Consorteum Holdings, Inc. (Form: 10-K, Received: 11/07/2012 14:31:04)

Name and Affiliation

No. of

Late

Reports

No. of
Transactions
Not Filed on
Timely Basis

Known

Failures to

File

Craig Fielding, Chairman, Chief

Executive Officer, Chief Financial

Officer and Director

Form 4,

Form 5

Patrick Shuster, Chief Operations Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED JUNE 30, 2012

¨ 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: 000-53153

CONSORTEUM HOLDINGS, INC.

(Exact Name of Company as Specified in Its Charter)

Nevada	45-2671583
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

5045 Orbitor Drive, Building 8, Suite 200

Mississauga, Ontario Canada L4W 4Y4

(Address of principal executive office, including zip code)

(888) 702-3410

(Telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $0.001 par value

Title of class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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 ¨	Accelerated filer ¨
Non-accelerated filer (Do not check if a smaller reporting company) ¨	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 ¨ No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Computed by reference to the last sale price of the common equity on October 26, 2012 of $0.012, the aggregate market value of voting stock held by non-affiliates is $ 1,187,884.26.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. There were 309,147,714 shares of the registrant’s common stock outstanding as of November 1, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated herein by reference in Part IV, Item 17: (i) Current Report on Form 8-K, filed May 21, 2012.

TABLE OF CONTENTS

		Page
PART I

Item 1. Business		1

Item 1A. Risk Factors		6

Item 1B. Unresolved Staff Comments		6

Item 2. Properties		6

Item 3. Legal Proceedings		6

Item 4. (Removed and Reserved)		7

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		7

Item 6. Selected Financial Data		8

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		8

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		12

Item 8. Financial Statements and Supplementary Data		12

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		12

Item 9A. Controls and Procedures		12

Item 9B Other Information		14

PART III

Item 10. Directors, Executive Officers and Corporate Governance		14

Item 11. Executive Compensation		15

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		17

Item 13. Certain Relationships and Related Transactions, and Director Independence		17

Item 14. Principal Accounting Fees and Services		18

Item 15. Exhibits, Financial Statement Schedules		19

SIGNATURES		20

This Report on Form 10-K including our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act).

Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the SEC.

Although the forward-looking statements in this Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this filing.

ITEM 1. BUSINESS

BUSINESS DEVELOPMENT

Consorteum Holdings, Inc. (“Holdings” and subsequent to the reverse merger, the “Company”), formerly known as Implex Corporation, was incorporated in the State of Nevada on November 7, 2005. On April 9, 2009, Holdings changed its name to Consorteum Holdings, Inc. Our corporate headquarters of are located at 5045 Orbitor Drive, Building 8, Suite 200 Mississauga, Ontario Canada L4W 4Y4. Our telephone number is (888) 702-3410.

We provided systems integration of electronic transaction processing solutions to public and private sector companies initially to the following population groups or to the following industries: First Nations of Canada, golf clubs, owners and participating courses. Our services provided were designed to be customized, innovative technology solutions that create, augment, and enhance customers existing financial, payment and transactional processing systems. The Company has a MasterCard ^© BIN (“Issuer Identification Number”) License and can utilize this license to issue card programs under the MasterCard ^© brand.

In June 2009, we closed an exchange agreement with Consorteum Inc., a corporation organized under the laws of the Province of Ontario (“Consorteum Sub”), pursuant to which Consorteum Sub became our wholly owned subsidiary. As a result of the exchange, we became a holding company and our business was conducted through Consorteum Sub.

On June 6, 2011, the Company entered into an asset purchase agreement, as amended, with Media Exchange Group, Inc. (“MEXI”) pursuant to which the Company agreed to buy, transfer and assign to the Company, and MEXI has agreed to sell all of the rights, title and interests to, and agreements relating to, its digital trading card business and platform, as well as all other intangible assets of the business in exchange for the Company assuming an aggregate principal and accrued interest amount of approximately $2.1 million of indebtedness of MEXI in accordance with the terms of that certain assignment and assumption agreement executed on June 6, 2011. On July 14, 2011, the Company completed its due diligence and finalized the asset purchase agreement with MEXI. A majority shareholder of MEXI and the former Chief Executive Officer (CEO), Director and Chairman of the Board of MEXI (who resigned on June 3, 2011) organized the asset purchase agreement with MEXI. In addition, the control persons of MEXI were to be effectively issued five (5) million shares of Series A preferred stock, which have super voting rights, causing such persons to have voting control of the Company. However, the Series A Preferred Stock had not been designated in accordance with the Articles of Incorporation and could not be issued. The transaction between MEXI and the Company was deemed consummated between two entities under common control and the transfer of assets was recorded at historical cost. In connection with the acquisition, the Company assumed convertible notes amounting to $2,073,646 of MEXI (principal and accrued interest as of July 2011), and accordingly, recorded a corresponding charge in the deficit accumulated during the development stage in the accompanying consolidated balance sheet.

On October 4, 2011, we entered into an Acquisition Agreement with Tarsin LTD, a company organized under the laws of the United Kingdom, whereby we purchased 100% of the issued and outstanding shares of Tarsin, Inc., a Nevada corporation (“Tarsin”), for a total of 100,000,000 shares of our common stock. Pursuant to the Acquisition Agreement, Tarsin LTD further agreed to grant to us an exclusive, royalty-free, worldwide perpetual license to use, distribute, and sell its CAPSA Mobile Platform technology (“CAPSA”). See below for discussion of termination of the acquisition agreement and acquisition of a license agreement with Tarsin.

In November 2011, the board of directors approved an amendment of the Company’s Articles of Incorporation, whereby the designations of Series A and Series B preferred stock were established, and the number of Series A preferred shares to be issued at 5,000,000 and the number of Series B preferred shares to be issued at 15,000,000. The rights and privileges of the Series A shares consist of super voting rights at 200 votes per share held, conversion rights on a one-to-one basis with common stock, and liquidation preference as described below. The rights and privileges of the Series B shares have voting rights equal to one vote per share held, conversion rights equal to Series A and liquidation preference as described below.

Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, before any distribution or payment shall be made to the holders of any common stock or Series B preferred stock liquidation preference, the holders of the Series A preferred stock shall be entitled to be paid out of the assets of the Company an amount per share of Series A Preferred Stock equal to the product of (i) the original amount paid by the holder thereof for each share of Series A Preferred Stock owned by such holder as of the effective date of such liquidation, multiplied by (ii) the number of shares of Series A Preferred Stock owned of record by such holder as of the liquidation date (as adjusted for any combinations, splits, recapitalization and the like with respect to such shares). Series B preferred stock is next in liquidation preference after the Series A preferred stock, and is computed consistently with the formula above for the Series A preferred stock. See below for authorization of Series C Preferred Stock.

Although the board originally voted to issue Mr. Cellura 55% of Series A Preferred Shares, Mr. Cellura elected to not submit a contract to the board for approval as required. After the Company was unsuccessful in attracting new working capital, the board could not agree on Mr. Cellura’s terms of employment. The Company’s board of directors elected not to issue the Series A & B Preferred Stock because of the removal of Mr. Cellura due to his failure to meet shareholder expectations concerning the direction of the Company, specifically but not limited to, his failure to source and secure critical funding for the Company in the amounts and at the times required to further the Company’s development. On May 18, 2012, Mr. Joseph A. Cellura was removed from his position as a CEO, director and Chairman of the Board of Directors of Consorteum. Mr. Cellura’s removal was accomplished through a written consent dated as of May 18, 2012 in lieu of a meeting. In the same Written Consent Mr. Craig A. Fielding, the sole remaining director of the Company was appointed Chief Executive Officer (CEO), President, Chief Financial Officer and Secretary of the Company effective May 18, 2012. In addition to Mr. Craig A. Fielding’s resumption of his positions as CEO and President of our Company and Chairman of our Board of Directors, Mr. Fielding is also our Principal Financial Officer and Secretary, and continues as CEO of Consorteum Sub.

The Series A & B Preferred Stock has been reflected as issued and outstanding as the Board of Directors held control and authorization of such shares. The Board of Directors has approved the transfer of the super-voting Series A Preferred Stock to Craig Fielding. The Series B Preferred Stock will not be issued in connection with Mr. Cellura’s employment agreement, and such shares will be reserved for future issuance.

On September 21, 2012, the Company’s board of directors approved designations for Series C Preferred Stock. In connection therewith, we filed the designations with Nevada Secretary of State to reserve 40,000,000 shares of Series C Preferred Stock. The shares are voting, will pay no dividend, each shares convertible into four (4) shares of common stock, and have a liquidation preference after the Series A & B Preferred Stock.

In January 2012, the Company was informed that its licensing agreement with aVinci Media Inc. to market its products under the “myESPN” brand, was no longer viable due to the announced Chapter 7 bankruptcy filing of aVinci Media Inc., a Nevada corporation. aVinci Media had previously entered into a Licensing Agreement with Media Exchange Group Inc., (“MEXI”) a Nevada corporation to grant MEXI a license to develop products under the myESPN brand. The licensing agreement was subsequently acquired by the Company as part of its announced Acquisition Agreement with Media Exchange Group, in July 2011. The Company subsequently evaluated the business potential associated with this licensing agreement in connection with one of its projects, the Digital Trading Card, and elected to focus its sales and marketing efforts on other projects and discontinue any work associated with the Digital Trading Card.

In June 2012, the Company entered into a joint venture agreement with Marksal Communications Inc. (“Marksal”), a Canadian corporation, to create a joint venture in order to meet growing demand for next generation telecommunication and financial transaction services focused across the North America and international markets. By combining the technical innovation of the Company’s payment processing expertise with the significant capability of Marksal to provide secure communications to remote regions, the anticipated joint venture would provide customers with new capabilities to deliver payment and banking services in areas that traditionally have been underserved. Combined with the Company’s new focus on mobile application delivery of secure financial transactions, the new joint venture will allow the delivery of next generation telecommunication and financial services anywhere in the world. Under the joint venture, the Company will contribute its proven transaction payment solutions and Marksal will provide the communications infrastructure necessary to link remote areas into secure securely, thus creating an overlay of new sophisticated financial networks. The Company will own 51 percent of the joint venture, and Marksal will own 49 percent of the joint venture.

The Company was unable to secure the necessary funding to complete the acquisition of Tarsin. Although we raised capital of $162,500, which was used to fund the working capital needs of Tarsin during 2012, ultimately we were not able to fulfill all of the requirements as prescribed in the Tarsin Acquisition Agreement dated October 4, 2011.

In July 2012, the Company entered into new negotiations with Tarsin Inc. in order to reach an agreement that would preserve the value of the CAPSA platform as developed by Tarsin and allow the Company to leverage its relationships with existing Canadian based casinos and resorts as customers that could utilize the CAPSA platform to provide mobile wagering and gaming to their customers. On October 10, 2012, the Company reached a new exclusive licensing agreement with Tarsin that allows the Company to license the CAPSA platform to sell mobile gaming and wagering programs throughout Canada, Mexico, as well as certain customers in the United States. We ultimately wish to expand in Latin America, China and Europe. The Company agreed to unwind its Acquisition Agreement previously entered into and Tarsin is again operating as a privately held Nevada corporation.

In September 2012, we entered into employment agreements with Mr. Craig Fielding, our CEO and Mr. Pat Shuster, our Chief Operating Officer (COO), which provide cash compensation, stock options and bonuses upon achieving revenue milestones through December 31, 2016. See Item 10 below. We believe that it is in the best interests of the Company and its shareholders to retain these individuals.

The business description below describes our business in greater detail.

OUR BUSINESS

We are a holding company incorporated in the State of Nevada, with one wholly owned subsidiary, Consorteum Sub. Our subsidiary has at its core, the delivery of digital media across diverse payment transactional platforms that are rapidly converging due to advances in smart phone mobile technology.

The licensing agreement that we have reached with Tarsin provides the Company with an exclusive right to license the CAPSA software platform in selected geographical markets throughout Canada, and Mexico, along with select customers within the United States and is capable of providing digital media to a wide range of mobile handsets, and provides for the ability to securely transmit financial information to individual handset owners. Tarsin provides us with the proven capabilities in the mobile handset market, which we can use to ensure cross functionality of mobile applications across a wide variety of handsets. The ability to deliver next generation services to all customers depends on our ability to develop an application that is agnostic to the type of smart phone deployed. The CAPSA platform was developed with the specific purpose of deploying rich multimedia content across diverse handsets. We intend to leverage the license agreement with Tarsin in the mobile sports betting and casino gaming vertical to monetize its applications in branded partnership relationships.

Combined with our experience in the payment processing and financial transaction markets, we believe that recent advances in technology have enabled smart phones to develop custom applications that will allow the phone to process payments, conduct banking transactions and emulate the traditional role that ATM machines now play. We intend to leverage our expertise in mobile applications development to target new opportunities to provide traditional banking and payment services to our customers.

The Company may continue to face significant uncertainty relating to liquidity and intends to continue to search for additional sources of working capital, and to actively search for collaborative partners. Many of the existing contracts and initiatives described in the Report on Form 10-K require capital expenditure by Consorteum to move forward and management anticipates that delays in project implementation will continue if funds are not available.

CAPSA - the Solution for Going Mobile

Tarsin’s mobile platform, CAPSA, eases the challenges brands face in mobile. There is urgency for brands to connect with consumers via mobile - regardless of tighter budgets and higher expectations in the mobile experience. Unfortunately, today’s current mobile application and content solutions are limited - whether it be in how users can interact, or the number of devices it can actually support. As companies look to mobile strategies, the picture gets extremely cloudy in how to develop a rich mobile offering that can resonate within the mass market. CAPSA is able to take the “how” out of mobile planning, encompassing all the components that allow for a rich mobile experience to be delivered to a handset. In order to initiate and maintain connections with mobile consumers, it is absolutely critical for its platform to be interoperable between any mobile network or device. This full-service approach redefines how brands develop mobile strategies to strengthen their connections to consumers. Tarsin works with operators and multi-tier networks to successfully execute programs on behalf of brands. Tarsin’s proven CAPSA platform provides an end-to-end, versatile framework for brands to design once and deliver unparalleled mobile experiences. CAPSA is the first universal mobile content delivery solution available that is based on web-standards and is carrier, operating systems and device agnostic. This allows companies to reach the broadest consumer base: 5200+ devices; 27+ languages; 180+ countries; non-native font support. The CAPSA platform is covered by 12 separate pending patents. Today, CAPSA supports millions of mobile consumers, with thousands added daily.

MARKET OVERVIEW

There is urgency for brands to connect with consumers via mobile - regardless of tighter budgets and higher expectations in the mobile experience. Unfortunately, today’s current mobile application and content solutions are limited - whether it be in how users can interact, or the number of devices it can actually support. As companies look to mobile strategies, the picture gets extremely cloudy in how to develop a rich mobile offering that can resonate within the mass market.

Utilizing the capability of the CAPSA platform developed by Tarsin LTD, we will be able to develop applications, which encompass all the components that allow for a rich mobile experience to be delivered to a handset. In order to initiate and maintain connections with mobile consumers, we believe it is absolutely critical for our platform to be interoperable between any mobile network or device. This full-service approach redefines how brands develop mobile strategies to strengthen their connections to consumers. While video and picture sharing on the Internet have been around for some time now, the task can be cumbersome and frustrating on most mobile devices. Multiple carriers and phone types with limited or no interoperability can make this potentially powerful communications tool languish in the background while texting and social networking Internet sites continue to grow and thrive. Compounding this problem is the continuing trend for mobile phone equipment manufacturers to offer new phones with additional capabilities while the mobile phone carriers are enhancing their 3G (and soon 4G) networks to allow users to take advantage of these capabilities.

Existing Solutions and Limitations

Multimedia Messaging Service

One possible solution is the use of MMS (Multimedia Messaging Service) to send pictures and videos. MMS is a standard developed by the Open Mobile Alliance, an industry consortium. MMS can be an effective way to send pictures from one person to another, but as the mobile experience moves from photo to videos and more importantly from point to point communication to social networks, MMS may begin to encounter substantial scalability issues. MMS approaches sending of rich media with a lowest common denominator to provide a video experience that will be common across handsets rather than providing the best possible experience a handset can provide. More specifically, MMS does not work consistently for video.

Other limitations of MMS include:

File size limitation. MMS videos are generally limited in duration by file size. Limits include 10, 15, or 30 second duration for video, and file size is often limited to 100, 200, or 300 Kbytes. These limits can be imposed both by carriers and by handset makers.

MMS video is not stored in “The Cloud.” An MMS file is generally not accessed easily from a PC. If the mobile phone user switches to another handset, that user must often first manually transfer the MMS picture or video to PC and then transfer it back to the new handset, a cumbersome process.

Conversation limitations. MMS does not allow a fluid interface for back and forth “video conversations.” You cannot easily comment on someone’s MMS video.

Difficulty interfacing with social networks. While it is possible to post an MMS picture or video to a Facebook or Twitter account, it does not lend itself to a feature rich mobile experience.

Standard setting delays. As new technologies to enhance MMS are developed, their adoption will be governed by the MMS standards setting process. This is likely to result in significant delays in enhancement, implementation, and evolution of the technology.

