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, 2006




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 September 27, 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.)


$5,000,000


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.









**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 (n/k/a Broadcaster, Inc.) (“Broadcaster”). The Company was to merge into a
      wholly owned subsidiary of Broadcaster. Shareholders of the Company were to
      exchange shares of common stock of the Company for Broadcaster common stock
      constituting approximately 51% of the issued and outstanding common stock of
      Broadcaster. 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
      Broadcaster to Union Bank of California, which note was to have been cancelled
      upon consummation of the merger.




On
        February 28, 2002, the Company and Broadcaster 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 Broadcaster plus $250,000 in cash to
        be paid
        in 15 monthly installments. The parties agreed to terminate the merger
        contemplated by the Merger Agreement. Broadcaster 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 Broadcaster 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 September 27, 2007, the closing bid price of
        common stock of Broadcaster (symbol BCAS) as quoted on the OTC Bulletin Board
        was $2.30.




Since
      1982, and up until June 2006, Broadcaster 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. Broadcaster, 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 Broadcaster 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 Broadcaster was reduced from
        approximately 25% to approximately 11% as a result of the issuance of shares
        of
        common stock of Broadcaster to the shareholders of AccessMedia. Under the
        merger
        agreement, if Broadcaster achieved certain performance milestones, the
        shareholders of AccessMedia were to be issued additional shares
        of Broadcaster which would 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 September 27, 2007, the
        closing bid price of common stock of Broadcaster (symbol BCAS) as quoted
        on the
        OTC Bulletin Board was $2.30.






2




**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.




3




Employees




As
      of
      June 30, 2006 and through the current date, the Company has no employees. Gary
      Herman, the Company’s Chairman, Chief Executive Officer, President and Secretary
      and Vincent De Lorenzo the Company’s Chief Financial Officer serve on a
      management consulting basis. Mr. De Lorenzo became Chief Financial Officer
      effective July 12, 2007 upon the resignation of Skuli Thorvaldsson , effective
      July 12, 2007.




Acquisitions




The
      Company‘s investments as of June 30, 2006 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 September
      26,
      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 Broadcaster’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.




4




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 after it no longer controlled Broadcaster to comply with the
      provisions of the Act since it no longer controls Broadcaster. If the SEC takes
      the view that the Company has been operating and continues to operate as an
      unregistered investment company in violation of the Act, and does not provide
      the Company with a sufficient period to either register as an investment company
      or divest itself of investment securities and/or acquire non-investment
      securities, the Company may be subject to significant potential penalties.




In
      the
      absence of exemptions granted by the SEC (which are discretionary in nature
      and
      require the SEC to make certain findings), the Company would be required either
      to register as a closed-end investment company or a business development company
      under the Act, 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 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.






**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 a formula in the original agreement ($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.






5




**Item
      4. Submission of Matters to a Vote of Security Holders.**




**None**




**PART
      II**




**Item
      5. Market for Common Equity and Related Stockholder Matters.**




The
        following table sets forth the high and low prices for the periods indicated
        as
        reported by the National Daily Quotation Service, Inc. between dealers and
        do
        not include retail mark-ups, mark-downs, or commissions and do not necessarily
        represent actual transactions, as reported by the National Association of
        Securities Dealers Composite Feed or other qualified inter-dealer quotation
        medium. On September 27, 2007 the closing bid price was $.12 /share.




2005
                Fiscal YearFirst
                Quarter
            
            $
            .18
            
            $
            .08Second
                Quarter
            
            $
            .14
            
            $
            .04Third
                Quarter
            
            $
            .18
            
            $
            .09Fourth
                Quarter
            
            $
            .15
            
            $
            .09




2006
                Fiscal YearFirst
                Quarter
            
            $
            .19
            
            $
            .11Second
                Quarter
            
            $
            .15
            
            $
            .07Third
                Quarter
            
            $
            .19
            
            $
            .19Fourth
                Quarter
            
            $
            .38
            
            $
            .15




2007
                Fiscal YearFirst
                Quarter
            
            $
            .38
            
            $
            .13Second
                Quarter
            
            $
            .14
            
            $
            .07Third
                Quarter
            
            $
            .23
            
            $
            .10Fourth
                Quarter
            
            $
            .22
            
            $
            .10




6




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 September 27, 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 $1,216,450 as of June 30, 2006.






