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, 2005
  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.
  720
        Fifth
        Avenue, New York, New York, 10019
 10th
        Floor
 (Address
        of principal executive offices)
 (212)
        247-0581
  Securities
                  registered under Section 12(b) of the Act:Title
                  of Each Class
              
              Name
                  of Each Exchange on Whichto
                  be so Registered
              
              Each
                  Class is to be RegisteredSecurities
                  registered under Section 12(g) of the Act:
              
              Common
                  Stock, $.01 par value(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: 53,864,165 at May 30, 2007
  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.)
  $4,975,000.
  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.
  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, the former head of the Company’s restaurant
        operations. Since the Spring of 2002, the Company has been inactive, except
        for
        managing its ownership interest in International Microcomputer Software Inc.
        (“IMSI”), now Broadcaster, Inc. (“Broadcaster”). (See additional information
        within this Section).
  In
        February 2000, the Company formed a subsidiary, Digital Creative Development
        Corporation, a Delaware corporation (“DCDC (Delaware)”), for the purpose of
        investing in 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.
  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 shares of common stock and to provide the
          Company with piggyback registration rights with respect to the remaining
          7,000,000 shares. Effective January 31, 2002, certain members of the Boards
          of
          Directors of the Company and IMSI resigned, with no directors serving on
          the
          boards of both companies. On June 25, 2007, Broadcaster effected a 1 for
          2 stock
          split. As of June 25, 2007, the closing bid price of common stock of
          Broadcaster (symbol BCAS) as quoted on the OTC Bulletin Board was $2.50.
  Since
        1982, and up until June 2006, IMSI had been a developer and publisher of
        productivity software in precision design, graphics design and other related
        business applications, as well as graphics and CAD (Computer Aided Design)
        software and Internet technology. IMSI, a graphics and CAD
        (Computer-Aided-Design) software and Internet technology company headquartered
        in Novato, California, owned and operated three business divisions up to
        June
        2006.
  On
          June
          2, 2006 IMSI closed its merger with AccessMedia Networks, Inc. (“AccessMedia”).
          On December 14, 2005 the board of the Company approved the execution of
          a Voting
          Agreement and Irrevocable Proxy in support of the transaction.  The
          Company's ownership stake in IMSI, now operating under the name Broadcaster,
          Inc. (“Broadcaster”) was reduced from approximately 25% to approximately 11% as
          a result of the issuance of shares of common stock of IMSI (n/k/a Broadcaster)
          to the shareholders of AccessMedia. Under the merger agreement, if Broadcaster
          achieves certain performance milestones, the shareholders of AccessMedia
          shall
          be issued additional shares of Broadcaster which shall further reduce the
          Company's ownership percentage. In the first calendar quarter of 2007,
          an
          additional 29.4 million shares of common stock of Broadcaster were issued
          to
          former shareholders of AccessMedia reducing the Company’s ownership
          in Broadcaster to approximately 6.5%. The combined company now trades under
          the ticker symbol BCAS, on the OTC Bulletin Board (OTCBB). As of June 25,
          2007,
          the closing bid price of common stock was $2.50 /share.
 
 3
  **Item
        1. Description of Business**
  Overview- ---
  Until
        February 28, 2002, the Company’s primary business 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.
  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 to 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.
  4
  Employees
  As
        of
        June 30, 2005 and through the current date, the Company has 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.
  Acquisitions
  The
        Company‘s investments as of June 30, 2005 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 on restaurant, software and
          digital
          entertainment business. Although the Company continues to search for candidates
          with which to enter into business combinations or strategic transactions,
          it
          does not have an operating business except for its interest, as of June
          25,
          2007, in Broadcaster represented by its ownership interest of approximately
          3,500,000 shares of common stock of Broadcaster, constituting approximately
          6.5%
          of the total outstanding shares of that entity’s common stock. These shares
          are reflective of  Broadcaster's 1 for 2 reverse split effected June
          25, 2007.
  An
          additional 225,000 shares of common stock, or approximately .43% of Broadcaster,
          Inc. is beneficially owned by Gary Herman, the Company’s Chairman, and 468,575
          shares of common stock, or approximately .91% of Broadcaster, Inc. is
          beneficially owned by Bruce Galloway, the Company’s principal shareholder. Mr.
          Galloway also owns options to purchase, (i)
          250,000 shares of Braodcaster’s common stock at $1.62 per share; (ii) 50,000
          shares at $1.80 per share; (iii) 32,500 shares at $3.80 per share; and
          (iv)
          5,000 shares at $3.76 per share. The description of these options reflects
          Broadcasters’ 1 for 2 reverse split effected June 25, 2007.
  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 Broadcaster
          as operating investments primarily intended to secure its strategic goals.
  5
  Although
        the Company and its affiliates do not act as a group, the Company has a
        significant position in Broadcaster. The Company believes that it has a minimum
        of one year to comply with the provisions for the Act since it no longer
        controlled Broadcaster. If the SEC takes the view that the Company has been
        operating and continues to operate as an unregistered investment company
        in
        violation of the Act, and does not provide the Company with a sufficient
        period
        to either register as an investment company or divest itself of investment
        securities and/or acquire non-investment securities, the Company may be subject
        to significant potential penalties.
  In
        the
        absence of exemptions granted by the SEC (which are discretionary in nature
        and
        require the SEC to make certain findings), the Company would be required
        either
        to register as a closed-end investment company or a business development
        company
        under the Act, 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, including limits
        on
        the values of its investment securities as a percentage of its total assets,
        the
        make up of its board of directors and transactions with affiliates. In order
        to
        comply with the Act, the Company may need to acquire additional operating
        assets
        that would have a material effect on the Company’s operations. There can be no
        assurance that the Company could identify such operating assets to acquire
        or
        could successfully acquire such assets. Any such acquisition could result
        in the
        Company issuing additional shares that may dilute the equity of the Company’s
        existing stockholders, and/or result in the Company incurring additional
        indebtedness, which could have a material impact on the Company’s balance sheet
        and results of operations. Were the Company to acquire any additional
        businesses, there would be the additional risk that the Company’s acquired and
        previously-existing businesses could be disrupted while the Company attempted
        to
        integrate the acquired business, as well as risks associated with the Company
        attempting to manage a new business with which it was not familiar. Any of
        the
        above risks could result in a material adverse effect on the Company’s results
        of operations and financial condition.
  **Item
        2. Description of Property.**
  The
        Company's principal executive offices are now located at 720 Fifth Avenue,
        10 th Floor
        New York, NY 10019. The Company is utilizing office space of its Chairman
        at a
        minimal cost to the Company until an acquisition or business transaction
        is
        consummated. The amount of office space currently utilized by the Company
        is
        insignificant.
  **Item
        3. Legal Proceedings.**
  The
        Company and its various subsidiaries and operating units are from time to
        time
        involved in ordinary and routine litigation.
  6
  **CineBlast
        Litigation**
 
 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). In July, 2003
        the
        parties executed a Settlement Agreement and a Stipulation of Discontinuance.
        In
        early 2006, the Company was unable to adhere to the settlement agreement.
 
 On
        February 21, 2006 the principals of CineBlast filed a legal action seeking
        payment of the outstanding balances ($103,350), plus the amount of the debt
        reduced by the formula ($21,400), and legal fees. On April 25, 2006 the court
        dismissed the action against the Company. On August 7, 2006 the court denied
        the
        Plaintiff’s motion to reargue. In September 2006 the Company received notice
        that it was served with another legal action from the principals of CineBlast.
        On November 15, 2006 the parties entered into a settlement agreement to satisfy
        the remaining liability over a period of approximately six months. As of
        the
        filing date, the matter is settled and there are no further obligations to
        the
        principals of CineBlast.
  **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 May 30, 2007 the closing bid price was $.12 /share.
  2004
                  Fiscal YearFirst
                  Quarter
              
              $
              .220
              
              $
              .080Second
                  Quarter
              
              $
              .180
              
              $
              .100Third
                  Quarter
              
              $
              .200
              
              $
              .105Fourth
                  Quarter
              
              $
              .240
              
              $
              .1502005
                  Fiscal YearFirst
                  Quarter
              
              $
              .18
              
              $
              .08Second
                  Quarter
              
              $
              .14
              
              $
              .04Third
                  Quarter
              
              $
              .18
              
              $
              .09Fourth
                  Quarter
              
              $
              .15
              
              $
              .09
  7
  The
        following table sets forth the high and low prices for the periods
        indicated
  2006
                  Fiscal YearFirst
                  Quarter
              
