Consorteum Holdings, Inc. (Form: 10-Q, Received: 11/14/2014 12:01:29)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2014

o 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 Registrant 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, L4G 6H8

(Address of Principal Executive Offices)(Zip Code)

(888) 603-5161

(Registrant’s Telephone Number,including Area Code)

N/A

(Former Name, Former Address, and Former Fiscal Year,if Changed Since Last Report)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer o	Accelerated filer o

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

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

As of November 14, 2014, the Company had 466,150,864 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes o No x

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended).

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 success of our fundraising efforts; our ability to meet our obligations, continue as a going concern or realize on our assets, if necessary to meet liabilities; international, national and local general economic and market conditions; demographic changes; our ability to achieve, 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; risks related to new product development and introduction including our Universal Mobile Interface (UMI); competition including the activities of competitors and the presence of new or additional competition; the failure to gain and/or 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 obtain and/or maintain key licensing arrangements, including the CAPSA license, joint ventures and partnerships; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).

Although the forward-looking statements in this Quarterly Report on Form 10-Q 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. Reference is made to our discussion of Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 on file with the SEC.

All forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto, or any change in events, conditions or circumstances on which any such statement is based.

CONSORTEUM HOLDINGS, INC .

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2014

TABLE OF CONTENTS


	Page
PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS	4

Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and June 30, 2014	4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2014 and 2013 (Unaudited)	5

Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2014 and 2013 (Unaudited)	6

Notes to Condensed Consolidated Financial Statements (Unaudited)	7

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18

ITEM 4 – CONTROLS AND PROCEDURES	18

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS	19

ITEM 1A – RISK FACTORS	19

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES	19

ITEM 4 – MINE SAFETY DISCLOSURE	19

ITEM 5 – OTHER INFORMATION	19

ITEM 6 – EXHIBITS	19

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

CONSORTEUM HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2014			June 30, 2014
	(unaudited)
ASSETS

Current Assets:
Cash	$	60,636		$	53,993
Current assets		60,636			53,993

Property and equipment, net		14,666			17,886
Total assets	$	75,302		$	71,879

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities :
Bank overdraft	$	1,137		$	1,137
Accounts payable		855,026			822,789
Accrued expenses		491,501			503,739
Accrued expenses - officers		554,292			446,649
Accrued expenses - payroll taxes and related penalties and interest		411,569			330,848
Loan payable, including accrued interest		4,300,572			4,170,081
Convertible promissory notes, including interest		3,676,751			3,584,303
Due to stockholders		1,586,977			1,228,326
Total current liabilities		11,877,825			11,087,872

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 shares issued and outstanding as of September 30, 2014 and June 30, 2014, respectively		5,000			5,000
Preferred stock B, $0.001 par value, 15,000,000 shares designated: 4,000,000 shares issued and outstanding as September 30, 2014 and June 30, 2014, respectively		4,000			4,000
Preferred stock C, $0.001 par value, 40,000,000 shares designated: zero shares issued and outstanding as of September 30, 2014 and June 30, 2014, respectively		–			–
Common stock, $0.001 par value, 500,000,000 shares authorized: 466,150,864 shares issued and outstanding as of September 30, 2014 and June 30, 2014, respectively		466,151			466,151
Collateralized shares issued		(137,500	)		(137,500	)
Shares committed to be issued		35,000			35,000
Additional paid-in capital		6,453,646			6,449,271
Accumulated other comprehensive loss		(49,236	)		(139,864	)
Accumulated deficit		(18,579,584	)		(17,698,051	)
Total stockholders' deficit		(11,802,523	)		(11,015,993	)
Total liabilities and stockholders' deficit	$	75,302		$	71,879

See Notes to Unaudited Condensed Consolidated Financial Statements.

CONSORTEUM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the Three Months Ended September 30, 2014			For the Three Months Ended September 30, 2013

Revenues	$	–		$	–

Operating expenses:
Selling, general and administrative		610,752			548,844
Total operating expenses		610,752			548,844

Operating loss		(610,752	)		(548,844	)

Other income and (expense)
Interest expense		(270,781	)		(323,047	)
Gain on settlement of debt		–			102,261
Total other expenses		(270,781	)		(220,786	)

Net loss		(881,533	)		(769,630	)

Foreign currency translation adjustment		90,628			(45,341	)

Comprehensive loss	$	(790,905	)	$	(814,971	)

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

Basic and diluted weighted average common shares outstanding		466,150,864			426,966,081

See Notes to Unaudited Condensed Consolidated Financial Statements.

CONSORTEUM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended September 30, 2014			For the three months ended September 30, 2013
Cash flows from operating activities:
Net loss	$	(881,533	)	$	(769,630	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,966			1,853
Gain on forgiveness or restructuring of debt		–			(102,261	)
Amortization of debt discount		–			5,750
Stock-based compensation		4,375			51,875
Changes in operating assets and liabilities:
Accounts payable		47,844			(82,270	)
Accrued expenses		203,788			6,776
Accrued interest		270,505			317,132
Net cash used in operating activities		(352,055	)		(570,775	)

Cash flows used in investing activities:
Capital expenditures		–			(37,077	)
Note receivable		–			(2,556	)
Net cash used in investing activities		–			(39,633	)

Cash flows from financing activities:
Proceeds from loans		–			395,000
Proceeds from stockholders' advances		410,692			96,980
Repayment of stockholders' advances		(44,100	)		(60,666	)
Proceeds from the issuance of convertible promissory notes		–			250,000
Net cash provided by financing activities		366,592			681,314

Effect of exchange rate on cash		(7,894	)		(11,171	)
Net increase in cash		6,643			59,735
Cash, beginning of year		53,993			489
Cash, end of year	$	60,636		$	60,224

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

Non-cash investing and financing activities:
Fair value of beneficial conversion feature on convertible promissory notes	$	–		$	35,000
Fair value of shares issued for convertible debt and accrued interest	$	–		$	428,500

See Notes to Unaudited Condensed Consolidated Financial Statements.

CONSORTEUM HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2014

(Unaudited)

1. Organization, Business 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.

In July 2013 the Company made a decision to recast its business as a provider of digital content across mobile devices. In conjunction therewith, the Company formed two new Nevada subsidiaries: Bad Rabbit Inc. and ThreeFiftyNine Inc. (359) and hired a senior level software development team. Moving forward, ThreeFiftyNine aims primarily at securely delivering rich mobile content across mobile devices as well as delivering diverse payment and other transactional platforms that are rapidly converging due to advances in smart phone mobile technology. ThreeFiftyNine intends 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.

Holdings has spent the last three years developing relationships and licensing agreements that will enable us to participate in the emerging market of mobile gaming. We intend to build our company with the capabilities to deliver rich mobile content to end users who will use their smart phones in radical new ways. In July 2013, we formed a wholly-owned subsidiary, ThreeFiftyNine Inc. and hired a software development team that had previously designed the world’s first regulatory compliant mobile platform for delivery of gaming content originally known as CAPSA, which met the rigorous standards of the Nevada Gaming Board. CAPSA represents the first generation software delivery platform for mobile devices.

The development team that we hired had spent the past five years and millions of dollars in non-recurring engineering costs to complete the development of the platform. At the heart is the capability to deliver any digital content across any cellular network to any mobile device or smart phone. This key differentiator makes it possible for us to approach many different markets that are in the business of providing mobile connectivity and mobile content.