**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.




7




**Results
      of Operations Fiscal 2006 and Fiscal 2005**





The
      Company had no operating revenues in fiscal years 2006 and 2005. General and
      administrative expenses decreased by $732,000 from $996,400 principally due
      to
      the nonrecurrence of stock based compensation and expenses, reflecting issuances
      of stock options with exercise prices below current market prices which the
      Company incurred in the 2005 fiscal year. Total Other Expense declined $104,900
      from fiscal 2005 principally due to gains on sales of securities and further,
      there was an impairment of investments of $300,000 recorded in the 2005 fiscal
      year. The net effect of the aforementioned resulted in a net loss of $204,900
      in
      the 2006 fiscal year compared to a $1.1 million loss for the 2005 fiscal year.





**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 a $311,500 loss for the 2004 fiscal year.




**LIQUIDITY
      AND CAPITAL RESOURCES**




The
      Company’s current liabilities exceeded its current assets by $138,600 at June
      30, 2006, compared to current liabilities exceeding its current assets by
      $314,100 at June 30, 2005. The change in working capital is principally due
      to
      the increase in market value of the Company’s holdings in Broadcaster, Inc The
      Company had cash or cash equivalents of $73,400 and $111.500 at June 30, 2006
      and 2005, respectively. Marketable securities—current portion, had a market
      value of approximately $1.3 million and $1.1 million at June 30, 2006 and June
      30, 2005, respectively; this increase is principally due to the increase in
      market value of the Company’s holdings in Broadcaster common shares addressed
      above. Marketable securities—noncurrent portion were $9.6 million and $7.8
      million at June 30, 2006 and June 30, 2005, respectively, which increase
      reflected the increase in market value of the Company’s holdings in Broadcaster
      common shares. Current and Total Liabilities were $1.5 million at both June
      30,
      2006 and at June 30, 2005.




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 have extended the maturity dates of
      their notes to December 31, 2007.


.


8




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%.




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 (n/k/a Broadcaster, Inc.) whereby we borrowed $350,000. The Note
      was
      due, with interest, on September 18, 2004. 200,000 shares of Broadcaster common
      stock (which gives effect to the 1 for 2 reverse stock split of Broadcaster
      shares on June 25, 2007) currently owned by DCDC secure the Note. On September
      18, 2004, the Company and Broadcaster entered into an amendment to the Note
      that
      extended the due date and provided for the Company to provide Broadcaster as
      additional collateral, its ownership stake in Access Propeller, LLC.




On
      January 5, 2005, Broadcaster sold and assigned the Note, which then had a
      principal amount of $325,000, to Multi-Mag Corporation ("Multi-Mag"). 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.
      This
      amount was paid on August 8 2007 and no default was declared.




9




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’s 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 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. 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 295,300 shares of IMSI (n/k/a Broadcaster, Inc.) from June
      30,
      2006 to May 31, 2007 and has used the proceeds of approximately $385,300 for
      general working capital purposes. These shares were sold before the 1 for 2
      reverse split of Broadcaster effected June 25, 2007. Additionally, 125,800
      shares of Broadcaster were sold from June 25, 2007 to August 31, 2007; the
      proceeds of approximately $268,800 were used for general working capital
      purposes.





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





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




**QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





The
      Company’s equity investments are concentrated in relatively few investees,
      principally Broadcaster, Inc. At June 30, 2006, 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.






10




**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.




**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,
                Former Chief Financial Officer, Treasurer Resigned July
                2007Vincent
                De Lorenzo
            
            61
            
            Chief
                Financial Officer, Treasurer




Directors




Gary
      Herman .
      Mr.
      Herman was elected to the Board of Directors in May 2001 and became Chairman
      and
      Chief Executive officer in January 2002. Mr. Herman is also a Managing Member
      of
      Galloway Capital Management, LLC. as well as a Managing Director with Arcadia
      Securities LLC., 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 Restaurants, Inc. Mr. Herman has a B.S. from the
      State University of New York at Albany.




