UNITED
STATESSECURITIES AND EXCHANGE COMMISSIONWashington,
D.C. 20549

_________________

FORM
10-Q





_________________

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

For
the quarterly period ended: September 30, 2012

or

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

For
the transition period from: ______ to ______

_________________





Digital
creative Development corporation

(Exact
name of registrant as specified in its charter)



_________________

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

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

(212) 2470-0581(Registrant’s
telephone number, including area code)

N/A(Former
name or 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  þNo o

Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).  Yes  þNo 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.

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

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  þNo o



APPLICABLE
ONLY TO CORPORATE ISSUERS





|Class                         |  | Outstanding at November 21, 2012
|----------------------------- |  | --------------------------------
|Common stock, $0.01 par value |  | 53,864,165                      
|                              |  |                                 























EXPLANATORY
NOTE



Digital
Creative Development Corporation, Inc. (the “Registrant”) and its professionals were severely impacted by the effects
of Hurricane Sandy and lost power, heat, email, and access to its electronic files for up to 14 days following the storm. Accordingly,
the Registrant was unable to file its Quarterly Report on Form 10-Q for the period ended September 30, 2012 (the “Quarterly
Report”) by the November 14, 2012 filing date applicable to smaller companies.



As
a result of the impact of Hurricane Sandy, the Registrant required additional time to complete its review of the financial statements
for the period ended September 30, 2012.



Pursuant
to the Securities and Exchange Commission’s release 2012-226, the Registrant will remain current and timely in its Exchange
Act Reports by filing its Quarterly Reports on Form 10-Q for the period ended September 30, 2012 on or before December 5, 2012,
not including any extensions allowable under Exchange Act Rule 12b-25.







---













DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

FOR
THE THREE MONTHS ENDED

September
30, 2012



INDEX



|PART
    I - FINANCIAL INFORMATION |                                                                                                                                     
|---------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------
|                                   |                                                                                                                                     
|Item 1.                            | CONSOLIDATED FINANCIAL STATEMENTS                                                                                                   
|                                   |                                                                                                                                     
|                                   | Consolidated Balance Sheets
    as of September 30, 2012 (Unaudited) and June 30, 2012                                              
|                                   |                                                                                                                                     
|                                   | Consolidated
    (Unaudited) Statements of Operations and Comprehensive Loss for the three months  ended September 30, 2012 and 2011
|                                   |                                                                                                                                     
|                                   | Consolidated
    (Unaudited) Statement of Stockholders’ Equity for the three months ended September 30, 2012                        
|                                   |                                                                                                                                     
|                                   | Consolidated (Unaudited)
    Statements of Cash Flows  for the three months ended September 30, 2012 and 2011                       
|                                   |                                                                                                                                     
|                                   | Notes to  Consolidated
    Financial Statements                                                                                     
|                                   |                                                                                                                                     
|Item 2.                            | MANAGEMENT'S DISCUSSION AND
    ANALYSIS AND PLAN OF OPERATION                                                                      
|                                   |                                                                                                                                     
|Item 3.                            | QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK                                                                      
|                                   |                                                                                                                                     
|Item 4.                            | CONTROLS AND PROCEDURES                                                                                                             
|                                   |                                                                                                                                     
|                                   | PART
    II OTHER     INFORMATION                                                                                                   
|                                   |                                                                                                                                     
|Item 1.                            | LEGAL PROCEEDINGS                                                                                                                   
|                                   |                                                                                                                                     
|Item 1 A.                          | RISK FACTORS                                                                                                                        
|                                   |                                                                                                                                     
|Item 2.                            | UNREGISTERED SALES OF EQUITY
    SECURITIES                                                                                         
|                                   |                                                                                                                                     
|Item 3.                            | DEFAULTS UPON SENIOR SECURITIES                                                                                                     
|                                   |                                                                                                                                     
|Item 4.                            | SUBMISSION OF MATTERS TO
    A VOTE                                                                                                 
|                                   |                                                                                                                                     
|Item 5.                            | OTHER INFORMATION                                                                                                                   
|                                   |                                                                                                                                     
|Item 6.                            | EXHIBITS AND REPORTS ON FORM
    8-K                                                                                                
|                                   |                                                                                                                                     
|                                   | Signatures                                                                                                                          
|                                   |                                                                                                                                     
|                                   | Certifications— pursuant
    to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.                                             
|                                   |                                                                                                                                     





