SECURITIES
AND EXCHANGE COMMISSION




Washington,
DC 20549




FORM
10-Q







(Mark
One)




x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.




For the
quarterly period ended December 31 , 2008




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




For the
transition period from ________   to ________




Commission
file number: 0-22315




DIGITAL
      CREATIVE DEVELOPMENT CORPORATION(Exact
      Name of Registrant as Specified in Its
Charter)




Utah
              
              34-1413104(State
      or Other Jurisdiction of Incorporation or Organization)
              
              (I.R.S.
      Employer Identification No.)




720
      Fifth Avenue 10th
      Floor, New York, New York 10019(Address
      of Principal Executive
Offices)




(212)
      247-0581(Issuer's
      telephone number, including area code)(Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report)




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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o
              
              Accelerated
      filer oNon-accelerated
      filer o (Do
      not check if a smaller reporting company)
              
              Smaller
      reporting company x










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




As of
February 19, 2009, there were 53,864,165 shares of the issuer’s common stock,
par value $0.01 per share, outstanding.










DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY


FOR
THE SIX MONTHS ENDED


DECEMBER 31
2008





INDEX





Part I - FINANCIAL
      INFORMATIONItem
      1.
                                              INTERIM
      FINANCIAL STATEMENTS
                                              F-1Condensed
      Consolidated Balance Sheets as of December 31, 2008 (Unaudited) and June
      30, 2008
                                              F-1Condensed
      Consolidated (Unaudited) Statements of Operations and Comprehensive Loss
      for the six months and three months ended December 31, 2008 and
      2007
                                              F-2Condensed
      Consolidated (Unaudited) Statement of Stockholders’ Equity for the six
      months ended December 31, 2008
                                              F-3Condensed
      Consolidated Statements of Cash Flow for the for the six months ended
      December 31, 2008 and 2007
                                              F-4Notes
      to Interim Financial Statements
                                              F-5Item
      2.
                                              MANAGEMENT'S
      DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
                                              3Item
      3.
                                              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                              5Item
      4.
                                              CONTROLS
      AND PROCEDURES
                                              5Part
      II
                                              OTHER
      INFORMATIONItem
      1. Legal Proceedings
                                              5Item
      1 A. Risk Factors
                                              6Item
      2. Unregistered Sales of Equity Securities
                                              6Item
      3. Defaults Upon Senior Securities
                                              6Item
      4. Submission of Matters To a Vote
                                              6Item
      5. Other Information
                                              6Item
      6.
                                              EXHIBITS
      AND REPORTS ON FORM 8-K
                                              6Signatures
                                              7Certifications




2




Part 1.
Financial Information





Item 1.
Financial Statements


DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 December 31,2008
                                              
                                              
                                              June 30, 2008(Unaudited)
                                              
                                              
                                              (Audited)(in thousands)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Marketable
      securities
                                              
                                              
                                              335.5
                                              
                                              
                                              
                                              1,171.5TOTAL
      CURRENT ASSETS
                                              
                                              
                                              335.5
                                              
                                              
                                              
                                              1,171.5OTHER
      ASSETSMarketable
      securities available for sale and non-marketable securities net of
      $300,000 at December 31, 2008 and June 30, 2008
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -TOTAL
      ASSETS
                                              
                                              $
                                              335.5
                                              
                                              
                                              $
                                              1,171.5LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)CURRENT
      LIABILITIESAccrued
      expenses and other liabilities
                                              
                                              $
                                              433.9
                                              
                                              
                                              $
                                              370.7Accrued
      interest
                                              
                                              
                                              348.1
                                              
                                              
                                              
                                              300.1Notes
      payable—related parties
                                              
                                              
                                              795.6
                                              
                                              
                                              
                                              795.6TOTAL
      CURRENT LIABILITIES
                                              
                                              
                                              1,577.6
                                              
                                              
                                              
                                              1,466.4STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      Stock 2,000,000 Shares AuthorizedSeries
      A Convertible, Par Value $1 ; 2,200 Shares Issued and Outstanding;
      Involuntary Liquidation Preference of $1 Per Share Plus Accrued and Unpaid
      Dividends
                                              
                                              
                                              2.2
                                              
                                              
                                              
                                              2.2Series
      C, Par Value $100 ; 9,900 Shares Issued and Outstanding; Involuntary
      Liquidation Preference of $100 Per Share Plus Accrued and Unpaid
      Dividends
                                              