11




Skuli
      Thorvaldsson. Mr.
      Thorvaldsson has been a member of the Board of Directors since May 1996. From
      February 2002 to July 2007, Mr. Thorvaldsson was the Company’s Chief Financial
      Officer. Mr. Thorvaldsson is a private entrepreneur/investor. From 1980 to
      2003,
      Mr. Thorvaldsson was the Chief Executive Officer of the Hotel Holt in Reykjavík,
      Iceland. He is a director of 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.





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




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




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




The
      Company has adopted a Code of Ethics, which is administered by the Board of
      Directors. A copy is available upon request from the Company. 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,
      2006
      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, 2006; 2005; and 2004.




(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
            
            
            2006
            
            
            96,300
            
            
            0
            
            
            0
            
            
            0
            
            
            1,250,000
            
            
            0
            
            
            02005
            
            $
            79,850
                *
            
            
            0
            
            
            0
            
            
            0
            
            
            1,750,000
            
            
            0
            
            
            02004
            
            $
            34,750
                *
            
            
            -0-
            
            
            -0-
            
            
            0
            
            
            0
            
            
            0
            
            
            0Skuli
              Thorvaldsson
              CFO
            
            
            2005
            
            
            -0-
            
            
            0
            
            
            0
            
            
            0
            
            
            1,250,000
            
            
            0
            
            
            02004
            
            
            -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.




12




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 was the Company's Chief Financial Officer through July 11, 2007.
      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 made a contingent award to each of its current
      directors, Gary Herman and Skuli Thorvaldsson, as well as an award to a former
      director and significant shareholder, Bruce Galloway, options to purchase
      7,440,000 shares of common stock at exercise prices ranging from of $.0732
      per
      share to $0.1385 and expiring through June 2015. These options, awarded for
      services rendered in connection with past services, including the restructuring
      of the Company in fiscal year 2002; director services; and other services,
      were
      valued at approximately $798,500.





The
      Company’s Board of Directors has approved this compensation for services
      rendered to the Company by Messrs. Herman and Thorvaldsson contingent upon
      the receipt of a fairness opinion from an independent advisory firm and approval
      of such fairness opinion by the Board of Directors. That fairness opinion has
      been received but not as yet approved by the Board. The value of the related
      awards will approximate $798,500 and be charged to earnings in the first quarter
      of fiscal 2008. 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 July 10, 2007, 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.




13




Shareholder
              
              Shares
              
              PercentageBruce
                  R. Galloway (1)
              
              
              10,970,566
              
              
              20.37Skuli
                  Thorvaldsson (2)
              
              
              1,650,000
              
              
              3.04Gary
                  Herman (3)
              
              
              4,828,100
              
              
              8.68Officers
                  and Directors as a group
              
              
              6,653,100
              
              
              11.84Total
                  Outstanding shares
              
              
              53,864,165




(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 4,000 shares of Series D Preferred Stock into
      400,000 shares of Common Stock for no additional consideration.




(3)
      Includes options to purchase 1,750,000 shares of Common Stock at an exercise
      price of $.01 per share through June 2015. Also includes 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
      shares.




**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)




14


10.12
            
            Form
                of Warrant to Burnham Securities Inc. (1)10.13
            
            Form
                of Stock Option to Employees. (1)10.18
            
            Form
                of agreement with holders of Series a Preferred Stock.
                (1)10.25.
            
            Agreement
                and Plan of Merger between the Company and International Microcomputer
                Software, Inc. (n/k/a BCAS). dated August 31, 2001.(4)10.26
            
            Loan
                Purchase Agreement between the Company and Union Bank of California
                dated
                August 22, 2001. (4)10.29
            
            Option
                Agreement with Martin Wade dated June 1, 2001.10.30
            
            Memorandum
                of Agreement between the Company, Ralph Sorrentino and RJS Consulting
                Corp. dated October 30, 2001.10.31
            
            Purchase
                Agreement between ATI (Delaware) and PAT Franchise dated February
                28,
                2002. (5)10.32
            
            Common
                Stock Purchase Agreement among the Company, DCDC (Delaware) and PAT
                Services, dated February 28, 2002. (4)10.33
            
            Guaranty
                and security Agreement between PAT Franchise and the Company dated
                February 28, 2002. (5)10.34
            
            Pledge
                Agreement between PAT Services and the Company dated February 28,
                2002.
                (5)10.35
            