F-1

---

















PART
1---FINANCIAL INFORMATION



ITEM
1.   CONSOLIDATED FINANCIAL STATEMENTS



|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                            |                  
|---------------------------------------------------------------------------------- | -----------------
|CONSOLIDATED BALANCE SHEET                                                         |                  
|                                                                                   |                  
|ASSETS                                                                             |                  
|                                                                                   |                  
|                                                                                   |                  
|                                                                                   | September 30,2012
|                                                                                   | (unaudited)      
|CURRENT ASSETS                                                                     | (in thousands)   
|Cash and cash equivalents                                                          | $                
|Investments in Securities                                                          |                  
|TOTAL CURRENT ASSETS                                                               |                  
|                                                                                   |                  
|                                                                                   |                  
|TOTAL ASSETS                                                                       | $                
|                                                                                   |                  
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                     |                  
|                                                                                   |                  
|CURRENT LIABILITIES                                                                |                  
|Accrued expenses and other liabilities                                             | $                
|Accrued Interest                                                                   |                  
|Notes Payable - related payments                                                   |                  
|TOTAL CURRENT LIABILITIES                                                          |                  
|                                                                                   |                  
|                                                                                   |                  
|STOCKHOLDERS' EQUITY (DEFICIT)                                                     |                  
|Preferred Stock 15,000,000 Shares Authorized                                       |                  
|Series A Convertible, Par Value $1, 2200 Shares Issued and                         |                  
|Outstanding, Involuntary Liquidation Preference of $1 Per Share                    |                  
|Plus Accrued and Unpaid Dividends                                                  |                  
|Series C Convertible, Par Value $100, 9,900 Shares Issued and                      |                  
|Outstanding, Involuntary Liquidation Preference of $1 Per Share                    |                  
|Plus Accrued and Unpaid Dividends                                                  |                  
|Series D Convertible, Par Value $100, 4,000 Shares Issued and                      |                  
|Outstanding, Involuntary Liquidation Preference of $1 Per Share                    |                  
|Plus Accrued and Unpaid Dividends                                                  |                  
|Common Stock, Par Value $.01, Authorized 600,000,000 Shares Issued and Outstanding |                  
|53,864,165 share at September 30, 2012 and June 30, 2012                           |                  
|Additional paid in capital                                                         |                  
|Accumulated other comprehensive income                                             |                  
|Accumulated Deficit                                                                |                  
|TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                               |                  
|                                                                                   |                  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                               | $                









See
accompanying notes to consolidated financial statements.



F-2









|DIGITAL
    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY           
|----------------------------------------------------------------------
|CONSOLIDATED
    STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS
|FOR
    THE THREE MONTHS  ENDED SEPTEMBER 30,                         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|REVENUE                                                               
|                                                                      
|                                                                      
|OPERATING EXPENSES                                                    
|                                                                      
|                                                                      
|(LOSS) FROM OPERATIONS                                                
|                                                                      
|                                                                      
|OTHER INCOME (EXPENSE)                                                
|                                                                      
|                                                                      
|NET LOSS                                                              
|                                                                      
|UNDECLARED PREFERRED STOCK
    DIVIDENDS                              
|                                                                      
|Net Loss applicable to common
    shareholders                        
|                                                                      
|                                                                      
|WEIGHTED AVERAGE NUMBER OF
    OUTSTANDING SHARES FOR                 
|                                                                      
|                                                                      
|BASIC AND DILUTED LOSS PER
    SHARE                                  
|                                                                      
|NET INCOME  (LOSS)                                                    
|Other comprehensive income
    (loss)                                 
|                                                                      
|Comprehensive income (loss)                                           













See
accompanying notes to consolidated financial statements.





F-3















|DIGITAL
    CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY
|-----------------------------------------------------------
|CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS' EQUITY        
|FOR
    THE THREE MONTHS ENDED SEPTEMBER  30, 2012         
|(in
    thousands)                                         
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Balance
    at June 30, 2012 (audited)                     
|                                                           
|                                                           
|                                                           
|                                                           
|Balance
    at September 30, 2012 (unaudited)              



See
accompanying notes to consolidated financial statements.