In October 2012, we secured a license to market and license the CAPSA technology from Tarsin Inc. (“Tarsin”). The licensing agreement provided 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. The Tarsin license provided us with capabilities in the mobile handset market which we could use to ensure cross functionality of mobile applications across a wide variety of handsets. Tarsin Inc. filed a voluntary petition for bankruptcy protection in the U.S. Bankruptcy Court, Northern District of California. The Company was a creditor in this Case No. 13-53607. In resolving the bankruptcy case, NYG Holdings LLC (“NYG”) acquired the original intellectual property from Tarsin Inc., which included the first generation CAPSA platform. On June 12, 2014, the Company entered into an agreement to enter into a multi-year license agreement for the CAPSA platform with NYG. This license, which is effective October 20, 2014, grants latitude to the Company to make modifications and further enhancements to the platform, which will be marketed as the Universal Mobile Interface (“UMI”). We intend to initially introduce the UMI platform into the market utilizing branded partnership relationships in the mobile sports betting and casino gaming verticals. The multi-year license agreement is for five years and is thereafter renewable annually. The Company is responsible to pay royalties fees of 10% of net revenues plus $100,000 annually. However, the first 18 months of the agreement will be royalty free and the first three years of annual payments waived.

The UMI, which our team is developing, will be a second generation platform and will represent a key advantage for our Company as we enter into the mobile gaming market as the UMI allows content providers the ability to develop content once, while the UMI platform identifies the mobile device and delivers the proper display format for that mobile device. Without a universal platform, content providers must reprogram their mobile application each time they update or add to their content; or the mobile device operating system is updated. We intend to initially introduce the UMI platform into the market utilizing branded partnership relationships in the mobile sports betting and casino gaming verticals.

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 may enter into a licensing and reselling agreement once Knockout launches their platform. Since July 2012, we paid $180,432 to Knockout as an interim payment against a future equity position in Knockout. If the Company obtains funding, we may purchase up to a 10% equity position in Knockout pending further due diligence.

Going Concern and Management Plan

The Company's condensed 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 has suffered losses from operations. As of September 30, 2014, the Company had a working capital deficit (current liabilities in excess of current assets) of approximately $11.8 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 $411,000 during the three months ended September 30, 2014. Subsequent to such date, the Company has raised additional capital totaling approximately $126,000; such proceeds were used for working capital of the business. The Company requires 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:

Basis of Presentation

The foregoing unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited consolidated interim financial statements should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended June 30, 2014. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for all the interim periods presented. Operating results for the three-month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending June 30, 2015.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Consorteum Holdings, Inc., Consorteum Inc., Bad Rabbit, Inc. and ThreeFiftyNine, Inc.; ThreeFiftyNine, Inc. had very few activities during the year. All significant intercompany balances and transactions are eliminated on consolidation.

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 the utilization of future income tax assets, potential penalties on certain wages, 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.

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 options and 3,172,184 warrants from the calculation for the three months ended September 30, 2014 and September 30, 2013, 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.

Recent accounting pronouncements

In June 2014, the FASB issued ASU No. 2014-10, which eliminates the concept of a development stage entity, or DSE, in its entirety from GAAP. Under existing guidance, DSEs are required to report incremental information, including inception-to-date financial information, in their financial statements. A DSE is an entity devoting substantially all of its efforts to establishing a new business and for which either planned principal operations have not yet commenced or have commenced but there has been no significant revenues generated from that business. Entities classified as DSEs will no longer be subject to these incremental reporting requirements after adopting ASU No. 2014-10. ASU No. 2014-10 is effective for fiscal years beginning after December 15, 2014, with early adoption permitted. Retrospective application is required for the elimination of incremental DSE disclosures. Prior to the issuance of ASU No. 2014-10, the Company had met the definition of a DSE since its inception. The Company elected to adopt this ASU early, and therefore it has eliminated the incremental disclosures previously required of DSEs, starting with this Quarterly Report on Form 10-Q.

Recently Issued Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. The Company is currently evaluating the impact of adopting this guidance.

In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2014 and the Company will continue to assess the impact on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

3. Note Receivable and License Agreement with Tarsin

On October 10, 2012, the Company entered into a multi-year licensing agreement with Tarsin for rights to the CAPSA technology. The licensing agreement provided 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. 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. The license was being amortized; however, 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 amount as of June 30, 2013 of approximately $183,000 was impaired.

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 was 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 in fiscal 2013.

The Company paid consulting fees to Tarsin’s president of approximately $50,100 and $34,000 during the three months ended September 30, 2014 and 2013, respectively. As of September 30, 2014 the Company owed Tarsin’s president $100,000 for services rendered.

4.	Accrued Expenses

The Company's accrued expenses are as follows:

	September 30, 2014		June 30, 2014
Salaries, wages and benefits - officers	$	554,292	$	446,649
Salaries, wages, and benefits – non-officers		50,779		46,612
Payroll taxes and related penalties and interest		411,569		330,848
Professional services		383,791		400,151
Other		56,931		56,976

Total Accrued Expenses	$	1,457,362	$	1,281,236

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. The Company has estimated such penalties and interest as indicated above.

5.	Loans Payable and Convertible Promissory Notes

Loans payable are as follows:

	September 30,			June 30,
	2014			2014

Loans payable, bearing interest at rates between 0% and 18% per annum with default interest up to 24% per annum. Interest payable monthly. These loans are past due, unsecured and payable on demand. Accrued interest of $1,518,582 and $1,335,769 at September 30, 2014 and June 30, 2014, respectively. Certain of these notes totaling $320,000 and $1,490,000 incurred flat fees of 15% upon issuance during fiscal 2014 and 2013, respectively.	$	4,300,572		$	4,170,081
Less: Current portion		(4,300,572	)		(4,170,081	)
Loans payable, non-current	$	–		$	–

Convertible Promissory Notes are as follows:

	September 30,		June 30,
	2014		2014
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 September 30, 2014 and June 30, 2014 of $332,545 and $317,253, respectively. These notes were convertible upon the merger that occurred in July 2011.	$	1,373,513	$	1,357,905

Convertible promissory notes, bearing interest between 5% and 18% per annum, which matured between October 2010 and March 2013. 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 $121,899 and $115,130 September 30, 2014 and June 30, 2014, respectively. The notes were substantially in default at June 30, 2012.		566,524		559,216

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 40,103 and $39,769 at September 30, 2014 and June 30, 2014, respectively.		114,603		114,269

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 $464,360 and $395,162 at September 30, 2014 and June 30, 2014, respectively.		1,622,111		1,552,913

Convertible promissory notes	$	3,676,751	$	3,584,303

Loans Payable

The Company issued 40,000,000 and 63,184,400 shares of its common stock to satisfy obligations under certain loans payable aggregating approximately 528,500 during fiscal 2014. There were no such issuances in fiscal 2015.

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. As of June 30, 2014, this primary lender principle loan balance was approximately $4,287,000. These repayment amounts include interest of either 15% or 10% over the term of the note and a default rate of 2% per month. Certain of these notes incur compounding interest. Of the total amount $250,000 is convertible into 1 million shares of Series B Preferred stock as noted above. 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.

Included in the note payable memorialized on July 17, 2014 was $250,000 in additional monies advanced during fiscal 2014. The same shareholder advanced an additional $70,000 through separate notes during fiscal 2014 with the same terms as the notes above. Maturity dates on these additional notes ranged from October to November 2013.