                                              
                                              852.7
                                              
                                              
                                              
                                              852.7Series
      D, Par Value $100 ; 4,000 Shares Issued and Outstanding; Involuntary
      Liquidation Preference of $100 Per Share Plus Accrued and Unpaid
      Dividends
                                              
                                              
                                              400.0
                                              
                                              
                                              
                                              400.0Common
      Stock, Par Value $.01; Authorized 75,000,000 Shares; Issued and
      Outstanding: 53,864,165 Shares at December 31, 2008 and June 30,
      2008
                                              
                                              
                                              538.6
                                              
                                              
                                              
                                              538.6Additional
      paid in capital
                                              
                                              
                                              38,380.1
                                              
                                              
                                              
                                              38,380.1Accumulated
      other comprehensive loss
                                              
                                              
                                              (2,399.9
                                              )
                                              
                                              
                                              (1,669.0
                                              )Accumulated
      deficit
                                              
                                              
                                              (39,015.8
                                              )
                                              
                                              
                                              (38,799.5
                                              )TOTAL
      STOCKHOLDERS' EQUITY (DEFICIT)
                                              
                                              
                                              (1,242.1
                                              )
                                              
                                              
                                              (294.9
                                              )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                              
                                              $
                                              335.5
                                              
                                              
                                              $
                                              1,171.5
 
 See
accompanying Notes to Consolidated Financial Statements
  F-1
  DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 (Unaudited)
 
 For the Six Months Ended December 31,
                                                
                                                
                                                For the Three Months Ended2008
                                                
                                                
                                                2007
                                                
                                                
                                                2008
                                                
                                                
                                                2007(in thousands)
                                                
                                                
                                                (in thousands)REVENUE
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -OPERATING
      EXPENSESGeneral
      and administrative expenses
                                                
                                                
                                                83.7
                                                
                                                
                                                
                                                244.
      5
                                                
                                                
                                                
                                                64.9
                                                
                                                
                                                
                                                72.7(LOSS)
      FROM OPERATIONS
                                                
                                                
                                                (83.7
                                                )
                                                
                                                
                                                (244.5
                                                )
                                                
                                                
                                                (64.9
                                                )
                                                
                                                
                                                (72.7
                                                )OTHER
      INCOME (EXPENSE)Interest
      expense, net and other
                                                
                                                
                                                (48.0
                                                )
                                                
                                                
                                                (48.0
                                                )
                                                
                                                
                                                (24.0
                                                )
                                                
                                                
                                                (24.0
                                                )Realized
      gains (losses)
                                                
                                                
                                                (84.6
                                                )
                                                
                                                
                                                147.5
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (7.3
                                                )TOTAL
      OTHER INCOME (EXPENSE)
                                                
                                                
                                                (132.6
                                                )
                                                
                                                
                                                99.5
                                                
                                                
                                                
                                                (24.0
                                                )
                                                
                                                
                                                (31.3
                                                )NET
      LOSS
                                                
                                                
                                                (216.3
                                                )
                                                
                                                
                                                (145.0
                                                )
                                                
                                                
                                                (88.9
                                                )
                                                
                                                
                                                (104.0
                                                )UNDECLARED
      PREFERRED STOCK DIVIDENDS
                                                
                                                
                                                (72.8
                                                )
                                                
                                                
                                                (72.8
                                                )
                                                
                                                
                                                (36.4
                                                )
                                                
                                                
                                                (36.4
                                                )Net
      Loss applicable to common shareholders
                                                
                                                $
                                                (289.1
                                                )
                                                
                                                $
                                                (217.8
                                                )
                                                
                                                $
                                                (125.3
                                                )
                                                
                                                $
                                                (140.4
                                                )WEIGHTED
      AVERAGE NUMBER OF OUTSTANDING SHARES FOR BASIC AND DILUTED EARNINGS PER
      SHARE
                                                
                                                
                                                53,864.2
                                                
                                                
                                                
                                                53,864.2
                                                
                                                
                                                
                                                53,864.2
                                                
                                                
                                                
                                                53,864.2BASIC
      AND DILUTED LOSS PER SHARE
                                                
                                                $
                                                (0.005
                                                )
                                                
                                                $
                                                (0.004
                                                )
                                                
                                                $
                                                (0.002
                                                )
                                                
                                                $
                                                (0.003
                                                )NET
      LOSS
                                                
                                                $
                                                (216.3
                                                )
                                                
