U.S. SECURITIES AND EXCHANGE
COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



(MARK ONE)

[X] QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012



OR



[ ] TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________



COMMISSION FILE NUMBER:
000-53153



Consorteum Holdings Inc.




(Exact Name of Company
as Specified in its Charter)



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



6 – 14845
Yonge Street, Suite #348, Aurora, Ontario, Canada, L4G 6H8

(Address of Principal
Executive Offices)



(888) 702-3410

(Company's
Telephone Number)

5045 Orbitor Drive,
Building 8, Suite 200

Mississauga, Ontario
Canada L4W 4Y4

(Former Name, Former
Address, and Former Fiscal Year,

if Changed Since Last
Report)



Indicate by check mark
whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) been subject
to such filing requirements for the past 90 days.

Yes [X] No [  ].



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



|Large accelerated filer [_]                                             | Accelerated filer [_]        
|----------------------------------------------------------------------- | -----------------------------
|                                                                        |                              
|Non-accelerated filer (Do not check if a smaller reporting company) [_] | Smaller reporting company [X]



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



As of November 18, 2012,
the Company had 309,147,714 shares of common stock issued and outstanding.



Consorteum Holdings, Inc. (the "Company"
or "CSRH") is filing its Report on Form 10-Q for the quarter ended September 30, 2012 on November 21, 2012 in reliance
upon the order dated November 14, 2012 (the "Order") of the Securities and Exchange Commission ("SEC") in
its Release No. 68224 under the Securities Exchange Act of 1934 as amended (the "Exchange Act").  In the Release,
among other things, the SEC permitted issuers to file until November 21, 2012 reports otherwise due between October 29 and November
20, 2012  if the reason for the delay in filing was (i) attributable to Hurricane Sandy and (ii) the filer states
factually the reasons it was prevented from doing so.  CSRH relies upon the Order because its independent accountants suffered
severe damage as a result of the storm in their New York and Long Island offices.  As a result employees of the independent
accounting firm were unable to work in their offices, and unable to receive e! -mails or answer telephone calls for  several
days in the immediate hurricane Sandy aftermath. In addition, it was difficult for the Company's internal accounting staff to
communicate with them without encountering delays. The cumulative effect was to cause delays in the normal time transmission,
gathering of accounting data and its verification.



Transitional Small Business
Disclosure Format (check one): Yes [ ] No [X]











Consorteum Holdings Inc.

(A DEVELOPMENT STAGE
COMPANY)

CONSOLIDATED FINANCIAL
STATEMENTS







PART I –FINANCIAL
INFORMATION



Item 1. Financial Statements.



|Consolidated Balance Sheets (Unaudited)                                           | 3
|--------------------------------------------------------------------------------- | -
|Consolidated Statements of Operations and Comprehensive (Income) Loss (Unaudited) | 4
|Consolidated Statements of Cash Flows (Unaudited)                                 | 5
|Notes to Consolidated Financial Statements (Unaudited)                            | 6







2





Consorteum Holdings Inc.

(A Development Stage
Company)

CONSOLIDATED BALANCE
SHEETS



|                                                                                                                                                                                  |  | September 30, |            |   | June 30, |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | -------- | -
|ASSETS                                                                                                                                                                            |  | 2012          |            |   | 2012     |  
|Current Assets:                                                                                                                                                                   |  |               |            |   |          |  
|Cash                                                                                                                                                                              |  | $             | 9,989      |   |          | $
|Deferred finance charges                                                                                                                                                          |  |               | 16,803     |   |          |  
|Total current assets                                                                                                                                                              |  |               | 26,792     |   |          |  
|                                                                                                                                                                                  |  |               |            |   |          |  
|Property and equipment, net of accumulated depreciation                                                                                                                           |  |               | 3,643      |   |          |  
|Intangible assets, net                                                                                                                                                            |  |               | 203,642    |   |          |  
|Total assets                                                                                                                                                                      |  | $             | 232,871    |   |          | $
|                                                                                                                                                                                  |  |               |            |   |          |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                             |  |               |            |   |          |  
|                                                                                                                                                                                  |  |               |            |   |          |  
|Current Liabilities:                                                                                                                                                              |  |               |            |   |          |  
|Accounts payable and accrued expenses                                                                                                                                             |  | $             | 1,109,241  |   |          | $
|Loans payable-short term                                                                                                                                                          |  |               | 1,254,457  |   |          |  
|Convertible promissory notes                                                                                                                                                      |  |               | 1,024,804  |   |          |  
|Due to stockholders                                                                                                                                                               |  |               | 207,588    |   |          |  
|Total current liabilities                                                                                                                                                         |  |               | 3,596,090  |   |          |  
|                                                                                                                                                                                  |  |               |            |   |          |  
|Convertible loans payable, net of short-term portion                                                                                                                              |  |               | 2,683,570  |   |          |  
|Total liabilities                                                                                                                                                                 |  |               | 6,279,660  |   |          |  
|                                                                                                                                                                                  |  |               |            |   |          |  
|Stockholders' Deficit:                                                                                                                                                            |  |               |            |   |          |  
|Preferred stock, $0.001 par value, 40,000,000 shares
        authorized: zero issued and outstanding                                                                              |  |               | -          |   |          |  
|Preferred A stock, $0.001 par value, 5,000,000 shares
        authorized:5,000,000 and zero issued and outstanding at
        September 30, 2012 and June 30, 2012, respectively  |  |               |            |   |          |  
|                                                                                                                                                                                  |  | 5,000         |            |   |          | -
|Preferred B stock, $0.001 par value, 15,000,000 shares
        authorized:4,000,000 and zero issued and outstanding at
        September 30, 2012 and June 30, 2012, respectively |  |               | 4,000      |   |          |  
|Preferred C stock, $0.001 par value, 40,000,000 shares
        authorized: zero issued and outstanding                                                                            |  |               | -          |   |          |  
|Common stock; $.001 par value; 500,000,000 shares
        authorized; 309,216,464 issued and outstanding at
        September 30, 2012 and June 30, 2012, respectively            |  |               | 309,217    |   |          |  
|Collateralized shares issued                                                                                                                                                      |  |               | (137,500   | ) |          |  
|Shares committed to be issued                                                                                                                                                     |  |               | 35,000     |   |          |  
|Additional paid-in capital                                                                                                                                                        |  |               | 3,444,227  |   |          |  
|Accumulated other comprehensive loss                                                                                                                                              |  |               | (172,972   | ) |          |  
|Accumulated deficit during prior development activities                                                                                                                           |  |               | (7,617,031 | ) |          |  
|Deficit accumulated during the development stage                                                                                                                                  |  |               | (1,916,730 | ) |          |  
|Total stockholders’ deficit                                                                                                                                                       |  |               | (6,046,789 | ) |          |  
|                                                                                                                                                                                  |  |               |            |   |          |  
|Total liabilities and stockholders’ deficit                                                                                                                                       |  | $             | 232,871    |   |          | $