As of September 30 2014, the Company owes this individual approximately $3,003,065 in principal pursuant to convertible notes and notes payable, along with approximately $1,497,435 accrued interest thereon.

During fiscal 2014, the Company issued two notes to a separate individual totaling $75,000. These notes incur 15% interest and were due in November 2013. To date these notes have not been repaid and are in technical default.

Convertible Promissory Notes

During the year ended June 30, 2014, the Company issued a convertible note to an existing shareholder in the amount of $250,000. The convertible note incurred a flat 10% interest and was due August 30, 2013 at which time a default interest was applied of 2% per month. The convertible note is convertible into 1 million shares of Series B preferred stock. To date, no amounts have been repaid on this note and it is in technical default.

The Company recognized interest expense of approximately $270,781 and $323,047 during the three months ended September 30, 2014 and 2013, respectively, in connection with all loans, convertible promissory notes, and financing costs.

6.	Related Party Transactions

The amounts due to stockholders include non-interest bearing, unsecured advances with no fixed terms of repayment and the note entered into May 30, 2012 as described below. Stockholders advanced the Company approximately $411,000 and $97,000 during the three months ended September 30, 2014 and 2013, and were repaid approximately $44,000 and $61,000 during the same time periods, respectively, inclusive of the convertible note below. As of September 30, 2014, the net balance due to stockholders for advances amounted to approximately $1,543,232 and is included in due to stockholders.

Included in Media Exchange Group Convertible Notes above, is approximately $148,000 in notes that are due to our COO.

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 in fiscal 2012, 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. There were no repayments of balances during the three months ended September 30, 2014 and 2013 As of September 30, 2014 $40,844 in principal and $2,902 in accrued interest remain due and payable.

7.	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:

Term of September 1, 2012 – December 31, 2016

	—	Base salary of $240,000
	—	Reimbursed office expense of $5,000 per month;
	—	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. Below is a summary of the terms of such agreement:

Term of September 1, 2012 through December 31, 2016

	—	Base salary of $240,000
	—	Reimbursed office expense of $5,000 per month.
	—	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

As of the 2014 fiscal year end, the Company was a creditor in two related bankruptcy cases in the U.S. Bankruptcy Court, Northern District of California (“Court”). The Company filed proofs of claim and submitted an administrative expense claim for critical support services rendered to debtors in both In re Game2Mobile, Case No. 13-52062 and In re Tarsin, Inc. Case No. 13-53607. On or about June 10, 2014, the Court approved the debtors’ motion to sell substantially all of their assets to NYG Holdings, LLC (“NYG”) and a related motion to approve a compromise of controversy with Tarsin (Europe) LTD., the largest unsecured creditor in these bankruptcy cases. As related to the sale, the Company negotiated a settlement with NYG whereby, among other things, NYG would grant the Company a new license for the CAPSA platform and the Company would withdraw its claims in the bankruptcy cases upon receipt of the license with NYG.

On June 12, 2014, the Company entered into an agreement to enter into a multi-year license agreement for the CAPSA platform with NYG. This license, which is effective October 20, 2014, grants latitude to the Company to make modifications and further enhancements to the platform, which will be marketed as the Universal Mobile Interface. We intend to initially introduce the UMI platform into the market utilizing branded partnership relationships in the mobile sports betting and casino gaming verticals. The multi-year license agreement is for five years and is thereafter renewable annually. The Company is responsible to pay royalties fees of 10% of net revenues plus $100,000 annually. However, the first 18 months of the agreement will be royalty free and the first three years of annual payments waived.

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 was for three months with various options to extend through July 2015 if desired.

8.	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 186,000,000 shares of common stock under convertible notes, warrants and stock options became due as of June 30, 2015, 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 September 30, 2014, the Company has 100,000,000 preferred shares authorized, having a par value of $.001 per share.

Of the preferred shares authorized, 5,000,000 have been designated as Series A preferred shares and 15,000,000 have been designated as Series B preferred shares. 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 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.

Common Stock

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. The Company does 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 in the near future 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.

Warrants

There were no warrants issued to purchase common stock during the three months ended September 30, 2014. As of September 30, 2014, there were warrants exercisable for 3,172,184 shares of common stock.

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.

At September 30, 2014, there is approximately $2,917 of unrecognized expense associated with the issuance of these stock options, which will be recognized during fiscal 2015.

Stock option expense related to these options was approximately $4,375 during the quarter ended September 30, 2014 and 2013. Stock option expense for all stock options during the quarters ended September 30, 2014 and 2013 was approximately $4,875 and $16,875, respectively.

As of September 30, 2014, 20,000,000 options were outstanding with 19,375,000 exercisable.

9.	Subsequent Events

From October 1, 2014 until November 12, 2014 the Company received an advance from the CEO of the Company in the amount of $186,000.

On October 20, 2014, the Company executed an agreement to enter into a multi-year license agreement for the CAPSA platform with NYG. This license grants latitude to the Company to make modifications and further enhancements to the platform, which will be marketed as the Universal Mobile Interface.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

We have continued to incur losses for the periods presented. 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.

We have significant liabilities which we acquired through the acquisition of MEXI and through the development of our business and the raising of working capital through loans and notes. We intend to work through reducing or eliminating our liabilities, and to continue to raise additional working capital to meet the demands of the Company’s new product offerings.

The Company’s 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 for the quarters presented are reflective of an early stage company that has pilot projects only in place but no active programs. Results for the periods presented have been impacted by the limited financial resources available.

See “Forward Looking Statements” on the first page of this Report.

LIQUIDITY AND CAPITAL RESOURCES

We had $60,636 in cash at September 30, 2014. Our working capital deficit amounted to approximately $11.8 million at September 30, 2014.

During the three-month period ended September 30, 2014, we used cash in our operating activities amounting to approximately $352,000. Our cash used in operating activities was comprised of our net loss from continuing operations of approximately $882,000 adjusted accrued interest of approximately $270,000 and other accounts payable and accrued liabilities of approximately $252,000.

The Company did not use or were provided cash from investing activities.

The Company had positive cash of approximately $367,000 from financing activities, all of which related to proceeds from stockholder advances.

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

Going Concern

We have suffered losses since inception, and at September 30, 2014, we have a working capital deficit of approximately $11.8 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

We have secured net working capital of approximately $367,000 during the three months ended September 30, 2014. We require additional equity or debt financing to meet our obligations as they become due. In the event that such financing is not secured, the Company will not be able to satisfy its liabilities. Furthermore, certain debt is past due and is secured by all assets of the Company. We are attempting to restructure some of the debt and secure additional financing to satisfy our existing obligations and provide for sufficient working capital to meet the Company’s future obligations but there are no guarantees that we will be able to do so.

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. 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.

Results of Operations

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses primarily consist of salaries and wages for our employees, including stock based compensation, along with professional fees and service fees in connection with maintaining our status as a public company.

The increase in our selling, general, and administrative expenses during the three-month period ended September 30, 2014 when compared with the prior period is primarily attributable to a minimal increase in an employee’s wages of approximately $15,000 and additional travel of $15,000. In addition, stock compensation was reduced by $60,000 offset by additional legal expense of $50,000.

Interest Expense

Interest consists of interest payable at stated rates on interest bearing indebtedness.

The decrease in interest expense during the three month period ended September 30, 2014 when compared with the prior period is primarily due to the absence of initial flat fee interest charged which were present in the quarter ending September 30, 2013 for a certain note holder.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act ) that are designed to ensure that information required to be disclosed in the Company's periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

Evaluation of Disclosure Controls and Procedures.

