Trunity Holdings, Inc. (Form: 10-K, Received: 04/15/2014 17:09:57)

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Revenues recognized in excess of billings are recorded as Unbilled Revenue (an asset). Billings in excess of revenues recognized are recorded as Deferred Revenue (a liability) until revenue recognition criteria are met. Client prepayments are deferred and recognized over future periods as services are delivered or performed.

Cash and Cash Equivalents - Cash and cash equivalents may include highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value due to interest rate, market price, or penalty on withdrawal. Amounts on deposit and available upon demand, or negotiated to provide for daily liquidity without penalty, are classified as Cash and cash equivalents.

The Company places its cash and cash equivalents on deposit with financial institutions in the United States. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts were fully insured by the Federal Deposit Insurance Company ('FDIC'), regardless of the balance of the account, at all FDIC-insured institutions. However, this provision expired on December 31, 2012 and beginning January 1, 2013 noninterest-bearing deposits now receive the same $250,000 insurance coverage provided to a depositor's other deposit accounts held at an FDIC-insured institution.

Accounts Receivable - We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific impairment allowance reserve is established based on expected future cash flows and the financial condition of the debtor. We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. We consider any balance unpaid after the contract payment period to be past due. We believe all accounts receivable due at December 31, 2013 and 2012 to be collectible.

Property and Equipment - Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets (generally three to seven years). Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred.

Accounting for Uncertainty in Income Taxes - Income taxes are accounted for in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Under ASC 740, income taxes are recognized for the amount of taxes payable for the current year and deferred tax assets and liabilities for the future tax consequence of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes. We consider accounting for income taxes critical to our operations because management is required to make significant subjective judgments in developing our provision for income taxes, including the determination of deferred tax assets and liabilities, and any valuation allowances that may be required against deferred tax assets.

ASC 740 clarifies the accounting for uncertainty in income tax recognized in an entity’s financial statements and requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is not “more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. This interpretation also provides guidance on de-recognition, classification, accounting in interim periods, and expanded disclosure requirements.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax period from July 28, 2009 (inception) to December 31, 2013. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments are expected to be minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it would be classified in the financial statements as selling, general and administrative expense. The tax years 2010 through 2013 are subject to examination by federal and state taxing authorities.

Taxes on Revenue Producing Transactions – The Company earns revenues through various services. Service revenue is taxable in some jurisdictions throughout the United States and The Company could be responsible for collecting those taxes subject to state or local requirements. The Company is not aware of any transactions which would necessitate the fiduciary responsibility of collecting and remitting sales based taxes.

Website Development –The Company has adopted the provisions of FASB ASC Topic 350 Intangible-Goodwill and Other. Research and development costs incurred in the planning stage of a website are expensed, while development costs of the website to be sold, leased, or otherwise marketed are subject are capitalized and amortized over the estimated three year life of the asset. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred.

Derivative Financial Instruments. The Company assesses whether it has embedded derivatives in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities.” The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.

For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings in the current period. Derivatives that do not qualify as hedges must be adjusted to fair value through current income.

Comprehensive Loss - The Company has adopted ASC Topic 220, “Comprehensive Income.” This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Items included in the Company’s comprehensive loss consist of unrealized gain (losses) .

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 of mark-to-market adjustments for the Canadian debentures, affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Stockholders’ Equity - Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.

Common stock share amounts in these financial statements have been retroactively adjusted for the effects of a 1 for 3 reverse stock split that occurred in 2011, as required by ASC Topic 505-20 (see Note 9).

Common Stock Purchase of Warrants - The Company accounts for common stock purchase warrants in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model value method for valuing the impact of the expense associated with these warrants. Amortization expense for the years ended December 31, 2013 and 2012 was approximately $0 and $43,640, respectively. The Company has elected the intrinsic value method for valuing the impact of the expense associated with these warrants.

Financial Instruments and Fair Values - The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

	Level 1 — inputs include exchange quoted prices for identical instruments and are the most observable

	Level 2 — inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.

	Level 3 — inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.

The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, trade receivables and other assets approximates fair value due to the short-term maturities of these instruments. The Company does not maintain any investments at fair value.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 3 -- Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued an update to Topic 740, Income Taxes. This update requires companies to present an unrecognized tax benefit (“UTB”) as a reduction to a deferred tax asset for a net operating loss carryforward, asimilar tax loss, or a tax credit carryforward in the applicable jurisdiction, to the extent such tax attributes are available to offset the additional tax liability that would result if the UTB were disallowed on the balance sheet date. Whether the settlement by use of carryforwards is available under the law would depend on facts and circumstances available on the balance sheet date. The new guidance is effective for the Company beginning July 1, 2014, and adoption is not expected to have a material impact on the Company’s consolidated financial statements.

On July 1, 2012, the Company adopted the updated guidance to ASC Topic 220, Comprehensive Income, issued by the FASB. The update required companies to present comprehensive income in either one or two consecutive financial statements and eliminated the option that permits the presentation of other comprehensive income in the consolidated statement of shareholders’ equity. The Company adopted the method of presentation using one consecutive financial statement.

In July 2012, the FASB issued an update to ASC Topic 350, Intangibles - Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment (“ASC 350”). The update simplifies the guidance for testing impairment of indefinite-lived intangible assets other than goodwill. Examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses, and distribution rights. The amendment allows a company the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. A company electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the company determines, based on such qualitative assessment, that it is “more likely than not” that the asset is impaired. The changes to ASC 350 were effective for the Company beginning July 1, 2013, the guidance did not have a material impact on the Company’s consolidated financial statements.

In January 2013, the FASB issued another update to the guidance in ASC Topic 220. This update does not change the requirements for reporting net income or other comprehensive income in financial statements, but rather improves the transparency of reporting reclassifications out of accumulated other comprehensive income. The new guidance was effective for the Company beginning July 1, 2013, and adoption did not have a material impact on the Company’s consolidated financial statements or disclosures.

Management has evaluated all other standards issued and to be effective and has determined their impact to the financials will not be material.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 4 – Property and Equipment

A summary of property and equipment at December 31, 2013 and 2012 is as follows:

December 31,	2013			2012

Furniture and fixtures	$	18,660		$	13,402
IT Equipment and software		191,512			164,946

Total Property and Equipment		210,172			178,348

Less: Accumulated depreciation		(164,226	)		(125,621	)

Net Property and Equipment	$	45,946		$	52,727

The amounts charged to operations for depreciation for the years ended December 31, 2013 and 2012 was approximately $38,605 and $50,256, respectively.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 5 – Intangible Assets

Intangible assets were comprised of the following at December 31, 2013 from Inception:

Trunity platform	Estimated Life	Gross Cost		Accumulated Amortization			Net Book Value

Assets acquired from Trunity, LLC	3 years	$	1,775,000	$	(1,775,000	)	$	—

Internal costs capitalized for period from July 28, 2009 (inception) to December 31, 2009	3 years		121,820		(121,820	)	$	—

Internal costs capitalized for the twelve months ended December 31, 2010	3 years		342,345		(342,345	)	$	—

Internal costs capitalized for the twelve months ended December 31, 2011	3 years		327,100		(272,583	)	$	54,517

Internal costs capitalized for the twelve months ended December 31, 2012	3 years		548,031		(300,367	)	$	247,664

Internal costs capitalized for the twelve months ended December 31, 2013	3 years		519,733		(105,751	)	$	413,982

Carrying value as of Dec 31, 2013							$	716,163

Estimated future amortization expense is as follows for the following periods:

For the period ending December 31, :
2014	$	410,438
2015		238,231
2016		67,494
Total future amortization expense	$	716,163

The Trunity eLearning Platform technology was acquired from a related company, Trunity, LLC, and was valued at management’s best estimate of its value at that time of the transaction. Trunity, LLC was wholly owned by the three founders of the Company. Subsequent internal costs capitalized consist of direct labor, including taxes and benefits. Amortization of three years is based on management’s best estimate of useful life of current technology in this industry.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 6- Notes Payable

At December 31, 2013, outstanding notes payable was made up of the following:

Note Holder	Principal		Accrued Interest		Outstanding as of December 31, 2013
Notes Payable– Related Parties	$	252	$	—	$	252
Total notes payable – current liabilities					$	252

At December 31, 2012, outstanding notes payable was made up of the following:

Note Holder	Principal		Accrued Interest		Outstanding as of December 31, 2012
Notes Payable– Related Parties	$	53,977	$	—	$	53,977
Loan from investors		66,784		5,000		71,784
Total notes payable – current liabilities					$	125,761

Notes Payable to Founders – At December 31, 2013 and 2012, the notes payable to the founders consisted of short-term loans with the three founders. Credit agreements exist with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% only and have been amended with board consent to remain in effect until December 31, 2014 subsequent to the initial expiration date. The loans have no repayment terms but were repaid in the second quarter of 2013. As of December 31, 2013, Les Anderton has a shareholder loan of $252. As of December 31, 2012, Terry Anderton, Les Anderton, and Joakim Lindblom had shareholder loans that were comprised of the following balances: $28,401, $10,066 and $15,510, respectively.

Short-term loan from Investors - In 2011, an investor in the Company made a short-term loan of $16,784 to the Company to cover its working capital needs. There are no documented terms for this loan. The Company has treated the loan as interest free and the loan was repaid in second quarter of 2013.

In 2012, an investor in the Company made a short-term loan of $50,000 to the Company to cover its working capital needs. There are no documented terms for this loan; however the Company repaid this loan during the second quarter of 2013 including accrued interest expense of $5,000.

Interest expense recognized for the years ended December 31, 2013 and 2012 related to notes payable and debentures was $122,799 and $61,902, respectively.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 7 – Derivatives

The Company’s convertible debt issued in November 2012 with a face value of $42,500 provides for conversion of the note into the Company’s common stock at a conversion rate equal to the average of the lowest three trading prices during the ten trading days immediately preceding the conversion date. Because of the uncertainty regarding the number of common shares that may be issuable upon the conversion of the convertible debt, the embedded conversion option is required to be accounted for separately and presented as a derivative liability on the Company’s balance sheet, with subsequent changes in fair value reported in the Company’s statement of operations. The Company determined the fair value of this derivative liability using Monte Carlo simulations. The Company used the following assumptions in estimating the fair value of the derivative liabilities on the issuance date through the conversion dates of the debt.

