38,979.45.
  18
 On
        September 30, 2004, the Company sold 200,000 shares of IMSI for gross proceeds
        of $200,000. The Company used $77,500 of this amount to pay certain indebtedness
        owed IMSI in the form of accrued interest and a reduction of
        principal.
  On
        May
        25, 2005 the Company sold 250,000 shares of IMSI for gross proceeds of $277,000.
        The Company used $38,979.45 of this amount to pay accrued interest to Multi-Mag
        and the remainder for general working capital purposes.
  The
        Company believes that it will need additional financing and working capital
        to
        finance its operations. Without additional financing, the Company will be
        unable
        to continue its operations. Although the Company has obtained additional
        financing in the past and believes it could meet its needs through either
        additional borrowings or the sale of additional equity, there can be no
        assurance that the Company would succeed in obtaining any such financing,
        or
        that the terms of such transactions could be effected, or that such strategy
        will be successful
  The
          shares of IMSI owned by the Company are "restricted securities" as defined
          in
          Rule 144 under the Securities Act of 1933. Under Rule 144, the Company
          can
          publicly sell, within any three month period, a number of shares not to
          exceed
          one percent of IMSI's then outstanding shares of common stock. In the event
          that
          IMSI becomes listed on the NASDAQ or on a national securities exchange,
          the
          maximum amount that can be sold will be the greater of one percent of the
          outstanding shares and the average weekly trading volume of IMSI's common
          stock
          for the four weeks preceding the Company's filing of a notice of sale with
          the
          SEC.
  Item
        7.
        Financial Statements.
  The
        financial statements are filed as part of this Annual Report on Form
        10-KSB.
  Item
        8. Changes in and Disagreements with Accountants.
  Effective
        June 23 ,2004, the company engaged the services of Miller Ellin & Co., LLP
        to replace the Company’s former auditor as the Company’s independent certifying
        public accountant. The Company notified its former auditor, Goldstein Golub
        & Kessler, LLP (the "Former Auditor") that the client-auditor relationship
        had ceased. The Former Auditor had served as the Company's independent
        public accountant prior to its resignation. The Former Auditor report
        on
        the financial statements for the past two years did not contain an adverse
        opinion or a disclaimer of opinion. There were no disagreements with the
        Former Auditors on any matter of accounting principles or practices,
        financial statement disclosures or auditing scope or procedure.
  Item
        8A. CONTROLS AND PROCEDURES
  (a)
        Disclosure Controls and Procedures. Under the supervision and with the
        participation of our management, including our principal executive and financial
        officer, we have evaluated the effectiveness of the design and operation
        of our
        disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
        or
        Rule 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended)
        within 90 days of the filing date of this quarterly report and, based on
        their
        evaluation, our principal executive and financial officer have concluded
        that
        these controls and procedures are not effective and do not meet the requirements
        thereof. We are, however, working diligently on having these requirements
        met.
        Disclosure controls and procedures include, without limitation, controls
        and
        procedures designed to ensure that information required to be disclosed by
        us in
        the reports that we file under the Exchange Act is recorded, processed,
        summarized and reported, within the time periods specified in the Securities
        and
        Exchange Commission's rules and forms, and that such information is accumulated
        and communicated to our management, including our principal executive and
        financial officer, as appropriate to allow timely decisions regarding required
        disclosure. (b) Changes in Internal Control Over Financial Reporting*.*There were no significant changes in our internal control over
        financial
        reporting identified in connection with the evaluation required by Exchange
        Act
        Rule 13a-15(d) or Rule 15d-15(d) that occurred during the period covered
        by this
        quarterly report, or to our knowledge in other factors, that have materially
        affected, or are reasonably likely to materially affect, our internal control
        over financial reporting.
  PART
        III
  Item
        9.  Directors,
        Executive Officers, Promoters and Control Persons.
  Name
                Age
                PositionGary
                    Herman
                41
                Chairman
                    of the Board, Chief Executive Officer, and SecretarySkuli
                    Thorvaldsson
                64
                Director,
                    Chief Financial Officer, TreasurerSigurdur
                    Jon Bjornsson
                38
 Directors
  Gary
        Herman. Mr. Herman was elected to the Board of Directors in May 2001 and
        became Chairman and Chief Executive officer in January 2002. Mr. Herman is
        also
        the Managing Partner of Galloway Capital Management, LLC. as well as a Managing
        Director with Arcadia Securites LLC. Prior to this, he was an investment
        banker
        with Burnham Securities from 1997 to 2002. Prior to joining Burnham, he was
        the
        managing partner of Kingshill Group, Inc., a merchant banking and financial
        firm
        with offices in New York and Tokyo. Mr. Herman is currently Chairman of the
        Board of DataMetrics Corporation and a director of Shells Seafood Restaurant
        Corp. Mr. Herman has a B.S. from the State University of New York at Albany.
        Mr.
        Herman became a director of IMSI in August 2001 pursuant to the merger agreement
        between the Company and IMSI. Mr. Herman resigned as a director of IMSI on
        January 25, 2002.
  Skuli
        Thorvaldsson. Mr. Thorvaldsson has been a member of the Board of Directors
        since May 1996. He became Chief Financial Officer in February 2002. Mr.
        Thorvaldsson is a private entrepreneur/investor. From 1980 to 2003 Mr.
        Thorvaldsson was the Chief Executive Officer of the Hotel Holt in Reykjavík,
        Iceland. He is a director of Allied Resource Corporation, an advanced
        technologies industrial service company based in Wayne, PA; as well as a
        director of Holt Holdings s.a., a Luxembourg-based investment company. Mr.
        Thorvaldsson graduated from the Commercial Collage of Iceland and the University
        of Barcelona and holds a law degree from the University of Iceland. He became
        a
        director of IMSI in August 2001 pursuant to the merger agreement between
        the
        Company and IMSI. Mr. Thorvaldsson resigned as a director of IMSI on February
        26, 2002.
  19
 Sigurdur
        Jon Bjornsson. Mr. Bjornsson had been a director of the Company since March
        2000. Until recently, Mr. Bjornsson served as the President and CEO of Framtak
        Investment Bank, Inc., an Icelandic based firm specializing in venture
        investments. Mr. Bjornsson also serves on the boards of several European
        companies including: Icebird Airline, Scandinavian Pizza Company "DOMINOS",
        New
        Industries, and Betware.com (chairman), Ltd. Mr. Bjornsson is a graduate
        of the
        University of Iceland with a BS in Business Finance. Mr. Bjornsson became
        a
        director of IMSI in August 2001 pursuant to the merger agreement between
        the
        Company and IMSI. Mr. Bjornsson resigned as a director of IMSI on February
        26,
        2002. Mr. Bjornsson resigned from the board of the Company in April 2005.
 
 Each
        Director is elected to serve until the Company's next annual meeting of
        shareholders and until his successor is duly elected and qualified.
  There
        are
        no agreements with respect to the election of directors. Executive officers
        are
        appointed annually by the Board of Directors and each executive officer serves
        at the discretion of the Board of Directors.The Company has adopted a
        Code of Ethics, which is administered by the Board of Directors. A copy is
        available upon request from the Company.