                                                $
                                                (145.0
                                                )
                                                
                                                $
                                                (88.9
                                                )
                                                
                                                $
                                                (104.0
                                                )Other
      comprehensive operationsUnrealized
      gain (loss) on marketable securities available for sale
                                                
                                                
                                                (730.9
                                                )
                                                
                                                
                                                (7,786.4
                                                )
                                                
                                                
                                                (213.5
                                                )
                                                
                                                
                                                (6,841.2
                                                )Comprehensive
      net loss
                                                
                                                $
                                                (947.2
                                                )
                                                
                                                $
                                                (7,931.4
                                                )
                                                
                                                $
                                                (302.4
                                                )
                                                
                                                $
                                                (6,945.2
                                                )
 
 See
accompanying Notes to Condensed Consolidated Financial
Statements
  F-2


DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
 FOR
THE SIX MONTHS ENDED DECEMBER 31, 2008
 (in
thousands)
 (unaudited)
 
 AccumulatedAdditional
                                                
                                                
                                                OtherPreferred Stock
                                                
                                                
                                                Common
                                                
                                                
                                                Paid-in
                                                
                                                
                                                Comprehensive
                                                
                                                
                                                AccumulatedSeries A
                                                
                                                
                                                Series C
                                                
                                                
                                                Series D
                                                
                                                
                                                Stock
                                                
                                                
                                                Capital
                                                
                                                
                                                Loss
                                                
                                                
                                                Deficit
                                                
                                                
                                                TotalBalance at June 30, 2008 (audited)
                                                
                                                $
                                                2.2
                                                
                                                
                                                $
                                                852.7
                                                
                                                
                                                $
                                                400.0
                                                
                                                
                                                $
                                                538.6
                                                
                                                
                                                $
                                                38,380.1
                                                
                                                
                                                $
                                                (1,669.0
                                                )
                                                
                                                $
                                                (38,799.5
                                                )
                                                
                                                $
                                                (294.9
                                                )Unrealized
      loss on investments
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (730.9
                                                )
                                                
                                                
                                                
                                                
                                                
                                                
                                                (730.9
                                                )Net
      loss
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (216.3
                                                )
                                                
                                                
                                                (216.3
                                                )Balance
      at December 31, 2008 (unaudited)
                                                
                                                $
                                                2.2
                                                
                                                
                                                $
                                                852.7
                                                
                                                
                                                $
                                                400.0
                                                
                                                
                                                $
                                                538.6
                                                
                                                
                                                $
                                                38,380.1
                                                
                                                
                                                $
                                                (2,399.9
                                                )
                                                
                                                $
                                                (39,015.8
                                                )
                                                
                                                $
                                                (1,242.1
                                                )
  See
accompanying Notes to Consolidated Financial Statements
  F-3
  DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
THE SIX MONTHS ENDED DECEMBER 31,
 (unaudited)
 
 2008
                                                        
                                                        
                                                        2007(in
      thousands)CASH
      FLOWS FROM OPERATING ACTIVITES:Net
      loss
                                                        
                                                        $
                                                        (216.3
                                                        )
                                                        
                                                        $
                                                        (41
      .0
                                                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Net
      realized (gains) losses on marketable securities
                                                        
                                                        
                                                        84.6
                                                        
                                                        
                                                        
                                                        (154.8
                                                        )Changes
      in assets and liabilities:Increase
      (decrease) in accounts payable, accrued expenses and other
      liabilities
                                                        
                                                        
                                                        111.2
                                                        
                                                        
                                                        
                                                        (36.0
                                                        )NET
      CASH USED IN OPERATING ACTIVITIES
                                                        
                                                        
                                                        (20.5
                                                        )
                                                        
                                                        
                                                        (231.8
                                                        )CASH
      FLOWS FROM INVESTING ACTIVITES:Proceeds
      from sale of investments, net of purchases
                                                        
                                                        
                                                        20.5
                                                        
                                                        
                                                        
                                                        241.1NET
      CASH PROVIDED BY INVESTING ACTIVITIES
                                                        
                                                        
                                                        20.5
                                                        
                                                        
                                                        
                                                        241.1CASH
      FLOWS FROM FINANCING ACTIVITES:Payments
      of note payable —related parties
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (1.0
                                                        )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (1.0
                                                        )NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        8.3CASH
      AND EQUIVALENTS, beginning of period
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        5.0CASH
      AND EQUIVALENTS, end of period
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        13.3CASH
      PAYMENTS FOR:Interest
      expense
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        48.7Income
      taxes
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
  See
accompanying Notes to Consolidated Financial Statements


F-4





DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY


NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008


(Unaudited)





NOTE
1- BASIS OF PRESENTATION





The
condensed consolidated financial statements include the accounts of Digital
Creative Development Corporation and its wholly owned subsidiary (collectively,
the "Company").