            Amended
                and Restated Senior Secured Promissory Note in favor of the Company
                dated
                February 28, 2002. (5)10.36
            
            Promissory
                Note Conversion and General Release dated February 28, 2002 between
                the
                Company and IMSI (n/k/a BCAS) (5)10.37
            
            Sale
                Agreement between International Microcomputer Software, Inc. and
                the
                Company dated November, 2001_for the sale of Keynomics, Inc.
                (7)10.38
            
            Note
                Purchase Agreement between the Company and KGS Holdings, Ltd. dated
                June,
                2002.10.39
            
            Settlement
                Agreement between the Company and Ralph Sorrentino dated January,
                2003.
                (7)10.40
            
            Settlement
                Agreement between the Company and Raymond DeMarco, Michael Morley
                and Gil
                Holland dated March, 2003. (7)10.42
            
            Promissory
                Note in favor of IMSI (n/k/a BCAS) dated September 18, 2003.
                (6)10.43
            
            Promissory
                Note issued by Access Propeller, LLC in favor of the Company dated
                September, 2003. (6)10.44
            
            Amendment
                No.1 to the Promissory Note in favor of IMSI (n/k/a BCSR) dated September
                18, 2004. (6)10.45
            
            Assignment
                Agreement of the Promissory Note between the Company, International
                Microcomputer Software, Inc. and Multi Mag Corporation dated as of
                February 3, 2005. (7)10.46
            
            Amendment
                No.2 to the Promissory Note in favor of Multi Mag dated June 5, 2005.
                (7)10.47
            
            Code
                of Ethics (8)10.48
            
            Amendment
                No. 3 to the Promissory Note in favor of Multi Mag dated December
                14,
                2005.10.49
            
            Amendment
                No. 4 to the Promissory Note in favor of Multi Mag dated May 31,
                2006.10.50
            
            Amendment
                No. 5 to the Promissory Note in favor of Multi Mag dated May 30,
                2007.(9)


List
      of
      Subsidiaries (3)





1
            
            Previously
                Filed with Form 10-SB Declared Effective on August 12,
                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
              9
            
            Previously
                filed with Form 10-KSB for the year ended June 30, 2004
              Previously
                filed with Form 10-KSB for the year ended June 30,
                2005





15




**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, 2006 and
      2005:


**2006**
            
            **2005**Audit
                fees: (1)
            
            $
            50,000
            
            $
            36,000Audit
                related fees: (2)
            
            
            None
            
            
            NoneTax
                fees: (3)
            
            
            None
            
            
            NoneAll
                other fees: (4)
            
            
            None
            
            
            NoneTotal
            
            $
            50,000
            
            $
            36,000




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





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




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




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




16


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 2006 and
      2005.




**SIGNATURES**




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




DIGITAL
      CREATIVE DEVELOPMENT CORPORATION (Registrant)




Date:
        October 2, 2007




By:
      /s/ Gary Herman




Gary
        Herman, President October 2, 2007




By:
      /s/ Vincent De Lorenzo




Vincent
        De Lorenzo, Chief Financial Officer October 2,
        2007




17




**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




18




**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, 2006 and 2005, 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, 2006 and 2005, 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 September
        28, 2007




19


**DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND
                  SUBSIDIARY****CONSOLIDATED
                  BALANCE SHEETS****JUNE
                  30, 2006 AND 2005**
 **ASSETS**
  **2006**
              
              **2005****(in
                  thousands)****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              73.4
              
              $
              111.5Marketable
                  securities
              
              
              1,302.0
              
              
              1,120.1**TOTAL
                  CURRENT ASSETS**
              
              
              1,375.4
              
              
              1,231.6.**OTHER
                  ASSETS**Marketable
                  securities and non-marketable securities and advances, net of $
                  300,000at
                  June 30,2006 and June 30,2005
              
              
              9,565.1
              
              
              7,834.8**TOTAL
                  ASSETS**
              
              **$**
              **10,940.5**
              
              **$**
              **9,066.4****LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accrued
                  expenses and other liabilities
              
              $
              599.9
              
              $
              607.1Current
                  portion of notes payable--related parties
              