	Issuance Date			December 31, 2012			March 30, 2013			May 22, 2013			June 19, 2013
Expected Volatility		51.08	%		52.67	%		40.55	%		38.46	%		25.09	%
Expected Term	0.75 Years			0.6 Years			0.3 Years			0.16 Years			0.1 Years
Risk Free Interest Rate		0.19	%		0.16	%		0.07	%		0.04	%		0.05	%
Dividend Rate		0	%		0	%		0	%		0	%		0	%

The Company recorded an initial derivative liability of $32,622 with an offsetting discount against the convertible debt to be amortized into interest expense through the maturity of the convertible debt. From the date of issuance to the date of conversion into 166,744 shares of common stock, the fair value of the derivative liability changed to $32,007 resulting in expense of $616 and a reclass to additional paid in capital of $31,990 that during the three months ended June 30, 2013, the period the transaction settled.

The Company’s convertible debt issued in January 2013 with a face value of $37,500 provides for conversion of the note into the Company’s common stock at a conversion rate equal to the average of the lowest three trading prices during the ten trading days immediately preceding the conversion date. Because of the uncertainty regarding the number of common shares that may be issuable upon the conversion of the convertible debt, the embedded conversion option is required to be accounted for separately and presented as a derivative liability on the Company’s balance sheet, with subsequent changes in fair value reported in the Company’s statement of operations. The Company determined the fair value of this derivative liability using Monte Carlo simulations. The Company determined the assumptions in estimating the fair value of the derivative liabilities on the issuance date and as of June 24, 2013.

	Issuance Date			March 31, 2013			June 24, 2013
Expected Volatility		50.77	%		49.82	%		29.43	%
Expected Term	0.75 Years			0.45 Years			0.16 Years
Risk Free Interest Rate		0.11	%		0.11	%		0.06	%
Dividend Rate		0	%		0	%		0	%

The Company recorded an initial derivative liability of $28,603 with an offsetting discount against the convertible debt to be amortized into interest expense through the maturity of the convertible debt. From the date of issuance until the full payment of $57,606 was made, the fair value of the derivative liability changed to $18,733 resulting in derivative income of $9,870 that was recorded during the three months ended June 30, 2013, the period the transaction settled.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 8 – Convertible Debt

July 2012 Convertible Debentures

In July 2012, the Company issued convertible debentures (“July Notes”) with an aggregate face value of $215,300 Canadian Dollars ($205,224 as of December 31, 2013). The July Notes mature in July 2014, bear interest at an annual rate of 10%, and are convertible at the option of the holders into Units, each consisting of a) one share of common stock and b) one warrant to purchase one share of common stock at 0.40 Canadian Dollars per share (“Unit”). The number of Units issuable upon conversion of the notes is determined by dividing the then outstanding principal and accrued but unpaid interest by a) 0.35 Canadian Dollars if a Liquidity Event, as defined in the debenture agreements, occurs within six months of the closing of the offering of the notes, or b) 0.32 Canadian Dollars if a Liquidity Event does not occur within six months of the closing of the offering of the July Notes.

The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of 0.32 Canadian Dollars. The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the July Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate - 0.22%, dividend rate – 0.00%. The Company recorded a discount against the debt for the beneficial conversion feature totaling $84,788, which is being amortized into interest expense through the maturity dates of the July Notes. For the twelve months ended December 31, 2013, the Company recorded amortization of the discount of $42,394. As of December 31, 2013, the net carrying value of the July Notes totaled $180,494, net of unamortized discount of $24,730. For the twelve months ended December 31, 2013, interest expense on the July Notes of $20,910 was recorded.

In connection with the issuance of the July Notes, the Company paid transactions fees to brokers consisting of cash of $85,237, and warrants to purchase 43,497 shares over a two-year period for an exercise price of 0.40 Canadian Dollars. The Company estimated the fair value of the warrants using a Black Scholes valuation model and the following assumptions: volatility – 50.49%, risk free rate – 0.22%, dividend rate – 0.00%.

The Company allocated a portion of the fair value of the consideration totaling $52,869, to debt issuance costs, which was capitalized and is being amortized into interest expense over the two-year terms of the July Notes. The remaining portion of the fair value of the transactions costs, totaling $36,126 was allocated to equity, treated as equity issuance costs, and recorded against additional paid in capital. Amortization of debt issuance costs on the July Notes of $26,435 was recorded for twelve months ended December 31, 2013.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

September 2012 Convertible Debentures

In September 2012, the Company issued convertible debentures (“September Notes”) with an aggregate face value of $330,900. The September Notes mature in September 2014, bear interest at an annual rate of 10%, and are convertible at the option of the holders into Units, each consisting of a) one share of common stock and b) one warrant to purchase one share of common stock at $0.40 per share (“Unit”). The number of units issuable upon conversion of the notes is determined by dividing the then outstanding principal and accrued but unpaid interest by a) $0.35 if a Liquidity Event, as defined in the debenture agreements, occurs within six months of the closing of the offering of the notes, or b) $0.32 if a Liquidity Event does not occur within six months of the closing of the offering of the September Notes.

The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of $0.32. The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate – 0.22%, dividend rate – 0.00%. The Company recorded a discount against the debt for the beneficial conversion feature totaling $115,712, which is being amortized into interest expense through the maturity dates of the September Notes. For the 12 months ended December 31, 2013, the Company recorded amortization of the discount of $57,856. As of December 31, 2013, the net carrying value of the September Notes totaled $292,329, net of unamortized discount of $38,571. For the twelve months ended December 31, 2013 interest expense on the September Notes of $33,090 was recorded.

In connection with the issuance of the September Notes, the Company paid cash transactions fees to brokers totaling $30,456. The Company allocated a portion of the transaction fees totaling $19,806, to debt issuance costs, which was capitalized and is being amortized into interest expense over the two-year terms of the September Notes. The remaining portion of the fair value of the transactions costs, totaling $10,650 was allocated to equity, treated as equity issuance costs, and recorded against additional paid in capital. Amortization of debt issuance costs on the September Notes of $9,903 was recorded for the twelve months ended December 31, 2013.

October and November 2012 Convertible Debentures

In October and November 2012, the Company issued convertible debentures (“October and November Notes”) with an aggregate face value of $624,372 of which $313,440 represented a conversion of notes payable related parties to the Founders. The October and November Notes mature in October and November 2014, bear interest at an annual rate of 10%, and are convertible at the option of the holders into Units, each consisting of a) one share of common stock and b) one warrant to purchase one share of common stock at $0.40 per share (“Unit”). The number of units issuable upon conversion of the October and November Notes is determined by dividing the then outstanding principal and accrued but unpaid interest by a) $0.35 if a Liquidity Event, as defined in the debenture agreements, occurs within six months of the closing of the offering of the October and November Notes, or b) $0.32 if a Liquidity Event does not occur within six months of the closing of the offering of the October and November Notes.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

The Company recorded a beneficial conversion feature based on the intrinsic value of the conversion feature equal to the excess of the fair value of one Unit over the conversion rate of $0.32. The fair value of one Unit was estimated based on the most recent sale of common stock in a private placement immediately preceding the issuance of the Notes and, for the warrant contained in one Unit, using a Black Scholes valuation model and the following assumptions: volatility – 50.50%, risk free rate –0.22%, dividend rate – 0.00%. The Company recorded a discount against the debt for the beneficial conversion feature totaling $254,004, which is being amortized into interest expense through the maturity dates of the October and November Notes. For the twelve months ended December 31, 2013, the Company recorded amortization of the discount of $127,193. As of December 31, 2013 the net carrying value of the October and November Notes totaled $518,678 net of unamortized discount of $105,694. For the twelve months ended December 31, 2013 interest expense on the October and November Notes of $62,437 was recorded.

In connection with the issuance of the October and November Notes, the Company paid no cash transactions fees to brokers.

The following is a summary of convertible debentures outstanding as of December 31, 2013:

	Face Value		Initial Discount			Amortization		Carrying Value
July 2012 Notes	$	205,224	$	(84,788	)	$	60,058	$	180,494
September 2012 Notes		330,900		(115,712	)		77,141		292,329
October & November Notes		59,000		(13,317	)		7,909		53,592
November – Related Party Notes*		565,372		(240,687	)		140,401		465,086
Total	$	1,160,496	$	(454,504	)	$	285,509	$	991,501

* In November 2013, Terry Anderton sold $100,000 principal amount of his related party note to an unrelated third party at face value.

Note 9 – Stockholders’ (Deficit) Equity

The Company has one class of stock, common, which has a par value of $0.001 per share. The Company has authorized up to 50,000,000 shares to be issued. During 2011, the Company implemented a 1 for 3 reverse share split of its shares. This transaction had the effect of reducing the number of outstanding shares from 38,874,291 to 12,958,135. The previous periods were adjusted to reflect the stock split.

Issuance of Founders’ Stock - Shortly after the formation of the Company in 2009, a total of 7,300,667 shares were issued to founders of the Company and others at the direction of the founders.

Sales of Common Stock - During 2012, the Company raised gross proceeds of approximately $875,000 through the sale of 2,462,211shares of its common stock to accredited investors in a private placement at an average price of $.35 per share. The Company incurred stock issuance costs of approximately $45,000 consisting chiefly of commissions paid to broker-dealers who assisted with the offering.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

During 2013, the Company raised gross proceeds of $3,857,588 through the sale of 9,668,416 shares of our common stock to investors at a price of $0.40 per share. These sales of shares occurred at various times throughout 2013. The Company incurred stock issuance costs of $186,729 consisting chiefly of commissions paid to broker-dealers who assisted with the offering. In addition, as consideration for services rendered in connection with the Private Placement, the Company issued to the Placement Agent 357,459 restricted shares of our Common Stock, representing 8% of the gross proceeds of the Private Placement at a price of $0.80 per share to determine the number of shares issued to the Placement Agent.

Common stock committed not yet issued – On December 29, 2011, the Company entered into a payment agreement and mutual release with an investment-banking firm that had been hired to provide strategic guidance and secure investors in the Company. The settlement calls for the Company to pay the firm $25,000 upon the Company’s next capital raise, and to issue the firm 100,000 shares of common stock. The Company valued the shares at $0.25 and has reflected this $50,000 total settlement as an administrative expense in the statement of operations. The Company issued these shares to the investment firm in early 2012.

Reverse Merger Transaction - Trunity acquired a 90.1% interest in Brain Tree International, Inc., a Utah corporation (“BTI”), pursuant to a Stock Purchase Agreement with the three principal shareholders of Trunity Holdings, Inc., 961,974 of BTI shares were purchased for the price of $325,000 plus 325,000 shares of Trunity common stock. As part of the transaction, on January 24, 2012, immediately prior to the Merger, BTI reincorporated in Delaware and changed its name from Brain Tree International, Inc. to Trunity Holdings, Inc. Pursuant to the reincorporation, 105,064 minority shares of BTI automatically converted into the same number of shares of THI. As a result of the reverse merger the par amount for shares was reduced from $.001 to $.0001 and subsequently an entry was recorded in 2013 to reflect this reclassification.