Beneficial
        Ownership Reporting Compliance
  Section
        16 A (a) of the Securities Exchange Act of 1934 requires the Company's officers,
        directors and persons who own more than ten percent of the Company's common
        shares to file reports of ownership with the SEC and to furnish the Company
        with
        copies of these reports. Based solely upon its review of reports received
        by it,
        or upon written representations from certain reporting persons that no reports
        were required, the Company believes that during fiscal year ended June 30,
        2004
        all filing requirements were met.
  Item
        10.
        Executive Compensation.
 The
        following table provides certain summary information concerning the compensation
        paid or accrued by the Company to or on behalf of its Chief Executive Officer
        and the other named executive officers of the Company for services rendered
        in
        all capacities to the Company and its subsidiaries for the fiscal years ended
        June 30, 2004; 2003; 2002.
  20
  (a)    Summary
                        Compensation TableAwardsPayouts
                    
                    PayoutsLong
                        term CompensationRestricted
                    
                    SecuritiesOther
                        Annual
                    
                    Stock
                    
                    Underlying
                    
                    LTIP
                    
                    All
                        OtherName
                      And Principal Position
                    
                    Year
                    
                    Salary
                    
                    Bonus
                    
                    Compensation
                    
                    Awards
                    
                    Options
                        /SARs
                    
                    Payouts
                    
                    CompensationBruce
                        Galloway
                    
                    
                    2004
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Former
                        Chairman & CFO
                    
                    
                    2003
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -2002
                    
                    $
                    0
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    10,000
                    
                    $
                    -
                    
                    $
                    -Martin
                          Wade III
                    
                    
                    2004
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Former
                        Chairman
                    
                    
                    2003
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -2002
                    
                    $
                    108,000
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    100,000
                    
                    $
                    -
                    
                    $
                    -Vincent
                          De Lorenzo
                    
                    
                    2004
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    $
                    -
                    
                    $
                    -Former
                        CFO
                    
                    
                    2003
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    $
                    -
                    
                    $
                    -2002
                    
                    $
                    87,500
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    137,500
                    
                    $
                    -
                    
                    $
                    -Jeffrey
                          Bernstein
                    
                    
                    2004
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -President
                        & CEO of Arthur
                    
                    
                    2003
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Treacher's
                    
                    
                    2002
                    
                    $
                    73,000
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    $
                    -
                    
                    $
                    -Ralph
                          Sorrentini
                    
                    
                    2004
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Former
                          President & CFO
                    
                    
                    2003
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -(Terminated)
                    
                    
                    2002
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    $
                    -
                    
                    $
                    225,262Gary
                          Herman
                    
                    
                    2004
                    
                    $
                    34,750
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Chairman
                        & CEO
                    
                    
                    2003
                    
                    $
                    21,700
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -2002
                    
                    $
                    32,000
                    
                    $
                    -
                    
                    $
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
  21
  (b) Option/SAR
                      Grants in Last Fiscal Year
  Name
                  
                  Number
                      of
                      SecuritiesUnderlying
                        Options/SARsGranted
                  
                  Percentage
                      of
                      Total
                        Options/SARsGranted to EmployeesIn Fiscal
                        Year
                  
                  Exercise
                      orBase Price
                  
                  ExpirationDateBruce
                      Galloway
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Martin
                      Wade III
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Gary
                      Herman
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -SkuliThorvaldsson
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
  (c) Aggregate
                        Options/SAR Exercises in Last Fiscal Year and Fiscal YE–None
  Name
                      
                      Shares
                          Acquired On
                          Exercise
                      
                      Value
                          Realized
                      
                      No.
                          Of UnexercisedOptions/SARsat June 30, 2004
                      
                      In
                          the MoneyOptions/SARsat June 30, 2004Bruce
                          Galloway
                      
                      
                      -
                      
                      
                      -
                      
                      
                      756,496
                      
                      
                      500,000Martin
                          Wade III
                      
                      
                      -
                      
                      
                      -
                      
                      
                      1,000,000
                      
                      
                      -Gary
                          Herman
                      
                      
                      -
                      
                      
                      -
                      
                      
                      500,000
                      
                      
                      500,000SkuliThorvaldsson
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
 22
  Executive
          Compensation
 Gary
        Herman and an affiliate, GH Ventures LLC, an entity of which Gary Herman
        is the
        sole member, provides services as the Company's Chairman, Chief Executive
        Officer, Secretary and Consultant. Due to the limited available working capital
        of the Company, he has received minor compensation since taking office in
        January 2002.
  Skuli
        Thorvaldsson is the Company's Chief Financial Officer. He has received no
        cash
        compensation for his services as Chief Finaincial Officer or as a consultant
        to
        the Company, since taking office in February 2002 due to the Company’s lack of
        working capital.
  In
          June,
          2005, the Company awarded both Mr. Herman and Mr. Thorvaldsson options
          to
          purchase 1,250,000 shares of common stock at an exercise price of $.01
          per share
          and expiring in June 2015.  These options were awarded for past
          services to
          the Company during the fiscal year ended June 30, 2002.  The options
          were
          valued at approximately $290,000 and charged to earnings in the fiscal
          year
          ended June 30, 2005.
 
 Further,
          the Company intends to grant Messrs. Herman and Thorvaldsson additional
          compensation in the form of cash and /or stock options in connection with
          their
          services as Directors and for management services to the Company for the
          fiscal
          years commencing July 1, 2001. However, the amount and nature of such additional
          compensation is subject to an evaluation by an independent third party
          consultant engaged by the Company.
  Item
        11.
        Security Ownership of Certain Beneficial Owners and Management
  The
        following table sets forth information as of September 22, 2005, with
        respect to officers, directors and persons who are known by the Company to
        be
        beneficial owners of more than 5% of the Company's Common Stock. Except as
        otherwise indicated, the Company believes that the beneficial owners of the
        Common Stock listed below, based on information furnished by such owners,
        have
        sole investment and voting power with respect to such shares, subject to
        community property laws where applicable.
  23
  Shareholder
                Shares
                PercentageBruce
                    R. Galloway(1)
                9,412,177
                18.0Skuli
                  Thorvaldsson (2)
                1,650,000
                3.1Gary
                  Herman (3)
                2,355,000
                4.4Officers
                    and Directors as a Group
                4,005,000
                7.27Total
                    Outstanding Shares
                51,689,165
  (1)
        Bruce
        R. Galloway was the Chairman of the Board of the Company until January 2002.
        Includes (i) options to purchase 1,750,000 shares of Common Stock,
        which
        are exercisable at an exercise price of $.01/share through June 2015;
        (ii)
        1,040,404 shares of common stock held by Jacombs Trading, Inc. and 544,100
        shares of common stock owned by his wife and children. Excludes 2,000,000
        shares
        owned by Burnham International, Inc. Bruce Galloway is a managing director
        of
        Burnham Securities Inc., which previously owned 49% of Burnham International,
        Inc.
  (2)
          Gives
          effect to the conversion of 400,000 shares of Series D Preferred Stock
          into
          400,000 shares of common stock for no additional consideration.
 
 
 (3)
          Includes options to purchase 1,750,000 shares of common stock at $.01 through
          June 30, 2015.
 