Video on Mobile Phones. Most major manufacturers of mobile phones already have, or plan to, deliver handsets with video capabilities into the market, often with multiple tiers of devices with unique profiles. Dozens of companies have developed and continue to maintain databases that capture the differences between handsets, at significant expense.

Smartphones. Smartphones have emerged as a fast growing sector of the market, blending multi-media, data and internet access and mobile communications. The smartphone market, most of which by definition is media enabled, will be a growth market that will allow carriers to add a variety of revenue streams attached to data and multi-media messaging. The market, demand for video sharing services will grow dramatically. Mobile phone equipment manufacturers continue to offer new phones with additional capabilities while the mobile phone carriers will need to enhance their 3G and soon 4G networks to allow users to take advantage of these capabilities.

Video and Picture Sharing Approaches. The current market is highly fragmented, with many companies and organizations offering service for the mobile phone video and picture market.

Generally, these services fall under five categories:

	1.	MMS, which was described earlier.
	2.	Mobile-to-Web, where mobile phone users post their pictures or videos on a Website to share with others. This category has a number of participants, and there is little product differentiation between and among them.
	3.	Web-to-Mobile, when pictures or videos are posted on Websites and then shared to phones using an open or proprietary application. This category may require a relationship with a carrier and also has a number of participants.
	4.	Proprietary Mobile-to-Mobile, where the user utilizes a proprietary application to send pictures or video from one phone to another. A carrier relationship may be required for this service.
	5.	Open Mobile-to-Mobile, where no proprietary application is required, nor is a carrier relationship.

While the entire market is nascent, leaders will emerge based on their brand recognition, number, or users in their network, ease of use and financial resources. Additionally, many of these services are free while others charge a use or monthly fee. Others appear to be focused on an advertising based model. At this time, the size of the market is indeterminable but is generally thought to be growing and viable. The size and ultimate viability of the market will be based on the ease of use, cost to use, adoption rate of smartphones and the acceptance of brands where mobile content delivery is a viable advertising medium.

COMPETITION

The main competition in this industry can be seen as the handset manufacture of OS development platforms such as RIM, ANDROID and iOS (Apple). These companies provide a developer with the ability to design and produce an offering for a target industry such as gaming. Several companies provide offerings such as www.appcelerator.com , www.rhomobile.com , www.getelastic.com that allow simple application development across multiple platforms and operating systems. Our CAPSA platform allows cross OS development but is unique in addressing the needs of the gaming industry, which is complex and highly regulated. Our offering addresses key issues such as security, user authentication, geo-location and geo-fencing. Addressing all the market needs allows rapid development and low cost of ownership and mass market mobile device coverage. Other companies such as Cantor Wireless, Harrah’s, IGT and Bally Tech have put forward public strategies and initial offerings within the gaming market but these companies do not have the history and pedigree in the needed technology to deliver a robust full featured mobile solution.

OUR SALES AND MARKETING STRATEGY

Strategy

We provide end-to-end mobile offerings within the following markets: Canada, Mexico and select customers within the United States.

Mobile Marketing Services – Providing loyalty card and group offerings to Casino’s and Hotel chains, allowing the property to have a presence with the members via SMS, MMS and mobile application offerings, creating a one to one marketing connecting ties to points, rewards and offerings.

Mobile Sports Book (real time) – Providing all the end to end mobile infrastructure from, cloud hosting, application design, mCommerce, authentication, security, location services and application publishing for sports book operators globally.

Mobile Lottery – Providing a turnkey offering to allow lottery operators to take their retail proposition to mobile, from the application design, mCommerce, security and publishing.

With these three key main service offerings targeted at gaming and consulting services to enhance and create customer offerings we have in place to take a bricks and mortar proposition to an ever increasingly mobile world.

Sales and Distribution

We have existing business partners that we are currently completing development on the above listed services. We expect development to be completed in the fourth quarter 2012. We intend to extend our base of business development to Canada, South America and Europe. Our revenue model is comprised of three main elements. We enter into contracts with existing casinos that desire to add mobile gaming and wagering to their offerings. The addition of a mobile wagering/sports betting platform allows the casinos to brand a new capability and attracts new clients to the property. Typically we enter into a contract to provide custom gaming and wagering using the CAPSA platform and additionally we charge a per user fee which may include a percentage of the wage or gaming “rake”.

Although the Company will focus its resources on generating revenue from the sale of the mobile gaming and wagering contracts, we also intend to look for other non-casino based opportunities, which may include prepaid cards and advanced automated teller machines that can make use of mobile handsets to provide next generation banking services in traditionally underserved areas. The company has retained its relationship with MasterCard ^© and is evaluating several opportunities in which a prepaid card program can be branded as part of providing services to the under-banked or un-bankable. Because these opportunities are seasonal, we do not intend to launch any new initiatives until the first quarter 2013.

The Company has entered into discussions with several customers to provide next generation automated teller machines, which are essentially a “bank in a box.” We are evaluating the potential of supplying these machines under contract to several customers. The opportunity for the Company would be to generate revenue from a percentage of the transactional fees from users of the “eTM” machines. An eTM machine is a next generation kiosk that is capable of handling the following transactions: Check Cashing, ATM Cash Withdrawal, Payday Loans, Money Transfer, Advertising, Prepaid Credit Card and Prepaid Phone Pins. Our partnership with Marksal is one area in which having the ability to provide secure communications combined with next generation banking technology may turn out to be a market for the Company to pursue. Our discussions to date have not resulted in any definitive supply agreements and we continue to evaluate the potential of this business.

We have no funding commitments and there can be no assurance that we will raise any of the financing we need for the projects and applications described above. Our financial results to date are reflective of an early stage company that has pilot projects only in place but no active programs. If we are not successful in raising funding in the amounts and the times required, our ability to implement one or more of the projects described above will be adversely affected.

INTELLECTUAL PROPERTY

The CAPSA platform is protected with over 12 patent pending positions filed over the last three years. Other intellectual property that has been licensed as part of our current business deals include cloud development and deployment technology, operating system authentication, white and black list control, mobile device ID verification and empirical application feature support, geo-location support, geo-fence technology and multi brand and location mobile application support.

REGULATION

We are fully compliant with the main mobile regulatory controls such as VeriSign, Safe Harbor, and commerce, all carrier commerce and mobile consumer privacy regulations. Tarsin’s CAPSA platform is approved by the NGB (Nevada Gaming Board) as a mobile payment based application and approved solution.

EMPLOYEES AND CONSULTANTS

At October 12, 2012, we had two employees, our CEO and Chief Operating Officer. We expect no significant changes in the number of our employees other than such changes, if any, incident to business combination. The Company engages the services of independent contractors to assist it with management in developing our product offering. We plan to engage full-time employees as our business develops and when we obtain sufficient working capital.

In July 2011, we entered into an Executive Employment agreement with Craig Fielding, CEO of Consorteum Sub. In December 2011, we entered into an Executive Employment agreement with Patrick Shuster, COO of Consorteum Holdings. Effective May 2012, we terminated Mr. Cellura who was operating as CEO without a written employment contract.

In September 2012, all existing management contracts were terminated by mutual agreement with the parties effective August 31, 2012. These changes in management contracts were undertaken in light of our financial position and in order to better position us to attract additional financing. Furthermore, as set out in the financial statements, these individuals exchanged significant liabilities that existed as of June 30, 2012, in consideration for issuance of common stock as a subsequent transaction.

On September 1, 2012, the Company entered into an Executive Employment agreement with Craig Fielding, CEO of Consorteum Holdings Inc. and Patrick Shuster, COO of the Company through December 31, 2016.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (“Exchange Act”) and are not required to provide the information under this item.

ITEM 1B. Unresolved Staff Comments

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 2. Properties

We have no leased space at the current time and we currently occupy office space at 5045 Orbitor Drive, Building 8, Suite 200

Mississauga, Ontario Canada L4W 4Y4 on a rent free basis. We anticipate that we will enter into a leasing agreement for office space in the fourth quarter of 2012.

ITEM 3. Legal Proceedings

In 2010, the Royal Bank of Canada commenced an action in Toronto, Canada against Consorteum Sub to recover amounts allegedly due under bank indebtedness totaling $158,307. Bank indebtedness is comprised of a Royal Bank of Canada (“RBC”) demand term loan and an operating credit facility. Starting July 2008, the loan was repayable on a monthly basis at $1,792 plus interest, at RBC’s prime rate plus 2% per annum. The loan was scheduled to mature in June 2013. The loan was secured by a general security agreement signed by the Company constituting a first ranking security interest in all personal properties of the Company and personal guarantees from certain stockholders.

The Company was unable to meet any repayment terms, and accordingly in 2010, RBC commenced legal proceedings to recover the full balances due. RBC’s legal proceedings named an officer and a former officer as defendants under guarantees in writing by both individuals. In May 2012, the Company satisfied the obligation through its Craig Fielding, CEO, inclusive of all interest, penalties and costs totaling approximately $179,000. A note was issued to the Mr. Fielding in the subsequent quarter on terms and conditions that were agreed to by the board.

On June 27, 2012 plaintiffs Joseph R. Cellura as Chairman and CEO of Game2Mobile and Joseph R. Cellura individually filed a summons and complaint in the United States District Court for the Southern District of New York (the “Action”) against the Company, our COO Patrick Shuster (“Shuster”), our CEO Craig Fielding (“Fielding”) and certain other defendants not affiliated with the Company. As of the date hereof defendants CHI, Shuster and Fielding have not been served with the summons and complaint, and, upon information and belief, neither have any of the remaining defendants. Plaintiffs allege 12 different causes of action against various defendants, but only Count XI is alleged against the Company. In this count, plaintiff Cellura individually alleges that the Company (among other defendants) breached his employment agreement with the Company and seeks damages in excess of $5,000,000. The complaint does not give any detail of the specific breaches by any of the defendants; nor does it describe how plaintiff has been damaged for a sum in excess of $5,000,000. As set forth elsewhere in this Report the Company never entered into any employment agreement with Mr. Cellura and will vigorously defend the Action if it proceeds. The Company also has various counterclaims against Mr. Cellura that it will assert as well. The complaint also alleges certain securities law violations against all individual defendants. Lastly, the complaint alleges various causes of action against the individual defendants for intentional infliction of emotional distress, breach of fiduciary duty, defamation, interference with various business opportunities, prospective advantage, and negligent supervision.

In October 2012 the Company and Cellura as well as certain of the individual defendants named in the Action entered into a settlement agreement pursuant to which (among other matters) Cellura agreed to discontinue the Action against the Company and file a stipulation of discontinuance with prejudice with the Court in which the Action was pending. The parties also agreed to exchange general releases with each other such that all claims by Cellura and his affiliates against the Company will be resolved.

ITEM 4. (Removed and Reserved.)

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Our shares of common stock are traded on the Over the Counter Bulletin Board under the symbol “CSRH.QB.”

The range of closing bid prices shown below is as reported by the Over the Counter Bulletin Board. We consider our stock to be “thinly traded” and any reported sale prices may not be a true market-based valuation of the stock. Some of the bid quotations from the OTC Bulletin Board set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Per Share Common Stock Bid Prices by Quarter

For the Fiscal Year Ended June 30, 2012 and 2011

	HIGH		LOW

Quarter Ended September 30, 2010	$	0.0055	$	0.0012
Quarter Ended December 31, 2010	$	0.0045	$	0.0012
Quarter Ended March 31, 2011	$	0.0045	$	0.0024
Quarter Ended June 30, 2011	$	0.012	$	0.0025

	HIGH		LOW

Quarter Ended September 30, 2011	$	0.0120	$	0.0020
Quarter Ended December 31, 2011	$	0.0140	$	0.0038
Quarter Ended March 31, 2012	$	0.0104	$	0.0038
Quarter Ended June 30, 2012	$	0.0100	$	0.0038

Holders of common equity

As of October 12, 2012, we had approximately 250 record holders of our common stock. The number of record holders was determined from the records of the transfer agent and does not include beneficial owners of common stocks whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

Dividend information

We have not declared or paid a cash dividend to stockholders since it was organized. Our board of directors presently intends to retain any earnings to finance operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon earnings, capital requirements and other factors.

RECENT SALES OF UNREGISTERED SECURITIES

From July 2011 through January 2012, the Company issued 425,000 five-year warrants having an exercise price of $0.025 per share of common stock. Such warrants were issued in connection with an issuance of convertible notes amounting to approximately $77,000. The Company determined that there was no significant value associated with the granting of these warrants associated with this convertible note.

On May 15, 2002, the Company received $254,500 from the issuance of a convertible promissory note with the terms. In addition to those terms, the note is convertible into shares in the event of a reverse stock split at 85% of the average trailing price ten (10) days after such an event. The convertible promissory note bears interest at 5% per annum and due on May 2014. Interest is payable monthly. The note is convertible at any time at the option of the holder, into shares of common stock at a rate $0.05, each.

On June 12, 2012, the Company received $31,168 and issued a note for a promise to repay $34,000, representing interest in the amount $2,832, on July 31, 2012. In connection therewith, we committed to issue 5,000,000 shares of our common stock valued at approximately $16,000 using our closing stock price of $0.007 as additional consideration. The note has a default rate of interest of 15%, per annum. The note has not been satisfied and is currently in technical default. As of the date of these financial statements the shares of our common stock have not been issued.

ITEM 6. Selected Financial Data.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 7. Managements’ Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE LEVEL OVERVIEW

Initially, we spent time validating our business models for the First Nations project and the My Golf Rewards program. The lack of capital to launch these programs has forced us to curtail our sales and marketing activities and to focus on identifying other opportunities in which we could compete for market share and generate revenue.

In 2011, we attempted to acquire Tarsin through the issuance of stock and cash, but due to our inability to obtain capital to complete the acquisition and provide working capital post close, we terminated the acquisition agreement in June 2012. On October 10, 2012, we entered into a licensing agreement with Tarsin for rights to the CAPSA technology. In connection therewith, we acquired exclusive rights to market, sell and service CAPSA in Canada, Mexico, as well as certain customers in the United States. The agreement is for a term of three (3) years, and is subject to a royalty of 12.5% of revenues derived from the CAPSA technology. The agreement specifies an annual license fee of $100,000 and a support fee based an annual turnover. We ultimately wish to expand in Latin America, China and Europe. The Company also retains the “Right of First Negotiation” to enter into markets in the US which do not overlap with the existing contractual relationships that Tarsin has with Stations Casino in Nevada.

The licensing agreement with Tarsin will become the keystone in our plans to rebrand ourselves as a leader in the mobile publishing and mobile gaming industry. All of our previous initiatives will be redesigned with the core focus of establishing our reputation for creative solutions in a mobile world. Tarsin is positioned to become a leading developer of mobile gaming on cross platform applications, which expect to significantly benefit from. The CAPSA platform facilitates our ability to develop mobile applications and can be leveraged into many different market verticals. We anticipate that in 2013 we will deliver to market a series of mobile applications in the gaming, entertainment, sports and mobile financial solutions industries.

During the current fiscal year, we have been focused on initiating new agreements and commencing pilot projects intended to demonstrate the efficacy of the business model. The lack of working capital funds has challenged this process and at the end of the fiscal year, we were forced to restructure our affairs. The outcome of that process included the decision to reduce the number of business opportunities, the termination of all management contracts, and the arrangement with officers, employees, and suppliers to forgive certain indebtedness as at June 30, 2012.

We have incurred losses since commencing the above initiatives in June 2011 and will likely continue into 2013 until such time we can generate revenues sufficient to meet our cash flows. We have significant liabilities which we acquired through the acquisition of MEXI. We intend to work through reducing or eliminating the remaining liabilities, and to continue to raise additional working capital to meet the demands of Tarsin’s new product offering.

We have no funding commitments and there can be no assurance that we will raise any of the financing we need. The financial results of 2011 and 2012 are reflective of an early stage company that has pilot projects only in place but no active programs. Results for the current year have been impacted by the limited financial resources available.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows – Fiscal 2012

We had $9,371 cash at June 30, 2012.

During fiscal 2012, we used cash in our operating activities amounting to approximately $603,000. Our cash used in operating activities was comprised of our net loss from continuing operations of approximately $1,621,000 primarily due to increase in payables and accrued liabilities.

During fiscal 2012, we used cash in our investing activities of approximately $145,000 for the proposed acquisition of Tarsin, which ultimately consummated a license agreement with Tarsin for certain territorial rights to their technology.

During fiscal 2012, we generated cash from financing activities of approximately $753,000, which consisted of the proceeds from the issuance of loans and convertible promissory notes.

Cash Flows – Fiscal 2011

During fiscal 2011, we used cash in our operating activities amounting to approximately $471,000. Our cash used in operating activities was comprised of our net loss from continuing operations of approximately $1.0 million adjusted for the following:

	·	Gain on forgiveness of debt of approximately $91,000;

Fair value of shares issued of $63,000;

Additionally, the following variations in operating assets and liabilities impacted our cash used in operating activity:

A decrease in our accounts payable and accrued liabilities expenses of approximately $244,000 and accrued interest of approximately $187,000, resulting from slower payment processing due to our financial condition.

There are no significant commitments for the purchase of capital assets or intangible assets, or for operating leases.