As of September 30, 2014, 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 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 September 30, 2014.

Management's Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of September 30, 2014. We identified the following material weaknesses in our internal control over financial reporting:

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.

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 as a result of the enactment of the Dodd-Frank Act of 2010.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last quarter (our fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 7 – Other Matters.

Item 1A. Risk Factors.

See the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

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

During the three months ended September 30, 2014, the Company had no capital stock transactions.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosure

Not Applicable

Item 5. Other Information.

None.

Item 6. Exhibits.

See list below.

SIGNATURES

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

	CONSORTEUM HOLDINGS, INC.

Dated: November 14, 2014	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.

Name	Position	Date

/s/Craig A. Fielding	Chief Executive Officer and Chief	November 14, 2014
Craig A. Fielding	Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

/s/Patrick Shuster	Director	November 14, 2014
Patrick Shuster

EXHIBIT LIST

Exhibit No.	Description
10.26	Capsa Platform License Agreement, dated October 20, 2014
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Temporary Hardship Exemption.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Label Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document

* Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Quarterly Report on Form 10-Q.

Exhibit 10.26

CAPSA PLATFORM LICENSE AGREEMENT

THIS CAPSA PLATFORM LICENSE AGREEMENT (this “Agreement”) is made and entered as of October 20, 2014 (the “ Effective Date ”) by and between NYG Holdings, LLC, (“ NYGH ”), and Consorteum Holdings, Inc. (“ CSRH ”) (each of NYGH and CSRH, a “ Party ”, and together, the “ Parties ”).

R E C I T A L S

Whereas , NYGH is the owner of the CAPSA Platform, including all software and the Intellectual Property Rights therein;

Whereas , CSRH desires to receive a license to the CAPSA Platform as set forth herein; and

Whereas , NYGH is willing to grant such a license on the terms and conditions set forth herein.

Now, Therefore , in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1
LICENSE AND RESTRICTIONS

Section 1.1 License Grant . Simultaneously with the execution of this Agreement, NYGH shall deliver to CSRH a copy of the CAPSA Platform, and a production instance (the “Instance”) thereof. Subject to CSRH’s compliance with the terms and conditions of this Agreement, NYGH hereby grants to CSRH a nonexclusive, non-transferable (except as set forth in Section 7.10), perpetual (subject to the termination of this Agreement as set forth herein), royalty-bearing license (a) to use, copy, modify, distribute, disclose, make Derivative Works of, display or perform the CAPSA Platform, and the Instance thereof, and (b) to sublicense (with NYGH’s prior written approval, not to be unreasonably withheld or delayed) to Approved Sublicensees the foregoing right to use the CAPSA Platform pursuant to Sublicense Agreements. CSRH shall have the right to run one production instance of the CAPSA Platform immediately following the execution of this Agreement, and additional instances for testing, disaster recovery or backup purposes as reasonably necessary. This Agreement shall remain in effect for five (5) years from the Effective Date; renewable for an unlimited number of additional one (1) year terms, upon the parties mutual agreement.

Section 1.2 Restrictions .

(a) Except as otherwise expressly permitted by this Agreement, CSRH shall not: (i) modify, distribute, disclose, display or perform the CAPSA Platform; (ii) sublicense, rent, lease, loan, timeshare, sell, disclose, publish, assign or transfer any rights in, grant a security interest in, or transfer possession of, the CAPSA Platform; (iii) distribute or otherwise use the CAPSA Platform in any manner that causes it or any portion thereof to become subject to the terms of a Copyleft License; or (iv) attempt or do any of the following: disassemble, decompile, otherwise derive source code from or reverse engineer the CAPSA Platform.

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(b) CSRH shall inform all of its employees who have access to the CAPSA Platform of the restrictions set forth in this Agreement with respect to use and disclosure of the CAPSA Platform.

Section 1.3 Ownership and Transfer . Subject only to the limited license expressly granted herein and the provisions of Section 1.4 as to CSRH Derivative Works, as between NYGH and CSRH, NYGH shall exclusively own all Intellectual Property Rights in and to the CAPSA Platform. Any sale or transfer of the CAPSA Platform by NYGH shall include a transfer of this Agreement. All rights in and to the CAPSA Platform not expressly licensed to CSRH hereunder are hereby reserved for NYGH. CSRH shall reasonably cooperate with NYGH in NYGH’s efforts to maintain, expand and enforce their respective rights in the CAPSA Platform and the Intellectual Property Rights therein. CSRH will not on its behalf or on behalf of any other party, in any country or jurisdiction, register or attempt to register any of the Intellectual Property Rights with respect to the CAPSA Platform, or any element thereof. CSRH will not do or permit to be done or assist any third party in taking any action which will in any way impair NYGH’s rights in and to the CAPSA Platform or any of the Intellectual Property Rights therein. CSRH will not contest or assist any other party in contesting the validity of NYGH’s ownership of the CAPSA Platform or any of the Intellectual Property Rights therein.

Section 1.4 Derivative Works . Notwithstanding any other provision of this Agreement to the contrary, CSRH shall own all right, title and interest in and to any enhancements, modifications or Derivative Works of the CAPSA Platform or any other updates, upgrades, modifications, new versions, improvements or derivative works with respect to any of the CAPSA Platform or any element thereof it creates or causes to be created (collectively the “ CSRH Derivative Works ”), and NYGH hereby waives any claim or right of ownership in and to the CSRH Derivative Works. Notwithstanding the forgoing, CSRH hereby grants to NYGH a perpetual, irrevocable, transferable, sublicenseable, worldwide, non-exclusive, royalty free license to use the CSRH Derivative Works during the term of this Agreement. In the event that CSRH undertakes or causes to be undertaken any CSRH Derivative Works, CSRH shall provide written notice thereof together with full disclosure of all of same to NYGH, including any know-how or proprietary information needed to implement and use same. All Derivative Works shall be subject to the royalty payment obligations hereunder.

Section 1.5 Warranty Disclaimer . THE CAPSA PLATFORM IS LICENSED “AS-IS”, WITH ALL FAULTS, AND WITHOUT ANY WARRANTY WHATSOEVER. THE CSRH DERIVATIVE WORKS ARE LICENSED “AS-IS”, WITH ALL FAULTS, AND WITHOUT ANY WARRANTY WHATSOEVER. EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED, AND STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.

Section 1.6 Representations and Warranties . CSRH represents and warrants to NYGH that:

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A. CSRH has full power and authority to execute and deliver this Agreement and to perform CSRH’s obligations hereunder;

B. this Agreement constitutes a legal, valid and binding obligation of CSRH, enforceable against CSRH in accordance with its terms; and

C. CSRH possesses all necessary permits, licenses, consents and any other legal and/or regulatory approvals and is and shall at all times while this Agreement is in effect remain in compliance with all applicable legal and regulatory requirements necessary in order for CSRH to perform its obligations hereunder.

NYGH represents and warrants to CSRH that this Agreement constitutes a legal, valid and binding obligation of NYGH, enforceable against NYGH in accordance with its terms.