 
 The
          Company intends to grant Messrs. Herman and Throvaldsson additional compensation
          in the form of cash and/or stock options in connection with their services
          as
          Directors and for management services to the Company for the fiscal years
          commencing July 1, 2001, but the amount and nature of such compensation
          is
          subject to an evaluation by an independent third party consultant engaged
          by the
          Company.
  Item
        12.
        Certain Relationships and Related Transactions.
 In
          May
          2004, Gary Herman and Bruce Galloway satisfied an obligation to a former
          officer
          totaling approximately $36,000 and are negotiating to extend the terms
          of the
          note with the Company.
  On
          September 18, 2003, the Company entered into a 15% one-year note with IMSI
          whereby the company borrowed $350,000. The note was due, with interest,
          on
          September 18, 2004. The note is secured by 400,000 shares of IMSI stock
          currently owned by DCDC. The agreement also calls for DCDC not to sell
          any other
          IMSI common stock, which it holds, with the exception of private sales
          of IMSI
          common stock, until February 15, 2004. Concurrent with this note, DCDC
          prepaid
          the entire principal portion of a $50,000 note, made in favor of IMSI on
          February 25, 2003. That note, due on February 25, 2004 was unsecured and
          carried
          a 4% interest rate. The interest payable, amounting to $1,712, was paid
          on June
          29, 2004.
  On
          September 18, 2004, the Company and IMSI entered into an amendment to the
          Note.
          The Amendment provides for the extension of the maturity date to May 31,
          2005 as
          well as the payment of accrued interest by October 31, 2004 in the sum
          of
          $52,000. In addition, the Company provided to IMSI as additional collateral,
          its
          ownership stake in Access Propeller, LLC. On October 18, 2004, the accrued
          interest payment was made to IMSI as well as an additional payment of $25,000
          credited towards a reduction of principal.
  On
          January 5, 2005, IMSI sold and assigned the Note to Multi-Mag
          Corporation ("Multi-Mag"). On June 5, 2005 the Company and Multi-Mag executed
          Amendment #2 to the Promissory Note.  This amendment provides that
          DCDC pay
          all accrued interest due from September 19, 2004 through May 31, 2005 of
          $38,900
          no later than June 30, 2005. On June 17, 2005, the Company remitted the
          interest
          payment. Additionally, interest will be paid on the Note from June
          1, 2005
          through the payment date, which will be no later than June 30, 2005 at
          the rate
          of $135 per day. The entire principal and the remaining interest
          on the
          Note is due on  December 31, 2005.
 24
  Item
        13.
        Exhibits and Report
  (a)
        Exhibits
  3.1.1
        Certificate of Incorporation.(1)
 3.1.2
        Agreement and Plan of Reorganization and First Addendum dated December 5,
        1983.(1)
 3.1.3
        Certificate of Merger dated January 23, 1984.(1)
 3.1.4
        Articles of Merger dated January 27, 1984.(1)
 3.1.5
        Articles of Amendment to Articles of Incorporation dated January 27,
        1984.(1)
 3.1.6
        Amendment to Articles of Incorporation dated January 27, 1986.(1)
 3.1.7
        Articles of Amendment to Articles of Incorporation dated June 28,
        1996.(1)
 3.1.8
        Articles of Amendment to Articles of Incorporation dated July 31,
        2000.(3)
 3.2
        Bylaws.(1)
 4.2
        Certificate of Designation of Series A Preferred Stock.(1)
 4.10
        Certificate of Designation of Series B Preferred Stock.(1)
 4.4
        Certificate of Designation of Series C Preferred Stock of Warrant to Burnham
        Securities Inc.(1)
 4.5
        Certificate of Designation of Series D Preferred Stock.(1)
 10.9
        Uniform Franchise Offering Circular dated January 1, 1997.(1)
 10.10
        Form of Franchise Agreement dated January 1, 1997.(1)
 10.11
        Form of Warrant exercisable at $1.51 per share.(1)
 10.12
        Form of Warrant to Burnham Securities Inc.(1)
 10.13
        *Uniform Franchise Offering Circular dated January 1, 1997.
 10.14
        *Form of Franchise Agreement dated January 1, 1997.
 10.15
        *Form of Warrant exercisable at $1.51 per share.
 10.16
        *Form of Warrant to Burnham Securities Inc.
 10.13
        Form of Stock Option to Employees.(1)
 10.18
        Form of agreement with holders of Series A Preferred Stock.(1)
  25
  10.20
        Co-Branding Agreement between the Company and Miami Subs Corp. dated August
        13,
        1998.(2)
 10.21
        Letter Agreement to co-brand between the Company and Miami Subs Corp. dated
        April 30, 1999.(3)
 10.24
        Purchase Agreement among the Company, TI (Delaware) and Jeffrey Bernstein,
        dated
        October 2, 2000.(3)
 10.25.
        Agreement and Plan of Merger between the Company and IMSI dated August 31,
        2001.(4)
 10.26
        Loan Purchase Agreement between the Company and Union Bank of California
        dated
        August 22, 2001.(4)
 10.29
        Option Agreement with Martin Wade dated June 1, 2001.
 10.30
        Memorandum of Agreement between the Company, Ralph Sorrentino and RJS Consulting
        Corp. dated October 30, 2001.
 10.31
        Purchase Agreement between ATI (Delaware) and PAT Franchise dated February
        28,
        2002.(5)
 10.32
        Common Stock Purchase Agreement among the Company, DCDC (Delaware) and PAT
        Services, dated February 28, 2002. 4
 10.33
        Guaranty and security Agreement between PAT Franchise and the Company dated
        February 28, 2002.(5)
 10.34
        Pledge Agreement between PAT Services and the Company dated February 28,
        2002.(5)
 10.35
        Amended and Restated Senior Secured Promissory Note in favor of the Company
        dated February 28, 2002. (5)
 10.36
        Promissory Note Conversion and General Release dated February 28, 2002 between
        the Company and IMSI.(5)
 10.37
        Sale Agreement between International Microcomputer Software, Inc. and the
        Company dated November, 2001_for the sale of Keynomics, Inc. (7)
 10.38
        Note Purchase Agreement between the Company and KGS Holdings, Ltd. dated
        June,
        2002.
 10.39
        Settlement Agreement between the Company and Ralph Sorrentino dated January,
        2003. (7)
 10.40
        Settlement Agreement between the Company and Raymond DeMarco, Michael Morley
        and
        Gil Holland dated March, 2003. (7)
 10.42
        Promissory Note in favor of IMSI dated September 18, 2003.(6)
 10.43
        Promissory Note issued by Access Propeller, LLC in favor of the Company dated
        September, 2003.(6)
 10.44
        Amendment No.1 to the Promissory Note in favor of IMSI dated September18,
        2003.(6)
 10.45
        Assignment Agreement of the Promissory Note between the Company, International
        MicrocomputerSoftware, Inc. and Multi Mag Corporation dated as of February
        3,
        2005 (7)
 10.46
        Amendment No.2 to the Promissory Note in favor of Multi Mag dated September,
        2003.(7)
 10.47
        Code of Ethics (8)21. List of Subsidiaries (3)
  1
        Previously Filed with Form 10-SB Declared Effective on August 12,
        1997
 2
        Previously filed with Form 10-KSB for the year ended June 30, 1999
 3
        Previously filed with Form 10-KSB for the year ended June 30, 2000
 4
        Previously filed with Form 8-K filed on September 19, 2001
 5
        Previously filed with Form 8-K filed on March 15, 2002
 6
        Previously filed with Form 8-K filed on October 20, 2004
 7
        Previously filed
        with Form 10-KSB for the year ended June 30, 2002
  26
   SIGNATURES
   In
        accordance with the Securities Exchange Act of 1934, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  DIGITAL
                CREATIVE DEVELOPMENT CORPORATION(Registrant)Date: November 17 ,
                2005
              By:
              /s/ Gary
                HermanGary
                HermanChairman
                and Chief Executive Officer
  By:
              /s/ Skuli
                ThorvaldssonSkuli
                ThorvaldssonChief
                Financial Officer
  Name
                
                Title
                Date/s/ Gary
                    Herman,
                
                Chairman
                    and CEO
                November 17,
                    2005Gary
                    Herman/s/ Skuli
                    Thorvaldsson,
                
                Director
                November
                    17, 2005Skuli
                    Thorvaldsson
  27
 Digital
                      Creative Development CorporationIndex
                      to Consolidated Financial StatementsReport
                        of independent accounting firm
                    F-2Consolidated
                        Balance Sheets
                    F-3Consolidated
                        Statements of Operations
                    F-4Consolidated
                        Statements of Stockholders' Equity (Deficiency)
                    F-5Consolidated
                        Statements of Cash Flows
                    F-6Notes
                        to Consolidated Financial Statements
                    F-7
                        to F-24
 **REPORT
            OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
            FIRM**
  **To
            the Stockholders**
 **Digital
            Creative Development Corporation and
            Subsidiary**
  We
            have audited the accompanying consolidated balance sheets of Digital
            Creative
            Development Corporation & Subsidiary as of June 30, 2004 and 2003, and the
            related consolidated statements of operations, stockholders' equity,
            and cash
            flows for the years then ended. The consolidated financial statements
            are
            the responsibility of the Company's management. Our responsibility is
            to express
            an opinion on these financial statements based on our audits.
  We
            conducted our audit in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform the audit to obtain reasonable assurance about whether the
            financial
            statements are free of material misstatement. An audit includes examining,
            on a
            test basis, evidence supporting the amounts and disclosures in the financial
            statements. An audit also includes assessing the accounting principles
            used and
            significant estimates made by management, as well as evaluating the overall
            financial statement presentation. We believe that our audits provide
            a
            reasonable basis for our opinion.
  In
            our opinion, the consolidated financial statements referred to above
            present
            fairly, in all material respects, the financial position of Digital Creative
            Development Corporation and Subsidiary as of June 30, 2004 and 2003,
            and the
            result of its operations and its cash flows for the years then
            ended, in
            conformity with U.S. generally accepted accounting principles.
  /s/
                    MILLER, ELLIN & COMPANY, LLP CERTIFIED PUBLIC
                    ACCOUNTANTS
  New
            York, New York
 July
            13, 2005
  F-2
  DIGITAL
                    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                    BALANCE SHEETSJUNE
                    30, 2004 AND 2003ASSETS2004
                