During fiscal 2011, we generated cash from financing activities of approximately $464,000, which consist of the proceeds from the issuance of loans, convertible promissory notes, and due to stockholders of approximately $661,000 offset by principal repayments on such debt amounting to approximately $196,000.

The Company may continue to face significant uncertainty relating to liquidity and intends to continue to search for additional sources of working capital, and to actively search for collaborative partners. Many of the existing contracts and initiatives require capital expenditure by Consorteum to move forward and management anticipates that delays will continue if funds are not available.

GOING CONCERN

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States assuming the Company will continue as a going-concern. We have incurred losses since inception and our ability to continue as a going-concern depends upon its ability to continue to raise adequate financing and develop profitable operations. We have a working capital deficit of approximately $3.7 million at June 30, 2012. Subsequent to June 30, 2012, we have raised working capital of $315,000 through the issuance of notes to fund our working capital requirements. We are actively targeting sources of additional financing, which would assure continuation of the Company’s operations. The current market conditions and volatility increase the uncertainty of the Company’s ability to continue as a going concern given the need to both curtail expenditures and to raise additional funds. The Company is and has experienced negative operating cash flows and needs to invest in continuing pilot projects and operating partnerships which cannot be met from existing cash balances. The Company will continue to search for new funds and for new collaborative partners for the projects but anticipates that the current market conditions may impact the ability to source such funds.

There can be no assurance that we will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, we may be forced to sell or assign rights to our technologies. Our consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

RESULTS OF OPERATIONS

Consorteum Holdings, Inc.

RESULTS OF OPERATIONS

							Increase/			Increase/
	Year ended						(Decrease)			(Decrease)
	June 30,						in $ 2012			in % 2012
	2012			2011			vs 2011			vs 2011

Revenues:	$	-		$	-		$	-			-	%

Operating expenses:
Selling, general and administrative		1,239,809			852,905			386,903			45	%
Total operating expenses		1,239,809			852,905			386,903			45	%

Operating loss		(1,239,809	)		(852,905	)		(386,903	)		-45	%

Other income (expense):
Gain on debt restructuring		68,813			78,684			9,871			-13	%
Interest expense		(450,064	)		(141,536	)		308,528			218	%
Total other income (expense)		(381,251	)		(62,852	)		318,399			507	%

Net loss	$	(1,621,059	)	$	(915,757	)		705,302			77	%

NM: Not Meaningful

Revenues

We are a development-stage company with no operating revenues generated since our inception. Our first revenues from commercial sales and licensing are expected to be from the Tarsin license agreement. We expect our revenues to be derived from transactions processed using the CAPSA platform technology in certain countries outside the United States. Our first market we expect to generate revenues in is North America.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses primarily consist of consultant fees related to marketing programs, which consists mostly of business development and advertising expenses, as well as other general and administrative expenses, including payroll expenses, necessary to support our marketing plans and our operations, legal expenses and professional fees.

The increase in our selling, general, and administrative expenses in fiscal 2012 when compared to fiscal 2011 is primarily attributable expanding our development efforts.

Interest Expense

Interest consists of interest payable pursuant to stated rate on interest bearing indebtedness, as well as amortization of debt discount and deferred financing costs.

The increase in interest expense in fiscal 2012 when compared to fiscal 2011 is primarily due to the issuance of loans payable during fiscal year.

Net Losses

We have suffered losses for the periods presented. Because we are a development-stage company, we expect to incur losses for the foreseeable future until such time we can generate significant revenues. We will need to raise capital to fund these losses, the amount of which is not currently known.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not currently have any off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

We do not have any significant contractual obligations to third parties other than an annual obligation to MasterCard and issuing banks under the Unity program initiative not exceeding $50,000 in any year.

There are no commitments for capital expenditures.

There are currently two management contracts.

There are no current leased premises or equipment leases.

CRITICAL ACCOUNTING POLICIES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and Liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:

Risks and Uncertainties

Factors that could affect the Company's future operating results and cause future results to vary materially from expectations include, but are not limited to, lower than anticipated retail transactions, and inability to control expenses, technology changes in the industry, relationships with processing agencies and networks, changes in its relationship with related parties providing operating services to the Company and general uncertain economic conditions. Negative developments in these or other risk factors could have material adverse effect on the Company's future financial position, results of operations and cash flow.

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (ASC) 360, “ Property plant and equipment ,” long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. As described in Note 1 to the Consolidated Financial Statements, the long-lived assets have been valued on a going concern basis. However, substantial doubt exists as to the ability of the Company to continue as a going concern. If the Company closes operations, the asset values may be materially impaired.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “ Income Taxes .” Deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. A valuation allowance is provided for net deferred tax assets since we have no history of earnings. In addition, we have deferred tax assets related to our net operating losses; however, due to our issuances of common and preferred stock, we will not be able to recover such losses carryforward to offset future taxable income.

Foreign Currency Translation

In accordance with the provision of ASC 830, “ Foreign Currency Matters ,” the Company, whose functional currency is the Canadian dollar, translates its balance sheet into U.S. dollars at the prevailing rate at the balance sheet date and translates its revenues and expenses at the average rates prevailing during each reporting period. Net gains or losses resulting from the translation of financial statements are accumulated and charged directly to accumulated comprehensive income or (loss), a component of stockholders' equity or (deficit). Realized gains or losses resulting from foreign currency transactions are included in operations for the period.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results will differ from those estimates. These estimates are reviewed on an ongoing basis and as adjustments become necessary, they are reported in earnings in the period in which they become known.

Comparative Financial Information

Certain financial information for the fiscal 2012 has been reclassified to conform to the financial statement presentation adopted in the current year.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASUs) to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us, or (iv) are not expected to have a significant impact on us.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements appear on page F-1 after the signature pages to this Report on Form 10-K.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Data

None.

ITEM 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

As of June 30, 2012, the end of the period covered by this report, we conducted, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) in ensuring that information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the required time periods. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that because of the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of June 30, 2012.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our internal control system is a process designed by, or under the supervision of, its principal executive and principal financial officer, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of our inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2012. As a result of its assessment, management identified material weaknesses in our internal control over financial reporting. Based on the weaknesses described below, management concluded that our internal control over financial reporting was not effective as of June 30, 2012. In making this assessment, our management used criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting – Guidance for Smaller Public Companies.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that, there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of our assessment, management identified the following material weaknesses in internal control over financial reporting as of June 30, 2012:

While there were internal controls and procedures in place that relate to financial reporting and the prevention and detection of material misstatements, these controls did not meet the required documentation and effectiveness requirements and therefore, management could not certify that these controls were correctly implemented. As a result, it was management’s opinion that the lack of documentation warranted a material weakness in the financial reporting process.

There is lack of segregation of duties in financial reporting, as one consultant performs our financial reporting and all accounting functions. This weakness is due to our lack of working capital to hire additional staff during the period covered by this report.

We intend to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow. Even with this change, due to the increasing number and complexity of pronouncements, emerging issues and releases, and reporting requirements and regulations, we expect there will continue to be some risk related to financial disclosures. However, the process of identifying risk areas and implementing financial disclosure controls and internal controls over financial reporting required under SOX continues to be complex and subject to significant judgment and may result in the identification in the future of areas where we may need additional resources. Additionally, due to the complexity and judgment involved in this process, we cannot guarantee that it will not find or have pointed out to it either by internal or external resources, or by its auditors, additional areas needing improvement or resulting in a future assessment that its controls are or have become ineffective as a result of overlooked or newly created significant deficiencies or unmitigated risks.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarterly period ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm

An attestation report of our registered public accounting firm regarding internal control over financial reporting is not required.

ITEM 9B. Other Information.

None.

ITEM 10. Directors, Executive Officers and Corporate Governance.

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers are as follows:

Name	Age	Position

Craig Fielding	48	Chairman of the Board of Directors, Chief Executive Officer, President, Chief Financial Officer and Secretary
Patrick Shuster	60	Chief Operating Officer, Director

Set forth below is biographical information with respect to each of the aforementioned individuals.

CRAIG R. FIELDING, CHAIRMAN, CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, AND DIRECTOR, AGE 48

From April 2006 to the present, Mr. Fielding has served as our CEO and one of our directors. Mr. Fielding assumed the role of President and CEO in August 2010, and was part of the team that took Consorteum Holdings Inc., into the public market, and one of the founders of the company. From 1999 to February 2006 Mr. Fielding was part of the management teams at two startup technology companies in the financial transaction processing market place. From August 1989 to August 1999, Mr. Fielding worked in a number of Sales Management and Senior Management roles in North America with Xerox Canada Ltd. Mr. Fielding attended Manchester Polytechnic in England where he studied business. Mr. Fielding’s experience in technology, solution selling and large system building in his prior positions enables him to bring this valuable experience to the Board and as CEO of the Company effective September 21, 2012.

MR. PATRICK SHUSTER, CHIEF OPERATING OFFICER, DIRECTOR AGE 60

Mr. Shuster has over 22 years business experience, including over 15 years in executive management, engineering, operations and marketing in the telecommunications industry. He has spent five (5) years as an officer and director of a publicly traded company. He has assisted numerous public and private companies in business development and private investment in public equity. Mr. Shuster retired as a decorated officer in the United States Navy serving in the submarine service. His last active duty assignment was as Chief Engineer of a nuclear submarine, one of the Navy’s most demanding jobs.

Mr. Shuster has served as founder of Smart Voice Telecommunications Inc., from January 2004 to 2006. His responsibilities included all aspects of a founding principal of a Voice Over Internet Telecommunications Company. Since 2006, Mr. Shuster has consulted for several public and privately held companies to develop strategic business plans and streamline operations. Most recently he has consulted for several companies engaged in Homeland Security projects working on detection of CBNR (Chemical, Biological, Nuclear and Radiological) threats.

BOARD OF DIRECTORS AND OFFICERS

Each director is elected until our next annual meeting and until the successor is duly elected and qualified. The Board of Directors may also appoint additional directors up to the maximum number permitted under our by-laws. A director so chosen or appointed will hold office until the next annual meeting of stockholders. Each executive officer serves at the discretion of the Board of Directors and holds office until their successor is elected or until their resignation or removal in accordance with our articles of incorporation and by-laws.

MEETING AND COMMITTEES OF THE BOARD OF DIRECTORS

During the year ended June 30, 2012, our Board of Directors held 18 meetings and took 22 actions by written consent.

There are no Committees of the Board of Directors at this time.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, officers and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To the best of our knowledge, the following delinquencies have occurred:

CODE OF ETHICS

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, and principal accounting officer, controller, and all others performing similar functions. The Code of Ethics is not yet posted on our web site. We will furnish, without charge, a copy of our Code of Ethics to any person requesting a copy. Any request for a copy should be directed via e-mail to patrick@consorteum.com .

ITEM 11. Executive Compensation

COMPENSATION OF DIRECTORS

For the fiscal year ended June 30, 2012, none of the current or former directors were compensated for their services as directors.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation paid by us for services rendered for the fiscal year ended June 30, 2012 to each of the individuals who served as Executive Chairman, Chief Executive Officer, and Chief Operating Officer (executives collectively referred to as the “Named Executives”).

EXECUTIVE COMPENSATION TABLE

Name and Principal Position	Year	Salary			Stock Awards ($)		Option Awards ($)(2)			All other Compensation ($)		Total ($)
Craig A. Fielding,	2012	$	212,500	(5)		0	$	13,854		$	0	$	226,354
Chief Executive Officer	2011	$	47,000				$	0				$	47,000
	2010	$	151,520	(1)			$	45,266	(2)	$	22,160	$	218,946

Patrick Shuster,	2012	$	202,500	(3)		0	$	13,854		$	0	$	216,354
Chief Operating Officer	2011
	2010

Joseph Cellura,	2012	$	97,500	(4)		0	$	11,667		$	75,000	$	109,167
Chief Executive Officer	2011
	2010

(1)	Mr. Fielding waived $173,680 of his accrued salary for fiscal 2010 and agreed to be compensated by the issuance of shares of the Company’s common stock at a rate of $0.003 per share or a total of 30,000,000 shares.

(2)	On September 19, 2009, we issued 1,750,000 options to purchase shares of our common stock to the following named directors and officers.

Name of Executive Officer	Number of Options		Exercise Price

James D. Beatty		500,000	$	0.15
Craig A. Fielding		500,000	$	0.15
Quentin Rickerby		750,000	$	0.15

All of the options above expired on September 21, 2012.

(3)

Subsequent to yearend, the Company entered into a new 51-month employment agreement with Mr. Patrick Shuster to serve as Chief Operating Officer, retroactive to September 1, 2012. Under the September 21, 2012 employment agreement, Mr. Shuster is to be paid a base salary of $240,000 and incentive compensation amounting to 5% to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000. Mr. Shuster was granted 10-year stock options to purchase up to 5,000,000 shares of common stock that vest in equal installments under the employment agreement beginning September 1, 2012 through December 31, 2016. As a signing bonus, Mr. Shuster was issued 2,000,000 shares of Series A Preferred Stock was granted and 2,000,000 shares of Series B Preferred Stock. Additionally, Mr. Shuster is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.

(4)

Starting in December 1, 2011 the Company began accruing salary for Mr. Cellura as CEO. Mr. Cellura was to be paid a base salary of $195,000 per year. For the period from December 1, 2011 until his termination for cause on May 18, 2012 the Company recorded accrued salary of $97,500. In addition, Mr. Cellura received advances of $75,000 towards compensation and expenses.

(5)

Subsequent to yearend, the Company entered into a new 51-month employment agreement with Mr. Craig Fielding to serve as Chief Executive Officer, retroactive to September 1, 2012. Under the September 21, 2012 employment agreement, Mr. Fielding is to be paid a base salary of $240,000 and incentive compensation amounting to 5% to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000. Mr. Fielding was granted 10-year stock options to purchase up to 5,000,000 shares of common stock that vest in equal installments under the employment agreement beginning September 1, 2012 through December 31, 2016. As a signing bonus, Mr. Fielding received 3,000,000 shares of Series A Preferred Stock and 2,000,000 shares of Series B Preferred Stock. Additionally, Mr. Fielding is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.

OTHER COMPENSATION

There are no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans and nonqualified defined contribution plans. Except as set forth immediately below, there are no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in the named executive officer’s responsibilities following a change in control, with respect to each named executive officer.

STOCK OPTION PLANS AND STOCK COMPENSATION PLANS

We currently have the following forms of stock compensation, equity compensation, and deferred compensation or other plan or pension in place for our directors, executive officers, and employees: (i) 2008 Stock Option Plan; and (ii) 2008 Employees Compensation and Stock Option Plan. We are authorized to issue up to a maximum of 2,500,000 shares of our common stock under each such Plan. No grants of any kind were issued and outstanding under either Plan during the fiscal year ended June 30, 2012.

On September 19, 2009, we issued 1,750,000 options to purchase shares of our common stock to the following named directors and officers.

Name Of Executive Officer	Number Of Options		Exercise Price

James D. Beatty		500,000	$	0.15
Craig A. Fielding		500,000	$	0.15
Quentin Rickerby		750,000	$	0.15

All of the options above were cancelled on September 21, 2012.

On September 21, 2012, we granted the options to purchase 5,000,000 shares, each, of our common stock to Mr. Fielding and Mr. Shuster exercisable at the estimated fair market price based on our closing stock price on the grant date of $0.002 per share. Such shares began vesting on September 1, 2012.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information regarding the beneficial ownership of our common stock as of October 12, 2012 by: (i) all stockholders known to us to be owners of more than 5% of our outstanding common stock; and (ii) all of our officers and directors, individually and as a group:

Name and Address of Beneficial Owner	Amount (1)		Percentage of Class Ownership (2)

Craig A. Fielding		88,759,999 common shares (4)		29.00	%(2)
464 Worthington Avenue,
Richmond Hill, Ontario,
Canada, L4E 4R6

James D. Beatty		23,000,000 common shares (5)		7.56	%(2)
46 Teddington Park Avenue,
Toronto, Ontario,
Canada, M4N 2C6

Tim Brown		42,826,150 common shares (6)		12.16	%(6)
Gippsland Mail Center
Victoria Australia

T. Brown Family Investment Trust		34,426,150 common shares (7)		10.02	%(7)
Gippland Mail Center
Victoria Australia

Paul Martin		21,144,700 common shares		6.84	%(2)
Unit 1, 425 Burlington Avenue
Burlington, Ontario
Canada, L7S 1R3

OFFICERS AND DIRECTORS		88,759,999 common shares (1)		29.00	%(2)

(1)

The amount includes shares owned of record and beneficially by each of the directors and officers as at October 12, 2012.; thus it includes shares issued and to be issued for accrued compensation, return of previously surrendered shares to our treasury for other use, the reissuance of shares for an equivalent number of shares foreclosed upon in satisfaction of an obligation of us and the forgiveness of our indebtedness owed to directors or officers. See Item 9B. Other Information.

(2)	For purposes of this calculation all beneficial ownership issuances have been included as issued and outstanding.

(3)	Represents beneficial ownership and not ownership of record.

(4)	Mr. Fielding owns of record 10,000 shares of our common stock and is the beneficial owner of 88,749,999 shares of our common stock.

