UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

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

For the Fiscal Year Ended August 31, 2014

[ ] 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: 000-53310

RED GIANT ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

           Nevada                                                98-0471928
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

614 E. Hwy 50, Suite 235, Clermont, Florida                        34711
 (Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code: (866) 926-6427

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

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

Common Stock, $0.0001 par value per share
(Title of Class)

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

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

Indicate by check mark whether the registrant (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 and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

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

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

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of February 28, 2014, the last business day of the registrant's most recently completed second fiscal quarter, was $624,867 (based on 390,541,905 shares at $0.0016 per share).

The registrant had 2,887,564,631 shares of common stock outstanding as of April 2, 2015.


TABLE OF CONTENTS

                                                                            Page
                                                                            ----

PART I

ITEM 1.  BUSINESS                                                             3

ITEM 1A. RISK FACTORS                                                         8

ITEM 1B. UNRESOLVED STAFF COMMENTS                                            8

ITEM 2.  PROPERTIES                                                           8

ITEM 3.  LEGAL PROCEEDINGS                                                    8

ITEM 4.  MINE SAFETY DISCLOSURES                                              9

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
         MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES                    9

ITEM 6.  SELECTED FINANCIAL DATA                                             14

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS                                               14

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK          27

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                         27

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                            47

ITEM 9A. CONTROLS AND PROCEDURES                                             47

ITEM 9B. OTHER INFORMATION                                                   48

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE             48

ITEM 11. EXECUTIVE COMPENSATION                                              51

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS                                     53

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
         INDEPENDENCE                                                        54

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES                              56

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES                             57

SIGNATURES                                                                   58

EXHIBIT INDEX                                                                59

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PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this "Annual Report") contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are not historical facts, but rather are based on our current expectations, estimates, and projections about us and our industry. You can identify these forward-looking statements when you see us using words such as "expect," "anticipate," "estimate," "plan," "believe," "seek," "intend" and other similar expressions that are intended to identify forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted. All statements other than statements of historical facts included in this Annual Report including, without limitation, any projections and assumptions in this Annual Report, are forward-looking statements.

You should not place undue reliance on these forward-looking statements, which reflect our management's view only on the date of this Annual Report. We undertake no obligation to update these statements or to report the result of any revision to the forward-looking statements that we may make to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

ITEM 1. BUSINESS

OVERVIEW AND CORPORATE HISTORY

Red Giant Entertainment, Inc., a Nevada corporation (OTCQB: REDG), is a developer of comic book style properties intended for both the print and online comic book market and also for use in other media such as movies, video games, television, novels, toys, apparel, and apps. As used herein, "the registrant," "we," "our," and similar terms include Red Giant Entertainment, Inc. and its subsidiaries, unless the context indicates otherwise.

We were incorporated in the State of Nevada on June 27, 2005 under the name Castmor Resources, Ltd. Prior to June 2012, we were primarily engaged in the acquisition and exploration of mining properties which were ultimately forfeited. Since we had minimal operations, we were considered a "shell company" as that term is defined under Rule 405 of the Securities Exchange Act of 1934 (the "Exchange Act"). Effective with the acquisition of Red Giant Entertainment, Inc., a Florida corporation ("RGE"), on June 11, 2012, we became an operating company and are no longer considered a "shell company." On June 26, 2012, we changed our name to Red Giant Entertainment, Inc.

On March 4, 2013, we acquired ComicGenesis, LLC, a Nevada limited liability company ("ComicGenesis"), which operates a user-generated comic site that hosts over 10,000 independent webcomics.

Our principal executive offices are located at 614 E. Highway 50, Suite 235, Clermont, Florida 34711, and our telephone number is (877) 904-7334. Our corporate website is www.redgiantentertainment.com. The contents of our corporate website are not incorporated into this Annual Report. Our corporate website should be considered to be a website under development.

OUR BUSINESS PLAN

We acquire co-ownership, development, publishing or other rights from creators of comic properties and other properties, such as films and novels, including properties created and initially owned by our officers. We expect to leverage our officers' years of experience in the comic book and film industry to discover up and coming properties we can acquire rights in and creators with whom we can forge relationships. Our officers and their affiliates have ownership or other rights to several comic book properties to which we may acquire ownership or other rights.

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We expect that our purchase of ComicGenesis will give us even greater access to up and coming comic properties and their creators in addition to providing new opportunities to sell advertising and increase consumer recognition. In addition, we expect that our relationship with Intrinsic Value Films ("Intrinsic"), a developer, producer and seller of independent films that is headed and co-owned by Isen Robbins and Amy Schoof, two of our officers and members of our Board of Directors (the "Board"), will enable us to identify films that we can adapt into comic book form. Intrinsic films are showcased on our corporate website so that we can educate audiences as to properties we may wish to develop and to gauge potential interest in such films among visitors to our website, and we may explore options to convert Intrinsic films into comic book form on a case-by-case basis.

We primarily intend to develop properties to which we or our affiliates have ownership or other rights for the comic book market, with many properties being published in Webcomic form to be accessible to consumers at no charge. We may also develop properties for use in other media such as movies, video games, television, and novels, and develop toys, and apparel and telephone wireless applications based on such properties depending on their popularity and demand. We may engage in either the direct production of such properties or enter into licensing agreements with others to accomplish these goals.

We have not established a timeline to reflect our anticipated plan of operations, and we have not established any anticipated operational milestones.

PRIMARY REVENUE SOURCES

Our revenue is recognized from three primary sources: Creative Services, Publishing Sales, and Advertising Revenue. We anticipate generating advertising revenue in the coming fiscal year in connection with the launch of our Giant-Size product line and the distribution of our first movie on Hulu.

CREATIVE SERVICES

CREATIVE AND PRODUCTION PROCESS

Our creative process generally begins with the development of a story line, following which a writer develops characters' actions and motivations into a plot. After a writer has developed the plot, a pencil artist translates it into an action-filled pictorial sequence of events. The penciled story then is returned to the writer who adds dialogue, indicating where the balloons and captions should be placed. The completed dialogue and artwork are forwarded to a letterer who letters the dialogue and captions in the balloons. Next, an inker enhances the pencil artist's work in order to make the drawing appear three dimensional.

The artwork is then sent to a coloring artist. Typically using only four colors in varying shades, the coloring artist uses overlays to create over 100 different tones. This artwork is subcontracted to a color separator who produces separations and sends the finished material to the printer.

We intend to retain freelance artists and writers who generally are paid on a per-page basis throughout this creative process, including artists and writers whose comic properties are being published by us or ComicGenesis. We may also use our officers or their affiliates at any stage of the creative process. Artists and writers will be eligible to receive incentives or royalties based on the number of copies sold (net of returns) of the titles in which their work appears. Rates of payment for these artists and writers will vary widely depending on the artist or writer, and on the work required. From time to time, we have and in the future are likely to retain Glass House Graphics, a sole proprietorship owned by David Campiti, our Chief Operating Officer and a member of the Board, to perform creative services for us.

To the extent that we have our officers or their affiliates perform any work for us, such persons will not receive compensation in excess of what we would expect to pay to an unrelated third party with comparable experience and quality.

It is anticipated that printing services for our print form titles will be done by Active Media Publishing LLC ("Active Media"), an entity controlled by Benny R. Powell, our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and a member of the Board.

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Digital form publication of our titles will be done on Keenspot Entertainment, LLC's ("Keenspot") Keenspot.com hosted websites pursuant to our exclusive web publishing agreement with Keenspot. Keenspot is owned by our director Chris Crosby.

PUBLISHING SALES

PRODUCTS AND SERVICES

Properties to which we or our affiliates have ownership or other rights are currently available in webcomic form and collected volume form. We intend to engage in the direct production of a "Giant-Size" line of titles that will be provided at no charge, with revenue being earned through selling advertising in such Giant-Size titles. In addition, we may license the development and publication of such properties in comic book or other forms to affiliates and third parties.

While our current lineup of titles is geared mainly toward the young-adult market, we also have family-friendly titles suitable for all ages. While many of our titles naturally are from the superhero or supernatural genre, we also have titles from the horror, science fiction, historical, and other genres.

ELECTRONIC BOOK DISTRIBUTION

We have been operating under an agreement with Keenspot to host the internet webcomic versions of our titles on an exclusive basis as well as handle the digital application and mobile media distribution channels. Keenspot.com currently has comic properties which include a network of more than five dozen Keenspot webcomic sites and receives over two million unique visitors each month according to Google Analytics Data. As of the date of this Annual Report, the following properties we or our affiliates co-own or have rights to have Keenspot sites: Banzai Girl(TM), Buzzboy(TM), Exposure(TM), Jade Warriors(TM), Katrina(TM), Medusa's Daughter(TM), Porcelein(TM), Shockwave: Darkside(TM), Supernovas(TM) and Wayward Sons(TM). Our Keenspot sites have received an average of approximately 2,315,718 page views per month in the fiscal year ended August 31, 2014. Keenspot also manages the web publication of properties to which we or our affiliates have ownership or other rights through comiXology's main app for the iPhone, iPad, Android, Kindle, and Windows 8 as well as on comiXology's website. The contents of our titles' Keenspot sites or any comiXology app or website are not incorporated into this Annual Report.

We anticipate continuing to offer our titles through our Keenspot sites at no charge and obtaining revenues from advertising rather than sales, but may offer certain titles on a subscription basis on the Internet depending on their popularity and demand. We expect that this strategic partnership with Keenspot will increase consumer recognition and demand for properties to which we or our affiliates have ownership or other rights that we anticipate will enable us to collect issues of popular titles into our Collected Book line for sale, either directly or through a third-party distributor.

COLLECTED BOOK DISTRIBUTION

Our "Collected" line consists of four to five issues bundled together with extra material to create what is called a "graphic novel." These books can be in either hardcover or softcover and currently are sold directly to consumers through an online store which we maintain on our website and at conventions we attend at prices currently ranging from $14.95 to $49.95 before taxes or shipping. We sell products on Amazon through its standard terms of service. The price points for our Collected line of products varies based on page count, type of cover and binding and other factors.

Effective January 1, 2014, we entered into a Supply Agreement (the "Supply Agreement") with Diamond Comic Distributors, Inc., a Maryland corporation ("DCD"). The Supply Agreement appoints DCD to be our sole and exclusive distributor worldwide for the sale and distribution of English-language comic books; related graphic novel, trade paperback and hard-cover books and compilations of our comic books; science fiction, fantasy and horror novels; miniature, role playing, and collectible card playing games; and related merchandise (collectively, the "Products") to chain book store retailers, independent book stores, mass-market merchandisers, libraries, Amazon.com, wholesalers servicing such accounts, warehouse clubs, and specialty mass merchandisers, and to hobby and specialty game retailers (the "Book Market"); and comic retailers and wholesalers that generally buy on a non-returnable basis

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and other stores through the direct sales channel of distribution (the "Direct Market"). We retain the right to sell special edition products directly in certain circumstances. Under the Supply Agreement, we provide Products to DCD on a consignment basis in amounts needed to meet DCD's requirements. Products are sold to DCD at a 60% discount off of cover prices, and we may also grant to DCD a sales allowance of 2.5%; and freight rebates where DCD picks up Products from us. We retain all risk of loss or damage with respect to Products until title passes to customers in accordance with DCD's terms of sale.

