Consorteum Holdings, Inc. (Form: 10-K, Received: 10/31/2013 09:24:17)

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, 2013

¨ 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.)

6-14845 Yonge Street, Suite #348

Aurora, Ontario Canada L4G6H8

(Address of principal executive office, including zip code)

(775) 298-7001

(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 13 or 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 Decmber 31, 2012 of $0.0120, the aggregate market value of voting stock held by non-affiliates is $ 1,601,826.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. There were 452,400,864 shares of the registrant’s common stock outstanding as of October 25, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated herein by reference in Part IV, Item 17: None

TABLE OF CONTENTS

		Page
PART I

Item 1. Business		1

Item 1A. Risk Factors		9

Item 1B. Unresolved Staff Comments		9

Item 2. Properties		9

Item 3. Legal Proceedings		9

Item 4. Mine Safety Disclosures		9

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		10

Item 6. Selected Financial Data		10

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		17

Item 8. Financial Statements and Supplementary Data		17

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		17

Item 9A. Controls and Procedures		17

Item 9B. Other Information		18

PART III

Item 10. Directors, Executive Officers and Corporate Governance		19

Item 11. Executive Compensation		20

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		22

Item 13. Certain Relationships and Related Transactions, and Director Independence		22

Item 14. Principal Accounting Fees and Services		23

Item 15. Exhibits, Financial Statement Schedules		23

SIGNATURES		25

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 the Company’s limited operating history; its limited financial resources; the Tarsin bankruptcy including the possible loss of the CAPSA platform; international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage or forecast growth; our failure to correctly anticipate market trends; 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 laws and regulations; adverse publicity; competition including the activities of competitors and the presence of new or additional 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 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 are located at 6-14845 Yonge Street, Suite#348, Aurora, Ontario, Canada, L4G6H8. Our telephone number is (775) 298-7001.

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 golf 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. 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 agreed to purchase 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 were set. 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 consist of 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.

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 and Chief Financial Officer 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 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 approved the issuing of the super-voting Series A Preferred Stock and Series B Preferred Stock to Craig Fielding and Pat Shuster.

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 share is convertible into four (4) shares of common stock, and have a liquidation preference after the Series A & B Preferred Stock. No Series C shares have been issued to date.

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. Due to the delay in securing funding, the Company has elected to suspend any activities with the joint venture at this time. Upon completion of funding the Company intends to revisit the business case drivers that were the basis of this 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. In connection therewith, the Company advanced monies for the license totaling approximately $234,000, loans totaling $423,100 and consulting fees to Tarsin’s president totaling approximately $73,000 through June 30, 2013. Tarsin Inc. filed a voluntary petition for bankruptcy protection in the U.S. Bankruptcy Court. Northern District of California. The Company is a creditor in this Case No. 13-53607. Until the outcome of this case is clear, the Company has elected to reserve the entire amount of this receivable.

In July 2012, we entered into negotiations with Knockout Gaming Limited (“Knockout”), a corporation organized under the laws of the Isle of Man, to resell their online gaming licensed platform, Fireplay. We intend to enter into a licensing and reselling agreement once Knockout launches their platform. Since that time, we paid $180,432 to Knockout as an interim payment against a future equity position in Knockout. Post funding as discussed in Items 1 and 7, we intend to purchase up to a 10% equity position in Knockout pending further due diligence.

In March 2013, we entered into negotiations with Knockout Entertainment (“KOE”), a Nevada corporation, for a future equity position in KOE. Post funding as discussed in Items 1 and 7, we intend to purchase up to a 5% equity position in KOE pending further due diligence. If and when funding is consummated, the Company will undertake further due diligence to determine whether or not the parties will move forward with the proposed transactions. The Company has elected to expense the funds advanced to date.

In September 2012, we entered into employment agreements with Mr. Craig Fielding, our CEO and Mr. Pat Shuster, our Chief Operating Officer (COO) and Secretary, which provide cash compensation, signing bonuses in Preferred stock, stock options and bonuses upon achieving revenue milestones through December 31, 2016. See Item 11 below. We believe that it is in the best interests of the Company and its shareholders to retain these individuals.

The Term Sheet provided that AIC agreed to lend $30,000,000 to the Company in six (6) consecutive monthly installments (the “Loan”) with the first portion of the funding was to begin no later than 60 days from the date of the Term Sheet. The installments will vary in size depending upon the working capital requirements of the Company at the time each installment is due. AIC may extend only the first installment one time for a period of up to 45 days. The Loan will bear interest at the rate of six percent (6%) per annum, payable quarterly in arrears beginning one year from the funding of the first portion of the Loan. The Loan and all remaining accrued and unpaid interest is due and repayable seven (7) years after the first funding installment; provided, however, that the Company may extend the repayment date for two successive one year periods by giving 90 day prior notice to AIC and paying an extension fee of 2% of the principal amount of the Loan to be renewed. If AIC defaults in making any installment of the Loan, then the Loan shall terminate forthwith and the Company shall have no repayment obligation to AIC. The Company may prepay all or any portion of the Loan at any time without premium or penalty. The Company will grant AIC a first priority security interest in and to all of its assets including its Intellectual Property (“IP”) as collateral security for the Loan. If the Company defaults in making any repayment of interest or principal or under any other material terms and conditions of the Loan, AIC shall have the rights of a secured party under the security agreement to foreclose on the Company collateral to satisfy the Loan. The Company will pay a total of four percent (4%) of the Loan in origination fees to two consultants as each portion of the Loan is funded, and a one- time administrative fee of $150,000 that will be refunded if the funding of the Loan does not occur as scheduled.

AIC had also agreed to use its best efforts to provide directly or through an affiliate a bridge loan for $2,000,000 (the “Bridge Loan”) within sixty (60) days of the execution of the Term Sheet. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and shall be repayable from the first proceeds under the Loan. If the Loan does not proceed, then the Bridge Loan (amended to $4,000,000 on May 22, 2013), if made, will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be repaid in one year from its date and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. The Bridge Loan did not close during the 60-day period, as discussed below.

As part of the Loan, the Company agreed to issue to AIC an amount of its shares of common stock as shall equal thirty–five percent (35%) of all of the issued and outstanding shares of common stock of the Company calculated on a fully-diluted basis (the “AIC Shares”); provided, however, that the issuance of the AIC Shares shall not occur until one year from the date of the first funding of the Loan by AIC to the Company. In the event that the Loan or any portion thereof is not funded as scheduled, the Company shall issue only that portion of the AIC Shares to AIC that is calculated as the percentage of the amount of the Loan actually funded by AIC to the total Loan amount. All of the AIC Shares shall be restricted shares and AIC shall enter into a covenant neither to engage in any short selling nor to sell more than certain specified numbers of its shares during each quarterly period.

There are other conditions to the Loan as follows: (1) AIC shall be given the right to designate up to two directors to the Company’s Board of Directors such appointments to be made in time with the funding of the Loan. (2) AIC and the Company shall enter into a Business Services Development Agreement under which AIC will assist and advise the Company in connection with development of its business under its business plan in effect from time to time. (3) The parties will negotiate and execute certain agreements to reflect all of these transactions including a loan agreement, a secured promissory note, a share issuance and shareholders agreement, a convertible bridge note, a business services development agreement, and such other documents as the parties may mutually agree.

The AIC Funding was expected to close on or before May 31, 2013. The closing delay was attributable to working through a complex process on the part of several international banks, which represent this transaction and the necessity of working through the due diligence items prior to closing. As a result of the delays, the Company has negotiated an Amendment No. 1 to the Term Sheet dated May 22, 2013 to increase the Bridge Loan from $2 million to $4 million with the remaining funds of $30 million to be paid out over the next six months. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. Ultimately AIC was unable to close this amended round of funding and experienced delays with its original funding partner and subsequently AIC secured an alternative funding partner. AIC has represented to the Company that the funds are now under AIC’s control and AIC is working with its bridge funding partners to provide the bridge financing on or before October 31, 2013. Due to the extreme delays experienced, the Company has informed AIC that should funding not occur as committed to, the Company will pursue all legal remedies available to recover its $150,000 funding deposit as well as damages relating to breach of contract and lost business opportunities. Furthermore, the Company has expensed the financing fees.

The Company received approximately $590,000 in cash proceeds in April through June 2013 from an existing convertible note holder with the intent to establish a note and provide for additional advances to the Company.

In July 2013 the Company made a decision to recast its business as a provider of digital content across mobile devices. To that end, we retained a senior level software development team. In conjunction therewith, the Company formed two Nevada subsidiaries: Bad Rabbit Inc. and ThreeFiftyNine Inc. Moving forward, ThreeFiftyNine sets out to be a highly differentiated business in the digital space, focusing on cloud infrastructure design, development and deployment, as well as in digital transaction management.

The business description below describes our business in greater detail.

OUR BUSINESS

Consorteum Holdings Inc. started out as a transaction management company focused on transaction processing solutions and products through a mix of on-deck partnerships, license agreements, and joint venture revenue share arrangements. It operates as a technology and services aggregator to meet the diverse needs of its client base by leveraging a wide range of products and services to develop end-to-end, turn-key card and payment transaction processing solutions. The Company has extensive expertise within the Payments and Transaction Industry in North America and internationally.

In 2011, the Company established a working relationship with Tarsin Inc. (a Nevada Corp), dedicated to the delivery of digital media across all mobile devices. The Company realized that a license agreement with Tarsin Inc. would allow us to develop a new generation of digital solutions utilizing secure transactional services that could be tailored specifically to defined geographic locations. At its essence, our ability to operate a platform that allows the delivery of digital content to any mobile device will allow us to develop solutions for many market verticals including medical, banking, and gaming, e-commerce, and government applications.

We are a holding company incorporated in the State of Nevada, with three subsidiaries, Bad Rabbit Inc. ThreeFiftyNine Inc. and Consorteum Sub. Our subsidiaries have, at their core, the delivery of digital media across diverse payment and other 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’s license agreement 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. For more information on Tarsin and the CAPSA license, see below.

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 formation of ThreeFiftyNineInc. brings in house a world-class software development team that is working to launch a second generation technology platform for the delivery of digital media and content.

The Company has faced and 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 this Annual Report on Form 10-K require capital expenditures by Consorteum to move forward and management anticipates that delays in project implementation will continue if funds are not available to it.

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 and 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 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. Today, CAPSA supports millions of mobile consumers, with thousands added daily. Tarsin Inc. filed for Chapter 11 bankruptcy in June 2013 and is in the process of reorganizing its business affairs. Should the license arrangement become impaired in the Tarsin bankruptcy, the Company will continue with its own technology development using its own team.

MARKET OVERVIEW

In 2011, smartphone sales surpassed computer sales for the first time. By 2012 desktop and portable computer sales contracted for the first time ever, and smartphone penetration in the US passed 50%. While for manufacturers this represents a notable change in the state of the market, such developments only reinforce our analysis that digital publishing is emerging past the tipping point as a leading mechanism for consumer transactions.

While overall retail sales are low, they are proven and represent high growth, with e-Marketer’s report of June 2013 predicting UK mobile sales (m-commerce) of £6.7 billion in 2013 growing to £17 billion in 2017. We believe this trend will continue in other worldwide markets over the coming years.

In the U.S. in 2012, there were 105 million mobile Internet subscribers (mobile phones, tablets, etc.). According to eMarketer, that number is poised to grow 24 percent in 2013. By 2016, U.S. mobile Internet subscribers will top 174 million people.

The global market has even more room for growth. Morgan Stanley estimates that while there were 1.1 billion global smartphone subscribers in 2012, the average growth rate for the top fifteen countries worldwide was an incredible 42 percent. This growth rate won’t slow soon—market penetration in these same fifteen countries is still only 17 percent of possible mobile subscribers.

Worldwide mobile phone users number over 5.5 billion, which provides a huge potential market just for those transitioning from regular mobile phones to smart phones.

Following on the heels of proven consumer adoption such as purchasing music, books and films from mobile industry distribution points such as the Apple Appstore, Android Marketplace, and Amazon e-reader, we see the wider business community looking for mechanisms to enter and be present in the space .

Utilizing the capability of the ThreeFiftyNine development team, 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 and 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 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.

	d.	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 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 last year saw further evidence of continuing morphing, merging and re-fragmentation in the digital space. HTML5 readiness for simple apps improved, but the open-source standard is still not “standardized”, and we believe it will never offer answers for complex regulatory standards. Apple has further fragmented its once consolidated technology proposition with the introduction of the new iPad, the iPad mini, the retina display technology, and iOS7.

While Android has competed on a software-centric strategy, overtaking Apple handset sales, Microsoft has pulled away from an OEM-based distribution method and is consolidating around a handset strategy with the acquisition of Nokia’s mobile manufacturing arm, and of Skype (in a challenge to the carriers). Blackberry (formerly RIM) is also likely to be acquired by a big player. We foresee Microsoft and Blackberry market share increasing, causing a cost and complexity challenge for companies who have based their mobile digital publishing strategy around Apple and Android.

Cloud and SaaS models have broken through the trust barrier, giving hosted solutions full security approval in B2B markets. We believe the reduction upon reliance of installed and maintained hardware, with the associated freedom to drive scale across multi-national footprints, will drive even greater adoption of cloud-based infrastructure.

The main competition in this industry can be seen as the handset manufacture of OS development platforms such as Blackberry (formerly 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 license 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.

Current solutions typically fall into one of two categories: native applications or web technology. Native applications, while seemingly inexpensive to start require OS updates as new versions and devices emerge. As traffic increases these applications also suffer from an inability to properly scale. Web users experience browsers that are chaotic, painfully slow, and offer a poor passive user interface experience. Web based applications suffer limitations in device functionality like messaging, cameras, tilt, and geolocation. Our technology platform positions itself uniquely between the facets of web and native applications providing high levels of satisfaction for:

User experience

Content management

Messaging and marketing capabilities

Security and compliance

Speed of market reach

Powerful multi-regional capability

Low cost of ownership

Because our technology solution is designed to work with all mobile handset devices, the fragmentation we see developing in the operating systems of the major suppliers will work to our advantage. There is a clear need to deliver new and innovative solutions that are agnostic to the mobile handset manufacturer. Ultimately ThreeFiftyNine is positioning itself to lead the industry in this capability.

OUR SALES AND MARKETING STRATEGY

Digital Gaming Strategy

Publishing content and managing transactions in a highly regulated environment such as gaming has also passed a key tipping point in 2012. In the US, 44 States allow some category of paid gaming or betting, and in the last 12 months the first five or six States have made progress in, or completed, digital gaming regulatory approval processes, led by Nevada.

US gaming represents the most testing technical and regulatory challenges, even more challenging than mobile banking by an order of magnitude. Requirements include geofencing within territorial borders and on-property, plus a sophisticated range of anti-fraud measures to validate the user’s account and the device. Mobile- and simcard-based technologies offer a flexible range of solutions, more so than online or web-based technology (where variable IP addressing negates many anti-fraud measures).

We believe there is a true market hunger for partnerships to mobilize and publish gaming content in full compliance with all legal and regulatory demands, by regulator and by territory. In Europe, licenses are also issued by territory and therefore gaming abroad demonstrates many of the same needs as seen in the US. Gaming operators in the EU are more advanced in their digital solution offerings than the US market has seen, although they have uncovered a range of new hurdles; base management, profiling and engagement; maximizing cross-sell and up-sell to their base; push messaging based on location and social media connectivity.

Global gambling revenues passed US$ 400 billion, according to the latest research undertaken by Global Betting and Gaming Consultants for its Global Gambling Report – Betting on Regulation .

GBGC’s provisional figures show that gambling activities generated US$ 419 billion in revenues across the world in 2011.This figure is an increase of 5.6% on the previous year.

The internet has given rise to an ever increasing trend in gambling. It’s becoming easier than ever to take a chance online. Interactive gambling accounted for 8.4% of global gambling revenues in 2011, up from 8.0% in 2010. This figure would suggest there is still room for further growth in the Interactive sector, especially if the US does adopt some kind of federal or state regulation for Internet gambling in the coming years.

Commenting on the figures, GBGC’s Director Lorien Pilling said, “GBGC is forecasting that global gambling revenues will reach US$ 500 billion by 2014. The market trend towards digital gaming has been reinforced by major technology investments by William Hill, and Ladbrokes to name just a few with the focus on seizing market share of a growing digital gambling market estimated by Juniper Research to be worth $100 billion by 2017.

Some of the gaming opportunities we foresee include but are not limited to:

Mobile Marketing Services – Providing loyalty card and group offerings to Casinos 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 experience 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.

Sales and Distribution

We have existing business partners that we are currently working on developing applications for. We intend to extend our base of business globally. Once funding is achieved, we plan to 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 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 mobile gaming and wagering contracts, we also intend to look for other non-casino based opportunities.

Having conducted a review of adjacent markets, we are confident that secure, compliant digital publishing and transaction solutions are a key component in the following:

E-health

increasingly turning mobile, for basic messaging communications right through to health apps

US security led by the HIPPA rules (Privacy, Security and Breach Notification)

The UN champions health apps in 7 key areas:

• Education and awareness

• Helpline

• Diagnostic and treatment support

• Communication and training for healthcare workers

• Disease and epidemic outbreak tracking

• Remote monitoring

• Remote data collection

Government

Local and national government organizations are looking to digital transformation to lead new ways of working

Increases accessibility, accountability and cost effectiveness

Increases population (and voter) engagement in the 35 and under age demographic

Finance and m-commerce

Micropayment solutions such as PayPal or adding small costs to phone bills are now widely accepted

Secure mobile banking solutions to underserved areas typically limited to “shadow banking” operations.

Our funding commitments have not yet materialized 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

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 25, 2013 the Company (and its subsidiaries) had seven (7) employees. We expect no significant changes in the number of our employees. The Company engages the services of independent contractors to assist it with developing our product offerings. We plan to engage full-time employees as our business develops and when we obtain sufficient working capital. All payments made to our officers in calendar 2013 will be properly reported to government agencies.

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 Consorteum Holdings 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

The Company maintains an office located at 6-14845 Yonge Street, Suite #348, Aurora, Ontario, Canada L4G6H8. The Company also leases office space in Incline Village, Nevada where the principal operations of ThreeFiftyNine Inc. occur.

ITEM 3. Legal Proceedings

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”), CEO Craig Fielding (“Fielding”) and certain other defendants not affiliated with the Company. The Company, Shuster and Fielding were never served with the summons and complaint, and, upon information and belief, neither were 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. The Company also has various counterclaims against Mr. Cellura. 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, and 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 were resolved.

The Company is a creditor in two related bankruptcy cases in the U.S.Bankruptcy Court, Northern District of California. The Company has filed proof of claims in both In re Game2Mobile, Case No. 13-52062 and In re Tarsin,Inc. Case No. 13-53607. The Company will also be submitting administrative expense claims.

ITEM 4. Mine Safety Disclosures

Not applicable.

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, 2013 and 2012

	HIGH		LOW

Quarter Ended September 30, 2012	$	0.0070	$	0.0012
Quarter Ended December 31, 2012	$	0.0150	$	0.0020
Quarter Ended March 31, 2013	$	0.0450	$	0.0093
Quarter Ended June 30, 2013	$	0.0399	$	0.0100

	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 25, 2013, 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 stock 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 our company 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 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. In August 2013 the Company issued 5,000,000 shares of its common stock relating to this note.

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

Consorteum Holdings has spent the last year recasting the direction of the Company. We intend to take advantage of the opportunities that we have identified in the digital delivery of content to mobile devices. The market opportunities that are opened to a company that can master the technology of delivering any digital content in a secure, geographically precise area, across any smartphone or mobile device are simply staggering. Our main task has been to narrow our initial focus on the market of mobile gaming. The technology necessary to successfully deliver end-to-end gaming content for our customers requires the platform to be capable of a secure financial transaction, with complicated rules of winning, regulated by a government entity that depends on location based services. If you break apart each of the technology barriers outlined, you can begin to see how powerful our advantage will become as we go to market with our customers in the gaming, medical and pharmaceutical industry, government services and financial transaction e-commerce businesses.