              $
              .19
              
              $
              .11Second
                  Quarter
              
              $
              .15
              
              $
              .07Third
                  Quarter
              
              $
              .19
              
              $
              .19Fourth
                  Quarter
              
              $
              .38
              
              $
              .152007
                  Fiscal YearFirst
                  Quarter
              
              $
              .38
              
              $
              .13Second
                  Quarter
              
              $
              .14
              
              $
              .07Third
                  Quarter
              
              $
              .23
              
              $
              .10
  The
          Common Stock was recorded on the OTC Bulletin Board with the symbol DCDC.
          In
          November 2001, the Company's stock was delisted from the OTC 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. On May 30, 2007 the
          number
          of record holders of the Company's Common Stock was 491.
  **Dividends**
  In
        November and December 1997, the Company consummated a private placement with
        respect to equity units consisting of shares of its Series C Preferred Stock
        and
        warrants to purchase shares of common stock for aggregate proceeds of $990,000.
        The Company sold 9,900 shares of Series C Preferred Stock with warrants to
        purchase 148,500 shares of common stock attached. The preferred stock is
        not
        convertible, but may be redeemed at the option of the Company at a redemption
        price of $100/share plus accrued and unpaid dividends, at any time. The holders
        of the preferred stock are entitled to a cumulative dividend of 10% per annum,
        payable semi-annually, if and when the Board declares a dividend. On September
        28, 1998, the Company sold 4,000 shares of Series D Preferred Stock and Common
        Stock Purchase Warrants with gross proceeds of an aggregate amount of $400,000.
        The preferred stock is convertible into 400,000 shares of common stock. The
        holders of the preferred stock are entitled to a cumulative dividend of 15%
        per
        annum, payable semi annually, if and when the Board declares a dividend.
        To
        date, the Company has not paid any dividends on its Common Stock or Preferred
        Stock. The payment of dividends, if any, in the future is within the discretion
        of the Board of Directors and will depend upon the Company's earnings, its
        capital requirements and financial condition, and other relevant factors.
        The
        Company does not intend to declare any dividends in the foreseeable future,
        but
        instead intends to retain all earnings, if any, for use in the Company's
        business operations. No dividends may be distributed with respect to the
        Common
        Stock so long as there are accrued and unpaid dividends on the Series A and
        Series C Preferred Stock. The amount of accumulated and unpaid dividends
        on the
        Series A Preferred Stock, Series C Preferred Stock and Series D Preferred
        Stock
        was approximately $1,071,000 as of June 30, 2005.
  8
  **Item
        6. Management's Discussion and Analysis or Plan of Operation.**
  This
        Management's Discussion and Analysis of Financial Condition and Results of
        Operations of the Company should be read in conjunction with the Financial
        Statements and Notes thereto.
  Safe
        Harbor Statement Under the Private Securities Litigation Reform Act of 1995.
  The
        financial and business analysis below provides information that the Company
        believes is relevant to an assessment and understanding of the Company's
        consolidated financial condition, changes in financial condition, and results
        of
        operations. This financial and business analysis should be read in conjunction
        with the consolidated financial statements and related notes.
  "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.
  **Results
        of Operations Fiscal 2005 and Fiscal 2004**
  The
        Company had no operating revenues in fiscal years 2005 and 2004. General
        and
        administrative expenses increased by $842,000 from $154,300 principally due
        to
        stock based compensation and expenses, reflecting issuances of stock options
        with exercise prices below current market prices. Total Other Expense declined
        $111,800 from fiscal 2004 to $45,400 principally due to gains on sales of
        securities and also due to a settlement with former employees. The net effect
        of
        the aforementioned resulted in a net loss of $1.0 million in the 2005 fiscal
        year compared to $311,500 for the 2004 fiscal year.
  9
  **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.
  **LIQUIDITY
        AND CAPITAL RESOURCES**
  The
        Company’s current liabilities exceeded its current assets by $314,100 at June
        30, 2005, compared to current assets exceeding its current liabilities by
        $1.4
        million at June 30, 2004. The change in working capital is principally due
        to
        all of the Company’s indebtedness becoming currently due as of June 30, 2005 and
        the restriction on the marketability of the Company’s holdings in Broadcaster,
        Inc. pursuant to the execution of a Lock-Up Agreement with Broadcaster. (See
        “Subsequent Events” in the Footnotes to Consolidated Financial Statements. ) The
        Company had cash or cash equivalents of $111,500 and $5,100 at June 30, 2005
        and
        2004, respectively. Marketable securities had a market value of approximately
        $1.1 million and $1.9 million at June 30, 2005 and June 30, 2004, respectively;
        this decrease is principally due to the reclassification to long term
        investments of certain Broadcaster common shares pursuant to the Lock-Up
        Agreement with Broadcaster. Other assets decreased approximately $400,000
        due
        principally to the decrease in market value of the Company’s holdings in IMSI
        (n/k/a Broadcaster, Inc.), net of the increase resulting from the
        reclassification of certain Broadcaster common shares addressed
        above.
  In
          April
          2003, the Company issued $345,000 of secured promissory notes to a group
          of
          seven investors. The notes matured in August 2005 and bore interest at
          10%. In
          addition, for each $60,000 of notes issued, the Company issued a warrant
          to
          purchase 1,000,000 shares of common stock at an exercise price of $0.01
          per
          share. Approximately 373,845 shares of Broadcaster common stock currently
          held by the Company collateralize the promissory notes. The amount reflects
          the
          1 for 2 reverse split of shares of Broadcaster on June 25, 2007. The
          proceeds of these notes were used to repay a loan to Mr. Galloway and for
          the
          Company’s working capital requirements. The warrants issued in 2003 were valued
          at $392,500 and charged to interest expense over the term of the notes.
          The
          holders of promissory notes have exercised 4,750,000 of the warrants associated
          with their notes at $0.01 per share. All but three of the noteholders
          representing $195,000 of principal notes extended their notes from December
          31,
          2005 to May 31, 2006. The
          same
          noteholders agreed to extend the maturity date to December 31, 2006, and
          subsequently, have agreed to further extend the maturity dates
          of
          their notes to May 31, 2007 .
          The
          Company is currently negotiating with these noteholders to further extend
          the
          maturity date. Although the Company's management is confident that such
          extension can be obtained, there are no assurances that this will occur.
          Those
          three noteholders referred to above currently will not extend their notes
          and
          those notes are currently in default.
  On
        September 10, 2003 the Company extended a $300,000 bridge loan to Access
        Propeller, LLC ("Access"). This loan was 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 bore interest at 10% and matured on February
        4,
        2004. In addition, the loan agreement allows the Company the option to make
        further investments 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’s loan was converted into 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, and the Company’s
        decision not to participate in those financings, it is estimated that the
        Company's ownership stake has been reduced to approximately 3%.
  10
  After
        a
        review of both the recent financial history of Access and its prospects for
        profitability, the Company elected to provide a full allowance of its investment
        in Access as of June 30, 2005.
  On
        September 18, 2003, the Company entered into a 15% one-year note (the “Note”)
        with IMSI whereby we borrowed $350,000. The Note was due, with interest,
        on
        September 18, 2004. 400,000 shares of IMSI (n/k/a Broadcaster) common stock
        currently owned by DCDC secure the Note. On September 18, 2004, the Company
        and
        IMSI entered into an amendment to the Note that extended the due date and
        provided for the Company to provide IMSI as additional collateral, its ownership
        stake in Access Propeller, LLC.
  On
        January 5, 2005, IMSI sold and assigned the Note, which then had a principal
        amount of $325,000, to Multi-Mag Corporation ("Multi-Mag"). On June 5, 2005,
        the
        Company and Multi-Mag executed Amendment #2 to the promissory note. This
        amendment provided that DCDC pay all accrued interest due from September
        19,
        2004 through June 17, 2005 to MULTI-MAG no later than June 30, 2005 On June
        17,
        2005, the Company remitted a payment of $38,979, and the maturity date of
        the
        Note had subsequently been extended until December 31,
        2005.
  On
        December 14, 2005, the Company and Multi-Mag executed Amendment No. 3 to
        the
        Promissory Note. The amendment provided that DCDC pay all accrued interest
        due
        from June 18, 2005 through December 23, 2005. The Company remitted payment
        for
        $22,572 and the maturity date of the note was extended to May 31,
        2006.
  On
        May
        31, 2006, the Company and Multi Mag executed Amendment No. 4 to the Promissory
        Note. This amendment provided that DCDC pay all accrued interest due from
        December 23, 2005 through May 31, 2006. The Company remitted a payment for
        $21,236 and the maturity date of the Note was extended to December 31,
        2006.
  On
            May
            30, 2007, the Company and Multi-Mag executed Amendment #5 to the Promissory
            Note. This amendment provided that the maturity date on the Note was
            extended to
            December 31, 2007 upon the payment of accrued interest from June 1, 2006
            through
            May 31, 2007 in the amount of $48,750 payable no later than July 15,
            2007.
  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
          common shares of  Broadcaster 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
Broadcaster
          then outstanding shares of common stock. So long as Broadcaster
          remains current in its periodic filings under the Securities Exchange Act
          of
          1934, the maximum amount that can be sold will be the greater of one percent
          of
          the outstanding shares or the average weekly trading volume of Broadcaster
          common stock for the four weeks preceding the Company's filing of a notice
          of
          sale with the SEC. Further, in connection with the merger with AccessMedia.,
          the
          Board of Directors of the Company approved the execution of a lock-up agreement
          with Broadcaster, Inc. which provides that the Company may transfer up
          to two
          (2) percent of its holdings of Broadcaster
          in each sixty (60) day period following the Closing Date as defined in
          the
          merger agreement. The agreement expired June 2, 2007. From
          time
          to time, the Company has sold and may sell a certain amount of its holdings
          in
          Broadcaster. The proceeds of any such sales are anticipated to be principally
          used by the Company for general working capital purposes. The Company has
          sold
          520,000 shares of IMSI (n/k/a Broadcaster, Inc.) from June 30, 2005 to
          May 31,
          2007 and has used the proceeds of approximately $658,000 for general working
          capital purposes. These shares were sold before the 1 for 2 reverse split
          of
          Broadcaster effected June 25, 2007.
  11
  **QUANTITATIVE
        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
 