The Supply Agreement has an initial term of three years from the Commencement Date and automatically renews for one-year periods unless earlier terminated. The Supply Agreement may be terminated by either party upon 90 days prior written notice before the expiration of an initial or renewal term, and may generally be terminated by the non-breaching party upon 45 days prior written notice of a material default and failure to cure, with immediate termination available for certain breaches.

The Supply Agreement does not pertain to our ongoing online direct sales of Products. We may also seek other third-party distribution opportunities.

We anticipate collecting issues of titles published online through our Keenspot sites or included in our Giant-Size line (as discussed below) (collectively, "free titles") into our Collected line depending on their popularity and demand. There is no guarantee, however, that any of the free titles will ever acquire sufficient consumer recognition to make it to our Collected line.

GIANT-SIZED BOOK DISTRIBUTION

Our planned Giant-Size line is expected to consist of four main monthly books with a fifth quarterly book that will fill out the calendar for a full 52 week schedule. We do not intend to reprint properties published online on our Keenspot sites online for these books; instead, each book will have new material and stories. Initial books are planned to feature works such as Duel Identity(TM), Tesla(TM), a modern version of Wayward Sons(TM), Pandora's Blog(TM), and four to six other works in any given month. Currently anticipated names for our monthly books are "Giant-Size Action(TM)," "Giant-Size Fatales(TM)," "Giant-Size Thrills(TM)," "Giant-Size Fantasy(TM)," and "Giant-Size Quarterly(TM)."

We believe each book will appeal to a diverse demographic group by hosting a different genre of stories. Giant-Size Action will feature mainstream science-fiction, fantasy, action, and adventure stories that appeal to a wide audience. Giant-Size Fatales will feature works by women creators that appeal to audiences of all genders, but are told from a female's perspective. Giant-Size Thrills will feature works of suspense, horror, thrillers and nail-biters of all sorts that appeal to the older teen and adult audiences. Giant-Size Fantasy will play host to all-ages fare suitable and enjoyable for the whole family. Their Giant-Size Quarterly book will rotate a wide range of books that will touch on each of these targets in a unique manner.

Each book is intended to be offered at no charge to book retailers, specialty shops and comic book shops through a third-party distributor, with revenues earned through selling advertising space in the books. By providing these books free of charge, we expect to build consumer recognition and demand that we anticipate will allow us to collect issues of popular titles into our Collected Book line for sale, either directly or through a third-party distributor.

Currently, we anticipate that each book will have two issues (one from each of two titles) for approximately 32 pages of content, with two to four pages for editorial and up to 30 interior pages and three "premium" cover pages (inside front, inside back and back cover) for advertising. The "Center Spread" will also be a premium spot and will always be reserved for advertisements. We intend to use the saddle stitch binding typically used for individual comic book issues for our Giant-Size line.

On June 16, 2014, we entered into a Promotion Agreement (the "Promotion Agreement") with Toys "R" Us - Delaware, Inc. ("TRU") for the distribution of our Giant-Size Line of Comics. Under the Promotion Agreement, TRU has agreed to distribute our Giant-Size Comic books free of charge to customers purchasing other products at TRU's Toys "R" Us and Babies "R" Us stores. Under the Promotion Agreement, we anticipate providing Giant Size Comic Books starting in the summer of 2015, with a weekly rotation as follows: Giant-Size Action, Giant-Size Fantasy, Giant-Size Adventure, and Giant-Size Thrills on weeks one

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through four, with a quarterly Giant Size edition available for any fifth weeks of a month. Each issue will consist of two stories plus advertising. Under the Promotion Agreement, we agreed to provide TRU with TRU exclusive covers for each book, a full page interior advertisement, and co-branded bags for distribution of the books. TRU may terminate the Promotion Agreement upon 10 days written notice.

ADVERTISING

We intend to sell advertising space on our Keenspot websites and in our Giant-Size line, as well as on our corporate website.

Keenspot and we share 50% of revenues generated by Keenspot from advertising on our Keenspot sites and from Keenspot's management of the web publication of properties to which we or our affiliates have ownership or other rights. We share 25% of the revenue generated from advertising on our corporate website with Project Wonderful for its services. All rates are based upon bids by advertisers and are not set by us.

Other than our agreements with Keenspot and our acceptance of Project Wonderful's standard terms of service, however, we have not entered into any agreements for advertising and there is no assurance that other companies will want to advertise in our websites or Giant-Size Books on favorable terms, if at all.

There is no guarantee that we will generate enough revenues from selling advertising space on our Keenspot websites or in our Giant-Size line to either
(i) recoup the expenses we incur in producing such products; or (ii) make such products profitable without considering their potential contribution to any profits made through the sale of our Collected line.

OTHER REVENUE SOURCES

LICENSING AND FILM ADAPTATION

We may license the use of properties to which we or our affiliates have ownership or other rights for merchandising as toys and apparel and for production in comic book or Webcomic form or as novels, video games, apps, films or television shows. In addition, several properties to which we or our affiliates have ownership or other rights have either been developed into feature-length films or are in process of being so developed, including without limitation Journey to Magika(TM), Supernovas(TM), Wayward Sons: Legends(TM), Last Blood(TM), and Katrina(TM). We expect to receive royalties on the production of such properties in any form by licensees. We have not reached any final agreement with any licensee, and there can be no guarantee that we will be able to license such properties for any specific product-type on favorable terms, if at all.

OTHER ACTIVITIES

We also provide creative services (e.g., artwork, writing, advertising and other creative endeavors) for outside clients through our network of artists and writers, and obtain revenues through the sale of advertising space on our corporate website through ProjectWonderful.com ("Project Wonderful") under their standard terms of service.

COMPETITION

The comic book and related intellectual development industries are highly competitive with little or no barriers to entry. We compete with publishers and creative individuals.

Most of our competitors are part of integrated entertainment companies and all have greater resources and financing than us. We also face competition from other entertainment media, such as movies and video games.

The market for digital distribution of content and products and related Internet services and products is intensely competitive. Since there are no substantial barriers to entry, we expect competition in these markets to intensify. We believe that the principal competitive factors in these markets are name

7

recognition, performance, ease of use and functionality. Our existing competitors, as well as a number of potential new competitors, may have longer operating histories in the digital distribution market, greater name recognition, larger customer bases and databases and significantly greater financial, technical, and marketing resources. Such competitors may be able to undertake more extensive marketing campaigns and make more attractive offers to potential employees. Further, there can be no assurance that our competitors will not develop services and products that are equal or superior to ours or that achieve greater market acceptance than our offerings in the area of name recognition, performance, ease of use and functionality. There can be no assurance that we will be able to compete successfully against our current or future competitors or that competition will not have a material adverse effect on our business, results of operations and financial condition.

Our competitors include DC Entertainment, home to DC Comics, Vertigo, and Mad Magazine; and Marvel Entertainment, LLC, a wholly-owned subsidiary of The Walt Disney Company.

The market for our products is not differentiated between age groups or gender, or region or country, nor have we noticed differentiation between our major revenue segments.

PATENT, TRADEMARK, LICENSE AND FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS

We do not currently have any patent or trademark applications pending, but we plan to obtain protection with applicable patents and trademarks. We also intend to protect our intellectual properties from license infringements or violations through our contracts with third parties.

We have not entered into any franchise agreements or other contracts that have given, or could give rise to obligations or concessions.

Our success depends in part upon our protection of our intellectual properties. We will principally rely upon copyright and contract law to protect our proprietary properties. There can be no assurance that the steps taken will be adequate to prevent misappropriation of our intellectual properties.

EMPLOYEES

We currently have one employee, Benny R. Powell, and four independent contractors, consisting of our remaining officers.

ITEM 1A. RISK FACTORS

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

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

ITEM 2. PROPERTIES

We lease a virtual office at 614 E. Highway 50, Suite 235, Clermont, Florida 34711 on a month-to-month basis for $15 per month. We will continue to use this space for our executive offices for the foreseeable future. Other office space and storage space for print products is provided to us by our officers at no charge. Such space can be described as home-office locations.

ITEM 3. LEGAL PROCEEDINGS

We are not currently a party to, nor are any of our properties currently the subject of, any other material legal proceeding other than as set forth herein. None of our directors, officers, or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

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On May 13, 2013, George Sharp ("Plaintiff") filed a Complaint in San Diego Superior Court, Central District, Case No. 37-2013-00048310-CU-MC-CTL, against 14 companies, including us (collectively, "Defendants"). We were served with the Complaint on May 23, 2013. The Complaint alleges that the Plaintiff received unsolicited promotional emails being sent by Defendant, Victory Mark Corp. Ltd., discussing the other 13 corporate Defendants, including us. The Plaintiff is seeking liquidated damages in the amount of $1,000 for each email he received for a total of $1,204,000 collectively for all Defendants. The Company is defending this action vigorously and believes that the matter is without legal merit. The Company cannot determine the ultimate outcome of this matter at this time.

Civil actions were brought against us by two of our lenders during the reporting period. Both actions were settled. For more information, see the discussions concerning settlements with AGS and IBC in ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION, in the section entitled "Liquidity and Capital Resources" and in the subsection entitled "Loan Transactions Grouped by Lender."

In the ordinary course of business, we may be from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters could have a material adverse effect upon our financial condition and/or results of operations.

SUBSEQUENT EVENT

On November 5, 2014, we consented to a cease-and-desist order brought by the SEC. The Order found that we failed to timely disclose a material financing arrangement, and that when we disclosed the arrangement, we used the wrong SEC form. We are required to pay a $25,000 civil money penalty and to cease and desist from committing or causing any violations or any future violations of
Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-11 thereunder. The Order is available at www.sec.gov. IN THE MATTER OF RED GIANT ENTERTAINMENT, INC., SEC Admin. Proc. File No. 3-16249 (Nov. 5, 2014).

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR COMMON EQUITY

Our common stock is traded in the over-the counter market and is quoted in the pink tier of OTC Markets, Inc. under the symbol "REDG." Prior to August 28, 2012, our symbol was "CASL."

There is a limited trading market for our common stock at present. There is no assurance that an active trading market will ever develop or, if such a market does develop, that it will continue. Prior to December 21, 2012, the only trade known to us was a private sale of 10,080,000 shares of our common stock on April 4, 2012, at a price of $0.0022 per shares, as reported on a Form 4 filed with the SEC on April 4, 2012.