F-4





















|DIGITAL CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY                    
|---------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|FOR THE THREE MONTHS ENDED SEPTEMBER  30                                   
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|CASH FLOWS FROM OPERATING ACTIVITES:                                       
|Net loss                                                                   
|Adjustments to reconcile net loss to net cash used in operating activities:
|Net realized  losses  on marketable securities                             
|                                                                           
|Changes in assets and liabilities:                                         
|Increase in accounts payable, accrued expenses and other liabilities       
|                                                                           
|NET CASH USED IN OPERATING ACTIVITIES                                      
|                                                                           
|NET CASH PROVIDED BY INVESTING ACTIVITIES                                  
|                                                                           
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                  
|                                                                           
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                    
|                                                                           
|CASH AND EQUIVALENTS, beginning of period                                  
|                                                                           
|CASH AND EQUIVALENTS, end of period                                        



See
accompanying notes to consolidated financial statements.





F-5















DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)



NOTE
1- BASIS OF PRESENTATION



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



The
accompanying consolidated financial statements as of  September 30, 2012 and for the three months ended September 30,
2012 and 2011 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, 2012
and other information as of June 30, 2012 have been derived from the Company's audited annual financial statements. These consolidated
financial statements do not include all disclosures provided in the Company's annual financial statements. The consolidated financial
statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended June
30, 2012 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 presented have
been made. The results of operations for the three months ended September 30, 2012 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
consolidated unaudited financial statements were prepared on the assumption that we will continue as a going concern. We currently
have a working capital and equity deficit of $2,738.8 and are in default of our notes payable. Our ability to obtain resources
sufficient to continue to meet our obligations as they come due is dependent on raising cash through the sale of Broadcaster,
Inc. shares, and/or raising additional equity, and / or obtaining forbearance of our debt holders. We intend to use our cash as
well as other funds, to the extent that they are 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
Company has no active business. However, the Company has been 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. Broadcaster,
Inc also operates an Internet entertainment network.





F-6

---











DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)





NOTE
4-INVESTMENTS IN SECURITIES



The
Company had investments and advances in certain marketable and non-marketable debt and equity securities at September 30, 2012
(unaudited) and June 30, 2012 (audited) as follows:



|                                        |  |   | 9/30/2012   |   |  |   | 6/30/2012   |  
|--------------------------------------- |  | - | ----------- | - |  | - | ----------- | -
|                                        |  | $ | (unaudited) |   |  |   | ( audited ) |  
|Broadcaster, Inc at  Cost               |  |   | 2,723       |   |  | $ | 2,723       |  
|Unrealized loss on marketable securites |  |   | (2,723      | ) |  |   | (2,723      | )
|Realized on marketable securites        |  |   | —           |   |  |   | (0.4        | )
|                                        |  | $ |             |   |  | $ |             |  
|                                        |  |   |             |   |  |   |             |  





Generally
Accepted Accounting Principles in the United States (GAAP) includes a framework for measuring fair value and disclosing fair value
measurements.  Under GAAP, fair value is the price that would be received for an investment in a current sale, which
assumes an orderly transaction between market participants on the measurement date. In determining the fair value of its financial
instruments, GAAP requires the Company to assume that the portfolio investment is sold in a principal market between market participants,
or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants
are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing
and able to transact. In accordance with GAAP, the Company has considered its principal market as the market in which the Company
exits its portfolio investments with the greatest volume and level of activity.  GAAP specifies a hierarchy of valuation
techniques based on the extent to which the inputs to those valuation techniques are observable or unobservable.  These
inputs are summarized in the three broad levels listed below:



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



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



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





F-7

---









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)





NOTE
4-INVESTMENTS IN SECURITIES (continued)



In
addition to using the above inputs in investment valuations, we continue to employ the valuation policy approved by our board
of directors that is consistent with GAAP.  Consistent with our valuation policy, we evaluate the source of inputs, including
any markets in which our investments are trading or any markets in which securities with similar attributes are trading, in determining
fair value. Our valuation policy considers the fact that because there is not a readily available market value for the investments
in our portfolio, the fair value of the investments must typically be determined using unobservable inputs.



The
fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ
significantly from the values that would have been used had a ready market existed for such investments and may differ materially
from the values that we may ultimately realize.   Further, such investments are generally subject to legal and other
restrictions on resale or otherwise are less liquid than publicly traded securities.



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



The
following table presents fair value measurements of investments as of September 30, 2012:



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



There
were no changes in investments that use Level 2 inputs for the three months ended September 30, 2012.



As
of September 30, 2012, the net unrealized loss on the investments that use Level 2 inputs was $2,723.0



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.