Our decision to enter into a licensing agreement with Tarsin Inc. to enable the use of their first generation platform for mobile content delivery has enabled the company to validate the market opportunities. In addition, the Company took action to acquire the necessary engineering resources to develop its own platform for the delivery of mobile content. It is our belief that once developed our next generation platform will lead the market in the capability to deliver unique solutions to our customers that will become the basis of our revenue moving forward.

In August 2013, the Company announced the first organizational restructuring that has been designed to expedite new market entries in technology and payment solutions. A new business entity, ThreeFiftyNine Inc. was incorporated by us in Nevada. This subsidiary will act as the lead operational business unit. It is registered at the same address as its parent.

ThreeFiftyNine Inc. sets out to be a highly differentiated business in the digital space, with brand development continuing for a launch later this year. The business is commercializing a number of new business opportunities that have been under assessment. This involves formalizing a structure to support go-to-market programs that have already been through a business review and modeling process. The proposed programs are closely tied to key vertical market segments, with lead customers and partners in both direct and indirect distribution models.

A core technology development team has been recruited and is in place, including world-class resources in the areas of cloud infrastructure design, development, and deployment, as well as in digital transaction management.

On February 6, 2013, the Company entered into a binding term sheet commitment (the “Term Sheet”) for a $30,000,000 funding agreement with AIC Group Holdings Limited, a corporation organized under the laws of the British Virgin Islands (“AIC” or “Funder”). AIC has agreed to lend $30,000,000 to the Company in six (6) consecutive monthly installments (the “Loan”) with the first portion of the funding to begin no later than 60 days from the date of the Term Sheet. The installments will vary in size depending upon the working capital requirements of the Company at the time each installment is due. AIC may extend only the first installment one time for a period of up to 45 days. The Loan will bear interest at the rate of six percent (6%) per annum, payable quarterly in arrears beginning one year from the funding of the first portion of the Loan. The Loan and all remaining accrued and unpaid interest is due and repayable seven (7) years after the first funding installment; provided, however, that the Company may extend the repayment date for two successive one year periods by giving 90 day prior notice to AIC and paying an extension fee of 2% of the principal amount of the Loan to be renewed. If AIC defaults in making any installment of the Loan, then the Loan shall terminate forthwith and the Company shall have no repayment obligation to AIC. The Company may prepay all or any portion of the Loan at any time without premium or penalty. The Company will grant AIC a first priority security interest in and to all of its assets including its Intellectual Property (“IP”) as collateral security for the Loan. If the Company defaults in making any repayment of interest or principal or under any other material terms and conditions of the Loan, AIC shall have the rights of a secured party under the security agreement to foreclose on the Company collateral to satisfy the Loan. The Company will pay a total of four percent (4%) of the Loan in origination fees to two consultants as each portion of the Loan is funded, and a one time administrative fee of $150,000 that will be refunded if the funding of the Loan does not occur as scheduled. The Company has elected to expense the financing fees advanced rather than to defer these items.

AIC has agreed to use its best efforts to provide directly or through an affiliate a bridge loan for $2,000,000 (amended to $4,000,000 on May 22, 2013)(the “Bridge Loan”) within sixty (60) days of the execution of the Term Sheet. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and shall be repayable from the first proceeds under the Loan. If the Loan does not proceed, then the Bridge Loan, if made, will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be repaid in one year from its date and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. The Bridge Loan did not close during either of the 60-day periods, as discussed below.

The AIC Funding was expected to close on or before May 31, 2013 and is now expected to close on or before October 31, 2013. The closing delay was attributable to working through a complex process on the part of several international banks, which represent this transaction and the necessity of working through the due diligence items prior to closing. As a result of the delays, the Company has negotiated an Amendment No 1 to the Term Sheet dated May 22, 2013 to increase the Bridge Loan from $2 million to $4 million with the remaining funds of $30 million to be paid out pursuant to an agreed upon installment schedule. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. Ultimately AIC was unable to close this amended round of funding and experienced delays with its original funding partner and subsequently AIC secured an alternative funding partner. AIC has represented to the Company that the funds are now under AIC’s control and AIC is working with its bridge funding partners to provide the bridge financing on or before October 31, 2013. Due to the extreme delays experienced, the Company has informed AIC that should funding not occur as committed to, the Company will pursue all legal remedies available to recover its $150,000 funding deposit as well as damages relating to breach of contract and lost business opportunities. Furthermore, the Company has elected to expense the financing fees advanced rather than to defer these items.

In January 2013, we made a partial payment of $182,000 towards acquiring a 10% common equity investment in KO Gaming, Inc. and a 5% common equity investment in KO Entertainment, Inc., for an aggregate purchase price of $3.5 million, which will be funded in its entirety when and if the funds are received from the $30 million investment discussed above and subject to further due diligence. The Company has elected to expense the funds advanced to date. Knockout Gaming, Inc., a Nevada Corporation, is dedicated to leading the online gaming industry worldwide by providing innovative i-gaming turnkey solutions in an expanding industry. Knockout Gaming’s executive management team has extensive expertise in this multi- billion-dollar industry. Knockout Gaming has aligned itself with industry leaders to provide cutting-edge online gaming solutions. Online gambling licenses are only awarded to companies that have passed a rigid vetting process. Knockout Gaming's license was issued on July 17, 2012 and is regulated by the Isle of Man Gambling Supervision Commission. The approval process has resulted in only 47 platforms to date being approved in the past eight years. In 2001, the Isle of Man Government was one of the first jurisdictions in the world to introduce legislation specifically designed to benefit gambling and e-gaming companies and fully protect customers. KO Entertainment, Inc. distributes quality entertainment and media products in online, digital, and print media. Its latest offering is the debut of Knockout LIVE on Roku IPTV Systems. Knockout LIVE will represent the launch of the first network to stream in Blu-Ray quality on IPTV. While intended primarily as a music network, Knockout LIVE will also be hosting exclusive pay-per-view interactive concerts and other events. We impaired this investment since we are not in a position to make any additional investment due to our illiquidity at the current time.

On October 10, 2012, we entered into a licensing agreement with Tarsin Inc. for rights to the CAPSA technology. 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 on annual revenue generated from licensing the platform.

Tarsin provides us with 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.

Tarsin Inc. filed for Chapter 11 bankruptcy in June 2013 and is in the process of reorganizing its business affairs. Should the license arrangement become impaired in the Tarsin bankruptcy, the Company will continue with its own technology development using its own team.

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 this Annual Report on Form 10-K require capital expenditures 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 and 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. Today, CAPSA supports millions of mobile consumers, with thousands added daily.

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. The CAPSA platform facilitates our ability to develop mobile applications and can be leveraged into many different market verticals (including but not limited to):

e-health

Government

Finance and m-commerce

We anticipate that in 2014 we will deliver to market a series of mobile applications in the gaming, entertainment, sports and mobile financial solutions industries.

In monetizing the platform itself, our B2B sales effort is focused on sports books and lotteries (who are already well aware of the compelling returns on mobile). We will leverage our compliance and audit proof points, and in addition to mobilizing their content we offer additional games from our content portfolio to generate cross-sell and higher revenues, maximizing ROI for the client on their customer base.

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 has challenged this process and at the end of the last 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 in September 2012.

We have incurred losses since commencing the above initiatives in June 2011 and will likely continue in 2013 and 2014 until such time that we can generate revenues sufficient to meet our operating needs. We have significant liabilities, some of which we acquired through the acquisition of MEXI, which we are currently converting into common stock, which should be completed by December 31, 2013. We will need to increase our authorized shares prior to converting all notes, which is in control of our two officers. We intend to work through reducing or eliminating the remaining liabilities, and to continue to raise additional working capital to meet the demands of the Company’s initiatives.

Our funding commitments have not yet materialized and there can be no assurance that we will raise any of the financing we need. The financial results of 2012 and 2013 are reflective of an early stage company. The limited financial resources available have impacted results for the current year.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows – Fiscal 2013

We had no cash balance at June 30, 2013.

During fiscal 2013, we used cash in our operating activities amounting to approximately $1,180,000. Our cash used in operating activities was comprised of our net loss from continuing operations of approximately $4,809,000 primarily due to stock based compensation expense and impairment.

During fiscal 2013, we used cash in our investing activities of approximately $700,000 for the proposed acquisition of Tarsin, which ultimately became a license agreement with Tarsin for certain territorial rights to their technology. We invested approximately $180,000 in minority ownership positions in both KO Gaming, Inc. and KO Entertainment, Inc. Both of these items have been expensed in the financial statements.

During fiscal 2013, we generated cash from financing activities of approximately $1,925,000, which consisted of proceeds from loans and the issuance of convertible promissory notes.

Cash Flows – Fiscal 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 an 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 became 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 proceeds from loans and the issuance of convertible promissory notes.

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 expenditures 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 $8,066,000 at June 30, 2013. Subsequent to such date, we have raised working capital of $845,000 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 its projects but anticipates that current market conditions may impact its 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 $ 2013		in % 2013
	2013			2012			vs. 2012		vs. 2012

Revenues:	$	–		$	–		$	–		–	%

Operating expenses:
Selling, general and administrative		3,561,198			1,239,808			2,321,390		187
Impairment of investment		180,432			–			180,432		–
Impairment of intangible assets		182,941			–			182,941		–
Total operating expenses		3,924,571			1,239,808			2,684,763		217

Operating loss		(3,924,571	)		(1,239,808	)		2,684,763		217

Gain on debt restructuring		–			68,813			68,813		-100
Interest expense		(883,997	)		(450,064	)		433,933		96
Total other income (expense)		(883,997	)		(381,251	)		502,746		132

Net loss	$	(4,808,568	)	$	(1,621,059	)	$	3,187,509		197	%

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 software development, 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 2013 when compared to fiscal 2012 is primarily attributable to expanding our development efforts.

Interest Expense

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

The increase in interest expense in fiscal 2013 when compared to fiscal 2012 is primarily due to the issuance of additional loans payable during the fiscal year.

Net Losses

We have continued to incur losses for the periods presented. Because we are a development-stage company, we expect to incur losses until the Company can generate revenues sufficient to cover its operating costs. The Company will need to continue to raise additional working capital to develop its business initiatives until they turn profitable.

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.

The Company leases office space in Incline Village, Nevada pursuant to a lease executed in July 2013. The monthly rent is approximately $4,500. The initial lease is for three months with various options to extend through July 2015 if desired.

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, the inability to raise funds for working capital, technology changes in the industry, relationships with processing agencies and networks, changes in its relationship with related parties providing operating services to the Company, the Tarsin bankruptcy, the activities of competitors and general uncertain economic conditions. Negative developments in these or other risk factors including the potential loss of the CAPSA platform could have a material adverse effect on the Company's future financial position, results of operations and cash flow. See also the Forward Looking Statements section of this report.

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. The asset values were materially impaired during the fourth quarter of 2013, largely due to our severe financial condition.

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 carry forward 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 Annual 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, 2013, 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 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 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, 2013.

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, 2013. 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, 2013. 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, 2013:

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, 2013 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	50	Chairman of the Board of Directors, Chief Executive Officer, President, Chief Financial Officer
Patrick Shuster	61	Chief Operating Officer, Secretary, 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 50

From April 2006 through December 2011 and May 2012 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, SECRETARY, AND DIRECTOR, AGE 61

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 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, 2013, our Board of Directors held 18 meetings and took 18 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 officers, 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, 2013, 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, 2013 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 ($)(1)(2)		Option Awards ($)(1)(2)		All other Compensation ($)(5)		Total ($)

Craig A. Fielding,	2013	$	231,000	(1)	$	810,000	$	8,750	$	0	$	1,049,750
Chief Executive Officer	2012	$	212,500	(3)			$	13,854	$	0	$	226,354
	2011	$	47,000				$	0	$		$	47,000

Patrick Shuster,	2013	$	227,000	(2)	$	808,000	$	8,750	$	0	$	1,043,750
Chief Operating Officer	2012	$	202,500			0	$	13,854	$	0	$	216,354
	2011

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

____________________

(1)

On September 21, 2012, 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 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.

(2)

On September 21, 2012, 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 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 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.

Name of Executive Officer	Number of Options		Exercise Price

Craig A. Fielding		5,000,000	$	0.002


Patrick Shuster		5,000,000	$	0.002

_________________

(3)	Mr. Fielding waived $109,000 of previously accrued and unpaid salaries.
(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)	Mr. Shuster and Mr. Fielding are entitled to 3% of monies raised totaling approximately $180,000.

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

On September 21, 2012, we issued 5,000,000 options, each, to purchase shares of our common stock to the following named directors and officers and 10,000,000 options to a consultant in connection with the Company’s 2012 Stock Option Plan.

Name Of Executive Officer	Number Of Options		Exercise Price

Patrick Shuster		5,000,000	$	0.002
Craig A. Fielding		5,000,000	$	0.002
William Mathews		10,000,000	$	0.04

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

On September 21, 2012, we granted ten-year options to purchase 5,000,000 shares, each, of our common stock to Mr. Fielding and Mr. Shuster in accordance with the Company’s 2012 Stock Option Plan, 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 and will be fully vested on December 31, 2016.

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 25, 2013 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		108,759,999 common shares (4)		24.00	%(2)
464 Worthington Avenue,
Richmond Hill, Ontario,
Canada, L4E 4R6

Tim Brown		42,826,150 common shares (5)		9.5	%(5)
Gippsland Mail Center
Victoria Australia

T. Brown Family Investment Trust		34,426,150 common shares (6)		7.6	%(7)
Gippland Mail Center
Victoria Australia

Patrick Shuster		20,000,000 common shares		4.4	%(2)
6424 Big A Road
Douglasville, Georgia
30135

OFFICERS AND DIRECTORS (2 persons)		128,759,999 common shares (1)		28.40	%(2)

___________________

(1)

The amount includes shares owned of record and beneficially by each of the directors and officers as at October 25, 2013.; 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.

(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 108,749,999 shares of our common stock.

(5)

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 6 below.

(6)

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 to such officers.

ITEM 14. Principal Accounting Fees and Services

(1) Audit Fees

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

	2013		$	59,500
	2012		$	59,500

(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., (11-07-2005); Amended and Restated Articles of Incorporation (09-29-2008); Articles of Merger (04-09-2009); Certificate of Designation (06/03/2010); Certificate of Amendment (09-13-2010); Certificate of Withdrawal of Certificate of Designation (12-05-2011); Certificate of Designation (12-08-2011).

(3)(ii)		By-laws of Consorteum, Inc.

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 Inc.

10.16		Amendment 1 to Tarsin Licensing Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 9, 2011).

10.17		Tarsin Termination Agreement dated October 10, 2012 between Consorteum Holdings Inc., Tarsin Ltd. and Tarsin Inc. (incorporated by reference on Form 10-K filed for June 30, 2012).

10.18		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).

10.19		Settlement and Release Agreement dated October 26, 2012 between Consorteum, Inc., Consorteum Holdings, Inc., Game2Mobile Inc., Craig Fielding, Patrick Shuster, and Joseph Cellura.(incorporated by reference on Form 10-K filed for June 30, 2012).

10.20		AIC Term Sheet (incorporated by reference on Form 10-Q filed for December 31, 2012).

10.21		Amendment 1 to AIC Term Sheet (filed herein).

10.22		Executive Employment Agreement for Craig Fielding (filed herein) .

10.23		Executive Employment Agreement for Patrick Shuster (filed herein).

10.24		Certificate of Designations for Series A and B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 5, 2011).

10.25		Certificate of Withdrawal for Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 5, 2011).

23.0		Consent of Audit Firm

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

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 herein).

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

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 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability.

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: October 30, 2013

	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: October 30, 2013

Name	Position	Date

/s/ Craig A. Fielding	Chief Executive Officer, Chief	October 30, 2013
Craig A. Fielding	Financial Officer, Chairman of the Board of Directors (Principal Executive Officer, Principal Financial Officer)

/s/ Patrick Shuster	Director	October 30, 2013
Patrick Shuster

CONSORTEUM HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013, and 2012

(EXPRESSED IN U.S. DOLLARS)

CONTENTS

Reports of Independent Registered Public Accounting Firms	F-2 to F-3

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 to F-23

F- 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Consorteum Holdings, Inc

We have audited the accompanying consolidated balance sheet of Consorteum Holdings, Inc. and subsidiaries (the “Company”), a development stage company as of June 30, 2013 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year ended June 30, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The accompanying financial statements of the Company for the period from July 1, 2011 (re-entering of development stage) through June 30, 2012 were not audited by us. Those statements were audited by other auditors whose report, dated November 2, 2012 expresses an unqualified opinion on those statements and included an explanatory paragraph regarding the Company’s ability to continue as a going concern. The financial statements for the period from July 1, 2011 (re-entering of development stage) through June 30, 2012, reflect a net loss of $ 1,621,051. Our opinion, insofar as it relates to the amounts included for such prior periods as indicated in the accompanying financial statements for such periods from July 1, 2011 (re-entering of development stage) through June 30, 2012 is based solely on the report of such other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 audit provided a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consorteum Holdings, Inc. and subsidiaries as of June 30, 2013 and the results of its operations and its cash flows for the year ended June 30, 2013, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that Consorteum Holdings, Inc. and subsidiaries will continue as agoing 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/ RBSM LLP

New York, New York

October 29, 2013

F- 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Consorteum Holdings, Inc

We have audited the accompanying balance sheet of Consorteum Holdings, Inc. and subsidiaries (the “Company”), a development stage company as of June 30, 2012 and the related statement of operations , stockholders’ deficit and cash flows for the year ended June 30, 2012, and the period from July 1, 2011 (re-entering of development stage) through June 30, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Consorteum Holdings, Inc. and subsidiaries as of June 30, 2012, and the results of its operations and its cash flows for the year then ended, and the period from July 1, 2011 (re-entering of development stage) through June 30, 2012, in conformity with accounting principles generally accepted in the United States of America

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

New York, New York

November 2, 2012

F- 3

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(A DEVELOPMENT STAGE COMPANY)

	June 30, 2013			June 30, 2012

ASSETS

Current Assets:
Cash	$	489		$	9,371
Current assets		489			9,371

Property and equipment, net		6,537			2,734
Intangible assets, net		–			145,000
Total assets	$	7,026		$	157,105

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities and Shareholders' Deficit:
Bank overdraft	$	1,042		$	–
Accounts payable		687,337			490,256
Accrued expenses		495,366			391,909
Accrued expenses - officers		69,687			244,895
Accrued expenses - payroll taxes and related penalties and interest		99,921			16,291
Loan payable , including accrued interest		3,109,931			1,235,085
Convertible promissory notes		3,500,346			3,288,463
Due to stockholders		102,886			196,085
Total current liabilities		8,066,516			5,862,984

Stockholders' Deficit:
Preferred stock, $0.001 par value, 100,000,000 shares authorized
Preferred stock A, $0.001 par value, 5,000,000 shares designated: 5,000,000 and zero shares issued and outstanding as of June 30, 2013 and 2012, respectively		5,000			–
Preferred stock B, $0.001 par value, 15,000,000 shares designated: 4,000,000 and zero shares issued and outstanding as of June 30, 2013 and 2012, respectively		4,000			–
Preferred stock C, $0.001 par value, 40,000,000 shares designated: zero shares issued and outstanding as of June 30, 2013 and 2012, respectively		–			–
Common stock, $0.001 par value, 500,000,000 shares authorized: 412,400,864 and 309,216,464 shares issued and outstanding as of June 30, 2013 and June 30, 2012, respectively		412,401			309,217
Collateralized shares issued		(137,500	)		(137,500	)
Shares committed to be issued		35,000			35,000
Additional paid-in capital		5,781,221			3,428,065
Accumulated other comprehensive loss		(112,954	)		(102,571	)
Deficit accumulated during prior development activities		(7,617,031	)		(7,617,031	)
Deficit accumulated during the development stage		(6,429,627	)		(1,621,059	)
Total stockholders' deficit		(8,059,490	)		(5,705,879	)
Total liabilities and stockholders' deficit	$	7,026		$	157,105

See Notes to Consolidated Financial Statements.