See Notes to Unaudited
Consolidated Financial Statements.

3





Consorteum Holdings Inc.

(A Development Stage
Company)

CONSOLIDATED STATEMENTS
OF OPERATIONS



|                                                                     |  |                                  |             |   |                                |   |             | Cumulative from    | 
|-------------------------------------------------------------------- |  | -------------------------------- | ----------- | - | ------------------------------ | - | ----------- | ------------------ | 
|                                                                     |  |                                  |             |   | Inception                      |  
|                                                                     |  | Three Months ended September 30, |             |   | (July 1, 2011)
        Through |  
|                                                                     |  | 2012                             |             |   | 2011                           |   |             | September 30, 2012 | 
|                                                                     |  | (Unaudited)                      |             |   | (Unaudited)                    |   |             | (Unaudited)        | 
|Revenues:                                                            |  | $                                | -           |   |                                | $ | -           |                    | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Operating expenses:                                                  |  |                                  |             |   |                                |   |             |                    | 
|Selling, General and administration expenses                         |  |                                  | 197,462     |   |                                |   | 228,357     |                    | 
|Total operating expenses                                             |  |                                  | 197,462     |   |                                |   | 228,357     |                    | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Operating loss                                                       |  |                                  | (197,462    | ) |                                |   | (228,357    | )                  | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Other expense:                                                       |  |                                  |             |   |                                |   |             |                    | 
|Gain on settlement of debt                                           |  |                                  | -           |   |                                |   | -           |                    | 
|Interest expense                                                     |  |                                  | (98,209     | ) |                                |   | (63,660     | )                  | 
|                                                                     |  |                                  | (98,209     | ) |                                |   | (63,660     | )                  | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Net loss                                                             |  |                                  | (295,671    | ) |                                |   | (292,017    | )                  | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Foreign currency translation adjustment                              |  |                                  | (70,401     | ) |                                |   | 92,456      |                    | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Comprehensive loss                                                   |  | $                                | (366,072    | ) |                                | $ | (199,561    | )                  | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Basic and diluted loss per common share                              |  | $                                | (0.00       | ) |                                | $ | (0.00       | )                  | 
|                                                                     |  |                                  |             |   |                                |   |             |                    | 
|Basic and diluted weighted average common
        shares outstanding |  |                                  | 309,216,464 |   |                                |   | 304,147,714 |                    | 





See Notes to Unaudited
Consolidated Financial Statements.

4







Consorteum Holdings Inc.