(5)	Mr. Beatty owns of record 3,000,000 shares of our common stock and is the beneficial owner of 20,000,000 shares of our common stock.

(6)

Mr. Brown owns directly 8,400,000 shares of our common stock and may be deemed to be the beneficial owner of 34,426,150 shares of our common stock that would be owned by the T.Brown Family Investment Trust (the "Trust") upon its conversion of $688,523.44 of our convertible promissory notes at a conversion of $0.02 for each share of common stock, by virtue of his position as trustee of the Trust. The Trust does not own any shares of our common stock at this time. See note 7 below.

(7)

The T. Brown Family Trust (the "Trust") does not own any shares of our common stock. The calculations in the table assume that the T. Brown Family Trust has converted a total of $688,523.44 of convertible promissory notes from the Company to the Trust into shares of our common stock at a conversion price of $0.02 per share. Under the promissory notes the conversion for all or any portion of the outstanding promissory notes can be made by the Trust at any time; therefore they are included in the table on as converted basis. These calculations are based upon the face amount of the Company promissory notes and do not include accrued and unpaid interest.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

Other than as set forth below, during the last fiscal year there has not been any relationships, transactions or proposed transactions to which we were or are to be a party, in which any of the directors, officers, or 5% or greater stockholders (or any immediate family thereof) had or is to have a direct or indirect material interest except for the following:

Share Issuances:

On September 21, 2012, we approved the issuance of 5,000,000 shares of Series A Preferred stock, 3,000,000 shares to Mr. Fielding and 2,000,000 shares to Mr. Shuster in connection with their employment contracts approved on September 21, 2012. In addition, we approved the issuance of 2,000,000 shares, each, of fully vested Series B Preferred stock. We have not issued the shares of our Preferred stock to these executive officers.

(b) On October 18, 2010, our Board of Directors approved the following issuances:

	(1)	3,500,000 shares of common stock to Mr. Peter Rickerby to replace an equivalent number of shares that Mr. Rickerby previously returned to treasury.
	(2)	11,835,000 shares of common stock to Mr. Quentin Rickerby to replace an equivalent number of shares that Mr. Rickerby previously returned to treasury.
	(3)	2,500,000 shares of common stock to Mr. Frank Fielding to replace an equivalent number of shares that Mr. Fielding previously returned to treasury.
	(4)	8,000,000 shares of common stock in satisfaction of a loan of $24,000 from Mr. Frank Fielding to us.
	(5)	20,000,00 shares of common stock to James D. Beatty and Associates as compensation for Mr. Beatty’s services up to and including August 26, 2010.
	(6)	8,750,000 shares of common stock to Mr. Craig A. Fielding to replace the identical number of shares owned by Mr. Fielding that were foreclosed upon in satisfaction of an obligation of ours to pay a promissory note for $100,000.
	(7)	30,000,000 shares of common stock to Mr. Craig A. Fielding as compensation for services performed by Mr. Fielding through and including October 19, 2010.
	(8)	33,333,333 shares of common stock to Mr. Craig A. Fielding in consideration for the elimination of a $100,000 loan from Mr. Fielding to us.

ITEM 14. Principal Accounting Fees and Services

(1) Audit Fees

The aggregate fees billed for the last fiscal year for professional services rendered by Sherb & Company, LLP, (“Accountant”) for the audit of our annual financial statements, and review of financial statements included in our Form 10-Q’s:

	2012		$	59,500
	2011		$	38,000

The fees billed for 2011 for professional services rendered by SF Chartered Accountants, LLP, (“Accountant”) for review of financial statements included in our Form 10-Q’s was $25,990.

(2) Audit Related Fees

None.

(3) Tax Fees

There were no fees billed in either of the last two fiscal years for professional services rendered for tax compliance, tax advice, or tax planning.

(4) All Other Fees

There were no other fees billed in each of the last two fiscal years for products and services other than the services reported above.

ITEM 15. Exhibits, Financial Statement Schedules

Index to Exhibits

(3)(i)		Articles of Incorporation of Consorteum, Inc., (incorporated by reference to Exhibit (3)(i) to the Company’s Current Report on Form 8-K filed on June 19, 2009).

(3)(ii)		By-laws of Consorteum, Inc. (incorporated by reference to Exhibit (3)(ii) to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.4		Shareholder Agreement dated January 5, 2009 among Consorteum, Inc., Innovative Solutions, Inc., William Bateman, and Michael Frasse (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.5		Management Services Agreement dated April 5, 2006 between Consorteum, Inc. and FP Financial Services, Ltd. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.6		Management Services Agreement dated as of May 1, 2006 between Consorteum, Inc. and Craig Fielding (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.7		Management Services Agreement dated as of May 1, 2006 between Consorteum, Inc. and Quentin Rickerby (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.8		Management Services Agreement dated as of May 1, 2006 between Consorteum, Inc. and James D. Beatty and Associates, Inc. (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.9		Joint Venture Agreement dated December 13, 2006 between Consorteum, Inc. and 1510848 Ontario, Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.10		Amended and Restated Management Services Agreement dated January 16, 2007 between Consorteum, Inc. and FP Financial Services, Ltd. (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on June 19, 2009).

10.11		Consorteum Purchase Agreement dated as of June 6, 2011 between Consorteum Holdings, Inc. and Media Exchange Group Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2011).

10.12		Assignment and Assumption Agreement dated as of June 6, 2011 between Consorteum Holdings, Inc. and Media Exchange Group Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 6, 2011).

10.13		Amendment Agreement dated as of June 6, 2011 between Consorteum Holdings, Inc. and Media Exchange Group Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 6, 2011).

10.14		Tarsin Acquisition Agreement dated as of Oct 4, 2011 between Consorteum Holdings, Inc. and Tarsin LTD (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 7, 2011).
10.15		Tarsin Licensing Agreement dated as of October 10, 2012 between Consorteum Holdings, Inc. and Tarsin Ltd.

10.16		Tarsin Termination Agreement dated October 10, 2012 between Consorteum Holdings Inc., Tarsin Ltd. and Tarsin Inc.

10.17		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers (incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K, filed May 21, 2012).

10.18		Settlement and Release Agreement dated October 26, 2012 between Consorteum, Inc., Consorteum Holdings, Inc., Game2Mobile Inc., Craig Fielding, Patrick Shuster, and Joseph Cellura.

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended (filed herewith).

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Label Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document

* Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Form 10-Q within the permitted 30-day grace period granted for the first quarterly period in which detailed footnote tagging is required.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CONSORTEUM HOLDINGS, INC.

Dated: November 7, 2012

	By:	/s/ Craig A. Fielding
	Craig A. Fielding Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Dated: November 7, 2012

Name	Position	Date

/s/ Craig A. Fielding	Chief Executive Officer, Chief	November 7, 2012
Craig A. Fielding	Financial Officer, Chairman of the Board of Directors (Principal Executive Officer, Principal Financial Officer)

/s/ Pat Shuster	Director	November 7, 2012
Pat Shuster

CONSORTEUM HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2012, and 2011

(EXPRESSED IN U.S. DOLLARS)

CONTENTS

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	F-4

Consolidated Statements of Operations and Comprehensive Loss	F-5

Consolidated Statements of Stockholders’ Deficit	F-6

Consolidated Statements of Cash Flows	F-7

Notes to Consolidated Financial Statements	F-8-18

F- 1

Report of Independent Registered Public Accounting Firm

The Directors and Shareholders of

Consorteum Holdings, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of Consorteum Holdings, Inc. and subsidiaries as of June 30, 2012 and 2011, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. These financial consolidated statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Consorteum Holdings, Inc. and subsidiaries as of June 30, 2012 and 2011, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that Consorteum Holdings, Inc. and subsidiaries will continue as a going concern. As more fully described in Note 1, the Company is in the development stage, has a working capital deficit, and has incurred net losses and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Sherb & Co., LLP

Certified Public Accountants

New York, New York

November 2, 2012

F- 2

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(A DEVELOPMENT STAGE COMPANY)

	June 30,			June 30,
	2012			2011
ASSETS
Current Assets:
Cash	$	9,371		$	3,641
Deferred finance charges		–			8,394
Total current assets		9,371			12,035

Property and equipment, net of accumulated depreciation		2,734			3,938
Intangible assets, net		145,000			–
Total assets	$	157,105		$	15,973

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses	$	1,143,351		$	745,478
Bank debt		–			158,307
Loans payable-short term		1,235,085			948,149
Convertible promissory notes		1,098,973			163,235
Due to related parties		196,085			523
Total current liabilities		3,673,494			2,015,692

Convertible promissory notes		2,189,490			–
Loans payable, net of short-term portion		–			407,998
Total liabilities		5,862,984			2,423,690

Stockholders' Deficit:
Preferred stock, $0.001 par value, 100,000,000 shares authorized: none issued and outstanding		–			–
Common stock; $0.001 par value; 500,000,000 shares authorized; 309,216,464 and 304,147,714 issued and outstanding		309,217			304,148
Collateralized shares issued		(137,500	)		(137,500	)
Shares committed to be issued		35,000			–
Additional paid-in capital		3,428,065			3,135,529
Accumulated other comprehensive loss		(102,518	)		(171,509	)
Deficit accumulated during prior development activities		(7,617,031	)		(5,538,385	)
Deficit accumulated during the development stage		(1,621,059	)		–

Total stockholders’ deficit		(5,705,879	)		(2,407,717	)

Total liabilities and stockholders’ deficit	$	157,105		$	15,973

See Notes to Consolidated Financial Statements.

F- 3

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(A DEVELOPMENT STAGE COMPANY)



	Year ended
	June 30,
	2012			2011

Revenues	$	–		$	–

Operating expenses
Selling, general and administrative		1,239,808			852,905
Total operating expenses		1,239,808			852,905

Operating loss		(1,239,808	)		(852,905	)

Other expense
Gain on debt restructuring		–			78,684
Gain on settlement of debt		68,813			–
Interest expense		(450,064	)		(141,536	)
		(381,251	)		(62,852	)

Net loss		(1,621,059	)		(915,757	)

Foreign currency translation adjustment		68,938			(116,815	)

Comprehensive loss	$	(1,552,121	)	$	(1,032,572	)

Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)

Basic and diluted weighted average common shares outstanding		305,407,977			206,796,885

See Notes to Consolidated Financial Statements.

F- 4

CONSORTEUM HOLDINGS, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FROM INCEPTION (July 1, 2011 TO JUNE 30, 2012

(A DEVELOPMENT STAGE COMPANY)

	Preferred Stock						Common Stock						Collateralized			Shares Committed to be		Treasury			Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			$			Shares			$			Shares Issued			Issued		Stock			Capital			Income (loss)			Deficit			Deficit

Balance, June 30, 2010		–		$	–			93,953,715			93,954		$	(137,500	)	$	–	$	15,286		$	2,737,908		$	(54,694	)	$	(4,622,628	)	$	(1,967,674	)

Fair value of shares issued for services		–			–			23,000,000			23,000			–			–		–			40,000			–			–			63,000
Fair value of shares issued in lieu of interest		–			–			1,500,000			1,500			–			–		–			3,000			–			–			4,500
Fair value of shares issued to satisfy obligations under loans payable		–			–			37,498,000			37,498			–			–		–			46,172			–			–			83,670
Fair value of shares issued to satisfy certain liabilities		–			–			61,000,000			61,000			–			–		–			119,000			–			–			180,000
Fair value of shares to satisfy obligations to shareholders		–			–			73,160,999			73,161			–			–		–			188,198			–			–			261,359
Shares issued from treasury		–			–			17,835,000			17,835			–			–		(15,286	)		(2,549	)		–			–			–
Shares returned to treasury		–			–			(3,800,000	)		(3,800	)		–			–		–			3,800			–			–			–
Foreign currency translation		–			–			–			–			–			–		–			–			(116,815	)		–			(116,815	)
Net loss		–			–			–			–			–			–		–			–			–			(915,757	)		(915,757	)
Ending balance, June 30, 2011		–			–			304,147,714			304,148			(137,500	)		–		–			3,135,529			(171,509	)		(5,538,385	)		(2,407,717	)

Fair Value of preferred stock issued for services (Series B)		14,000,000			14,000			–			–			–			–		–			124,000			–			–			138,000
Distributions (Series A)		5,000,000			5,000			–			–			–			–		–			–			–			(2,078,646	)		(2,073,646	)
Return of preferred shares		(19,000,000	)		(19,000	)		–			–			–			–		–			19,000			–			–			–
Conversion of note		–			–			5,068,750			5,069						–					96,306			–			–			101,375
Stock option expense		–			–			–			–			–			–		–			53,230			–			–			53,230
Shares committed to be issued		–			–			–			–			–			35,000		–			–			–			–			35,000
Foreign currency translation		–			–			–			–			–			–		–			–			68,938			–			68,938
Net loss		–			–			–			–			–			–		–			–			–			(1,621,059	)		(1,621,059	)
Ending balance, June 30, 2012		–		$	–			309,216,464		$	309,217		$	(137,500	)	$	35,000	$	–			3,428,065		$	(102,571	)	$	(9,238,090	)	$	(5,705,879	)

See Notes to Consolidated Financial Statements.

F- 5

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(A DEVELOPMENT STAGE COMPANY)

	Year ended
	June 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(1,621,059	)	$	(915,757	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment in investment of an affiliated company		1,176			–
Depreciation		–			1,625
Gain on forgiveness or restructuring of debt		–			(90,593	)
Gain on settlement of debt		(68,813	)
Amortization of deferred finance charges and debt discount		59,141			19,038
Impairment of intangible asset		–			10,279
Fair value of shares issued for services		191,230			63,000
Changes in operating assets and liabilities:
Other receivable		–			11,512
Prepaid expenses		–			–
Accounts payable and accrued liabilities		423,606			244,029
Accrued interest		411,269			186,609

Net cash used in operating activities		(603,450	)		(470,258	)

Cash flows used in investing activities:
Purchase of license agreement		(145,000	)		11,512

Net cash provided (used in) by investing activities		(145,000	)		11,512

Cash flows from financing activities:
Proceeds from loans		141482			425,000
Repayment of loans		–			(74,408	)
Repayment of bank indebtedness		(121,938	)		(9,900	)
Proceeds from stockholders' advances		195,585			111,300
Repayment of stockholders' advances		–			(111,878	)
Repayment of convertible promissory notes		(4,020	)		–
Proceeds from the issuance of convertible promissory notes		541,757			124,301

Net cash provided by financing activities		752,866			464,415

Effect of exchange rate on cash		1,314			374

Net increase (decrease) in cash		5,730			(5,469	)

Cash, beginning of period		3,641			9,110

Cash, end of period	$	9,371		$	3,641

Supplemental disclosures of cash flow information:
Cash paid for interest	$	–		$	–

Cash paid for income taxes	$	–		$	–

Non-cash investing and financing activities:

Fair value of shares to satisfy obligations under loan payable	$	–		$	83,670
Fair value of shares to satisfy certain liabilities	$	–		$	180,000
Fair value of shares to satisfy obligations to stockholders	$	–		$	261,539
Carrying value of shares issued from treasury stock	$	–		$	17,835
Fair value of convertible notes issued related to acquisition	$	2,078,646		$	–
Conversion of convertible note payable	$	101,375		$	–

See Notes to Consolidated Financial Statements.

F- 6

CONSORTEUM HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANICIAL STATEMENTS

1. Organization, Development Stage Activities, and Going Concern

Consorteum Holdings, Inc. ("Holdings" and subsequent to the reverse merger, the “Company”), formerly known as Implex Corporation, was incorporated in the State of Nevada on November 7, 2005. On April 9, 2009, Holdings changed its name to Consorteum Holdings, Inc.

On June 15, 2009, we entered into an agreement and plan of exchange whereby Holdings acquired 100% of the issued and outstanding shares of common stock of Consorteum Inc. (“Consorteum”) from Consorteum's stockholders, by exchanging 39,999,750 shares of Holdings’ common stock, in a reverse merger transaction. Consorteum is a company incorporated under the laws of the province of Ontario on April 3, 2006. Prior to the agreement and plan of exchange, Holdings had 29,860,000 shares of its common stock, issued and outstanding. At the closing of the exchange transaction, Holdings cancelled 23,000,000 shares of its common stock held by one stockholder. As a result of the exchange, the principal stockholders of Consorteum controlled 85% of Holdings.

On June 6, 2011, the Company entered into an asset purchase agreement, as amended, with Media Exchange Group, Inc. (“MEXI”) pursuant to which the Company agreed to buy, transfer and assign to the Company, and MEXI has agreed to sell all of the rights, title and interests to, and agreements relating to, its digital trading card business and platform, as well as all other intangible assets of the business in exchange for the Company assuming an aggregate principal and accrued interest amount of approximately $2.1 million of indebtedness of MEXI in accordance with the terms of that certain assignment and assumption agreement executed on June 6, 2011. On July 14, 2011, the Company completed its due diligence and finalized the asset purchase agreement with MEXI. A majority shareholder of MEXI and the former Chief Executive Officer, Director and Chairman of the Board of MEXI (who resigned on June 3, 2011) organized the asset purchase agreement with MEXI. In addition, the control persons of MEXI were effectively issued 5,000,000 shares of Series A preferred stock (see Note 10), which have super voting rights, causing such persons to have voting control of the Company. Accordingly, the transaction was deemed consummated between two entities under common control and the transfer of assets was recorded at historical cost. MEXI’s rights, title and interests to, and agreements relating to, its digital trading card business and platform were valued at the historical cost basis of zero since MEXI’s activities were related to research and development. However, in connection with the acquisition, the Company assumed convertible notes amounting to $2,073,646 of MEXI (principal and accrued interest as of July 2011), and accordingly, recorded a corresponding charge in the deficit accumulated during the development stage in the accompanying consolidated balance sheet at June 30, 2012, and the statement of Stockholders’ Deficit for the fiscal year ended June 30, 2012. See Note 10 for commitments and contingencies related to 5,000,000 shares of Series A preferred stock not issued.