F- 4

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(A DEVELOPMENT STAGE COMPANY)

	For the Year Ended June 30, 2013			For the Year Ended June 30, 2012			For the period from entering into de velopment stage (July 1, 2011) through June 30, 2013

Revenues	$	–		$	–		$	–

Operating expenses:
Selling, general and administrative		3,561,198			1,239,808			4,801,006
Impairment of investment		180,432			–			180,432
Impairment of intangible assets		182,941			–			182,941
Total operating expenses		3,924,571			1,239,808			5,164,379

Operating loss		(3,924,571	)		(1,239,808	)		(5,164,379	)

Other income and (expense)
Interest expense		(883,997	)		(450,064	)		(1,334,061	)
Gain on settlement of debt		–			68,813			68,813
Total other expenses		(883,997	)		(381,251	)		(1,265,248	)

Net loss		(4,808,568	)		(1,621,059	)		(6,429,627	)

Foreign currency translation adjustment		(10,383	)		68,938			58,555

Comprehensive loss	$	(4,818,951	)	$	(1,552,121	)	$	(6,371,072	)

Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)

Basic and diluted weighted average common shares outstanding		336,072,678			305,407,977

See Notes to Consolidated Financial Statements.

F- 5

CONSORTEUM HOLDINGS, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE PERIOD FROM ENTERING INTO DEVELOPMENT STAGE (July 1, 2011 TO JUNE 30, 2013

(A DEVELOPMENT STAGE COMPANY)

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

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 exercise		–			–			–		–		–			–		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	)

Preferred A shares issued for services at $0.001 per share in September 2012		5,000,000			5,000			–		–		–			–		5,000		–			–			10,000
Preferred B shares issued for services at $0.001 per share in September 2012		4,000,000			4,000			–		–		–			–		4,000		–			–			8,000
Share-based compensation – stock options		–			–			–		–		–			–		208,493		–			–			208,493
Discount on convertible promissory notes		–			–			–		–		–			–		2,787		–			–			2,787
Shares issued for officer compensation (See note 12)		–			–			40,000,000		40,000		–			–		1,560,000		–			–			1,600,000
Shares issued for conversion of convertible promissory notes (See note 12)		–			–			63,184,400		63,184		–			–		572,876		–			–			636,060
Foreign currency translation		–			–			–		–		–			–		–		(10,383	)		–			(10,383	)
Net loss		–			–			–		–		–			–		–		–			(4,808,568	)		(4,808,568	)

Ending balance June 30, 2013		9,000,000		$	9,000			412,400,864	$	412,401	$	(137,500	)	$	35,000	$	5,781,221	$	(112,954	)	$	(14,046,658	)	$	(8,059,490	)

See Notes to Consolidated Financial Statements.

F- 6

CONSORTEUM HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(A DEVELOPMENT STAGE COMPANY)

	Year Ended June 30, 2013			Year Ended June 30, 2012			For the period from entering into development stage (July 1, 2011) through June 30, 2013
Cash flows from operating activities:
Net loss	$	(4,808,568	)		$(1,621,059	)		$(6,429,627	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of investment		180,432			–			180,432
Impairment of intangible assets		182,941			–			182,941
Write-off of note receivable		423,100			–			423,100
Depreciation		1,173			1,176			2,349
Gain on forgiveness or restructuring of debt		–			(68,813	)		(68,813	)
Amortization of debt discount		2,787			–			3,192
Amortization of deferred finance charges		14,657			59,141			73,798
Amortization of intangible asset		51,000			–			51,000
Stock-based compensation		1,607,838			191,230			1,783,782
Changes in operating assets and liabilities:
Accounts payable		206,617			141,445			348,062
Accrued expenses		237,007			282,161			534,455
Accrued interest		721,851			411,269			1,132,715
Net cash used in operating activities		(1,179,165	)		(603,450	)		(1,782,615	)

Cash flows used in investing activities:
Purchase of license agreement		(88,941	)		(145,000	)		(233,941	)
Capital expenditures		(4,660	)		–			(4,660	)
Note receivable		(423,100	)		–			(423,100	)
Purchase of investment		(180,432	)		–			(180,432	)
Net cash used in investing activities		(697,133	)		(145,000	)		(842,133	)

Cash flows from financing activities:
Proceeds from loans		1,490,000			141,482			1,631,482
Repayment of bank indebtedness		–			(121,938	)		(121,938	)
Financing costs		(14,250	)		–			(14,250	)
Proceeds from stockholders' advances		–			195,585			195,585
Repayment of stockholders' advances		(87,436	)		–			(87,436	)
Proceeds from the issuance of convertible promissory notes		536,507			541,757			1,078,264
Repayment of convertible promissory notes		–			(4,020	)		(4,020	)
Net cash provided by financing activities		1,924,821			752,866			2,677,687

Effect of exchange rate on cash		(57,405	)		1,314			(56,091	)
Net (decrease) increase in cash		(8,882	)		5,730			(3,152	)
Cash, beginning of period		9,371			3,641			3,641
Cash, end of period	$	489		$	9,371		$	489

Supplemental disclosures of cash flow information:
Cash paid for interest	$	9,212		$	–		$	9,212
Cash paid for income taxes	$	–		$	–		$	–

Non-cash investing and financing activities:
Fair value of beneficial conversion feature on convertible promissory notes	$	2,787		$	–		$	2,787
Fair value of convertible notes issued related to acquisition	$	–		$	2,078,646		$	2,078,646
Fair value of shares issued for convertible debt and accrued interest	$	636,060		$	101,375		$	737,435
Fair value of shares issued for accrued salaries	$	218,655		$	–		$	218,655

See Notes to Consolidated Financial Statements.

F- 7

CONSORTEUM HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Development Stage Activities, and Going Concern

Consorteum Holdings, Inc. ("Holdings" or 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 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 the transaction. 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 11, 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 12).

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 12).

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 to be issued at a deemed issuance price of $0.10 per share; and(2) a cash payment of $3,000,000 to Seller. Pursuant to the Amendment No. 1 , 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. The Company has been unable to meet these obligations because the Company was unable to provide the necessary financing. 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. 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. Tarsin is operating as a privately held Nevada corporation. In connection therewith, the Company advanced monies for the license totaling approximately $234,000, loans totaling $423,100 and consulting fees to Tarsin’s president totaling approximately $73,000 through June 30, 2013. Tarsin, Inc. recently entered into bankruptcy because of its inability to continue as a going concern. There are no assurances that the Company will be able to retain and commercialize its license rights to the CAPSA technology, nor whether the Company will be able to recover its notes receivable and costs incurred with the license. As a result, as of June 30, 2013, the license was deemed impaired and the note receivable reserved. See Note 4.

F- 8

The Term Sheet provided that AIC agreed to lend $30,000,000 to the Company in six (6) consecutive monthly installments (the “Loan”) with the first portion of the funding which was to begin no later than 60 days from the date of the Term Sheet. The installments, if the note is closed, will vary in size depending upon the working capital requirements of the Company at the time each installment is due. The Loan will bear interest at the rate of six percent (6%) per annum, payable quarterly in arrears beginning one year from the funding of the first portion of the Loan. The Loan and all remaining accrued and unpaid interest is due and repayable seven (7) years after the first funding installment; provided, however, that the Company may extend the repayment date for two successive one year periods by giving 90 day prior notice to AIC and paying an extension fee of 2% of the principal amount of the Loan to be renewed. If AIC defaults in making any installment of the Loan, then the Loan shall terminate forthwith and the Company shall have no repayment obligation to AIC. The Company may prepay all or any portion of the Loan at any time without premium or penalty. The Company will grant AIC a first priority security interest in and to all of its assets including its Intellectual Property (“IP”) as collateral security for the Loan. If the Company defaults in making any repayment of interest or principal or under any other material terms and conditions of the Loan, AIC shall have the rights of a secured party under the security agreement to foreclose on the Company collateral to satisfy the Loan. The Company will pay a total of four percent (4%) of the Loan in origination fees to two consultants as each portion of the Loan is funded;the Company paid a one-time, refundable administrative fee of $150,000 (see below for impairment).

AIC had also agreed to use its best efforts to provide directly or through an affiliate a bridge loan for $2,000,000 (the “Bridge Loan”) within sixty (60) days of the execution of the Term Sheet. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and shall be repayable from the first proceeds under the Loan. If the Loan does not proceed, then the Bridge Loan(amended to $4,000,000 on May 22, 2013), if made, will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be repaid in one year from its date and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. The Bridge Loan did not close during the 60-day period, as discussed below.

F- 9

The AIC Funding was expected to close on or before May 31, 2013. The closing delay was attributable to working through a complex process on the part of several international banks which represent this transaction and the necessity of working through the due diligence items prior to closing. As a result of the delays, the Company has negotiated an Amendment No. 1 to the Term Sheet dated May 22, 2013 to increase the Bridge Loan from $2 million to $4 million with the remaining funds of $30 million to be paid out over the next six months. The Bridge Loan shall bear interest at the rate of six percent (6%) per annum and will convert to a convertible note that shall continue to bear interest at six percent (6%) per annum and be convertible into restricted shares of common stock of the Company at any time at a conversion rate equal to 85% of the average closing price per share of common stock of the Company for the five (5) days preceding the conversion date. Ultimately AIC was unable to close this amended round of funding and experienced delays with its original funding partner and subsequently AIC secured an alternative funding partner. AIC has represented to the Company that the funds are now under AIC’s control and AIC is working with its bridge funding partners to provide the bridge financing on or before October 31, 2013. Due to the extreme delays experienced, the Company has informed AIC that should funding not occur as committed to, the Company will pursue all legal remedies available to recover its $150,000 funding deposit, as well as damages relating to breach of contract and lost business opportunities. Furthermore, the Company has charged to expense the financing fees advanced rather than to defer these items because of the uncertainties regarding completing the funding.

Development Stage Activities

The Company 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, the Company changed its date of inception as a result of the change in business for accounting of 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, the Company began to focus its efforts to acquire Tarsin, Inc.; however, the Company was unsuccessful in completing the acquisition because the Company could not secure the financing necessary to close. In October 2012, the Company secured a license to market and license the CAPSA technology from Tarsin. The Company expects to generate revenues from licensing the CAPSA technology in fiscal 2014 subject to the outcome of the Tarsin bankruptcy (see Note 4). The Company has 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, 2013, the Company had a working capital deficit (current liabilities in excess of current assets) of approximately $8.1 million. The Company's working capital deficit and recent losses raise substantial doubt as to its ability to continue as a going concern.

The Company has secured working capital of approximately $2,000,000 during the year ended June 30, 2013. Subsequent to such date, the Company has raised additional capital totaling approximately $845,000; such proceeds were used for working capital of the business, to secure a funding agreement with AIC and other Tarsin related activities. The Company require additional equity or debt financing to meet its 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. The Company is attempting to restructure some of the debt and secure cash from an executed capital raise agreement and additional financing partners to satisfy its existing obligations and provide for sufficient working capital to meet the Company’s future obligations but there are no guarantees that the Company will be able to do any of these things.

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:

F- 10

Basis of Presentation

The consolidated financial statements include the accounts of Consorteum Holdings, Inc. Consorteum Inc., and Bad Rabbit Inc. which was formed on May 30, 2013 with no operating activity as of the fiscal year end. Subsequently, the Company formed ThreeFiftyNine 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, the potential impairments of long-lived 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 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 a total of approximately $234,000 paid to Tarsin. Amortization expense relating to intangible assets was $51,000 and $0 for the fiscal years ended June 30, 2013 and 2012, respectively. As of June 30, 2013, management determined that impairment of the intangible asset was appropriate, (see Note 4).

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.

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 using the effective interest method. As of June 30, 2013, the Company paid an outside broker a one-time refundable administrative fee of approximately $150,000 related to a $30,000,000 financing transaction that was to initially close by May 31, 2013 (see AIC transaction in Note 1). Due to the uncertainty of the transaction and recoverability of the funding deposit, the Company has charged the $150,000 to expense rather than to defer this amount.

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.

F- 11

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.

F- 12

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 of operations and comprehensive loss.

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 are 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 20,000,000 and 16,500,000 options and 3,172,184 and 2,492,184 warrants from the calculation for the year ended June 30, 2013 and 2012, respectively, 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.

Reclassification

Certain amounts reported in prior years have been reclassified to conform to the presentation at June 30, 2013.

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, (Level 1), note receivables, due to stockholders, accounts payable, accrued liabilities, convertible promissory notes 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.

F- 13

4 .	Note Receivable and License Agreement with Tarsin

On October 10, 2012, the Company 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, the Company acquired exclusive rights to market, sell and service CAPSA in Canada, Mexico, as well as select customers in the United States. The Company must pay $100,000, annually, beginning in year two of the agreement. Under the license, the Company is 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. Since the date of the license agreement, the Company advanced Tarsin approximately $234,000 and applied such amount to the license. Amortization of said license for the year ended June 30, 2013 and 2012 was $51,000 and zero, respectively. Management determined that due to the financial difficulties of Tarsin and their bankruptcy filing, the ability for the Company to execute on the licensed technology may be hindered. Accordingly, the remaining capitalized amounts of approximately $183,000 were impaired as of June 30, 2013. The charge for impairment is included in the accompanying statement of operations.

During the three months ended March 31, 2013, the Company made advances to Tarsin totaling $241,000. The Company entered into a note agreement with Tarsin to be repaid by September 16, 2013, with interest at 0.25%, per annum. During the three months ended June 30, 2013, the Company advanced Tarsin an additional $182,000 with aggregate advances of approximately $423,000. This note and additional advances was not repaid as of June 30, 2013. Management determined that due to the financial difficulties of Tarsin and their bankruptcy filing, there is substantial doubt about the ability to be repaid on the aggregate amount of the note receivable from Tarsin. Accordingly, management reserved the full amount of advances totaling $423,000 and charged operations.

The Company paid consulting fees to Tarsin’s president of approximately $73,000 during the 2013 fiscal year.

5.	Investment, at cost and Deferred Financing Costs

Investment, at cost

During 2013, the Company made a partial payment of approximately $180,000 towards acquiring a 10% common equity investment in KO Gaming, Inc. and a 5% common equity investment in KO Entertainment, Inc., for an aggregate purchase price of $3.5 million. If the funds are received from the $30 million investment discussed in Note 1, management will perform further due diligence and reassess the business opportunities.

Management determined that since the initial investment was made, an impairment of the asset value had occurred. Management determined that the remaining value was minimal, if any, and fully impaired the investment as of June 30, 2013. The charge for impairment is included in the accompanying statement of operations.

Deferred Financing Costs

Per the terms of the of a funding agreement disclosed in Note 1 to these consolidated financial statements with AIC Group Holdings Limited, the Company paid a one-time administration fee of $150,000 during the quarter ended March 31, 2013. As discussed in Note 2, due to the uncertainty surrounding the transaction the Company has charged the $150,000 to expense rather than to defer this amount.

6.	Equipment, Net

Equipment consists of cost of computer equipment of approximately $25,000 and $20,400, at June 30, 2013 and 2012, respectively, and related accumulated depreciation of approximately $18,900 and $17,700 at June 30, 2013 and 2012, respectively.

Depreciation expense amounted to approximately $1,200 and $1,200 during fiscal 2013 and 2012, respectively.

F- 14

7.	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 the Company’s 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 CEO the funds used to satisfy the RBC note. 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 during the year ended June 30, 2012.

8.	Accrued Expenses

The Company's accrued expenses are as follows:

		June 30, 2013		June 30, 2012
Salaries, wages and benefits - officers	$	69,687	$	244,895
Salaries, wages, and benefits – non-officers		46,056		46,056
Payroll taxes and related penalties and interest		99,921		16,292
Professional services		389,835		285,173
Other		59,475		60,679

Total Accrued Expenses	$	664,974	$	653,095

The Company has not reported wages paid 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.

9.	Loans Payable and Convertible Promissory Notes

Loans payable are as follows:

	June 30,			June 30,
	2013			2012

Loans payable, bearing interest at rates between 0% and 18% per annum. Interest payable monthly. These loans are past due. Unsecured and payable on demand. Accrued interest of $661,309 and $212,201 at June 30, 2013 and 2012, respectively. Certain of these notes totaling $1,490,000 incurred flat fees of 15% upon issuance during fiscal 2013.	$	3,109,931		$	1,235,085
Less: Current portion		(3,109,931	)		(1,235,085	)
Loans payable, non-current	$	–		$	–

Convertible Promissory Notes are as follows:

	June 30,		June 30,
	2013		2012
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, 2013 and 2012 of $340,127 and $408,521, respectively. These notes were convertible upon the merger that occurred in July 2011.	$	1,685,779	$	2,189,490

Convertible promissory notes, bearing interest between 5% and 18% per annum, which matured 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 each at a rate ranging from $0.008 to $0.05 or at 35% discount of market. Accrued interest of $48,322 and $22,176 at June 30, 2013 and 2012, respectively. The notes are substantially in default at June 30, 2012.		340,039		167,771

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 $62,836 and $12,231 at June 30, 2013 and 2012, respectively.		387,336		336,731

Convertible promissory notes, bearing interest at 8-12% per annum plus 2% default interest per month as applicable, maturing August 2012 to December 2013. Interest payable monthly. These notes are convertible at any time at the option of the holder, into shares of common stock at a rate of $0.02-$0.03 each. Accrued interest of $179,441 and $90,440 at June 30, 2013 and 2012, respectively.		1,087,192		594,471

Convertible promissory notes	$	3,500,346	$	3,288,463

F- 15

Loans Payable

In April 2012, the Company received $45,000 from an individual known to Mr. Cellura. To date, the Company has 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 settlement agreement with Mr. Cellura as discussed in Note 11, Mr. Cellura is to assume the obligation and formalize an agreement for said amount. The Company has included such amount in financial statements until such time the agreement is consummated and the Company is 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, the Company committed to issue 5,000,000 shares of common stock valued at approximately $35,000 using 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 common stock has not been issued.

On June 12, 2012, the Company issued a note for $35,314 received, interest at 8%, per annum, due August 31, 2012. The note has not been satisfied and is currently in technical default.

The Company issued 63,184,400 and 5,068,750 shares of its common stock to satisfy obligations under certain loans payable aggregating approximately, $636,060 and $101,375 respectively, during fiscal 2013 and 2012.

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.

During fiscal 2013, the Company received approximately $2,000,000 in cash proceeds from an existing note holder with the intent to establish an all encompassed promissory note for the primary lender and provide for additional advances to the Company. On July 17, 2013, the Company memorialized the loans made by the primary lender to provide for repayments in an aggregate amount of approximately $3,557,000, of which $2,957,000 was outstanding as of June 30, 2013. These repayment amounts include interest of either 15% or 10% over the term of the note and a default rate of 2% per month. A portion of these repayments also include fixed fee charges in the amount of $135,000 payable upon issuance of the loan, of which $85,000 was payable at June 30, 2013. As of this date, the Company has been unable to satisfy the repayment obligation.

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, which matured 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%) which matured 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 matured 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.

F- 16

In connection with the assumption of convertible notes from MEXI in June 2011 of approximately $2.1 million, the Company 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, the Company would issue approximately 128 million shares of our common stock. As of the audit report date, the Company has converted approximately $636,060 of these notes. The Company intend to satisfy the remaining notes with common stock by fiscal year end 2014.

During the year ended matured June 30, 2013, the Company issued convertible notes totaling approximately $130,000 to various parties for cash. The notes bear interest at 8% and matured between January and July 2013, at which time all principal and accrued interest is due and payable. The notes and accrued interest thereon are convertible at $0.025 or based on the next equity financings and include default interest up to 12%.