(A Development Stage
Company)

CONSOLIDATED STATEMENTS
OF CASH FLOWS



|                                                               |  |                                  |          |   |             |   |           | Cumulative from   
|-------------------------------------------------------------- |  | -------------------------------- | -------- | - | ----------- | - | --------- | ------------------
|                                                               |  |                                  |          |   |             |   |           | Inception         
|                                                               |  |                                  |          |   |             |   |           | (July 1, 2011)    
|                                                               |  | Three Months Ended September 30, |          |   | Through    
|                                                               |  | 2012                             |          |   | 2011        |   |           | September 30, 2012
|                                                               |  | (Unaudited)                      |          |   | (Unaudited) |   |           | (Unaudited)       
|Cash flows from operating activities:                          |  |                                  |          |   |             |   |           |                   
|Net loss                                                       |  | $                                | (295,671 | ) |             | $ | (292,017  | )                 
|Adjustments to reconcile net loss to net cash used in          |  |                                  |          |   |             |   |           |                   
|operating activities:                                          |  |                                  |          |   |             |   |           |                   
|Depreciation                                                   |  |                                  | 301      |   |             |   | 295       |                   
|Stock issued on reverse merger                                 |  |                                  | -        |   |             |   | -         |                   
|Amortization of debt discount                                  |  |                                  | 718      |   |             |   | 15,938    |                   
|Amortization of deferred finance charges                       |  |                                  | -        |   |             |   | 3,624     |                   
|Stock-based compensation                                       |  |                                  | 23,375   |   |             |   | 96,000    |                   
|Changes in operating assets and liabilities:                   |  |                                  |          |   |             |   |           |                   
|Accounts payable and accrued liabilities                       |  |                                  | (61,008  | ) |             |   | (6,599    | )                 
|Accrued interest                                               |  |                                  | 92,720   |   |             |   | 64,819    |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Net cash used in operating activities                          |  |                                  | (240,567 | ) |             |   | (117,940  | )                 
|                                                               |  |                                  |          |   |             |   |           |                   
|Cash flows used in investing activities:                       |  |                                  |          |   |             |   |           |                   
|Purchase of license agreement                                  |  |                                  | (58,642  | ) |             |   | -         |                   
|Net cash used in investing activities                          |  |                                  | (58,642  |   |             |   | -         |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Cash flows from financing activities:                          |  |                                  |          |   |             |   |           |                   
|Proceeds from loans                                            |  |                                  | -        |   |             |   | -         |                   
|Deferred finance costs                                         |  |                                  | (16,803  | ) |             |   |           |                   
|Proceeds from bank indebtedness                                |  |                                  | -        |   |             |   | -         |                   
|Repayment of bank indebtedness                                 |  |                                  | -        |   |             |   | -         |                   
|Proceeds from stockholders' advances                           |  |                                  | 979      |   |             |   | -         |                   
|Repayment of convertible promissory notes                      |  |                                  |          |   |             |   |           |                   
|Proceeds from the issuance of convertible promissory notes     |  |                                  | 314,292  |   |             |   | 114,000   |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Net cash provided by financing activities                      |  |                                  | 298,468  |   |             |   | 114,000   |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Effect of exchange rate on cash                                |  |                                  | 2,326    |   |             |   | 223       |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Net increase (decrease) in cash                                |  |                                  | 618      |   |             |   | (5,095    | )                 
|                                                               |  |                                  |          |   |             |   |           |                   
|Cash, beginning of period                                      |  |                                  | 9,371    |   |             |   | 9,110     |                   
|Cash, end of period                                            |  | $                                | 9,989    |   |             | $ | 4,015     |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Supplemental disclosures of cash flow information:             |  |                                  |          |   |             |   |           |                   
|Cash paid for interest                                         |  | $                                | -        |   |             | $ | -         |                   
|Cash paid for income taxes                                     |  | $                                | -        |   |             | $ | -         |                   
|                                                               |  |                                  |          |   |             |   |           |                   
|Non-cash investing and financing activities:                   |  |                                  |          |   |             |   |           |                   
|Fair value of convertible notes issued  related to acquisition |  | $                                | -        |   |             | $ | 2,073,646 |                   
|Conversion of convertible note payable                         |  | $                                | -        |   |             | $ | -         |                   
|Debt discount related to convertible debt                      |  | $                                | 2,787    |   |             | $ |           |                   



See Notes to Unaudited Consolidated Financial Statements.

5





Consorteum Holdings
Inc.

(A DEVELOPMENT STAGE
COMPANY)

Notes to Consolidated
Financial Statements

(Unaudited)



1.         Organization,
Business and Going Concern



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



In October 2012, we
secured a license to market and license the CAPSA technology from Tarsin. The licensing agreement provides the Company with an
exclusive right to license the CAPSA software platform in selected geographical markets throughout Canada, and Mexico, along with
select customers within the United States and is capable of providing digital media to a wide range of mobile handsets, and provides
for the ability to securely transmit financial information to individual handset owners. Tarsin provides us with the proven capabilities
in the mobile handset market, which we can use to ensure cross functionality of mobile applications across a wide variety of handsets.  The
ability to deliver next generation services to all customers depends on our ability to develop an application that is agnostic
to the type of smart phone deployed.  The CAPSA platform was developed with the specific purpose of deploying rich multimedia
content across diverse handsets.  We intend to leverage the license agreement with Tarsin in the mobile sports betting
and casino gaming vertical to monetize its applications in branded partnership relationships.