Section 1.7 Limitation of Liability . NEITHER PARTY NOR AFFILIATE OF A PARTY SHALL BE LIABLE FOR ANY DIRECT, ACTUAL, COMPENSATORY, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR LOST PROFITS, FORESEEABLE OR UNFORSEEABLE, OF ANY KIND (INCLUDING, WITHOUT LIMITATION, LOSS OF BUSINESS OPPORTUNITIES, LOSS OF GOODWILL, LOST OR DAMAGED DATA OR SOFWARE, LOSS OF USE OF PRODUCTS, DOWNTIME, PERSONAL INJURY, PROPERTY DAMAGE OR LIABILITY OF ANY KIND RELATING TO INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS) ARISING FROM THE USE OF THE CAPSA PLATFORM OR OTHERWISE RELATING TO OR ARISING FROM THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In the event that the use of the CAPSA Platform by CSRH is enjoined, or, in NYGH’s judgment, may be enjoined, NYGH may, at its sole option and expense, a) procure for CSRH the right to continue using the CAPSA platform as provided hereunder; b) modify the CAPSA Platform so that it is lo longer infringing; or, c) replace the CAPSA Platform with one of the substantially the same functional capability. IF NYGH, in its sole discretion, determines that none of the foregoing is commercially reasonable, NYGH shall have the right to terminate this Agreement and require the discontinuation of use of the CAPSA Platform. CSRH shall, upon notification from NYGH or a court of competent jurisdiction, immediately return or, at NYGH’s election, destroy, CSRH’s copies of tangible embodiments thereof and remove electronic versions there of from its compute systems and other electronic devices, and cease all use, licensing or other commercialization of the CAPSA Platform, without any claim or liability against NYGH for loss of use or otherwise, and CRSH’s rights under this Agreement shall immediately terminate. NYGH shall have no obligation to provide a noninfringing modification of the CAPSA Platform, or procure a license for CSRH to be able to continue using the CAPSA Platform, or otherwise take any action in the event of such an injunction or potential injunction, nor is CSRH authorized to attempt to make or cause to be made any such modification or to procure or cause to be procured any such license. IN NO EVENT SHALL NYGH’S OR ANY OF ITS AFFILIATES’ TOTAL AGREEMENT LIABILITY TO CSRH OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM WHETHER IN CONTRACT ORE TORT OR OTHERWISE) RELATING TO OR ARISING FROM USE OF THE CAPSA PLATFORM, OR THIS AGREEMENT OR THE RIGHTS GRANTED HEREUNDER EXCEED THE PAYMENTS MADE BY CSRS TO NYGH DURING THE MONTH PRECEDING THE ASSERTION OF ANY SUCH CLAIM. CSRS ACKNOWLEDGES AND AGREES THAT THE FOREGOING LIMITATIONS ARE A MATERIAL INDUCEMENT FOR NYGH TO ENTER INTO THIS AGREEMENT AND GRANT THE RIGHTS TO CSRS HEREUNDER.

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Section 1.8 Indemnification . CSRH shall indemnify, defend and hold NYGH, its affiliates, and each of their respective officers, directors, employees, shareholders and other representatives, and each of their successors and assigns (each, “ NYGH Indemnified Party ” and collectively, the “ NYGH Indemnified Parties ”), from and against any claim, loss, damages, expense, obligation, or other liability of any kind (including, without limitation, attorney’s fees, court costs and other legal expenses), incurred by any of them arising or resulting any breach by CSRH of any of the terms and conditions of this Agreement or otherwise relating to the use of the CAPSA Platform or any act or omission by CSRH or its affiliates or sublicensees. In the event of any claim for which any such Indemnified Party is or may be entitled to indemnification from CSRH hereunder, such Indemnified Parties will notify CSRH of such claim, and such Indemnified parties will have the right to require that CSRH will tender to the Indemnified parties (and/or their respective insures) full authority to defend or settle any such claim and CSRH shall cooperate in the defense of such claim. If any of the indemnified Parties elect to require CSRH to defend any such claim, CSRH shall defend such Indemnified Parties with respect to such claim utilizing legal counsel subject to the prior written approval of each such Indemnified Party at CSRH’s own expense, and such Indemnified parties shall continue to have the right at any time to defend themselves with respect to any such claim with counsel of their own choosing, but an CSRH’s sole cost and expense. CSRH acknowledges that none of the Indemnified Parties shall have any obligation whatsoever to indemnify, defend or hold CDRH harmless form or against any claim,loss, expense, damages, obligation or liability of any kind relating to this Agreement or CSRH’s use of the CAPSA Platform.

ARTICLE 2
ROYALTIES

Section 2.1 Payment and Timing . Commencing on the third anniversary of the Effective Date and within sixty (60) days of the last day of each calendar year during the remaining term of this Agreement, CSRH shall pay to NYGH an annual payment of One Hundred Thousand Dollars ($100,000.00).

Section 2.2 Royalty Payment . Commencing eighteen (18) months from the Effective Date and within sixty (60) days of the last day of each calendar quarter during the remaining term of this Agreement, CSRH shall pay to NYGH a royalty payment of the Royalty Percentage on the CAPSA Revenue within such calendar quarter according to the royalty rate schedule set forth in Section 2.3 below.

Section 2.3 Royalty Rate . The “Royalty Percentage,” with respect to CAPSA Revenue received in a particular calendar year, means:

(a) Ten percent (10%), if such CAPSA Revenue totals US$500,000 or less for such calendar year;

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(b) Seven and one-half (7.5%), if such CAPSA Revenue totals more than US$500,000 and is US$1,000,000 or less for such calendar year; and

Section 2.4 Reporting. Within sixty (60) days of the last day of each calendar year during the term of this Agreement, CSRH shall deliver to NYGH a written report, in such format as may be reasonably requested by NYGH, setting forth all CAPSA Revenue received by CSRH during such calendar year.

Section 2.5 Audit. NYGH may, at reasonable times but not more than once per calendar year and on reasonable notice to CSRH, audit, directly or via a reasonably selected third-party auditor, books, records, equipment and facilities of CSRH to verify CSRH’s compliance with the terms hereof. The cost of such audit shall be borne by NYGH, except if such audit reveals an underpayment hereunder of more than 10% for any audited period, in which case CSRH shall reimburse NYGH on demand for all actual and reasonable expenses incurred in connection with such audit.

Section 2.6 Interest . Interest shall accrue on all amolunts not paid to NYGH when due hereunder at the lesser of 1% per month or the highest legal rate. CSRH shall pay all such interest to NYGH on demand.

ARTICLE 3
MARKING AND OTHER REQUIREMENTS

Section 3.1 Confidentiality . CSRH shall mark the Instance of the CAPSA Platform and all copies thereof “Confidential.”

Section 3.2 Notices . CSRH shall ensure that all copies of all portions of the CAPSA Platform are marked as reasonably requested by NYGH.

Section 3.3 Re-Branding . CSRH may combine the CAPSA Platform with other Technology and market such combination under the ThreeFiftyNine brand name or any other name or brand upon mutual agreement of the Parties.

Section 3.4 Leads. CSRH will submit a list of current leads for sublicensees of the CAPSA Platform that, with the consent of NYGH (which consent may be held in NYGH’s sole discretion), CSRH will have the exclusive right to close within two (2) years of the Effective Date; provided, however, that royalties shall be payable to NYGH on the total aggregate revenues received from any such combinations. NYGH shall maintain the confidentiality of such leads to the extent the same (a) were not already known to NYGH or its affiliates prior to CSRH submitting them, or (b) do not become available to NYGH from a source that is not subject to an existing confidentiality obligation owed to CSRH.