The following table sets forth, for the periods indicated, the quarterly high and low bid prices per share as reported where indicated by OTC Markets, Inc. or Nasdaq.com. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

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Period                                    High Price(Bid)        Low Price(Bid)
------                                    ---------------        --------------
YEAR ENDED AUGUST 31, 2013 (1)
  First Quarter (Sep-Nov 2012)               No Quote               No Quote
  Second Quarter (Dec 2012-Feb 2013)         $0.26                  $0.065
  Third Quarter (Mar-May 2013)               $0.20                  $0.0091
  Fourth Quarter (Jun-Aug 2013)              $0.023                 $0.01
YEAR ENDED AUGUST 31, 2014 (2)
  First Quarter (Sep-Nov 2013)               $0.0128                $0.004
  Second Quarter (Dec 2013-Feb 2014)         $0.0125                $0.0013
  Third Quarter (Mar-May 2014)               $0.0172                $0.0007
  Fourth Quarter (Jun-Aug 2014)              $0.0024                $0.0009

----------
(1)  Source: OTC Markets, Inc.
(2)  Source: Nasdaq.com.

There was no volume of trading for the first quarter of 2013 and only sporadic trading in the second quarter of 2013. We engaged in a stock repurchase program between June 25, 2013 and November 30, 2013 (see "Stock Repurchase Plan" below). We did not repurchase any of our common stock during the reporting period, but we did not terminate the plan until the end of our first quarter.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

STOCK PURCHASE PLAN

We terminated our Stock Purchase Plan on November 30, 2013. We purchased a total of 1,785,900 shares during our fiscal year ended August 31, 2013. We did not make any additional purchases during the fiscal year ended August 31, 2014. The repurchased shares have not been cancelled or reissued.

TABLE OF SHARE REPURCHASES

(FROM INCEPTION OF STOCK REPURCHASE PLAN THROUGH TERMINATION OF PLAN):

                                                                          Total Number of Shares Purchased
                              Total Number of      Average Price Paid       as Part of Publicly Announced
Period                       Shares Purchased          Per Share                  Plans or Programs
------                       ----------------          ---------                  -----------------
June 2013                         615,900               $0.0141                         615,900
July 2013                       1,170,000               $0.0192                       1,785,900
August 2013                            -0-                   -0-                      1,785,900
September 2013                         -0-                   -0-                      1,785,900
October 2013                           -0-                   -0-                      1,785,900
November 2013                          -0-                   -0-                      1,785,900

The shares repurchased as listed above have not yet been returned to authorized but unissued status, but upon doing so, will result in us having outstanding 2,889,350,531 shares of common stock.

HOLDERS

As of August 31, 2014, there were 43 holders of record of our common stock.

DIVIDENDS

We have paid no dividends on our common stock since inception and do not anticipate or contemplate paying cash dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

Other than as set forth in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K during the preceding three years, the Company has made no sales of unregistered securities.

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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

                                  Number of Securities
                              Number of Securities to be                                     Remaining Available for
                               Issued Upon Exercise of       Weighted-Average Exercise        Future Issuance Under
                                 Outstanding Options,      Price of Outstanding Options,    Equity Compensation Plans
   Plan Category                 Warrants and Rights           Warrants and Rights            (excluding column (a))
   -------------                 -------------------           -------------------            ----------------------
Equity Compensation Plans            25,000,000 (1)                    --                            25,000,000
Approved by Security
Holders

Equity Compensation Plans Not                --                        --                                    --
Approved by Security Holders

     Total                           25,000,000                        --                            25,000,000


(1) Represents shares reserved for the Company's 2013 Stock Option Plan

As of December 24, 2013, the Board and a majority of our shareholders adopted the 2013 Stock Option Plan.

SUMMARY OF THE 2013 STOCK OPTION PLAN

The following is a summary of the material features of the 2013 Stock Option Plan and is qualified in its entirety by reference to the full text of the 2013 Stock Option Plan. The full text is publicly available as part of our Definitive Information Statement Pursuant to Section 14C of the Securities Exchange Act of 1934, which was filed with the SEC on January 6, 2014. Capitalized terms used in this summary and not otherwise defined shall have the meaning set forth in the 2013 Stock Option Plan.

PURPOSES OF THE 2013 STOCK OPTION PLAN

The purpose of the 2013 Stock Option Plan is to further our growth and financial success by providing additional incentives to selected employees, directors and consultants of us and our Affiliates (referred to collectively as "Eligible Persons") by providing incentives for Eligible Persons to exert maximum efforts for the success of us and our Affiliates. As of the date of this Information Statement, we and our Affiliates have one employee who is also a director and four consultants who are also directors.

ADMINISTRATION

The 2013 Stock Option Plan is administered by the Board unless delegated to a committee of not fewer than three disinterested administrators, of which at least two are members of the Board (either the Board or such committee, as applicable, referred to as the "Committee"). The Committee has the authority to determine the specific terms and conditions of all awards granted under the 2013 Stock Option Plan, including, without limitation, the number of shares subject to each award, the price to be paid for the shares, and the recipients of awards ("Participants"), and the applicable vesting criteria. The Committee has discretion to make all other determinations necessary or advisable for the administration of the 2013 Stock Option Plan.

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SHARES SUBJECT TO THE PLAN

We are required to reserve 50,000,000 shares of Common Stock for awards under the 2013 Stock Option Plan. The shares may be unissued shares or reacquired shares, bought on the market or otherwise. To the extent any stock options expire or terminate without having been exercised in full, the shares underlying such stock options shall revert to and again become available for issuance under the 2013 Stock Option Plan.

ELIGIBILITY

Options intended to qualify as "incentive stock options" as defined under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") may be granted only to employees of us or our Affiliates and in accordance with regulations promulgated under the Code for incentive stock options. All other stock options may be granted to Eligible Persons except where such grants would not comply with applicable securities laws.

Options shall be designated as either incentive stock options or non-statutory stock options (i.e., options not intended to qualify as incentive stock options) and shall have a term of not more than ten years from the grant date. To the extent that the aggregate fair market value of Common Stock (determined at grant date) with respect to which incentive stock options are exercisable for the first time by any Participant during any calendar year (under all plans of us and our Affiliates) exceeds $100,000, the options or portions thereof that exceed such limit (according to the order of grant) shall be treated as non-statutory stock options.

The exercise price of incentive stock options shall not be less than 100% (and in the case of incentive stock options granted to 10% or greater stockholders of us or our Affiliates, not less than 110%) of the fair market value of the Common Stock on the grant date.

The exercise price may be paid, at the discretion of the Board, at either the time of grant or the time of exercise of the Option (i) in cash or by check at the time of exercise; (ii) by the delivery to us of other Common Stock not acquired from us or otherwise held by the Participant for more than six months;
(iii) by an interest-bearing promissory note; or (iv) in any other form of legal consideration acceptable to the Board.

Options shall vest as the Committee may deem appropriate, and the vesting provisions of individual options may vary. Generally, options are expected to vest immediately upon issuance.

CAPITALIZATION ADJUSTMENTS; DISSOLUTION OR LIQUIDATION; ASSETS SALE, MERGER, CONSOLIDATION OR REVERSE MERGER

The Committee shall adjust the number of shares of Common Stock subject to the 2013 Stock Option Plan, the maximum limits on the number of shares of Common Stock subject to award to any person, and each award outstanding in the case of any subdivision, consolidation, stock dividend, exchange of shares, or other such changes in our capital structure.

All stock options shall terminate immediately prior to any event of our dissolution or liquidation.

In the case of any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of shares of Common Stock equal to the shares subject to the option would have been entitled by reason of such merger or consolidation.

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AMENDMENT, TERMINATION OR SUSPENSION OF THE 2013 STOCK OPTION PLAN AND OPTION AWARDS

The Committee may terminate, suspend, or amend the 2013 Stock Option Plan at any time, subject to applicable law. If necessary to comply with any applicable law any such amendment will be subject to stockholder approval. We will obtain stockholder consent prior to amending the 2013 Stock Option Plan to (i) increase the number of shares subject to the 2013 Stock Option Plan; (ii) decrease the price at which options thereunder may be granted; (iii) materially increase benefits to Participants; or (iv) change the class of Eligible Persons. Provided, however, that no action may impair the rights of any Participant under any Stock Award, without his or her written consent.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of certain tax consequences of certain transactions under the 2013 Stock Option Plan. This summary is not intended to be complete and does not describe state or local tax consequences.

Under the Code, we will generally be entitled to a deduction for federal income tax purposes at the same time and in the same amount as the ordinary income that Participants recognize pursuant to awards (subject to the Participant's overall compensation being reasonable, and to the discussion below with respect to Code
Section 162(m)). For Participants, the expected tax consequences of awards are as follows:

NON-STATUTORY STOCK OPTIONS

A Participant will not recognize income at the time a non-statutory stock option is granted. At the time a non-statutory stock option is exercised, the Participant will recognize ordinary income in an amount equal to the excess of
(i) the fair market value of the shares of Common Stock issued to the Participant on the exercise date over (ii) the exercise price paid for the shares. At the time of sale of shares acquired pursuant to the exercise of a non-statutory stock option, the appreciation (or depreciation) in value of the shares after the date of exercise will be treated either as short-term or long-term capital gain (or loss) depending on how long the shares have been held.

INCENTIVE STOCK OPTIONS

A Participant will not recognize income upon the grant of an incentive stock option. There are generally no tax consequences to the Participant upon exercise of an incentive stock option (except the amount by which the fair market value of the shares at the time of exercise exceeds the option exercise price is a tax preference item possibly giving rise to an alternative minimum tax). If the shares of Common Stock are not disposed of within two years from the date the incentive stock option was granted or within one year after the incentive stock option was exercised, any gain realized upon the subsequent disposition of the shares will be characterized as long-term capital gain and any loss will be characterized as long-term capital loss. If both of these holding period requirements are not met, then a "disqualifying disposition" occurs and (i) the Participant recognizes gain in the amount by which the fair market value of the shares at the time of exercise exceeded the exercise price for the incentive stock option and (ii) any remaining amount realized on disposition (except for certain "wash" sales, gifts or sales to related persons) will be characterized as capital gain or loss.

SPECIAL TAX PROVISIONS

Under certain circumstances, the accelerated vesting, cash-out or accelerated lapse of restrictions on awards in connection with a change in control of us might be deemed an "excess parachute payment" for purposes of the golden parachute tax provisions of Code Section 280G, and the Participant may be subject to a 20% excise tax and we may be denied a tax deduction. Furthermore, we may not be able to deduct the aggregate compensation in excess of $1,000,000 attributable to awards that are not "performance-based" within the meaning of Code Section 162(m) in certain circumstances.

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GENERAL TAX LAW CONSIDERATIONS

The preceding paragraphs are intended to be merely a summary of certain important tax law consequences concerning a grant of options under the 2013 Stock Option Plan and the disposition of shares issued thereunder in existence as of the date of this proxy statement. Special rules may apply to our officers, directors or greater than ten percent stockholders. Participants in the 2013 Stock Option Plan should review the current tax treatment with their individual tax advisors at the time of grant, exercise or any other transaction relating to an award or the underlying shares.

ITEM 6. SELECTED FINANCIAL DATA

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

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

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

PRINCIPLES OF CONSOLIDATION

We operate under the name of Red Giant Entertainment, Inc. We have two wholly-owned subsidiaries, RGE and ComicGenesis. We formed these companies to develop brand names, but both companies are inactive. Any activities of these subsidiaries or holdings have been included in our consolidated financial statements, with elimination of any intercompany accounts and transactions.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with the Board, we have identified several accounting principles that we believe are key to the understanding of our financial statements. These important accounting policies require management's most difficult, subjective judgments.