Going Concern Assumption



We
have secured working capital of approximately $314,000 during the three months ended September 30, 2012. Subsequent to such date,
we have raised additional capital totaling approximately$10,000.These proceeds
were used for working capital of the business.  We require additional equity or debt financing to meet our obligations
as they become due. In the event that such financing is not secured, the Company will not be able to satisfy its liabilities.   Furthermore,
certain debt is overdue and is secured by all assets of the Company.  We are attempting to restructure some of the debt
and secure additional financing to satisfy its existing obligations and provide for sufficient working capital to meet the Company’s
future obligations but there are no guarantees that we will be able to do so. Our convertibles notes of approximately $2.2 million
reflected as non-current liabilities will be satisfied through the issuance of common stock, which is in our control and expected
to be completed no later than the Company’s quarterly period ended March 31, 2013.





The Company's continuance
as a going concern is dependent on the successful efforts of its management to secure additional equity or debt financing. In the
event that such financing is not secured, the Company will not be able to satisfy its liabilities.   Furthermore,
certain debt is overdue and is secured by all assets of the Company.  Management is attempting to restructure some of
its debt and secure additional financing to satisfy its existing obligations and provide for sufficient working capital to meet
its future obligations but there are no guarantees that it will be able to do so.



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



The foregoing unaudited
consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial
information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted
accounting principles in the United States of America for complete financial statements. These unaudited consolidated interim financial
statements should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year
ended June 30, 2012.  In the opinion of management, the unaudited interim consolidated financial statements furnished
herein include adjustments, all of which are of a normal recuing nature, necessary for a fair statement of the results for all
the interim periods presented. Operating results for the three-month period ended September 30, 2012 are not necessarily indicative
of the results that may be expected for the year ending June 30, 2013.



6





2.       
Summary of Significant Accounting Policies



The accounting policies
of the Company are in accordance with accounting principles generally accepted in the United States of America, and their basis
of application is consistent with that of the previous year.



Basis of Presentation

The consolidated financial
statements include the accounts of Consorteum Holdings, Inc., Consorteum Inc., and My Golf Rewards Canada, Inc. All significant
intercompany balances and transactions are eliminated on consolidation.



Use of estimates

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



Development Stage
Activities

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



Earnings or loss
per share

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



The Company excluded
10,000,000 options and 3,352,184 warrants from the calculation periods ended September 30, 2012 and 2011 as the exercise prices
were in excess of the average closing price of the Company’s common stock.  In addition, all conversion prices
of convertible debt were in excess of the average closing price of the Company’s common stock, and accordingly, excluded
from dilutive share calculation.  Preferred shares outstanding (9,000,000) are convertible into common stock on a one-to-one
basis.  However, the effects of these shares would be anti-dilutive due to the net loss in the applicable periods.



Share-Based Payments

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



Recent Accounting
Pronouncements

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



7







3. Fair Value Measurements



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



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



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



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



The fair value hierarchy
also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial
instruments include accounts payable and accrued liabilities, loans payable, and convertible promissory notes.  Cash
is considered a (Level 1) financial instrument.  The Company does not have any level 2 or 3 financial assets or liabilities.



4.   Intangible
Assets



On October 10, 2012,
we entered into a licensing agreement with Tarsin for rights to the CAPSA technology; the agreement is for a term of three (3)
years. In connection therewith, we acquired exclusive rights to market, sell and service CAPSA in Canada, Mexico, as well as select
customers in the United States. We must pay $100,000, annually, beginning in year two of the agreement. Under the license, we are
subject to a royalty of 12.5% of revenues generated by the Company from the CAPSA technology. The Company also retains the “Right
of First Negotiation” to enter into markets in the United States which do not overlap with the existing contractual relationships
that Tarsin has with Stations Casino in Nevada. Through the date of the license agreement, we advanced Tarsin approximately $204,000
and applied such amount to the license.



5.  Loans
payable and convertible promissory notes



Loans payable are as follows:



|                                                                                                                                                                                                                                                               |  | September 30, |            |   | June 30, |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | -------- | -
|                                                                                                                                                                                                                                                               |  | 2012          |            |   | 2012     |  
|Loans payable, bearing interest at rates between 10% and 18% per annum. Interest payable monthly. These loans are past due, unsecured and payable on demand.  Accrued interest of $249,610 and $212,201 at  September 30, 2012 and June 30, 2012, respectively |  | $             | 1,254,433  |   |          | $
|Less: Current portion                                                                                                                                                                                                                                          |  |               | (1,235,085 | ) |          |  
|Loans payable, non-current                                                                                                                                                                                                                                     |  | $             | –          |   |          | $