                2003(in
                    thousands)CURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                5.1
                
                $
                1.0Marketable
                    securities
                
                
                1,905.3
                
                
                1,072.6TOTAL
                    CURRENT ASSETS
                
                
                1,910.4
                
                
                1,073.6.OTHER
                    ASSETSMarketable
                    and non-marketable securities and advances net of allowance of
                    $ 3,560,000
                    in both years
                
                
                8,155.9
                
                
                4,391.9TOTAL
                    ASSETS
                
                $
                10,066.3
                
                $
                5,465.5LIABILITIES
                    AND STOCKHOLDERS' EQUITYCURRENT
                    LIABILITIESAccrued
                    expenses and other liabilities
                
                $
                264.8
                
                $
                227.7Current
                    portion of notes payable - related parties
                
                
                240.1
                
                
                175.0TOTAL
                    CURRENT LIABILITIES
                
                
                504.9
                
                
                402.7NOTES
                    PAYABLE - RELATED PARTIESNET
                    OF CURRENT MATURITIES
                
                
                724.8
                
                
                335.4TOTAL
                    LIABILITIES
                
                
                1,229.7
                
                
                738.1STOCKHOLDERS'
                    EQUITYPreferred
                    Stock 2,000,000 Shares AuthorizedSeries
                    A Convertible, Par Value $ 1; 2,200 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 1 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                2.2
                
                
                2.2Series
                    C, Par Value $ 100; 9,900 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 100 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                852.7
                
                
                852.7Series
                    D, Par Value $ 100; 4,000 Shares Issued andOutstanding;
                    Involuntary Liquidation Preference of $ 100 Per SharePlus
                    Accrued and Unpaid Dividends
                
                
                400.0
                
                
                400.0Common
                    Stock, Par Value $ .01; Authorized 75,000,000 Shares;
                    Issuedand
                    Outstanding: 51,649,165 Shares at June 30,2004; 47,649,165
                    Sharesat
                    June 30,2003
                
                
                516.5
                
                
                476.5Additional
                    paid in capital
                
                
                37,916.9
                
                
                37,916.9Accumulated
                    other comprehensive income
                
                
                6,309.7
                
                
                1,929.0Accumulated
                    deficit
                
                
                (37,161.4
                )
                
                (36,849.9
                )TOTAL
                    STOCKHOLDERS' EQUITY
                
                
                8,836.6
                
                
                4,727.4TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                10,066.3
                
                $
                5,465.5See
                    accompanying Notes to Consolidated Financial
                    Statements
  F-3
 
 DIGITAL
                        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR
                      THE YEARS ENDED JUNE 30, 2004 AND 20032004
                  
                  2003(in
                      thousands)TOTAL
                      REVENUEDividend,
                      interest income, and other income
                  
                  $
                  -
                  
                  $
                  6.1OPERATING
                      EXPENSESGeneral
                      and administrative expenses
                  
                  
                  154.3
                  
                  
                  425.5(LOSS)
                      FROM OPERATIONS
                  
                  
                  (154.3
                  )
                  
                  (419.4
                  )OTHER
                      INCOME (EXPENSE)Interest
                      expense, net and other
                  
                  
                  (49.1
                  )
                  
                  (444.3
                  )Realized
                      loss net of
                      unrealized gain on investments
                  
                  
                  (108.1
                  )
                  
                  -Settlement
                      of litigation with former employees
                  
                  
                  -
                  
                  
                  (359.6
                  )TOTAL
                      OTHER INCOME (EXPENSE)
                  
                  
                  (157.2
                  )
                  
                  (803.9
                  )NET
                      LOSS
                  
                  
                  (311.5
                  )
                  
                  (1,223.3
                  )UNDECLARED
                      PREFERRED STOCK DIVIDENDS
                  
                  
                  (145.5
                  )
                  
                  (145.5
                  )Net
                    loss attributable to common shareholders
                  
                  $
                  (457.0
                  )
                  $
                  (1,368.8
                  )WEIGHTED
                      AVERAGE NUMBER OF OUTSTANDING SHARES FORBASIC
                      AND DILUTED EARNINGS PER SHARE
                  
                  
                  51,357.5
                  
                  
                  45,128.3BASIC
                      AND DILUTED LOSS PER SHARE
                  
                  $
                  (0.01
                  )
                  $
                  (0.03
                  )NET
                      LOSS
                  
                  $
                  (311.5
                  )
                  $
                  (1,223.3
                  )Other
                      comprehensive operationsUnrealized
                      Gain (loss) on marketable securities
                  
                  
                  4,380.7
                  
                  
                  (984.4
                  )Comprehensive
                      net income (loss)
                  
                  $
                  4,069.2
                  
                  $
                  (2,207.7
                  )
  F-4
  DIGITAL
                        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                        STATEMENTS OF STOCKHOLDERS' EQUITYFOR
                        THE YEARS ENDED JUNE 30, 2004 AND 2003(in
                        thousands)AccumulatedAdditional
                    
                    OtherPreferred
                        Stock
                    
                    Common
                    
                    Paid-in
                    
                    Comprehensive
                    
                    AccumulatedSeries
                        A
                    
                    Series
                        C
                    
                    Series
                        D
                    
                    Stock
                    
                    Capital
                    
                    Operations
                    
                    Deficit
                    
                    TotalBalance
                        at June 30, 2002
                    
                    $
                    2.2
                    
                    $
                    852.7
                    
                    $
                    400.0
                    
                    $
                    444.0
                    
                    $
                    37,380.2
                    
                    $
                    2,913.4
                    
                    $
                    (35,626.6
                    )
                    $
                    6,365.9Issuance
                        of common stock in
                      connection
                        with debt issuance
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    5.0
                    
                    
                    15.0
                    
                    
                    
                    
                    
                    
                    
                    
                    20.0Interest
                        and compensation charges forissuance
                        of stock options and warrants
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    392.5
                    
                    
                    
                    
                    
                    
                    
                    
                    392.5Exercise
                        of warrants and other
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    27.5
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    27.5Unrealized
                        loss on investments
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (984.4
                    )
                    
                    
                    
                    
                    (984.4
                    )Discount
                        on notes payable issued
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    -
                    
                    
                    129.2
                    
                    
                    -
                    
                    
                    -
                    
                    
                    129.2Net
                        loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,223.3
                    )
                    
                    (1,223.3
                    )Balance
                        at June 30, 2003
                    
                    
                    2.2
                    
                    
                    852.7
                    
                    
                    400.0
                    
                    
                    476.5
                    
                    
                    37,916.9
                    
                    
                    1,929.0
                    
                    
                    (36,849.9
                    )
                    
                    4,727.4Exercise
                        of warrants
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    40.0
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    40.0Unrealized
                        gain on investments
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4,380.7
                    
                    
                    
                    
                    
                    4,380.7Net
                        loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (311.5
                    )
                    
                    (311.5
                    )Balance
                        at June 30, 2004
                    
                    $
                    2.2
                    
                    $
                    852.7
                    
                    $
                    400.0
                    
                    $
                    516.5
                    
                    $
                    37,916.9
                    
                    $
                    6,309.7
                    
                    $
                    (37,161.4
                    )
                    $
                    8,836.6See
                        accompanying Notes to Consolidated Financial
                        Statements
  F-5
  DIGITAL
                          CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
                          STATEMENTS OF CASH FLOWSFOR
                          THE YEARS ENDED JUNE 30, 2004 AND 20032004
                      
                      2003(in
                          thousands)CASH
                          FLOWS FROM OPERATING ACTIVITES:Net
                          loss
                      $
                      (311.5
                      )
                      $
                      (1,223.3
                      )Adjustments
                          to reconcile net loss to net cash used in operating
                          activities:Amortization
                          of options and warrants issued
                      
                      -
                      
                      
                      392.5Amortization
                          of debt discount
                      
                      96.9
                      
                      
                      16.1Realized
                          loss on investments, net of unrealized gains
                      
                      15.0
                      
                      
                      -Stock
                          based compensation
                      
                      -
                      
                      
                      254.4Loss
                          realized on settlement of litigation with former employees
                      