 The
        Company’s equity investments are concentrated in relatively few investees,
        principally Broadcaster, Inc. At June 30, 2005, almost 100% of the total
        fair
        value of equity investments was concentrated in Broadcaster, Inc. The Company’s
        present preferred strategy is to hold equity investments for trading purposes
        and for long-term strategic purposes. Thus, the Company’s management is not
        necessarily troubled by short term equity price volatility with respect to
        its
        investments provided that the underlying business, economic and management
        characteristics of the investees remain favorable. The carrying values of
        investments subject to equity price risks are based on quoted market prices
        or
        management’s estimates of fair value as of the balance sheet dates. Market
        prices are subject to fluctuation and, consequently, the amount realized
        in the
        subsequent sale of an investment may significantly differ from the reported
        market value. Fluctuation in the market price of a security may result from
        perceived changes in the underlying economic characteristics of the investee,
        the relative price of alternative investments and general market conditions.
        Furthermore, amounts realized in the sale of a particular security may be
        affected by the relative quantity of the security being sold. Insofar as
        the
        Company’s liabilities are concerned, all loans to the Company have been made
        with fixed interest rates, and, accordingly, the market risk to the Company
        prior to the maturity of those instruments is minimal.
  **Item
        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.**
  None
  **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 officers, we have evaluated the effectiveness
        of the design and operation of our disclosure controls and procedures (as
        such
        term is defined in Rule 13a-15(e) or Rule 15d-15(e) under the U.S. Securities
        Exchange Act of 1934, as amended) within 90 days of the filing date of this
        quarterly report and, based on their evaluation, our principal executive
        and
        financial officers have concluded that these controls and procedures are
        not
        effective and do not meet the requirements thereof. We are, however, working
        diligently on having these requirements met. Disclosure controls and procedures
        include, without limitation, controls and procedures designed to ensure that
        information required to be disclosed by us in the reports that we file under
        the
        Exchange Act is recorded, processed, summarized and reported, within the
        time
        periods specified in the Securities and Exchange Commission's rules and forms,
        and that such information is accumulated and communicated to our management,
        including our principal executive and financial officers, as appropriate
        to
        allow timely decisions regarding required disclosure.
  (b) Changes
        in Internal Control Over Financial Reporting .
        There
        were no significant changes in our internal control over financial reporting
        identified in connection with the evaluation required by Exchange Act Rule
        13a-15(d) or Rule 15d-15(d) that occurred during the period covered by this
        quarterly report, or to our knowledge in other factors, that have materially
        affected, or are reasonably likely to materially affect, our internal control
        over financial reporting.
  12
  **PART
        III**
  **Item
        9. Directors, Executive Officers, Promoters and Control Persons.**
 Name
                
                Age
                
                PositionGary
                    Herman
                
                42
                
                Chairman
                    of the Board, Chief Executive Officer, and SecretarySkuli
                    Thorvaldsson
                
                65
                
                Director,
                    Chief Financial Officer, TreasurerSigurdur
                    Jon Bjornsson
                
                40
                
                Former
                    Director, Resigned April 2005
  Directors
  Gary
        Herman .
        Mr.
        Herman was elected to the Board of Directors in May 2001 and became Chairman
        and
        Chief Executive officer in January 2002. Mr. Herman is also a Managing Member
        of
        Galloway Capital Management, LLC. as well as a Managing Director with Arcadia
        Securities LLC., an NASD registered broker -dealer based in New York. Prior
        to
        this, from 1997 to 2002, he was an investment banker with Burnham Securities,
        Inc. Prior to joining Burnham, he was the managing partner of Kingshill Group,
        Inc., a merchant banking and financial firm with offices in New York and
        Tokyo.
        Mr. Herman is currently Chairman of the Board of DataMetrics Corporation
        and a
        director of Shells Seafood Restaurant, Inc. Mr. Herman has a B.S. from the
        State
        University of New York at Albany.
  Skuli
        Thorvaldsson. Mr.
        Thorvaldsson has been a member of the Board of Directors since May 1996.
        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 technology 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.
  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 resigned from the board of the Company
        in
        April 2005. He had no disagreements with the directors of the
        Company.
  13
  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,
        2005
        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, 2005; 2004; and 2003.
  (a) Summary
        Compensation Table
  Awards
                
                Payouts
                
                Payouts
                
                Long
                    term CompensationName
                    and Principal Position
                
                Year
                
                Compensation
                
                Bonus
                
                Other
                    Annual Compensation
                
                Restricted
                    Stock Awards
                
                Securities
                    Underlying Options
                
                LTIP
                    Payouts
                
                All
                    Other CompensationGary
                    Herman Chairman & CEO
                
                
                2005
                
                $
                79,850
                    *
                
                
                0
                
                
                0
                
                
                0
                
                
                1,750,000
                
                
                0
                
                
                02004
                
                $
                34,750
                    *
                
                
                -0-
                
                
                -0-
                
                
                0
                
                
                0
                
                
                0
                
                
                02003
                
                $
                21,700
                    *
                
                
                0
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                -0-Skuli
                    ThorvaldssonCFO
                