Convertible Promissory
Notes are as follows:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | September 30, |            |   | June  30, |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | --------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 2012          |            |   | 2012      |  
|Convertible promissory notes assumed in accordance with asset purchase agreement with Media Exchange Group bearing interest between 5% to 8% per annum, convertible into shares of common stock at a rate ranging from $0.01 to $0.05.  Accrued interest of $437,666 and $408,251 at September 30, 2012 and June 30, 2012 was $408,521, respectively. These notes were convertible upon the merger that occurred in July 2011.                                                                                                      |  | $             | 2,218,318  |   |           | $
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |               |            |   |           |  
|Convertible promissory notes, bearing interest between 5% and 18% per annum, maturing between October 2010
and November 2013. Interest is payable at maturity. The promissory notes are convertible at any time at the option of the holder,
into shares of common stock at either a rate ranging from $0.008 to $0.05, or at 35% discount of market, or at the price of the
next qualified financing. Accrued interest of $135,865 and $112,616 at June 30, 2012 and 2011. The notes are substantially in default
at June 30, 2012 |  |               | 1,148,132  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |               |            |   |           |  
|Convertible promissory notes, bearing interest between at 5% per annum, maturing October 2012 to May 2013. Interest payable monthly. The notes are convertible at any time at the option of the holder, into shares of common stock at a rate from $0.02 to $0.05, each. Accrued interest of $17,424 and $12,231 at September 30, 2012 and June 30, 2012, respectively.                                                                                                                                                             |  |               | 341,924    |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |               |            |   |           |  
|Convertible promissory notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $             | 3,708,374  |   |           | $
|Less: short-term portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |               | (1,024,804 | ) |           |  
|Convertible promissory notes long-term portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | $             | 2,683,570  |   |           | $



8





Convertible Notes Issued



In September 2012, the
Company issued a convertible note in the amount of $184,492. The note bears interest at 8% and is matures September 2013, at which
time all principal and accrued interest is due and payable.  The convertible promissory note and accrued interest thereon
is convertible at $0.02 per share into the Company’s common stock at the option of the holder.  Concurrently, the
Company issued two convertible exchange promissory notes to satisfy two existing notes in the amounts of $380,000 and $124,031
with the same investor. Aggregate accrued interest of $100,686 from the extinguished notes remain outstanding as part of the new
convertible promissory notes. The notes bear interest at 8%, per annum, are due between May and November 2013, and are convertible
into the Company’s common stock at $0.02 per share.  Principal and accrued interest thereon is due and payable
upon maturity.  None of the three notes had beneficial conversion features at the issuance date.



In July 2012, we entered
into a convertible promissory note in the amount of $30,000, interest at 8%, per annum, subject to a default rate of 12%, per annum,
due January 2013. The note is convertible upon a qualified financing at the same price per equivalent common share. In connection
therewith, the Company issued a warrant to purchase 180,000 shares of common stock, for five years, at $0.025 per share.  The
Company valued the warrants in connection with the note and determined the relative fair value of the warrants were $1,041 at the
issuance date using the Black-Scholes assumptions below.  Accordingly, a discount for the warrants was recognized at
the notes inception and will be amortized over the life of the note.  During the three months ended September 30, 2012,
the Company recognized interest expense of $364 in connection with the amortization of the discount, with unamortized discount
of $677 remaining.



On July 18, 2012, we
issued a convertible promissory note in the amount of $100,000, interest at 12%, per annum, is due on July 2013 and convertible
into common stock at $0.025 per share for proceeds received.  . In connection therewith, the Company issued a warrant
to purchase 500,000 shares of common stock, for five years, at $0.025 per share.  The Company valued the warrants in
connection with the note and determined that the relative fair value of the warrants were $1,746 at the issuance date using the
below Black-Scholes assumptions. Accordingly, a discount for the warrants was recognized at the notes inception and will be amortized
over the life of the note.  During the three months ended September 30, 2012, the Company recognized interest expense
of $354 in connection with the amortization of the discount, with unamortized discount of $1,392 remaining.



The following assumptions
were used in connection with the warrants issued with convertible promissory notes :



|Annual dividend yield    |  |  | -   |  
|------------------------ |  |  | --- | -
|Expected life (years) of |  |  | 5.0 |  
|Risk-free interest rate  |  |  | 0.6 | %
|Expected volatility      |  |  | 279 | %



The Company recognized
interest expense of approximately $98,000 and $64,000 during the three months ended September 30, 2012 and 2011, respectively.



9







6.        Due to Stockholders

The amounts due to stockholders
are non-interest bearing, unsecured and have no fixed terms of repayment. Stockholders advanced the Company approximately $1,000
and zero during the three months ended September 30, 2012 and 2011, respectively.





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





7.        Commitments and
Contingences

Threatened Litigation



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



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



On June 27, 2012, plaintiffs
Joseph R. Cellura as Chairman and CEO of Game2Mobile and Joseph R. Cellura individually filed a summons and complaint in the United
States District Court for the Southern District of New York (the “Action”) against the Company, our COO Patrick Shuster
(“Shuster”), our CEO Craig Fielding (“Fielding”) and certain other defendants not affiliated with the Company.
As of the date hereof defendants CHI, Shuster and Fielding have not been served with the summons and complaint, and, upon information
and belief, neither have any of the remaining defendants. Plaintiffs allege 12 different causes of action against various defendants,
but only Count XI is alleged against the Company. In this count, plaintiff Cellura individually alleges that the Company (among
other defendants) breached his employment agreement with the Company and seeks damages in excess of $5,000,000. The complaint does
not give any detail of the specific breaches by any of the defendants; nor does it describe how plaintiff has been damaged for
a sum in excess of $5,000,000.