                      -
                      
                      
                      283.7Changes
                          in assets and liabilities:Increase
                          in accounts payable, accrued expenses and other
                          liabilities
                      
                      47.1
                      
                      
                      (4.2
                      )NET
                          CASH USED IN OPERATING ACTIVITIES
                      
                      (152.5
                      )
                      
                      (280.8
                      )CASH
                          FLOWS FROM INVESTING ACTIVITES:Proceeds
                          from sale of subsidiary and merger termination settlement
                      
                      -
                      
                      
                      250.1Proceeds
                          from sale of investments
                      
                      69.0
                      
                      
                      -Purchase
                          of investments
                      
                      (300.0
                      )
                      
                      -NET
                          CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
                      
                      (231.0
                      )
                      
                      250.1CASH
                          FLOWS FROM FINANCING ACTIVITES:Proceeds
                          from issuance of common stock
                      
                      40.0
                      
                      
                      47.5Proceeds
                          from issuance of notes payable - related parties
                      
                      376.1
                      
                      
                      645.0Payments
                          of amounts due to former executive
                      
                      -
                      
                      
                      (341.2
                      )Payments
                          of note payable to related parties
                      
                      (28.5
                      )
                      
                      (319.6
                      )NET
                          CASH PROVIDED BY FINANCING ACTIVITIES
                      
                      387.6
                      
                      
                      31.7NET
                          CHANGE IN CASH AND CASH EQUIVALENTS
                      $
                      4.1
                      
                      $
                      1.0CASH
                          AND EQUIVALENTS, beginning of year
                      
                      1.0
                      
                      
                      -CASH
                          AND EQUIVALENTS, end of year
                      $
                      5.1
                      
                      $
                      1.0Supplemental
                          disclosure of noncash transactions:Services
                          settled in exchange for shares of marketable securities
                          held
                      $
                      -
                      
                      $
                      249.2Conversion
                          of loan receivable into 304,250 shares of preferred stock
                      $
                      300.0
                      
                      $
                      -See
                          accompanying Notes to Consolidated Financial Statements




F-6




DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003




1. 
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




PRINCIPLES
      OF CONSOLIDATION




The
      consolidated financial statements include the accounts of Digital Creative
      Development Corporation and its wholly owned subsidiary, (collectively the
      "Company"). The wholly owned subsidiary at June 30, 2004 and June 30, 2003
      is
      Digital Creative Development Company (Delaware). All significant inter-company
      accounts and transactions have been eliminated in consolidation.




ORGANIZATION




Digital
      Creative Development Corporation (the "Company" or "Digital") was originally
      founded in 1969 as Arthur Treacher's Fish &Chips, Inc., a Delaware
      corporation. In 1979, Mrs. Paul's, Inc, ("Mrs. Paul's") purchased Arthur
      Treacher’s Fish &Chips, Inc. In 1982, Lumara Foods of America, Inc.
      ("Lumara") acquired the assets of Arthur Treacher's Fish &Chips, Inc. from
      Mrs. Paul's. Lumara sought bankruptcy protection in 1983. In December 1983,
      Arthur Treacher's Inc., an Ohio corporation, entered into an agreement to
      purchase the assets of Lumara, during Chapter XI bankruptcy proceedings. In
      February 1984, Arthur Treacher's Inc., merged into El Charro, Inc.,
      a Utah
      corporation, which consummated the acquisition of the assets of Lumara and
      changed its name to Arthur Treacher's, Inc. On May 31, 1996, an investor group
      organized by Mr. Bruce Galloway, the former chairman of the board, acquired
      control of the Company. In February 2000, the Company formed a subsidiary,
      Digital Creative Development Corporation, a Delaware corporation ("DCDC
      (Delaware)"), for the purpose of acquiring and investing in entities engaged
      in
      the creation of software and traditional entertainment content. In March 2000,
      Digital formed the subsidiary, Arthur Treacher's, Inc., a Delaware corporation
      ("ATI (Delaware)") to own and operate the restaurant business. In August 2000,
      Digital, a Utah corporation, changed its name from Arthur Treacher's, Inc.
      to
      Digital Creative Development Corporation.




The
      Company owned, operated and franchised quick-service restaurants under the
      names
      "Arthur Treacher's Fish &Chips" and "'Pudgie's Famous Chicken". In addition,
      the Company acquired and made investments in traditional entertainment content
      entities and invested and formed joint ventures with Web design, Web consulting
      and other companies that create and transmit digital broadband content.




On
      December 28, 2000, the Company filed Form 10-SB with the Securities and Exchange
      Commission. The purpose of this registration statement was the distribution
      of
      common stock to separate the restaurant business from the Company's
      entertainment business, in order (i) to allow the restaurant business to focus
      on its core strengths and (ii) to permit customers, stockholders and other
      constituencies to better evaluate the respective businesses. The Company and
      its
      restaurant subsidiary had entered into a series of agreements, contingent on
      the
      completion of the distribution, relating to the distribution and the
      relationship of the entities thereafter. This registration statement was not
      declared effective and the proposed spin-off did not occur.




On
      February 28, 2002, the Company sold its 80% interest in ATI (Delaware).




The
      Company currently has no active business. However, the Company is involved
      in
      acquiring and investing in software and high technology companies, with a focus
      on acquiring controlling interests and has entered into the software technology
      industry through the investment of International Microcomputer Software, Inc.
      ("IMSI"). Since 1982, IMSI has been a developer and publisher of productivity
      software in precision design, graphics design and other related business
      applications, as well as graphics and CAD (Computer Aided Design) software
      and
      internet technology.




F-7


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003




IMPAIRMENT
      OF LONG-LIVED ASSETS




In
      accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-lived Assets, the Company continually evaluates the fair value of
      long-lived assets for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable.




STOCK-BASED
      COMPENSATION




Since
      July 1, 2002, the Company has accounted for stock-based compensation in
      accordance with the provisions of SFAS No. 123, "Accounting for Stock-Based
      Compensation," which provided guidance for the recognition of compensation
      expense as it related to the issuance of stock options and warrants. In
      addition, the Company adopted the provisions of SFAS No. 148, "Accounting for
      Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS
      No.
      123." SFAS No. 148 amended SFAS No. 123 to provide alternative methods of
      transition for a voluntary change to the fair value based method of accounting
      for stock-based employee compensation provided by SFAS No. 123. In addition,
      SFAS No. 148 amended the disclosure requirements of SFAS No. 123 to require
      prominent disclosures in both annual and interim financial statements about
      the
      method of accounting for stock-based employee compensation and the effect of
      the
      method used on reported results. SFAS No. 148 also amended the manner by which
      a
      company accounts for the transition to the fair value based method recommended
      by SFAS No. 123. As permitted by SFAS No. 148, the Company has adopted the
      fair
      value method recommended by SFAS No. 123 to effect a change in accounting for
      stock-based employee compensation. Prior to July 1, 2002, the Company accounted
      for stock-based employee compensation under the recognition and measurement
      provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
      Issued to Employees," and related Interpretations.




CASH
      AND CASH EQUIVALENTS




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




FAIR
      VALUE OF FINANCIAL INSTRUMENTS




In
      determining the fair value of its financial instruments, the Company uses a
      variety of methods and assumptions that are based on market conditions and
      risks
      existing as of each balance sheet date. For the majority of financial
      instruments, including receivables, long-term debt, and stock options and
      warrants, standard market conventions and techniques, such as discounted cash
      flow analysis, option pricing models, replacement cost and termination cost,
      are
      used to determine fair value. All methods of assessing fair value result in
      a
      general approximation of value, and such value may never be actually
      realized.




F-8


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003
 USE
      OF
      ESTIMATES




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




NEW
      ACCOUNTING PRONOUNCEMENTS




In
      2004,
      2003, and 2002 the FASB issued the following new statements and
      interpretations:




Statement
      No. 132 (revised 2003), Employers' Disclosures about Pensions and Other
      Postretirement Benefits--an amendment of FASB Statements No. 87, 88, and
      106.




Statement
      No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
      Statement No. 13, and Technical Corrections




Statement
      No. 146, Accounting for Costs Associated with Exit or Disposal
      Activities.