During the year ended June 30, 2013, the Company issued convertible notes totaling approximately $908,000 to an existing shareholder which is included in the $2,000,000 in total advances noted above in the Loans Payable section. Of the $908,000, approximately $504,000 was related to prior convertible notes that were refinanced during the year with new terms. The notes bear interest at 8%, per annum and are due at various dates through December 31, 2013, at which time all principal and accrued interest is due and payable. The notes and accrued interest thereon are generally convertible at $0.02 per share into the Company’s common stock at the option of the holder at any time prior to maturity and carry a 2% per month default rate.

The Company recognized interest expense of approximately $883,997 and $450,064 during fiscal 2013 and 2012, respectively, in connection with all loans,convertible promissory notes, and financing costs.

10.

Related Party Transactions

The amounts due to stockholders are non-interest bearing, unsecured and have no fixed terms of repayment. Stockholders advanced the Company approximately $0 and $196,000 during the years ended June 30, 2013 and 2012, and were repaid approximately $87,000 and $0 during the same time periods, respectively.

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 7), 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. During the year ended June 30, 2013, approximately $81,000 of interest and principal related to this note was repaid.

The Company’s Chief Executive Officer repaid the obligation to RBC on behalf of the Company – see Note 7, as well as paid direct and indirect costs as a result of his guarantee on the debt on behalf of the Company.

F- 17

11.

Commitments and Contingencies

Threatened Litigation

The Company is not aware of any threatened litigation at this time.

Employment Agreements

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

	—	Retroactive to September 1, 2012
	—	Base salary of $240,000
	—	Reimbursed office expense of $5,000 per month;
		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
	—	2,000,000 shares of Series B Preferred, fully vested on September 21, 2012
	—	Unspecified pension and compensation retirement plan; 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. 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.

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

	—	Retroactive to September 1, 2012
	—	Base salary of $240,000
	—	Reimbursed office expense of $5,000 per month.
	—	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;
	—	2,000,000 shares of Series B Preferred, fully vested on September 21, 2012
	—	Unspecified pension and compensation retirement plan; 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. 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.

Other Matters

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, the Company requested Tarsin management to assume the investment and satisfy the investor with an interest in Tarsin. The Company 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.

F- 18

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. The Company, Shuster and Fielding were never 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. The Company also has various counterclaims against Mr. Cellura. 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.

The Company is a creditor in two related bankruptcy cases in the U.S.Bankruptcy Court, Northern District of California. The Company has filed proof of claims in both In re Game2Mobile, Case No. 13-52062 and In re Tarsin Inc, Case No. 13-53607. The Company will also be submitting administrative expense claims.

12.

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 approximately 253,000,000 shares of common stock under convertible notes, warrants and stock options became due as of June 30, 2013, the Company would not have sufficient authorized common shares to fulfill such obligations. However, Company’s two officers, who are also directors, control sufficient votes through their holdings of Series A and B Preferred Stock to increase the authorized shares at any time, when deemed appropriate. The Company intends to increase our authorized common shares in the near future.

Preferred Stock

As of June 30, 2013, the Company has 100,000,000 preferred shares authorized, having a par value of $.001 per share.

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 were set. 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 consist of voting rights equal to one vote per share held, conversion rights equal to Series A and liquidation preference as described below.

F- 19

On September 21, 2012, the Company’s board of directors approved designations for Series C Preferred Stock. In connection therewith, the Company 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 share is convertible into four (4) shares of common stock, and have a liquidation preference after the Series A & B Preferred Stock. No Series C shares have been issued.

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,the Company did not reverse the compensation expense upon the cancellation of the commitment to issue such shares in May 2012.

Common Stock

During the year ended June 30, 2012, the Company issued 5,068,750 shares to satisfy $101,375 of convertible notes and accrued interest. During the year ended June 30, 2013, the Company issued 63,184,400 shares to satisfy $636,060 of convertible notes and accrued interest. The convertible notes and accrued interest thereon were converted at $0.01 per share.

In connection with the employment agreements described in Note 11, the Company issued 40,000,000 fully-vested shares valued at $1,600,000 based on the market price of the Company's common stock on the date approved by these recipients, $218,655 was applied against accrued salaries and the remaining $1,381,345 was charged to operations during the year ended June 30, 2013.

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.

During the year ended June 30, 2013, the Company issued 680,000 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 $130,000. The Company determined that the value associated with the granting of these warrants associated with this convertible note was approximately $3,000, all of which was amortized in fiscal 2013.

F- 20

A summary of the status of the warrants for the years ended June 30, 2013 and 2012 is as follows:

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

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
Granted		680,000			0.025		5.0
Exercised		–			–
Forfeited		–			–
Outstanding June 30, 2013		3,172,184		$	0.018		3.1

Options

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 ten-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, 2013, there is approximately $25,000 of unrecognized expense associated with the issuance of stock options, of which $17,500 and $7,500 in expense is expected to be recognized in fiscal 2014 and 2015, respectively.

During February 2013, the Company issued 10,000,000 options to a third-party consultant for services to be rendered. There were no terms to the options and thus, it has been determined that the exercise price is the fair market value on the date of exercise and the options carry a ten (10) year contractual life. Half of the options vest upon commencement of the contract, and the other half vest at the anniversary date of the contract. The options are valued at each reporting date based on the guidance of ASC 505. The Company used the following range of inputs to the Black-Scholes pricing model during the year ended June 30, 2013:

Annual dividend yield	–
Expected life (years)	5.25-5.5
Risk-free interest rate	0.78-1.41	%
Expected volatility	339-341	%

Stock option expense related to these options was approximately $17,500 during the year ended June 30, 2013. Stock option expense for all stock options during the year ended June 30, 2013 and 2012 was approximately $208,000 and $53,000, respectively.

F- 21

Stock option activity for the years ended June 30, 2013 and 2012, respectively is summarized as follows:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Terms		Aggregate Intrinsic Value
Outstanding at June 30, 2011		2,500,000		$	0.15		1.5		–
									–
Granted		20,000,000			0.01		10.0		–
Exercised		–			–		–		–
Expired		(6,500,000	)		0.01 - 0.15		3.0		–
Outstanding at June 30, 2012		16,000,000		$	0.02		8.9	$	–

Granted		20,000,000			0.002-0.04		10.0		–
Exercised		–			–		–		–
Cancelled		(16,000,000	)		0.01		3.0		–
Outstanding at June 30, 2013		20,000,000		$	0.02		9.0	$	–

Exercisable and vested at June 30, 2013		9,375,000		$	$0.002-0.04		9.0	$	–

13.

Income Tax

The Company's income taxes are as follows:

	June 30,			June 30,
	2013			2012

Expected income tax benefit at the combined statutory rate of 35%	$	1,603,000		$	516,000
Non-deductible stock compensation and other		(558,000	)		(67,000	)
U.S. effective rate in excess of Canadian tax rate		(79,000	)		(51,000	)
Valuation allowance		(966,000	)		(398,000	)

Benefit from income taxes	$	–		$	–

The components of deferred tax assets are as follows:

	June 30, 2013			June 30, 2012

Net operating loss carry forwards	$	1,495,000		$	450,000
Accounts payable and accrued liabilities		799,000			391,000
Valuation allowance		(2,294,000	)		(841,000	)

Net	$	–		$	–

The components of net loss for fiscal 2013 and 2012 before income tax consisted of the following:

	Year Ended June 30,
Description	2013			2012

U.S. Operations	$	(3,878,000	)	$	(1,024,000	)
Canadian Operations		(930,000	)		(597,000	)
Total net loss	$	(4,808,000	)	$	(1,621,000	)

F- 22

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 be limited to a nominal amount, annually. During the year ended June 30, 2012, the Company excluded NOLs prior to fiscal 2012 from its deferred tax assets. The Canadian NOL will be calculated using the Canadian tax rate of 26% compared to the U.S. tax rate of 36%.

The Company has not filed its United States Federal and State tax returns for the years ended June 30, 2011, 2012 or 2013. 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 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, the 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 years ended June 30, 2013 and 2012, the Company paid advances to two officers totaling $0 and $125,675. The Company has 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.

14.

Subsequent Events

In June 2013 the Company formed Bad Rabbit Inc., a Nevada corporation. Bad Rabbit was initially set up in order to operationally segment Company’s development team, which the Company began hiring in July 2013. Concurrent with the hiring, the Company engaged a marketing company in the UK, The Alternative Ltd., to advise the Company on creating a new brand for Company’s mobile platform. A London-based agency, The Alternative, purveyors of brand engineering since 1996, started their business to provide fresh thinking and bespoke alternatives for clients wanting to be brand leaders. Their core services include B2B campaigns and creative direction, employee engagement and internal marketing, event management and launch events, social media, and leadership development and engagement. Their clients include Skype, Orange, Sainsburys, YO! Sushi, Friends Life, Microsoft, American Express and Virgin.

In August 2013 the Company formed ThreeFiftyNine Inc., a Nevada corporation, as the first step in establishing a brand.

From July 1, 2013 until October 15, 2013 the Company raised funding in the amount of $845,000 from the issuance of loan agreements. The terms of the loans have been disclosed in Note 9.

From July 1, 2013 through October 15, 2013 the Company paid approximately $170,000 to the CEO. Approximately $60,000 was paid as salary and approximately $110,000 was paid to satisfy a loan the CEO advanced the Company relating to the RBC Note (see Notes 7 and 10).

From July 1, 2013 through October 15, 2013 the Company paid approximately $75,000 to the COO. Approximately $60,000 was paid as salary and approximately $15,000 was paid to reimburse office allowance per the employment agreement.

From July 1, 2013 through October 28, 2013 the Company issued an aggregate of 35 million shares as a result of debt conversions amounting to $425,000. In addition 5 million shares were issued for services valued at approximately $35,000.

The Company is proposing an increase in the authorized number of shares of common stock available for future issuance in order to have shares available for a variety of corporate purposes including the conversion to common stock of outstanding convertible notes. Company’s Articles of Incorporation authorize it to issue up to 500,000,000 shares of common stock, par value $.001 per share, and 100,000,000 shares of preferred stock, par value $.001 per share, including 5,000,000 shares of Series A Preferred Stock and 15,000,000 shares of Series B Preferred Stock, and the Company is proposing to increase the authorized common stock to 750,000,000 shares. The Company currently have 452,400,864 shares of common stock outstanding and 13,352,184 shares reserved for issuance pursuant to outstanding options and warrants and 5,000,000 shares of Series A Preferred Stock and 4,000,000 shares of Series B Preferred Stock outstanding. The Company do not propose to increase our authorized preferred stock, which will remain unchanged. In August 2013, the Company filed a PREFORM 14C with the SEC to increase the authorized shares of its common stock to 750 million. The Company will be finalizing and filing that document and then notifying shareholders as required and changing our Articles of Incorporation to reflect the additional shares. Once this process is complete the Company will have sufficient common shares to convert existing note holders.

F- 23

STATE OF NEVADA

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF WELLENTECH SERVICES, INC.

Wellentech Services, Inc., a corporation organized and existing under the laws of the State of Nevada, hereby amends and restates its Articles of Incorporation, as follows:

1. The Name of the Corporation: Implex Corporation

2. Its registered agent is CSC Services of Nevada, Inc., 502 Eat John Street, Carson City, Nevada 89706.

3. The corporation shall have authority to issue Two Hundred Million (200,000,000) shares of Capital Stock. The Two Hundred Million (200,000,000) shares which the corporation shall have authority to issue shall be divided into two classes:

100,000,000 Preferred Shares, having a par value of one tenth of a cent ($.001) per share

and

100,000,000 Common Shares, having a par value of one tenth of a cent ($.001) per share

A description of the different classes of stock and a statement of the designations, preferences, voting rights, limitations and relative rights of the holders of stock of such classes are as follows:

A. Common Shares . The terms of the Common Shares of the corporation shall be as follows:

(1) Dividends. Whenever cash dividends upon the Preferred Shares of all series thereof at the time outstanding, to the extent of the preference to which such shares are entitled, shall have been paid in full for all past dividend periods, or declared and set apart for payment, such dividends, payable in cash, stock, or otherwise, as may be determined by the Board of Directors, may be declared by the Board of Directors and paid from time to time to the holders of the Common Shares out of the remaining net profits or surplus of the corporation.

(2) Liquidation. In the event of any liquidation, dissolution, or winding up of the affairs of the corporation, whether voluntary or involuntary, all assets and funds of the corporation remaining after the payment to the holders of the Preferred Shares of all series thereof of the full amounts to which they shall be entitled as hereinafter provided, shall be divided and distributed among the holders of the Common Shares according to their respective shares.

(3) Voting rights. Each holder of a Common Share shall have one vote in respect of each share of such stock held by him. There shall not be cumulative voting.

B. Preferred Shares . Prior to the issuance of any of the Preferred Shares, the Board of Directors shall determine the number of Preferred Shares to then be issued from the total shares authorized, and such shares shall constitute a series of the Preferred Shares. Such series shall have such preferences, limitations, and relative rights as the Board of Directors shall determine and such series shall be given a distinguishing designation. Each share of a series shall have preferences, limitations, and relative rights identical with those of all other shares of the same series. Except to the extent otherwise provided in the Board of Directors' determination of a series, the shares of such series shall have preferences, limitations, and relative rights identical with all other series of the Preferred Shares. Preferred Shares may have dividend or liquidation rights which are prior (superior or senior) to the dividend and liquidation rights and preferences of the Common Shares and any other series of the Preferred Shares. Also, any series of the Preferred Shares may have voting rights.

4. Its Board of Directors is:

James D. Beatty	Richard C. Fox
141 Adelaide St. W.	131 Court St., #11
Suite 500	Exeter, New Hampshire 03833
Toronto, Ontario M5H 3L5

5. The purposes for which the corporation is organized are to do or engage in any lawful business for which corporation may be organized under the Nevada Corporation Law.

8. Board of Directors. The business and property of the corporation shall be managed by a Board of Directors of not fewer than one (1) nor more than twenty-one (21) directors, who shall be natural persons of full age, and who shall be elected annually by the shareholders having voting rights, for the term of one year, and shall serve until the election and acceptance of their duly qualified successors. In the event of any delay in holding, or adjournment of, or failure to hold an annual meeting, the terms of the sitting directors shall be automatically continued indefinitely until their successors are elected and qualified. Directors need not be residents of the State of Nevada nor shareholders. Any vacancies, including vacancies resulting from an increase in the number of directors, may be filled by the Board of Directors, though less than a quorum, for the unexpired term. The Board of Directors shall have full power, and it is hereby expressly authorized, to increase or decrease the number of directors from time to time without requiring a vote of the shareholders.

9. Limitation on Liability of Director. No director of the corporation shall be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director; provided, that the foregoing clause shall not apply to any liability of a director for any action for which the Nevada Corporation Law proscribes this limitation and then only to the extent that this limitation is specifically so proscribed.

10. Interested Directors. In case the corporation enters into contracts or transacts business with one or more of its directors, or with any firm of which one or more of its directors are members, or with any other corporation or association of which one or more of its directors are shareholders, directors, or officers, such contracts or transactions shall not be invalidated or in any way affected by the fact that such director or directors have or may have an interest therein which is or might be adverse to the interest of this corporation, provided that such contracts or transactions are in the usual course of business.

In the absence of fraud, no contract or other transaction between this corporation and any other corporation or any individual or firm, shall in any way be affected or invalidated by the fact that any of the directors of this corporation is interested in such contract or transaction, provided that such interest shall be fully disclosed or otherwise known to the Board of Directors in the meeting of such Board at which time such contract or transaction was authorized or confirmed, and provided, however, that any such directors of this corporation who are so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors of this corporation which shall authorize or confirm such contract or transaction, and any such director may vote thereon to authorize any such contract or transaction with the like force and effect as if he were not such director or officer of such other corporation or not so interested.

11. Indemnification. The following indemnification provisions shall be deemed to be contractual in nature and not subject to retroactive removal or reduction by amendment.

(a) This corporation shall indemnify any director and any officer who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil or criminal, judicial, administrative or investigative, by reason of the fact that he/she is or was serving at the request of this corporation as a director or officer or member of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement, actually and reasonably incurred by him/her in connection with such action, suit or proceeding, including any appeal thereof, if he/she acted in good faith or in a manner he/she reasonably believed to be in, or not opposed to, the best interests of this corporation, and with respect to any criminal action or proceeding, if he/she had no reasonable cause to believe his/her conduct was unlawful. However, with respect to any action by or in the right of this corporation to procure a judgment in its favor, no indemnification shall be made in respect of any claim, issue, or matter as to which such person is adjudged liable for negligence or misconduct in the performance of his/her duty to the corporation unless, and only to the extent that, the court in which such action or suit was brought determines, on application, that despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity in view of all the circumstances of the case.

Termination of any action, suit or proceeding by judgment, order, settlement, conviction, or in a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the party did not meet the applicable standard of conduct. Indemnification hereunder may be paid by the corporation in advance of the final disposition of any action, suit or proceeding, on a preliminary determination that the director, officer, employee or agent met the applicable standard of conduct.

(b) The corporation shall also indemnify any director or officer who has been successful on the merits or otherwise, in defense of any action, suit, or proceeding, or in defense of any claim, issue, or matter therein, against all expenses, including attorneys' fees, actually and reasonably incurred by him/her in connection therewith, without the necessity of an independent determination that such director or officer met any appropriate standard of conduct.

(c) The indemnification provided for herein shall continue as to any person who has ceased to be a director or officer, and shall inure to the benefit of the heirs, executors, and administrators of such persons.

(d) In addition to the indemnification provided for herein, the corporation shall have power to make any other or further indemnification, except an indemnification against gross negligence or willful misconduct, under any resolution or agreement duly adopted by the Board of Directors, or duly authorized by a majority of the shareholders.

12. Stock Splits without Stockholder Approval. The Board of Directors, without the consent of the stockholders of the corporation, may adopt any recapitalization affecting the outstanding shares of capital stock of the corporation by effecting a forward or reverse split of all of the outstanding shares of any class of capital stock of the corporation, with appropriate adjustment to the corporation’s capital accounts.

STATE OF NEVADA

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF WELLENTECH SERVICES, INC.

Continued from the Certificate of Amendment primary sheet:

A. Common Shares . The terms of the Common Shares of the corporation shall be as follows:

(3) Voting rights. Each holder of a Common Share shall have one vote in respect of each share of such stock held by him. There shall not be cumulative voting.

4. Its Board of Directors is:

James D. Beatty	Richard C. Fox
141 Adelaide St. W.	131 Court St., #11
Suite 500	Exeter, New Hampshire 03833
Toronto, Ontario M5H 3L5

5. The purposes for which the corporation is organized are to do or engage in any lawful business for which corporation may be organized under the Nevada Corporation Law.

11. Indemnification. The following indemnification provisions shall be deemed to be contractual in nature and not subject to retroactive removal or reduction by amendment.

CONSORTEUM HOLDINGS, INC.

Entity Number E0753552005-4

Certificate of Designation for Nevada For Profit Corporations

Series A Preferred Shares continuation page 1 of 2

Manner of Exercise of Conversion Privilege. The conversion privilege herein provided for may be exercised by the holder giving notice in writing to the Company at its registered office, or at its business address, accompanied by the certificate or certificates representing the Series A Preferred Shares in respect of which the holder thereof desires to exercise such right of conversion, with duly executed signature guarantees. Such notice shall be signed by such holder or his duly authorized representative and shall specify the number of Series A Preferred Shares which the holder desires to have converted. The Company shall deliver certificates for the shares of common stock represented by the conversion request within five (5) days after its receipt of the conversion request to the person and to the address designated by the holder, failing which the holder of the Series A Preferred Shares shall be entitled to all of its damages under the Uniform Commercial Code and other applicable law, and its costs and expenses including reasonable attorneys fees, in enforcing its rights to receive certificates for shares of common stock as provided herein. If less than all the Series A Preferred Shares represented by a certificate or certificates accompanying any such notice are to be converted, the holder shall be entitled to receive, at the expense of the Company, a new certificate representing the number of Series A Preferred Shares comprised in the certificate or certificates surrendered as aforesaid which are not to be converted, said certificate to be delivered to the person and the address designated by the holder.