In October 2012, the
Company and Cellura, as well as certain of the individual defendants named in the Action entered into a settlement agreement (“Settlement
Agreement”) pursuant to which (among other matters) Cellura agreed to discontinue the Action against the Company and file
a stipulation of discontinuance with prejudice with the Court in which the Action was pending. The parties also agreed to exchange
general releases with each other such that all claims by Cellura and his affiliates against the Company will be resolved. In connection
therewith, the Company will pay Mr. Cellura approximately $46,000, which is reflected in our consolidated balance sheets at September
30, 2012 and June 30, 2012.



10





Employment Contracts



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



| | ● | Retroactive to September 1, 2012                                                                                                                                                                                                                                                                              
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | Base salary of $240,000                                                                                                                                                                                                                                                                                       
| | ● | 5,000,000 options to purchase common stock at $0.002 per share which vest in equal installments from September 1, 2012 through December 31, 2016; provided, however, that all remaining options shall vest immediately upon the termination with cause of the agreement;                                      
| | ● | 2,000,000 shares of Series A Preferred, fully vested on September 21, 2012; and                                                                                                                                                                                                                               
| | ● | 2,000,000 shares of Series B Preferred, fully vested on September 21, 2012                                                                                                                                                                                                                                    
| | ● | Unspecified pension and compensation retirement plan;                                                                                                                                                                                                                                                         
| | ● | Incentive compensation amounting to 5 to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000.  Additionally, Mr. Shuster is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.



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



| | ● | Retroactive to September 1, 2012                                                                                                                                                                                                                                                                                   
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | Base salary of $240,000                                                                                                                                                                                                                                                                                            
| | ● | 5,000,000 options to purchase common stock at $0.002 per share, which vest in equal installments from September
1, 2012 through December 31, 2016; provided, however, that all remaining options shall vest immediately upon the termination with
cause of the agreement; and have a contractual term of ten years;
| | ● | 3,000,000 shares of Series A Preferred, fully vested on September 21, 2012; and                                                                                                                                                                                                                                    
| | ● | 2,000,000 shares of Series B Preferred, fully vested on September 21, 2012                                                                                                                                                                                                                                         
| | ● | Unspecified pension and compensation retirement plan;                                                                                                                                                                                                                                                              
| | ● | Incentive compensation amounting to 5 to 50% of base salary with revenue targets ranging from $0- $2,000,000 and in excess of $10,000,000.  Additionally, Mr. Fielding is entitled to a cash compensation amounting to 2% of the purchase price in the event of a sale of the Company and 3% of capital raised.    



Convertible Notes
Issued



See Note 5 for convertible
promissory notes issued during the three months ended September 30, 2012.



11





8.        Stockholders’ Deficit



Common Stock



There were no common stock
issuances for the three months ended September 30, 2012.



The Company is authorized
to issue 500,000,000 shares of common stock and 100,000,000 shares of preferred stock. At the present time, assuming all of the
rights and obligations to issue approximately 235,000,000 shares of our common stock under convertible notes, warrants and stock
options became due as of September 30, 2012, we would not have sufficient authorized common shares to fulfill as such obligations.  However,
our two officers, which are also directors, control sufficient votes through their holdings of Series A and B Preferred stock to
increase the authorized shares at any time, when deemed appropriate. We intend to increase our authorized common shares in the
near future from 500 million to 1 billion.



Preferred Stock



As of September 30, 2011,
the Company has 100,000,000 preferred shares authorized, having a par value of $.001 per share.



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



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



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



On September 21, 2012,
the Company’s board of directors approved two employment agreements which provide for the issuance and immediate vesting
of 5,000,000 shares of Series A Preferred stock and 4,000,000 shares of Series B Preferred stock.  In connection therewith,
we recorded compensation expense of $18,000 based on the underlying value of the common stock of $0.002 per share on the date of
grant.



12





Warrants



There were 680,000 warrants to purchase shares of common stock issued during the three months ended September
30, 2012 in connection with the issuance of convertible promissory notes. See Note 5 for details of warrant issuances.





Options



On September 21, 2012, in connection with two employment agreements (Note
7), we granted options to purchase 10,000,000 shares of common stock at $0.002 per share which vest in equal installments from
September 1, 2012 through December 31, 2016; provided, however, that all remaining options shall vest immediately upon the termination
with cause of the agreements. The options have a contractual term of ten years. The option issuances to the two employees were
accounted for as a modification of existing options as the existing options were extinguished with concurrent issuance of these
new options. The new options extended the vesting period and repriced the options. The Company valued the extinguished options
immediately before extinguishment and compared the value of unvested shares to the new option issuance and determined that any
incremental value was insignificant. Accordingly, the remaining option value on the original options of approximately $42,000
will be recognized over the term of the original options.In connection therewith, we recorded compensation in the amount
of $4,375 during the three months ended September 30, 2012.



During the three months ended September 30, 2012, options to purchase 6,000,000 shares were cancelled or forfeited.





As of September 30,
2012, we had 10,000,000 options outstanding.



9.  Subsequent
Events



From October 1, 2012 through November 19, 2012, the
Company issued convertible promissory notes totaling $$10,000.