Statement
      No. 147, Acquisitions of Certain Financial Institutions—an amendment of FASB
      Statements No. 72 and 144 and FASB Interpretation No. 9.




Statement
      No. 148, Accounting of Stock-Based Compensation - Transition and Disclosure,
      an
      amendment of FASB Statement No. 123.




Statement
      No. 149, Amendment of Statement No. 133 on Derivative Instruments and Hedging
      Activities.




Statement
      No. 150, Accounting for Certain Financial Instruments with Characteristic's
      of
      Both Liabilities and Equity.




Statement
      No. 151, Inventory Costs--an amendment of ARB No. 43, Chapter 4.




Statement
      No. 152, Accounting for Real Estate Time-Sharing Transactions.




Statement
      No. 153, Exchanges of Nonmonetary Assets




Statement
      No. 154, Accounting Changes and Error Corrections




FASB
      Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others--an interpretation of FASB Statements No. 5, 57, and 107 and rescission
      of FASB Interpretation No. 34.




FASB
      Interpretation 46, Consolidation of Variable Interest Entities--an
      interpretation of ARB No. 51.




FASB
      Interpretation 46(R), Consolidation of Variable Interest Entities (revised
      December 2003)--an interpretation of ARB No. 51.






In
      addition, in 2004, 2003, and 2002 the American Institute of Certified Public
      Accountants ("AICPA") issued the following new accounting Statements of Position
      (SOPs):




F-9


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003




Statement
      of Position (SOP) 02-2: Accounting for Derivative Instruments and Hedging
      Activities by Not-for-Profit Health Care Organizations, and Clarification of
      the
      Performance Indicator.




Statement
      of Position (SOP) 03-1: Accounting and Reporting by Insurance Enterprises for
      Certain Nontraditional Long-Duration Contracts and for Separate
      Accounts.




Statement
      of Position (SOP) 03-3: Accounting for Certain Loans or Debt Securities Acquired
      in a Transfer.




Statement
      of Position (SOP) 03-4: Reporting Financial Highlights and Schedule of
      Investments by Nonregistered Investment Partnerships - An Amendment to the
      Audit
      and Accounting Guide "Audits of Investment Companies" and AICPA Statement of
      Position 95-2, "Financial Reporting by Nonpublic Investment
      Partnerships."




Statement
      of Position (SOP) 03-5: Financial Highlights of Separate Accounts - An Amendment
      to the Audit and Accounting Guide "Audits of Investment Companies."




None
      of
      these pronouncements had or are expected to have a material impact on the
      Company's financial position and results of operations.




INVESTMENTS




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


INCOME
      TAXES




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




F-10


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


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.
      INVESTMENTS IN MARKETABLE SECURITIES AND NONMARKETABLE
      SECURITIES






The
      Company had investments and advances in certain marketable and non-marketable
      debt and equity securities at June 30, 2004 and 2003, as follows:






June
                30, 2004
            
            June
                30, 2003Securities
                not readily marketable, Nonmarketable Securities and
                AdvancesIMSI
            
            $
            2,800,900
            
            $
            2,800,900MadeMyWay.com,
                Inc.
            
            
            1,200,000
            
            
            1,200,000Interactive
                Pager Media, Inc
            
            
            1,000,000
            
            
            1,000,000Our
                Yearbook Corporation
            
            
            610,000
            
            
            610,000Heavy.com
            
            
            500,000
            
            
            500,000Liquor.com
            
            
            250,000
            
            
            250,000Access
                Propeller Holdings Inc.
            
            
            300,000
            
            
            -Sub
                total
            
            
            6,660,900
            
            
            6,660,900Unrealized
              gain on marketable
              securities
            
            
            5,055,000
            
            
            1,591,000Less
                allowance for impairment loss
            
            
            (3,560,000
            )
            
            (3,560,000
            )Total
            
            $
            8,155,900
            
            $
            4,391,900Marketable 
                Securities:IMSI
            
            $
            679,200
            
            $
            672,200Thinking
                Tools, Inc.
            
            
            216,000
            
            
            300,000Unrealized
                gain on marketable securities
            
            
            1,010,100
            
            
            93,400Total
            
            $
            1,905,300
            
            $
            1,072,600




F-11


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


On
      September 18, 2003 the Company extended a bridge loan to Access Propeller
      Holdings Inc.(“Access”) in the sum of $300,000. This loan is secured by all the
      assets of Access. Access owns 81% of Jippii (USA), n/k/a as DownPlay, Inc.
      DownPlay is in the business of providing downloadable mobile entertainment
      to
      cell phones and wireless devices. In addition, the loan allows the Company
      the
      option to convert and make a further investment of $900,000 in the form of
      preferred stock to acquire a total of 51.1% of Access. On October 31, 2003
      the
      Company converted its loan to 304,250 shares of Preferred Series A stock. In
      December 2003, the Company decided not to make a further investment in Access
      or
      its subsidiary, DownPlay. As of the date of this filing, the ownership stake
      in
      Access is approximately 13%.




An
      impairment loss of non-marketable securities has been recorded because the
      Company has concluded that recoverability of its investments in such entities
      is
      unlikely and improbable based upon its review of the current financial status
      of
      each entity.




The
      shares of IMSI owned by the Company are "restricted securities" as defined
      in
      Rule 144 under the Securities Act of 1933. Under Rule 144, the Company can
      publicly sell, within any three month period, a number of shares not to exceed
      one percent of IMSI's then outstanding shares of common stock. In the event
      that
      IMSI becomes listed on the NASDAQ or on a national securities exchange, the
      maximum amount that can be sold will be the greater of one percent of the
      outstanding shares and the average weekly trading volume of IMSI's common stock
      for the four weeks preceding the Company's filing of a notice of sale with
      the
      SEC. Since these shares are restricted, the shares, which can be sold within
      one
      year are shown as a current asset and the balance of the shares are shown in
      other assets on the balance sheet.




A
      total
      of 400,000 shares of IMSI stock secures the Company's 15% $350,000 Promissory
      Note to Multi Mag Corporation and 747,869 shares of IMSI stock secure the
      $345,000 note to investors. See Note 4 - "Notes Payable - Related
      Parties."




3.
      ACCOUNTS PAYABLE AND ACCRUED EXPENSES




Accrued
      expenses consist basically of accrued legal and other professional fees and
      general administrative expenses of the Company.




4.
      NOTES PAYABLE - RELATED PARTIES




At
      June
      30, 2004 and 2003, the Company’s long term debt consisted of the
      following:




2004
            
            2003Secured
                Promissory Note with Interest at 15%
            
            $
            350,000
            
            
            -0-$345,000
                Secured Promissory Notes with Interest at 10%, net of discount at
                issuance
            
            
            328,800
            
            
            231,900Notes
                payable to certain former executives
            
            
            110,100
            
            
            103,500Debt
                due to former employees in conjunction with settlement agreement
                (See Note
                10 “Settlement With Former Employees”)
            
            
            175,000
            
            
            175,000Total
            
            $
            964,900
            
            $
            510,400Less:
                Current portion
            
            
            290,100
            
            
            175,000Net
                long term debt
            
            $
            674,800
            
            $
            335,400




In
      December 2001, Martin Wade, the Company’s former CEO, lent the Company $50,000
      bearing interest at 12%, and due on December 31, 2001. As additional
      consideration for the loan, Mr. Wade was issued warrants to purchase 500,000
      shares of common stock of the Company at $0.01 per share, which was valued
      at
      $53,900 and included as interest expense. On July 1, 2005, the maturity date
      of
      this loan was extended to December 31, 2005.




In
      November 2001, Mr. Bernstein, the former President of the Company's Restaurant
      Division advanced the Company $50,000 bearing interest at 12%.  The
      Company
      made periodic payments on this debt, totaling approximately $21,500 leaving
      approximately $36,000, which included certain other indebtedness.  In
      May
      2004, Gary Herman and Bruce Galloway satisfied the remaining obligation to
      Mr.
      Bernstein on behalf of the Company. Mr. Herman and Mr. Galloway have equally
      assumed the balance of the note and the Company and Messrs. Galloway and Herman
      are negotiating to extend the note. The Company's management is confident that
      such extension can be obtained.