On July 8, 2011, the former Chief Executive Officer of MEXI assumed the position of the Chairman and Chief Executive Officer of Consorteum Holdings, Inc. and, in accordance with the Board of Director’s authorization, was directed to submit an executory employment contract which promised 4,000,000 shares of Consorteum’s Series B preferred stock as part of his compensation in accordance with the terms of his executory contract. However, the board of directors never approved the executory contract. See Note 10.

On October 4, 2011, the Company entered into an Acquisition Agreement (the “Agreement”) with Tarsin (Europe) LTD, a company organized under the laws of the United Kingdom (“Seller”), whereby the Company agreed to purchase 100% of the issued and outstanding shares of Tarsin, Inc., a Nevada corporation (“Tarsin Subsidiary”) from Seller. On November 4, 2011, the Company entered into Amendment No. 1 (the “Amendment”) to the Agreement. Pursuant to the Agreement and the Amendment, the Company was to purchase 100% of the issued and outstanding shares of Tarsin Subsidiary from Seller for: (1) a total of 24,500,000 shares of the Company’s common stock issued at a deemed issuance price of $0.10 per share; and (2) a cash payment of $3,000,000 to Seller as follows: (i) $200,000 no later than January 30, 2012, (ii) $800,000 no later than March 31, 2012, (iii) $1,000,000 no later than July 31, 2012, and (iv) $1,000,000 no later than December 31, 2012. Further, the Company was to have paid in full the existing outstanding balance owed by Seller on its line of credit established with NAT West in the total amount of $90,000. Pursuant to the Amendment No. 1 above, Seller further agreed to grant to the Company an exclusive, worldwide perpetual license to use, distribute, and sell its CAPSA Mobile Platform technology in consideration for a 12.5% royalty fee calculated on future net revenues from the use of the CAPSA Mobile Platform technology. The Company was further obligated to provide or procure working capital to Tarsin Subsidiary as follows: (1) $300,000 no later than December 31, 2011, and (2) an additional $250,000 no later than March 31, 2012 and (3) an additional $1,150,000 no later than December 31, 2012. The Company has been unable to meet these obligations because the Company was unable to provide the necessary financing. In connection therewith, the Company advanced monies for working capital totaling approximately $145,000 through June 30, 2012. The acquisition was not completed because the Company was unable to provide the necessary financing.

In July 2012, the Company entered into new negotiations with Tarsin Inc. in order to reach an agreement that would preserve the value of our investment and the CAPSA platform as developed by Tarsin, and allow the Company to leverage its relationships with existing Canadian based casinos and resorts as customers that could utilize the CAPSA platform to provide mobile wagering and gaming to their customers. As discussed in Note 13, the Company reached a new exclusive licensing agreement with Tarsin that allows the Company to license the CAPSA platform to sell mobile gaming and wagering programs throughout Canada, Mexico and select customers within the United States, as well as other countries. The Company agreed to unwind its acquisition Agreement previously entered into and Tarsin is again operating as a privately held Nevada corporation.

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Development Stage Activities

We previously operated as a technology and services aggregator to meet the diverse needs of its client base by leveraging its wide-ranging partner technologies to develop end-to-end, turnkey card and payment transaction processing solutions. On or about July 14, 2011, we changed our date of inception as a result of the change in business for accounting of our development-stage activities under Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”. Activities prior to such date are included in development activities and the historical accumulated losses are segregating in the accompanying consolidated balance sheet in stockholders’ deficit. In June 2011, we began to focus our efforts to acquire Tarsin, Inc.; however, we were unsuccessful in completing the acquisition because we could not secure the financing necessary to close. In October 2012, we secured a license to market and license the CAPSA technology from Tarsin. We expect to generate revenues from licensing the CAPSA technology in fiscal 2013. We have established an inception date effective July 1, 2011 (Inception).

Going Concern Assumption

The Company's consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business. The Company is in the development stage and has suffered losses from operations. As of June 30, 2012, the Company had a working capital deficit (current liabilities in excess of current assets) of approximately $3.7 million. The Company's working capital deficit and recent losses raise substantial doubt as to its ability to continue as a going concern.

We have secured working capital of approximately $677,000 during the year ended June 30, 2012. Subsequent to such date, we have raised additional capital totaling approximately $315,000; such proceeds were used for working capital of the business and to advance funds to Tarsin. We require additional equity or debt financing to meet our obligations as they become due. In the event that such financing is not secured, the Company will not be able to satisfy its liabilities. Furthermore, certain debt is overdue and is secured by all assets of the Company. We are attempting to restructure some of the debt and secure additional financing to satisfy its existing obligations and provide for sufficient working capital to meet the Company’s future obligations but there are no guarantees that we will be able to do so. Our convertible notes of approximately $2.2 million reflected as non-current liabilities will be satisfied through the issuance of common stock, which is in our control and expected to be completed no later than the Company’s quarterly period ended March 31, 2013.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern.

2.	Summary of Significant Accounting Policies

The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America, and their basis of application is consistent with that of the previous year. Set forth below are the Company's significant accounting policies:

Basis of Presentation

The consolidated financial statements include the accounts of Consorteum Holdings, Inc., Consorteum Inc., and My Golf Rewards Canada, Inc. All significant intercompany balances and transactions are eliminated on consolidation. The merger of Holdings and Consorteum has been recorded as a recapitalization of Holdings, with the net assets of Consorteum and Holdings brought forward at their historical bases and represents a continuation of the financial statements of Consorteum. The substance of the Company’s share issuance and the reorganization is a transaction which results in Consorteum becoming a listed public entity through Holdings’ acquisition of Consorteum's net assets.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant areas requiring the use of estimates relate to the estimated useful lives of equipment, the utilization of future income tax assets and the valuation of stock-based compensation. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results will ultimately differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents comprise bank balances and short-term bank deposits with an original maturity of three months or less.

Property and equipment

Property and equipment is recorded at cost. Depreciation, based on the estimated useful life of the property and equipment, is provided over a period of three years.

Intangible asset

Intangible asset represents a software license right acquired as part of our exclusive licensing agreement with Tarsin Inc. to use the Capsa platform in defined territories. The license is subject to an annual license fee, which was satisfied for 2013 in consideration for $145,000 paid to Tarsin Inc.

Impairment of long-lived assets

In accordance with ASC 360, "Property, plant and equipment," long lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. At June 30, 2011, we fully impaired an intangible asset totaling $10,000.

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Deferred finance charges

Deferred finance charges represent the unamortized financing costs associated with the issuance of debt instruments and are amortized over the terms of the respective financing arrangement.

Convertible Debt with Beneficial Conversion Features

Convertible debt is accounted for under the guidelines established by Accounting Standards Codification (“ASC”) 470 “Debt with Conversion and Other Options” and ASC 740 “Beneficial Conversion Features”. The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that have conversion features at fixed or adjustable rates that are in-the-money when issued and records the fair value of warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to paid-in-capital.

The Company calculates the fair value of warrants issued, if any, with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718 “Compensation – Stock Compensation”, except that the contractual life of the warrant is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. For a conversion price change of a convertible debt issue, the additional intrinsic value of the debt conversion feature, calculated as the number of additional shares issuable due to a conversion price change multiplied by the previous conversion price, is recorded as additional debt discount and amortized over the remaining life of the debt.

Convertible Debt with Adjustable Conversion Options

Convertible debt which contains rights that allow the holders to adjust their conversion price in the event the Company issues common stock at a price per share below their conversion price or convert principal into a variable number of shares with no floor price. Accordingly, the provisions of ASC 815 “Derivatives and Hedging” (“ASC 815”) apply and must be evaluated by us. ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. These conversion features are bifurcated and recorded at fair value at each reporting date using the Black Sholes valuation model.

Revenue recognition

The Company will recognize revenue based on the following criteria: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured.

Share-Based Payments

The Company accounts for stock options issued to employees and consultants under ASC 718 “Share-Based Payment”. Under ASC 718, share-based compensation cost to employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee's requisite vesting period.

The Company measures compensation expense for its non-employee stock-based compensation under ASC 505 “Equity”. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to stock-based compensation expense and credited to additional paid-in capital.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes." Deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

Foreign currency translation

In accordance with the provision of ASC 830, "Foreign Currency Matters," the Company, whose functional currency is the Canadian dollar, translates its balance sheet into U.S. dollars at the prevailing rate at the balance sheet date and translates its revenues and expenses at the average rates prevailing during each reporting period. Net gains or losses resulting from the translation of financial statements are accumulated and charged directly to accumulated comprehensive income or (loss), a component of stockholders' equity or (deficit). Realized gains or losses resulting from foreign currency transactions are included in operations for the period.

Comprehensive Income or loss

The Company applies the provisions of ASC 220, “Comprehensive Income.” Unrealized gains and losses from foreign exchange translation are reported in the accompanying consolidated statements as comprehensive income or loss.

F- 9

Earnings or loss per share

The Company accounts for earnings or loss per share pursuant to ASC 260, "Earnings per Share," which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus potentially dilutive securities outstanding for each year. The computation of diluted earnings (loss) per share has not been presented as its effect would be anti-dilutive.

The Company excluded 16,500,000 options and 2,492,184 warrants from the calculation for the year ended June 30, 2012 as the exercise prices were in excess of the average closing price of the Company’s common stock. In addition, all conversion prices of convertible debt were in excess of the average closing price of the Company’s common stock, and accordingly, excluded from dilutive share calculation.

Concentration of Credit Risk

ASC 825 "Financial Instruments," requires disclosure of any significant off-balance-sheet risk and credit risk concentration. The Company does not have significant off-balance-sheet risk or credit concentration. The Company maintains cash with major financial institutions. From time to time, the Company may have funds on deposit with commercial banks that exceed federally insured limits. Management does not consider this to be a significant credit risk as these banks and financial institutions have good standing.

The Company maintains its cash accounts in a commercial bank and in an institutional money-market fund account. The total cash balances held in a commercial bank are secured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, although on January 1, 2014 this amount is scheduled to return to $100,000 per depositor, per insured bank. At times, the Company has cash deposits in excess of federally insured limits. In addition, the Institutional Funds Account is insured through the Securities Investor Protection Corporation (“SIPC”) up to $500,000 per customer, including up to $100,000 for cash. At times, the Company has cash deposits in excess of federally and institutional insured limits.

Recent accounting pronouncements

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Except for the ASUs listed above, those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

3.	Fair Value Measurements

The Company adopted ASC 820 “Fair Value Measurements and Disclosures.” ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Cash, bank indebtedness (Level 1), other receivables, due to stockholders, accounts payable, accrued liabilities, and loans payable (Level 2) are reflected in the balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments.

4.	Equipment, Net

Equipment consists of cost of computer equipment of approximately $20,400 and $20,000, at June 30, 2012 and 2011, respectively, and related accumulated depreciation of approximately $17,700 and $17,000 at June 30, 2012 and 2011, respectively.

Depreciation expense amounted to approximately $1,200 and $1,600 during fiscal 2012 and 2011, respectively.

5.	Intangible Asset s

The Company advanced $145,000 to Tarsin through June 30, 2012 and subsequent to year end, we secured a license as discussed in Note 13. We have reported the amount paid as an intangible asset as a result.

As a result of the acquisition of the additional interest in My Golf Rewards Canada Inc., the Company acquired an interest in the rights to a software license and other proprietary software necessary to operate the business. Accordingly, the asset has been recorded at its estimated acquisition cost, which value has been supported by recent arms-length negotiations.

F- 10

The asset was amortized on a systematic basis over its estimated life. The software license is subject to an annual renewal fee which will be expensed as incurred.

Purchase price allocation as follows:

Purchase Price			$	46,717

Cash			$	9,814
Accounts Receivable				150,872
Total Assets			$	160,686

Accounts Payable	$	40,199
Loan Payable	$	83,692

Total Liabilities			$	123,891

Net Assets Acquired					$	36,795

Intangible asset					$	9,922

During its annual review of impairment of intangibles for the year ended June 30, 2011, management determined that the unit My Golf Rewards Canada, Inc. would not be profitable for the following two years. Additionally, the proprietary technology may become obsolete by the time the Company becomes profitable. While the Company believes that My Golf Rewards Canada, Inc. may become profitable in the future, assuming that it is able to secure proper financing for working capital, the proprietary technology would have to be substantially redesigned using the latest software engineering technology. Additionally, management does not believe that the proprietary technology can be licensed to third-parties without significant customization, further reducing the value of the proprietary technology. Accordingly, Management, impairment the full value of the asset of approximately $10,000, with a corresponding charge to selling, general, and administrative expense as of and during the year ended June 30, 2011.

6.	Bank Indebtedness

Bank indebtedness was comprised of a Royal Bank of Canada (“RBC”) demand term loan and an operating credit facility. Starting July 2008, the loan was repayable on a monthly basis at $1,792 plus interest, at RBC’s prime rate plus 2% per annum. The loan was scheduled to mature in June 2013. The loan was secured by a general security agreement signed by the Company constituting a first ranking security interest in all personal properties of the Company and personal guarantees from certain stockholders. In 2010, the Company defaulted on the note and RBC obtained a judgment against the Company and it guarantors.

In May 2012, the loan was satisfied by our Chief Executive Officer (CEO), who was a co-guarantor on the debt, in the amount of $162,500. The Company entered into a note agreement to repay our CEO the funds used to satisfy the RBC note – See Note 7 and 9. The co-guarantor was responsible for $51,000 of the bank indebtedness and remitted said funds along with funds provided by the Company’s CEO. The co-guarantor forgave the company of any indebtedness due him as part of the settlement. Accordingly, a total gain of approximately $69,000 was recognized on settlement of debt.

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7. Loans Payable and Convertible Promissory Notes

Loans payable are as follows:

	June 30,			June 30,
	2012			2011

Loans payable, bearing interest at rates between 10% and 18% per annum. Interest payable monthly. These loans are past due. Unsecured and payable on demand. Accrued interest of $212,201 and $90,926 at June 30, 2012 and 2011, respectively	$	1,235,085		$	1,372,085
Less: Current portion		(1,235,085	)		(407,998	)
Loans payable, non-current	$	–		$	1,372,085

Convertible Promissory Notes are as follows:

	June 30,			June 30,
	2012			2011
Convertible promissory notes assumed in accordance with asset purchase agreement with Media Exchange Group bearing interest between 5% to 8% per annum, convertible into shares of common stock at a rate ranging from $0.01 to $0.05. Accrued interest at June 30, 2012 was $408,521. These notes were convertible upon the merger that occurred in July 2011.	$	2,189,490		$	–

Convertible promissory notes, bearing interest between 5% and 18% per annum, maturing between October 2010 and December 2012. Interest is payable at maturity. The promissory notes are convertible at any time at the option of the holder, into shares of common stock at a rate ranging from $0.008 to $0.05 or at 35% discount of market. Accrued interest of $112,616 and $45,679 at June 30, 2012 and 2011. The notes are substantially in default at June 30, 2012.		762,242			163,235

Convertible promissory notes, bearing interest between at 5% per annum, maturing October 2012 to May 2013. Interest payable monthly. The note is convertible at any time at the option of the holder, into shares of common stock at a rate from $0.02 to $0.05, each. Accrued interest of $12,231 at June 30, 2012.		336,731

Convertible promissory notes	$	3,288,463		$	163,235
Less: short-term portion		(1,098,973	)		(163,235	)
Convertible promissory notes long-term portion	$	2,198,490		$	–

Loans Payable

In April 2012, the Company received $45,000 from an individual known to Mr. Cellura. To date, we have been unable to obtain an agreement with this party; however, the proposed terms are that the amount is due April 23, 2013, interest at 8%, per annum and no conversion rights. In connection with our settlement agreement with Mr. Cellura as discussed in Note 10, Mr. Cellura is to assume the obligation and formalize an agreement for said amount. We have included such amount in our financial statements until such time the agreement is consummated and the Company released from any obligation to repay the amount.

On June 12, 2012, the Company received $31,168 and issued a note for a promise to repay $34,000, representing interest in the amount $2,832, on July 31, 2012. In connection therewith, we committed to issue 5,000,000 shares of our common stock valued at approximately $35,000 using our closing stock price of $0.007 as additional consideration. The note has a default rate of interest of 15%, per annum. The note has not been satisfied and is currently in technical default. As of the date of these financial statements the shares of our common stock has not been issued.