                
                2005
                
                
                -0-
                
                
                0
                
                
                0
                
                
                0
                
                
                1,250,000
                
                
                0
                
                
                02004
                
                
                -0-
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                02003
                
                
                -0-
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
  *
          The
          compensation listed above is in the form of consulting payments to GH Ventures,
          LLC, Mr. Gary Herman or a related entity and Skuli
          Thorvaldsson.
  14
  Executive
        Compensation
  GH
        Ventures LLC, an entity of which Gary Herman is the sole member, provides
        services as the Company's Chairman, Chief Executive Officer, Secretary and
        Management Consultant. Due to the limited available working capital of the
        Company, he has received minor compensation since taking office in January
        2002.
        Although Mr. Herman does not receive any recurring compensation, he is
        compensated from time to time for his services and as funds are available.
        In
        the future, Messrs. Herman and Thorvaldsson will be paid pursuant to a
        compensation agreement approved by the Board of Directors.
  Skuli
        Thorvaldsson is the Company's Chief Financial Officer. He has received no
        cash
        compensation for his services as Chief Financial Officer or as a consultant
        to
        the Company, since taking office in February 2002 due to the Company’s lack of
        working capital.
  In
          October 2005, the Company awarded to each of its current directors, Gary
          Herman
          and Skuli Thorvaldsson, as well as to a former director and significant
          shareholder, Bruce Galloway, options to
          purchase 11,190,000 shares of common stock at exercise prices ranging from
          of
          $.01 per share to $
          .1385
          and expiring through June 2015. These options, awarded for services rendered
          in
          connection with past services, including the restructuring of the Company
          in
          fiscal year 2002; director services; and other services, were valued at
          approximately $1,246,500 and charged to earnings in the fiscal year ended
          June
          30, 2006.. The Company’s Board of Directors has approved this compensation for
          services rendered to the Company by Messrs. Herman and Thorvaldsson contingent
          upon the receipt of a fairness opinion from an independent advisory firm,
          which
          has not yet been approved by the Board. Further, the Company finalized
          compensation agreements for Messrs. Herman and Thorvaldsson which include
          amounts to be paid for past services to the Company for the calendar years
          2002,
          2003, 2004, 2005 and 2006.
  **Item
        11. Security Ownership of Certain Beneficial Owners and Management**
  The
        following table sets forth information as of November 8, 2006, with respect
        to
        officers, directors and persons who are known by the Company to be beneficial
        owners of more than 5% of the Company's Common Stock. Except as otherwise
        indicated, the Company believes that the beneficial owners of the Common
        Stock
        listed below, based on information furnished by such owners, have sole
        investment and voting power with respect to such shares, subject to community
        property laws where applicable.
  Shareholder
              
              Shares
              
              PercentageBruce
                  R. Galloway (1)
              
              
              10,970,566
              
              
              20.37Skuli
                  Thorvaldsson (2)
              
              
              1,650,000
              
              
              3.04Gary
                  Herman (3)
              
              
              2,355,000
              
              
              8.68Officers
                  and Directors as a group
              
              
              4,005,000
              
              
              11.57Total
                  Outstanding shares
              
              
              53,864,165
  15
  (1)
Includes
 (i)
                  2,898,000
                      shares held by an investment fund, Strategic Turnaround Equity
                      Partners,
                      LP (Cayman) (“STEP”) which is managed by Galloway Capital Management, LLC.
                      Mr. Galloway, a managing member of Galloway Capital Management,
                      LLC
                      disclaims beneficial ownership of the shares held by STEP except
                      to the
                      extent of being a limited partner in STEP. Mr. Galloway, along
                      with Mr.
                      Gary Herman, also a member of Galloway Capital Management,
                      LLC, has the
                      discretion to vote and sell all of these
                      shares;
 (ii)
                  4,513,701
                      shares of common stock owned by Mr. Galloway
                      individually;
 (iii)
                  1,947,361
                      held by Mr. Galloway’s Individual Retirement
                      Account;
 (iv)
                  1,040,404
                      shares owned by Jacombs Investments, Ltd for which Mr. Galloway
                      has the
                      power to vote and dispose such
                      shares;
 (v)
                  47,500
                      shares of common stock held by RexonGalloway Capital Growth,
                      LLC an
                      investment company in which Mr. Galloway is a member and for
                      which Mr.
                      Galloway retains full investment and voting discretion;
                      and
 (vi)
                  523,600
                      shares held by Mr. Galloway’s children for which he has the power to vote
                      and dispose.
  (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 an exercise
          price of $.01 per share through June 2015. Also
          includes 2,898,000 shares held by an investment fund Strategic Turnaround
          Equity
          Partners, LP (Cayman) (“STEP”) which is managed by Galloway Capital Management,
          LLC. Mr. Herman, a managing member of Galloway Capital Management, LLC
          disclaims
          beneficial ownership of the shares held by STEP except to the extent of
          being a
          limited partner in STEP. Mr. Herman, along with Mr. Bruce Galloway, also
          a
          member of Galloway Capital Management, LLC, has the discretion to vote
          and sell
          all of these share.
  **Item
        12. Certain Relationships and Related Transactions.**
  None
  **Item
        13. Exhibits and Report**
 (a)
                
                Exhibits3.1.1
                
                Certificate
                    of Incorporation. (1)3.1.2
                
                Agreement
                    and Plan of Reorganization and First Addendum dated December
                    5, 1983.
                    (1)3.1.3
                
                Certificate
                    of Merger dated January 23, 1984. (1)3.1.4
                
                Articles
                    of Merger dated January 27, 1984. (1)3.1.5
                
                Articles
                    of Amendment to Articles of Incorporation dated January 27, 1984.
                    (1)3.1.6
                
                Amendment
                    to Articles of Incorporation dated January 27, 1986.
                    (1)3.1.7
                
                Articles
                    of Amendment to Articles of Incorporation dated June 28, 1996.
                    (1)3.1.8
                
                Articles
                    of Amendment to Articles of Incorporation dated July 31, 2000.
                    (3)3.2
                
                Bylaws.
                    (1)4.2
                
                Certificate
                    of Designation of Series A Preferred Stock. (1)4.10
                
                Certificate
                    of Designation of Series B Preferred Stock. (1)4.4
                
                Certificate
                    of Designation of Series C Preferred Stock of Warrant to Burnham
                    Securities Inc. (1)4.5
                
                Certificate
                    of Designation of Series D Preferred Stock. (1)10.11
                
                Form
                    of Warrant exercisable at $1.51 per share.
                    (1)
  16
  10.12
                  
                  Form
                      of Warrant to Burnham Securities Inc. (1)10.13
                  
                  Form
                      of Stock Option to Employees. (1)10.18
                  
                  Form
                      of agreement with holders of Series a Preferred Stock.
                      (1)10.25.
                  
                  Agreement
                      and Plan of Merger between the Company and IMSI (n/k/a Broadcaster,
                      Inc.).
                      dated August 31, 2001.(4)10.26
                  
                  Loan
                      Purchase Agreement between the Company and Union Bank of California
                      dated
                      August 22, 2001. (4)10.29
                  
                  Option
                      Agreement with Martin Wade dated June 1, 2001.10.30
                  
                  Memorandum
                      of Agreement between the Company, Ralph Sorrentino and RJS
                      Consulting
                      Corp. dated October 30, 2001.10.31
                  
                  Purchase
                      Agreement between ATI (Delaware) and PAT Franchise dated February
                      28,
                      2002. (5)10.32
                  
                  Common
                      Stock Purchase Agreement among the Company, DCDC (Delaware)
                      and PAT
                      Services, dated February 28, 2002. (4)10.33
                  
                  Guaranty
                      and security Agreement between PAT Franchise and the Company
                      dated
                      February 28, 2002. (5)10.34
                  
                  Pledge
                      Agreement between PAT Services and the Company dated February
                      28, 2002.
                      (5)10.35
                  
                  Amended
                      and Restated Senior Secured Promissory Note in favor of the
                      Company dated
                      February 28, 2002. (5)10.36
                  
                  Promissory
                      Note Conversion and General Release dated February 28, 2002
                      between the
                      Company and IMSI (n/k/a BCSR) (5)10.37
                  
                  Sale
                      Agreement between International Microcomputer Software, Inc.
                      and the
                      Company dated November, 2001_for the sale of Keynomics, Inc.
                      (7)10.38
                  
                  Note
                      Purchase Agreement between the Company and KGS Holdings, Ltd.
                      dated June,
                      2002.10.39
                  
                  Settlement
                      Agreement between the Company and Ralph Sorrentino dated January,
                      2003.
                      (7)10.40
                  
                  Settlement
                      Agreement between the Company and Raymond DeMarco, Michael
                      Morley and Gil
                      Holland dated March, 2003. (7)10.42
                  
                  Promissory
                      Note in favor of IMSI (n/k/a BCSR) dated September 18, 2003.
                      (6)10.43
                  
                  Promissory
                      Note issued by Access Propeller, LLC in favor of the Company
                      dated
                      September, 2003. (6)10.44
                  
                  Amendment
                      No.1 to the Promissory Note in favor of IMSI (n/k/a BCSR) dated
                      September
                      18, 2004. (6)10.45
                  
                  Assignment
                      Agreement of the Promissory Note between the Company, International
                      Microcomputer Software, Inc. and Multi Magi Corporation dated
                      as of
                      February 3, 2005. (7)10.46
                  
                  Amendment
                      No.2 to the Promissory Note in favor of Multi Mag dated June
                      5, 2005.
                      (7)10.47
                  
                  Code
                      of Ethics (8)10.48
                  
                  Amendment
                      No. 3 to the Promissory Note in favor of Multi Mag dated December
                      14,
                      2005.10.49
                  
                  Amendment
                      No. 4 to the Promissory Note in favor of Multi Mag dated May
                      31,
                      2006.10.50
                  
                  Amendment
                      No. 5 to the Promissory Note in favor of Multi Mag dated May
                      30,
                      2007.
 