The
accompanying condensed consolidated financial statements as of December 31, 2008
and for the six months and  three months ended of December 31, 2008
and 2007 are unaudited and have been prepared by the Company in accordance
with the rules and regulations of the Securities and Exchange Commission
relating to interim financial statements. The accompanying consolidated balance
sheet as of June 30, 2008 and other information as of June 30, 2008 has been
derived from the Company's audited annual financial statements. These condensed
financial statements do not include all disclosures provided in the Company's
annual financial statements. The condensed financial statements should be read
in conjunction with the financial statements and notes thereto for the year
ended June 30, 2008 contained in the Company's Form 10-K filed with the
Securities and Exchange Commission. All adjustments of a normal recurring
nature, which, in the opinion of management, are necessary to present a fair
statement of results for the periods have been made. Results of operations are
not necessarily indicative of the results to be expected for the full
year.





NOTE
2- DOUBT AS TO CONTINUING AS A GOING CONCERN





Our
condensed consolidated unaudited financial statements were prepared on the
assumption that we will continue as a going concern. We currently have a working
capital and equity deficit of $1,242,100. Our ability to obtain resources
sufficient to continue to meet our obligations as they come due is dependent on
raising cash through the sale of Broadcaster, Inc. shares and/or raising
additional equity. We intend to use our cash as well as other funds in the event
that they shall be available on commercially reasonable terms, to finance our
activities, although we can provide no assurance that these additional funds
will be available in the amounts or at the times we may require. Management
believes that it can obtain the additional funds necessary to continue its
operations.





NOTE
3- PRINCIPLES OF CONSOLIDATION





The
condensed consolidated financial statements include the accounts of Digital
Creative Development Corporation and its wholly owned subsidiary, (collectively
the "Company"). The Company currently has no active business. However, the
Company was involved in acquiring and investing in software and high technology
companies, with a focus on acquiring controlling interests and has entered into
the software technology industry through the investment in International
Microcomputer Software, Inc. (“IMSI”), (n/k/a
Broadcaster, Inc).  Since 1982, IMSI (n/k/a Broadcaster, Inc.) had been a
developer and publisher of productivity software in precision design, graphics
design and other related business applications, as well as graphics and CAD
(Computer Aided Design) software and internet technology. On June 2, 2006 IMSI
closed its acquisition of AccessMedia Networks, Inc. The combined company
operates under the name Broadcaster, Inc., and operates an Internet
entertainment network.





F-5


DIGITAL CREATIVE DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008


(Unaudited)





NOTE
4- MARKETABLE SECURITIES





The
Company had investments and advances in certain marketable and non-marketable
debt and equity securities at December 31, 2008 (unaudited) and June 30, 2008
(audited) as follows:




(in thousands)December
      31,
                                    2008
                                  
                                  
                                  June 30,
                                    2008(Unaudited)
                                  
                                  
                                  (Audited)Marketable
      Securities - current:Broadcaster,
      Inc., - at cost
                                  
                                  $
                                  2,763.4
                                  
                                  
                                  $
                                  2,868.5Unrealized
      loss on marketable securities
                                  
                                  
                                  (2,427.9
                                  )
                                  
                                  
                                  (1,697.0
                                  )Total
      - at fair market value
                                  
                                  $
                                  335.5
                                  
                                  
                                  $
                                  1,171.5Marketable
      Securities - non-current:Access
      Propeller Holdings, Inc., at cost
                                  
                                  
                                  300.0
                                  
                                  
                                  
                                  300.0Sub
      total
                                  
                                  
                                  300.0
                                  
                                  
                                  
                                  300.0Less:
      allowance for impairments
                                  
                                  
                                  (300.0
                                  )
                                  
                                  
                                  (300.0
                                  )Total
                                  
                                  $
                                  -0-
                                  
                                  
                                  $
                                  -0-





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





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





F-6




DIGITAL CREATIVE DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008


(Unaudited)