F-8

---







DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)



NOTE
6- NOTES PAYABLE - RELATED PARTIES



At
September 30, 2012 (unaudited) and June 30, 2012 (audited) the Company’s long term debt consisted of the following:

|                                                               | September 30, 2012 | June 30,  2012
|-------------------------------------------------------------- | ------------------ | --------------
|                                                               | (Unaudited)        | (Audited)     
|Promissory Note with Interest at 15% (1)                       | $                  | 325.0         
|Promissory Notes with Interest at 10% (2)                      |                    | 345.0         
|Notes payable to certain former executives and related parties |                    |               
|with interest at 10%, due on various dates                     |                    | 138.1         
|                                                               |                    | 808.1         
|Less: Current portion                                          |                    | 808.1         
|Long-term portion                                              | $                  | -0-           



|(1) | On May 30, 2007,
    the Company and the lender (“Multi-Mag”) executed Amendment #5 to this Promissory Note to extend the maturity
    date of the Note to December 31, 2007.  The Company and Multi-Mag are currently in negotiations to further extend
    the due date of the note.  Although extensions were obtained in the past, there can be no assurance that the Company
    will be able to obtain these extensions, if needed.  Interest expense in the amounts of $12.2 was charged to operations
    in the three months ended September 30, 2012.  The note is secured by 200,000 shares of Broadcaster, Inc. common
    stock.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Of the $345.0 Secured
    Promissory Notes, all but three of these note holders whose notes total $195.0 have extended the due dates of their notes
    to December 31, 2008. There can be no assurance that the Company will be able to obtain further extensions of the due dates
    of these notes. The remaining three note holders have not agreed to extend. Currently all of these notes are now in default.  Interest
    expense in the amount of $41.8 was charged to operations in the three months ended September 30, 2012. These notes are
    secured by 373,845 shares of Broadcaster, Inc. common stock.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Because
shares of Broadcaster are not readily marketable, these Notes are now under-collateralized.



NOTE
7- COMMITMENTS AND CONTINGENCIES



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

F-9

---









DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)





NOTE
8- STOCK-BASED COMPENSATION



Thorvaldsson,
as well as an award to a former director and significant shareholder, Bruce Galloway based upon the board obtaining valuations
and approvals. The award consisted of options granted to purchase 7,440,000 shares of common stock at exercise prices ranging
from $0.0732 per share to $0.1385 and expiring through June 2015. These options, awarded for services rendered in connection with
past services, including the restructuring of the Company in fiscal year 2002; director services; and other services, were valued
at approximately $800.0 using the Black-Scholes model.



The
Company’s Board of Directors has approved this compensation for services rendered to the Company by Messrs. Herman and Thorvaldsson
contingent upon the receipt of a fairness opinion from an independent advisory firm and approval of such fairness opinion
by the Board of Directors. That fairness opinion has been received and approved by the Board on February 2, 2011. The value of
the related awards will approximate $800.0 Further, the Company finalized compensation agreements for Messrs. Herman In October
2005, the Company made a contingent award to each of its current directors, Gary Herman and Skuli and Thorvaldsson which
include amounts to be paid for past services to the Company for the calendar years 2002, 2003, 2004, 2005 and 2006.





Although
the Board approved the plan on February 2, 2011, the plan was never finalized and the Board may revise the plan in light of the
current financial situation of the Company.





NOTE
9- STOCKHOLDERS’ EQUITY



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



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

The
amount of accumulated and unpaid dividends was approximately $26,500 and $26,400 as of September 30 and June 30, 2012, respectively.

F-9

---







DIGITAL
CREATIVE DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September
30, 2012

(unaudited)

(dollars
in thousands)



NOTE
9- STOCKHOLDERS’ EQUITY (continued)



The
Series C Preferred stock is not convertible, but may be redeemed at the option of the Company at a redemption price of $100 per
share plus accrued and unpaid dividends, at any time after October 31, 1999. The holders of the preferred stock are entitled to
a cumulative dividend of 10% per annum, payable semiannually, if and when the board declares a dividend. As of September 30 and June
30, 2012, the Company had accumulated and unpaid dividends of approximately $1,234,000 and $1,212,700, respectively, on this series
of preferred stock.