 17
  List
        of
        Subsidiaries (3)
 1
                
                Previously
                    Filed with Form 10-SB Declared Effective on August 12,
                    19972
                
                Previously
                    filed with Form 10-KSB for the year ended June 30, 19993
                
                Previously
                    filed with Form 10-KSB for the year ended June 30, 20004
                
                Previously
                    filed with Form 8-K filed on September 19, 20015
                
                Previously
                    filed with Form 8-K filed on March 15, 20026
                
                Previously
                    filed with Form 8-K filed on October 20, 20047
                
                Previously
                    filed with Form 10-KSB for the year ended June 30, 20028
                
                Previously
                    filed with Form 10-KSB for the year ended June 30,
                    2004
  **Item
        14. Principal Accountant Fees and Services.**
  The
        following table presents fees for professional audit services rendered by
        Miller, Ellin & Company, LLP for the audit of our annual financial
        statements and fees for other services for the years ended June 30, 2005
        and
        2004:
 **2005**
              
              **2004**Audit
                  fees: (1)
              
              $
              36,000
              
              $
              84,000Audit
                  related fees: (2)
              
              
              None
              
              
              NoneTax
                  fees: (3)
              
              
              None
              
              
              NoneAll
                  other fees: (4)
              
              
              None
              
              
              NoneTotal
              
              $
              36,000
              
              $
              84,000
 **Policy
          on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services
          of
          Independent Auditors**
  18
  We
        do not
        currently have an Audit Committee and all actions that would otherwise be
        handled by the Audit Committee are undertaken by our full Board of Directors.
        If
        and when we find a suitable merger candidate and we successfully enter into
        a
        merger transaction whereby a company with assets and operations survives,
        we
        intend to establish an Audit Committee that fulfills the independent and
        other
        requirements promulgated by the SEC. However, recognizing the SEC policies
        regarding auditor independence, our Board of Directors has responsibility
        for
        appointing, setting compensation and overseeing the work of the independent
        auditor. In recognition of this responsibility, our Board of Directors has
        established a policy to pre-approve all audit and permissible non-audit services
        provided by the independent auditor.
  Prior
        to
        engagement of the independent auditor for the next year’s audit, management will
        submit an aggregate of services expected to be rendered during that year
        for
        each of the following four categories of services to our Board of Directors
        for
        approval.
  1. ***Audit*** services
        include audit work performed in the preparation of financial statements,
        as well
        as work that generally only the independent auditor can reasonably be expected
        to provide, including comfort letters, statutory audits, and attest services
        and
        consultation regarding financial accounting and/or reporting standards.
  2. ***Audit-Related*** services
        are for assurance and related services that are traditionally performed by
        the
        independent auditor, including due diligence related to mergers and
        acquisitions, employee benefit plan audits, and special procedures required
        to
        meet certain regulatory requirements.
  3. ***Tax*** services
        include all services performed by the independent auditor’s tax personnel except
        those services specifically related to the audit of the financial statements,
        and includes fees in the areas of tax compliance, tax planning, and tax advice.
  4. ***Other
        Fees*** are
        those associated with services not captured in the other categories.
  Prior
        to
        engagement, our Board of Directors pre-approves these services by category
        of
        service. The fees are budgeted and our Board of Directors requires the
        independent auditor and management to report actual fees versus the budget
        periodically throughout the year by category of service. During the year,
        circumstances may arise when it may become necessary to engage the independent
        auditor for additional services not contemplated in the original pre-approval.
        In those instances, our Board of Directors requires specific pre-approval
        before
        engaging the independent auditor.
  Our
        Board
        of Directors may delegate pre-approval authority to one or more of its members.
        The member to whom such authority is delegated must report, for informational
        purposes only, any pre-approval decisions to our Board of Directors at its
        next
        scheduled meeting.
  Our
        Board
        of Directors pre-approved the retention of Miller, Ellin & Company, LLP for
        all audit, audit-related and tax services during fiscal 2005 and
        2004.
  19
 **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:
            June 29, 2007
  By:
            /s/
            Gary Herman
  Gary
            Herman, Chairman and CEO June 29, 2007
  By:
            /s/
            Skuli Thorvaldsson
  Skuli
            Thorvaldsson, Chief Financial Officer  June 29, 2007
  20




**Digital
      Creative Development Corporation Index to Consolidated Financial
      Statements**




Report
      of
      independent accounting firm





Consolidated
      Balance Sheets





Consolidated
      Statements of Operations




Consolidated
      Statements of Stockholders' Equity (Deficiency)





Consolidated
      Statements of Cash Flows





Notes
      to
      Consolidated Financial Statements




21




**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, 2005 and 2004, 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, 2005 and 2004, 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 May 9, 2007




22




**DIGITAL
          CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
          BALANCE SHEETS**
 **JUNE
          30, 2005 AND 2004**
 **2005**
                
                **2004****(in
                    thousands)****ASSETS****CURRENT
                    ASSETS**Cash
                    and cash equivalents
                
                $
                111.5
                
                $
                5.1Marketable
                    securities
                
                
                1,120.1
                
                
                1,905.3**TOTAL
                    CURRENT ASSETS**
                
                
                1,231.6
                
                
                1,910.4.**OTHER
                    ASSETS**Marketable
                    securities and non-marketable securities and advances, net of
                    $
                    300,000at
                    June 30,2005
                
                
                7,834.8
                
                
                8,155.9**TOTAL
                    ASSETS**
                
                **$**
                **9,066.4**
                
                **$**
                **10,066.3****LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES**Accrued
                    expenses and other liabilities
                
                $
                607.1
                
                $
                264.8Current
                    portion of notes payable--related parties
                
                
                938.6
                
                
                240.1**TOTAL
                    CURRENT LIABILITIES**
                
                
                1,545.7
                
                
                504.9**NOTES
                    PAYABLE - RELATED PARTIES****NET
                    OF CURRENT MATURITIES**
                
                
                -
                
                
                724.8**TOTAL
                    LIABILITIES**
                
                
                1,545.7
                
                
                1,229.7**STOCKHOLDERS'
                    EQUITY**Preferred
                    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 30,2005 and 2004
                
                
                516.5
                
                
                516.5Additional
                    paid in capital
                
                
                38,364.9
                
                
                37,916.9Accumulated
                    other comprehensive income
                
                
                5,587.6
                
                
                6,309.7Accumulated
                    deficit
                
                
                (38,203.2
                )
                
                (37,161.4
                )**TOTAL
                    STOCKHOLDERS' EQUITY**
                
                
                7,520.7
                
                
                8,836.6**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                **$**
                **9,066.4**
                
                **$**
                **10,066.3**
  **See
          accompanying Notes to Consolidated Financial Statements**
  23
  **DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**
 **FOR
        THE YEARS ENDED JUNE 30, 2005 AND 2004**
  **2005**
              
              **2004****(in
                  thousands)****TOTAL
                  REVENUE**Dividend
                  interest income, and other income
              
              $
              -
              
              $
              -**OPERATING
                  EXPENSES**General
                  and administrative expenses
              
              
              996.4
              
              
              154.3**(LOSS)
                  FROM OPERATIONS**
              
              
              (996.4
              )
              
              (154.3
              )**OTHER
                  INCOME (EXPENSE)**Interest
                  expense, net and other
              
              
              (134.1
              )
              
              (49.1
              )Realized
                  gains (losses) net of unrealized gain on investments
              
              
              367.3
              
              
              (108.1
              )Impairment
                  of investments
              
              
              (300.0
              )
              
              -Settlement
                  of litigation with former employees
              
              
              21.4
              
              
              -**TOTAL
                  OTHER INCOME (EXPENSE)**
              
              
              (45.4
              )
              
              (157.2
              )**NET
                  LOSS**
              
              
              **(1,041.8**
              **)**
              
              **(311.5**
              **)****UNDECLARED
                  PREFERRED STOCK DIVIDENDS**
              
              
              (145.5
              )
              
              (145.5
              )**Net
                  Loss available to common shareholders**
              
              **$**
              **(1,187.3**
              **)**
              **$**
              **(457.0**
              **)****BASIC
                  AND DILUTED INCOME (LOSS) PER SHARE**
              