              
              914.1
              
              
              938.6**TOTAL
                  CURRENT LIABILITIES**
              
              
              1,514.0
              
              
              1,545.7**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; Issued and
                  Outstanding:51,689,165
                  Shares at June 30,2006 and 51,649,165 Shares at June 30,2005
              
              
              516.9
              
              
              516.5Additional
                  paid in capital
              
              
              38,370.1
              
              
              38,364.9Accumulated
                  other comprehensive income
              
              
              7,692.7
              
              
              5,587.6Accumulated
                  deficit
              
              
              (38,408.1
              )
              
              (38,203.2
              )**TOTAL
                  STOCKHOLDERS' EQUITY**
              
              
              9,426.5
              
              
              7,520.7**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              10,940.5
              
              **$**
              **9,066.4**
  **See
          accompanying Notes to Consolidated Financial
          Statements**




20


**DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND
                  SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                  INCOME****FOR
                  THE YEARS ENDED JUNE 30, 2006 AND
                  2005**
  **2006**
              
              **2005****(in
                  thousands)****REVENUE**
              
              $
              -
              
              $
              -**OPERATING
                  EXPENSES**General
                  and administrative expenses
              
              
              264.4
              
              
              996.4**LOSS
                  FROM OPERATIONS**
              
              
              (264.4
              )
              
              (996.4
              )**OTHER
                  INCOME (EXPENSE)**Interest
                  expense, net and other
              
              
              (35.7
              )
              
              (134.1
              )Realized
                  gains (losses) net of unrealized gain on investments
              
              
              170.5
              
              
              367.3Impairment
                  of investments
              
              
              -
              
              
              (300.0
              )Settlement
                  of litigation with former employees
              
              
              -
              
              
              21.4Other
                  settlements
              
              
              (75.3
              )
              
              -**TOTAL
                  OTHER INCOME (EXPENSE)**
              
              
              59.5
              
              
              (45.4
              )**NET
                  LOSS**
              
              **$**
              **(204.9**
              **)**
              **$**
              **(1,041.8**
              **)****UNDECLARED
                  PREFERRED STOCK DIVIDENDS**
              
              
              (145.5
              )
              
              (145.5
              )**Net
                  Loss available to common shareholders**
              
              **$**
              **(350.4**
              **)**
              **$**
              **(1,187.3**
              **)****WEIGHTED
                  AVERAGE NUMBER OF OUTSTANDING SHARES FOR****BASIC
                  AND DILUTED EARNINGS PER SHARE**
              
              
              51,680.1
              
              
              51,649.2**BASIC
                  AND DILUTED LOSS PER SHARE**
              
              $
              (0.01
              )
              $
              (0.02
              )**NET
                  LOSS**
              
              $
              (204.9
              )
              $
              (1,041.8
              )**Other
                  comprehensive operations****Gain
                  (Loss) on marketable securities**
              
              
              2,105.1
              
              
              (722.1
              )**Comprehensive
                  net income (loss)**
              
              $
              1,900.2
              
              $
              (1,763.9
              )**See
                  accompanying Notes to Consolidated Financial
                  Statements**


21


**DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND
                  SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' EQUITY****FOR
                  THE YEARS ENDED JUNE 30, 2006 AND
                  2005**
  **(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, 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**Unrealized
                  gain on investments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,105.1
              
              
              
              
              
              2,105.1Issuance
                  of common stock for services
              
              
              
              
              
              
              
              
              
              
              
              0.4
              
              
              5.2
              
              
              
              
              
              
              
              
              5.6Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (204.9
              )
              
              (204.9
              )**Balance
                  at June 30, 2006**
              
              **$**
              **2.2**
              
              **$**
              **852.7**
              
              **$**
              **400.0**
              
              **$**
              **516.9**
              
              **$**
              **38,370.1**
              
              **$**
              **7,692.7**
              
              **$**
              **(38,408.1**
              **)**
              **$**
              **9,426.5**
  **See
                  accompanying Notes to Consolidated Financial
                  Statements**


22


**DIGITAL
                  CREATIVE DEVELOPMENT CORPORATION AND
                  SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS****FOR
                  THE YEARS ENDED JUNE 30, 2006 AND
                  2005**
  **2006**
              