Throughout
      the period from July 1, 2001 through June 30, 2004, Mr. Bruce Galloway, the
      Company's former chairman, had advanced monies at 12% to allow the company
      to
      satisfy operating expenses. The amounts outstanding to Mr. Galloway totaled
      $
      31,600 and $ 25,000 at June 30, 2004 and 2003, respectively.




F-12


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


On
      September 18, 2003, the Company entered into a 15% one-year note with IMSI
      whereby the company borrowed $350,000. The note was due, with interest,
      on
      September 18, 2004. The note is secured by 400,000 shares of IMSI
      stock owned by the Company. The agreement provided that the Company
      cannot sell any other IMSI common stock, which it holds, with the exception
      of private sales of IMSI common stock, until February 15, 2004. Concurrent
      with
      this note, DCDC prepaid the entire principal portion of a $50,000 note, made
      in
      favor of IMSI on February 25, 2003. That note, due on February 25, 2004 was
      unsecured and carried a 4% interest rate. The interest payable, amounting to
      $1,712, was paid on June 29, 2004.




On
      September 18, 2004, the Company and IMSI entered into an amendment to the Note.
      The Amendment provides for the extension of the maturity date to May 31, 2005
      as
      well as the payment of accrued interest by October 31, 2004 in the sum of
      $52,000. In addition, the Company provided to IMSI as additional collateral,
      its
      ownership stake in Access Propeller, LLC. On October 18, 2004 the accrued
      interest payment was made to IMSI as well as an additional payment of $25,000
      credited towards a reduction of principal.




On
      January 5, 2005, IMSI sold and assigned the Note to Multi-Mag
      Corporation ("Multi-Mag"). On June 5, 2005, the Company and Multi-Mag executed
      Amendment #2 to the Promissory Note.  This amendment provides that DCDC
      pay
      all accrued interest due from September 19, 2004 through June 17, 2005 of
      $38,900 no later than June 30, 2005. The Company remitted this payment on June
      17, 2005. Additionally, interest will be paid on the Note from June 1, 2005
      through the payment date, which will be no later than June 30, 2005 at the
      rate
      of $135 per day. The entire principal and the remaining interest on
      the
      Note is due on  December 31, 2005.




In
      January 2003, the Company borrowed the sum of $300,000 from its former chairman,
      Bruce Galloway to satisfy certain obligations of the Company. The term of the
      loan was three months with interest at 12%. In addition, Mr. Galloway received
      a
      warrant to purchase 1,000,000 shares of common stock of the Company with an
      exercise price of $.01 per share. Mr. Galloway borrowed the funds advanced
      to
      the Company from AFC Enterprises, Inc. (“AFC”). In addition, AFC received a
      warrant to purchase 1,000,000 shares of common stock at $.01/share as an
      inducement to advance the funds to Mr. Galloway. The loan was repaid in April
      2003. Mr. Galloway and AFC Enterprises have exercised their respective warrants.




In
      April
      2003 the Company issued $345,000, in the form of secured promissory
      notes
      to a group of investors. The notes mature in August 2005 and bear interest
      at 10%. In addition, for each $60,000 of notes issued, the company issued a
      warrant to purchase 1,000,000 shares of stock at an exercise price of
      $.01/share.  A total of 5,750,000 warrants were exercised at
      a price
      of $.01/share. These warrants  were valued at $392,500 and charged to
      interest expense. The notes were collateralized by 2,053,571 shares
      of IMSI
      stock currently held by the Company. The proceeds of this offering were used
      to
      repay the loan to Mr. Galloway and for the Company’s working capital
      requirements.








F-13


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


The
      number of shares of IMSI 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 IMSI as listed on the
      OTC
      Bulletin Board or such other exchange as such shares are then listed upon.
      As
      such, the number of shares that are subject to the pledge agreement as of June
      2004 are 747,869 shares.




In
      the
      Fall of 2004 all but two of the note holders granted extensions to the company
      through December 31, 2005. The Company is attempting to negotiate an
      extension of the maturity dates with the two remaining note holders
      in
      respect to all of the promissory notes.




The
      Company's management is confident that such extensions can be obtained,
      but there can be no assurances that this will occur.




In
      connection with the issuance of the notes to Martin Wade, Bruce Galloway and
      the
      secured promissory notes, the Company also issued detachable stock purchase
      warrants to purchase 8,250,000 shares of common stock at $.01 per share. The
      warrants expire in 2011 and 2012. Based on the relative fair values, the Company
      has attributed $230,000 of the total proceeds to the warrants and has recorded
      the warrants as additional paid-in capital and as a discount to the notes.
      The
      resulting discount on the notes is being amortized over the notes' initial
      term
      as a charge to interest expense.




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




Related
      interest expense, including those charges associated with the issuance of
      warrants, approximated $194,000 and $420,200 for the years ended June 30, 2004
      and 2003, respectively.




Net
      long term debt matures over the subsequent years as follows :




2005 $
      240,000
      including amortization of debt discount


2006 $
      741,000
      including amortization of debt discount


2007 $
      -0-


2008 $
      -0-


2009 $
      -0-




5.
      INCOME TAXES




For
      the
      years ended June 30, 2004 and 2003, 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:




2004
            
            2003Federal
                statutory rate
            
            
            34
            %
            
            34
            %Valuation
                allowance on net operating loss carryforwards, and investment
                write-downs
            
            
            (34
            %)
            
            (34
            %)Effective
                income tax rate
            
            
            0
            %
            
            0
            %




F-14




DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


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, 2004 and 2003 are as
      follows:




2004
            
            2003Deferred
                tax assets:Operating
                loss carryforwards
            
            $
            2,635,000
            
            $
            2,568,000Write-down
                of investments
            
            
            1,424,000
            
            
            1,424,000Total
                Deferred Tax Asset
            
            
            4,059,000
            
            
            3,992,000Valuation
                Allowance
            
            
            (4,059,000
            )
            
            (3,992,000
            )$
            -
            
            $
            -




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




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




Digital
      Creative Development Corporation and subsidiaries have not filed an income
      tax
      return since the year ended June 30, 2000. The draft financial statements for
      the year ended June 30, 2001 disclose a net operating loss carryforward of
      approxmately $32,748,000. The current tax laws as it pertains to disposal of
      subsidiaries that generate net operating loss carryforwards ("NOL") essentially
      eliminate the NOL carryforward and do not provide for a company to recognize
      a
      loss on dispositon of the subsidiary for tax purposes. However, the laws do
      provide for the parent to reallocate the NOL based upon their basis in the
      Companies being disposed of. We have obtained the consolidating worksheets
      for
      the fiscal year ended June 30, 2001 and have determined that the Company's
      investment in its subsidiaries is as follows:




Cineblast
            $3,241,250Tune-in
            679,041Keynomics
            679,042ATI-Delaware
            1,101,008$5,700,341




Therefore,
      the NOL for reporting purposes will be assumed to be the $5.7 million and will
      be finalized when all of the corporate tax returns are completed.




F-15




DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


As
      of
      June 30, 2004, the Company had federal net operating loss carry forwards of
      $6,586,600 available to offset future federal taxable income. The federal net
      operating loss carry-forwards expire in varying amounts through 2024.




The
      Company is in the process of filing its tax returns for the current and all
      applicable prior years.




6.
      PER
      SHARE INFORMATION




In
      accordance with SFAS No. 128, "Earnings Per Share", basic net income (loss)
      per
      common share ("Basic EPS") is computed by dividing the net income (loss)
      attributable to common shareholders by the weighted-average number of common
      shares outstanding. Diluted net income (loss) per common share ("Diluted EPS")
      is computed by dividing the net income (loss) attributable to common
      shareholders by the weighted-average number of common shares and dilutive common
      share equivalents on convertible securities, options, and warrants then
      outstanding. SFAS No. 128 requires the presentation of both Basic EPS and
      Diluted EPS on the face of the Company's Consolidated Statements of Operations.
      There were 11,612,904 and 16,360,496 stock options and warrants excluded
      from the computation of Diluted EPS for the years ended June 30, 2004 and 2003,
      respectively, 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
                30,2004
            
            2003(in
                thousands)Numerator:*Basic
                and Diluted:*Loss
                attributable to common shareholders
            
            $
            (311.5
            )
            $
            (1,223.3
            )Denominator:Weighted
                average common shares outstanding for basic and full
                dilution
            
            
            51,357.5
            
            
            45,128.3Basic
                and Diluted Per Share Information:Net
                loss
            
            $
            (0.01
            )
            $
            (0.03
            )





7.
      STOCK OPTIONS AND STOCK WARRANTS




During
      2003, the Company granted 7,750,000 stock warrants, at an exercise price of
      $
      0.01 per shares, to lenders in conjunction with the issuance of debt
      by the
      Company. These warrants were valued at $180,097 and were amortized to interest
      expense over the terms of the loans. There were no grants during the
      2004
      year.