Warrants for Services - During the year ended December 31, 2012, in connection with services rendered, the Company issued warrants to purchase 250,000 and 25,000 shares of the Company’s common stock at an exercise price of $0.50 and $0.25 per share, respectively. The Company recognized expense of $37,453 related to warrants granted for services rendered during the 12-month period, ended December 31, 2012 and valued them at the grant date using the Black Scholes valuation model.

Shares for Services – During the year ended December 31, 2013, in connection with services rendered, the Company issued 120,000 shares of the Company’s common stock at a strike price of $0.40 per share in exchange for sales and brokerage services conducted on behalf of the Company.

Shares in exchange for conversion of trade payable – During the year ended December 31, 2013, in connection with services rendered, the Company issued 143,750 shares of the Company’s common stock at a strike price of $0.40 per share in exchange for settlement of an outstanding payable due to RCM Financial Consulting of $57,500.

Note 10 – Stock-Based Compensation

In 2009, the Company approved the 2009 Employee, Director and Consultant Stock Option Plan (The Plan) and authorized an option pool of 5,500,000 shares. Stock options typically vest over a 3 year period and have a life of 10 years from the date granted. As of December 31, 2013, there were 16,233 shares available for awards under this plan.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

In 2012, the Company approved the 2012 Employee, Director and Consultant Stock Option Plan (The Plan) and authorized an option pool of 7,500,000 shares. Stock options typically vest over a 3 year period and have a life of 10 years from the date granted. As of December 31, 2013, there were 5,046,141 shares available for awards under this plan.

During the year ended December 31, 2013, the Company issued options to acquire 4,970,000 shares of common stock at exercise price(s) of $0.35-$0.70 per share to employees, directors, and consultants. During the year ended December 31, 2012, the Company issued options to acquire 5,830,000 shares of common stock at exercise price of $0.35 per share to employees, directors, and consultants.

The grant-date fair value of options is estimated using the Black Scholes option pricing model. The per share weighted average fair value of stock options granted during 2013 was $0.36 and was determined using the following assumptions: expected price volatility ranging between 51% to 53%, risk-free interest rate ranging from .76% to 1.68%, zero expected dividend yield, and six years expected life of options. The per share weighted average fair value of stock options granted during 2012 was $.13 and was determined using the following assumptions: expected price volatility ranging between 51% to 52%, risk-free interest rates ranging from 0.61% to 0.86%, zero expected dividend yield, and six years expected life of options. The expected term of options granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107, and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day.

As of December 31, 2013, there was approximately $532,395 of total unrecognized stock compensation expense, related to unvested stock options under the Plan. This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of 1.8 years.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

A summary of options issued, exercised and cancelled for the years ended December 31, 2013 and 2012 are as follows (shares have been retroactively adjusted for the 1 for 3 reverse stock split in 2011):

	Shares			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2011		1,783,333		$	0.32		6.08		—
Granted		5,830,000		$	0.35		9.60		—
Cancelled		(228,715	)	$	0.32		—		—
Outstanding at December 31, 2012		7,384,618		$	0.34		8.30		—
Granted		4,970,000		$	0.48		9.87		—
Exercised		(110,092	)	$	0.35		—		—
Cancelled		(3,928,568	)	$	0.35		—		—
Outstanding at December 31, 2013		8,315,958		$	0.42		9.09		—

Note 11 – Warrants to Purchase Common Stock

During the years ended December 31, 2013 and 2012, in connection with services rendered, the issuance of convertible debt, and the sale of common stock the Company issued warrants to purchase 9,887,169 and 580,997 shares of the Company’s common stock at exercise prices of $1.00 and $0.25 to $1.00 per share, respectively. The Company recognized expense of $0 in 2013 and $41,015 in 2012 related to warrants granted for services rendered during the period and valued them at the grant date using the Black Scholes valuation model. All warrants are still outstanding as of December 31, 2013 and expire at various dates through 2016.

A summary of warrants issued, exercised and expired for the years ended December 31, 2013 and 2012 follows:

	Shares			Weighted-Average ExercisePrice		Weighted- Average Remaining Contractual Term
Outstanding at December 31, 2011		80,950		$	3.00		0.75
Granted		580,997		$	0.70		1.35
Outstanding at December 31, 2012		661,947		$	0.80		1.31
Granted		9,887,169		$	1.00		1.36
Expired		(63,050	)	$	3.00		—
Outstanding at December 31, 2013		10,486,066		$	1.00		1.36
Exercisable at December 31, 2013		10,486,066		$	1.00		1.36

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Note 12 – Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes plus operating loss carryforwards. The tax effects of significant items comprising the Company’s net deferred tax assets and liabilities are as follows:

	As of December 31,
	2013			2012
Deferred Tax Assets:
Net operating loss carryforward	$	4,627,565		$	3,594,979
Charitable contributions carryforward		5,070			5,028
Deferred Revenue		125,108			11,103
Property and Equipment		9,015			—
Stock-based compensation		67,898			—
Deferred Tax Assets	$	4,834,656		$	3,611,110

Deferred Tax Liabilities
Property and Equipment	$	—		$	(6,956	)
Stock-based compensation		—			(17,489	)
Convertible Stock		(67,015	)		—
Deferred Tax Liabilities	$	(67,015	)	$	(24,445	)

Valuation Allowances		(4,767,641	)		(3,586,665	)
Total Net deferred tax assets	$	—		$	—

At December 31, 2013 the Company has tax operating losses of $12 million (tax effected $4.7 million). The Company is in a domestic cumulative taxable loss position for the three year period ended December 31, 2013, which is considered significant evidence that the Company may not be able to realize some portion or all of these deferred tax assets in the future. The Company has decided that based on all available evidence that a full valuation allowance should be taken against the entire deferred tax assets of $4.7 million.

The Company has federal operating loss carried forward of $11.6 million that can be carried forward for twenty years. The operating losses will begin to expire in 2029 through 2034. The Company’s ability to utilize the net operating losses is contingent on generating sufficient future taxable income prior to their expiration. As a result, an equivalent amount of taxable income would need to be generated in order to fully realize the net deferred tax assets. However due to the Company’s limited operating history and uncertainty of achieving sufficient profits to utilize the net operating loss carryforwards the Company has recorded a valuation allowance of $4.7 million related to the net deferred tax assets.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

The Company will continue to monitor and update its assumptions and forecasts of future taxable income to determine if a valuation allowance will continue to be needed.

T he Company’s effective income tax rate is lower than what would be expected if the federal statutory rate were applied to the loss from operations primarily because of the effect of the state tax benefit, net of federal benefit, and the change in the valuation allowance provided against deferred tax assets. The change in the valuation allowance for the year ended December 31, 2013 was $1,180,976.

Uncertain Tax Positions

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered in income. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that the tax benefits will not be realized. Management has evaluated the effect of the guidance provided by GAAP on Accounting for Uncertainty in Income Taxes. Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2013.

Note 13 – Related Parties

The Company’s three founders, Terry Anderton, Les Anderton, and Joakim Lindblom have a number of transactions that warrant disclosure per ASC Topic 850, Related Party Disclosures.

Stock Options - In 2012, Mr. Lindblom was granted additional options to purchase additional 250,000 and 800,000 shares both at a strike price of $0.35.

Corporate Rental - Through September 2013, the Company paid monthly rent to Terry Anderton for his guest house used by corporate employees who work for extended periods of time at the corporate offices located in New Hampshire but reside elsewhere.

Credit Agreements – At December 31, 2013 and 2012, the notes payable to the founders consisted of short-term loans with the three founders. Credit agreements exist with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% and have been amended with board consent to remain in effect until December 31, 2014 subsequent to the initial expiration date. The loans have no repayment terms but were repaid in the second quarter of 2013. As of December 31, 2013 only Les Anderton has a shareholder loan of $252. As of December 31, 2012, Terry Anderton, Les Anderton, and Joakim Lindblom had shareholder loans that were comprised of the following balances: $28,401, $10,066 and $15,510, respectively.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Founder Stock Transactions - Upon forming the Company in 2009, 3,333,333 shares were issued to both Terry Anderton and Les Anderton for a total of 6,666,667 shares (as adjusted for a 1 for 3 reverse stock split in 2011). At December 31, 2013, Terry Anderton directly owned and controlled 4,550,412 shares; Les Anderton directly and indirectly, with his wife, controlled 4,907,683 shares; and Joakim Lindblom directly owned and controlled 467,000 shares.

Transactions with Officers — Transactions with Officers -The Company’s current Interim CEO and CFO, Nicole Fernandez-McGovern, is one of the managing principals of both RCM Financial and Premier Financial Filings, companies that have provided contracted financial services to Trunity during 2013 and 2012. In 2013, RCM Financial Inc., a financial consulting firm providing interim CFO services, and accounting and tax professional services was paid total fees of $42,630 by the Company; and Premier Financial Filings, a full service financial printer, was compensated $2,163. In 2012, RCM Financial received $ 93,000 in total fees from the Company. Ms. Fernandez-McGovern’s services as CFO in a consulting capacity were paid through April 2013 as part of RCM Financial until she became the Company’s full-time CFO.

The Company’s Chief Education Officer Cutler Cleveland, prior to his full-time employment was a consultant for the company and currently authors on the platform. In his capacity as an author and consultant he received royalty payments based on his transaction sales for his vbook and a monthly consultant fee. In 2013 and 2012 he received $33,458 and $11,097 respectively. As a result of his full-time employment with Trunity the company has discontinued payment of his consulting fees on a go forward basis.

In 2012, various notes with the founders were converted to debentures with the Company.

Conversion to Debentures
	Notes Payable to Founders
Terry Anderton	$	261,932
Les Anderton		222,170
Joakim Lindblom		81,270
Total	$	565,372

Note 14 – Commitments and Contingencies

Leases

In 2010, the Company entered into a lease agreement for 6,400 square feet of office space located in Newburyport, Massachusetts. This lease was effective from August 2010 through July 2013. This agreement provided a free rent period of the first four months of the term.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

In August 2013, the Company executed a lease for 8,713 square feet for its corporate offices located in Portsmouth, New Hampshire. The lease commenced on August 9, 2013 and has a five-year term ending on September 8, 2018. The monthly rental payments for the first year are $10,165 per month and will increase on each anniversary at a rate of 3% per annum. The Company is required to pay its proportionate share of the building’s common area maintenance (“CAM”), real estate taxes, utilities serving the premises and the cost of premises janitorial service. These additional items are estimated to be $5,900 on a monthly basis.