              $
              (0.02
              )
              $
              (0.01
              )**WEIGHTED
                  AVERAGE NUMBER OF OUTSTANDING SHARES FOR****BASIC
                  AND DILUTED EARNINGS PER SHARE**
              
              
              51,649.2
              
              
              51,357.5**NET
                  INCOME (LOSS)**
              
              $
              (1,041.8
              )
              $
              (311.5
              )**Other
                  comprehensive operations****Gain
                  (Loss) on marketable securities**
              
              
              (722.1
              )
              
              4,380.7**Comprehensive
                  net income (loss)**
              
              $
              (1,763.9
              )
              $
              4,069.2
  **See
        accompanying Notes to Consolidated Financial Statements**
  24
  **DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' EQUITY**
 **FOR
        THE YEARS ENDED JUNE 30, 2005 AND 2004**
 **(in
        thousands)**
  **Accumulated****Additional**
              
              **Other****Preferred
                  Stock**
              
              **Common**
              
              **Paid-in**
              
              **Comprehensive**
              
              **Accumulated****Series
                  A**
              
              **Series
                  C**
              
              **Series
                  D**
              
              **Stock**
              
              **Capital**
              
              **Operations**
              
              **Deficit**
              
              **Total****Balance
                  at June 30, 2003**
              
              **$**
              **2.2**
              
              **$**
              **852.7**
              
              **$**
              **400.0**
              
              **$**
              **476.5**
              
              **$**
              **37,916.9**
              
              **$**
              **1,929.0**
              
              **$**
              **(36,849.9**
              **)**
              **$**
              **4,727.4**Exercise
                  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**
              
              **$**
              **(37,161.4**
              **)**
              **$**
              **8,836.6**Unrealized
                  loss on investments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (722.1
              )
              
              
              
              
              (722.1
              )Interest
                  and compensation charges for issuance ofstock
                  options and warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              448.0
              
              
              
              
              
              
              
              
              448.0Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,041.8
              )
              
              (1,041.8
              )**Balance
                  at June 30, 2005**
              
              **$**
              **2.2**
              
              **$**
              **852.7**
              
              **$**
              **400.0**
              
              **$**
              **516.5**
              
              **$**
              **38,364.9**
              
              **$**
              **5,587.6**
              
              **$**
              **(38,203.2**
              **)**
              **$**
              **7,520.7**
  **See
        accompanying Notes to Consolidated Financial Statements**
  25
  **DIGITAL
          CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED JUNE 30, 2005 AND 2004**
 **2005**
                
                **2004****(in
                    thousands)**CASH
                    FLOWS FROM OPERATING ACTIVITES:Net
                    loss
                
                $
                (1,041.8
                )
                $
                (311.5
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Amortization
                    of debt discount
                
                
                16.1
                
                
                96.9Realized
                    (gain) loss on investments
                
                
                (21.8
                )
                
                15.0Stock
                    based compensation
                
                
                448.0
                
                
                -Gain
                    realized on settlement of litigation with former employees
                
                
                (21.4
                )
                
                -Changes
                    in assets and liabilities:Increase
                    in accounts payable, accrued expenses and other
                    liabilities
                
                
                310.2
                
                
                47.1NET
                    CASH USED IN OPERATING ACTIVITIES
                
                
                (310.7
                )
                
                (152.5
                )CASH
                    FLOWS FROM INVESTING ACTIVITES:Sale
                    of investments
                
                
                1,425.7
                
                
                69.0Purchase
                    of investments
                
                
                (987.6
                )
                
                (300.0
                )NET
                    CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
                
                
                438.1
                
                
                (231.0
                )CASH
                    FLOWS FROM FINANCING ACTIVITES:Proceeds
                    from issuance of common stock
                
                
                -
                
                
                40.0Proceeds
                    from issuance of notes payable—related
                    parties
                
                
                -
                
                
                376.1Payments
                    of note payable to related parties
                
                
                (21.0
                )
                
                (28.5
                )NET
                    CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
                
                
                (21.0
                )
                
                387.6NET
                    CHANGE IN CASH AND CASH EQUIVALENTS
                
                $
                106.4
                
                $
                4.1CASH
                    AND EQUIVALENTS, beginning of year
                
                
                5.1
                
                
                1.0CASH
                    AND EQUIVALENTS, end of year
                
                $
                111.5
                
                $
                5.1**Supplemental
                    disclosure of noncash transactions:**Conversion
                    of loan receivable into 304,250 shares of preferred stock
                
                $
                -
                
                $
                300.0
  **See
        accompanying Notes to Consolidated Financial Statements**
  26




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY** ****


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




**1.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




PRINCIPLES
      OF CONSOLIDATION




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




ORGANIZATION




Digital
      Creative Development Corporation (the "Company" or "Digital") was originally
      founded in 1969 as Arthur Treacher's Fish & Chips, Inc., a Delaware
      corporation. 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.




27




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




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 in International Microcomputer Software,
      Inc.(“IMSI”), (n/k/a Broadcaster, Inc). Since 1982, IMSI (n/k/a
      Broadcaster, Inc.) had been a developer and publisher of productivity software
      in precision design, graphics design and other related business applications,
      as
      well as graphics and CAD (Computer Aided Design) software and internet
      technology. On June 2, 2006 IMSI closed its acquisition of AccessMedia Networks,
      Inc. The combined company operates under the name Broadcaster, Inc., and expects
      to globally launch an Internet entertainment network (See “Subsequent
      Events”).




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




The
      Company accounts 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.




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.




28




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




FAIR
      VALUE OF FINANCIAL INSTRUMENTS




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




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




**RECENT
      ACCOUNTING PRONOUNCEMENTS**





The
      Financial Accountings Standards Board has issued FASB Statement No. 154,
      "Accounting Changes and Error Corrections", which changes the requirements
      for
      the accounting for and reporting accounting changes and error corrections for
      both annual and interim financial statements, effective for 2006 financial
      statements. The Company has not determined what the effect, if any, will be
      on
      the Company's financial statements.





Management
      does not believe that any other recently issued, but not yet effective
      accounting pronouncements, if adopted, would have a material effect on the
      accompanying financial statements.




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.




29




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




INCOME
      TAXES




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




PER
      SHARE
      DATA




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




CONCENTRATIONS
      AND CREDIT RISK




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




**2.
      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, 2005 and 2004, as follows:




June
                30, 2005
            
            June
                30, 2004Marketable
                Securities-current:Broadcaster,
                Inc., (formerly IMSI)
            
            $
            679,200
            
            $
            679,200Other
                marketable securities
            
            
            87,600
            
            
            216,000766,800
            
            
            895,200Unrealized
                gain on marketable securities
            
            
            1,161,800
            
            
            1,010,100Total
            
            $
            1,928,600
            
            $
            1,905,300




30




**DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **June
        30, 2005 and 2004**




Marketable
                Securities - non-current:Broadcaster,
                Inc.(formerly IMSI)
            
            $
            2,597,200
            
            $
            2,800,900Access
                Propeller Holdings, Inc.
            
            
            300,000
            
            
            300,0002,897,200
            
            
            3,100,900Unrealized
                gain on marketable securities
            
            
            4,429,100
            
            
            5,055,000Less:
                allowance for impairments
            
            
            (300,000
            )
            
            -0-Total
            
            $
            7,026,300
            
            $
            8,155,900





The
        table
        above excludes $3,560,000 of investments formally written off in June 2005;
        these investments had previously been fully reserved as the result of the
        recording of an impairment loss because the Company had concluded that
        recoverability of its investments in such entities was unlikely and improbable
        based upon its review of the current financial status of each entity. The
        shares
        of Broadcaster, Inc. 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 Broadcaster, Inc.'s then outstanding shares of common stock.
        In
        the event that Broadcaster, Inc. 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
        Broadcaster, Inc.'s common stock for the four weeks preceding the Company's
        filing of a notice of sale with the SEC. Further, in connection with the
        merger
        with AccessMedia Networks, Inc., the Board of Directors of Broadcaster, Inc.
        approved the execution of a Lock-Up Agreement which provides that the
        Company may transfer up to two (2) percent of its holdings of Broadcaster
        in
        each sixty (60) day period following the Closing Date as defined in the merger
        agreement. That agreement expired June 2,2007. 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 200,000 shares of Broadcaster, Inc. common stock
        secures the Company's 15% $325,000 Promissory Note which Broadcaster, Inc.
        sold
        to Multi Mag Corporation in January 2005 and approximately 373,845 shares
        of Broadcaster, Inc. common stock secure the $345,000 Notes to investors.
        The
        shares reflect the 1 for 2 reverse stock split of Broadcaster's shares effected
        at June 30, 2007.