On June 12, 2012, the Company issued a note for $35,314 received, interest at 5%, per annum, due August 31, 2012. The note has not been satisfied and is currently in technical default.

The Company issued 5,068,750 and 37,498,000 shares of its common stock to satisfy obligations under certain loans payable aggregating approximately, $101,375 and $84,000 during fiscal 2012 and 2011, respectively.

On May 15, 2012, the Company received $200,000 from a third party. Of the $200,000 initially received, $170,000 was immediately returned and directed to Tarsin per the instructions of the third party investor. The Company retained $30,000 as a loan payable. The Company has not yet negotiated final terms of the loan.

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Convertible Promissory Notes

On May 15, 2012, the Company formalized a convertible promissory note stemming from $254,500 received from January to April 2012. The convertible note bears interest at 5% per annum, matures May 14, 2013, and is convertible at the option of the holder, at any time into shares of the company’s common stock at $0.05 per share. In addition to those terms, the note is convertible into shares in the event of a reverse stock split at 85% of the average trailing price ten (10) days after such an event.

From July through August 2011, the Company received advances from various individuals of approximately $77,000 and issued notes, with interest at 8%, per annum (default rate of 12%) and due December 31, 2011. In connection therewith, the Company issued warrants to purchase 425,000 shares of the Company’s common stock at $0.025 per share, which expire in five years. The Company valued the warrants using the Black-Scholes valuation method, and determining the value of the warrants was insignificant compared to the debt.

From July through December 2011, the Company received advances from various individuals of approximately $211,000 and issued convertible notes, with interest ranging from 5% to 8%, per annum and due between December 31, 2011 and December 31, 2012. These convertible notes are convertible into shares of the company’s common stock based on conversion prices ranging from $0.008 to $0.025 per share.

In connection with the assumption of convertible notes from MEXI in June 2011 of approximately $2.1 million, we required each holder to agree to certain terms and conditions. The holders agreed to accept shares of common stock at $0.01 or $0.05 per share, depending on the nature and terms of their then existing note. No holder may demand repayment under the terms of the assumption. All notes will be converted into common stock based on the original principal of the note, exclusive of accrued interest. If all notes were converted at their respected principal amounts, we would issue approximately 119 million shares of our common stock. We intend to satisfy the notes with our common stock no later than March 31, 2013. Accordingly, we have classified these convertible notes as non-current liabilities in the accompanying consolidated balance sheet at June 30, 2012 because of our control over conversion and our intent to force conversion into common stock.

On November 2, 2010, the Company issued a $380,000 convertible secured promissory note bearing interest at 12% per annum to a private investor. These funds were used for general working capital. Interest only was payable quarterly in arrears, with all remaining interest and principal due and payable on November 2, 2011 (see Note 13 for discussion of the refinancing of the note). At the option of the investor, all or part of the principal could have be paid by cancelling the amount sought to be converted through the issuance of shares of the Company’s common stock at a discount of thirty-five percent (35%) from the average of the bid and ask price of the common stock for the ten days preceding the date selected for conversion. The Company also issued the lender 7,500,000 restricted shares of the Company as part of the transaction. The collateral to secure the promissory note was not specified.

An additional amount of $75,000 was advanced in December 2010 as a loan which bore interest at 12% per annum, and a final advance of $45,000 Canadian was provided in May 2011. Both of these advances with interest were combined into a second convertible promissory note for $124,031, bearing interest at 12% per annum. These funds were also used for working capital. The promissory note and all accrued interest was convertible into common shares of the Company at a conversion rate of $0.03 per share. The promissory note was due for repayment May 2012. In connection with the issue of the promissory note, the lender was granted warrants on this note equal to 25% of the value of the promissory note and interest that may be converted. The warrants were granted at $0.015 per share. See Note 13 for the refinancing of this note.

The Company recognized interest expense of approximately $341,231 and $141,000 during fiscal 2012 and 2011, respectively, in connection with all loans and convertible promissory notes.

The Company and one of the holders of a loan payable agreed to restructure the terms of its loan payable during fiscal 2011. The interest rate was reduced from 18% to 6% retroactively, resulting in a gain on debt restructuring of approximately $79,000.

The Company has minimum principal payments of $88 due or coming due in fiscal 2012 and approximately $254,500 due in fiscal 2014.

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8.	Due to Related Parties

In fiscal 2012, the Company received approximately $19,500 from a stockholder. The advances are unsecured and have no fixed repayment terms. The amount to be repaid is approximately $20,000 which is the amount reflected at June 30, 2012. During fiscal 2011, stockholders advanced to the Company approximately $111,000 and repaid approximately $112,000.

On May 30, 2012, the Company formalized a convertible promissory note with the Company’s CEO for approximately $179,809. The convertible note bears interest at 5% per annum, matures May 29, 2012, and is convertible at the option of the holder, at any time into shares of the Company’s common stock at $0.02 per share. Of the total monies advanced by the CEO, approximately $111,500 was used for settlement of bank indebtedness (see Note 6), approximately $15,600 was used to pay legal fees in connection with the bank indebtedness settlement, and approximately $52,700 was used to pay certain operating costs on behalf of the Company.

See Note 9 for Additional Note.

During fiscal 2011, the Company issued 73,160,999 shares of its common stock at a fair value of approximately $261,000 to satisfy certain of its obligations to such stockholders.

9.	Certain Related Party Transactions

The Company’s Chief Executive Officer repaid the obligation to RBC on behalf of the Company – see Notes 6 and 8, as well as paid direct and indirect costs as a result of his guarantee on the debt on behalf of the Company.

In addition, our CEO advanced addition monies to provide cash for operations in the amount of $19,500, as described in Note 8.

For the period from December 1, 2011 through June 30, 2012, our former CEO was paid $97,500 for services. In addition, advances of $90,816.94 were made by and to our former CEO, which have been expensed. We plan to file the appropriate tax information with the Internal Revenue Service for the calendar year 2012.

10.

Commitments and Contingencies

Threatened Litigation

In July 2011, the board of directors approved the acquisition of MEXI and the appointment of Joe Cellura as the CEO of the Company. At that time, we intended approve and file designations with the Nevada Secretary of State for Series A Preferred Stock, as well as Series B Preferred and to enter into an employment agreement as compensation to Mr. Cellura with expectation that Mr. Cellura could raise the funds necessary to exploit technologies. Once the Series A & B Preferred Stock designations were to be filed, the Board was obligated to issue 55% of the 5,000,000 shares of Series A Preferred Stock in connection with the acquisition of MEXI and 4,000,000 shares of Series B Preferred Stock in connection with the proposed employment agreement with Joe Cellura. However, Mr. Cellura elected to not submit an Employment contract for Board approval due to lack of funding.

Mr. Cellura, during his position as CEO, raised capital for his compensation and to provide working capital to Tarsin in an effort to complete the acquisition of Tarsin. Insufficient funds were raised and ultimately the acquisition of Tarsin was suspended and disagreements occurred among management and the board of directors. On May 18, 2012, Mr. Joseph A. Cellura was removed from his position as a CEO, director and Chairman of the board of directors of Consorteum. Mr. Cellura’s removal was accomplished through a written consent dated as of May 18, 2012 in lieu of a meeting. In the same Written Consent Mr. Craig A. Fielding, the sole remaining director of the Company was appointed Chief Executive Officer (CEO), President, Chief Financial Officer and Secretary of the Company effective May 18, 2012. Ultimately after the removal of Mr. Cellura, the board of directors elected not to issue the Series A & B Preferred Stock because of the removal of Mr. Cellura due to his failure to meet shareholder expectations concerning the direction of the Company, specifically but not limited to, his failure to source and secure critical funding for the Company in the amounts and at the times required to further the Company’s development.

F- 14

In October 2012 the Company and Cellura as well as certain of the individual defendants named in the Action entered into a settlement agreement (“Settlement Agreement”) pursuant to which (among other matters) Cellura agreed to discontinue the Action against the Company and file a stipulation of discontinuance with prejudice with the Court in which the Action was pending. The parties also agreed to exchange general releases with each other such that all claims by Cellura and his affiliates against the Company will be resolved. In connection therewith, the Company will pay Mr. Cellura approximately $46,000.

Employment Agreements

As discussed above, on September 21, 2012, the Company’s board of directors approved two new employment contracts with its CEO and Chief Operating Officer through December 31, 2016. Such contracts provide for annual salaries, bonuses, stock-based compensation and other benefits. See Note 13.

Other Matter

During the fourth quarter of fiscal 2012, the Company received $200,000 from an unrelated party known to Mr. Cellura. Of such funds, $170,000 was advanced to Tarsin to provide working capital in an effort to consummate our acquisition agreement. The balance of $30,000 was used to compensate Mr. Cellura. The Company’s board of directors did not approve the transactions. As a result, we requested Tarsin management to assume the investment and satisfy the investor with an interest in Tarsin. We received confirmation that $170,000 was received and that the entire $200,000 obligation was assumed by Tarsin. No obligation remains as of June 30, 2012.

11.

Stockholders Deficit

The Company is authorized to issue 500,000,000 shares of common stock and 100,000,000 shares of preferred stock. At the present time, assuming all of the rights and obligations to issue 163,252,741 shares our common stock under convertible notes, warrants and stock options became due as of June 30, 2012, we would have sufficient authorized common shares to fulfill as such obligations. However , our two officers, which are also directors, control sufficient votes through their holdings of Series A Preferred stock to increase the authorized shares at any time, when deemed appropriate. We intend to increase our authorized common shares in the near future from 500 million to 1 billion.

Preferred Stock

In November 2011, the Company’s board of directors approved an amendment of the Company’s Articles of Incorporation, whereby the designations of Series A and Series B preferred stock were established, and the number of Series A preferred shares to be issued at 5,000,000 and the number of Series B preferred shares to be issued at 15,000,000. The rights and privileges of the Series A shares consist of super voting rights at 200 votes per share held, conversion rights on a one-to-one basis with common stock, and liquidation preference as described below. The rights and privileges of the Series B shares have voting rights equal to one vote per share held, conversion rights equal to Series A and liquidation preference as described below.

As discussed in Note 10, the Company was to issue shares of Series A and B Preferred Stock in connection with the acquisition of MEXI and as compensation to Mr. Cellura. In addition, the Company was to issue 4,000,000 shares of the Company’s Series B Preferred Stock to Craig Fielding for compensation for his employment. The 8,000,000 Series B Preferred shares described above were valued at $0.012 on the date of commitment based on the market value of the Company’s common stock, and as a result, the Company recorded $96,000 of compensation expense which is included in selling, general and administrative expense during the year ended June 30, 2012. These shares were ultimately not issued and were deemed cancelled in May 2012. As appropriate, we did not reverse the compensation expense upon the cancellation of the commitment to issue such shares in May 2012.

On December 1, 2011, the Company’s board of directors approved employment contracts with two additional employees. In connection therewith, the two employees were to be issued 4,000,000 and 2,000,000 Series B Preferred stock, respectively, which were deemed vested on the date of commitment. The 6,000,000 preferred shares were valued at $0.007 on the date of issuance based on the market value of the Company’s common stock, and as a result, the Company recorded $42,000 of compensation expense which is included in selling, general and administrative expense during year ended June 30, 2012. These shares were not issued and were deemed cancelled in May 2012. As appropriate, we did not reverse the compensation expense upon the cancellation of the commitment to issue such shares in May 2012.

F- 15

Common Stock

The issuance of common stock during fiscal 2012 is summarized in the table below:

Number of
Shares of
Common Stock

Fair Value at
Issuance

Fair Value at
Issuance
(per share)

Satisfy certain debt

5,068,750

101,375

N/A

The issuance of common stock during fiscal 2011 is summarized in the table below:

	Number of Shares of Common Stock		Fair Value at Issuance		Fair Value at Issuance (per share)

Services performed		23,000,000	$	63,000	$	0.002-0.003
Interest payment		1,500,000		4,500		0.003
Satisfy obligations under loans payable		37,498,000		83,670		0.002-0.003
Satisfy certain liabilities		61,000,000		180,000		0.002-0.003
Satisfy due to shareholders		73,160,999		261,359		0.003-.004

During fiscal 2011 and 2010, certain stockholders returned 3,800,000 and 15,286,035 shares of common stock, respectively, to the Company’s treasury. During fiscal 2011, the Company reissued to the respective stockholders, 15,286,035 shares of common stock from its treasury.

Warrants

During fiscal 2009, the Company issued 4,140,000 warrants having an exercise price of $0.001 per share of common stock, expiring December 31, 2011. Such warrants were issued to stockholders pursuant to an equity offering and expired without exercise during fiscal 2012.

During fiscal 2011, the Company issued 2,067,184 warrants having an exercise price of $0.015 per share of common stock, expiring in May 2016. Such warrants were issued in connection with an issuance of a convertible promissory note amounting to approximately $124,000.

During the year ended June 30, 2012, the Company issued 425,000 five-year warrants having an exercise price of $0.025 per share of common stock. Such warrants were issued in connection with an issuance of convertible notes amounting to approximately $77,000. The Company determined that there was no significant value associated with the granting of these warrants associated with this convertible note.

A summary of the status of the warrants for the years ended June 30, 2011 and 2012 is as follows:

	Warrants			Weighted Average Exercise Price	Weighted Average Contractual Term (years)


Outstanding June 30, 2010	4,140,000		$	0.001	1.5
Granted	2,067,184			0.015	5.0
Exercised	–			–
Forfeited	–			–	–
Outstanding June 30, 2011	6,207,184			0.006	2.3
Granted	425,000			0.025	5.0
Exercised	–			–
Forfeited	(4,140,000	)		0.001
Outstanding June 30, 2012	2,492,184		$	0.017	3.9

F- 16

Options

On September 19, 2009, the Company’s board of directors, the Company granted 2,500,000 stock options pursuant to the stock option plan established by the Company.

The Company had a commitments in fiscal 2010 to issue 500,000 stock options to a private investor as a bonus for a loan, and a further 50,000 stock options to an individual as a finder's fee. As at June 30, 2010, these options had not been issued. During fiscal 2011, the commitment for options was alleviated through the issuance of an equivalent number of shares with a market price of $0.003. The options were considered not issued in the roll forward below.

On September 1, 2011, the Company granted 20,000,000 stock options to directors and officers of the Company, pursuant to the stock option plan established by the Company. One fourth of the options vested immediately, with one quarter vesting on each anniversary thereafter. The options are exercisable at $0.007 per share and have a 10 year contractual life. The grant date fair value of these options was determined to be $140,000 at the date of grant using the Black-Scholes options pricing model. The Company used the following assumptions for determining the fair value of options granted under the Black-Scholes option pricing model during the year ended June 30, 2012:

Annual dividend yield	-
Expected life (years)	6.5
Risk-free interest rate	0.97	%
Expected volatility	346	%

At June 30, 2012, there is unrecognized expense associated with the issuance of stock options of $63,438.

Stock option expense for the years ended June 30, 2012 and 2011 was approximately $53,000 and zero, respectively.

Stock option activity for the years ended June 30, 2012 and 2011, respectively is summarized as follows:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Terms		Aggregate Intrinsic Value
Outstanding at June 30, 2010		2,500,000		$	0.15		2.48

Granted		–			–
Exercised		–			–
Expired		–			–
Outstanding at June 30, 2011		2,500,000			0.15		1.48	$	–

Granted		20,000,000			0.01		10.00		–
Exercised		–			–		–		–
Expired		(6,500,000	)		0.01 - 0.15		3.00
Outstanding at June 30, 2012		16,000,000		$	0.02		8.86	$	–

Exercisable and vested at June 30, 2012		4,750,000		$	0.02		7.54	$	–

The options outstanding on June 30, 2012 above were cancelled on September 21, 2012.

12.

Income Tax

The Company's income taxes are as follows:

	2012			2011

Expected income tax benefit at the combined statutory rate of 35%	$	567,000		$	321,000
Assumed loss of net operating losses		–			–
Impact of lower jurisdictional tax rates					(16,000	)
Impact of non- deductible expenses		(88,000	)		(7,000	)
Other - adjustment		112,000
Change in valuation allowance		(591,000	)		(298,000	)

Benefit from income taxes	$	–		$	–

F- 17

The components of deferred tax assets are as follows:

	2012			2011

Net operating loss carry forwards	$	200,000		$	844,000
Investment in affiliated companies		–			–
Equipment		–			–
Accounts payable and accrued liabilities		391,000			260,000
Valuation allowance		(591,000	)		(1,104,000	)

Net	$	–		$	–

The components of net loss for fiscal 2012 and the 2011 transition period before income tax consisted of the following:

Description	2012			2011

U.S. Operations	$	(1,024,028	)	$	(489,934	)
Canadian Operations		(597,031	)		(425,823	)
Total net loss	$	(1,621,059	)	$	(915,757	)

The Company has net operating loss carry forwards available to be applied against future years' taxable income. Due to the losses from operations and expected future operating results, it is more likely than not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction of future income tax payments. Accordingly, a 100% valuation allowance has been recorded for deferred tax assets and current income taxes.