Authority to Modify. The rights, privileges, restrictions and conditions attached to the Series A Preferred Shares may be added to, changed or removed only with the prior approval of the holders of a majority of the issued and outstanding Series A Preferred Shares voting as a separate class, in addition to any vote or authorization required by law or the Articles of Incorporation of the Company.

Voting Rights. Each holder of Series A Preferred Shares shall be entitled to receive notice of and to attend all regular and special meetings of shareholders of the Company. Each Series A Preferred Share shall be entitled to two (2) votes per Series A Preferred Share and shall vote together with all of the issued and outstanding shares of common stock as a single class on all matters presented to stockholders of the Company for a vote, except for any vote taken for purposes of modifying or amending the terms and conditions of the Series A Preferred Shares, in which case, the Series A Preferred Shares shall vote as a separate class as provided in subsection 3 above. The Series A Preferred Shares shall be deemed authorized) issued and outstanding for all purposes under the laws of the State of Nevada including the Nevada Private Corporations Law that require a certain percentage for a quorum and a specified required percentage for certain categories of votes as required by Nevada law.

CONSORTEUM HOLDINGS, INC.

Entity Number E075355200S-4

Certificate of Designation for Nevada For Profit Corporations

Series A Preferred Shares continuation page 2 of 2

Simple Priority. In the event of the liquidation. dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series A Preferred Shares shall be entitled to receive $.001 pet share in respect of each Series A Preferred Share held before any amount shall be paid to the holders of the shares of common stock or any other shares ranking junior to the Series A Preferred Shares. Except as provided above the holders of the Series A Preferred Shares shall be entitled to participate in any distribution of the assets of the Company to the same extent as the holders of its common stock calculated as if the holders of Series A Preferred Shares were participating on a fully converted basis.

Mandatory Conversion by Company. Within ten (10) days after the Company files an amendment to its Articles of Incorporation increasing its authorized shares of common stock to a minimum number sufficient to deliver shares of its common stock to the holders of all of the Series A Preferred Shares issued and outstanding, the Company shall deliver a written notice to all of the holders of Series A Preferred Shares to the effect that upon surrender to the Company or its transfer agent of the certificates for their Series A Preferred Shares for cancellation, the Company will issue and deliver to them the number of shares of its common stock required to be delivered upon conversion. The holders of the Series A Preferred Shares shall have ten (10) in which to deliver their certificates with duly executed signature guarantees directing cancellation of the Series A Preferred Shares in exchange for the requisite shares of common stock, at the end of which time period the Series A Preferred Shares shall be deemed void and cancelled and no longer issued and outstanding for any purpose, and the holders shall be entitled to receive only certificates for the requisite number of shares of common stock to be issued upon the respective conversions.

Document Number 20110855593-29

Filing Date and Time 12/05/2011 11:00 AM

Entity Number E0753552005-4

Certificate of Withdrawal of

Certificate of Designation

(Pursuant to NRS 78.1955(6))

Certificate of Withdrawal of

Certificate of Designation For

Nevada Profit Corporations

(Pursuant to NRS 78.1955(6))

1.	Name of corporation:

CONSORTEUM HOLDINGS, INC.

2.	Following is the resolution by the board of directors authorizing the withdrawal of Certificate of Designation establishing the classes or series of stock:

WHEREAS, no shares of the Corporation’s Series A Preferred Stock, par value $0.001 (the “Series A Preferred Stock”), are currently outstanding.

NOW, THEREFORE, BE IT RESOLVED, that, in accordance with Section 78.1955 of the Nevada Revised Statutes, the Certificate of Designation of the Series A Preferred Stock, filed with the Nevada Secretary of State on June 3, 2010, is hereby withdrawn.

3.	No shares of the class or series of stock being withdrawn are outstanding.

4.	Signature: (required)

X /s/ Patrick Shuster

Signature of Officer

Filing Fee: $175.00

IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected

Document Number 20110867393-50

Filing Date and Time 12/08/2011 3:45 PM

Entity Number E0753552005-4

Certificate of Designation

(Pursuant to NRS 78.1955)

Certificate of Designation For

Nevada Profit Corporations

(Pursuant to NRS 78.1955)

5.	Name of corporation:

CONSORTEUM HOLDINGS, INC.

6.	By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.

5,000,000 shares of Preferred Stock of Consorteum Holdings, Inc., a Nevada corporation (the “Corporation”) are designated as Series A Preferred Stock (“Series A Preferred”) and 15,000,000 shares of the Corporation’s Preferred Stock are designated as Series B Preferred Stock (“Series B Preferred”).

ARTICLE I: The Series A Preferred shall have the rights, preferences, privileges and restrictions set forth below:

Section A. Dividend Rights. Holders of Series A Preferred shall not be entitled to any dividend rights.

(See attached pages)

7.	Effective date of filing: (optional)

(must not be later than 90 days after the certificate is filed)

8.	Signature: (required)

X /s/ Patrick Shuster

Signature of Officer

Filing Fee: $175.00

IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.

Section B. Liquidation Rights . In the event of any Liquidation (as defined below), dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner:

B.1 Upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment shall be made to the holders of any Common Stock or Series B Liquidation Preference (as defined below), the holders of the Series A Preferred shall be entitled to be paid out of the assets of the Corporation an amount (the “ Series A Liquidation Preference ”) per share of Series A Preferred equal to the product of (i) the original amount paid by the holder thereof (the “ Original Issue Price ”) for each share of Series A Preferred owned by such holder as of the effective date of such liquidation (the “ Liquidation Date ”), multiplied by (ii) the number of shares of Series A Preferred 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 in the manner set forth herein).

B.2 Thereafter, the Series B Liquidation Preference shall be made out of any of the remaining assets of the Corporation legally available for distribution, if any.

B.3 Thereafter, any remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock.

B.4 The following events shall be considered a liquidation under this Section B, provided such event has been approved by the holders of a majority of the then outstanding Common Stock voting as a separate class:

(a) any consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other corporate reorganization, in which the shareholders of the Corporation immediately prior to such consolidation, merger or reorganization own less than 50% of the Corporation’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of 50% of the Corporation’s voting power is transferred (an “Acquisition”); or

(b) a sale, lease, transfer or other disposition of all or substantially all of the assets of the Corporation (an “Asset Transfer”).

B.5 If, upon any liquidation, distribution, or winding up, the assets of the Corporation shall be insufficient to make payment in full to all holders of Series A Preferred of the Liquidation Preference set forth in Section I.B.1 after payment in full of all other outstanding debts, judgments or other obligations of the Corporation as of the Liquidation Date, then such assets shall be distributed among the holders of the Series A Preferred at the time outstanding, on a pro rata basis in proportion to the full amounts to which they would otherwise be respectively entitled if the entire amount due and payable pursuant to Section I.B.1 above were available for distribution at such time.

Section C. Voting Rights . On all matters submitted to a vote of the holders of the Common Stock, including, without limitation, the election of directors, a holder of Series A Preferred shall be entitled to the number of votes on such matters equal to the number of shares of the Series A Preferred held by such holder multiplied by 200, on the record date for the determination of shareholders entitled to vote on such matter. If no such record date is established, the date to be used for determination of the shareholders entitled to vote on such matters shall be the date on which notice of the meeting of the shareholder at which the vote is to be taken is marked, or the date any written consent of shareholders is solicited if the vote is not to be taken at a meeting. The holders of Series A Preferred shall not vote as a separate class, but shall vote with the holders of the Common Stock.

Section D. Conversion Rights . Each share of Series A Preferred shall be convertible, at the option of the holder, into one fully paid and non-assessable share of Common Stock, provided, however, that such conversion would not violate any applicable federal, state, or local law, rule, regulation, or any judgment, writ, decree, or order binding upon the Corporation or the holder, or any provision of the Corporation’s or holder’s, if applicable, amended Articles of Incorporation or Bylaws, nor conflict with or contravene the provisions of any agreement to which the Corporation and the holder are parties or by which they are bound. The foregoing conversion calculation shall be hereinafter referred to as the “Conversion Ratio.” Said Conversion Ratio shall be subject to equitable adjustment at the reasonable discretion of the Board of Directors of the Corporation in the event of the occurrence of capital events which make such adjustment appropriate, such as a dividend payable in shares of common stock, combinations of the common stock, a merger or consolidation, or the like.

D.1 Conversion Procedure . The holder shall effect conversions by surrendering the certificate(s) representing the Series A Preferred to be converted to the Corporation, together with a form of conversion notice satisfactory to the Corporation, which shall be irrevocable. If the holder is converting less than all of the shares of Series A Preferred represented by the certificate tendered, the Corporation shall promptly deliver to the holder a new certificate representing the Series A Preferred not converted. Not later than five calendar days after the conversion date, the Corporation will deliver to the holder, (i) a certificate or certificates, which shall be subject to restrictive legends and trading restrictions required by law, representing the number of shares of Common Stock being acquired upon the conversion; provided, however, that the Corporation shall not be obligated to issue such certificates until the Series A Preferred certificate or certificates is/are delivered to the Corporation. If the Corporation does not deliver such certificate(s) by the date required under this paragraph, the holder shall be entitled by written notice to the Corporation at any time on or before receipt of such Common Stock certificate(s), to rescind such conversion.

D.2 Adjustments on Stock Splits, Dividends and Distributions . If the Corporation, at any time while any Series A Preferred is outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of its capital stock, whether payable in shares of its Common Stock or of capital stock of any class, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine outstanding shares of Common Stock into a smaller number of shares, or (d) issue reclassification of shares of any Common Stock shares of capital stock of the Corporation, the Conversion Ratio shall be adjusted by multiplying the number of shares of Common Stock issuable by a fraction of which the numerator shall be the number of shares of Common Stock of the Corporation outstanding after such event and of which the denominator shall be the number of shares of Common Stock outstanding before such event. Any adjustment made pursuant to this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. Whenever the Conversion Ratio is adjusted pursuant to this paragraph, the Corporation shall promptly mail to the holder a notice setting forth the Conversion Ratio after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

D.3 Adjustments on Reclassifications, Consolidations and Mergers . In case of reclassification of the Common Stock, any consolidation or merger of the Corporation with or into another person, the sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then each holder of Series A Preferred then outstanding shall have the right thereafter to convert such Series A Preferred only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which such Series A Preferred could have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the holder the right to receive the securities or property set forth in this paragraph upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers, or share exchanges.

D.4 Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of Series A Preferred. All shares of Common Stock (including a fraction thereof) issuable upon conversion of more than one share of Series A Preferred by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Corporation shall, in lieu of issuing any fractional share, round the fraction up or down, as the case may be, to the nearest whole share.

Section E. No Redemption. The Corporation shall be under no obligation to redeem all or any portion of the Series A Preferred at any time.

ARTICLE II: The Series B Preferred shall have the rights, preferences, privileges and restrictions set forth as follows:

Section A. Dividend Rights . Holders of Series B Preferred shall not be entitled to any dividend rights.

Section B. Liquidation Rights . In the event of any Liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner:

B.1 Upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment shall be made to the holders of any Common Stock, but only after giving effect to the Series A Liquidation Preference, the holders of the Series B Preferred shall be entitled to be paid out of the assets of the Corporation an amount (the “ Series B Liquidation Preference ”) per share of Series B Preferred equal to the product of (i) the original amount paid by the holder thereof (the “ Original Issue Price ”) for each share of Series B Preferred owned by such holder as of the effective date of such liquidation (the “ Liquidation Date ”), multiplied by (ii) the number of shares of Series B Preferred 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 in the manner set forth herein).

B.2 Thereafter, any remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock.

B.3 The following events shall be considered a liquidation under this Section B, provided such event has been approved by the holders of a majority of the then outstanding Common Stock voting as a separate class:

(a) an Acquisition; or

(b) an Asset Transfer.

B.4 If, upon any liquidation, distribution, or winding up, the assets of the Corporation shall be insufficient to make payment in full to all holders of Series B Preferred of the Liquidation Preference set forth in Section II.B.1 after payment in full of the Series A Liquidation Preference and all other outstanding debts, judgments or other obligations of the Corporation as of the Liquidation Date, then such assets shall be distributed among the holders of the Series B Preferred at the time outstanding, on a pro rata basis in proportion to the full amounts to which they would otherwise be respectively entitled if the entire amount due and payable pursuant to Section II.B.1 above were available for distribution at such time.

Section C. Voting Rights . On all matters submitted to a vote of the holders of the Common Stock, including, without limitation, the election of directors, a holder of Series B Preferred shall be entitled to the number of votes on such matters equal to the number of shares of the Series B Preferred held by such holder on the record date for the determination of shareholders entitled to vote on such matter. If no such record date is established, the date to be used for determination of the shareholders entitled to vote on such matters shall be the date on which notice of the meeting of the shareholder at which the vote is to be taken is marked, or the date any written consent of shareholders is solicited if the vote is not to be taken at a meeting. The holders of Series B Preferred shall not vote as a separate class, but shall vote with the holders of the Common Stock.

Section D. Conversion Rights . Each share of Series B Preferred shall be convertible, at the option of the holder, into one fully paid and non-assessable share of Common Stock, provided, however, that such conversion would not violate any applicable federal, state, or local law, rule, regulation, or any judgment, writ, decree, or order binding upon the Corporation or the holder, or any provision of the Corporation’s or holder’s, if applicable, amended Articles of Incorporation or Bylaws, nor conflict with or contravene the provisions of any agreement to which the Corporation and the holder are parties or by which they are bound. The foregoing conversion calculation shall be hereinafter referred to as the “Conversion Ratio.” Said Conversion Ratio shall be subject to equitable adjustment at the reasonable discretion of the Board of Directors of the Corporation in the event of the occurrence of capital events which make such adjustment appropriate, such as a dividend payable in shares of common stock, combinations of the common stock, a merger or consolidation, or the like.

D.1 Conversion Procedure . The holder shall effect conversions by surrendering the certificate(s) representing the Series B Preferred to be converted to the Corporation, together with a form of conversion notice satisfactory to the Corporation, which shall be irrevocable. If the holder is converting less than all of the shares of Series B Preferred represented by the certificate tendered, the Corporation shall promptly deliver to the holder a new certificate representing the Series B Preferred not converted. Not later than five calendar days after the conversion date, the Corporation will deliver to the holder, (i) a certificate or certificates, which shall be subject to restrictive legends and trading restrictions required by law, representing the number of shares of Common Stock being acquired upon the conversion; provided, however, that the Corporation shall not be obligated to issue such certificates until the Series B Preferred certificate or certificates is/are delivered to the Corporation. If the Corporation does not deliver such certificate(s) by the date required under this paragraph, the holder shall be entitled by written notice to the Corporation at any time on or before receipt of such Common Stock certificate(s), to rescind such conversion.

D.2 Adjustments on Stock Splits, Dividends and Distributions . If the Corporation, at any time while any Series B Preferred is outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of its capital stock, whether payable in shares of its Common Stock or of capital stock of any class, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine outstanding shares of Common Stock into a smaller number of shares, or (d) issue reclassification of shares of any Common Stock shares of capital stock of the Corporation, the Conversion Ratio shall be adjusted by multiplying the number of shares of Common Stock issuable by a fraction of which the numerator shall be the number of shares of Common Stock of the Corporation outstanding after such event and of which the denominator shall be the number of shares of Common Stock outstanding before such event. Any adjustment made pursuant to this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. Whenever the Conversion Ratio is adjusted pursuant to this paragraph, the Corporation shall promptly mail to the holder a notice setting forth the Conversion Ratio after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

D.3 Adjustments on Reclassifications, Consolidations and Mergers . In case of reclassification of the Common Stock, any consolidation or merger of the Corporation with or into another person, the sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then each holder of Series B Preferred then outstanding shall have the right thereafter to convert such Series B Preferred only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which such Series B Preferred could have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the holder the right to receive the securities or property set forth in this paragraph upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers, or share exchanges.

D.4 Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of Series B Preferred. All shares of Common Stock (including a fraction thereof) issuable upon conversion of more than one share of Series B Preferred by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Corporation shall, in lieu of issuing any fractional share, round the fraction up or down, as the case may be, to the nearest whole share.

Section E. No Redemption . The Corporation shall be under no obligation to redeem all or any portion of the Series B Preferred at any time.

Exhibit 3.1(ii)

BYLAWS

WELLENTECH SERVICES, INC.

A Nevada Corporation

As of November 7, 2005

ARTICLE I

Meetings of Stockholders

Section 1.1 Time and Place . Any meeting of the stockholders may be held at such time and such place, either within or without the State of Nevada, as shall be designated from time to time by resolution of the board of directors or as shall be stated in a duly authorized notice of the meeting.

Section 1.2 Annual Meeting . The annual meeting of the stockholders shall be held on the date and at the time fixed, from time to time, by the board of directors. The annual meeting shall be for the purpose of electing a board of directors and transacting such other business as may properly be brought before the meeting.

Section 1.3 Special Meetings . Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the articles of incorporation, may be called by the president and shall be called by the president or secretary if requested in writing by the holders of not less than one-tenth (1/10) of all the shares entitled to vote at the meeting. Such request shall state the purpose or purposes of the proposed meeting.

Section 1.4 Notices . Written notice stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, except as otherwise required by statute or the articles of incorporation, either personally, by mail or by a form of electronic transmission consented to by the stockholder, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the official government mail of the United States or any other country, postage prepaid, addressed to the stockholder at his address as it appears on the stock records of the Corporation. If given personally or otherwise than by mail, such notice shall be deemed to be given when either handed to the stockholder or delivered to the stockholder’s address as it appears on the records of the Corporation.

Section 1.5 Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting, or at any adjournment of a meeting, of stockholders; or entitled to receive payment of any dividend or other distribution or allotment of any rights; or entitled to exercise any rights in respect of any change, conversion, or exchange of stock; or for the purpose of any other lawful action; the board of directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors. The record date for determining the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof shall not be more than sixty nor less than ten days before the date of such meeting. The record date for determining the stockholders entitled to consent to corporate action in writing without a meeting shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. The record date for any other action shall not be more than sixty days prior to such action. If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at any meeting shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived by all stockholders, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is required, shall be the first date on which a signed written consent setting forth the action taken or to be taken is delivered to the Corporation and, when prior action by the board of directors is required, shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action; and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating to such other purpose.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 1.6 Voting List . If the Corporation shall have more than five (5) shareholders, the secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, at the Corporation’s principal offices. The list shall be produced and kept at the place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.

Section 1.7 Quorum . The holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the articles of incorporation. If, however, such a quorum shall not be present at any meeting of stockholders, the stockholders entitled to vote, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice if the time and place are announced at the meeting, until a quorum shall be present. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.8 Voting and Proxies . At every meeting of the stockholders, each stockholder shall be entitled to one vote, in person or by proxy, for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after six months from its date unless the proxy provides for a longer period, which may not exceed seven years. When a specified item of business is required to be voted on by a class or series of stock, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series. If a quorum is present at a properly held meeting of the shareholders, the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the subject matter under consideration, shall be the act of the shareholders, unless the vote of a greater number or voting by classes (i) is required by the articles of incorporation, or (ii) has been provided for in an agreement among all shareholders entered into pursuant to and enforceable under Nevada Revised Statutes §78.365.

Section 1.9 Waiver . Attendance of a stockholder of the Corporation, either in person or by proxy, at any meeting, whether annual or special, shall constitute a waiver of notice of such meeting, except where a stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A written waiver of notice of any such meeting signed by a stockholder or stockholders entitled to such notice, whether before, at or after the time for notice or the time of the meeting, shall be equivalent to notice. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in any written waiver of notice.

Section 1.10 Stockholder Action Without a Meeting . Except as may otherwise be provided by any applicable provision of the Nevada Revised Statutes, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power; provided that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required. In no instance where action is authorized by written consent need a meeting of stockholders be called or noticed.