3.5 P ayment Processing . At all times during the Term of this Agreement and the term of any Sublicense Agreement, CSRH agrees that in connection with any use of the CAPSA Platform pursuant to this Agreement and any Sublicense Agreement, it will use, and will cause any sublicensee to use, the payment processing services of NYGH and/or its designee in connection with such use of the CAPSA Platform.

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ARTICLE 4
CONFIDENTIALITY

Section 4.1 Obligation . CSRH shall treat as confidential the Confidential Information and shall not use such Confidential Information except as expressly permitted under this Agreement. CSRH shall not disclose the Confidential Information to any third party. Without limiting the foregoing, CSRH shall use at least the same degree of care which it uses to prevent the disclosure of its own most highly confidential information, but in no event with less than reasonable care, to prevent the disclosure of the Confidential Information.

Section 4.2 Compelled Disclosure . If the Confidential Information must be disclosed by CSRH pursuant to the order or requirement of a court, administrative agency, or other governmental body and, to the extent permitted by applicable law, CSRH shall provide prompt notice thereof to NYGH.

Section 4.3 Remedies . Unauthorized use or disclosure by CSRH of the Confidential Information will diminish the value of such information. Therefore, if CSRH breaches any of its obligations with respect to confidentiality or use of Confidential Information hereunder, NYGH shall be entitled to seek equitable relief to protect its interest therein, including but not limited to injunctive relief, as well as money damages.

ARTICLE 5
INTENTIONALLY OMITTED

ARTICLE 6
TERM AND TERMINATION

Section 6.1 Term. This Agreement shall commence on the Effective Date and continue until terminated in accordance herewith.

Section 6.2 Termination for Payment Breach. NYGH may terminate this Agreement upon CSRH’s breach of any payment obligation hereunder by providing written notice thereof to CSRH, provided that (a) in connection with the first such breach, CSRH shall have a ninety (90) day period to cure such breach following NYGH’s delivery of written notice of such breach to CSRH and (b) in connection with the second and subsequent such breaches, CSRH shall have a thirty (30) day period to cure such breach following NYGH’s delivery of written notice of such breach to CSRH.

Section 6.3 Termination for other Breach. NYGH may terminate this Agreement upon CSRH’s breach of any provision other than a payment obligation hereunder by providing written notice thereof to CSRH, provided that (a) in connection with the first such breach, CSRH shall have a sixty (60) day period to cure such breach following NYGH’s delivery of written notice of such breach to CSRH and (b) in connection with the second and subsequent such breaches of the same provision or a similar type of provision, CSRH shall have a thirty (30) day period to cure such breach following NYGH’s delivery of written notice of such breach to CSRH.

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Section 6.4 Alternative Cure . At any time that the equity of CSRH is publicly traded on a nationally recognized stock exchange in the United States, CSRH may, at its option, as an alternative to payment in United States dollars, cure the breach of any payment obligation hereunder, up to an aggregate maximum of US$25,000, by paying NYGH an equivalent value of immediately tradable (without regard to Rule 144) securities representing such equity.

Section 6.5 Other Grounds for Termination . NYGH may terminate this Agreement immediately upon providing written notice thereof to CSRH if any of the following occur:

A. If there is any attempted assignment by CSRH in violation of Section 7.10 of this Agreement or sublicensing by CSRH in violation of Section 1.1 of this Agreement, or any of the rights granted hereunder to CSRH become the subject of a third party claim not expressly permitted hereunder;

B. if CSRH commences a voluntary case or other proceeding, or if any involuntary case or other proceeding is commenced against CSRH, seeking liquidation, rehabilitation, reorganization, conservatorship or other relief with respect to CSRH or CSRH’s assets under any bankruptcy, insolvency or other similar law, or seeking the appointment of a trustee, receiver or other similar official with respect to CSRH or any substantial part of CSRH’s property which is not dismissed within sixty (60) days of initiation; or

C. if CSRH becomes a defendant or counter defendant in a legal proceeding in which a third party seeks possession, use or ownership of any rights of CSRH under this Agreement, regardless of the type of claim asserted in such legal proceeding or the merits of such claim; or

D. If CSRH exceeds the scope of the license granted hereunder without prior written consent of NYGH on two (2) or more occasions.

Section 6.6 Intentionally Omitted .

Section 6.7 Effect of Termination . Upon any termination of this Agreement, all rights and licenses granted to CSRH hereunder shall immediately terminate and CSRH shall: (i) not use, sublicense or disclose the CAPSA Platform for any purpose whatsoever; (ii) immediately destroy or return to NYGH all material belonging to NYGH, including without limitation all copies of the CAPSA Platform then in CSRH’s possession; and (iii) promptly certify to NYGH that CSRH has done so. These remedies shall be cumulative and in addition to any other remedies available to NYGH. Upon any termination of this Agreement, any sublicensee of CSRH may enter into a contract directly with NYGH on terms consistent with their contract with CSRH, provided the terms of such contract were previously approved by NYGH.

Section 6.8 Survival . The provisions of Article 2 (Royalties), Article 4 (Confidentiality), Article 7 (General Provisions) and Article 8 (Definitions) shall survive any termination of this Agreement.

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ARTICLE 7
GENERAL PROVISIONS

Section 7.1 Governing Law and Jurisdiction . This Agreement shall be governed by, and construed in accordance with, the Laws of the state of Nevada. In any action among or between any of the Parties arising out of or relating to this Agreement, including any action seeking equitable relief, each of the Parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state courts located in Clark County, Nevada, and the federal courts for the United States for the Southern District of Nevada. The Parties hereby disclaim and exclude the application hereto of the United Nations Convention on Contracts for the International Sale of Goods.

Section 7.2 Compliance with Applicable Laws . In the exercise of their respective rights, and the performance of their respective obligations under this Agreement, each Party shall strictly comply with all applicable Laws.

Section 7.3 Breach . Each Party shall indemnify and hold the other Party harmless from and against any loss, cost, damage, liability or expense (including reasonable attorneys’ fees) arising out of or in connection with any claim by a third party directly resulting from a breach of this Agreement by the other Party.

Section 7.4 Parties in Interest . This Agreement shall be binding on and inure solely to the benefit of the Parties and their respective successors, heirs, legal representatives and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.5 Amendments . This Agreement may be amended, modified or supplemented at any time, but only pursuant to an instrument in writing signed by each of the Parties hereto.

Section 7.6 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties to the fullest extent possible.

Section 7.7 No Waiver . No waiver of any term or condition of this Agreement will be valid or binding on any Party unless the same will have been mutually assented to in writing by an officer of each Party. The failure of a Party to enforce at any time any of the provisions of this Agreement, or the failure to require at any time performance by another Party of any of the provisions of this Agreement, will in no way be construed to be a present or future waiver of such provisions, nor in any way affect the ability of a Party to enforce each and every such provision thereafter.

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Section 7.8 Construction . The headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant.

Section 7.9 Entire Agreement . This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof.

Section 7.10 Assignment . Neither this Agreement nor any right or obligation hereunder may be assigned by CSRH, by operation of law or otherwise with the prior written consent of NYGH, which consent shall not be unreasonably withheld or delayed; provided, however, CSRH may assign this Agreement upon a merger, acquisition or sale of substantially all of its assets without such consent. Any purported assignment in breach of the foregoing prohibition shall be void and of no force or effect. NYGH may assign this Agreement in its sole discretion.