In September 2013, the Company executed a lease for office space located in Palo Alto, California. The lease commenced on September 1, 2013 with monthly payments of $600 per month and has a twelve month term ending on August 31, 2014. The Company has sublet partial space of the office in Palo Alto for $300 a month through the end of the rental term ending on August 31, 2014.

The minimum lease payments payable over the remaining life of the agreements are:

		2014				2015				2016				2017				2018
Remaining lease payments by year		$	128,602			$	128,890			$	130,695			$	134,646			$	91,454

For the years ending December 31, 2013 and 2012, the Company recognized approximately $98,000 and $89,000 respectively in rent expense.

Legal

In February 2012, Trunity and our former CEO Terry Anderton were served with a complaint filed by an ex-Trunity, employee, William Horn, in the Nashua, New Hampshire, Superior Court. The plaintiff served as Executive Vice President of Marketing & Business Development from March until August 2011 at an annual salary of $100,000. He asserts whistleblower status and alleges that he was wrongfully terminated because of his allegations that the Company had violated securities, tax and employment laws. The complaint seeks unspecified damages under the New Hampshire Whistleblower Act and common law, including reinstatement, back pay and attorney’s fees and costs. In May 2012, we responded to the complaint by denying all material allegations and filing a counterclaim against the plaintiff for breach of contract, tortious interference with contractual and business relations, breach of fiduciary duty and violation of the Uniform Trade Secrets Act. Discovery has begun; a deposition of Mr. Horn was conducted on March 25, 2013. No expert has been disclosed by Mr. Horn for liability or damages.

On June 13, 2013, the Court granted our Motion to Dismiss Terry Anderton, in his individual capacity, from the case. Therefore, Trunity remains the sole defendant in this matter. We continue to proceed with discovery and may schedule a second deposition of the plaintiff based upon the additional documents and information produced by the plaintiff pursuant to the Court’s Order. As discovery continues, third party depositions are expected to be scheduled.

Trial of the case is now scheduled for the weeks of June 16 and June 23, 2014. Pretrial materials are due May 23, 2014 and a trial conference has been scheduled for June 6, 2014. Based on the preliminary information available to us, we believe that the complaint is without merit and intend to vigorously defend the case and prosecute the counterclaim.

TRUNITY HOLDINGS, INC. AND SUBSIDIARY

Notes To Consolidated Financial Statements

December 31, 2013

Mediation is mandatory in New Hampshire. A half-day mediation has been scheduled for April 14, 2014. To date, there has not been a settlement demand from Plaintiff. Moreover, at this point in the litigation, Trunity has paid in full the deductible under the applicable insurance policy and the insurance company is paying for the defense of this case.

There are no other material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

Note 15 – Subsequent Events

On February 12, 2014, Arol Buntzman resigned from his positions as Chairman, Director and Chief Executive Officer (CEO) of the Company. The Company’s Board of Directors has commenced a search for a permanent CEO and has appointed Nicole Fernandez-McGovern, the Company’s Chief Financial Officer, as interim CEO to serve until a permanent CEO is hired.

As a result of Mr. Buntzman’ s resignation pursuant to the December 2013 non-qualified stock option agreement between him and the Company which granted to him options to purchase up to 4,000,000 shares of common stock outside of the Company’s 2009 and 2012 stock option plans (the “Option Agreement”) options to purchase 1,500,000 shares of stock were automatically cancelled. These options covered the tranches of 500,000 shares each at an exercise price of $.40, $.60 and $.70, respectively. The Company believes that some or all of the remaining options under the Option Agreement, representing 1,500,000 shares in three tranches of 500,000 shares each at exercise prices of $.40, $.60 and $.70, respectively, should be cancelled based on the circumstances of Mr. Buntzman’ s resignation. Mr. Buntzman disputes the Company’s position. If the dispute is not settled, the matter is subject to binding arbitration. No demand for arbitration has been filed by either party. See Note 10 Stock-Based Compensation.

On January 21, 2014, Jude Blake resigned as a Director of the Company.

From March 1, 2014 to April 11, 2014, the Company raised gross proceeds of $53,000 through the sale of 353,333 shares of its Common Stock to accredited investors in private placement transactions at a price of $0.165 per share. Each investor also received a five-year warrant to purchase one share of common stock for every four shares purchased at an exercise price of $0.50 per share. In addition, in March 2014 we borrowed $100,000 from an accredited investor pursuant to a six month convertible promissory note bearing interest at 10% per year. The note is convertible at $.165 per share with the same warrant coverage as for the shares privately sold as set forth above. The Company incurred $5,000 of securities issuance costs representing commissions paid to broker-dealers who assisted these transactions.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures . We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on her evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Interim Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed 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. Our internal control over financial reporting includes those policies and procedures that:

●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting. Based on this assessment, our management has concluded that as of December 31, 2013, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control over Financial Reporting. During the fourth quarter of 2013, there were no changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table and biographical summaries set forth information, including principal occupation and business experience about our directors and executive officers:

Name	Age	Position

Nicole Fernandez-McGovern	41	Interim Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary

Dr. Joakim Lindblom	52	Executive Vice President and Chief Technology Officer (and former Secretary and Director)

Dr. Cutler Cleveland	58	Chief Education Officer

Les Anderton	69	Director

Ivan Berkowitz, PhD	66	Director

Richard H. Davis	56	Director

Dana M. Reed	42	Director

Nicole Fernandez-McGovern – Interim Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary

Ms. Fernandez-McGovern has served as our Company’s Chief Financial Officer since April 2013 and as Interim-CEO since February 2014. From March 2012 to March 2013, she provided financial consulting services Trunity through RCM Financial Consulting, a firm she continues to serve as Managing Principal. RCM was a management consulting firm founded by Ms. Fernandez-McGovern that provided interim Chief Financial Officer services for numerous companies seeking to capitalize on her expertise in SEC reporting, technical accounting, treasury and strategic cash flow management, audits, budgeting and financial planning. Ms. Fernandez-McGovern is also one of the founders and Managing Principals of Premier Financial Filings, a full service financial printer providing SEC filing support services to publicly traded companies, including the Company since 2013.

She previously served in leadership roles in the private sector for such companies as Elizabeth Arden, Inc. and Ryder System, Inc., where she worked closely with senior management and was involved in all aspects of the SEC, treasury and financial reporting processes. Ms. Fernandez-McGovern began her professional career at KPMG in the audit and assurance practice where she managed a wide range of large scale engagements for both public and privately held companies. She has a Master of Business Administration with a concentration in Accounting and International Business, and a Bachelor of Business Administration with a concentration in accounting, both from the University of Miami. She is also a Certified Public Accountant in the State of Florida and is fluent in Spanish.

Joakim F. Lindblom, Ph.D. – Executive Vice President and Chief Technology Officer

Dr. Lindblom is a co-founder of Trunity and has been our Company’s Chief Technology Officer since its inception in July 2009. He also served as a member of the Board of Directors from inception through the fall of 2013. An innovator and pioneer in the field of education technology, Dr. Lindblom is responsible for product development and operations at Trunity, and is the Chief Architect of the Trunity eLearning Platform . He has over 20 years’ experience in Internet information architecture, global R&D, technology business management, space science instrumentation and solar astrophysics. Previously, he served as Vice President of Platform Strategy at ManyOne Networks, Global R&D Management Consultant at Nokia and Chief Scientist for NASA’s UHRXS Space Station project and MSSTA solar observatory at Stanford University. Dr. Lindblom has a Ph.D. in Applied Physics and Astrophysics from Stanford University, as well as a Bachelors of Science degree with honors in Physics from the California Institute of Technology.

Cutler J. Cleveland, Ph.D. – Chief Education Officer

Appointed to serve as Trunity’s Chief Education Officer in July 2013, Dr. Cleveland is also Professor of Earth and Environment at Boston University, where he serves on the faculty of the Center for Energy and Environmental Studies. Professor Cleveland is the co-author of Environmental Science , the web’s first entirely electronic introductory textbook on the subject, which was authored and published on the Trunity eLearning Platform . He is also Editor-in-Chief of the Encyclopedia of Energy (Elsevier, 2004), winner of an American Library Association award, the Dictionary of Energy (Elsevier, 2005), Handbook of Energy (Elsevier, forthcoming), and is the Founding Editor-in-Chief of the Encyclopedia of the Earth . He is the recipient of the Adelman-Frankel Award from the United States Association of Energy Economics for “unique and innovative contributions to the field of energy economics.”

Dr. Cleveland’s research has been funded by the Mellon Foundation, the National Science Foundation, the National Aeronautics and Space Administration, the Environmental Protection Agency, and the MacArthur Foundation. He has published his findings in journals such as Nature , Science , Ecological Modeling , Energy , The Energy Journal , The Annual Review of Energy , Resource and Energy Economics , the American Association of Petroleum Geologists Bulletin , the Canadian Journal of Forest Research and Ecological Economics. Professor Cleveland has been a consultant to numerous private and public organizations, including the Asian Development Bank, the United Nations Commission on Sustainable Development, Charles River Associates, the Energy Information Administration and the U.S. Environmental Protection Agency. He has won publication awards from the International Association of Energy Economics, the American Library Association and the National Wildlife Federation. Professor Cleveland holds a Bachelor of Science degree in Ecology from Cornell University, a Master of Science degree in Marine Science from Louisiana State University, and a Ph.D. in Geography from the University of Illinois at Urbana-Champaign.

Les Anderton – Director

Mr. Anderton was appointed as a new director in December 2013. As a original director and former Executive Vice President of Finance of Trunity, he has already played a significant role in the Company’s corporate structuring and previous capital formation activities. Mr. Anderton brings to Trunity over 40 years’ experience in sales, marketing, corporate finance and mergers and acquisitions. Les began his career with the Lever Brothers Company in New York, where he was Sales Plans Development Manager for the Personal Products Division. He left Lever Brothers after ten years to pursue a career on Wall Street. He earned distinction as an investment banker for, among others, John Hancock, Covey & Company, and currently Wilson-Davis & Company, Salt Lake City. Mr. Anderton has compiled significant financial analysis expertise in a broad range of industries, including technology, energy, healthcare and real estate, and as an active individual investor and due diligence manager for Alternative Investments at Wilson-Davis. With professional designations of CLU and ChFC, he also holds several securities licenses, including Series 7, Series 24, Series 27 and Series 63. Les Anderton is the father of Terry Anderton.