GOING CONCERN

The financial statements included in our filings have been prepared in conformity with generally accepted accounting principles that contemplate our continuance as a going concern. Management may use borrowings and security sales to mitigate the effects of its cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue existence.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the 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 revenues and expenses for the reporting period. We review our estimates on an ongoing basis. The estimates were based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates. We believe the judgments and estimates required in our accounting policies to be critical in the preparation of our financial statements.

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REVENUE RECOGNITION

Our revenue is recognized from three primary sources: Advertising Revenue, Publishing Sales, and Creative Services. Revenue is processed through our Paypal Account and Project Wonderful accounts where applicable. Advertising Revenue comes from the following sources and is stated at net after commissions:

* Keenspot: Revenue is recognized from Keenspot's arrangements with advertisers at an agreed upon cost per thousand verified impressions (CPM) to our Keenspot sites whereby advertisers pay based on the number of times the target audience is exposed to the advertisement. This revenue is recognized on a net basis in the monthly period in which the impressions occur (i.e., advertisers pay us within 90 calendar days of receiving Keenspot's invoices). The particular CPM rate varies based upon bids by advertisers and other customary factors. In exchange for advertising, hosting, IT, and sales management. Keenspot takes 50% commission of ad revenue for their services.
* Project Wonderful: Revenue is paid immediately and based upon bids by advertisers for a set amount of time at the prevailing highest winning rate. Project Wonderful takes a 25% commission of ad revenue for its services.

Publishing Revenue comes from the following sources:

* Kickstarter Campaigns: These are presales for books and revenue is recognized only once the books arrive and are shipped to the buyers.
* Direct Sales: Through our online store, we sell directly to clients and the transactions process through our Paypal account. All orders are shipped immediately and revenue is recognized immediately.

Creative Services Revenue comes from artwork, writing, advertising, and other creative endeavors we handle for outside clients. Revenue is recognized upon completion of the services and payment has been received.

Shipping and Handling for purchases are paid directly by the consumer through Paypal. The Company has not established an allowance for doubtful accounts, as all transactions are handled through Paypal directly by the consumer.

COST OF GOODS SOLD

Cost of goods sold includes the cost of creating services or artwork, advertising and books.

EARNINGS (LOSS) PER SHARE

We follow financial accounting standards, which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share.

There were approximately 2,693,271,000 common stock equivalents outstanding, attributable to the convertible debt agreements as of August 31, 2014.

INCOME TAXES

We have adopted ASC 740, Income Taxes, which requires us to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in our financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

ADVERTISING

Advertising costs are expensed as incurred. We expensed advertising costs of $130,258 and $88,001, respectively, for the periods ending August 31, 2014 and August 31, 2013.

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CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, we consider all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As of August 31, 2014 and August 31, 2013, we had $5,953 and $14,937, respectively in cash. We had no cash equivalents during the years then ended.

RESULTS OF OPERATIONS

YEARS ENDED AUGUST 31, 2014 AND 2013

REVENUES. Our revenues decreased to $0 for the fiscal year ended August 31, 2014 as compared to revenues of $497,486 for the fiscal year ended August 31, 2013. The decrease was due to direct bulk shipments of our product that occurred during 2013.

COST OF SALES. Our cost of sales decreased to $80,629 for the fiscal year ended August 31, 2014, as compared to $275,690 for the fiscal year ended August 31, 2013, based on volume of sales. For the year ending August 31, 2014 a charge of $80,629 was recorded for lower of cost or market adjustments to inventory.

OPERATING EXPENSES. Operating expenses increased to $1,251,280 for the fiscal year ended August 31, 2014, as compared to $639,890 for the fiscal year ended August 31, 2013. This change occurred due to an increase in selling and marketing efforts (increase of approximately $153,000), an increase in stock based compensation (approximately $268,000), and impairment of intellectual property of $30,300. Cash-based compensation increased due to an increase in active personnel, and an increase in professional costs of legal and securities compliance.

OTHER INCOME (EXPENSE). Other expenses increased significantly due to our funding arrangements, which are accounted for as derivative contracts. Interest expense and the change in the fair value of derivatives increased to $8,206,994 during fiscal year ending August 31, 2014 due to an increase in financing efforts under the terms of the convertible notes payable.

NET LOSS. We had a net loss of $9,563,903 for the fiscal year ended August 31, 2014 compared to a net loss of $1,741,752 for the fiscal year ended August 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES

We financed ourselves during the reporting period largely through the issuance of securities to lenders in stock-based loan transactions. We dealt with several lenders. The terms of certain transactions were carried forward from our prior annual reporting period. The status of our loan financing transactions as of August 31, 2014 is as follows:

LOAN TRANSACTIONS GROUPED BY LENDER

1. TYPENEX CO-INVESTMENT, LLC

On June 21, 2013, we entered into a Securities Purchase Agreement (the "Typenex SPA") with Typenex Co-Investment, LLC ("Typenex") under which we concurrently issued to Typenex a Secured Convertible Promissory Note in principal amount of $557,500 with an original issue discount of $50,000 plus an additional $7,500 to cover Typenex's due diligence and legal fees in connection therewith (the "Typenex Note") in exchange for $100,000 in cash, two secured notes (the "Secured Buyer Notes") and two unsecured notes (the "Unsecured Buyer Notes"; together with the Secured Buyer Notes, the "Buyer Notes"). The Typenex Note is secured by the Buyer Notes. The Buyer Notes are each dated concurrently with the Typenex SPA and are each in the principal amount of $100,000 and bear interest at the rate of 5% per annum. Unless we fail to meet certain conditions related to our common stock and representations and warranties given in the Typenex Note, the Secured Buyer Notes are due and payable seven and nine months, respectively, after the issuance of the Typenex Note, and the Unsecured Buyer notes are due and payable 11 and 13 months after the issuance of the Typenex Note. Otherwise, each of the Buyer Notes matures two months following the

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maturity of the Typenex Note. Each of the Buyer Notes may be prepaid in Typenex's discretion. The Secured Buyer Notes are secured by that certain Membership Interest Pledge Agreement (the "Typenex Pledge Agreement") dated concurrently with the Typenex SPA under which Typenex has pledged a 40% membership interest in Typenex Medical, LLC, an Illinois limited liability company; provided, however, that Typenex may substitute collateral with a fair market value not less than the aggregate principal balance of the Buyer Notes.

Loan funding under the Typenex Note is made at its discretion. Payment may be made in cash or in shares of our common stock or any combination of cash and shares; provided, however, that we may only pay in cash if we fail to meet certain conditions related to our common stock and representations and warranties given in the Typenex Note. We may prepay the Typenex Note with a payment of 125% of the outstanding balance (including interest and other fees and amounts due).

Interest accrues at the rate of 8% per annum. If we fail to repay the Typenex Note when due, or if other events of default thereunder apply, a default interest rate of 22% per annum will apply. In addition, if we fail to issue stock to Typenex within three trading days of receipt of a notice of conversion, we must pay a penalty equal to the greater of (i) $2,000 per day; or (ii) 2% of the product of (A) the number of shares to which Typenex was entitled that were not issued on a timely basis; and (B) the closing sale price of the common stock on the trading day immediately preceding the last day for us to timely issued the shares.

The Typenex Note is convertible into shares of our common stock in five tranches consisting of an initial tranche of $157,500 plus interest and other fees and amounts due and four tranches of $100,000 plus interest and other fees and amounts due, with conversion of the last four tranches conditioned upon payment in full of the Buyer Note corresponding to such tranche. The Typenex Note is convertible at a price equal to the average of the daily closing bid prices for the 15 days immediately prior to the six-month anniversary of the Typenex Note.

Under and concurrently with the Typenex SPA, we also issued to Typenex a warrant (the "Typenex Warrant") to purchase the number of shares equal to $557,500 divided by the product of (i) the average of the three lowest VWAPs in the 20 if the three lowest VWAPs were lower than $0.005) at a price of $0.015 per share. The Typenex Warrant may also be exercised by cashless exercise.

This conversion price of the Typenex Note, the exercise price of the Typenex Warrant, and the number of shares of our common stock subject to the Typenex Warrant are subject to adjustment for issuance of securities with a lower issuance price (as defined in the Typenex Note). Unless Typenex gives us 61 calendar days written notice to the contrary, however, Typenex may not convert the Typenex Note or exercise the Typenex Warrants in an amount which would cause Typenex to own more than 4.99%, or if our market capitalization (as defined in the Typenex Note) is less than $10,000,000, more than 9.99%, of our outstanding common stock.

Under the Typenex SPA, we must pay a penalty of $100 per $10,000 in outstanding principal per trading day that we are late in filing any information required to be filed by us up to ten days, and $200 per day for each trading day after ten days that we are late. Under the Typenex SPA, we also must pay $100 per $10,000 in outstanding principal per trading day past three business days that we do not and $200 per day for each trading day after ten days that we are late, and may be required to pay additional fees if Typenex purchases shares on the open market in order to make delivery in satisfaction of a sale of our shares by Typenex.

Under the Typenex SPA, we are also required to periodically post the then-current number of issued and outstanding shares of our common stock on our webpage at otcmarkets.com if we fail to maintain a market capitalization of $10,000,000 or greater, or pay a late fee for each calendar day we fail to comply with such obligation.

We have granted piggyback registration rights for shares issuable under the Typenex Note and the Typenex Warrant.

The Typenex Note and Typenex Warrant were issued to Typenex pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of

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1933. Typenex represented to us that it is an accredited investor. We believe that Typenex had adequate information about us as well as the as the opportunity to ask questions and receive responses from our management.

2. ICONIC HOLDINGS, LLC

As of April 15, 2013, we entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with Iconic Holdings, LLC ("Iconic") providing that at any time during the period beginning upon the effective date of a registration statement for the registration of the resale by Iconic of the restricted shares of our common stock issued under, or issuable upon exercise of any warrants issued under, the Securities Purchase Agreement (the "Registration Statement") (the "Effective Date") and ending on the earliest to occur of: (1) the date on which Iconic has purchased a total of $5,000,000 worth of our common stock pursuant to the Securities Purchase Agreement; or (2) the date of termination of the Securities Purchase Agreement; or (3) the date which is 36 months from the Effective Date or 48 months from the Effective Date if 36 months after the Effective Date, we file an amendment to the Registration Statement or a new registration statement is declared effective, (the "Commitment Period); we may sell shares of our common stock to Iconic Holdings, LLC, for a purchase price of: (1) 92.5% of the lowest trading price of our common stock during the five consecutive trading days including and immediately following the date of our notice of sale (the "Market Price"); or (2) 90% of the Market Price if our common stock is eligible for Deposit/Withdrawal at Custodian ("DWAC"); or (3) 80% of the Market Price if our common stock is under a chill order of the Depository Trust & Clearing Corporation.