As of June 30, 2011, the Company had approximately $2,700,000 of Federal, provincial and state net operating loss (“NOL”) carry forwards available to offset future years’ taxable income. Such carry forwards expire between 2026 and 2032. Due to a change in ownership as defined under Section 382 of the Internal Revenue Code due to share issuances exceeding 50%, these net operating losses will likely will be limited to a nominal amount, annually. During the year ended June 30, 2012, we excluded NOLs prior to fiscal 2012 from our deferred tax assets.

The Company has not filed its United States Federal and State tax returns for the year ended June 30, 2011. Management intends to comply with the requirements to file the tax returns upon raising capital. Failure to file the tax returns could result in penalties assessed against the Company. The Company has identified the United States Federal tax returns as its "major" tax jurisdiction. The United States Federal return years 2008 through 2011 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations.

During September 2011, Canada Revenue Agency informed the Company that business losses amounting to approximately$1.2 million from fiscal 2007 and 2008 are disallowed.

The Company is required to report compensation for its officers. During the year ended June 30, 2012, the Company paid advances to two officers totaling $125,675. We have not reported these advances as wages subject to withholding of Federal and state income taxes. The Company may be subject to taxes, penalties and interest if such advances are not properly reported in a timely manner.

F- 18

13. Subsequent Events

Employment Contracts

The Company has entered in an employment agreement with Mr. Patrick Shuster, as Chief Operating Officer of Consorteum Holdings Inc., Inc. Please find below a summary of the terms of such agreement:

Retroactive to September 1, 2012

Base salary of $240,000

5,000,000 options to purchase common stock at $0.002 per share which vest in equal installments from September 1, 2012 through December 31, 2016; provided, however, that all remaining options shall vest immediately upon the termination with cause of the agreement;

2,000,000 shares of Series A Preferred, fully vested on September 21, 2012; and

2,000,000 shares of Series B Preferred, fully vested on September 21, 2012

Unspecified pension and compensation retirement plan;

Incentive compensation amounting to 5 to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000. Additionally, Mr. Shuster is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.

The Company has entered in an employment agreement with Mr. Craig Fielding, as Chief Executive Officer of Consorteum Holdings Inc., Inc. Please find below a summary of the terms of such agreement:

Retroactive to September 1, 2012

Base salary of $240,000

5,000,000 options to purchase common stock at $0.002 per share, which vest in equal installments from September 1, 2012 through December 31, 2016; provided, however, that all remaining options shall vest immediately upon the termination with cause of the agreement;

3,000,000 shares of Series A Preferred, fully vested on September 21, 2012; and

2,000,000 shares of Series B Preferred, fully vested on September 21, 2012

Unspecified pension and compensation retirement plan;

Incentive compensation amounting to 5 to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000. Additionally, Mr. Fielding is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.

Convertible Notes Issued

From July through September 2012, the Company issued a convertible note in the amount of $184,492 and issued two convertible exchange promissory notes to satisfy two existing notes in the amount of $380,000 and $124,031. Aggregate interest of $90,440 through June 30, 2012, plus additional aggregate interest accrued through September 2012 totaling $10,245 shall remain an existing and outstanding obligation of the company. The note bears interest at 8%, per annum, is due on September 11, 2013 and convertible into common stock at $0.02 per share.

In July 2012, we entered into a convertible promissory note in the amount of $30,000, interest at 8%, per annum, subject to a default rate of 12%, per annum, due January 13, 2013. The note is convertible upon a qualified financing at the same price per equivalent common share. In connection therewith, the Company issued a warrant to purchase 180,000 shares of common stock at $0.025 per share.

On July 18, 2012, we issued a convertible promissory note in the amount of $100,000, interest at 12%, per annum, is due on July 18, 2013 and convertible into common stock at $0.02 per share for proceeds received.

License Agreement with Tarsin

As discussed in Note 1, we attempted to acquire Tarsin through the issuance of stock and cash, but due to our inability to obtain capital to complete the acquisition and provide working capital post close, we terminated the acquisition agreement in June 2012. On October 10, 2012, we entered into a licensing agreement with Tarsin for rights to the CAPSA technology; the agreement is for a term of three (3) years. In connection therewith, we acquired exclusive rights to market, sell and service CAPSA in Canada, Mexico, as well as select customers in the United States. We must pay $100,000, annually, beginning in year two of the agreement. Under the license, we are subject to a royalty of 12.5% of revenues generated by the Company from the CAPSA technology. The Company also retains the “Right of First Negotiation” to enter into markets in the United States which do not overlap with the existing contractual relationships that Tarsin has with Stations Casino in Nevada. Through the date of the license agreement, we advanced Tarsin $202,500 and applied such amount to the license.

F- 19

Exhibit 10.15

SOFTWARE LICENSE AND ROYALTY AGREEMENT

This Software License AND ROYALTY AGREEMENT (this " Agreement "), effective as of October 10, 2012 (the " Effective Date "), is made between Consorteum Holdings, Inc., a Nevada corporation with an office at 5045 Orbitor Road, Building 8, Suite 200, Mississauga, Ontario, Canada, L4W 4Y4 (“ Licensee ”), and Tarsin Inc., a Nevada corporation with its registered office at 916 Southwood Blvd., Incline Village, Nevada (“ Licensor ”). Each of Licensee and Licensor is a “ Party ” and collectively, the “ Parties .”

WHEREAS, Licensor has developed certain software described in Schedule A , Description of the Software (“ Software ”);

WHEREAS, Licensee wishes to license the Software (including the source code to the Software) from Licensor under the terms and conditions set forth below; and

WHEREAS, Licensor wishes to license the Software (including the source code to the Software) to Licensee under the terms and conditions set forth below.

NOW, THEREFORE, the Parties mutually agree as follows:

GRANT OF LICENSE TO SOFTWARE

License Agreement. At the closing, the Licensor will grant to the Licensee a regional, exclusive, 3 year, royalty bearing license under Licensor’s intellectual property rights to use, demonstrate, market, offer for sale, sell, license, and/or otherwise distribute the Software Platform to the following geographic areas:

(a) Canada

(b) Mexico

In addition, Licensee shall have a right of first negotiation (the "ROFN'') to expand the Territory upon notification from Licensor of its intention to negotiate a license for the Software Platform (or a portion of it) for a new Territory. Licensee must exercise such ROFN (if at all) by written notice to Licensor within 5 business days after receiving the notice contemplated by the previous sentence. In the event Licensee exercises the ROFN, the parties shall negotiate in good faith with respect to the terms of such expansion.

Licensor reserves the right to alter the Licensee’s rights granted under paragraph 1 for non-performance. Non-performance shall be evidenced by failure of Licensee to contractually deliver business opportunities in the geographic territories outlined above within 180 days of grant of this license. Licensor shall notify Licensee in writing of non-performance and Licensee shall have an additional 30 days to cure such non-performance. In the event that Licensee is unable to cure the non-performance, Licensor shall have the right to alter the geographic territory granted to Licensee under this agreement.

Unless notified in writing, License shall automatically renew annually after the third anniversary date.

	1.	OWNERSHIP OF SOFTWARE

	1.	Licensor’s title to the Software, whether in whole or in part, and all copies thereof, and all rights of Licensor therein, will remain in and be the sole and exclusive property of Licensor.

	1.	Any and all enhancements, changes or derivative works, whether made by or on behalf of Licensee, to the Software and all associated technical data and information in connection therewith will remain in and be property of Licensor until the transfer contemplated in section 2.1.

	1.	PAYMENT, TAXES AND AUDITING

	1.	The fees and other charges applicable to the Software are set out in Exhibit A . The License Premium shall be paid pursuant to the Note issued to Licensor in the form attached hereto as Exhibit A1 .

	1.	Within thirty (30) days of the end of each calendar quarter, Licensee will provide Licensor with a report of the revenue received by it during the previous quarter together with the payment of the 12.5% royalty thereon calculated in accordance with Exhibit A . Licensor shall provide Licensee with an invoice for its records immediately upon receipt of the quarterly payment.

With respect to their respective revenue share license fee payments, the Parties agree to pay all license fees, assessments, sales, use, personal property, excise, and other taxes, and any penalties or interest thereon (" Taxes "), now or in the future imposed by any appropriate governmental body on such Party with respect to the Software, or any portion thereof, and its possession, use, operation, or maintenance during the term of the license granted under this Agreement. If a Party is required by law to withhold income taxes on any payment owed to the other Party, then such Party may deduct such taxes from amounts owed and shall pay them to the appropriate tax authority, provided that the paying Party shall deliver to the other an official receipt for any taxes withheld and any other documents necessary to enable the appropriate Party to claim tax credit.

Licensee shall keep reasonable records and books of account with respect to all items for which payments may be due hereunder. On at least 45 days’ notice, and no more frequently than once per calendar year, Licensor shall be entitled to retain an independent third party accounting firm reasonably acceptable to audit the records pertaining to payments under this Agreement for the purpose of confirming the accuracy of payments. Any such audit shall be performed during normal business hours and be subject to a standard confidentiality agreement. The independent accounting firm shall only be allowed to report the results of the audit. The audit will be conducted at Licensor’s expense unless the results of such audit establish that inaccuracies in the quarterly reports have resulted in an underpayment of more than five percent (5%) of the amount due in any quarter, in which case Licensee will bear the expenses of the audit. In the event of any underpayment, Licensee shall promptly remit to the Licensor all amounts due together with interest calculated at a daily rate equal to 5%.

	1.	WARRANTIES

	1.	Licensor warrants that it is the owner of the Software and has the right to license the Software to Licensee.

	1.	Licensee hereby acknowledges that Licensor does not give any other warranty express or implied with respect to the Software.

	1.	TERM AND TERMINATION

	1.	This Agreement is effective on the Effective Date and unless earlier terminated as a result of any default under clause 5.2 will remain in full force and effect in perpetuity (the “ Term ”).

	1.	The following will be considered a default hereunder:

	1.	A party fails to perform when due any of its obligations under this Agreement or breaches any term or condition of this Agreement and such failure or breach is not remedied within fifteen (15) days after receipt of written notice from the other party.

	1.	A party becomes insolvent or makes an assignment for the benefit of creditors or ceases to do business or institutes or has instituted against it any proceedings for bankruptcy, reorganization, insolvency, or liquidation or other proceedings under any bankruptcy or other law for the relief of debtors and such proceedings are not terminated within fifteen (15) days after institution.

	1.	A breach by Licensee of clause 6.2.

Upon default by a Party, the other Party will have the right to terminate this Agreement and will be entitled to exercise any and all rights and remedies available to it at law or in equity.

1. SOURCE CODE

6.1 Licensor hereby grants to Licensee a royalty-free, annual license to use the binary and object build code of the Software. Upon payment of the final amount of the License Premium, Licensor shall transfer all right, title and interest to the binary and object build code to Licensee subject to the standard commercial terms and conditions.

6.2 Licensee acknowledging the importance and value that the source code has and undertakes to the Licensor that until payment in full of the Note it shall not dispose of (whether for value or not), license or distribute the source code or any part thereof but may with the prior written approval of Licensor enter into escrow agreements in respect of the same. Any breach of this clause shall constitute a material breach by Licensee.

7. Notices

Except as otherwise provided for herein, all notices required or permitted to be given hereunder shall be in writing and shall be sent by registered mail (return receipt requested and postage prepaid), facsimile, overnight or two-day courier or delivered-in-person and shall be addressed as follows:

If to Licensee:

Consorteum Holdings, Inc.

5045 Orbitor Road, Building 8

Suite 200

Mississauga, Ontario, Canada, L4W 4Y4 Attention: CEO Fax: ___________

If to Licensor:

Tarsin Inc.

916 Southwood Blvd.

Incline Village, Nevada 89451 Attention: CEO Fax: ___________

Either Party may change its address by a notice given to the other Party in the manner set forth above. Mailed notices given as herein provided shall be considered to have been given seven (7) days after the mailing thereof or facsimile notices shall be considered to have been given on the day sent, overnight or two-day courier sent notices shall be considered to have been given two (2) days after sending, and delivered in person notices shall be considered to have been given on the day of delivery.

8 GENERAL

8.1 Force Majeure . The obligations of the Parties will be temporarily suspended in the event of, or for any delay in performance that results from any circumstance beyond its reasonable control and without its fault or negligence, including without limitation an act of God, war, riot, strike, accident, fire, explosion, delay by carrier(s), or governmental orders. Any failure to perform in accordance with this Agreement by the affected Party as a result of any such interference or interruption will not be deemed in default. The Party which is unable to perform or who is delayed in performance on account of the foregoing will, in a timely manner; provide the other Party with written notification explaining the reason for non-performance or delayed performance, and will exert its best efforts to recommence performance as soon as possible. If the delay in the affected Party's performance of its obligations continues for more than 60 (sixty) days, the Party not affected by the circumstances may terminate the Agreement and no liability shall be incurred by either Party as a result of such termination.

8.2 Relationship of the Parties. Each Party shall act as, and shall be, an independent contractor in all aspects of this Agreement. Neither Party will act or have authority to act as an agent for the other for any purpose whatsoever. Nothing in this Agreement will be deemed to constitute or create a joint venture, partnership or other formal business entity or fiduciary relationship between Consorteum and Licensor.

8.3 Assignment. Neither Party may assign this Agreement or any of its rights or obligations hereunder without the express written consent of the other Party.

8.4 Compliance with Laws . Both Parties agree to comply with all federal, state, and local statutes, regulations, and ordinances of the United States and any other jurisdiction applicable to the products and services delivered and each Party’s performance under this Agreement.

8.5 Governing Law. This Agreement will be governed by the laws of the State of Nevada without reference to conflict of laws provisions. The Parties consent to the exclusive jurisdiction of the federal or state courts in Nevada and expressly waive any objection or defense based on lack of jurisdiction or venue.

8.6 Severability . If any one or more of the provisions of this Agreement is held to be unenforceable under applicable law, (a) such unenforceability shall not affect any other provision of this Agreement; (b) this Agreement shall be construed as if said unenforceable provision had not been contained therein; and (c) the Parties shall negotiate in good faith to replace the unenforceable provision by a provision which has the effect nearest to that of the provision being replaced.

8.7 Expenses. Each Party shall be responsible for all expenses, including attorney’s fees and costs, incurred by it in relation to the making, review and negotiation of this Agreement, and to the fulfillment of its obligations as set forth in this Agreement.

8.8 Titles, Headings and Subheadings. The titles, headings and subheadings used throughout this Agreement are intended solely for convenience of reference and form no part of this Agreement.

8.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which, when so executed, shall be deemed an original, but all of which counterparts together shall constitute one and the same document.

8.10 Waiver . Failure or delay by either Party to exercise any right or power under this Agreement will not operate as a waiver of such right or power.

8.11 Entire Agreement and Amendments . This Agreement, including any and all Exhibits, as amended, constitute the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding and replacing any and all prior or contemporaneous agreements, communications, and understandings, both written and oral, regarding such subject matter. This Agreement may be amended only by a written document signed by authorized representatives of both Parties.

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its duly authorized representative.

CONSORTEUM HOLDINGS, INC.		TARSIN INC., AS LICENSOR

Signature /s/ Craig A. Fielding		Signature /s/John Osborne
Craig Fielding		John Osborne
Printed Name		Printed Name
CEO		CEO
Title		Title

SCHEDULE A

DESCRIPTION OF SOFTWARE

CAPSA is a thin client mobile application platform for the development and deployment of application and content-based mobile solutions. It simplifies the task of developing and deploying applications that work on a broad range of mobile handsets and different operating systems. It includes other related software used in the development of the mobile marketing services application set out below.

A fuller description of CAPSA is provided in the White Paper referenced below ( Exhibit C ).

The elements that make up CAPSA include but are not be limited to:

Client code

Cloud setup and configuration

CMS code and application setup

Carrier messaging interfaces

Brand management

Transport layer control

Load testing scripts and accounts

Multi language support and management

Black and white list OS authentication management

Billing and commerce account management

Reporting

Legal and security documentation

Examples of CAPSA applications already available:

Dilbert

Mobile marketing application (Pechanga)

Mobile marketing services

Stations Sports Book

Hallmark

CAMELOT Demo

Lottery Demo

All gamming concept demos (Bally Spin Win)

All derivative applications currently in development or deployed. Any commercial agreements already in place at closing with companies that have executed agreements with Tarsin Inc. utilizing the CAPSA platform shall be conveyed to Consorteum on the date hereof. Royalty payments shall be made on any revenue generated by Consorteum as a result of these contracts.

Associated Documents

Exhibit C : The Capsa White Paper

EXHIBIT A

ROYALTY CHARGES

Consorteum shall pay to Licensor royalties in a sum equal to 12.5% of the turnover receivable in respect of the Software licensed under this Agreement after deducting from the amount of such turnover the costs payable to third parties that are necessarily and properly incurred by Consorteum and that are not reimbursed by any end user. For the avoidance of doubt, such costs payable to third parties shall not, for the purposes of calculating turnover, include costs of supporting, developing or maintaining the Software or any form of management charges or other on-costs.

Licensee shall pay to Licensor an annual renewal fee of $100,000 due on or before the anniversary date of the license.

Licensee and Licensor shall agree to an annual support fee based on total annual turnover.

The annual license fee and support fee for the initial year is waived.