              **2005****(in
                  thousands)**CASH
                  FLOWS FROM OPERATING ACTIVITES:Net
                  loss
              
              $
              (204.9
              )
              $
              (1,041.8
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Amortization
                  of debt discount
              
              
              -
              
              
              16.1Realized
                  gain on investments net of unrealized gains on investments
              
              
              (170.4
              )
              
              (21.8
              )Stock
                  based compensation
              
              
              -
              
              
              448.0Issuance
                  of stock for services
              
              
              5.6
              
              
              -Gain
                  realized on settlement of litigation with former employees
              
              
              -
              
              
              (21.4
              )Changes
                  in assets and liabilities:Increase
                  (decrease) in accounts payable, accrued expenses and other
                  liabilities
              
              
              (7.2
              )
              
              310.2NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (376.9
              )
              
              (310.7
              )CASH
                  FLOWS FROM INVESTING ACTIVITES:Proceeds
                  from sale of investments
              
              
              363.3
              
              
              1,425.7Purchase
                  of investments
              
              
              -
              
              
              (987.6
              )NET
                  CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
              
              
              363.3
              
              
              438.1CASH
                  FLOWS FROM FINANCING ACTIVITES:Proceeds
                  from issuance of notes payable--related parties
              
              
              26.7
              
              
              -Payments
                  of notes payable to related parties
              
              
              (1.0
              )
              
              (21.0
              )Payments
                  of other long term debt
              
              
              (50.2
              )
              
              -NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              (24.5
              )
              
              (21.0
              )NET
                  CHANGE IN CASH AND CASH EQUIVALENTS
              
              $
              (38.1
              )
              $
              106.4CASH
                  AND EQUIVALENTS, beginning of year
              
              
              111.5
              
              
              5.1CASH
                  AND EQUIVALENTS, end of year
              
              $
              73.4
              
              $
              111.5Cash
                  payments for:Interest
                  expense
              
              $
              43.9
              
              $
              39.00Income
                  taxes
              
              $
              -
              
              $
              -**Supplemental
                  disclosure of noncash transactions:**None
              
              $
              -
              
              $
              -
  **See
                  accompanying Notes to Consolidated Financial
                  Statements**


23
 
  **DIGITAL
        CREATIVE DEVELOPMENT CORPORATION AND
        SUBSIDIARY**


**NOTE
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**




**1.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




PRINCIPLES
      OF CONSOLIDATION




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




ORGANIZATION




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




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 its restaurant business from its
        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.




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





24


**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**




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 operates 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 whereby the grant date
        fair
        value of the stock bond awards are charged to expenses over their vesting
        period.




CASH
      AND
      CASH EQUIVALENTS




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




FAIR
      VALUE OF FINANCIAL INSTRUMENTS




In
      determining the fair value of its financial instruments, the Company uses a
      variety of methods and assumptions that are based on market conditions and
      risks
      existing as of each balance sheet date. 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.




25




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**





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.




In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement 123R, Share-Based Payment. As a result of the conversion, this
      statement would be effective for all employee awards granted, modified, or
      settled after June 30, 2006. Adoption of this standard could materially
      impact the amount of salaries and employee benefits incurred in future years
      if
      the Company adopts a stock award program.




In
      June
      2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
      Income Taxes—An Interpretation of FASB No. 109 (“FIN 48”). FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 is effective for fiscal years beginning after
      December 31, 2006. The Company is currently evaluating the impact of the
      adoption of FIN 48, with respect to its results of operation, financial
      position, and liquidity.





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.





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.




26




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**










**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, 2006 and 2005, as follows:




June
                30, 2006
            
            June
                30, 2005Marketable
                Securities-current:Broadcaster,
                Inc., (formerly IMSI)
            
            $
            380,400
            
            $
            679,200Other
                marketable securities
            
            
            -0-
            
            
            87,600380,400
            
            
            766,800Unrealized
                gain on marketable securities
            
            
            921,600
            
            
            1,161,800Total
            
            $
            1,302,000
            
            $
            1,928.600







Marketable
                Securities - non-current:Broadcaster,
                Inc.(formerly IMSI)
            
            $
            2,794,300
            
            $
            2,597,200Access
                Propeller Holdings, Inc.
            