Section 7.11 Notices . Any notice, request or demand desired or required to be given hereunder shall be in writing and shall be given by personal delivery, confirmed facsimile transmission or overnight courier service, in each case addressed as respectively set forth below or to such other address as any Party shall have previously designated by such a notice. The effective date of any notice, request or demand shall be the date of personal delivery, the date on which successful facsimile transmission is confirmed or one business day after it is delivered to a reputable overnight courier service, as the case may be, in each case properly addressed as provided herein and with all charges prepaid.

TO NYGH:

NYG Holdings, LLC

16 E. Patrick St., Ste 300

Frederick, MD 21701

Fax: 301-662-9215

Attention: Chris Cocolini

TO CSRH:

Consorteum Holdings, Inc.

916 Southwood Blvd., Building 3, Suite A

Incline Village, NV 89451

Fax: 404.745.0714

Attention: Chief Operating Officer

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with a copy (which shall not constitute notice) to:

Greenberg Traurig, P.A.

401 East Las Olas Boulevard, Suite 2000

Fort Lauderdale, FL 33301

Fax: 954.759.5565

Attention: David C. Peck, Esq.

with a copy (which shall not constitute notice) to:

Schnader Harrison Segal ~~and~~ & Lewis LLP

140 Broadway, Suite 3100

New York, NY 10005-1101

Fax: 212.972.8798

Attention: Sarah Hewitt, Esq.

Section 7.12 Specific Performance . Each Party acknowledges and agrees that the other Party would be damaged irreparably if any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached. Accordingly, each Party agrees that the other Party shall be entitled to seek an injunction to prevent breaches of any provision of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof, without requirement of bond, in addition to any other remedy available at law or in equity.

Section 7.13 Counterparts . This Agreement may be executed and delivered in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same agreement.

Section 7.14 Section 365(n). All rights and licenses granted under or pursuant to this Agreement by NYGH to CSRH are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Code”), licenses to rights to “intellectual property” as defined in the Code. CSRH, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Code. In the event of the commencement of bankruptcy proceeding by or against NYGH under the Code, CSRH shall be entitled to retain all of its rights under the licenses granted hereunder.

ARTICLE 8
DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below:

“ affiliate ” means any person or entity directly or indirectly controlling or having the power to control, or controlled by or being under common control with another person or entity. For this purpose, “control” means the direct or indirect possession of power to direct or cause the direction of the management or policies of such party, whether through ownership or stock or other securities, by contract or otherwise. Ownership of more than fifty percent (50%) of the beneficial interest of an entity shall be conclusive evidence that control exists.

“ Approved Sublicensee ” means (i) ThreeFiftyNine Hong Kong (or other name), CSRH’s Hong Kong joint venture, and (ii) such other companies as may be agreed upon in writing by the Parties including pursuant to Section 3.4.

“ CAPSA Platform ” means the executable object code only of the software listed on Exhibit A attached hereto, including all portions and versions thereof.

“ CAPSA Revenue ” means all amounts received (gross amounts and not net, by way of example only, of any expenses of CSRH) in connection with (i) the use of the CAPSA Platform or any portion thereof (including any Derivative Works thereof), including the performance of services, directly or indirectly, involving the use, execution, operation, performance or virtualization of the CAPSA Platform or any portion thereof, (ii) the license, distribution, or other provision of the CAPSA Platform or any portion thereof, including pursuant to any Sublicense Agreement or (iii) the performance, directly or indirectly, of installation services, implementation services, software maintenance services, technical support services or other services with respect to the CAPSA Platform or any portion thereof.

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“ Confidential Information ” means the features, functionality and operational details of the CAPSA Platform, any Source Code of the CAPSA Platform that may come into CSRH’s possession and any documentation of the CAPSA Platform unpublished as of the Effective Date.

“ Copyleft License ” means any license that requires, as a condition of use, modification or distribution of software or content made available under such license, that such software or content, or other software or content incorporated into, derived from, used, or distributed with such software or content: (i) be made available to any third party recipient in a form other than object code form, (ii) be made available to any third party recipient under terms that allow preparation of derivative works, or (iii) be made available to any third party recipient under terms that allow software or interfaces therefor to be reverse engineered, reverse assembled or disassembled (other than to the extent any contrary restriction would be unenforceable under law). Copyleft licenses include without limitation the GNU General Public License, the GNU Lesser General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License, and all Creative Commons “sharealike” licenses.

“ Derivative Work ” has the meaning set forth in 17 U.S.C. 101.

“ Governmental Body ” means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

“ Intellectual Property Rights ” means all current and future worldwide common law and statutory rights, whether arising under the Laws of the United States of America or any other Governmental Authority, in, to, or associated with (a) patents, patent applications, and invention disclosures; (b) copyrights, copyright registrations and applications therefor, moral rights, and mask work rights; (c) the protection of trade or industrial secrets or confidential information; (d) all other intellectual property rights and proprietary rights; (e) trademarks, service marks, and other designations of source or origin, along with goodwill appurtenant thereto (collectively, “Trademarks”); (f) any analogous rights to those set forth above; (g) divisions, continuations, renewals, reissuances, and extensions of the foregoing (as applicable); and (h) rights to apply for, file for, certify, register, record, or perfect any of the foregoing.

“ Law ” means any law, statute, ordinance, code, regulation, rule, other requirement, orders, decisions, judgments, writs, injunctions, decrees, awards or other determination of any Governmental Body.

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“ Person ” means any individual, corporation, partnership, trust, joint venture, limited liability company, association, organization, other entity or Governmental Body or regulatory authority.

“ Source Code ” means computer programming code in human readable form that is not suitable for machine execution without the intervening steps of interpretation or compilation.

“ Sublicense Agreement ” means a valid and enforceable written agreement (i) pursuant to which CSRH sublicenses to an Approved Sublicensee the right to use the CAPSA Platform in object code form only, (ii) that contains terms and conditions not less protective of the CAPSA Platform and NYGH’s rights therein than the terms and conditions of this Agreement, and (iii) that is approved by NYGH in writing, such approval not to be unreasonably withheld or delayed.

“ Technology ” means all products, tools, devices, mask works, computer programs, software, source code, object code, development tools, techniques, concepts, know-how, algorithms, methods, processes, procedures, formulae, designs, drawings, customer lists, supplier lists, databases, data collections, information, specifications, brands, logos, user interfaces, websites, specifications, programmer notes, specifications, packaging, trade dress, content, graphics, artwork, audiovisual works, images, photographs, literary works, performances, music, sounds, content, user interfaces, “look and feel,” inventions (whether or not patentable), invention disclosures, discoveries, works of authorship (whether or not copyrightable), designs and other technology.

[ Signature page follows .]

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IN WITNESS WHEREOF , the Parties have entered into and signed this Agreement as of the date and year first above written.

		NYG Holdings, LLC By: /s/Chris Cicolino Name: Chris Cicolino Its: Managing Director


		Consorteum Holdings, Inc.

		By: /s/ Craig A. Fielding
		Name: Craig A. Fielding
		Its: CEO

[SIGNATURE PAGE TO AGREEMENT]

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Exhibit A

SOFTWARE

Elements provided by the CAPSA Platform:

Cloud setup and Configuration

Application setup

Carrier Messaging Interfaces

Brand Management

Transport Layer Control

Load testing scripts and accounts

Multi-language support

Black and white list OS authentication database

Supported Carriers and Device database

Element Descriptions:

The Capsa platform is an architecture allowing for a single application to be deployed and run on multiple devices regardless of limiting factors such as operating systems, screen resolutions, development languages, distribution methods, etc. In order to accomplish this, the platform was broken down into two key components: the Capsa Viewer and the Brand Application. The Capsa Viewer is installed directly on each device, while the Brand Application is housed completely server side and is delivered to the device at run-time and displayed via the Capsa Viewer.