Ivan Berkowitz, Ph.D. – Director

Dr. Berkowitz has served as an independent member of the Board since his appointment in November 2013. Dr. Berkowitz is a corporate executive and advisor with 40 years of professional experience in the financial and real estate industries. He has acted as a corporate advisor on matters that pertain to corporate structure and governance, transfer pricing, EEC antitrust law, mergers and international syndication. In 2003, he co-founded and has since served as the Chairman of Great Court Capital, a global structured finance and traditional merchant banking firm based in New York City, active in identifying, investing and managing the investment process for a syndicate of high net worth individuals, hedge funds and institutions.

Until its sale in 2003, Dr. Berkowitz served as senior managing partner of Avatar Associates, a New York-based institutional asset management firm managing $1.8 billion in assets. He has been a member of the boards of directors of both public and private companies, domestically and internationally. In addition to these activities, he is a Board member of the Council for Economic Education, is a past board member of Yeshiva College and Cambridge in America, Dr. Berkowitz holds a Ph.D. in International Law from Cambridge University, an MBA in Finance (honors) from Baruch College and a B.A. cum laude in Economics from Brooklyn College. He has guest lectured at professional and academic forums that have included Young Presidents’ Organization, Cambridge University, Whittier College, School of Law, and New York University’s Center for Law and Business. Over the years, he has contributed to media, business, law and academic journals, including the Cambridge Law Journal and Juris Doctor .

Richard H. Davis − Director

Mr. Davis has served as an independent member of the Board since 2012. He has over 30 years of experience in finance, investment banking and venture capital. In February 2008, he became a Director of PowerVerde Inc., a Phoenix, Arizona-based producer of emissions-free electric power generation systems. Since August 2011, he has also served as the part-time Chief Executive Officer of PowerVerde. Beginning in 1982, Mr. Davis worked for First Equity Corporation, a regional full-service brokerage and investment bank. While at First Equity, his duties included equity deal structure and brokerage-related activities. After First Equity was acquired in 2001, he joined the corporate finance department of William R. Hough & Company, where he continued structuring equity finance and private acquisitions. Hough was acquired in 2004 by RBC Dain Rauscher, a global investment banking firm. Dain consolidated Hough’s corporate finance activities into its New York offices, at which time Mr. Davis joined Martinez-Ayme Securities, assuming the newly-created position of Managing Director of Corporate Finance. He received a Bachelor of Science degree in Economics from Florida State University in 1982.

Dana M. Reed − Director

Ms. Reed was appointed as a member of the Board in June 2013. She is the Chief Executive Officer of PanAfrican Investment Co. (“PIC”) and is responsible for managing the business day-to-day, as well as overseeing all investment decisions. Prior to joining PIC, she served as Managing Director of UCM Partners, where her responsibilities included marketing, product development and strategic growth of the firm. She previously served as a Vice President of Institutional Equity Sales at Friedman Billings Ramsey, and she was in the Investment Banking Groups of JP Morgan and Goldman Sachs. Ms. Reed began her career as a Fellow at the Export-Import Bank of the U.S. She received a Bachelor of Business Administration in International Business with minors in Marketing and Spanish and a Masters of Business Administration from Howard University. She was appointed by New York Governor Paterson to serve as a Director of the Harlem Community Development Corp. and still serves in that role today. In addition to serving Trunity’s Board, Ms. Reed also serves on the Board of Directors of PrePex and Shea Yeleen.

Arrangements for Nomination as Directors and Changes in Procedures for Nomination; Election of Directors

No arrangement or understanding exists between any director or nominee and any other persons pursuant to which any individual was or is to be selected or serve as a director. No director has any family relationship with any other director or with any of the Company’s executive officers.

Holders of our Common Stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders, including the election of directors. Cumulative voting with respect to the election of directors is not permitted by our Certificate of Incorporation.

Our Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. Each director shall hold office until the next annual meeting of shareholders and until the director’s successor is elected and qualified.

Involvement in Certain Legal Proceedings

During the last ten years, none of our Directors, persons nominated to become Directors, or executive officers were subject to any of the following events material to an evaluation of the ability or integrity of any such person:

●

A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

●

Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

●

Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

Engaging in any type of business practice; or

Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

●

Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) Item 401 of Regulation S-K, or to be associated with persons engaged in any such activity;

●

Such person was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission (the “Commission”) to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

●

Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

●

Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

Any Federal or State securities or commodities law or regulation; o

Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

●

Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Committees

Our Audit Committee consists of Messrs. Berkowitz and Davis and Ms. Reed, with Mr. Berkowitz elected as Chairman of the Committee. Our Board of Directors has determined that each of Messrs. Berkowitz and Davis are “independent” as that term is defined under applicable SEC rules and under the current listing standards of the NASDAQ and NYSE. Mr. Berkowitz is also qualified as our Audit Committee financial expert.

Our Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Audit Committee. Our Audit Committee’s responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent auditors, (ii) appointing, replacing and discharging the independent auditor, (iii) pre-approving the professional services provided by the independent auditor, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent auditor, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management and the independent auditor.

Our Compensation/Stock Option Committee consists of Messrs. Berkowitz and Davis, with Mr. Davis elected as Chairman of the Committee. Our Board of Directors has determined that all of the members are “independent” under the current listing standards of the NYSE MKT. Our Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Compensation/Stock Option Committee.

Our Compensation Committee has responsibility for assisting the Board of Directors with, among other things, evaluating and making recommendations regarding the compensation of our executive officers and directors, assuring that the executive officers are compensated effectively in a manner consistent with our stated compensation strategy, producing an annual report on executive compensation in accordance with the rules and regulations promulgated by the SEC, periodically evaluating the terms and administration of our incentive plans and benefit programs and monitoring of compliance with the legal prohibition on loans to our directors and executive officers.

Board Meetings; Committee Meetings; and Annual Meeting Attendance

During 2013, the Board of Directors held 1 regular meeting in person and 10 special telephonic meetings. Each regular and telephonic meeting was attended by all of the members of the Board.

The Board does not have a policy regarding director attendance at annual meetings. We did not have an in person annual meeting of shareholders in 2013.

Shareholder Recommendations for Board Nominees

The Board does not have a Governance or Nominating Committee that is tasked with identifying individuals qualified to become Board members and recommending to the Board the director nominees for the next annual meeting of shareholders. Until such committee is formed, shareholder recommendations for Board nominees are directed to the entire Board, who considers the qualifications of the person recommended based on a variety of factors, including:

●

the appropriate size and the diversity of our Board;

●

our needs with respect to the particular talents and experience of our directors;

●

the knowledge, skills and experience of nominees, including experience in technology, business, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;

●

experience with accounting rules and practices;

●

whether such person qualifies as an “audit committee financial expert” pursuant to the SEC Rules;

●

appreciation of the relationship of our business to the changing needs of society; and

●

the desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members.

Compliance with Section 16(A) of the Exchange Act

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).

Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2013, were timely.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics, which applies to our Board of Directors, our executive officers and our employees, and outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:

●

compliance with applicable laws and regulations,

●

handling of books and records,

●

public disclosure reporting,

●

insider trading,

●

discrimination and harassment,

●

health and safety,

●

conflicts of interest,

●

competition and fair dealing, and

●

protection of company assets.

A copy of our Code of Business Conduct and Ethics is attached as an exhibit to this Report.

Certain Legal Proceedings

ITEM 11. EXECUTIVE COMPENSATION

Summary of Executive Compensation

The following table sets forth the compensation of the Company’s current and former Chief Executive Officers and each other executive officers serving as such whose annual compensation exceeded $100,000, for services in all capacities to the Company in 2013, except as otherwise indicated. The value attributable to any option awards is computed in accordance with FASB ASC Topic 718. The assumptions made in the valuations of the option awards are included in Note 6(D) of the Notes to our Financial Statements appearing later in this report.

S ummary of Executive Compensation Chart

Name and Position(s)	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Other ($)		Total Compensation ($)
Nicole Fernandez-McGovern	2013	$	108,750	$	15,000		-0-	$	105,538		-0-	$	229,288
Interim CEO and CFO	2012		-0-		-0-		-0-		-0-		-0-		—

Dr. Joakim Lindblom	2013	$	124,458	$	15,000		-0-		-0-		-0-	$	139,458
EVP and CTO	2012	$	98,748		-0-		-0-	$	178,290		-0-		277,038

Dr. Cutler Cleveland	2013	$	50,300		-0-		-0-		-0-		-0-	$	50,300
Chief Education Officer	2012		-0-		-0-		-0-		-0-		-0-		-0-

Terry B. Anderton (1)	2013	$	168,780	$	40,000		-0-		-0-		-0-	$	208,780
Former Chairman, President and CEO	2012		176,166		-0-		-0-	$	476,000		-0-	$	652,166

Arol Buntzman (2)	2013		-0-		-0-		-0-	$	376,784		-0-	$	376,784
Former Chairman and CEO	2012		-0-		-0-		-0-		-0-		-0-		-0-

(1) On October 14, 2013, Mr. Anderton resigned as an officer and director of Trunity.

(2) On February 12, 2014, Mr. Buntzman resigned as an officer and director of Trunity.

Executive Employment, Termination and Change of Control Arrangements

We do not have any employment contracts for our executive officers; however our Board’s Compensation Committee is reviewing our executive compensation structure, and we intend to implement employment contracts for our executive officers in 2014.

Effective September 24, 2013, Mr. Terry Anderton resigned as the Company’s Chairman and Chief Executive Officer, but remained for a brief period as President and a member of the Board of Directors. On October 14, 2013, Mr. Anderton resigned as President and a Director of Trunity.

Effective September 24, 2013, Dr. Arol Buntzman was appointed as Chairman of the Board and Chief Executive Officer of the Company. Dr. Buntzman resigned as Chairman and Chief Executive Officer of Trunity on February 12, 2014.

Effective February 12, 2014, Ms. Nicole Fernandez-McGovern, the Company’s Chief Financial Officer, was appointed to serve as Interim CEO of the Company while the Board commences a search for a permanent CEO.