We also entered into a Registration Rights Agreement with Iconic as of April 15, 2013 (the "Registration Rights Agreement") under which we are required, among other things, to file the Registration Statement prior to selling any securities to Iconic under the Securities Purchase Agreement, to keep the Registration Statement effective until the fulfillment of the Commitment Period and to pay all expenses incurred in connection with the registration. In addition, on April 15, 2013, we issued Iconic a 9.9% Secured Convertible Promissory Note in the amount of $130,000 for which we received $125,000 (the "Note"). The Note matured on April 15, 2014 and is convertible into our common stock at 60% of the lowest trading price of any day during the ten consecutive trading days prior to the date of conversion. The shares of common stock into which the Note is convertible are not being registered in the Registration Statement. All descriptions of the Agreements herein are qualified in their entirety by reference to the respective text thereof filed as exhibits hereto, which are incorporated herein by reference.

The Note was issued, and securities under the Securities Purchase Agreement will be issued, if at all, to Iconic pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder. Iconic has represented to us that it is an accredited investor and had adequate information about us as well the opportunity to ask questions and receive responses from our management.

On December 20, 2013, we issued Iconic a 10% Secured Convertible Promissory Note in the amount of $25,000 for which we received $17,500 (the "Second Iconic Note") with an original issue discount of $7,500. The Second Iconic Note matures on December 20, 2014 and is convertible into our common stock at the lower of
(i) $0.0033 per share; or (ii) 60% of the lowest trading price of any day during the 20 consecutive trading days prior to the date of conversion. The shares of common stock into which the Second Iconic Note is convertible are not being registered in the Registration Statement.

The Second Iconic Note was issued to Iconic pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder. Iconic has represented to us that it is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

3. GEL PROPERTIES, LLC

On May 24, 2013, we issued a $50,000 6% Convertible Redeemable Note to Gel Properties, LLC ("GEL") (the "Initial GEL Note") in exchange for $42,500 in cash and $7,500 in legal fees and due diligence fees paid by GEL. On May 24, 2013, we also issued four $75,000 6% Convertible Redeemable Secured Notes (the "Back-End Notes"; together with the Initial GEL Note, the "GEL Notes"), each in exchange for a $75,000 Secured Promissory Note issued by GEL to us and secured by the $75,000 cash value interest in a life insurance policy assigned to GEL by its member, or other collateral with an equivalent or greater cash value. The four

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GEL Notes have a maturity date of January 24, March 24, May 24 and July 24, 2014, respectively. $10,000 had been converted into 2,915,452 shares of our common stock under the Initial GEL Note as of December 5, 2013. The GEL Notes were issued pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that GEL is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On January 24, 2014, we agreed with GEL to reduce the second of four $75,000 Secured Promissory Note issued by GEL to us (each, a "GEL Payment Note") as consideration the second of four $75,000 6% Convertible Redeemable Secured Notes (each, a "Back End Note") to $35,000 and extend the maturity date of the amended GEL Payment Note to April 24, 2014, and received the remaining $40,000 GEL Payment Note in March 2014 to complete the originally contemplated $75,000 tranche.

The GEL Payment Notes are secured by the $75,000 cash value interest in a life insurance policy assigned to GEL by its member, or other collateral with an equivalent or greater cash value. If we do not meet the current information requirement under Rule 144 of the Securities Act of 1933, however, GEL may offset the amounts owing under the GEL Payment Note from the amount owed by us to GEL.

Pursuant to the above, the second of four Back End Notes was funded. On April 2, 2014, we received funding of the third of four $75,000 Back End Notes.

The Back End Notes are due and payable on May 24, 2015, with interest payable in shares of our common stock. If we fail to repay the Back End Notes when due, or if other events of default thereunder apply, a default interest rate of 24% per annum will apply. In addition, if we fail to issue unrestricted stock to GEL within three business days of receipt of a notice of conversion, we must pay a $250 per day penalty, which fee increases to $500 per day beginning on the tenth day. We may redeem the Back End Notes with a payment of 150% of the outstanding principal amount, and are required to redeem the Back End Notes upon certain sales events as set forth in the Back End Notes. The Back End Notes are convertible into shares of our common stock at a conversion price equal to 70% of the lowest closing bid price of our common stock for the five trading days on or prior to the date upon which notice of conversion is received. The Back End Notes were issued pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that GEL is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On April 28, 2014, we issued a $40,000 8% Convertible Redeemable Note to GEL (the "GEL Note") in exchange for a $40,000 Collateralized Secured Promissory Note due December 27, 2014 (contingent on our continuing to meet current information requirements of Rule 144 under the Securities Act) issued by GEL to us (the "GEL Payment Note"), bearing interest at the rate of 8% per annum and secured by a $75,000 8% convertible promissory note issued by BioNeutral, Inc. to GEL. Provided, however, we agreed that to reimburse GEL $6,000 in legal fees and due diligence fees paid by GEL. The GEL Note is due and payable on April 28, 2015, with interest payable in shares of common stock. If we fail to repay the GEL Note when due, or if other events of default thereunder apply, a default interest rate of 24% per annum will apply. In addition, if we fail to issue unrestricted stock to GEL within three business days of receipt of a notice of conversion, we must pay a $250 per day penalty, which fee increases to $500 per day beginning on the tenth day. We may not prepay the GEL Note. The GEL Note is convertible into shares of our common stock at a conversion price equal to 62% of the lowest closing bid price of our common stock for the five trading days on or prior to the date upon which notice of conversion is received, subject to reduction to 55% if there is DTC Chill placed on our shares of common stock. The GEL Note was issued pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that GEL is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

4. SETTLEMENT AGREEMENT WITH AGS

On January 30, 2014, we entered into a Settlement Agreement and Release (the "AGS Settlement") with AGS to settle an action brought by AGS against us in the Circuit Court of the Second Judicial Circuit, Leon County, Florida (the "Court") for our failure to pay certain invoices (the "Invoices") purchased by AGS from certain creditors of ours, including (i) $17,901.30 owed by us to Active Media Publishing, LLC, an entity controlled by Benny R. Powell, an officer and

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director of us; and (ii) $56,352 owed by us to Glass House Graphics, a sole proprietorship owned by David Campiti an officer and director of us. Following a fairness hearing pursuant to Section 3(a)(10) of the Securities Act of 1933, the Court approved and we concurrently issued to AGS a 12% Convertible Promissory Note in principal amount of $149,129.50 (the "December AGS Note") as payment in full of the Invoices. The principal balance was converted into our common stock in April 2014, and the December AGS Note is no longer outstanding. The December AGS Note was issued to AGS pursuant to the exemption from registration set forth in Section 3(a)(10) of the Securities Act.

On January 8, 2014, we issued an 18% Convertible Promissory Note in principal amount of $19,000 (the "January AGS Note") to AGS. If we fail to repay the January AGS Note when due, or if other events of default thereunder apply, 150% of sum of the outstanding principal along with any unpaid interest and other costs, fees or charges under the January AGS Note immediately prior to such default shall become immediately due and payable, and the January AGS Note will accrue interest at the maximum amount of interest available under state law during the default on a note. In addition, if we fail to issue stock to AGS within three trading days of receipt of a notice of conversion, we must pay a penalty equal to the greater of (i) $2,000 per day; or (ii) 100% of the product of (A) the number of shares to which AGS was entitled that were not issued on a timely basis; and (B) the closing sale price of the common stock on the trading day immediately preceding the last day for us to timely issued the shares. The balance due under the January AGS Note will also increase if that our shares are not DWAC eligible at the time of conversion.

The January AGS Note matures on January 8, 2015 and is initially convertible into shares of our common stock at a price equal to 60% of the average daily closing bid prices for the 50 trading days immediately prior to the conversion date; provided, however, that an additional 10% discount shall apply if we are late with any of our filings with the SEC, and another 20% discount shall apply if we are late with another filing after curing the first late filing. This conversion price of the January AGS Note is subject to adjustment for issuance of securities for a consideration per share lower than the above conversion price. Unless AGS gives us 61 calendar days written notice to the contrary, however, AGS may not convert the January AGS Note in an amount which would cause AGS to own more than 4.99% of our outstanding common stock. In no case may AGS convert the January AGS Note in an amount which would cause AGS to own more than 9.99% of our outstanding common stock.

We are prohibited from threatening or entering into litigation with AGS under the January AGS Note, and have released AGS from any past, current or future claims we have or may have against AGS. Under the January AGS Note, we are also prohibited from issuing any securities whose purchase, conversion or exercise price is determined using any floating discount or other post-issuance adjustable discount to the market price of our common stock.

We may redeem the January AGS Note with a payment of 150% of the outstanding principal amount and any unpaid interest thereon upon 20 trading days' notice if certain conditions related to our performance under the December AGS Note and our ability to issue shares without restrictive legend are met.

We have granted demand registration rights for shares issuable under the January AGS Note.

The January AGS Note was issued to AGS pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933. We believe that AGS is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

5. SETTLEMENT AGREEMENT WITH IBC

On February 5, 2014, we entered into a Settlement Agreement and Release (the "IBC Settlement") with IBC to settle an action brought by IBC against us in the Circuit Court of the Twelfth Judicial Circuit, Sarasota County, Florida (the "Court") for our failure to pay certain invoices (the "Invoices") purchased by IBC from certain creditors of ours, none of whom were related parties of us or our affiliates. Following a fairness hearing pursuant to Section 3(a)(10) of the Securities Act of 1933, the Court approved and we issued to IBC 7,500,000 shares of common stock as payment in full of the Invoices and agreed to issue to IBC in one or more tranches as necessary that certain number of shares equal to the $102,000 owed under the Invoices divided by the IBC Repayment Price (as defined below) (the "Repayment Obligation").

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The IBC Note was issued to IBC pursuant to the exemption from registration set forth in Section 3(a)(10) of the Securities Act. The Company's obligation is extinguished.

6. JMJ FINANCIAL

On June 13, 2013, we issued a $335,000 promissory note to JMJ FINANCIAL ("JMJ") (the "JMJ Note"). Under the terms of the JMJ Note, we have given JMJ a $35,000 original issued discount and anticipate receiving up to $300,000 in installments payable at JMJ's discretion, of which we have received $55,000 as of the date of this Annual Report. Each installment by JMJ matures and is due and payable one year after receipt thereof. No interest applies to an installment if payment is made within 90 days from receipt thereof. A one-time 12% interest charge applies to payments made after 90 days from receipt of the respective installment.

If we default on the JMJ Note an interest rate of 18% will apply, and we will be required to pay the greater of (i) (A) the outstanding balance (including interest and other fees and amounts), (B) divided by the conversion price and multiplied by the VWAP; or (ii) 150% of the outstanding principal amount along with 100% of the accrued and unpaid interest and other fees and amounts due. In addition, if we fail to issue stock to JMJ within three business days of receipt of a notice of conversion, we must pay a $2,000 per day penalty, which will be added to the principal of the JMJ Note.

The JMJ Note is convertible into shares of our common stock at a conversion price equal to 60% of the lowest trading price of our common stock as reported on the OTCQB for any of the 25 trading days prior to conversion, subject to additional discounts based on DWAC and DTC eligibility. Unless otherwise mutually agreed in writing, however, JMJ may not convert an amount which would cause JMJ to own more than 4.99% of our outstanding common stock. We have granted piggyback registration rights for shares issuable under the JMJ Note.