On
      September 18, 2003 the Company extended a bridge loan to Access Propeller
      Holdings Inc. (“Access”) in the sum of $300,000. All the assets of Access secure
      this loan. 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 3%, resulting principally from the Company’s decision not to
      participate in subsequent rounds of financing of Access. After reviewing the
      most recent financial history of Access and the prospective earnings and
      liquidity situation, it was decided to record a full allowance of the Company’s
      investment in Access. Therefore, effective June 30, 2005, the Company recorded
      an impairment loss for the total amount of its investment in Access.




31




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




**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, 2005 and 2004, the Company’s long term debt consisted of the following:





June
                30, 2005
            
            June
                30, 2004Secured
                Promissory Note with Interest at 15%
            
            $
            325,000
            
            $
            350,000$345,000
                Secured Promissory Notes with Interest at 10%, net of discount
            
            
            345,000
            
            
            328,800Notes
                payable to certain former executives
            
            
            115,000
            
            
            111,100Debt
                due to former employees in conjunction with settlement
                agreement
            
            
            153,600
            
            
            175,000Total
            
            
            938,600
            
            
            964,900Less:
                Current portion
            
            
            938,600
            
            
            240,100$
            -0-
            
            $
            724,800




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. On January 23, 2007, Mr. Wade
      agreed to extend the maturity date of this note to May 31 ,2007. The Company's
      management is confident that future extensions, if necessary can be obtained,
      but there can be no assurance that the Company will be able to obtain these
      extensions, if needed.




32




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




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 equally assumed
      the balance of the note, and on December 14, 2006 the Company and,Messrs.
      Galloway and Herman extended the maturity date of the note to May 31 ,2007.
      The
      Company's management is confident that future extensions, if necessary, can
      be
      obtained, but there can be no assurance of this.




Throughout
      the period from July 1, 2001 through June 30, 2005, Mr. Bruce Galloway, the
      Company's former chairman, and Gary Herman had advanced monies at 10% to allow
      the company to satisfy operating expenses.




The
      amounts outstanding to both Mr. Galloway and Mr. Herman totaled $51,000, before
      accrued interest, at June 30, 2005 and 2004. The due dates of all of these
      related party notes to current and former directors have been extended to May
      31, 2007. Subsequently, from July 1, 2005 to the present, the Company has needed
      to borrow funds from Mr. Herman and GH Ventures LLC to satisfy occasional cash
      shortfalls. These funds have amounted to a total of $56,700 with varying
      interest rates from 8% to 10%. A total of $33,600 of these funds have been
      repaid.




On
      September 18, 2003, the Company entered into a 15% one-year note with IMSI
      (n/k/a Broadcaster Inc.) whereby we borrowed $350,000. The note was due, with
      interest, on September 18, 2004. In addition, 200,000 shares of IMSI (n/k/a
      Broadcaster) common stock currently owned by the Company secure this note.
      The
      agreement provided that the Company not sell any of its holdings in Broadcaster
      common stock with the exception of private sales of Broadcaster common stock,
      until February 15, 2004. Concurrent with this note on February 25, 2003, the
      Company repaid Broadcaster the entire principal portion of a $50,000 note.
      That note was unsecured and bore interest at 4%. The shares reflect the 1 for
      2
      stock split of Broadcaster's shares effected June 30, 2007.




On
      September 18, 2004, the Company and IMSI (n/k/a Broadcaster Inc.) 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 IMSI
      (n/k/a Broadcaster Inc.) as additional collateral, its ownership stake in
      Access Propeller, LLC. Further, the Company made a principal payment of $25,000
      on September 30, 2004, reducing the principal amount of the Note to $325,000.




On
      January 31, 2005, IMSI (n/k/a Broadcaster Inc.)  sold and assigned the
      Note to Multi-Mag Corporation ("Multi-Mag"). On May 31, 2005, the Company and
      Multi-Mag executed Amendment #2 to the Promissory Note. This amendment provided
      that the Company pays all accrued interest due from September 19, 2004 through
      May 31, 2005 under the Note to Multi-Mag no later than June 30, 2005. On June
      17, 2005 the Company remitted this payment of $38,979.





On
      December 14, 2005, the Company and Multi-Mag executed Amendment #3 to the Note
      This amendment provided that the Note was extended to May 31, 2006 upon the
      payment of accrued interest from June 18, 2005 through December 23, 2005 in
      the
      amount of $22,572.




33




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




On
      May
      31, 2006, the Company and Multi-Mag executed Amendment #4 to the Note. This
      amendment provided that the maturity date on the Note was extended to December
      31, 2006 upon the payment of accrued interest from December 23, 2005 through
      May
      31, 2006 in the amount of $21,263.





On
        May
        30, 2007, the Company and Multi-Mag executed Amendment # 5 to the Note. This
        amendment provided the
        maturity date on the Note was extended to December 31, 2007 upon the payment
        of
        accrued interest from June 1, 2006 through May 31, 2007 in the amount of
        $48,750
        payable no later than July 15, 2007.




In
        April
        2003 the Company issued $345,000 of secured promissory notes to a group of
        seven
        investors. The notes matured in August 2005 and bore interest at 10%. In
        addition, for each $60,000 of notes issued, the Company issued a warrant
        to
        purchase 1,000,000 shares of stock at an exercise price of $.01 per share.
        A
        total of 5,750,000 warrants were exercised at a price of $.01 per share.
        These
        warrants were valued at $392,500 and charged to interest expense. The notes
        are
        collateralized by 1,026,785 shares of Broadcaster, Inc. (formerly IMSI)
        common stock currently held by the Company. The proceeds of this offering
        were
        used to repay a $300,000 loan due to Mr. Galloway and for the Company’s working
        capital requirements.  The shares reflect the 1 for 2 reverse
        stock split of Broadcaster's shares effected June 25, 2007.




The
        number of shares of Broadcaster, Inc. Common Stock pledged as Collateral
        was
        subject to adjustment one year after the initial closing date based on the
        30-day trailing average of the bid prices of shares of Common Stock of
        Broadcaster, Inc. 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 and June 2005 are 373,845 shares.
        The shares reflect the 2 for 1 reverse stock split of Broadcaster's shares
        effected June 25, 2007.




All
        but
        three of the noteholders whose notes total $195,000 have extended their notes
        from December 31, 2005 to May 31, 2006. Additionally in May 2006 the same
        group
        of investors agreed to further extend the maturity dates of their notes to
        December 31, 2006. Subsequently, these noteholders have agreed to further
        extend
        the maturity dates of their notes to May 31, 2007. The Company is currently
        negotiating with these noteholders to further extend the maturity
        date. Although the Company's management is confident that such extension
        can be obtained, there are no assurances that this will
        occur.




On
      July
      10, 2006, the Company, in a private placement transaction, borrowed $90,000
      from
      an unrelated party, the proceeds of which were used to satisfy a liability
      of
      the Company. The Note with the unrelated party bears interest at 12% and was
      due
      July 31, 2006. During November and December 2006, the Company repaid $27,650
      representing a partial payment of the principal and interest due. On December
      21, 2006 the maturity date of the note was extended to January 31, 2007. On
      March 14, 2007, the remaining principal balance of $65,000 and accrued interest
      of $3.750 was paid, retiring the liability.




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




34




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




Related
      interest expense, including those charges associated with the issuance of
      warrants, approximated $485,000 and $194,000 for the years ended June 30, 2005
      and 2004, respectively.




**5.
      INCOME TAXES**




For
      the
      years ended June 30, 2005 and 2004, 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:




2005
            
            2004Federal
                statutory rate
            
            
            34
            %
            
            34
            %Valuation
                allowance on net operating loss carryforwards, and
                investmentwrite-downs
            
            
            (34
            %)
            
            (34
            %)Effective
                income tax rate
            
            
            -0-
            
            
            -0-




Deferred
      income taxes reflect the net tax effect of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. Deferred tax assets result primarily
      from net operating loss carry-forwards. The components of the Company’s deferred
      tax assets and liabilities at June 30, 2005 and 2004 are as follows:




2005
            
            2004Deferred
                tax assets:Operating
                loss carryforwards
            
            $
            3,678,000
            
            $
            2,635,000Write-down
                of investments
            
            
            1,424,000
            
            
            1,424,000Total
                Deferred Tax Asset
            
            
            4,278,000
            
            
            4,059,000Valuation
                Allowance
            
            
            (4,278,000
            )
            
            (4,059,000
            )$
            -0-
            
            $
            -0-




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




35




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




operating
      loss carryforward of approximately $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 disposition 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.