ARTICLE II

Directors

Section 2.1 Number . The number of directors shall be one or more, as fixed from time to time by resolution of the board of directors; provided, however, that the number of directors shall not be reduced so as to shorten the tenure of any director at the time in office. The initial number of directors shall be one.

Section 2.2 Elections . Except as provided in Section 2.3 of this Article II, the board of directors shall be elected at the annual meeting of the stockholders or at a special meeting called for that purpose. Each director shall hold such office until his successor is elected and qualified or until his earlier resignation or removal.

Section 2.3 Vacancies . Any vacancy occurring on the board of directors and any directorship to be filled by reason of an increase in the board of directors may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director. Such newly elected director shall hold such office until his successor is elected and qualified or until his earlier resignation or removal.

Section 2.4 Meetings . The board of directors may, by resolution, establish a place and time for regular meetings which may be held without call or notice.

Section 2.5 Notice of Special Meetings . Special meetings may be called by the chairman, the president or any two members of the board of directors. Notice of special meetings shall be given to each member of the board of directors: (i) by mail by the secretary, the chairman or the members of the board calling the meeting by depositing the same in the official government mail of the United States or any other country, postage prepaid, at least seven days before the meeting, addressed to the director at the last address he has furnished to the Corporation for this purpose, and any notice so mailed shall be deemed to have been given at the time when mailed; or (ii) in person, by telephone or by electronic transmission addressed as stated above at least forty-eight hours before the meeting, and such notice shall be deemed to have been given when such personal or telephone conversation occurs or at the time when such electronic transmission is delivered to such address.

Section 2.6 Quorum . At all meetings of the board, a majority of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as otherwise specifically required by statute, the articles of incorporation or these bylaws. If less than a quorum is present, the director or directors present may adjourn the meeting from time to time without further notice. Voting by proxy is not permitted at meetings of the board of directors.

Section 2.7 Waiver . Attendance of a director at a meeting of the board of directors shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A written waiver of notice signed by a director or directors entitled to such notice, whether before, at or after the time for notice or the time of the meeting, shall be equivalent to the giving of such notice.

Section 2.8 Action Without Meeting . Any action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors and filed with the minutes of proceedings of the board of directors. Any such consent may be in counterparts and shall be effective on the date of the last signature thereon unless otherwise provided therein.

Section 2.9 Attendance by Telephone . Members of the board of directors may participate in a meeting of such board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

ARTICLE III

Officers

Section 3.1 Election . The Corporation shall have such officers, with such titles and duties, as the board of directors may determine by resolution, which must include a chairman of the board, a president, a secretary and a treasurer and may include one or more vice presidents and one or more assistants to such officers. The officers shall in any event have such titles and duties as shall enable the Corporation to sign instruments and stock certificates complying with Section 6.1 of these bylaws, and one of the officers shall have the duty to record the proceedings of the stockholders and the directors in a book to be kept for that purpose. The officers shall be elected by the board of directors; provided, however, that the chairman may appoint one or more assistant secretaries and assistant treasurers and such other subordinate officers as he deems necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as are prescribed in the bylaws or as may be determined from time to time by the board of directors or the chairman. Any two or more offices may be held by the same person.

Section 3.2 Removal and Resignation . Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any officer appointed by the chairman may be removed at any time by the board of directors or the chairman. Any officer may resign at any time by giving written notice of his resignation to the chairman or to the secretary, and acceptance of such resignation shall not be necessary to make it effective unless the notice so provides. Any vacancy occurring in any office of chairman of the board, president, vice president, secretary or treasurer shall be filled by the board of directors. Any vacancy occurring in any other office may be filled by the chairman.

Section 3.3 Chairman of the Board . The chairman of the board shall preside at all meetings of shareholders and of the board of directors, and shall have the powers and perform the duties usually pertaining to such office, and shall have such other powers and perform such other duties as may be from time to time prescribed by the board of directors..

Section 3.4 President . The president shall be the chief executive officer of the Corporation, and shall have general and active management of the business and affairs of the Corporation, under the direction of the board of directors. Unless the board of directors has appointed another presiding officer, the president shall preside at all meetings of the shareholders.

Section 3.5 Vice President . The vice president or, if there is more than one, the vice presidents in the order determined by the board of directors or, in lieu of such determination, in the order determined by the president, shall be the officer or officers next in seniority after the president. Each vice president shall also perform such duties and exercise such powers as are appropriate and such as are prescribed by the board of directors or, in lieu of or in addition to such prescription, such as are prescribed by the president from time to time. Upon the death, absence or disability of the president, the vice president or, if there is more than one, the vice presidents in the order determined by the board of directors or, in lieu of such determination, in the order determined by the president, or, in lieu of such determination, in the order determined by the chairman, shall be the officer or officers next in seniority after the president. in the order determined by the and shall perform the duties and exercise the powers of the president.

Section 3.6 Assistant Vice President . The assistant vice president, if any, or, if there is more than one, the assistant vice presidents shall, under the supervision of the president or a vice president, perform such duties and have such powers as are prescribed by the board of directors, the president or a vice president from time to time.

Section 3.7 Secretary . The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, keep the minutes of such meetings, have charge of the corporate seal and stock records, be responsible for the maintenance of all corporate files and records and the preparation and filing of reports to governmental agencies (other than tax returns), have authority to affix the corporate seal to any instrument requiring it (and, when so affixed, attest it by his signature), and perform such other duties and have such other powers as are appropriate and such as are prescribed by the board of directors or the president from time to time.

Section 3.8 Assistant Secretary . The assistant secretary, if any, or, if there is more than one, the assistant secretaries in the order determined by the board of directors or, in lieu of such determination, by the president or the secretary shall, in the absence or disability of the secretary or in case such duties are specifically delegated to him by the board of directors, the chairman, or the secretary, perform the duties and exercise the powers of the secretary and shall, under the supervision of the secretary, perform such other duties and have such other powers as are prescribed by the board of directors, the chairman, or the secretary from time to time.

Section 3.9 Treasurer . The treasurer shall have control of the funds and the care and custody of all the stocks, bonds and other securities of the Corporation and shall be responsible for the preparation and filing of tax returns. He shall receive all moneys paid to the Corporation and shall have authority to give receipts and vouchers, to sign and endorse checks and warrants in its name and on its behalf, and give full discharge for the same. He shall also have charge of the disbursement of the funds of the Corporation and shall keep full and accurate records of the receipts and disbursements. He shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as shall be designated by the board of directors and shall perform such other duties and have such other powers as are appropriate and such as are prescribed by the board of directors or the president from time to time.

Section 3.10 Assistant Treasurer . The assistant treasurer, if any, or, if there is more than one, the assistant treasurers in the order determined by the board of directors or, in lieu of such determination, by the chairman or the treasurer shall, in the absence or disability of the treasurer or in case such duties are specifically delegated to him by the board of directors, the chairman or the treasurer, perform the duties and exercise the powers of the treasurer and shall, under the supervision of the treasurer, perform such other duties and have such other powers as are prescribed by the board of directors, the president or the treasurer from time to time.

Section 3.11 Compensation . Officers shall receive such compensation, if any, for their services as may be authorized or ratified by the board of directors. Election or appointment as an officer shall not of itself create a right to compensation for services performed as such officer.

ARTICLE IV

Committees

Section 4.1 Designation of Committees . The board of directors may establish committees for the performance of delegated or designated functions to the extent permitted by law, each committee to consist of one or more directors of the Corporation, and if the board of directors so determines, one or more persons who are not directors of the Corporation. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of such absent or disqualified member.

Section 4.2 Committee Powers and Authority . The board of directors may provide, by resolution or by amendment to these bylaws, for an Executive Committee to consist of one or more directors of the Corporation (but no persons who are not directors of the Corporation) that may exercise all the power and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that an Executive Committee may not exercise the power or authority of the board of directors in reference to amending the articles of incorporation (except that an Executive Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors, pursuant to Article 3(3) of the articles of incorporation, fix the designations and any of the preferences or rights of shares of preferred stock relating to dividends, redemption, dissolution, any distribution of property or assets of the Corporation, or the conversion into, or the exchange of shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these bylaws; and, unless the resolution expressly so provides, no an Executive Committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

Section 4.3 Committee Procedures . To the extent the board of directors or the committee does not establish other procedures for the committee, each committee shall be governed by the procedures established in Section 2.4 (except as they relate to an annual meeting of the board of directors) and Sections 2.5, 2.6, 2.7, 2.8 and 2.9 of these bylaws, as if the committee were the board of directors.

ARTICLE V

Indemnification

Section 5.1 Expenses for Actions Other Than By or In the Right of the Corporation . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with which action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful.

Section 5.2 Expenses for Actions By or In the Right of the Corporation . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

Section 5.3 Successful Defense . To the extent that any person referred to in the preceding two sections of this Article V has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in such sections, or in defense of any claim issue, or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 5.4 Determination to Indemnify . Any indemnification under the first two sections of this Article V (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth therein. Such determination shall be made (i) by the stockholders, (ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (iii) if such quorum is not obtainable or, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion.

Section 5.5 Expense Advances . Expenses incurred by an officer or director in defending any civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article V.

Section 5.6 Provisions Nonexclusive . The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article V shall not be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or under any other bylaw, agreement, insurance policy, vote of stockholders or disinterested directors, statute or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

Section 5.7 Insurance . By action of the board of directors, notwithstanding any interest of the directors in the action, the Corporation shall have power to purchase and maintain insurance, in such amounts as the board of directors deems appropriate, on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not he is indemnified against such liability or expense under the provisions of this Article V and whether or not the Corporation would have the power or would be required to indemnify him against such liability under the provisions of this Article V or of the Nevada Revised Statutes §78.7502; §78.751 or §78.752 or by any other applicable law.

Section 5.8 Surviving Corporation . The board of directors may provide by resolution that references to “the Corporation” in this Article V shall include, in addition to this Corporation, all constituent corporations absorbed in a merger with this Corporation so that any person who was a director or officer of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, employee or agent of another corporation, partnership, joint venture, trust, association or other entity shall stand in the same position under the provisions of this Article V with respect to this Corporation as he would if he had served this Corporation in the same capacity or is or was so serving such other entity at the request of this Corporation, as the case may be.

Section 5.9 Inurement. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors, and administrators of such person.

Section 5.10 Employees and Agents . To the same extent as it may do for a director or officer, the Corporation may indemnify and advance expenses to a person who is not and was not a director or officer of the Corporation but who is or was an employee or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise.

ARTICLE VI

Stock

Section 6.1 Certificates . Every holder of stock in the Corporation represented by certificates and, upon request, every holder of uncertificated shares shall be entitled to have a certificate, signed by or in the name of the Corporation by the President or chairman of the board of directors, or a vice president, and by the secretary or an assistant secretary, or the treasurer or an assistant treasurer of the Corporation, certifying the number of shares owned by him in the Corporation.

Section 6.2 Facsimile Signatures . Where a certificate of stock is countersigned (i) by a transfer agent other than the Corporation or its employee or (ii) by a registrar other than the Corporation or its employee, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been placed upon, any such certificate shall cease to be such officer, transfer agent or registrar, whether because of death, resignation or otherwise, before such certificate is issued, the certificate may nevertheless be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 6.3 Transfer of Stock . Transfers of shares of stock of the Corporation shall be made on the books of the Corporation only upon presentation of the certificate or certificates representing such shares properly endorsed or accompanied by a proper instrument of assignment, except as may otherwise be expressly provided by the laws of the State of Nevada or by order by a court of competent jurisdiction. The officers or transfer agents of the Corporation may, in their discretion, require a signature guaranty before making any transfer.

Section 6.4 Lost Certificates . The board of directors may direct that a new certificate of stock be issued in place of any certificate issued by the Corporation that is alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen, or destroyed. When authorizing such issue of a new certificate, the board of directors may, in its discretion and as a condition precedent to the issuance of a new certificate, require the owner of such lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

ARTICLE VII

Seal

The board of directors may, but are not required to, adopt and provide a common seal or stamp which, when adopted, shall constitute the corporate seal of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or manually reproduced.

ARTICLE VIII

Fiscal Year

The board of directors, by resolution, may adopt a fiscal year for the Corporation.

ARTICLE IX

Amendment

These bylaws may at any time and from time to time be amended, altered or repealed exclusively by the board of directors, as provided in the articles of incorporation.

Exhibit 10.21

AMENDMENT NO. 1 TO TERM SHEET

THIS AMENDMENT NO. 1 TO TERM SHEET (this “ Amendment ”) is made and entered into as of May 22, 2013 by and among AIC, LLC (the “ Lender ” or “ AIC ”) and CONSORTEUM HOLDINGS, INC., a Nevada corporation (the “ Borrower ” or “ CHI ”).

WHEREAS, the Borrower and the Lender entered into a binding “TERM SHEET FOR $30,000,000 7 YEAR TERM LOAN FINANCING FROM AIC, LLC (AIC) TO CONSORTEUM HOLDINGS, INC. (CHI); (ii) $2,000,000 BRIDGE LOAN FROM AIC OR AN AFFILIATE TO CHI, (iii) SALE/PURCHASE OF A MAXIMUM OF 35% OF RESTRICTED COMMON STOCK OF CHI BY AIC, TOGETHER WITH (iv) MISCELLANEOUS RELATED AGREEMENTS DESCRIBED BELOW”, dated as of February 6, 2013 (the “ Term Sheet ”), providing the principal terms of a loan, a bridge loan and an investment by AIC in CHI;

WHEREAS, capitalized terms used herein without definition have the meanings set forth in the Term Sheet; and

WHEREAS, the Borrower and the Lender wish to amend the Term Sheet pursuant to the terms thereof to increase the amount of the Bridge Loan described therein from $2,000,000.00 to $4,000,000.00 and to extend the date of funding of such Bridge Loan;

NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1.01 . Amendments to Term Sheet. (a) The first paragraph of Section B THE BRIDGE LOAN of the Term Sheet is deleted in its entirety and replaced with the following:

Terms/Conditions of On or about May 31, 2013, AIC or an affiliate shall lend $4,000,000 to

Bridge Loan

CHI (the “Bridge Loan”) that CHI shall repay from the first proceeds of the Loan hereunder. If the funding of the Loan does not proceed, then the Bridge Loan shall convert to a convertible note. The convertible note shall be for one year and shall accrue interest at 6% per annum and shall be convertible into common stock of the company at a 85% discount of market price based on a 5 day trailing average of the closing stock price; at the option of the Company. The Bridge Loan shall bear simple interest at six percent (6%) per annum, and the Bridge Lender shall be given a collateral security interest in the assets of CHI. If the funding of the Bridge Loan does not proceed, then this Term Sheet shall terminate and AIC shall forthwith repay the Expenses Fee to CHI. The documentation for the Bridge Loan shall include a Bridge Loan Note and the related Collateral Security Agreement.

(b) All references in the Term Sheet to the “$2,000,000 Bridge Loan” are deleted and replaced with references to the “$4,000,000 Bridge Loan.”

Section 1.02 . Ratification. Except as modified as set forth herein, the Term Sheet shall continue if full force and effect. In the event of a conflict between the provisions of this Amendment and the provisions of the Term Sheet, the provisions of this Amendment shall prevail.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Term Sheet as of the date first written above.

CONSORTEUM HOLDINGS, INC.

By: /s/ Craig Fielding

Craig Fielding, CEO

AIC, LLC

By: /s/ Edward JP Brigham

Edward JP Brigham, Member and CEO

Exhibit 10.22

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Employment Agreement” or “Agreement”) is made and entered into as of the 1st day of September 2012 (the “Execution Date”), by and between Consorteum Holdings Inc., a Nevada corporation (the “Company”), and Craig Fielding, an individual (“Executive”). N-Viro

W I T N E S S E T H :

WHEREAS , the Company owns, operates and licenses and solutions in the payment services industry, together with all other activities of the Company, as conducted at or prior to the termination of this Employment Agreement, and any future activities reasonably related thereto that are contemplated by the Company at the termination of this Employment Agreement identified in writing by the Company to Executive at the date of such termination, are hereinafter collectively referred to as the “Business Activities”);

WHEREAS , the Company and Executive have agreed that Executive shall perform the duties of Chief Operating Officer of the company, subject to the terms and conditions set forth in this Employment Agreement.

NOW, THEREFORE , in consideration of the premises, the mutual promises, covenants and conditions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:

Section 1. Employment . During the Employment Period (as hereinafter defined), the Company shall employ Executive, and Executive shall accept employment with the Company, all upon the terms and subject to the conditions set forth in this Employment Agreement.

Section 2. Capacity and Duties . Executive shall be employed in the capacity of Chief Executive Officer of the Company and shall have such other duties, responsibilities and authorities as are assigned to him by the Board of Directors of the Company (the “Board”). Subject to the control and general directions of the Board and except as otherwise herein provided, Executive shall devote all necessary business time, best efforts and attention to promote and advance the business of the Company and its subsidiaries and affiliates and to perform diligently and faithfully all the duties, responsibilities and obligations of Executive to be performed by him under this Employment Agreement. Executive's duties shall include the ongoing management and oversight of the general business affairs and operations of the Company and its subsidiaries and affiliates and shall include, but not be limited to, routine operations, matters relating to research and development, technical direction, national and international sales and/or licensing, national policy and governmental regulations, legal matters, and industry relations including those relating to water and the environment. It is expressly understood that Executive also is and/or may become engaged in other limited business activities not involving the Company. Any such independent activity shall be disclosed to the Audit Committee of the Company’s Board in advance, and any such other business activities shall not unreasonably interfere with Executive's performance of his obligations under this Employment Agreement.

Section 3. Term of Employment . The term of employment of Executive by the Company pursuant to this Employment Agreement, which supersedes any prior agreement between Company and Executive, shall be for the period (the "Employment Period") commencing on September 1, 2012 (the “Commencement Date”) and ending on December 31, 2016 or later date that Executive's employment is extended in accordance with the provisions of this Employment Agreement (the “Termination Date”). So long as Executive is in full compliance with all of the terms and conditions of this Employment Agreement, Executive is not in default under or in breach of any of the covenants, agreements, representations or warranties set forth in this Employment Agreement and neither Executive nor the Company has delivered a Notice of Termination (as hereinafter defined) to the other at least ninety (90) days prior to expiration of the then-current Employment Period that the Employment Period shall not be extended, then this Employment Agreement and the Employment Period shall automatically be extended for additional successive one (1) year periods.

Section 4. Place of Employment . Executive's principal place of work shall be deemed to be at the principal offices of the Company in the Toronto, Ontario, area or such other locations as may be reasonably designated by the Board or assigned by management; provided, however, that the Board may not require that Executive permanently relocate to a place that is more than 100 miles from Toronto measured as the radius in any direction from the Toronto center. The Company and Executive acknowledge that Executive's principal place of work is consistent with the extensive national and international business travel which may be required of Executive in connection with the performance of his duties, responsibilities and authorities under this Agreement.

Section 5. Compensation . During the Employment Period, subject to all the terms and conditions of this Employment Agreement and, except as otherwise provided in Sections 9 or 10, as the case may be, as compensation for all services to be rendered by Executive under this Employment Agreement, the Company shall pay to or provide Executive with the following:

5.01 Base Salary . The Company shall pay to Executive a base annual salary (the “Base Salary”) at the rate of at least Two Hundred Forty Thousand Dollars ($240,000) per year, payable at such intervals (at least monthly) as salaries are paid generally to other executive officers of the Company. At least once each year on or before each January 1 during the Employment Period, Executive's Base Salary shall be reviewed by the Board and, at the discretion of the Board, may be increased to an amount determined in good faith based upon a complete review of Executive's performance under this Employment Agreement during the prior year and the growth and profitability of the Company and Executive’s contributions thereto, which review shall be communicated in writing to Executive.

5.02 Cash Bonus . At the sole and exclusive discretion of the Board, the Company agrees to pay to Executive an quarterly cash bonus (the “Cash Bonus”) per quarter in good faith by the Board based upon a complete review of Executive's performance under this Employment Agreement during the current calendar year and the growth and profitability of the Company and Executive's contribution thereto. Any Cash Bonus payable to Executive pursuant to this Section 5.02 shall be payable, if at all, on or before January 31, of each year during the Employment Period immediately following the prior calendar year then ended, based upon Executive’s performance for the immediate prior calendar year.