            
            300,000
            
            
            300,0003,094,300
            
            
            2,897,200Unrealized
                gain on marketable securities
            
            
            6,770,800
            
            
            4,429,100Less:
                allowance for impairments
            
            
            (300,000
            )
            
            (300,000
            )Total
            
            $
            9,565,100
            
            $
            7,026,300





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 secures 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.





27




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**






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.




**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, 2006 and 2005, the Company’s long term debt consisted of the following:





June
                30, 2006
            
            June
                30, 2005Secured
                Promissory Note with Interest at 15%
            
            $
            325,000
            
            $
            325,000$345,000
                Secured Promissory Notes with Interest at 10%, net of discount
            
            
            345,000
            
            
            345,000Notes
                payable to certain former executives
            
            
            140,794
            
            
            115,000Debt
                due to former employees in conjunction with settlement
                agreement
            
            
            103,350
            
            
            153,600Total
            
            
            914,144
            
            
            938,600Less:
                Current portion
            
            
            914,144
            
            
            938,600$
            -0-
            
            $
            -0-




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. Subsequently,
      on June 14, 2007 Mr. Wade agreed to extend the maturity date of this note to
      December 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.







28




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**




In
      November 2001, Mr. Bernstein, the former President of the Company's Restaurant
      Division advanced the Company $50,000 bearing interest at 12%. The Company
      made
      periodic payments on this debt, totaling approximately $21,500 leaving
      approximately $36,000, which included certain other indebtedness. In May 2004,
      Gary Herman and Bruce Galloway satisfied the remaining obligation to Mr.
      Bernstein on behalf of the Company. Mr. Herman and Mr. Galloway 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.
      Subsequently, on June 14, 2007 Messrs. Galloway and Herman agreed to extend
      the
      maturity date of this note to December 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, 2006, Mr. Bruce Galloway, the
      Company's former chairman, and Gary Herman and a related entity had advanced
      monies with interest rates up to 10% to allow the Company to satisfy operating
      expenses. As of June 30, 2006 the total amount owed to these parties
      approximated $ 91,000.




The
      amounts outstanding to both Mr. Galloway and Mr. Herman totaled $90,700 and
      $51,000, respectively, before accrued interest, at June 30, 2006 and 2005.
      respectively. The due dates of all of these related party notes to current
      and
      former directors have been extended to December 31, 2007. On occasion, from
      July1, 2005 to the present, the Company has needed to borrow funds from Mr.
      Herman and GH Ventures LLC, an affiliate of Mr. Herman, 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 has 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 provided 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.





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




29




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**





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. This amount was
      paid on August 8, 2007 and no default was declared.




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 373,845 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 2006 and June 2005 are 373,845 shares.
        The shares reflect the 1 for 2 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 these notes to
      December 31, 2006. Subsequently, these noteholders have agreed to further extend
      the maturity dates of these notes to May 31, 2007 and additionally to December
      31, 2007. The remaining three noteholders have not agreed to extend and those
      notes are now currently in default.




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. To date, 6,750,000 warrants have
      been exercised.




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.




30




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**




Related
      interest expense, including those charges associated with the issuance of
      warrants, approximated $_96,000 and $485,000 for the years ended June 30, 2006
      and 2005, respectively.








**5.
      INCOME TAXES**




For
      the
      years ended June 30, 2006 and 2005, 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:




2006
            
            
            2005Federal
                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, 2006 and 2005 are as follows:




2006
            
            2005Deferred
                tax assets:Operating
                loss carryforwards
            
            $
            3,748,000
            
            $
            3,678,000Write-down
                of investments
            
            
            1,424,000
            
            
            1,424,000Total
                Deferred Tax Asset
            
            
            5,172,000
            
            
            4,278,000Valuation
                Allowance
            
            
            (5,172,000,
            )
            
            (4,278,000
            )$
            -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  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:




31




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**











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, 2006, the Company had federal net operating loss carry forwards of
      $5.7
      million available to offset future federal taxable income. The federal net
      operating loss carry-forwards expire in varying amounts through 2026.




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 6,665,000 and 7,000,000 stock options and warrants excluded from
      the
      computation of Diluted EPS for the years ended June 30, 2006 and 2005,
      respectively, as their effect on the computation of Diluted EPS would have
      been
      anti-dilutive.