The terms of the JMJ Note are subject to adjustment if we issue securities with more favorable terms than the JMJ Note, including without limitation terms re:
warrant coverage, original issue discount, interest rates, conversion price and lookback periods, etc.

The JMJ Note was issued pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that JMJ is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

As of February 2014, we received an additional $25,000 installment under our promissory note with JMJ dated June 13, 2013 (the "JMJ Note"), under which JMJ may lend to us an aggregate amount of $335,000 with a $35,000 original issue discount. Each installment by JMJ matures and is due and payable one year after receipt thereof. No interest applies to an installment if payment is made within 90 days from receipt thereof. A one-time 12% interest charge applies to payments made after 90 days from receipt of the respective installment. If we default on the JMJ Note an interest rate of 18% will apply, and we will be required to pay the greater of (i) (A) the outstanding balance (including interest and other fees and amounts), (B) divided by the conversion price and multiplied by the VWAP; or (ii) 150% of the outstanding principal amount along with 100% of the accrued and unpaid interest and other fees and amounts due. In addition, if we fail to issue stock to JMJ within three business days of receipt of a notice of conversion, we must pay a $2,000 per day penalty, which will be added to the principal of the JMJ Note.

The JMJ Note is convertible into shares of our common stock at a conversion price equal to 60% of the lowest trading price of our common stock as reported on the OTCQB for any of the 25 trading days prior to conversion, subject to additional discounts based on DWAC and DTC eligibility. Unless otherwise mutually agreed in writing, however, JMJ may not convert an amount which would cause JMJ to own more than 4.99% of our outstanding common stock. We have granted piggyback registration rights for shares issuable under the JMJ Note.

The terms of the JMJ Note are subject to adjustment if we issue securities with more favorable terms than the JMJ Note, including without limitation terms re:
warrant coverage, original issue discount, interest rates, conversion price and lookback periods, etc.

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The JMJ Note was issued pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that JMJ is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

7. WHC CAPITAL, LLC

On August 1, 2013, we entered into a purchase agreement with WHC Capital, LLC ("WHC") (the "Purchase Agreement" under which we concurrently issued a $166,000 12% secured convertible debenture (the "Debenture") to WHC. The Debenture matures on August 1, 2014, and interest on the Debenture is payable in cash upon maturity. If we fail to repay the Debenture with interest upon maturity, the interest rate increases to 22%. The Debenture is secured by 35,000,000 shares of common stock pledged by Benny R. Powell, our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and a member of the Board, from his individual holdings. Funding of this note was received in August 2013 and the Debenture was paid in full during the reporting period.

The Debenture was issued to WHC pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933. WHC represented to us that it is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

8. LG CAPITAL FUNDING, LLC

On October 2, 2013, we issued a $55,000 convertible note (the "LG Note") to LG Capital Funding, LLC ("LG") with an original issue discount of 10% covering $5,000 in LG's due diligence and legal fees in connection with the LG Note. The LG Note is due and payable on October 2, 2015, with interest payable in shares of our common stock. If we fail to repay the LG Note upon maturity, a default interest rate of 24% shall also apply from such date, or at the highest rate permitted by law. We may redeem the LG Note with a payment of 150% of the outstanding principal amount, and are required to redeem the LG Note upon certain sales as set forth in the LG Note. The LG Note is convertible after the running of the applicable Rule 144 holding period without restrictive legend into shares of our common stock at a conversion price equal to 60% of the lowest trading price of our common stock as reported on the OTCQB for any of the ten trading days prior to and including the date upon which notice of conversion is received. The LG Note was issued pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that LG is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On June 4, 2014, we issued 54,685,981 shares of common stock to LG Capital Funding, LLC to convert $32,811.59 in principal and interest due under the 9% Convertible Redeemable Note dated October 2, 2013 (the "2013 LG Note"). The issuance was made pursuant to a May 27, 2014 notice of conversion and fully paid off the 2013 LG Note.

On March 5, 2014, we issued a $53,000 8% convertible, redeemable note (the "LG Note") to LG with an original issue discount covering $3,000 in LG's legal fees in connection with the LG Note. The LG Note is due and payable on March 5, 2015, with interest payable in shares of our common stock. If we fail to repay the LG Note upon maturity, a default interest rate of 24% shall also apply from such date, or at the highest rate permitted by law. We may redeem the LG Note with a payment of 150% of the outstanding principal amount during the first 180 days of the LG Note, and are required to redeem the LG Note upon certain sales events as set forth in the LG Note.
The LG Note is convertible after the running of the applicable Rule 144 holding period without restrictive legend into shares of our common stock at a conversion price equal to 55% of the lowest closing bid price of our common stock as reported on the OTCQB for any of the ten trading days prior to and including the date upon which notice of conversion is received.

The LG Note was issued pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that LG is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On May 24, 2014, we entered into a Securities Purchase Agreement with LG (the "LG SPA") under which we agreed to issue two 9% convertible notes in the

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principal amount of $50,000 each for an aggregate principal amount of $100,000 (each a "LG Note") in exchange for (i) $50,000 in cash for the first LG Note; and (ii) for the second LG Note, a $50,000 promissory note issued by LG to us (the "LG Payment Note") due January 30, 2015 (contingent on our continuing to meet current information requirements of Rule 144 under the Securities Act) issued by GEL to us, bearing interest at the rate of 8% per annum and secured by a pledge of the second LG Note; provided, however, that LG may substitute other collateral with equivalent appraised value upon three days prior written notice if we do not object. The second LG Note may not be converted until the LG Payment Note is fully paid. Provided, however, that we have agreed to reimburse $2,500 in legal fees to LG for each LG Note.

The LG Notes are due and payable on May 30, 2015, with interest payable in shares of common stock. If we fail to repay the LG Notes when due, or if other will apply. In addition, if we fail to issue unrestricted stock to LG within three business days of receipt of a notice of conversion, we must pay a $250 per day penalty, which fee increases to $500 per day beginning on the tenth day; provided, however, that once each LG Note is cash funded, the penalty shall be an increase of principal by 10%, 20%, or 50% for certain breaches of such LG Note.

We may redeem the First LG Note within 180 days of issuance of such first LG Note at 140% of the face value of the note plus any accrued interest. We may not prepay the Second LG Note unless that first LG Note is redeemed as set forth above. The LG Note is convertible into shares of our common stock at a conversion price equal to 55% of the lowest closing bid price of our common stock for the ten trading days on or prior to the date upon which notice of conversion is received, subject to reduction to 45% if there is DTC Chill placed on our shares of common stock. The LG Notes were issued pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that LG is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

9. JSJ INVESTMENTS, INC.

On August 5, 2013, we issued a $27,500 convertible note (the "JSJ Note") to JSJ. The JSJ Note was due and payable in six months from issuance at a premium of 125% of the principal amount. If we fail to repay the JSJ Note upon maturity, a default interest rate of 10% shall also apply from such date. The JSJ Note is convertible into shares of our common stock at a conversion price equal to the lower of 55% of the average of the three lowest trading prices in (i) the ten trading days prior to the date of conversion; or (ii) the ten trading days prior to the execution of the JSJ Note. The Debenture was issued to JSJ pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that JSJ is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On June 10, 2014, we issued a $50,000 12% Convertible Note (the "JSJ Note") to JSJ. The JSJ Note is due and payable on December 30, 2014 at a premium of 150% of the principal amount upon approval and acceptance by JSJ Investments; provided, however, that the principal balance of the note is payable on demand. If we fail to repay the JSJ Note on demand, a default interest rate of 12% shall also apply from such date. We may not prepay this Note. The JSJ Note is convertible into shares of our common stock at a conversion price equal to the lower of 55% of the average of the three lowest trading prices in (i) the 20 trading days prior to the date of conversion; or (ii) the ten trading days prior to the execution of the JSJ Note. If we do not issue shares to JSJ within three business days after receipt of a conversion notice, we will be required to issue an additional 25% shares of the shares in the conversion notice per day beginning on the fourth day following our receipt of a conversion notice. This conversion price is subject to adjustment if we issue any securities convertible into or exercisable for common stock where the aggregate price of purchase and exercise per share is lower than the then-existing conversion price.

On July 11, 2014, we issued another $50,000 12% Convertible Note to JSJ (together with the June 10, 2014 12% Convertible Note, the "JSJ Notes") with a maturity date of January 11, 2015. The JSJ Notes are identical in all respects other than the stated maturity date.

On July 25, 2014, we also entered into amendments of the June 10, 2014 and July 11, 2014 Notes increasing the interest rate on each Prior Note to 22% per annum from the issue date of such Prior Note and increasing the default interest rate of each Prior Note to 22% per annum from the maturity date of such Prior Note.

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On July 25, 2014, we issued a $100,000 22% Convertible Note (the "JSJ Note") to JSJ. The JSJ Note is due and payable on January 25, 2015 at a premium of 150% of the principal amount upon approval and acceptance by JSJ, with the principal balance of the note payable on demand. If we fail to repay the JSJ Note on demand, a default interest rate of 22% shall also apply from such date. We may not prepay this Note. The JSJ Note is convertible into shares of our common stock at a conversion price equal to the lower of 55% of the average of the three lowest trading prices in (i) the 20 trading days prior to the date of conversion; or (ii) the ten trading days prior to the execution of the JSJ Note. If we do not issue shares to JSJ within three business days after receipt of a conversion notice, we will be required to issue an additional 25% of the shares in the conversion notice per day beginning on the fourth day following our receipt of a conversion notice. This conversion price is subject to adjustment if we issue any securities convertible into or exercisable for common stock where the aggregate price of purchase and exercise per share is lower than the then-existing conversion price. In addition, if the aggregate price per share of any securities we issue that are convertible into or exchangeable for, directly or indirectly, or exercisable for common stock The JSJ Note was issued to JSJ pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that JSJ is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On August 20, 2014, we issued a $50,000 22% Convertible Note (the "JSJ Note") to JSJ. The JSJ Note is due and payable on February 20, 2015 at a premium of 150% of the principal amount upon approval and acceptance by JSJ, with the principal balance of the note payable on demand. If we fail to repay the JSJ Note on demand, a default interest rate of 22% shall also apply from such date. We may not prepay this Note. The JSJ Note is convertible into shares of our common stock at a conversion price equal to the lower of 55% of the average of the three lowest trading prices in (i) the 20 trading days prior to the date of conversion; or (ii) the ten trading days prior to the execution of the JSJ Note. If we do not issue shares to JSJ within three business days after receipt of a conversion notice, we will be required to issue an additional 25% of the shares in the conversion notice per day beginning on the fourth day following our receipt of a conversion notice. This conversion price is subject to adjustment if we issue any securities convertible into or exercisable for common stock where the aggregate price of purchase and exercise per share is lower than the then-existing conversion price. The JSJ Note was issued to JSJ pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. We believe that JSJ is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

10. ASHER ENTERPRISES, INC.

On September 30, 2013 and November 11, 2013, we entered into Securities Purchase Agreements (the "Asher SPAs") and 8% Convertible Promissory Notes (the "Asher Notes") with Asher in the principal amounts of $37,500 and $53,000, respectively. The two transactions are substantially the same, and the documents relating to the November 11, 2013 investment are filed herewith.