5.03 Stock Option Grant . The Company hereby grants to the Executive ten-year stock options to purchase 5 million (5,000,000) shares of its common stock which shall vest in equal installments on the Execution Date and on each successive anniversary of this Employment Agreement; provided, however, that all remaining options shall vest immediately upon the termination with cause of this Employment Agreement by Executive under Section 10A hereof. The exercise price of these options shall be the “fair market value” as defined in the Company’s 2012 Plan, and are intended to be Incentive Stock Options or “ISOs” as further defined by the Company 2012 Plan. Such options are being granted under, and are otherwise subject to the terms and conditions of the Company’s 2012 Stock Option Plan as amended (the “Company 2012 Plan”). The Executive acknowledges that the Company has delivered a copy of the Company 2012 Plan to him. In addition, the Company shall issue 3 million shares of its Series A Preferred Stock, par value $0.001 and 2 million shares of its Series B Preferred Stock, par value $0.001 to Executive as part of his signing bonus.

5.04 Accrued Pension the company shall provide a retroactive pension and compensation retirement plan for the executive. The executive shall have vested 1 year of accrued time on the date of the execution of this contract. The company further agrees to pay into the pension fund all deficiencies in interest and principal payments so as to bring executive current over the vesting period.

5.05 Incentive Compensation : The Company shall pay Executive, during the Term of this Agreement, an annual performance/incentive bonus which shall be calculated as follows:

Fiscal Year
Revenue	Bonus
$0 – 2,000,000	Five Percent (5%) of Base Salary
$2,000,001 to $5,000,000	Fifteen Percent (15%) of Base Salary
$5,000,001 to $10,000,000	Thirty Percent (30%) of Base Salary
In excess of $10,000,001	Fifty Percent (50%) of Base Salary
Sale of Company	Two Percent of the Purchase Price
Capital Raised	Three Percent of all Capital Raised

5.06 Benefits. In addition to the foregoing, the Executive shall be entitled to the following benefits during the term of this Agreement:

(i)

Executive shall be entitled to (A) 21 vacation days per calendar year, as well as sick days and paid holidays not to exceed an additional ten (10) days per year, all of which will be determined to the extent possible by agreement with the Company; (B) non-contributory health insurance for himself and his spouse and dependent children that will provide coverage for major medical, hospitalization expenses and dental subject to a co-payment; (C) such other benefits as may be adopted from time to time by the management of the Company.

5.07 Working Facilities and Expenses . Executive shall be furnished with an office at the principal executive offices of the Company, or at such other location as agreed to by Employee and the Company, and other working facilities and secretarial and other assistance suitable to his position and reasonably required for the performance of his duties hereunder The Company hereby agrees to advance expenses to Employee, subject to the provisions of this Section all of the costs of Employee’s maintaining an office and residence in Toronto, which costs are currently estimated to be approximately $5,000 per month. The Company shall promptly advance the Employee for all of Employee’s reasonable expenses incurred while employed, and performing his duties under and in accordance with the terms and conditions of this Agreement, subject to Employee’s full and appropriate documentation, including, without limitation, receipts for all such expenses in the manner required pursuant to Company’s policies arid procedures and the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations as are in effect from time to time.

5.08 Insurance. The Company may secure in its own name or otherwise, and at its own expense, life, disability, and other insurance covering Employee or Employee and others, and Employee shall not have any right, title or interest in or to such insurance other than as expressly provided herein. Employee agrees to assist the Company in procuring such insurance by submitting to the usual and customary medical and other examinations to be conducted by such physicians(s) as the Company or such insurance company may designate and by signing such applications and other written instruments as may be required by any insurance company to which application is made for such insurance.

Section 6 . Policies. Executive shall institute and comply with the written policies, standards, rules and regulations of the Company from time to time established for all executive officers of the Company.

Section 7. Review of Performance . The Board shall periodically review and evaluate the performance of Executive under this Employment Agreement with Executive.

Section 8. Expenses. The Company shall reimburse Executive for all reasonable, ordinary and necessary expenses (including, but not limited to, automobile and other business travel and customer entertainment expenses) incurred by him in connection with his employment hereunder; provided , however , Executive shall render to the Company a complete and accurate accounting of all such expenses in accordance with the substantiation requirements of Section 274 of the Internal Revenue Code of 1986, as amended (the “Code”), as a condition precedent to such reimbursement. Executive will also follow all established guidelines relating to reimbursement of expenses as may be promulgated by the Board.

Section 9. Termination with Cause by the Company . This Employment Agreement may be terminated with Cause (as hereinafter defined) by the Company provided that the Company shall (i) give Executive the Notice of Termination and (ii) pay Executive his annual base salary through the Termination Date at the rate in effect at the time the Notice of Termination is given plus any bonus or incentive compensation which have been earned or have become payable pursuant to the terms of this Employment Agreement or any compensation or benefit plan as of the Termination Date, but which have not yet been paid. In addition, Executive shall have the right to exercise all options that have vested through and including the Termination Date.

Section 10. Termination without Cause by the Company or by Executive . This Employment Agreement may be terminated by (i) the Company by reason of the death or Disability (as hereinafter defined) of Executive, (ii) the Company by giving Executive the Notice of Termination, (iii) Executive after giving the Company the Notice of Termination at least thirty (30) days prior to such termination. In the event of termination of this Employment Agreement under this Section 10, the Company shall pay Executive his Base Salary through the Termination Date at the rate in effect at the time the Notice of Termination is given plus any bonus or incentive compensation which are due or have become payable pursuant to the terms of this Employment Agreement or any compensation or benefit plan as of the Termination Date, but which have not yet been paid. In addition, Executive shall have the right to exercise all options that have vested through and including the Termination Date. In the event of termination of this Employment Agreement under this Section 10 by the Company (other than by reason of the death or Disability of Executive) and such termination is on or prior to the Termination Date that would be in effect if such employment had not been terminated under this Section 10, the Company shall pay to Executive, in addition to the other benefits specifically provided for in this Section, his Base Salary for the period between the Termination Date and the natural expiration of this Employment Agreement or the expiration of any extension period thereof in effect as of the Termination Date. In addition, Executive shall have the right to exercise all options that have vested through and including the Termination Date. This Section 10 shall not be interpreted so as to limit any benefits to which Executive, as a terminated Executive of the Company, or his family may be entitled under the Company's life insurance, medical, hospitalization or disability plans following the Termination Date or under applicable law.

Section 10A. Termination with Cause by Executive. Executive may elect, by written Notice of Termination to the Company, said Notice to be effective immediately upon receipt by the Company, to terminate his employment hereunder if:

(1) The Company sells all or substantially all of its assets;

(2) The Company merges or consolidates with, or undergoes a share exchange or other form of recapitalization with another business entity in a transaction immediately following which the holders of all of the outstanding shares of the voting capital stock of the Company own less than a majority of the outstanding shares of the voting capital stock of the resulting entity (whether or not the resulting entity is the Company);

(3) More than Fifty (50%) percent of the outstanding shares of the voting capital stock of the Company are acquired by a person or group (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934, as amended), which person or group includes neither Executive nor the holders of the majority of the outstanding shares of the voting capital stock of the Company on the date hereof;

(4) The Company assigns to Executive duties which would require him, as a practical matter, to permanently relocate to a place that is more than 100 miles from Atlanta measured as the radius in any direction from the Atlanta center ;

(5) The Company shall have engaged in a material breach of this Agreement which for this purpose is defined as the occurrence of one or more of the following events without Executive’s prior written consent:

(i) Executive is otherwise removed from the position(s) provided for in this Agreement, for any reason other than the legal termination of his employment;

(ii) Executive is assigned any duties or responsibilities that are inconsistent, in any significant respect, with the scope of duties and responsibilities associated with Executive’s position;

(iii) Executive suffers a reduction in the authority, duties or responsibilities associated with his position, on the basis of which he makes a determination in good faith that he can no longer carry out such position in the manner contemplated at the time this Agreement was entered into;

(iv) Executive’s Base Salary is decreased by the Company, or his benefits or opportunities under any Executive benefit or incentive plan or program of the Company or any other material benefit specifically promised to Executive herein is or are materially reduced unless such benefit, plan, or program (but excluding Annual Base Salary) is reduced or eliminated for all eligible Executives of the Company on an equal basis;

(v) the Company fails to pay Executive any payments under any bonus or incentive plans when such payments are due or issue shares to Executive upon his exercise of his options under the 2012 Plan;

(vi) the Company fails to reimburse Executive for business expenses in accordance with the Company’s policies, procedures or practices;

(vii) the Company fails to agree to or actually indemnify Executive for his actions and/or inactions, as either an Executive, director or officer of the Company, to the fullest extent permitted by applicable law;

(viii) the Company fails to obtain a written agreement satisfactory to the Executive from any successor or assignee of the Company to assume and perform this Agreement;

(ix) the Company’s breach or failure to perform any of the indemnification obligations described in Section 13 of this Agreement including the failure to reimburse Executive promptly for his expenses and the failure to maintain directors’ and officers’ liability insurance; or

(x) the Company purports to terminate the Executive’s employment for cause and such purported termination of employment is not effected in accordance with the procedures required by this Agreement, and for purposes of this Agreement, such purported termination of employment shall be invalid and of no force and effect.

(6) If Executive elects to terminate his employment hereunder pursuant to this Section 10A, (1) the Company shall continue to pay to Executive his base salary as provided in Section 5.01 hereof through the end of the Term or any extensions thereof; (2) the Company shall pay to Executive the Bonus specified in Section 5.02 hereof; (3) the Company shall continue to provide to Executive through the end of the Term the benefits provided at the Execution Date of this Employment Agreement as amended or supplemented by the Board through the date of termination ; and (4) all of the options granted to Executive under Section 5.03 hereof to purchase shares of the common stock of the Company shall vest immediately.

(7) No Mitigation. In the event of the termination of this Employment Agreement by Executive as a result of a material breach by the Company of any of its obligations hereunder, or in the event of the termination of Executive’s employment by the Company in breach of this Employment Agreement, Executive shall not be required to seek other employment in order to mitigate his damages hereunder.

Section 11. Definitions . In addition to the words and terms elsewhere defined in this Employment Agreement, certain capitalized words and terms used in this Employment Agreement shall have the meanings given to them by the definitions and descriptions in this Section 11 unless the context or use indicates another or different meaning or intent, and such definition shall be equally applicable to both the singular and plural forms of any of the capitalized words and terms herein defined. The following words and terms are defined terms under this Employment Agreement:

11.01 “ Disability” shall mean a physical or mental illness which, in the judgment of the Company after consultation with the licensed physician attending Executive, impairs Executive’s ability to substantially perform his duties under this Employment Agreement as an Executive with or without reasonable accommodation and as a result of which he shall have been absent from his duties with the Company on a full-time basis for three (3) consecutive months.

11.02 A termination with “Cause” shall mean a termination of this Employment Agreement by reason of (a) a good faith determination by the Board that Executive (i) failed to substantially perform his duties with the Company (other than a failure resulting from his incapacity due to physical or mental illness) after a written demand for substantial performance has been delivered to him by the Board, which demand specifically identifies the manner in which the Board believes he has not substantially performed his duties and Executive has failed to substantially perform as requested within a reasonable time, (ii) has engaged in conduct the consequences of which are materially adverse to the Company, monetarily or otherwise, (iii) is found guilty of fraud, dishonesty or other acts of gross misconduct or misfeasance in the performance of his duties under this Employment Agreement by a court of competent jurisdiction whose decision is final and non-appealable (provided, however, that Executive's Base Salary shall continue to be paid until such decision is final and non-appealable), (iv) is found to be under the influence of illegal drugs or other similar substance while performing his duties under this Employment Agreement or (v) is convicted of a felony (provided, however, that Executive's Base Salary shall continue to be paid until such conviction is final and non-appealable). No act, or failure to act, on Executive's part shall be grounds for termination with Cause unless he has acted or failed to act with an absence of good faith or without a reasonable belief that his action or failure to act was in or at least not opposed to the best interests of the Company. Not less than ten (10) business days before the Board’s consideration and adoption of a resolution determining that Executive engaged in conduct specified in the first sentence of this Section 11.02, Executive may, by written notice to the Board, cause the matter of the termination of his employment by the Company to be discussed at the next regularly scheduled meeting of the Board or at a special meeting of the Board. The Board shall give Executive sufficient written notice of its intention to schedule a meeting to discuss such termination so as to permit Executive time to prepare for said meeting. Executive shall be entitled to be present and to be represented by counsel at such meeting which shall be conducted according to a procedure deemed equitable by a majority of the directors present. If, at the conclusion of such meeting, it shall be determined by a majority of the entire membership of the Board (exclusive of Executive) that Executive engaged in conduct specified in the first sentence of Section 11.02, then the Board shall deliver the resolution specified in the next succeeding sentence. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated with Cause unless there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (exclusive of Executive) at a meeting of the Board called at least in part for that purpose finding that in the good faith opinion of the Board, Executive engaged in conduct in the manner or of the type set forth above in the first sentence of this Section 11.02 and specifying the particulars thereof in detail.

11.03 Notice of Termination . “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Employment Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated; provided , however , no such purported termination shall be effective without such Notice of Termination; provided further , however , any purported termination by the Company or by Executive shall be communicated by a Notice of Termination to the other party hereto in accordance with Section 3 of this Employment Agreement.

Section 12. Fees and Expenses . The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by Executive as a result of a contest or dispute over Executive's termination of employment if such contest or dispute is resolved in Executive's favor.

Section 13. Indemnification . (a) In addition to any rights of Executive under the Company’s certificate of incorporation and by-laws, any agreement, or any applicable State law, the Company hereby agrees to hold harmless and indemnify Executive:

(i) Against any and all expenses (including attorney’s fees and costs), judgments, fines and amounts paid in settlement actually and reasonable incurred by Executive in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the name of Company) to which Executive is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Executive is, was or at any time becomes a director, officer, Executive, consultant, or agent of the Company, or is or was serving or at any time serves at the request of the Company as a Director, officer, Executive, consultant, partner, trustee or agent regardless of his subsequent title or position at another corporation, partnership, joint venture, trust or other enterprise;

(ii) Otherwise to the fullest extent as may be provided to Executive by the Company under the by-laws of the Company and Nevada General Corporation Law (“GCL”).

(b) No indemnity pursuant to this Section 13 shall be paid by Company:

(i) In respect to remuneration paid to Executive if it shall be determined by a final judgment or other final adjudication which is non appealable that such remuneration was in violation of law;

(ii) On account of conduct which is finally adjudged and non-appealable to have been willful misconduct by Executive; and

(iii) If a final decision by a Court having jurisdiction in the matter shall determine that such indemnification to Executive is not lawful, and such decision is non-appealable.

(c) All agreements and obligations of the Company contained herein shall continue during the period Executive is a director, Executive, officer, consultant or agent of Company (or is or was serving at the request of the Company as a director, officer, Executive, partner, consultant or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Executive shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, or investigative, by reason of the fact that Executive was an officer or director of Company or serving in any other capacity referred to herein.

(d) The Company shall not be liable to indemnify Executive under this Employment Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner, which would impose any penalty or limitation on Executive without Executive’s written consent or contain as part of the settlement any statement, description or assertion of wrongdoing by Executive. Neither the Company nor Executive will unreasonably withhold their consent to any proposed settlement.

(e) The Company will pay all Executive fees, costs and expenses incurred under, or related to, Executive’s indemnification under this Section 13, including all legal and accounting bills, immediately upon the presentment of bills for such expenses. Executive agrees that Executive will reimburse Company for all reasonable expenses paid by Company in defending any civil or criminal action, suit or proceeding against Executive in the event and only to the extent that it shall be ultimately determined without right of further appeal that Executive is not entitled to be indemnified by Company for such expenses. This Employment Agreement shall not affect any rights of Executive against Company, any insurer, or any other person to seek indemnification or contribution.

(f) If Company fails to pay any expenses (including without limiting the generality of the foregoing, legal fees and expenses incurred in defending any action, suit or proceeding), Executive shall be entitled to institute suit against Company to compel such payment and Company shall pay Executive all costs and legal fees incurred in enforcing such right to prompt payment.

(g) To the extent allowable under Nevada law, the burden of proof with respect to any proceeding or determination with respect to Executive’s entitlement to indemnification under this Employment Agreement shall be on Company.

(h) If any provision of this Section 13 shall be determined as conflicting with any provision of (1) Company’s certificate of incorporation and by-laws, (2) Nevada law, or (3) the provisions of any other agreement between the parties as to indemnification, and such other document or law would provide Executive with greater rights to benefits of indemnification, then such other document or law shall prevail; it being the intention of the parties hereto to provide maximum indemnification to Executive. Otherwise, unless prohibited by law, any document or law which affords Executive with greater rights of indemnification by Company than do the provisions of this Employment Agreement shall have superiority over the provisions of this Employment Agreement.

(i) In support of its obligations hereunder, the Company agrees to maintain a director’s and officer’s liability and other insurance policies covering the Executive and further agrees that these policies shall be maintained both during and after the end of the Term of employment so as to provide as broad and as complete coverage as is reasonably available in relation both to the Executive’s position during the Term of Employment and to any claims arising thereafter but related to said Term of Employment.

Section 14. Notices . For the purposes of this Employment Agreement, notices and all other communications provided for in the Employment Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, or by expedited (overnight) courier with established national reputation, shipping prepaid or billed to sender, in either case addressed to the respective addresses last given by each party to the other (provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company) or to such other address as either party may have furnished to the other in writing in accordance herewith. All notices and communication shall be deemed to have been received on the date of delivery thereof, on the third business day after the mailing thereof, or on the second day after deposit thereof with an expedited courier service, except that notice of change of address shall be effective only upon receipt.

Section 15. Life Insurance . The Company may, at any time after the execution of this Employment Agreement, apply for and procure as owner and for its own benefit, life insurance on Executive, in such amounts and in such form or forms as the Company may determine. Executive shall, at the request of the Company, submit to such medical examinations, supply such information, and execute such documents as may be required by the insurance company or companies to whom the Company has applied for such insurance. Executive hereby represents that to his knowledge he is in good physical and mental condition and is not under the influence of illegal drugs or similar substance.

Section 16. Proprietary Information and Inventions . Executive understands and acknowledges that:

16.01 Trust . Executive’s employment creates a relationship of confidence and trust between Executive and the Company with respect to certain information applicable to the business of the Company and its subsidiaries and affiliates (collectively, the “Group”) or applicable to the business of any licensee, vendor or customer of any of the Group, which may be made known to Executive by the Group or by any licensee, vendor or customer of any of the Group or learned by Executive during the Employment Period.

16.02 Proprietary Information . The Group possesses and will continue to possess information that has been created, discovered, or developed by, or otherwise become known to, the Group (including, without limitation, information created, discovered, developed or made known to by Executive during the period of or arising out of his employment by the Company) or in which property rights have been or may be assigned or otherwise conveyed to the Group, which information has commercial value in the business in which the Group is engaged and is treated by the Group as confidential. Except as otherwise herein provided, all such information is hereinafter called “Proprietary Information”, which term, as used herein, shall also include, but shall not be limited to, data, functional specifications, computer programs, know-how, research, patents, inventions, discoveries, processes, procedures, formulae, technology, improvements, developments, designs, marketing plans, strategies, forecasts, new products, unpublished financial statements, budgets, projections, licenses, prices, costs, and customer, supplier and potential acquisition candidates lists. Notwithstanding anything contained in this Employment Agreement to the contrary, the term “Proprietary Information” shall not include (i) information which is in the public domain, (ii) information which is published or otherwise becomes part of the public domain through no fault of Executive, (iii) information which Executive can demonstrate was in Executive’s possession at the time of disclosure and was not acquired by Executive directly or indirectly from any of the Group on a confidential basis, (iv) information which becomes available to Executive on a non-confidential basis from a source other than any of the Group and which source, to the best of Executive’s knowledge, did not acquire the information on a confidential basis, or (v) information required to be disclosed by any federal or state law, rule or regulation or by any applicable judgment, order or decree or any court or governmental body or agency having jurisdiction in the premises.