13





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



FORWARD LOOKING STATEMENTS.



This Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations
and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance
on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements,
prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the
Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated
in the forward-looking statements. We caution that words used in this document such as "expects," "anticipates," "believes," "may,"
and "optimistic," as well as similar words and expressions used herein, identify and refer to statements describing events that
may or may not occur in the future.



These forward-looking
statements and the matters to which they refer are subject to considerable uncertainty that may cause actual results to be materially
different from those described herein. There are numerous factors that could cause actual results to be different than those anticipated
or predicted by us, including: (i) a deterioration in economic conditions in general; (ii) a decrease in demand for our products
or services in particular; (iii) our loss of a key employee or employees; (iv) regulatory changes, including further changes in
the area of credit card regulation or implementation of new regulations in furtherance of the new legislation that may have an
adverse affect on the demand for our products or services; (v) increases in our operating expenses resulting from increased costs
of labor and/or consulting services; (vi) our inability to exploit existing or secure additional sources of revenues or capital
to fund operations; (vii) a failure to collect upon or otherwise secure the benefits of existing contractual commitments with third
parties, including our customers; and (viii) other factors and risks identified in our SEC filings. This list provides examples
of factors that could affect the results described by forward-looking statements contained in this press release; however, this
list is not exhaustive and many other factors could impact our business and it is impossible to predict with any accuracy which
factors could result in negative impacts.



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



OVERVIEW



Initially in June 2011,
we spent time validating our business models for the First Nations project and the My Golf Rewards program. The lack of capital
to launch these programs has forced us to curtail our sales and marketing activities and to focus on identifying other opportunities
in which we could compete for market share and generate revenue.



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



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



14





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



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



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



LIQUIDITY AND CAPITAL
RESOURCES



We had $9,989 in cash
at September 30, 2012.  Our working capital deficit amounted to approximately $3.6 million at September 30, 2012.



During the three-month
period ended September 30, 2012, we used cash in our operating activities amounting to approximately $241,000. Our cash used in
operating activities was comprised of our net loss from continuing operations of approximately $296,000 adjusted for stock compensation
and other non-cash items of approximately $23,000 and operating assets and liabilities of approximately $31,000.



The Company used cash
from investing activities of approximately $59,000 for license costs.



The Company had positive
cash from financing activities, primarily related to the issuance of approximately $314,000 in convertible promissory notes.



During the three-month
period ended September 30, 2011, we used cash in our operating activities amounting to approximately $118,000. Our cash used in
operating activities was comprised of our net loss from continuing operations of approximately $292,000 adjusted for the following:



|● | Amortization of debt discount of  approximately $16,000;          | 
|- | ----------------------------------------------------------------- | 
|● | Fair value of preferred shares issued for services of $96,000;    | 
|● | mortization of deferred finance charges of  approximately $3,600; | 
|● | Depreciation of approximately $300;                               | 



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



| | A decrease in our accounts payable and accrued liabilities expenses of approximately $6,600;                                         
| | -------------------------------------------------------------------------------------------------------------------------------------
| | An increase of accrued interest of approximately $65,000, resulting from the issuance of assumed loans as a result of an acquisition;



During the three-month
period ended September 30, 2011, we generated cash from financing activities of approximately $114,000, which consists of the proceeds
from the issuance of convertible notes.



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



15





Going Concern



Our consolidated financial
statements have been prepared in accordance with generally accepted accounting principles in the United States assuming the Company
will continue as a going-concern. We have incurred losses since inception and our ability to continue as a going-concern depends
upon its ability to continue to raise adequate financing and develop profitable operations. We have a working capital deficit
of approximately $3.6 million at September 30, 2012. Subsequent to September 30, 2012, we have raised working capital of $10,000
through the issuance of notes to fund our working capital requirements. We are actively targeting sources of additional financing,
which would assure continuation of the Company’s operations. The current market conditions and volatility increase the uncertainty
of the Company’s ability to continue as a going concern given the need to both curtail expenditures and to raise additional
funds. The Company is and has experienced negative operating cash flows and needs to invest in continuing pilot projects and operating
partnerships which cannot be met from existing cash balances. The Company will continue to search for new funds and for new collaborative
partners for the projects but anticipates that the current market conditions may impact the ability to source such funds.



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



Results of Operations



Selling, General, and
Administrative Expenses



Selling, general, and
administrative expenses primarily consist of salaries and wages for our employees, including stock based compensation of approximately
$23,000, along with professional fees and service fees in connection with maintaining our status as a public company.



The decrease in our
selling, general, and administrative expenses during the three-month period ended September 30, 2012 when compared with the prior
period is primarily attributable to decreased operations and the absence of acquisition activity that was present during the 2011
period.



Interest Expense



Interest consists of interest
payable pursuant to stated rate on interest bearing indebtedness.



The increase in interest
expense during the three month period ended September 30, 2012 when compared with the prior period is primarily due to the issuance
of new convertible notes in addition to the convertible notes assumed from the MEXI acquisition.



Item 3. Quantitative
and Qualitative Disclosures About Market Risk.