The Asher Notes were due approximately one year from their respective issuances, and they were paid in full during the reporting period. .

The Asher Notes were issued pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. Asher has represented to us that it is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

On January 7, 2014, we entered into a 8% Convertible Promissory Note (the "Asher Note") and Securities Purchase Agreement (the "Asher SPA") with Asher in the principal amounts of $32,500. The Asher Note was due approximately one year from its issuance, but we paid it in full.

The Asher Note was issued pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and regulations promulgated thereunder. Asher has represented to us that it is an accredited investor and had adequate information about us as well as the opportunity to ask questions and receive responses from our management.

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LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

At August 31, 2014, we had cash of $5,953 compared to $14,937 at August 31, 2013. The bulk of our other assets consist of inventory and prepaid inventory expenses. We are currently generating revenues from operations that are insufficient to meet our operating expenses. Our management believes that given the current economic environment and the continuing need to strengthen our cash position, there is still doubt about our ability to continue as a going concern. We are currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities, as well as a strategic or other transaction, to obtain additional funding to continue the development of, and successfully commercialize, our products. There can be no assurance that we will be successful in these. Should we be unable to obtain adequate financing or generate sufficient revenue in the future, our business, results of operations, liquidity and financial condition would be materially and adversely harmed, and we will be unable to continue as a going concern.

The disclosures contained in "Item 5. Market For Registrant's Common Equity, Related Stockholder Matters, And Issuer Purchases Of Equity Securities-- Recent Sales of Unregistered Securities" above are incorporated herein by reference.

We believe that events may have occurred or may exist that (i) may require adjustments to the conversion price and other terms of our convertible debt;
(ii) may subject us to penalties and fees under such convertible debt; and (iii) may require us to issue additional securities to convertible debt holders. Nevertheless, we have not received any notice of default or notice of acceleration of any of our convertible debt.

STOCK REPURCHASE PROGRAM

On June 25, 2013, we announced that we had authorized a stock repurchase program permitting us to repurchase shares of our common stock over the next six to 12 months. The shares are to be repurchased from time to time in open market transactions or in privately negotiated transactions in our discretion. We purchased 615,900 shares in June 2013 for an average price of $0.0141 and 1,170,000 shares in July 2013 for an average price of $0.0192. We have not purchased any shares under this program from August 2013 though the date of this report. The shares repurchased as listed above have not yet been returned to authorized but unissued status, but upon doing so, will result in us having outstanding 1,785,900 less shares of common stock.

CASH

Our net cash used by operating activities was $1,019,528 for the fiscal year ended August 31, 2014 as compared to $451,808 for the fiscal year ended August 31, 2013.

Cash used in investing activities increased from $8,211 for the fiscal year ended August 31, 2013 to $19,461 for the fiscal year ended August 31, 2014.

Cash provided by financing activities for the fiscal years ended August 31, 2014 and 2013 was $1,030,005 and $474,687, respectively, largely due to proceeds from notes payable of $1,010,353 in the fiscal year ended August 31, 2014, as compared to $490,500 from notes payable proceeds in the fiscal year ended August 31, 2013.

OFF BALANCE SHEET ARRANGEMENTS

We may engage in off-balance sheet financing from time-to-time. Generally, such arrangements have involved the pledging of collateral in connection with loans undertaken by the Company. Benny R. Powell, our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and a member of our Board of Directors, is the principal pledger of collateral. Mr. Powell may be reimbursed to the extent his pledged assets have been forfeited to the Company's lenders.

Under the 12% Secured Convertible Debenture (the "Debenture") we issued to WHC Capital, LLC ("WHC") on August 1, 2013, as disclosed in our Current Report on Form 8-K filed on August 19, 2013, we were required to register 300% of the principal amount of the shares into which the Debenture may be converted. Because such registration was not declared effective by the Securities and

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Exchange Commission by December 9, 2013, the principal amount of the Debenture has increased by 140% to $232,400. WHC has notified us of its intention to sell the 35,000,000 shares of common stock (the "Pledged Shares") pledged as collateral by Benny R. Powell, our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and a member of our Board of Directors under the Pledge and Security Agreement with WHC and Mr. Powell, to cover payment of the $232,400 plus interest.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, REVENUE FROM CONTRACTS WITH CUSTOMERS. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 COMPENSATION -- STOCK COMPENSATION (TOPIC 718), ACCOUNTING FOR SHARE-BASED PAYMENTS WHEN THE TERMS OF AN AWARD PROVIDE THAT A PERFORMANCE TARGET COULD BE ACHIEVED AFTER THE REQUISITE SERVICE PERIOD. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, COMPENSATION -- STOCK COMPENSATION. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 PREPARATION OF FINANCIAL STATEMENTS - GOING CONCERN (SUBTOPIC 205-40), DISCLOSURE OF UNCERTAINTIES ABOUT AN ENTITY'S ABILITY TO CONTINUE AS A GOING CONCERN. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, PRESENTATION OF FINANCIAL STATEMENTS--LIQUIDATION BASIS OF ACCOUNTING. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU and future reports will include any additional disclosures required.

We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

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SUBSEQUENT EVENTS

ISSUANCES OF PREFERRED STOCK

As of November 6, 2014, we entered into a Securities Purchase Agreement (the "SPA") with Mark Fischbach under which we agreed to issue to Mr. Fischbach (i) 30,000,000 shares of our common stock (the "Common Shares"); and (ii) 5,000,000 shares of our proposed Series Z Preferred Stock, with rights, privileges and preferences as set forth below (the "Series Z Preferred Shares") (collectively with the Common Shares, the "Shares") for an aggregate price of $200,000 (the "Purchase Price"). We closed on this transaction on November 12, 2014. Mr. Fischbach is entitled appoint one member of our Board. Mr. Fischbach has been appointed to our Board contingent on the Closing pursuant to this right.

As of December 23, 2014, we entered into a Securities Purchase Agreement (the "SPA") with our director and officer Benny R. Powell under which we agreed to issue to Mr. Powell 5,000,000 shares of our Series Z Preferred Stock, with rights, privileges and preferences as set forth below (the "Shares") in exchange for payment of $150,000.00 (the "Purchase Price"). We closed on this transaction on December 22, 2014.

Each Series Z Preferred Share is entitled to a liquidation preference equal to the original purchase price of the Series Z Preferred Shares ($0.03 per share). In addition, subject to the applicable rules and published guidance of a national securities exchange or automated inter-dealer quotation system on which our common stock may in the future be listed or quoted (the "Listing Rules"), and for so long as investor continues to hold Series Z Preferred Shares, the holder will be entitled to 100:1 super-voting rights on all matters submitted to a vote of our stockholders, subject to adjustment. The Company retains the option of redeeming the Series Z Shares to the extent that we reasonably determine that the above rights would impede our ability to be listed or quoted under the Listing Rules.

CONVERSION OF DEBT, SHARE ISSUANCES, DEFAULT TO CERTAIN LOAN TERMS

Since the fiscal year end, we converted notes and accrued interest of approximately $154,000 in exchange for 317,303,879 shares of our common stock.

In accordance with convertible note agreements, delinquent filings of our annual and quarterly reports are subject to default provisions. As of the date of filing, we are delinquent in filing this annual report for the year ended August 31, 2014 and in filing our report for the quarter ended November 30, 2014. These delinquencies trigger defaults in the terms of outstanding loan covenants for which monetary penalties are accruing. We estimate these costs to be approximately $152,000, which satisfaction will require additional issuance of common stock, in accordance with conversion terms of those agreements. We estimate that an additional 315,000,000 shares of common stock will be required to be issued in satisfaction of these terms.

ITEM 7A. 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 and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page

------------------------------------------                                 ----
Reports of Independent Registered Public Accounting Firms                   28
Consolidated Balance Sheets                                                 30
Consolidated Statements of Operations                                       31
Consolidated Statements of Changes in Stockholders' Deficit                 32
Consolidated Statements of Cash Flows                                       33
Notes to the Consolidated Financial Statements                              34

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[LETTERHEAD OF D'ARELLI PRUZANSKY, P.A.]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors Red Giant Entertainment, Inc.

We have audited the accompanying consolidated balance sheet of Red Giant Entertainment, Inc. as of August 31, 2014 and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Red Giant Entertainment, Inc. as of August 31, 2014 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred a net loss of approximately $9,600,000 and had cash used in operations of approximately $1,000,000 for the year ended August 31, 2014, and the Company had an accumulated deficit of approximately $11,300,000 and a working capital deficit of approximately $4,300,000 at August 31, 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

                                           /s/ D'Arelli Pruzansky, P.A.
                                           -------------------------------------
                                           Certified Public Accountants

Boca Raton, Florida
April 2, 2015

28


Messineo & Co., CPAs LLC 2471 N McMullen Booth Road, Suite 302 Clearwater, FL 33759-1362 [LOGO] T: (518) 530-1122 F: (727) 674-0511

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders:
Red Giant Entertainment, Inc.
Clermont, Florida

We have audited the consolidated balance sheet of Red Giant Entertainment, Inc., as of August 31, 2013 the related consolidated statement of operations, consolidated changes in stockholders' deficit, and consolidated cash flows for the year ended August 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements were free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the consolidated financial position of Red Giant Entertainment, Inc. as of August 31, 2013 and the results of its operations, changes in its stockholders' deficit and its cash flows for the year ended August 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred losses resulting in accumulated deficit and may be unable to raise further funds through equity or other traditional financing. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Messineo & Co., CPAs, LLC
-------------------------------------
Messineo & Co., CPAs, LLC
Clearwater, Florida
December 2, 2013

29

Red Giant Entertainment, Inc. Consolidated Balance Sheets For the years ended August 31, 2014 and 2013

                                                                                      August 31,
                                                                         -----------------------------------
                                                                             2014                   2013
                                                                         ------------           ------------
ASSETS

Current Assets
  Cash                                                                   $      5,953           $     14,937
  Accounts receivable, net of allowance for doubtful
   accounts of $1,253 and $0, respectively                                         --                     --
  Inventory                                                                     6,990                 52,107
  Prepaid and other current assets                                                 --                 82,000
                                                                         ------------           ------------
Total Current Assets                                                           12,943                149,044

Property and equipment, net of accumulated
  depreciation of $5,103 and $996, respectively                                25,902                 10,548

Intangible assets, net of accumulated amortization
 and impairments of $74,250 and $23,100, respectively                              --                 51,150
                                                                         ------------           ------------

      TOTAL ASSETS                                                       $     38,845           $    210,742
                                                                         ============           ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
  Accounts payable and accrued expenses                                  $    230,281           $     88,000
  Shareholder loans                                                            58,839                 39,187
  Convertible notes payable, net of discounts                                 447,032                 81,397
  Derivative liability from embedded conversion option of notes             3,518,650              1,339,599
  Derivative liability, warrants                                               35,000                355,800
                                                                         ------------           ------------
Total Current Liabilities                                                   4,289,802              1,903,983