All Proprietary Information shall be the sole property of the Group and their respective assigns. Executive assigns to the Company any rights Executive may have or acquire in such Proprietary Information. At all times, both during Executive's employment by the Company and after its termination, Executive shall keep in strictest confidence and trust all Proprietary Information, and Executive shall not use or disclose any Proprietary Information without the written consent of the Group, except as may be necessary in the ordinary course of performing Executive's duties as an Executive of the Company. Notwithstanding the foregoing, Executive agrees that all Proprietary Information shall be kept in confidence by Executive for a period of at least three (3) years after the Termination Date of this Employment Agreement.

Section 17. Inventions . Any and all inventions, conceptions, processes, discoveries, improvements, patent rights, letter patents, programs, copyrights, trademarks, trade names and applications therefore relating to technology used by the Company to treat and recycle wastewater sludge and other bio-organic wastes, utilizing certain alkaline and mineral by-products produced by cement, lime, electric utilities and other industries, in the United States and other countries, and any and all rights and interest in, to and under the same, that are conceived, made, acquired, or possessed by Executive, alone or with other Executives, during the term of this Employment Agreement shall become the exclusive property of the Company and shall at all times and for all purposes be regarded as acquired and held by Executive in a fiduciary capacity for the sole benefit of the Company, and the Executive hereby assigns and agrees to assign the same to the Company without further compensation. Executive agrees that, upon request, he will promptly make all disclosures, execute all applications, assignments or other instruments and perform all acts whatsoever necessary or desired by the Company to vest and confirm in it, its successors, assigns and nominees, fully and completely, all rights and interests created or contemplated by this Section.

Section 18. Surrender of Documents . Executive shall, at the request of the Company, promptly surrender to the Company or its nominee any Proprietary Information or document, memorandum, record, letter or other paper in his possession or under his control relating to the operation, business or affairs of the Group.

Section 19. Prior Employment Agreements . Executive represents and warrants that Executive's performance of all the terms of this Employment Agreement and as an Executive of the Company does not, and will not, breach any agreement to keep in confidence proprietary information acquired by Executive in confidence or in trust prior to Executive’s employment by the Company. Executive has not entered into, and shall not enter into, any agreement, either written or oral, which is in conflict with this Employment Agreement or which would be violated by Executive entering into, or carrying out his obligations under, this Employment Agreement.

Section 20. Restrictive Covenant . Except as provided herein and/or as agreed by the Board of the Company, Executive acknowledges and recognizes Executive’s possession of Proprietary Information and the highly competitive nature of the business of the Group and, accordingly, agrees that in consideration of the covenants and conditions contained herein Executive shall not, during the Employment Period, (i) directly or indirectly engage in any new Business Activities that do not involve the Company that relate to the treatment of mobile gaming, whether such engagement shall be as an employer, officer, director, owner, Executive, consultant, stockholder, partner or other participant, (ii) assist others in engaging in any Business Activities in the manner described in the foregoing clause (i), or (iii) induce Executives of the Company to terminate their employment with the Company or engage in any Business Activities in the world. Executive shall not for a period of one (1) year following the termination of this Agreement, for any customer and/or active potential customer of the Company that was such a customer or potential customer as of the date of termination, attempt to contact or solicit said customer or potential customer to provide like services and/or performance as had been or was proposed to be provided by the Company.

Section 21. Remedies . The parties hereto acknowledge and agree that the a remedy at law for a breach or a threatened breach of the provisions of Sections 16, 17, 18 and 20 herein would be inadequate, and in recognition of this fact, in the event of a breach or threatened breach of any of such provisions, it is agreed that the parties shall be entitled to equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without posting bond or other security. No remedy herein conferred is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder now or hereinafter existing at law or in equity or by statute or otherwise.

Section 22. Successive Employment Notice . In the event this Employment Agreement is terminated by Executive pursuant to Section 10, within five (5) business days after the Termination Date, Executive shall provide notice to the Company of Executive’s next intended employment. If such employment is not known by Executive at such date, Executive shall notify the Company immediately upon determination of such information. Executive shall continue to provide the Company with notice of Executive’s place and nature of employment and any change in place or nature of employment during the period ending one (1) year after the Termination Date.

Section 23. Successors . This Employment Agreement shall be binding on the Company and any successor to any of its businesses or assets. Without limiting the effect of the prior sentence, the Company shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Employment Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The Company’s failure to obtain said assumption shall be a breach of this Employment Agreement under Section 10A hereof. As used in this Employment Agreement, "Company" shall mean the Company as hereinbefore defined and any successor or assign to its business and/or assets as aforesaid which assumes and agrees to perform this Employment Agreement or which is otherwise obligated under this Agreement by the first sentence of this Section 23, by operation of law or otherwise.

Section 24. Binding Effect . This Employment Agreement shall inure to the benefit of and be enforceable by Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Employment Agreement to Executive's estate.

Section 25. Modification and Waiver . No provision of this Employment Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Employment Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

Section 26. Headings . Headings used in this Employment Agreement are for convenience only and shall not be used to interpret or construe its provisions.

Section 27. Waiver of Breach . The waiver of either the Company or Executive of a breach of any provision of this Employment Agreement shall not operate or be construed as a waiver of any subsequent breach by either the Company or Executive. Any such waiver must be in writing signed by the party against whom the waiver is sought to be enforced or asserted.

Section 28. Amendments . No amendments or variations of the terms and conditions of this Employment Agreement shall be valid unless the same is in writing and signed by all of the parties hereto.

Section 29. Severability . The invalidity or unenforceability of any provision of this Employment Agreement, whether in whole or in part, shall not in any way affect the validity and/or enforceability of any other provision herein contained. Any invalid or unenforceable provision shall be deemed severable to the extent of any such invalidity or unenforceability.

Section 30. Governing Law; Arbitration .

(a) Governing Law. This Employment Agreement shall be construed and enforced pursuant to the laws of the State of Nevada.

(b) Arbitration. ( 1) Any unresolved controversy or claim arising out of, in connection with, under or relating to this Employment Agreement, shall be submitted to arbitration (the “Arbitration”) before the American Arbitration Association (“AAA”) using the Commercial Arbitration Rules then in effect. The Arbitration shall be conducted by one (1) arbitrator mutually agreed upon by the parties. The arbitration shall take place in Toronto, Ontario. Judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. Both parties agree and consent to the personal jurisdiction of the United States District Court for the Northern District of Nevada, or the State Courts of the State of Nevada, for all purposes relating to the arbitration including any equitable relief, and the entry of judgment upon, and enforcement of, any award.

(b)(2) There shall be limited discovery prior to the Arbitration hearing as follows: (i) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (ii) depositions of all party witnesses and (iii) such other depositions as may be allowed by the arbitrator only upon a showing of good cause. Depositions shall be conducted in accordance with the Federal Rules of Civil Procedure.

(b)(3) A court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. The arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator. The arbitrator shall have no power and authority to award punitive, exemplary, incidental and consequential (including without limitation lost profits) damages in favor of one party against the other party in the Arbitration. Each party shall bear its own legal costs and expenses in connection with the Arbitration; provided, however, that the arbitrator shall make an award of legal fees, and all other costs and expenses of the Arbitration to the prevailing party as part of any Arbitration award including therein (i) the filing fees for the Arbitration and (ii) the stenographic costs of transcription. The arbitrator’s fees shall be divided equally between the parties.

Section 31. Counterparts . This Employment Agreement may be executed in more than one (1) counterpart and each counterpart shall be considered an original.

Section 32. Survival . The provisions of Sections 10, 10A, 12, 13, 16 and 30 herein shall survive termination of this Employment Agreement for any reason.

Section 33. Sections . Unless the context requires a different meaning, all references to "Sections" in this Agreement shall mean the Section of this Agreement.

Section 34. Publicity . Press releases and other publicity materials relating to the transactions contemplated by this Employment Agreement shall be released by the parties hereto only after review and with the consent of the other party; provided , however , that if legal counsel for the Company advises the Company that disclosure of this Employment Agreement is required under applicable federal or state securities laws, then the Company shall be permitted to make such disclosure in the form recommended by such legal counsel without the prior consent of Executive.

IN WITNESS WHEREOF , this Employment Agreement has been duly executed by the Company and Executive as of the date first above written.

Consorteum Holdings Inc.

By /s/Patrick Shuster

Its Chief Operating Officer

/s/Craig A. Fielding

Craig Fielding

Executive Employment Agreement between

Consorteum Holdings Inc. (the Company)

And Craig Fielding (Executive)

Exhibit A

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is made this 1 ^st day of September 2012 by and between Consorteum Holdings Inc., a Nevada corporation, (the "Company") and Craig Fielding (the "Indemnitee").

RECITALS

A. The Indemnitee has been requested to serve, or is presently serving, as a Director and/or an Officer of the Company. The Company desires the Indemnitee to serve or to continue to serve in such capacity. The Company believes that the Indemnitee's undertaking or continued undertaking of such responsibilities is important to the Company and that the protection afforded by this Agreement will enhance the Indemnitee's ability to discharge such responsibilities under existing circumstances. The Indemnitee is willing, subject to certain conditions including without limitation the execution and performance of this Agreement by the Company and the Company's agreement to provide the Indemnitee at all times the broadest and most favorable (to Indemnitee) indemnification permitted by applicable law (whether by legislative action or judicial decision), to serve or to continue to serve in that capacity.

B. In addition to the indemnification to which the Indemnitee is entitled under the Composite Certificate of Incorporation of the Company (the "Certificate") or the By-laws, as amended, of the Company (the "By-laws"), the Company has/will purchased and maintains insurance protecting its officers and directors and certain other persons (including the Indemnitee) against certain losses arising out of actual or threatened actions, suits or proceedings to which such persons may be made or threatened to be made parties ("D&O Insurance").

NOW, THEREFORE, for and in consideration of the premises, the mutual promises hereinafter set forth, the reliance of the Indemnitee hereon in continuing to serve the Company in his present capacity and in undertaking to serve the Company in any additional capacity or capacities, the Company and the Indemnitee agree as follows:

1. Indemnification - General. The Company shall indemnify and advance Expenses (as hereinafter defined) to Indemnitee to the fullest extent, and only to the extent, permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement. Although there can be no assurance as to the continuation or renewal of the D&O Insurance or that any such D&O Insurance will provide coverage for losses to which the Indemnitee may be exposed, the Company will use commercially reasonable efforts, taking into consideration availability of D&O Insurance in the marketplace, to continue D&O Insurance in effect at current levels for the duration of Indemnitee's service and for six (6) years thereafter.

2. Proceedings Other than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the indemnification rights provided in this Section 2 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to, or otherwise incurs Expenses in connection with, any threatened, pending or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company. Pursuant to this Section 2, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.

3. Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the indemnification rights provided in this Section 3, if, by reason of his Corporate Status, he is, or is threatened to be made, a party to, or otherwise incurs Expenses in connection with, any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company despite such adjudication of liability, if and only to the extent that the Courts of the State of Nevada, or the court in which such Proceeding shall have been brought or is pending, shall determine.

4. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For the purposes of this Section 4 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

5. Contribution. In the event that the indemnity contained in Sections 2, 3 or 4 of this Agreement is unavailable or insufficient to hold Indemnitee harmless in a Proceeding described therein, then in accordance with the non-exclusivity provisions of the Nevada Revised Statutes and General Corporation Law and the Certificate and By-laws, and separate from and in addition to, the indemnity provided elsewhere herein, the Company shall contribute to Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such Proceeding or any claim, issue or matter therein, in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company on the one hand and Indemnitee on the other in the acts, transactions or matters to which the Proceeding relates and other equitable considerations.

6. Procedure for Determination of Entitlement to Indemnification.

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The determination of Indemnitee's entitlement to indemnification shall be made not later than 90 days after receipt by the Company of the written request for indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) Indemnitee's entitlement to indemnification under any of Sections 2, 3, 4 and 5 of this Agreement shall be determined in the specific case: (i) by the Board of Directors by a majority vote of a quorum of the Board consisting of Disinterested Directors (as hereinafter defined); (ii) by Independent Counsel (as hereinafter defined), in a written opinion if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs; or (iii) by the stockholders of the Company. If, with regard to Section 5 of this Agreement, such a determination is not permitted by law or if a quorum of Disinterested Directors so directs, such determination shall be made by the proper Court of the State of Nevada or the court in which the Proceeding giving rise to the claim for indemnification is brought.

(c) In the event that the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. Indemnitee may, within 7 days after receipt of such written notice of selection shall have been given, deliver to the Company a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected shall be disqualified from acting as such. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) of this Agreement, no Independent Counsel shall have been selected, or if selected shall have been objected to, in accordance with this Section 6(c), either the Company or Indemnitee may petition the Court of the State of Nevada for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person so appointed shall act as Independent Counsel under Section 6(b) of this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

7. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within 20 days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Indemnitee shall, and hereby undertakes to, repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.

8. Presumptions and Effect of Certain Proceedings. The termination of any proceeding described in any of Sections 2, 3 or 4 of this Agreement, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

9. Term of Agreement. All agreements and obligations of the Company contained herein shall commence as of the time the Indemnitee commenced to serve as a director, officer, employee or agent of the Company (or commenced to serve at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue for so long as Indemnitee shall so serve or shall be, or could become, subject to any possible Proceeding in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder.

10. Notification and Defense of Claim. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission to notify the Company will not relieve it from any liability which it may have to Indemnitee otherwise than under this Agreement. With respect to any such Proceeding as to which Indemnitee notifies the Company of the commencement thereof:

(a) The Company will be entitled to participate therein at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election so to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other Expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ its counsel in such Proceeding but the fees and Expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Company, or (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of the defense of such Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases the fees and Expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the conclusion provided for in (ii) above.

(c) The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding or claim affected without its written consent. The Company shall not settle any Proceeding or claim in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement.

11. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as a director and/or officer of the Company, and acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve in such capacity.

(b) In the event Indemnitee is required to bring any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, the Company shall reimburse Indemnitee for all of Indemnitee's reasonable fees and Expenses in bringing and pursuing such action.

12. Non-Exclusivity of Rights. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate, the By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.

13. Definitions.

For purposes of this Agreement:

(a) "Corporate Status" describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

(b) "Disinterested Director" means a director of the Company who is not and was not at any time a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(c) "Expenses" shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or Expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend or investigating a Proceeding.

(d) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.

(e) "Proceeding" includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative.

14. Severability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.

15. Governing Law; Binding Effect; Amendment and Termination.

(a) THIS AGREEMENT SHALL BE INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA, EXCLUDING ANY CONFLICT-OF- LAW RULE OR PRINCIPLE THAT MIGHT REFER TO THE LAWS OF ANOTHER STATE OR COUNTRY.

(b) This Agreement shall be binding upon Indemnitee and upon the Company, its successors and assigns, and shall inure to the benefit of Indemnitee, his heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns.

(c) No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing by the parties.

The parties have executed this Agreement as of the day and year first above written.

Consorteum Holdings Inc.

By: /s/ Patrick Shuster

Director

/s/ Craig Fielding

Indemnitee

Exhibit 10.23

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Employment Agreement” or “Agreement”) is made and entered into as of the 1st day of September 2012 (the “Execution Date”), by and between Consorteum Holdings Inc., a Nevada corporation (the “Company”), and Patrick Shuster, an individual (“Executive”). N-Viro

W I T N E S S E T H :

Section 2. Capacity and Duties . Executive shall be employed in the capacity of Chief Operating Officer of the Company and shall have such other duties, responsibilities and authorities as are assigned to him by the Board of Directors of the Company (the “Board”) Board of the Company. Subject to the control and general directions of the Board and except as otherwise herein provided, Executive shall devote all necessary business time, best efforts and attention to promote and advance the business of the Company and its subsidiaries and affiliates and to perform diligently and faithfully all the duties, responsibilities and obligations of Executive to be performed by him under this Employment Agreement. Executive's duties shall include the ongoing management and oversight of the general business affairs and operations of the Company and its subsidiaries and affiliates and shall include, but not be limited to, routine operations, matters relating to research and development, technical direction, national and international sales and/or licensing, national policy and governmental regulations, legal matters, and industry relations including those relating to water and the environment. It is expressly understood that Executive also is and/or may become engaged in other limited business activities not involving the Company. Any such independent activity shall be disclosed to the Audit Committee of the Company’s Board in advance, and any such other business activities shall not unreasonably interfere with Executive's performance of his obligations under this Employment Agreement.

Section 4. Place of Employment . Executive's principal place of work shall be deemed to be at the principal offices of the Company in the Atlanta, Georgia, area or such other locations as may be reasonably designated by the Board or assigned by management; provided, however, that the Board may not require that Executive permanently relocate to a place that is more than 100 miles from Atlanta measured as the radius in any direction from the Atlanta center. The Company and Executive acknowledge that Executive's principal place of work is consistent with the extensive national and international business travel which may be required of Executive in connection with the performance of his duties, responsibilities and authorities under this Agreement.

5.03 Stock Option Grant . The Company hereby grants to the Executive ten-year stock options to purchase 5 million (5,000,000) shares of its common stock which shall vest in equal installments on the Execution Date and on each successive anniversary of this Employment Agreement; provided, however, that all remaining options shall vest immediately upon the termination with cause of this Employment Agreement by Executive under Section 10A hereof. The exercise price of these options shall be the “fair market value” as defined in the Company’s 2012 Plan, and are intended to be Incentive Stock Options or “ISOs” as further defined by the Company 2012 Plan. Such options are being granted under, and are otherwise subject to the terms and conditions of the Company’s 2012 Stock Option Plan as amended (the “Company 2012 Plan”). The Executive acknowledges that the Company has delivered a copy of the Company 2012 Plan to him. In addition, the Company shall issue 2 million shares of its Series A Preferred Stock, par value $0.001 and 2 million shares of its Series B Preferred Stock, par value $0.001 to Executive as part of his signing bonus.

5.05 Incentive Compensation : The Company shall pay Executive, during the Term of this Agreement, an annual performance/incentive bonus which shall be calculated as follows:

Fiscal Year
Revenue	Bonus
$0 – 2,000,000	Five Percent (5%) of Base Salary
$2,000,001 to $5,000,000	Fifteen Percent (15%) of Base Salary
$5,000,001 to $10,000,000	Thirty Percent (30%) of Base Salary
In excess of $10,000,001	Fifty Percent (50%) of Base Salary
Sale of Company	Two Percent of the Purchase Price
Capital Raised	Three Percent of all Capital Raised

5.06 Benefits. In addition to the foregoing, the Executive shall be entitled to the following benefits during the term of this Agreement:

(i)

5.07 Working Facilities and Expenses . Executive shall be furnished with an office at the principal executive offices of the Company, or at such other location as agreed to by Employee and the Company, and other working facilities and secretarial and other assistance suitable to his position and reasonably required for the performance of his duties hereunder The Company hereby agrees to advance expenses to Employee, subject to the provisions of this Section all of the costs of Employee’s maintaining an office and residence in Atlanta, which costs are currently estimated to be approximately $5,000 per month. The Company shall promptly advance the Employee for all of Employee’s reasonable expenses incurred while employed, and performing his duties under and in accordance with the terms and conditions of this Agreement, subject to Employee’s full and appropriate documentation, including, without limitation, receipts for all such expenses in the manner required pursuant to Company’s policies arid procedures and the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations as are in effect from time to time.

Section 7. Review of Performance . The Board shall periodically review and evaluate the performance of Executive under this Employment Agreement with Executive.

(1) The Company sells all or substantially all of its assets;

		(i) Executive is otherwise removed from the position(s) provided for in this Agreement, for any reason other than the legal termination of his employment;