F-16


DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


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 and warrants issued under the Plan is presented in the table
      below:




Options
            
            Weighted
                Average Exercise Price
            
            Warrants
            
            Weighted
                Average Exercise PriceOutstanding,
                June 30, 2002 (unaudited)
            
            
            9,265,230
            
            $
            0.42
            
            
            2,653,502
            
            $
            .33Expired
            
            
            (409,736
            )
            $
            0.50
            
            
            (148,500
            )
            $
            1.00Exercised
            
            
            -
            
            
            -
            
            
            (2,750,000
            )
            $
            0.01Issued
            
            
            -
            
            
            
            
            
            7,750,000
            
            $
            0.01Outstanding,
                June 30, 2003
            
            
            8,855,494
            
            $
            0.42
            
            
            7,505,002
            
            $
            0.10Expired
            
            
            (374,165
            )
            $
            0.74
            
            
            (373,427
            )
            $
            0.44Exercised
            
            
            -
            
            
            -
            
            
            (4,000,000
            )
            $
            0.01Issued
            
            
            -
            
            
            -
            
            
            -
            
            
            -Outstanding,
                June 30, 2004
            
            
            8,481,329
            
            $
            0.41
            
            
            3,131,575
            
            $
            0.18






8.
      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.




F-17




DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


9.
      STOCKHOLDERS' EQUITY




DCDC
      (Delaware) (the ”Subsidiary”) was formed in February 2000. Approximately
      12,000,000 common shares or approximately 45% of the outstanding common stock
      of
      the Subsidiary were sold to third parties. Under the terms of the stock sale,
      the Subsidiary's common stock may be converted into the Company's stock, in
      whole or in part, at any time, at the option of the holder. The Company may
      elect at any time to convert the Subsidiary's common stock into the Company’s
      common stock provided that certain conditions related to market listing and
      reporting are met. Effective January 25, 2001*,*the Company notified
      holders of common shares of the Subsidiary that it was converting 11,869,957
      shares of common stock outstanding into shares of the Company's common stock
      on
      a one-for-one basis.




In
      November and December 1997, the Company consummated a private placement to
      investors with respect to equity units consisting of shares of its Series C
      Preferred Stock, with warrants to purchase shares of common stock attached,
      for
      aggregate proceeds of $990,000, On November 25, 1997, the Company sold 8,100
      shares of Series C Preferred Stock, with warrants to purchase 121,500 shares
      of
      common stock attached. On December 23, 1997, the Company sold 1,800 shares
      of
      Series C Preferred Stock, with warrants to purchase 27,000 shares of common
      stock attached. The Company allocated approximately $137,000 of the proceeds
      to
      the value of the warrants and approximately $853,000 to the value of the
      preferred stock. The preferred stock is not convertible, but may be redeemed
      at
      the option of the Company at a redemption price of $100 per share plus accrued
      and unpaid dividends, at any time after October 31, 1999. The holders of the
      preferred stock are entitled to a cumulative dividend of 10% per annum, payable
      semiannually, if and when the board declares a dividend. At June 30, 2004 and
      2003, the Company had accumulated and unpaid dividends of approximately $555,800
      and $470,500, respectively, on this series of preferred stock. The warrants
      entitle the holder to purchase one share of common stock at an exercise price
      of
      $3.125 per share of common stock. The Company utilized the proceeds for working
      capital needs.




The
      holders of the Series A Preferred Stock are entitled to a cumulative dividend
      of
      $0.10 per share per annum. Such dividends accrue annually but are payable if
      and
      when the Company declares a dividend. The Company has not paid any dividends
      with respect to the Series A Preferred Stock. The 2,200 outstanding shares
      of
      Series A Preferred Stock are convertible into 3,300 shares of Common Stock
      for
      no additional consideration at the option of the holder of the stock. The Series
      A Preferred Stock is entitled to a liquidation preference of $1.00 per share,
      plus any accrued and unpaid dividends. The Series A Preferred Stock may be
      redeemed by the Company at a redemption price of $1.00 per share plus all
      accrued and unpaid dividends. The amount of accumulated and unpaid dividends
      was
      approximately $ 24,700 and $24,400 for the years ended June 30, 2004 and 2003,
      respectively.




The
      holders of the Series D Preferred Stock are entitled to a cumulative dividend
      of
      15% per share per annum. Such dividends accrue annually but are payable if
      and
      when the Company declares a dividend. The Company has not paid any dividend
      with
      respect to the Series D Preferred Stock. The 4,000 outstanding shares of Series
      D Preferred Stock arc convertible into 400,000 shares of Common Stock for no
      additional consideration at the option of the holder of the stock The amount
      of
      accumulated and unpaid dividends was approximately $ 345,000 and $ 285,000
      at
      June 30, 2004 and 2003, respectively.




F-18




DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 June
        30,
        2004 and 2003


For
      the
      years ended June 30, 2004 and 2003, the Company issued the following common
      shares:




June
                30,2004
            
            2003Exercise
                of stock warrants
            
            
            4,000,000
            
            
            2,750,000




10.
      SETTLEMENT WITH FORMER EMPLOYEES




In
      January 2003 the principals of CineBlast, Raymond DeMarco, Michael Morley and
      Gil Holland, entered an action in New York State Supreme Court, New York County
      (Index# 100192/03) against the Company and DCDC (Delaware), alleging among
      other
      things, breach of contract and fraud. On March 31, 2003 the parties executed
      a
      Settlement Agreement, which provided for a Mutual General Release and a
      Stipulation of Discontinuance. In addition, Mssrs. DeMarco, Morley and Holland
      each received a payment of $5,000, 80,000 restricted shares of IMSI and a
      promissory note for $58,333.33, with a two year maturity. The terms of the
      Note
      provide that if on the date of maturity, the shares of IMSI transferred to
      Mssrs. DeMarco, Morley and Holland are unrestricted and trading above $2.00
      per
      share, the Company shall have no obligation to pay the notes, which shall become
      null and void. If on the date of maturity, the price of IMSI is below
      $2.00/share, the balance of the Note shall be proportionately reduced.




On
      April
      21, 2005 the Notes Payable related to the CineBlast settlement of $175,000
      became due and payable. Based upon the formula in the settlement agreement
      the
      total obligation due the principals of CineBlast is $153,600.  Management
      of the Company has negotiated a payout of this obligation under which the amount
      of $153,600 will be paid over six months, beginning July 2005, without interest,
      as follows: $ 15,000 at July 1 and August 1; $30,000 at September 1, October
      1
      and November 1; and $33,600 at December 1, 2005.






11.
      SUBSEQUENT EVENTS




On
      September 30, 2004, the Company sold 200,000 shares of IMSI for gross proceeds
      of $200,000. The Company used $77,500 of this amount to pay certain indebtedness
      owed IMSI in the form of accrued interest and a reduction of
      principal.




On
      May
      25, 2005, the Company sold 250,000 shares of IMSI for gross proceeds of
      approximately $ 277,000. The Company will use approximately $35,000 of this
      amount to pay accrued interest to Multi-Mag and the remainder for general
      working capital purposes.




In
        June,
        2005, the Company awarded to each of its current directors, Gary Herman and
        Skuli Thorvaldsson, options to purchase 1,250,000 shares of common stock
        at an
        exercise price of $.01 per share and expiring in June 2015. These options,
        awarded for past services to the Company, were valued at approximately $290,000
        and charged to earnings in the fiscal year ended June 30,
        2005.




F-19