The Capsa viewer, in its most basic terms, is a custom designed mobile browser. Nearly every device on the market has differing levels of functionality and compatibility due to unique operating systems, web browsers, development platforms, and hardware limitations. In order to combat these issues, the Capsa platform must level the playing field across all of these devices, which is exactly what the Capsa Viewer does. The Capsa Viewer itself is built natively for each group of commonalities between phones, be that operating system, or development platform, with a specific set of functionality that is common for all instances. This means that a version of the Capsa Viewer that is built for Java based phones will have the exact same capabilities as a version that is built for BREW based phones. Leveling the playing field in this way allows Tarsin to build Brand Applications that can be designed to the capabilities of the Capsa viewer, which is common to all platforms, instead of designing applications around the key constraints of each device.

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The Capsa Viewer has been built to function using a wide range of standard web based technologies including JavaScript, HTML, XHTML, CSS, etc. This provides a broad range of design possibilities for Brand Applications as most anything that can be designed for web usage can also be designed easily for mobile as well.

One of the major benefits of building our platform based on the Capsa Viewer is that the only piece of the overall application that is actually installed onto a device is the Viewer itself. The Brand Application as a whole is housed completely on a server, which is delivered at run-time. This provides two important value-adds for the customer. First, the installed application on device is very small, since it does not contain any of the content that is brand specific. This means that the installed application can be delivered very quickly as well as run on devices with low memory capabilities that would generally otherwise not be able to run very robust applications. The second major benefit is that since the brand application is being delivered at run-time, changes can be made to the brand application itself without the need for any interaction from the user. The current process for making changes to an installed application vary by device and carrier, but generally require that the application be verified by an external QA team which can add a considerable amount of time and cost to the process, and once approved, the user must find and download the updated application themselves. Since Capsa delivers the content of the brand application at run-time via server architecture, any changes that need to be made to the brand application can be made directly on the server and are immediately available to the end user, completely bypassing any carrier or user interaction.

Web services allow the developer of the solution to integrate external systems to the Capsa platform. This allows integration for the management of account access, information or services.

Within most applications, some form of real time information is needed, either as part of the content interface, or as part of the feedback to the system. These external data feeds are managed through a series of Web services that can be developed as part of the mobile client or as part of a Web solution

The Capsa platform supports over 30 languages in over 120 countries, allowing offerings to be scaled and released on a global basis. A simple example would be the release of a service in the US where both English and Spanish are needed. In this case, the Web and Mobile clients could dynamically support both languages for the service.

Cloud Architectures are designs of software applications that use Internet-accessible on-demand services. Applications built on Cloud Architectures are built so that the underlying computing infrastructure is used only when it is needed, draw the necessary resources on-demand, perform a specific job, then relinquish the unneeded resources and often dispose them after the job is done. While in operation the application scales up or down elastically based on resource needs.

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Cloud Architectures address key difficulties surrounding large-scale data processing:

In traditional data processing it is difficult to get as many machines as an application needs.

It is difficult to get the machines when one needs them.

It is difficult to distribute and co-ordinate a large-scale job on different machines, run processes on them, and provision another machine to recover if one machine fails.

It is difficult to auto-scale up and down based on dynamic workloads.

It is difficult to get rid of all those machines when the job is done.

Cloud Architectures solve these difficulties as well as providing some clear business benefits such as:

Almost zero upfront infrastructure investment

The ability to scale in real-time

More efficient resource utilization

Usage-based costing

Potential for the shrinking of required processing time

Because of its underlying architecture, the Capsa Platform is built to work with any carrier across the globe. We currently have customers using our application on all of the major US carriers and many worldwide.

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SUPPORTED CARRIERS

Supported Carriers include:
AT&T	Orange
T Mobile	O2
Sprint	Vodafone
Nextel	3
Verizon	Virgin Mobile
Altell	Rogers Wireless
Metro PCS	Bell Mobility

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SUPPORTED DEVICES

In order to reach the largest possible audience, the Capsa Platform supports an incredible number of phones that range from smart phones to the more basic feature phones offered by carriers. This list continues to grow as new phones are being released on a daily basis. The following list shows a quick snapshot of some of the devices that the Capsa Platform already supports in the US:

Apple	Nokia	Samsung	Rim/Blackberry
iPhone (all models)	E73	Behold	8100
	6085	Comeback	8820
Motorola	N95	SCH-U900 FlipShot	8320
Z6c	6555	SCH-U470 Juke	Bold 9000
V3xx	6650	SCH-U350 Smooth	8130
Motorola Razr 2 V9	N96	SCH-U750 Alias 2	8330
Motorola Rizr Z9	E71	SCH-U540	Pearl Flip 8220
MOTOZINE ZN5	E71x	SGH-T659	8310
Motorola Razr 2 V9x	6790S	SCH-U620	8800
QA1	E75	A767	8830
VA76R TUNDRA	E63	Eternity	8703e
Motorola Rizr Z9	5800 XpressMusic	SGH-A637	8900
W755	N79	SGH-A827	8300
W766	E66	SGH-A837	8110
Barrage	6220 Classic	SLM-A747	9630
	6210 Navigator	SGH-A877 Impression	8120
Sony	N78	SGH-A777	Curve
W350	X6	Lumina	8230 Pearl Flip
W580i	E72	A900	Storm 2 9520
C905	E52 US	A920	8130m
Tm506	E55	M500	8830m
W810i	6730 Classic	M610	8330m
W760a	5730 XpressMusic	SGH-A657 (Bound)	Storm2 9550
HTC	6720 Classic	Highlight
Tilt	Nuron	Solstice	Sanyo
	5530 XpressMusic	Reclaim	SCP-2700
Pantech	N86 8MP	A517	6600 Katana
Matrix	7705 Twist	SCH-U490 Trance	M1
C610	6700 slide	SCH-U650 Sway
C820 (Matrix Pro)	N97 mini	SCH-U960 Rogue	PCD
C630	C6	SCH-U410 Triton	CDM8950
Impact	E5	Mythic	Quickfire
Reveal		SCH-U550	CDM-8975
Verizon Escapade		SGH-A687

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig A. Fielding, certify that:

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of Consorteum Holdings, Inc. (the “registrant”).

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

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

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

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

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

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

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

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

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

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

Date: November 14, 2014

/s/ Craig A. Fielding

Craig A. Fielding

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig A. Fielding, certify that:

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of Consorteum Holdings, Inc. (the “registrant”).

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

Date: November 14, 2014

/s/Craig A. Fielding

Craig A. Fielding,

Chief Financial Officer

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

and CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Consorteum Holdings, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig A. Fielding, President and Chief Executive Officer and Chief Financial Officer, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig A. Fielding

Craig A. Fielding, President and Chief Executive Officer and Chief Financial Officer

November 14, 2014

Exhibit 99.1

Temporary Hardship Exemption

IN ACCORDANCE WITH THE TEMPORARY HARDSHIP EXEMPTION PROVIDED BY RULE 201 OF REGULATION S-T, THE DATE BY WHICH THE INTERACTIVE DATA FILE IS REQUIRED TO BE SUBMITTED HAS BEEN EXTENDED BY SIX BUSINESS DAYS.