EXHIBIT B

ROYALTY ENHANCEMENT

Licensee shall continually strive to develop and enhance Royalties from the Software by ensuring that is kept updated with a view to maximizing the commercial application and value thereof. To that end Consorteum shall:

	1.	Continually develop and enhance the Software to ensure its relevance to the markets it addresses.

	1.	Correct any malfunction, defect, nonconformity or failure in the Software.

	1.	Ensure that the Licensor’s intellectual property rights are maintained, updated and safeguarded at all times and shall at its own cost take such actions as Licensor in its absolute discretion requires in connection therewith.

	1.	Apply for and register at its own cost all patents and other appropriate intellectual property protection in respect of any enhancements, changes or derivative works in respect of the Software.

	1.	Distribute the Software on commercial terms negotiated at arm’s length.

Use its best endeavors to maximize the Royalties from its distribution of the Software.

EXHIBIT C

THE CAPSA WHITE PAPER

Provided as separate attachment.

Exhibit 10.16

TERMINATION OF ACQUISITION AGREEMENT

This Termination of Acquisition Agreement is made as of this 10th day of October 2012 (this “Agreement”) by and among Consorteum Holdings, Inc., a Nevada corporation (“CSRH” or the “Company”), Tarsin, Inc., a Nevada corporation (“Tarsin”), and Tarsin, LTD., a United Kingdom corporation (“Seller”). CSRH, Tarsin and the Seller are referred to together as the “Parties” and individually as a “Party.”

RECITALS:

On or about October 4, 2011 CSRH, Tarsin and the Seller entered into an acquisition agreement (the “Original Acquisition Agreement”) under which CSRH was going to acquire all of the issued and outstanding shares of Tarsin from the Seller for the purchase price and upon the remaining terms and conditions contained in the Acquisition Agreement.

On or about November 4, 2011 CSRH, Tarsin and the Seller entered into amendment no. 1 (the “Amendment”) to the Original Acquisition Agreement.

The Original Acquisition Agreement and the Amendment are referred to hereinafter together as the “Acquisition Agreement.”

The parties to the Acquisition Agreement have agreed that it is in their best interests to terminate the Acquisition Agreement upon the terms and conditions contained in this Agreement.

Capitalized terms not otherwise defined in this Agreement shall have the meanings assigned to them in the Acquisition Agreement.

NOW, Therefore, in consideration of the foregoing recitals, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Termination of Acquisition Agreement. The Acquisition Agreement is terminated effective as of September 30, 2012 and shall have no further force and effect (the “Termination”).

2. Consequences of Termination. The Parties acknowledge that during the time period between execution of the Acquisition Agreement and the Termination (the “Time Period”) each of the Parties took certain actions in relation to its duties and obligations under the Acquisition Agreement. The Parties desire to provide for these actions and agree that the consequences of the Termination are the following:

(i) During the Time Period CSRH paid the Seller and/or Tarsin a total of Two Hundred and Two Thousand Five Hundred Dollars ($ 202,500) (the “CSRH Payment”) that represented a portion of the purchase price under the Acquisition Agreement. The Parties agree that the CSRH Payment shall be deemed and treated as a payment by CSRH to Tarsin under the term sheet agreement dated as of June 21, 2012 (the “Term Sheet”) for a license from Tarsin to CSRH of certain Tarsin assets as therein provided. The Parties shall adjust their respective financial and accounting books and records accordingly such that all Parties reflect identical treatment of the reallocation of the CSRH Payment.

(b) During the Time Period CSRH did not issue any shares of its common stock (the “CSRH Acquisition Shares”) to Seller or Tarsin under the Acquisition Agreement. CSRH shall not be required to issue any additional shares of its common stock to Tarsin or the Seller as a result of the termination of the Acquisition Agreement.

(c) CSRH shall have no additional funding obligations of any kind to Tarsin or payment obligations to the Seller under the Acquisition Agreement.

(d) The master license agreement and use of Tarsin assets by CSRH as provided for in the Acquisition Agreement is terminated.

(e) CSRH shall not be required to appoint anyone to its Board of Directors as provided for in the Acquisition Agreement.

(f) Each Party shall bear its own tax, accounting and financial consequences of the Termination.

(g) Each Party shall remain liable for its debts and obligations as the same were in effect as at October 4, 2011, and no Party shall assume or shall be deemed to have assumed any liability for any debt or obligation of any other Party from on and after October 4, 2011.

(h) The Executive Employment agreement delivered to the CEO of Tarsin Inc. shall be rescinded in its entirety and no proposed salary, stock options, stock issuance or compensation of any kind shall be provided to the CEO of Tarsin Inc.

3. General Release. Subject to performance of the duties and obligations set forth in this Agreement, each of the Parties hereto for themselves, and their respective parent, subsidiary and affiliated corporations or companies, and their respective members, managers, directors, officers, stockholders, employees, heirs, successors and assigns, privies, executors, administrators, legatees, and distributees, hereby releases and forever discharges each other Party and their respective Releasees (as defined at the end of this paragraph) of and from any and all charges, complaints, actions, grievances, causes of action, suits, liabilities, obligations, promises, controversies, damages, losses, debts and expenses (including attorneys fees and costs) and claims in law or equity of any nature whatsoever, known or unknown, suspected or unsuspected, any Party ever had, now has, or shall have against the Releasees to the date of each Party’s execution and delivery of this Agreement, including but not limited to (i) claims arising out of breach of an express or implied agreement, (ii) claims for wrongful termination of any such agreement, (iii) claims for intentional or negligent tort, (iv) any claims, demands, and causes of action alleging violations of public policy, or of any federal, state, or local law, statute, regulation, executive order, or ordinance, (v) claims for alleged violation of any other local, state or federal law, regulation, ordinance or public policy, including breach of the implied covenant of good faith and fair dealing, and (vi) any claims, demands, and causes of action for monetary or equitable relief, including, but not limited to, compensatory damages, exemplary or punitive damages, fines, liquidated damages, injunctive relief, or attorneys’ fees and costs, except as noted within this Agreement. Each Party agrees not to bring or cause to be brought any claim or demand against any of the Releasees in any court or before any other governmental authority or regulatory body for, or relating to or arising out of or under the matters that are the subject of, or included within this Agreement and in this Release. The release set forth in this Paragraph 3 covers not only rights or claims that any Party may have in its own right but also all other rights or claims of whatever nature that might be asserted on behalf of any Party against any other Party and its Releasees by the Party’s Affiliates or any third party.

For purposes of this paragraph 3 a Party’s “Releasees” is defined to mean the Party and its parent, affiliates, subsidiaries, successors and assigns, and the present and former stockholders, members, managers, officers, directors, employees, representatives, consultants, and agents of any of them, whether in their individual or official capacities, and their respective heirs, executors, administrators, legatees, distributees, successors and assigns.

4 Severability. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not IMFPA impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

5 Successors and Assigns; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that none of the parties may assign or transfer any of its rights or obligations under this Agreement without prior written consent of all other parties hereto. The Parties do not intend to create and specifically disclaim all third party beneficiary claims that may be asserted by anyone in relation to this Agreement or against any of the Parties hereto.

6 Amendments; Interpretation . No amendment, modification, or waiver of any provision of this Agreement shall be effective without the express written agreement of all parties hereto. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. In the event of any inconsistency between the terms of this Agreement and any other arrangement between the parties, this Agreement shall govern and control. No provision of this Agreement shall be construed against any Party hereto on the theory that such party drafted such provision.

7 Counterparts. This Agreement may be executed by one or more of the Parties hereto in any number of separate counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument, and all signature pages transmitted by electronic transmission shall be considered as original executed counterparts. Each Party to this Agreement agrees that it will be bound by its own facsimile or electronic signature and that it accepts the facsimile or electronic signatures of each other Party.

8 Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

9 Further Assurances. Each Party agrees to execute such other and further documents and instruments as any other Party may reasonably request to implement the provisions of this Agreement.

10 Applicable Law. THIS AGREEMENT IS EXECUTED PURSUANT TO THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.

11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN OR AMONG ANY OF THE PARTIES OR ANY OF THEIR RESPECTIVE AFFILIATES ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

12 Submission to Jurisdiction . Each Party agrees that all disputes among them arising out of, connected with, related to, or incidental to the relationship established between them in this Agreement, whether arising in contract, tort, equity, or otherwise, shall be resolved only by the federal or state courts of the State of Nevada.

13 Notice. Unless otherwise agreed, all notices to be given under this Agreement by one Party to the other Party shall be in writing and either delivered in person or sent by prepaid overnight courier delivery or U.S Postal Service Express Mail, facsimile, e-mail, at its address specified in this Paragraph 13 Notice by facsimile and e-mail shall be deemed to have been received on the same day it was transmitted, unless transmitted after close of the business day, in which case it shall be deemed received on the next business day after it was transmitted. Notice by overnight courier service or Express Mail shall be deemed to have been received on the next business day after it was sent. A notice given by facsimile or e-mail, shall be subsequently confirmed by letter, unless otherwise agreed, but without prejudice to the validity of the original notice.

The name, address, facsimile number and e-mail address for all purposes of Seller, Tarsin and CSRH are as follows:

SELLER:

Adam House, Birmingham Road

Kidderminster DY10 2SH England

Attn: John Osborne, CEO

e-mail: john@tarsin.com

TARSIN:

916 Southwood Blvd.

Incline Village, Nevada 89451

Attn: John Osborne, CEO

e-mail: john@tarsin.com

CSRH:

5045 Orbiter Drive-Building 8-Suite 200

Mississauga Ontario Canada L4W 4Y4

Attn: Craig A. Fielding, CEO

Facsimile:

e-mail: cfielding@consorteum.com

IN WITNESS WHEREOF, the Parties have executed this agreement as of this 10th day of October 2012 intending it to be effective as of September 30, 2012.

Tarsin, LTD.

By: /s/ John Osborne

John Osborne, Director

Tarsin, Inc.

By: /s/ John Osborne

John Osborne, CEO

Consorteum Holdings, Inc.

By: /s/ Craig A. Fielding

Craig A. Fielding, CEO

Exhibit 10.18

SETTLEMENT AND RELEASE AGREEMENT

This Settlement and Release Agreement (this "Agreement"), is made by, between and among Joseph A. Cellura, Craig A. Fielding, Patrick Shuster, Todd Sherman, Consorteum Holdings, Inc., and Consorteum, Inc.

RECITALS:

The parties to this Agreement have various disputes and claims against each other arising out of or in connection with their respective positions with, and actions taken or omitted to be taken for, Consorteum Holdings, Inc., Consorteum, Inc. and various other entities and persons named below in this Agreement.

The parties acknowledge that the outcome of these disputes is uncertain, and that litigation of the disputes will be time consuming, and expensive, and will take years to conclude.

The parties agree that it is not in the best interests of any of them to engage in protracted litigation of the disputes.

N 0 W, T H E R E F 0 R E, in consideration of the foregoing recitals, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

SECTION A

DEFINITIONS

"Affiliate" refers to a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or under common control with, the Person specified, for so long as such Person remains so associated to the specified Person. Control means, with respect to a specified Person, the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise. For the avoidance of doubt CSRH and Consorteum will not be deemed Affiliates of Cellura for any purposes under this Agreement.

"Agreement" refers to this Settlement and Release Agreement

"BA" refers to Bank of America.

"Cellura" refers to Joseph Cellura and his heirs, successors and assigns, privies, executors, administrators, legatees, and distributes, attorneys, insurers, employees and agents, past or present.

"Consorteum" refers to Consorteum, Inc., and its shareholders, predecessors, successors, parents, subsidiaries, and affiliates, and their respective directors, officers, management committee members, attorneys, insurers, employees and agents, past or present.

"CSRH" refers to Consorteum Holdings, Inc., and its shareholders, predecessors, successors , parents, subsidiaries, and affiliates, and their respective directors, officers, management committee members, attorneys, insurers, employees and agents, past or present.

"Disputes" refers to any and all claims, counterclaims , cross claims, third-party claims by any Party against any other Party arising out of, in connection with , under or related to CSRH, Consorteum, Cellura , Fielding, their Affiliates, and any executed and closed or potential and unconsummated transaction by and among any of the foregoing beginning on and after March 1, 2011, and continuing through and including the Effective Date.

"Effective Date" refers to the date on which this Agreement becomes effective, which date shall be the date on which this Agreement is signed by all parties.

"Fielding" refers to Craig A. Fielding, and his heirs, successors and assigns, privies, executors, administrators, legatees , and distributes, attorneys, insurers, employees and agents, past or present.

"Ghiselli Brothers" refers to Michael and Steven Ghiselli.

" Joseph R. Cellura" in both his individual and official capacity of any. "Todd Sherman" in both his individual and official capacity of any. "Patrick Shuster" in both his individual and official capacity of any.

"Governmental Authority": Any nation or government , any state or other political subdivision thereof , and any entity exercising executive, legislative , judicial, regulatory or administrative functions of or pertaining to government.

"MEXI" refers to Media Exchange Group, Inc. and its shareholders , predecessors, successors, parents, subsidiaries, and affiliates, and their respective directors, officers, attorneys, insurers, employees and agents, past or present.

"MEXI Note holders" refers collectively to the holders of MEXI Notes the obligations for payment of which were assumed by CSRH pursuant to an agreement dated as of June 6. 2011 by and among CSRH and MEXI.

" Parties " refers collectively to all parties to this Agreement.

"Person": Any natural person, corporation, partnership, joint venture, trust, incorporated organization , limited liability company , other form of business or legal entity or Governmental Authority.

"S ignature Page" refers to the signature page is last page containing a signature of signatures of the parties.

SECTION B

SETTLEMENT TERMS

1. Mr. Cellura agrees , upon his separation to turn over all relevant documents related to any financing or other transaction which was entered into by or on behalf of the Company and confirm such agreements with the auditor as necessary to enable the Company to complete its 1OK filing on or before October 23, 2012.

2. Mr. Cellura shall withdraw any confirms against the Company for funds deposited into accounts not connected with Consorteum Holdings. Specifically, Mr. Cellura will withdraw his claims for amounts deposited by Mike or Steve Ghiselli into accounts not under the direct control of Consorteum Holdings. The $1.785 million dollars initially confirmed shall be adjusted to the figure previously disclosed by the Company to the Company's accountants which now totals approximately $350,000 for 2012. All of these deposits were made into Company accounts in 2012, of which convertible notes have previously been issued. In addition Mr. Cellura shall withdraw his confirmations for funds deposited into Malibu Entertainment Group Inc.

3. The Company shall continue to carry the MEXI note holder's debt acquired during the MEXI acquisition agreement as disclosed by the 8K filing in July 2011.

4. Mr. Cellura shall provide a signed convertible note in the amount of $45,000 convertible at $0.025 /share in the name of Judith Beatty to the Company and work with Mrs. Beatty to confirm the same with the auditor no later than Monday October 22, 2012.

5. Mr. Cellura shall confirm the accrued salary in the amount of $46,000 to the auditors no later than Monday October 22, 2012. Mr. Cellura shall withdraw the confirmation for $199,990 previously sent to the auditors including but not limited to the confirmation for lost opportunity funding with Steve Chop, legal fees to Attorney Douglas R. Dollinger and expenses at the London Hotel.

6. Mr. Cellura agrees for himself and for Game2 Mobile to withdraw the complaint with prejudice filed in the Southern District of New York and drop any legal action pending or contemplated against the Company or its officers, directors or agents.

7. The parties to the foregoing action as described above ("7") shall agree to refrain from any future disparaging remarks concerning either Mr. Cellura and/or the officers, directors or agents of the Companies- Consorteum Holdings and/or Game2Mobile.

8. The parties to the foregoing action as described above ("6") shall provide mutual general releases to one another.

In recognition of this agreement and the terms of the Separation and Settlement Agreement Points, the Parties hereto affix their signatures below.

Dated: October 21, 2012

Consorteum Holdings, Inc.

/s/ Craig A. Fielding

Craig A. Fielding, CEO

Consorteum, Inc.

/s/ Craig A. Fielding

John Osborne, CEO

Game2Mobile Inc.

/s/ John Osborne

Joseph R. Cellura

/s/ Joseph R. Cellura

Patrick Shuster

/s/Patrick Shuster

Craig Fielding

/s/ Craig A. Fielding

Todd Sherman – Under Separate Agreement

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig A. Fielding, certify that:

	1.	I have reviewed this Annual Report on Form 10-K for the year ended June 30, 2012 of Consorteum Holdings, Inc. (the “registrant”).

	2.	Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

	3.	Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

	4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.	Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

	5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

	a.	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2012

/s/ Craig A. Fielding
Craig A. Fielding,
Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig A. Fielding, certify that:

	1.	I have reviewed this Annual Report on Form 10-K for the year ended June 30, 2012 of Consorteum Holdings, Inc. (the “registrant”).

	2.	Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

	3.	Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

	4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.	Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

	5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

	a.	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2012

/s/ Craig A. Fielding
Craig A. Fielding,
Chief Financial Officer

Exhibit 32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Consorteum Holdings, Inc. (the “Company”) on Form 10-K for the year ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Craig R. Fielding, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 7, 2012

/s/Craig A. Fielding
Craig A. Fielding,
Chief Executive Officer and
Chief Financial Officer