Several
of the officers, directors and significant shareholders of Broadcaster were
defendants in an action captioned Paul Goodman v. Spelling, et
al in New York State Supreme Court.  On January 16, 2008,  Mr.
Goodman commenced an action in New York State Supreme Court against Broadcaster
and certain of its officers, directors, and shareholders, seeking monetary
damages “in an amount to be determined but not less than $10 million plus other
special, punitive and compensatory damages” for alleged defamation contained in
a Company filing with the SEC.  Mr. Goodman sought and obtained an ex parte
temporary restraining order, which was vacated by the Court upon hearing
argument from the defendants.   This action had been removed and
transferred to the Federal District Court for the Southern District of New York
and then transferred to United States District Court for the Central District of
California. Management of Broadcaster believes that the action was without merit
and intended to defend it vigorously.





A total
of 200,000 shares of Broadcaster, Inc. common stock secures the Company's 15%
$325,000 Promissory Note to Multi Mag Corporation 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 25, 2007. Due to the recent
decline in the price of shares of Broadcaster, the Notes are now
under-collateralized.





The
Company has sold 116,000 shares of Broadcaster, Inc. from July 1, 2008 through
December 31, 2008. The proceeds of approximately $20,600 have been used for
general working capital purposes.





From time
to time, the Company 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.





NOTE
5- ACCRUED EXPENSES AND OTHER LIABILITIES





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





NOTE
6- NOTES PAYABLE - RELATED PARTIES




At December 31, 2008 (unaudited) and
June 30, 2008 (audited) the Company’s long term debt consisted of the
following:




(in thousands)December
      31,
                                2008
                              
                              
                              June 30,
                                2008(Unaudited)
                              
                              
                              (Audited)Secured Promissory
      Note with Interest at 15%
                              
                              $
                              325.0
                              
                              
                              $
                              325.0Secured
      Promissory Notes with Interest at 10%
                              
                              
                              345.0
                              
                              
                              
                              345.0Notes
      payable to certain former executives and related partieswith
      interest at 10%
                              
                              
                              125.6
                              
                              
                              
                              126.6795.6
                              
                              
                              
                              796.6Less:
      Current portion
                              
                              
                              795.6
                              
                              
                              
                              796.6Long-term
      portion
                              
                              $
                              -
                              
                              
                              $
                              -




F-7




DIGITAL CREATIVE DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008


(Unaudited)





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




On May
30, 2007, the Company and Multi-Mag executed Amendment #5 to the $325,000
Secured Promissory Note. This amendment extended the maturity date of the Note
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 any defaults were waived by
Multi-Mag. The Company and Multi-Mag are currently in negotiations to extend the
due date of the note. The Company’s management is confident that future
extensions can be obtained. Although extensions were obtained in the past, there
can be no assurance that the Company will be able to obtain these extensions, if
needed.





NOTE
7- 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.




NOTE
8- STOCK-BASED COMPENSATION





In
October, 2005, the Company made a contingent award to two of its
current directors, Gary Herman and Skuli Thorvaldsson, as well as an award to a
former director and significant shareholder, Bruce Galloway. The award consisted
of options granted to purchase 7,440,000 shares of common stock at exercise
prices ranging from $.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. 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. 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.




F-8


ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





Statements
contained in this Quarterly Report on Form 10-Q, other than the historical
financial information, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All such
forward-looking statements involve known and unknown risks, uncertainties or
other factors which may cause actual results, performance or achievement of the
Company to be materially different from any future results, performance or
achievement expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, but are not limited to, risks and
uncertainties related to the substantial capital requirements, development of
effective internal processes and systems, the ability to attract and retain high
quality employees, changing overall economy and other risks described herein and
in the Company's June 30, 2008 Annual Report on Form 10-K.




PLAN
OF OPERATION





Digital
Creative Development Corporation (the “Company”) was principally involved in
acquiring and investing in software and high technology companies, with a focus
on acquiring controlling interests. At present, the Company does not have an
operating business except for its interest in Broadcaster, Inc., (OTCBB- BCAS).
The Company has since begun to search for candidates with which to enter into
business combinations or strategic transactions.




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 the Company, 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.





·
            unforeseen
      obligations or liabilities;




The
Company 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 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.





3




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.




RESULTS OF
OPERATIONS





Six Month Period Ended
December 31, 2008 Compared To The Six Month Period Ended December 31,
2007.