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



16





Item 4. Controls and
Procedures.



Evaluation of Disclosure
Controls and Procedures.



The Company maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934,
as amended) that are designed to ensure that information required to be disclosed in the Company's periodic reports filed under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms,
and that such information is accumulated and communicated to management, including the Company's principal executive officer and
principal financial officer, to allow timely decisions regarding required disclosures.



Under SEC Rules that
affect the Company, the Company is required to provide management's report on internal control over financial reporting for its
first fiscal year ending on or after December 15, 2008. The Company has prepared management's report as required.



As of the end of the
period covered by this report, management carried out an evaluation, under the supervision and with the participation of the Company's
principal executive officer and principal financial officer, of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, the Company's principal executive officer and
principal financial officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level
to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. In addition, the
Company's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were
effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal
executive officer and principal financial officer, to allow timely decisions regarding required disclosure.



Item 4A. Controls and
Procedures.



Management's Report
on Internal Control over Financial Reporting



The Company's management
is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control
over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's financial reporting
and the preparation of financial statements in accordance with generally accepted accounting principles. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation. Management conducted an evaluation of the
effectiveness of the Company's internal control over financial reporting as of September 30, 2012. We identified the following
material weakness in our internal control over financial reporting- we did not have adequately segregation of duties, in that we
only had one person performing all accounting-related on-site duties. Because of the "barebones" level of relevant personnel, however,
certain deficiencies which are cured by separation of duties cannot be cured, but only a monitored as a weakness.



Attestation Report of
Independent Registered Public Accounting Firm



An attestation report
of our registered public accounting firm regarding internal control over financial reporting is not required as a result of the
enactment of the Dodd-Frank Act of 2010.



Changes in Internal
Control over Financial Reporting



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



17







PART II – OTHER
INFORMATION



Item 1. Legal Proceedings.





Item 1A. Risk Factors.



None.



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



During the three months
ended September 30, 2012, the Company had no capital stock transactions.



During the three months
ended September 30, 2012, the Company’s Board of Directors authorized the issuance of 5,000,000 shares of the Company’s
Series A Preferred stock and 4,000,000 shares of Series B Preferred stock.  These shares were fully vested upon issuance.  These
shares were valued at $0.002 on the date of issuance and as a result the Company recorded $18,000 of compensation expense which
is included in selling, general and administrative expense.



In September 2012, the
Company issued a convertible note in the amount of $184,492. The note bears interest at 8% and is matures September 2013, at which
time all principal and accrued interest is due and payable.  The convertible promissory note and accrued interest thereon
is convertible at $0.02 per share into the Company’s common stock at the option of the holder.  Concurrently, the
Company issued two convertible exchange promissory notes to satisfy two existing notes in the amounts of $380,000 and $124,031
with the same investor. Aggregate accrued interest of $100,686 from the extinguished notes remain outstanding as part of the new
convertible promissory notes. The notes bear interest at 8%, per annum, are due between May and November 2013, and are convertible
into the Company’s common stock at $0.02 per share.  Principal and accrued interest thereon is due and payable
upon maturity.  None of the three notes had beneficial conversion features at the issuance date.



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



On July 18, 2012, we
issued a convertible promissory note in the amount of $100,000, interest at 12%, per annum, is due on July 2013 and convertible
into common stock at $0.025 per share for proceeds received.  . In connection therewith, the Company issued a warrant
to purchase 500,000 shares of common stock, for five years, at $0.025 per share.



All of the transactions
were exempt from registration under Section 4(2) of the Securities Act of 1933 as transactions by an issuer not involving a public
offering.



Item 3. Defaults upon
Senior Securities.



None.



Item 4. (Removed and
Reserved).



Item 5. Other Information.



None.



Item 6. Exhibits.



See list below.



18











SIGNATURES



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



|                         | CONSORTEUM HOLDINGS, INC. |                                                                                                                                                
|------------------------ | ------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|                         |                           |                                                                                                                                                
|Dated: November 19, 2012 | By:                       | /s/  Craig A. Fielding                                                                                                                         
|                         |                           | Craig A. Fielding                                                                                                                              
|                         |                           | Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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



Dated: November 19, 2012





|Name                 |  | Position                                                                                                                                 |  | Date             
|-------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------
|                     |  |                                                                                                                                          |  |                  
|/s/Craig A. Fielding |  | Chief Executive Officer, Chief                                                                                                           |  | November 19, 2012
|Craig A. Fielding    |  | Financial Officer, Chairman of
        the Board of Directors
        (Principal Executive Officer,
        Principal Financial Officer) |  |                  
|                     |  |                                                                                                                                          |  |                  
|/s/Patrick Shuster   |  | Director                                                                                                                                 |  | November 19, 2012
|Patrick Shuster      |  |                                                                                                                                          |  |                  







19









EXHIBIT LIST



|Exhibit No. | Description                                                                                                                                                                            
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        | Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
|            |                                                                                                                                                                                        
|31.2        | Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
|            |                                                                                                                                                                                        
|32          | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002          





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



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



















20