The
holders of the Series D Preferred Stock are entitled to a cumulative dividend of 15% per share per annum. Such dividends accrue
annually but are payable if and when the Company declares a dividend. The Company has never paid any dividend with respect to
the Series D Preferred Stock. The 4,000 outstanding shares of Series D Preferred Stock are convertible into 400,000 shares of
Common Stock for no additional consideration at the option of the holder of the stock. The amount of accumulated and unpaid dividends
was approximately $840,000 and $825,000 as of September 30 and June 30, 2012, respectively.

In
the event of a merger or an acquisition transaction, the Company will seek to convert all of the accumulated unpaid dividends
to common shares.  There can be no assurance that the company will be successful in completing all or part of these conversions.





F-10

---







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, 2012 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. 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 (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 involve 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;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|· |  | Unforeseen
                                                                                                                           obligations
                                                                                                                           or
                                                                                                                           liabilities.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





We
cannot make assurances that the Company will make any acquisitions or business combinations or that the Company 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 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, the target business, and/or 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 not have any business activities, aside from
carrying on its search for a transaction partner. 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



Three
Month Period Ended September 30, 2012 Compared To The Three Month Period Ended September 30, 2011.



The
net loss of $82,500 in the three month period ended September 30, 2012 was slightly higher than the net loss of $77,100 in the
comparable 2011 period, principally due to higher interest expense.





LIQUIDITY
AND CAPITAL RESOURCES



The
Company's current liabilities exceeded its current assets by approximately $2,738,800 at September 30, 2012, compared to
current liabilities exceeding its current assets by $2,656,300 at June 30, 2012. The change in this financial condition was principally
the result of continued operating losses, principally the result of interest expenses and other administrative costs.



Since
the Company is inactive, and its interest in Broadcaster is not presently contemplated to provide funds in any manner (e.g. sales
of shares; borrowings; dividends; etc.), the Company can only depend on funding from third parties, of which there can be no assurance.



The
amount of proceeds available to the Company from the sale of shares of Broadcaster, Inc. cannot be determined due to the absence
of a market for Broadcaster, Inc. shares.



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 additional equity or by additional borrowings until and
unless the Company acquires a profitable operating business or makes other investments.



The
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 $2,738,800, and the fact that we are in default of our notes payable, the
Company’s ability to obtain resources sufficient to continue to meet obligations as they come due is dependent on raising
cash by raising additional equity; and obtaining forbearance of our debt holders. 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



Not
required for smaller reporting companies.



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.





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.



Item
1A. Risk Factors



No
required for smaller reporting companies



Item
2. Unregistered Sales of Equity Securities and Uses of Proceeds



None.



Item
3. Defaults upon Senior Securities



None.



Item
4. Safety and Mine Disclosures



None.



Item
5. Other Information



None.



Item
6. Exhibits And Reports On Form 8-K



|(a) | Exhibits:
|--- | ---------







|Exhibit No. | Description                                                                                                             
|----------- | ------------------------------------------------------------------------------------------------------------------------
|31.1        | Chief Executive Officer-- Certification pursuant to Rule 13a-14 (a) of the Exchange Act of 1934, as adopted pursuant to 
|            | Section 302 of the Sarbanes-Oxley Act of 2002.                                                                          
|            |                                                                                                                         
|31.2        | Chief Financial Officer-- Certification pursuant to Rule 13a-14 (a) of the Exchange Act of  193,4 as adopted pursuant to
|            | Section 302 of the Sarbanes-Oxley Act of 2002.                                                                          
|            |                                                                                                                         
|32.1        | Chief Executive Officer-- Certification pursuant to Rule 13a-14(b) of the Exchange Act of 1934 and 18 U.S.C. Section    
|            | 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                             
|            |                                                                                                                         
|32.2        | Chief Financial Officer-- Certification pursuant to Rule 13a-14(b) of the Exchange Act of 1934 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





---









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 DEVELOPMENT CORPORATION





|                        |     | Digital Creative
    Development Corporation
|----------------------- | --- | --------------------------------------------
|                        |     |                                             
|Date: December 19, 2012 | By: | /s/
    Gary Herman                         
|                        |     | Name: Gary Herman                           
|                        |     | Title: Chief Executive Officer              
|                        |     |                                             
|                        |     |                                             
|                        |     | Digital Creative Development Corporation    
|                        |     |                                             
|Date: December 19, 2012 | By: | /s/
    Vincent De Lorenzo                  
|                        |     | Name: Vincent De Lorenzo                    
|                        |     | Title: Chief Financial Officer              





---