Net loss
increased to $216,300 in the six month period ended December 31, 2008 from
$145,000 in the comparable 2007 period, principally due to losses on sales of
securities in the current period totaling $84,600 as compared to gains on sales
of securities of $147,500 in the 2007 period. General and administrative
expenses decreased to $83,700 in the current period from $244,500 due to lower
professional fees, including legal, administrative and accounting
services.





ThreeMonth
Period Ended December 31, 2008 Compared To The Three Month Period Ended December
31, 2007.





Net loss
decreased to $88,900 in the three month period ended December 31, 2008 from
$104,000 in the comparable 2007 period, principally due to losses on sales of
securities in the prior period totaling $7,300 as compared to no losses on sales
of securities in the current period. General and administrative expenses
decreased to $64,900 in the current period from $72,700 in the prior
period.





LIQUIDITY AND CAPITAL
RESOURCES




The
Company's current liabilities exceeded its current assets by approximately
$1,242,100 at December 31, 2008, compared to current liabilities exceeding its
current assets by $294,900 at June 30, 2008. These financial conditions are
principally due the reduced market value of the Company’s investment in
Broadcaster. The Company's total investments at December 31, 2008 were $335,500
compared to $1.2 million at June 30, 2008.




Since the
Company is inactive, except for its interest in Broadcaster, and it is not
contemplated that Broadcaster will declare and pay dividends on its common
stock, the Company depends upon sales of its shares of Broadcaster, Inc common
stock, which are quoted on the OTCBB in order to meet its expenses, unless the
Company could obtain funding from third parties, of which there can be no
assurance. The Company has sold 116,000 shares of Broadcaster, Inc. from July 1,
2008 through December 31, 2008. The proceeds of approximately $20,600 have been
used for general working capital purposes.





The
amount of proceeds available to the Company from the sale of shares of
Broadcaster, Inc depends upon the market for Broadcaster, Inc. shares, 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.





4





The
condensed consolidated unaudited financial statements were prepared on the
assumption that the Company will continue as a going concern. Considering the
working capital and equity deficit of $1,242,100, the Company’s ability to
obtain resources sufficient to continue to meet obligations as they come due is
dependent on raising cash through the sale of Broadcaster, Inc. shares and/or
raising additional equity. However the Company can provide no assurance that
these additional funds will be available in the amounts or at the times
required. Management currently believes that it can obtain the additional funds
necessary to continue its operations.





ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





The
Company’s equity investments are concentrated in Broadcaster, Inc. At December
31, 2008, 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
4. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





The
Company's chief executive officer in conjunction with the chief financial
officer, after evaluating the effectiveness of the Company's "disclosure
controls and procedures" (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this
report (the "Evaluation Date") has concluded that the Company's disclosure
controls and procedures are effective in ensuring that material information
required to be disclosed is included in the reports that it files with the
Securities and Exchange Commission.


This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
 Company’s registered public accounting firm pursuant to temporary rules of
the securities and Exchange Commission that permit the Company to provide only
management’s report in this report.





Changes
in Internal Controls




During
this fiscal quarter,there were no significant changes in the Company's internal
controls over financial reporting or, to the knowledge of the management of the
Company, in other factors that could significantly affect those controls
subsequent to the Evaluation Date.





PART II. OTHER
INFORMATION





Item 1. Legal
Proceedings




The
Company is, from time to time, the subject of litigation, claims and assessments
arising out of matters occurring during the normal operation of the Company's
business. In the opinion of management, the liability, if any, under such
current litigation, claims and assessments, that are material, have been
properly accrued.





5





Item 1A.
Risk Factors


The
Company’s equity investments are concentrated in Broadcaster, Inc. At December
31, 2008, 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 2. Unregistered Sales of Equity
Securities and Uses of Proceeds


None.




Item 3. Defaults upon Senior
Securities


None.





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


None.





Item 5. Other
Information


None.





Item 6. Exhibits And Reports On Form
8-K




(a)
Exhibits: None.




31
              Certification
      pursuant to Rule 13a-14(a) of the Exchange Act32
              Certification
      pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350,
      as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002




(b)
Reports on Form 8-K





None





6





SIGNATURES





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





DIGITAL
      CREATIVE DIGITAL CORPORATIONDated:
      February 23, 2009
                      By:
                      /s/
      Gary HermanName:
      Gary HermanTitle:
      PresidentBy:
                      /s/
      Vincent De LorenzoName:
      Vincent De LorenzoTitle:
      Chief Financial
Officer




7