As
      of
      June 30, 2005, the Company had federal net operating loss carry forwards of
      $9,195,000 available to offset future federal taxable income. The federal net
      operating loss carry-forwards expire in varying amounts through 2025.




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 7,000,000 and 11,612,904 stock options and warrants excluded from
      the
      computation of Diluted EPS for the years ended June 30, 2005 and 2004,
      respectively, as their effect on the computation of Diluted EPS would have
      been
      anti-dilutive.




36




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




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




June
                30,2005
            
            2004(in
                thousands)Numerator:Basic
              and Diluted:Loss
              attributable to common shareholders
            
            $
            (1,041.8)
            
            $
            (311.5)Denominator:Weighted
                average common shares outstanding for basic and full
                dilution
            
            
            51,649.2
            
            
            51,357.5Basic
                and Diluted Per Share Information:Net
                loss
            
            $
            (0.02
            )
            $
            (0.01
            )




**7.
      STOCK OPTIONS AND STOCK WARRANTS**




During
      2005, the Company granted 3,750,000 stock options, at an exercise price of
      $0.01
      per share to certain officers and directors of the Company and to a former
      director in connection with past services to the Company. There were no grants
      during the 2004 year. Also, see “Subsequent Events” note elsewhere herein for
      information on options granted to officers and directors subsequent to June
      30,
      2005.




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:




37




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




OPTIONS
            
            WEIGHTED
                AVERAGE EXERCISE PRICE
            
            WARRANTS
            
            WEIGHTED
                AVERAGE EXERCISE PRICEOutstanding
                -June 30,2003
            
            
            8,855,494
            
            $
            .42
            
            
            7,505,002
            
            $
            .10Expired
            
            
            (374,165
            )
            $
            .74
            
            
            (373,427
            )
            $
            .44Exercised
            
            
            -0-
            
            
            -0-
            
            
            (4,000,000
            )
            $
            .01Issued
            
            
            -0-
            
            
            -
            
            
            -0-
            
            
            --Outstanding
                -June 30,2004
            
            
            8,481,329
            
            $
            .41
            
            
            3,131,575
            
            $
            .18Expired
            
            
            (6,731329
            )
            $
            .47
            
            
            (1,631,575
            )
            $
            .34Exercised
            
            
            -0-
            
            
            -
            
            
            -0-
            
            
            -Issued
            
            
            3,750,000
            
            $
            .01
            
            
            -0-
            
            
            -Outstanding
                -June 30,2005
            
            
            5,500,000
            
            $
            .0557
            
            
            1,500,000
            
            $
            .01




**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.




**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.




38




**GITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




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, 2005 and
      2004, the Company had accumulated and unpaid dividends of approximately $641,100
      and $555,800, 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 $24,900 and $24,700 for the years ended June 30, 2005 and 2004,
      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 are convertible into 400,000 shares of Common Stock for no
      additional consideration at the option of the holder of the stock The amount
      of
      accumulated and unpaid dividends was approximately $405,000 and $345,000 at
      June
      30, 2005 and 2004, respectively.




39




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




For
      the
      years ended June 30, 2005 and 2004, the Company issued the following common
      shares:




June
                  30,2005
            
            2004Exercise
                of stock warrants
            
            
            -0-
            
            
            4,000,000




**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 (n/k/a
      Broadcaster, Inc.) 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 had 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. Subsequent cash payments reduced
      this obligation to its current amount of $103,350.




On
      February 21, 2006 the principals of CineBlast filed a legal action seeking
      payment of the outstanding balances ($103,350) owed to them, plus the amount
      of
      the  debt reduced by formula ($21,400), and legal fees. On April 25, 2006
      the court dismissed the action against the Company. On August 7, 2006 the court
      denied the Plaintiff’s motion to reargue. In September 2006 ,the Company
      received notice that it was served with another legal action from the principals
      of CineBlast. On November 15, 2006 the parties entered into a settlement
      agreement to satisfy the remaining liability over a period of approximately
      six
      months. As of the filing date of this report, the matter is settled and there
      are no further obligations to the principals of CineBlast.




40




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




**11.
      SUBSEQUENT EVENTS**




The
        Company has sold 520,000 shares of International Microcomputer Software,
        Inc.
        (n/k/a “Broadcaster, Inc.”) from June 30, 2005 to May 31, 2007 and has used the
        proceeds of approximately $658,000 for general working capital purposes.
        These
        shares were sold before the 2 for 1 reverse stock split of  Broadcaster
        shares effected June 25, 2007.




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




On
        occasion, from July 1, 2005 to the present, the Company has needed to borrow
        funds from Mr. Herman and GH Ventures LLC to satisfy occasional cash shortfalls.
        These funds have amounted to a total of $56,700 with varying interest rates
        from
        8% to 10%. A total of $45,750 of these funds have been
        repaid.




In
      October, 2005, the Company awarded to each of its current directors, Gary Herman
      and Skuli Thorvaldsson, as well as to a former director and significant
      shareholder, Bruce Galloway, options to purchase 7,440,000 shares of common
      stock at exercise prices ranging from of $.0732 per share to $0.1385 and
      expiring through June 2015. These options, awarded for services rendered in
      connection with past services, including the restructuring of the Company in
      fiscal year 2002; director services; and other services, were valued at
      approximately $798,500. The Company’s Board of Directors has approved this
      compensation for services rendered to the Company by Messrs. Herman and
      Thorvaldsson upon the receipt of a fairness opinion from an independent advisory
      firm. Further, the Company finalized compensation agreements for Messrs. Herman
      and Thorvaldsson which include amounts to be paid for past services to the
      Company for the calendar years 2002, 2003, 2004, 2005 and 2006.




On
        December 16, 2005, International Microcomputer Software, Inc. (“IMSI”) (n/k/a
“Broadcaster, Inc.”) filed a Form S-4 with the Securities & Exchange
        Commission for the proposed merger with AccessMedia Networks, Inc.  On
        December 14, 2005 the board of the Company approved the execution of a Voting
        Agreement and Irrevocable Proxy in support of the transaction.  Based on
        the proposed transaction, the Company's ownership stake in Broadcaster, was
        reduced from approximately 25% to 11% as a result of the issuance of shares
        of
        common stock of  Broadcaster to the shareholders of AccessMedia Networks.
        If Broadcaster achieves certain performance milestones, the shareholders
        of
        AccessMedia shall be issued additional shares of Broadcaster which shall
        further
        reduce the Company's ownership percentage. On June 2, 2006 IMSI closed its
        acquisition of AccessMedia Networks, Inc. An additional 29.4 million shares
        of
        common stock of Broadcaster were issued to the shareholders of Access Media
        and
        their advisor based upon reaching certain milestones. These share
        issuances have reduced the Company's ownership stake in Broadcaster to
        approximately 6.5 %. The combined company operates under the name Broadcaster,
        Inc., and trades under the ticker symbol BCAS on the OTC Bulletin Board
        (OTCBB).





41




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2005 and 2004**




In
      connection with the transaction, the Board of Directors of the Company approved
      the execution of a Lock-Up Agreement. This lock-up agreement provided that
      the
      Company may transfer up to two (2) percent of its holdings of Broadcaster in
      each sixty (60) day period following the Closing Date as defined in the merger
      agreement. A transfer is defined as a sale, offer, pledge, contract to sell,
      make any short sale of, grant any option for the purchase of, or enter into
      any
      hedging or similar transaction with the same economic effect as a sale, or
      otherwise transfer or dispose of, directly or indirectly. The transfer
      provisions of the lock-up may be waived at the good faith determination of
      Baytree Capital Associates, LLC, the investment banking firm to Broadcaster.
      The
      agreement expired June 2, 2007.  From
      time
      to time, the Company has sold and may sell a certain amount of its holdings
      in
      Broadcaster. The proceeds of any such sales are anticipated to be principally
      used by the Company for general working capital purposes




42