Outstanding Equity Awards at December 31, 2013 The following table sets forth the outstanding stock options held by the named executive officers and directors as of December 31, 2013:

Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date
Nicole Fernandez-McGovern		—			500,000	(1)		—	$	0.40	04/01/2023
Dr. Cutler Cleveland		67,580	(2)		32,420	(2)		—	$	0.25	12/22/2021
Dr. Joakim Lindblom		333,333	(3)		—			—	$	0.33	08/01/2019
Dr. Joakim Lindblom		100,000	(4)		—			—	$	0.33	03/02/2020
Dr. Joakim Lindblom		296,803	(5)		36,530	(5)		—	$	0.25	05/01/2021
Dr. Joakim Lindblom		48,384	(6)		11,616	(6)		—	$	0.25	08/01/2021
Dr. Joakim Lindblom		159,817	(7)		90,183	(7)		—	$	0.35	01/31/2022
Dr. Joakim Lindblom		332,420	(8)		467,580	(8)		—	$	0.35	10/02/2022
Terry Anderton		222,100	(9)		—			—	$	0.35	10/15/2015
Dr. Arol Buntzman		1,000,000	(10)		—			—	$	0.30	12/22/2023
Dr. Arol Buntzman		—			1,000,000	(10)		—	$	0.40	12/22/2023
Dr. Arol Buntzman		—			1,000,000	(10)		—	$	0.60	12/22/2023
Dr. Arol Buntzman		—			1,000,000	(10)		—	$	0.70	12/22/2023

(1) These options vest over a three year period with: (i) 166,667 vesting on April 1, 2014, and (ii) 333,333 vesting each month over a 24 month period from April 2, 2014 through April 1, 2016.

(2) These options vest over a three year period with: (i) 33,333 vesting on December 22, 2012, and (ii) 66,667 vesting each month over a 24 month period from December 23, 2012 through December 22, 2016.

(3) These options were fully vested on August 1, 2012.

(4) These options were fully vested on March 1, 2013.

(5) These options vest over a three year period with: (i) 111,111 vesting on May 1, 2012, and (ii) 222,222 vesting each month over a 24 month period from May 2, 2012 through May 1, 2014.

(6) These options vest over a three year period with: (i) 20,000 vesting on August 1, 2012, and (ii) 40,000 vesting each month over a 24 month period from August 2, 2012 through August 1, 2015.

(7) These options vest over a three year period with: (i) 83,333 vesting on January 31, 2013, and (ii) 166,667 vesting each month over a 24 month period from February 1, 2013 through January 31, 2015.

(8) These options vest over a three year period with: (i) 266,667 vesting on October 2, 2013, and (ii) 533,333 vesting each month over a 24 month period from October 3, 2013 through October 2, 2016.

(9) These options were fully vested on October 15, 2013.

(10) As a result of Mr. Buntzman’ s resignation pursuant to the December 2013 non-qualified stock option agreement between him and the Company which granted to him options to purchase up to 4,000,000 shares of common stock outside of the Company’s 2009 and 2012 stock option plans (the “Option Agreement”) options to purchase 1,500,000 shares of stock were automatically cancelled. These options covered the tranches of 500,000 shares each at an exercise price of $.40, $.60 and $.70, respectively. The Company believes that some or all of the remaining options under the Option Agreement, representing 1,500,000 shares in three tranches of 500,000 shares each at exercise prices of $.40, $.60 and $.70, respectively, should be cancelled based on the circumstances of Mr. Buntzman’ s resignation. Mr. Buntzman disputes the Company’s position. If the dispute is not settled, the matter is subject to binding arbitration. No demand for arbitration has been filed by either party.

Pension Benefits; Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

The Company does not offer pension benefits, non-qualified contribution or other deferred compensation plans to its executive officers.

Compensation of Directors

The following table sets forth, for the year ended December 31, 2013, information relating to the compensation of each director of the Company who served during the fiscal year and who was not a named executive officer. Compensation received or accrued by Terry B. Anderton, Dr. Joakim Lindblom and Arol Buntzman during their former tenures as executive officers are fully reflected in the tables above.

Director Name	Fees Earned or Paid in Cash		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Nonqualified Deferred Compensation Earnings		All Other Compensation		Total
Les Anderton		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Ivan Berkowitz, PhD		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Richard H. Davis		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Dana M. Reed		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Jude Blake (1)		-0-		-0-		-0-		-0-		-0-		-0-		-0-
David Breukelman (2)		-0-		-0-		-0-		-0-		-0-		-0-		-0-

(1) Mr. Blake resigned from Trunity's Board in January 2014.

(2) Mr. Breukelman resigned from Trunity's Board in April 2013.

Narrative to Director Compensation Table

We have not established standard compensation arrangements for our directors and compensation payable to each individual for his/her service on our Board is determined from time to time by our Board of Directors based upon the amount of time expended and other contributions by each of the directors on our behalf.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information as of April 11, 2014 regarding the beneficial ownership of our Common Stock by (i) each person (including any “group” as such term is used in Section 13(d)(3) of the Exchange Act) known by us to be a beneficial owner of more than 5% of our Common Stock, (ii) each of our directors and “named executive officers;” and (iii) all of our directors and executive officers as a group. To our knowledge, no other person beneficially owns more than 5% of our Common Stock. At April 11, 2014, we had 47,051,224 shares of Common Stock outstanding.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock that they beneficially own.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership of Shares Owned			Percent of Class
Debra Anderton
4866 S. Viewmont St.		5,599,351	(1)		11.9	%
Holladay, Utah 84117

Terry B. Anderton
51 Depot Road		6,291,108	(2)		13.1	%
Portsmouth, New Hampshire 03081

PanAfrican Investment Co., LLC					10.1	%
420 Lexington Ave, Suite 2650		5,000,000	(3)
New York, NY 10170

Executive Officers and Directors

Nicole Fernandez-McGovern, Interim CEO & CFO		544,566	(4)		1.1	%

Dr. Cutler Cleveland		77,078	(5)		0.2	%

Dr. Joakim Lindblom, EVP & CTO		2,356,262	(6)		4.8	%

Les Anderton		2,863,334	(1)(7)		5.9	%

Ivan Berkowitz, Director		-0-	(8)		0.0	%

Richard H. Davis, Director		500,000			1.1	%

Dana Reed, Director		-0-	(2)(8)(9)		0.0	%

All Directors and Executive Officers as a group (7 persons)		6,341,240	(10)		12.5	%

(1)	These shares are directly or indirectly owned by a trust whose sole trustee and beneficiary is Debra Anderton, wife of Les Anderton, our Director. Les Anderton disclaims beneficial ownership of these shares.

(2)	Includes shares held by trusts for Mr. Anderton’s children for which he is trustee, 462,663 shares underlying convertible debentures owned by Mr Anderton, and 626,930 shares subject to currently exercisable common stock options and warrants.

(3)	Includes 2,500,000 shares subject to currently exercisable warrants.

(4)	Includes 171,223 shares that are subject to currently exercisable stock options.

(5)	Includes 77,078 shares that are subject to currently exercisable stock options.

(6)	Includes 232,200 shares underlying convertible debentures owned by Mr. Lindblom and 1,607,062 shares subject to currently exercisable common stock options and warrants.

(7)	Includes 634,771 shares underlying convertible debentures owned by Mr. A nderton and 839,735 shares subject to currently exercisable common stock options and warrants.

(8)	Dana Reed is CEO of PanAfrican Investment Co., LLC.

(9)	Includes 866,971 shares underlying convertible debentures and 2,835,108 shares subject to currently exercisable common stock options and warrants.

(10)	In January 2014, Mr. Berkowitz was granted an option to purchase 250,000 shares of common stock at an exercise price of $.30 per share. These options vest one-third in one year and the balance monthly over two years.

Equity Compensation Plan Information

The Company has two plans under which stock options are currently outstanding or pursuant to which stock options may be granted, the 2009 Employee, Director and Consultant Stock Option Plan and the 2012 Employee, Director and Consultant Stock Option Plan. The terms of each plan are substantially the same.

Options granted under each plan may be incentive stock options qualified under Section 422 of the Internal Revenue Code or non-qualified stock options. In October 2012, the Company approved the 2012 Employee, Director and Consultant Stock Option Plan (“the Plan”) and authorized an additional option pool of 7,500,000 shares. Under the terms of both plans stock options typically vest over a three year period and have a life of 10 years from the date granted. The Company has the right to accelerate the option vesting of certain employees who terminated their employment subsequent to issuance, but agree to work in a consulting capacity.

The following table provides information regarding the shares of Common Stock authorized for issuance under the Company’s equity compensation plans as of December 31, 2013:

Plan	Expiration	Original Number of Shares		Options Granted, Net of Forfeitures During 2013			Options Outstanding at December 31, 2013		Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans
2009 Plan	August 1, 2019		1,833,333		(972,518	)		1,812,100	$	0.35		21,233	(1)
2012 Plan	October 2, 2022		7,500,000		(2,096,141	)		2,503,858	$	0.39		4,996,142	(2)

(1) As of December 31, 2013, there were 145,000 shares outstanding that were issued out of the 2009 Stock Plan as non-qualified options.

(2) As of December 31, 2013, there were 400,000 outstanding that were issued out of the 2012 Stock Plan as non-qualified options.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The Company’s three founders, Terry Anderton, Les Anderton, and Joakim Lindblom have a number of transactions that warrant disclosure per ASC 850, Related Party Disclosures.

Credit Agreements – At December 31, 2013 and 2012, the notes payable to the founders consisted of short-term loans with the three founders. Credit agreements exist with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% and have been amended with board consent to remain in effect until December 31, 2014 subsequent to the initial expiration date. The loans have no repayment terms but were repaid in the second quarter of 2013. As of December 31, 2013, Les Anderton had a shareholder loan of $252. As of December 31, 2012, Terry Anderton, Les Anderton, and Joakim Lindblom had shareholder loans that were comprised of the following balances: $28,401, $10,066 and $15,510, respectively.

Transactions with Officers -The Company’s current Interim CEO and CFO, Nicole Fernandez-McGovern, is one of the managing principals of both RCM Financial and Premier Financial Filings, companies that have provided contracted financial services to Trunity during 2013 and 2012. In 2013, RCM Financial Inc., a financial consulting firm providing interim CFO services, and accounting and tax professional services was paid total fees of $42,630 by the Company; and Premier Financial Filings, a full service financial printer, was compensated $2,163. In 2012, RCM Financial received $ 93,000 in total fees from the Company. Ms. Fernandez-McGovern’s services as CFO in a consulting capacity were paid through April 2013 as part of RCM Financial until she became the Company’s full-time CFO.

The Company’s Chief Education Officer Cutler Cleveland, prior to his full-time employment was a consultant for the company and currently authors on the platform. In his capacity as an author and consultant he received royalty payments based on his transaction sales for his book and a monthly consultant fee. In 2013 and 2012 he received $33,458 and $11,097, respectively. As a result of his full-time employment with Trunity the company has discontinued payment of his consulting fees on a go forward basis.

Reverse Merger with BTI IN 2012

Trunity, Inc. was formed on July 28, 2009 through the acquisition of certain intellectual property by its three founders, Terry B. Anderton, Dr. Joakim Lindblom and Les V. Anderton. In early 2012, the Company became a publicly-traded company through a reverse merger with Brain Tree International, Inc., a Utah corporation (“BTI”). At the time of the reverse merger, BTI was a shell company with no assets.