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




June
                30,2006
            
            2005(in
                thousands)Numerator:Basic
                and Diluted:Loss
                attributable to common shareholders
            
            $
            (204.9
            )
            $
            (1,041.8
            )Denominator:Weighted
                average common shares outstanding for basic and full
                dilution
            
            
            51,680.1
            
            
            51,649.2Basic
                and Diluted Per Share Information:Net
                loss
            
            $
            (.01
            )
            $
            (0.02
            )






32








**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**





**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.





In
      October, 2005, the Company made a contingent award to each of its current
      directors, Gary Herman and Skuli Thorvaldsson, as well as an award to a former
      director and significant shareholder, Bruce Galloway, options to purchase
      7,440,000 shares of common stock at exercise prices ranging from of $.0732
      per
      share to $0.1385 and expiring through June 2015. These options were awarded
      in
      connection with past services to the Company. The Company’s Board of Directors
      has approved this compensation for services rendered to the Company by Messrs.
      Herman and Thorvaldsson contingent upon the receipt of a fairness opinion
      from an independent advisory firm and approval of such fairness opinion by
      the
      Board of Directors. The Board of Directors has not reviewed or approved the
      opinion of the independent advisory firm. If such compensation is granted in
      full, the value of the related awards will approximate $798,500 and be charged
      to earnings at that time.




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




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




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


OPTIONS
              
              WEIGHTED
                  AVERAGE EXERCISE PRICE
              
              WARRANTS
              
              WEIGHTED
                  AVERAGE EXERCISE PRICEOutstanding
                  -June 30,2004
              
              
              8,481,329
              
              $
              ,41
              
              
              3,131,575
              
              $
              .18Expired
              
              
              (6,731,329
              )
              $
              .47
              
              
              (1,631,575
              )
              $
              .34Exercised
              
              
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              -0-Issued
              
              
              3,750,000
              
              
              .01
              
              
              -0-
              
              
              --Outstanding
                  -June 30,2005
              
              
              5,500,000
              
              $
              ..0557
              
              
              1,500,000
              
              $
              .01Expired
              
              
              (335,000
              )
              $
              .4660
              
              
              -0-
              
              $
              -0-Exercised
              
              
              -0-
              
              
              -0--
              
              
              -0-
              
              
              -0--Issued
              
              
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0--Outstanding
                  -June 30,2006
              
              
              5,165,000
              
              $
              .0291
              
              
              1,500,000
              
              $
              .01


33




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**











**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.




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, 2006 and
      2005, the Company had accumulated and unpaid dividends of approximately $726,350
      and $641,100, 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 $25,100 and $24,900 for the years ended June 30, 2006 and 2005,
      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 $465,000 and $405,000 at
      June
      30, 2006 and 2005, respectively.






34


**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**




For
      the
      years ended June 30, 2006 and 2005, the Company issued the following common
      shares:




June
                30,2006
            
            2005Common
                shares issued for services
            
            
            40,000
            
            
            -0-




**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.




**11.
      SUBSEQUENT EVENTS**




The
      Company has sold 295,300 shares of International Microcomputer Software, Inc.
      (n/k/a “Broadcaster, Inc.”) from June 30, 2006 to June 25, 2007 and has used the
      proceeds of approximately $385,300 for general working capital purposes. These
      shares were sold before the 1 for 2 reverse stock split of Broadcaster
      shares effected June 25, 2007. Additionally, 125,800 shares of Broadcaster
      were
      sold from June 25, 2007 to August 31, 2007; the proceeds of approximately
      $268,800 were used for general working capital purposes.




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.






35




**DIGITAL
      CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2006 and 2005**











On
      occasion, from July 1, 2006 to the present, the Company has needed to borrow
      funds from Mr. Herman to satisfy occasional cash shortfalls. These funds have
      amounted to a total of $30,000 with interest rates of 10%. These funds have
      been
      repaid.







On
      June
      25, 2007, Broadcaster effected a 1 for 2 reverse stock split. As of June 25,
      2007, the closing bid price of common stock of Broadcaster as quoted on the
      OTC
      Bulletin Board was $ 2.50.





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 BCAS. This
      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 used by the Company principally for general working
      capital purposes.