On January 24, 2012, the Company, Trunity, Inc. and Trunity Acquisition Corporation (“TAC”), a wholly-owned subsidiary of the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on January 24, 2012, TAC merged with and into Trunity, Inc. with Trunity, Inc. remaining as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). As consideration for the Merger, as of the closing of the Merger, (i) each of the 961,974 shares of common stock of the Company owned by Trunity, Inc. was cancelled, (ii) each issued and outstanding share of common stock of Trunity, Inc. was converted into the right to receive one share of the common stock of the Company; and (iii) each share of TAC was converted into one share of Trunity common stock. As a result of the Merger, the former shareholders of Trunity, Inc. held 99% of the common stock of the Company.

In order to facilitate the reverse merger transaction, immediately prior to execution of the Merger Agreement, Trunity, Inc. acquired a 90.1% interest in BTI pursuant to a Stock Purchase Agreement among BTI and the three principal shareholders of the Company. As a result of the transaction, Trunity, Inc. acquired 961,974 BTI shares for the price of $325,000 plus 325,000 shares of Trunity, Inc. common stock. As part of the transaction, on January 24, 2012, immediately prior to the Merger, BTI reincorporated in Delaware and changed its name from Brain Tree International, Inc. to Trunity Holdings, Inc. Pursuant to the reincorporation, 105,064 minority shares of BTI automatically converted into the same number of common stock of the Company.

Director Independence

We do not have securities listed on a national securities exchange or in an inter-dealer quotation system. As such, there is no requirement that a majority of the members of our Board of Directors be independent. Nonetheless, our Board of Directors, in the exercise of reasonable business judgment, determined that a majority of our directors should qualify as independent directors pursuant to SEC rules and regulations and the independence standards of the listing requirements of The NASDAQ Stock Market. Under these standards, a director is not “independent” if he or she has certain specified relationships with the Company or any other relationships that, in the opinion of the Board, would interfere with his exercise of independent judgment as a director.

In particular and subject to some exceptions, the NASDAQ rules generally provide that a director will not be independent if:

●

the director is, or in the past three years has been, employed by the Company or any of its subsidiaries;

●

the director has an immediate family member who is, or in the past three years has been, an executive officer of the Company or any of its subsidiaries;

●

the director or a member of the director’s immediate family has received payments from the Company of more than $120,000 during any period of twelve consecutive months within the past three years other than for service as a director;

●

the director or a member of the director’s immediate family is a current partner of our independent auditors, or is, or in the past three years, has been, employed by our independent auditors in a professional capacity and worked on the Company’s audit;

●

the director or member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a Company where the Company’s executive officer serves on the compensation committee; or

●

the director or a member of the director’s immediate family is a partner in, or a controlling stockholder or an executive officer of, an entity that makes payments to or receive payments from the Company in an amount which, in any fiscal year during the past three years, exceeds the greater of $200,000 or 5% of the other entity’s consolidated gross revenues.

Based on its review of the foregoing standards, the Board of Directors has affirmatively determined that our independent directors are: Ivan Berkowitz, Richard Davis and Dana Reed.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents fees billed for professional audit services rendered by Cherry Bekaert, L.L.P. (“CB”), the Company’s current principal accounting firm, for the audit of the Company’s annual financial statements for 2013 and 2012, review of the quarterly financial statements for 2013 and 2012 and fees billed for other services rendered by CB in 2013 and 2012.

	2013		2012
Audit fees	$	67,500	$	68,500
Audit-related fees	$	-0-	$	-0-
Tax fees	$	-0-	$	-0-
All other fees	$	-0-	$	-0-
Total	$	67,500	$	68,500

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services such as regulatory filings that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.

Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

In accordance with existing requirements of the Sarbanes-Oxley Act, our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2011 were pre-approved by the entire Board of Directors. This includes audit services, audit-related services, tax services and other services. All of the fees listed above have been approved by the Board.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit 3.1		Certificate of Incorporation of Trunity Holdings, Inc. dated as of January 18, 2012 *

Exhibit 3.2		Bylaws of Trunity Holdings, Inc. *

Exhibit 3.3		Certificate of Ownership and Merger dated as of January 24, 2012, between Trunity Holdings, Inc. and Brain Tree International, Inc.**

Exhibit 4.1		Form of Series A 10% Unsecured Convertible Redeemable Debenture Due July 2014**

Exhibit 4.2		Form of Series B 10% Unsecured Convertible Redeemable Debenture Due August 2014**

Exhibit 10.1		Stock Purchase Agreement between dated as of January 24, 2012 by and among George Norman, Donna Norman, Lane Clissold, Trunity Holdings, Inc. and Trunity, Inc. *

Exhibit 10.2		Agreement and Plan of Merger, dated as of January 24, 2012 by and among Brain Tree International, Inc. and Trunity Holdings, Inc. *

Exhibit 10.3		Agreement and Plan of Merger, dated as of January 24, 2012 by and among Trunity Holdings, Inc., Trunity, Inc. and Trunity Acquisition Corporation *

Exhibit 10.4		Trunity Holdings, Inc. 2012 Employee, Director and Consultant Stock Option Plan.**

Exhibit 10.5		Investment Project Contract dated as of March 20, 2013, among Trunity, InnSoluTech LLP and Educom Ltd.**

Exhibit 10.6		Share Purchase Agreement dated as of March 20, 2013, between Trunity and InnSoluTech LLP.**

Exhibit 10.7		License Agreement dated as of March 20, 2013, between Trunity and Educom Ltd.**

Exhibit 10.8		Form of Indemnification Agreement between Trunity and its Directors**

Exhibit 10.9		Subscription Agreement dated May 28, 2013 between the Company and Pan African Investment Company***

Exhibit 10.10		Investors Rights Agreement dated May 30, 2013 between the Company and Pan African Investment Company***

Exhibit 10.11		Voting Agreement dated May 30, 2013 between the Company and Pan African Investment Company***

Exhibit 10.12		Indemnification Agreement dated May 30, 2013 between the Company and Pan African Investment Company***

Exhibit 10.13		Memorandum of Understanding dated June 5, 2013 between the Company and Pan African Investment Company***

Exhibit 10.14		Non-Qualified Stock Option Agreement between the Company and Arol Buntzman dated December 23, 2013***

Exhibit 14		Code of Ethics**

Exhibit 21		Subsidiaries of the Company **

Exhibit 31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ***

Exhibit 31.2		Certification of Principal Financial Officer and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ***

Exhibit 32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***

Exhibit 32.2		Certification of Principal Financial Officer and Principal Accounting Officer Pursuant to18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***

101.INS		XBRL INSTANCE DOCUMENT ***

101.SCH		XBRL TAXONOMY EXTENSION SCHEMA ***

101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE ***

101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE ***

101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE ***

101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE ***

* Filed with the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2012

** Filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on April 16, 2013

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TRUNITY HOLDINGS, INC.

Dated: April 15, 2014	By:	/s/ Nicole Fernandez-McGovern
		Nicole Fernandez-McGovern Interim Chief Executive Officer and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature and Title		Date

/s/ Nicole Fernandez-McGovern		April 15, 2014
Nicole Fernandez-McGovern
Interim Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary

/s/ Les Anderton		April 15, 2014
Les Anderton
Secretary, Treasurer and Director

/s/ Ivan Berkowitz		April 15, 2014
Ivan Berkowitz, PhD
Director

/s/ Richard H. Davis		April 15, 2014
Richard H. Davis
Director

/s/ Dana Reed		April 15, 2014
Dana Reed
Director

Exhibit 10.12

EXECUTION VERSION

INDEMNIFICATION AGREEMENT

THIS AGREEMENT (the “ Agreement ”) is made and entered into as of May 30, 2013 by and between Trunity Holdings, Inc., a Delaware corporation (the “ Company ”), and Dana M. Reed (“ Indemnitee ”).

RECITALS

WHEREAS, Indemnitee performs a valuable service for the Company; and

WHEREAS, the Board of Directors of the Company has adopted Bylaws and a Certificate of Incorporation (the “ Charter Documents ”) providing for the indemnification of the officers and directors of the Company to the maximum extent authorized by Section 145 of the Delaware General Corporation Law, as amended (the “ Law ”); and

WHEREAS, the Charter Documents and the Law, by their nonexclusive nature, permit contracts between the Company and the officers or directors of the Company with respect to indemnification of such officers or directors; and

WHEREAS, in accordance with the authorization as provided by the Law, the Company may in its sole discretion elect to purchase and maintain a policy or policies of directors’ and officers’ liability insurance (“ D & O Insurance ”), covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company; and

WHEREAS, in order to induce Indemnitee to continue to serve as an officer or director of the Company, the Company has determined and agreed to enter into this contract with Indemnitee.

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged:

1. Indemnity of Indemnitee . The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and the Charter Documents, as such may be amended. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a) Proceedings Other Than Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status (as hereinafter defined), Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a) , Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(b) Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b) , Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided , however , that, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

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

(d) If (i) Indemnitee is or was affiliated with one or more investment funds that has invested in the Company (an “ Appointing Stockholder ”), and (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of Appointing Stockholder’s position as a stockholder of, or lender to, the Company, or Appointing Stockholder’s appointment of or affiliation with Indemnitee or any other director, including without limitation any alleged misappropriation of a Company asset or corporate opportunity, any claim of misappropriation or infringement of intellectual property relating to the Company, any alleged false or misleading statement or omission made by the Company (or on its behalf) or its employees or agents, or any allegation of inappropriate control or influence over the Company or its Board members, officers, equity holders or debt holders, then the Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall apply to any such indemnification of Appointing Stockholder as an intended, direct third party beneficiary of this Agreement.

2. Additional Indemnity . In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 , the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.

3. Contribution in the Event of Joint Liability .

(a) To the fullest extent permissible under applicable law, whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. Company shall not enter into any settlement of any action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided , however , that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct is active or passive.

(c) Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.

4. Indemnification for Expenses of a Witness . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

5. Advancement of Expenses . Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within 30 days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided , however , that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).

6. Procedures and Presumptions for Determination of Entitlement to Indemnification . It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

(a) To obtain indemnification (including, but not limited to, the advancement of Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of the Board of Directors: (i) by a majority vote of the Disinterested Directors (as defined herein), even though less than a quorum, or (ii) by Independent Counsel (as defined herein) in a written opinion, or (iii) by the stockholders.

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c) . The Independent Counsel shall be selected by the Board of Directors. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c) , regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 6(a) of this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as defined herein), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

(f) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided , however , that such thirty (30) day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors, or stockholder of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee’s entitlement to indemnification. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

7. Remedies of Indemnitee .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a) . The Company shall not oppose Indemnitee’s right to seek any such adjudication.

(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b ) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) In the event that Indemnitee, pursuant to this Section 7 , seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by Indemnitee in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.

8. Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation .

(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter Documents, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Charter Documents and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.

(c) Primacy of Indemnification . The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by other entities and/or organizations (collectively, the “ Fund Indemnitors ”) and that Indemnitee may have additional sources of indemnification or insurance (other than the Company), whether currently in force or established in the future (such sources, including the Fund Indemnitors, being collectively referred to as the “ Outside Indemnitors ”). The Company hereby agrees that: (i) it is the indemnitor of first resort with respect to Indemnitee (i.e., its obligations to Indemnitee are primary, and any obligation of the Outside Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary); (ii) the Company shall be required to advance the full amount of expenses, judgments, penalties, fines and amounts paid in settlement to the maximum extent legally permitted by the terms of this Agreement, the Certificate of Incorporation of the Company, the Bylaws of the Company or any other agreement between the Company and Indemnitee, without regard to any rights Indemnitee may have against any Outside Indemnitor and without regard to any rights Indemnitee may have to coverage under insurance policies maintained by any Outside Indemnitor; and (iii) that with respect to the Company’s obligations to advance Expenses and indemnify Indemnitee by reason of Indemnitee’s service as a director of the Company, the Company irrevocably waives, relinquishes and releases the Outside Indemnitors from any and all claims against the Outside Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. No advancement or payment by any Outside Indemnitor, or any insurance carrier of an Outside Indemnitor, on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Outside Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company or any insurance carrier of the Company if the Outside Indemnitors had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Outside Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Outside Indemnitors shall have a right of contribution by the Company to the Outside Indemnitors with respect to any advance or payment by the Outside Indemnitors to or on behalf of Indemnitee. The Company and Indemnitee agree that each Outside Indemnitor is an express third party beneficiary of this Agreement and the terms hereof. Nothing in this Agreement shall be deemed to prevent the Company from taking any action necessary to require its own insurer(s) to provide coverage to the Company or its directors (including Indemnitee), including causing any person (including any Outside Indemnitor to be named as a party to a declaratory judgment action brought to obtain such relief).

(d) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(e) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

9. Exception to Right of Indemnification . Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to: (a) any claim made against Indemnitee for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or (b) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

10. Duration of Agreement . All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

11. Security . To the extent requested by the Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

12. Enforcement .

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

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

13. Definitions . For purposes of this Agreement:

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

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

(c) “ Enterprise ” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

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

(e) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(f) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director of the Company, by reason of any action taken by him or of any inaction on Indemnitee’s part while acting as an officer or director of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce Indemnitee’s rights under this Agreement.

14. Severability . If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

15. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16. Notice By Indemnitee . Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

17. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Indemnitee, to the address set forth below Indemnitee’s signature hereto.

(b) If to the Company, to:

Trunity Holdings, Inc.

15 Green Street

Newburyport, MA 01950

Attention: Terry Anderton, Chairman and CEO

Fax: (603) 218-6006

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

Robert B. Macaulay, Esq.

Carlton Fields, P.A.

Miami Tower

100 SE Second Street, Suite 4200

Miami, FL 33131

Fax: (305) 530-0055

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

18. Identical Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

19. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20. Governing Law . The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws principles thereof.

21. Gender . Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.

	TRUNITY HOLDINGS, INC.

	By:
	Name: Terry Anderton
	Title: Chairman and CEO

	INDEMNITEE:


	Dana M. Reed

	Address for Notice: Pan-African Investment Company, LLC 52 Vanderbilt Avenue, Suite 401 New York, NY 10017 Facsimile: (212) 425-4199 Attention: Dana M. Reed, Co-CEO With a copy (which shall not constitute notice) to: Reed Smith, LLP 599 Lexington Avenue, 22 nd Floor New York, New York 10022 Telephone: ( 212) 549-0378 Facsimile: (212) 521-5450 Attention: Yvan Claude Pierre, Esq.

SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT


Delaware		87-0496850
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification Number)

230 Commerce Way Portsmouth, New Hampshire		03801
(Address of principal executive offices)		(Zip Code)

¨	LARGE ACCELERATED FILER	¨	ACCELERATED FILER
¨	NON-ACCELERATED FILER	x	SMALLER REPORTING COMPANY

		PAGE
PART I

Item 1.	Business	4
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	24
Item 4.	Mine Safety Disclosures	24

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 8.	Financial Statements and Supplementary Data	39
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	64
Item 9B.	Other Information	65

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	66
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	78
Item 14.	Principal Accountant Fees and Services	81

PART IV

Item 15.	Exhibits	82

Quarter ended	High		Low
March 31, 2014	$	0.23	$	0.23
June 30, 2014( through April 11, 2014)	$	0.23	$	0.23

Quarter ended	High		Low
March 31, 2013	$	0.85	$	0.80
June 30, 2013	$	0.59	$	0.50
September 30, 2013	$	0.37	$	0.33
December 31, 2013	$	0.30	$	0.30

Quarter ended	High		Low
March 31, 2012	$	5.00	$	5.00
June 30, 2012	$	3.00	$	3.00
September 30, 2012	$	3.00	$	3.00
December 31, 2012	$	0.40	$	0.40

PAGE	38	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PAGE	39	BALANCE SHEETS AS OF DECEMBER 31, 2013 AND DECEMBER 31, 2012

PAGE	40	CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012

PAGE	41	CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE PERIOD FROM DECEMBER 31, 2011 TO DECEMBER 31, 2013

PAGE	42	CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

PAGES	43	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	For the Year Ended			For the Year Ended
	Dec 31,			Dec 31,
	2013			2012

Net Sales	$	176,437		$	159,359

Cost of sales		78,358			58,522

Gross Profit		98,079			100,837

Operating Expenses:
Research and development		838,925			894,157
Selling, general and administrative		2,268,031			1,493,233
		3,106,956			2,387,390

Loss From Operations		(3,008,877	)		(2,286,553	)

Other Income (Expense):
Interest expense		(392,645	)		(141,930	)

Net Loss		(3,401,522	)		(2,428,483	)

Other Comprehensive Gain (Loss):
Foreign currency translation gain (loss)		11,948			(8,299	)
Total Other Comprehensive Gain (Loss)	$	11,948		$	(8,299	)

Comprehensive Loss	$	(3,389,574	)	$	(2,436,782	)

Net Loss per Share - Basic and Diluted	$	(0.08	)	$	(0.07	)

Weighted Average Number of Shares Outstanding During the Period - Basic and Diluted		42,811,746			35,051,373

	Par $ .0001 Common Shares*		Common Stock			Paid in Capital			Accumulated Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Balance at December 31, 2011		32,641,953	$	32,642		$	7,228,386		$	—		$	(6,908,017	)	$	353,011
Sale of common stock, net of issuance costs		3,164,479		3,164			943,157			—			—			946,321
Reverse recapitalization related to acquisition		325,000		325			(325,325	)		—			—			(325,000	)
Reclass for Recapitalization of Stock Entry		—		(32,518	)		32,518			—			—			—
Employee stock based compensation		—		—			226,807			—			—			226,807
Warrants issued for services		—		—			37,453			—			—			37,453
Debt beneficial conversion feature, net of issuance costs		—		—			295,004			—			—			295,004
Foreign currency translation loss		—		—			—			(8,299	)		—			(8,299	)
Net loss		—		—			—			—			(2,428,483	)		(2,428,483	)
Balance at December 31, 2012		36,131,432	$	3,613		$	8,438,000		$	(8,299	)	$	(9,336,500	)	$	(903,186	)
Sale of common stock, net of issuance costs		10,192,617		10,193			3,594,914			—			—			3,605,107
Common stock issued upon conversion of trade payable		143,750		144			57,356			—			—			57,500
Shares issued for services		120,000		120			31,024			—			—			31,144
Exercise of common stock options		110,092		11			38,521									38,532
Reclass for recapitalization of stock entry		—		(9,411	)		9,411			—			—			—
Stock compensation period costs		—		—			227,129			—			—			227,129
Foreign currency translation gain		—		—			—			11,948			—			11,948
Net loss		—		—			—			—			(3,401,522	)		(3,401,522	)
Balance at December 31, 2013		46,697,891	$	4,670		$	12,396,355		$	3,649		$	(12,738,022	)	$	(333,348	)

The Company:	TRUNITY HOLDINGS, INC.

	By:
	Name: Terry Anderton
	Title: Chairman and CEO

		INVESTOR:

		(Print Name of Investor)

Number of Shares:		By:

		Name:

Purchase Price per Share: $0.40		Its:

Telephone:	( 212) 549-0378
Facsimile:	(212) 521-5450
Attention:	Yvan Claude Pierre, Esq.

	TRUNITY HOLDINGS, INC.:

	By:
	Name: Terry Anderton
	Title: Chairman and CEO

	TRUNITY HOLDINGS, INC .

	By:
	Name: Terry Anderton
	Title: Chairman and CEO

Name and Address	Number of Shares Held

Pan-African Investment Company, LLC 52 Vanderbilt Avenue, Suite 401 New York, NY 10017 Facsimile: (212) 425-4199 Attention: Dana M. Reed, Co-CEO

Name and Address	Number of Shares Held

Terry Anderton 15 Green Street Newsburyport, Massachusetts 01950 Fax: (____) ____-_______	4,550,412

RRM Ventures LLC 4866 S. Viewmont Street Holladay, Utah 84117 Fax: (____) ____-_______	2,068,859

Aureus Investments LLC 4866 S. Viewmont Street Holladay, Utah 84117 Fax: (____) ____-_______	4,907,683

HOLDER:		ACCEPTED AND AGREED:

By:		TRUNITY HOLDINGS, INC.
	Name and Title of Signatory

Address:		By:

		Title:
Facsimile Number:

Number of Shares Subject to Option	Applicable Purchase Price	Vesting Schedule
1,000,000	$0.30 per Share	Immediately upon Grant Date
1,000,000	$0.40 per Share	500,000 Shares on March 24, 2014; and 500,000 Shares on September 24, 2014
1,000,000	$0.60 per Share	All on September 24, 2014
1,000,000	$0.70 per Share	500,000 Shares March 24, 2015; and 500,000 Shares vesting in equal monthly increments of 27,777.78 Shares on the 24 th day of each month from April 24, 2015 to September 24, 2016

COMPANY :

Trunity Holdings, Inc.

By:
Name:		Nicole Fernandez-McGovern
Titile:	Chief Financial Officer

OPTIONEE:

		Arol Buntzman