Note payable                                                                       --                 24,314
                                                                         ------------           ------------
      TOTAL LIABILITIES                                                     4,289,802              1,928,297
                                                                         ------------           ------------

Commitments and Contingencies (Note 12)

Stockholders' Deficit
  Preferred stock: 100,000,000 authorized; $0.0001 par value
   0 shares issued and outstanding                                                 --                     --
  Common stock: 3,000,000,000 authorized; $0.0001 par value
   2,540,260,752 and 434,922,000 shares issued and outstanding                254,026                 43,492
  Additional paid in capital                                                6,863,020                 43,053
  Treasury stock, at cost; 1,785,900 shares                                   (55,000)               (55,000)
  Accumulated deficit                                                     (11,313,003)            (1,749,100)
                                                                         ------------           ------------
Total Stockholders' Deficit                                                (4,250,957)            (1,717,555)
                                                                         ------------           ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $     38,845           $    210,742
                                                                         ============           ============

See accompanying notes to consolidated financial statements

30

Red Giant Entertainment, Inc. Consolidated Statements of Operations For the years ended August 31, 2014 and 2013

                                                                    For the Years Ended
                                                                         August 31,
                                                          ---------------------------------------
                                                               2014                     2013
                                                          --------------           --------------
Sales                                                     $           --           $      497,486

Cost of sales                                                     80,629                  275,690
                                                          --------------           --------------
Gross profit                                                     (80,629)                 221,796
                                                          --------------           --------------
OPERATING EXPENSES
  Selling and marketing                                          347,723                  194,648
  Compensation                                                   325,759                   52,781
  Professional fees                                              198,298                  151,732
  General and administrative                                     324,243                  226,439
  Impairments of intangible assets                                30,300                       --
  Depreciation and amortization                                   24,957                   14,290
                                                          --------------           --------------
      Total operating expenses                                 1,251,280                  639,890
                                                          --------------           --------------

LOSS FROM OPERATIONS                                          (1,331,909)                (418,094)


  Interest expense                                            (1,472,364)                (479,559)
  Change in fair value of derivative liabilities              (6,734,630)                (844,099)
  Other expense                                                  (25,000)                      --
                                                          --------------           --------------
Loss before income taxes                                      (9,563,903)              (1,741,752)

Income taxes                                                          --                       --
                                                          --------------           --------------

NET LOSS                                                  $   (9,563,903)          $   (1,741,752)
                                                          ==============           ==============

BASIC AND DILUTED LOSS PER SHARE                          $        (0.01)          $        (0.00)
                                                          ==============           ==============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING              1,129,699,920              434,922,000
                                                          ==============           ==============

See accompanying notes to consolidated financial statements

31

Red Giant Entertainment, Inc. Consolidated Statements of Changes in Stockholders' Deficit For the years ended August 31, 2014 and 2013

                     Preferred Stock         Common Stock         Additional      Treasury Shares
                    ----------------      -------------------      Paid in      ------------------      Accumulated
                    Shares    Amount      Shares       Amount      Capital      Shares      Amount        Deficit          Total
                    ------    ------      ------       ------      -------      ------      ------        -------          -----

BALANCE,
AUGUST 31, 2012       --     $  --     434,922,000    $ 43,492   $   (1,947)          --   $     --     $     (7,348)   $    34,197

Stock issued
 for
 acquisition                    --              --          --       45,000           --         --               --         45,000

Stock buy-back
 program              --        --              --          --           --    1,785,900    (55,000)              --        (55,000)

Net loss              --        --              --          --           --           --         --       (1,741,752)    (1,741,752)
                   -----     -----   -------------    --------   ----------    ---------   --------     ------------    -----------
BALANCE,
AUGUST 31, 2013       --        --     434,922,000      43,492       43,053    1,785,900    (55,000)      (1,749,100)    (1,717,555)

Stock issued
 for services         --        --      14,541,570       1,454      146,870           --         --               --        148,324

Conversions of
 debt to equity       --        --   1,827,266,132     182,727    6,129,866           --         --               --      6,312,593

Settlements in
 stock                --        --      38,197,717       3,820       42,017          --          --               --         45,837

Warrants exercised
 for stock
 issuance             --        --     225,333,333      22,533      381,267          --          --               --        403,800

Options issued
 for services         --        --              --          --      119,947           --         --               --        119,947

Net loss              --        --              --          --           --           --         --       (9,563,903)    (9,563,903)
                   -----     -----   -------------    --------   ----------    ---------   --------     ------------    -----------
BALANCE,
AUGUST 31, 2014       --     $  --   2,540,260,752    $254,026   $6,863,020    1,785,900   $(55,000)    $(11,313,003)   $(4,250,957)
                   =====     =====   =============    ========   ==========    =========   ========     ============    ===========

See accompanying notes to consolidated financial statements

32

Red Giant Entertainment, Inc. Consolidated Statements of Cash Flows For the years ended August 31, 2014 and 2013

                                                                                 Year Ended
                                                                                 August 31,
                                                                    -----------------------------------
                                                                        2014                   2013
                                                                    ------------           ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                          $ (9,563,903)          $ (1,741,752)
  Adjustment to reconcile net loss to net
   cash used in operating activities:
     Depreciation and amortization                                        24,957                 14,290
     Stock-based compensation                                            268,271                355,800
     Amortization of debt discounts                                    1,472,364                110,711
     Change in fair value of derivative liabilities                    6,734,630                844,099
     Inventory write-down to lower of cost or market                      80,629                     --
     Impairment of intangible assets                                      30,300
  Changes in operating assets and liabilities:
  (Increase) decrease in operating assets:
     Inventory                                                           (35,512)               (41,179)
     Prepaid expenses and other assets                                    82,000                (62,000)
  Increase (decrease) in operating liabilities:
     Accounts payable and accrued expenses                              (113,264)                68,223
                                                                    ------------           ------------
        Total adjustments                                              8,544,375              1,289,944
                                                                    ------------           ------------
        Net Cash Used in Operating Activities                         (1,019,528)              (451,808)
                                                                    ------------           ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment                                  (19,461)                (8,211)
                                                                    ------------           ------------
        Net Cash Used in Investing Activities                            (19,461)                (8,211)
                                                                    ------------           ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from shareholder loans, net                                    19,652                 39,187
  Proceeds from convertible notes payable                              1,010,353                490,500
  Purchase of treasury stock                                                  --                (55,000)
                                                                    ------------           ------------
        Net Cash Provided by Financing Activities                      1,030,005                474,687
                                                                    ------------           ------------

Net increase (decrease) in cash                                           (8,984)                14,668
Cash, beginning of year                                                   14,937                    269
                                                                    ------------           ------------

Cash, end of year                                                   $      5,953           $     14,937
                                                                    ============           ============
Supplemental cash flow information
  Cash paid for interest                                            $         --           $         --
                                                                    ============           ============
  Cash paid for income taxes                                        $         --           $         --
                                                                    ============           ============
Non-cash transactions:
  Expenses paid from proceeds of convertible notes payable          $     24,000           $         --
                                                                    ============           ============
  Notes payable converted to common stock                           $  6,312,593           $         --
                                                                    ============           ============
  Warrants exercised for stock issuance                             $    403,800           $         --
                                                                    ============           ============

See accompanying notes to consolidated financial statements

33

Red Giant Entertainment, Inc.

Notes to the Consolidated Financial Statements August 31, 2014 and 2013

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Red Giant Entertainment LLC (the "LLC") was formed in the State of Florida, U.S.A., on January 1, 2011. On May 9, 2012, the LLC incorporated and changed its name to Red Giant Entertainment, Inc. ("RGE"). All income and expenses in these financial statements have been recharacterized for reporting purposes to be all inclusive for the corporate entity. The LLC was originally a publishing company, but has expanded its operations to include mass media and graphic novel artwork development.

On March 4, 2013, the Company acquired ComicGenesis, LLC ("ComicGenesis"), a Nevada limited liability company that operates a user-generated comic site that hosts over 10,000 independent webcomics.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts, inventory valuation, useful lives and valuation of property and equipment and intangible assets, stock based compensation, derivative liabilities, and the deferred tax assets valuation allowance. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION
The Company operates under the name of Red Giant Entertainment, Inc. and its wholly owned subsidiaries RGE and ComicGenesis. The companies were incorporated for the intentions of developing brand names. Any activities of these subsidiaries or holdings have been included in the consolidated financial statements, with elimination of any intercompany accounts and transactions.

FAIR VALUE MEASUREMENTS
Topic 820 in the Accounting Standards Codification (ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, ASC 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

* Level 1 inputs -- Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.
* Level 2 inputs -- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
* Level 3 inputs -- Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

34

                           Level 1         Level 2       Level 3        Total
                           -------         -------       -------        -----

Derivative Liabilities     $    --         $     --    $3,553,650     $3,553,650
Total Derivative
 Liabilities               $    --         $     --    $3,553,650     $3,553,650

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the twelve months of fiscal year 2014:

                                                                    Fair Value
                                                                   Measurements
                                                                   using inputs
                                                                   ------------
Balance, September 1, 2013                                         $  1,695,399
Total (gains) losses realized and included in net loss                6,734,630
Purchases, issuances and settlements                                 (4,876,379)
Transfers in (out)                                                           --
                                                                   ------------
Balance, August 31, 2014                                           $  3,553,650
                                                                   ============

Assumptions used in the calculation of the derivative liability are as follows:

                                                               August 31,
                                                         ---------------------
                                                          2014           2013
                                                         ------         ------
Weighted Average:
  Dividend rate                                           0.00%          0.00%
  Risk-free interest rate                                 0.05%           .08%
  Expected lives (years)                                   .375           1.05
  Expected price volatility                              426.8%         288.2%
  Forfeiture Rate                                         0.00%          0.00%

CASH FLOW REPORTING
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method ("Indirect method") as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.

CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As of August 31, 2014 and August 31, 2013, we had $5,953 and $14,937, respectively in cash. We had no cash equivalents during the years then ended.

ACCOUNTS RECEIVABLE
The Company recognizes accounts receivable for its credit sales and does not require any collateral. The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the allowance, the Company makes judgments regarding its customers' ability to make required payments, economic events, and other factors. As the financial condition of these parties change, circumstances develop, or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. As of August 31, 2014 and 2013, the Company estimated the allowance for doubtful accounts to be $1,253, and $0, respectively.

35

INVENTORY
As of August 31, 2014, inventory consists of physical copies of published books, as well as artwork that is used for digitally distributed works for advertising revenue and future publications. The inventory is valued at the lower of the cost to produce, on a first-in-first-out (FIFO) basis, or market value. In August 2014, the Company charged $80,629 to cost of sales as a write-down of inventory held to its estimated market value.

PROPERTY AND EQUIPMENT
Property and equipment are recorded at historical cost. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. The Company currently has equipment being depreciated for estimated lives of three to five years.

INTANGIBLE ASSETS
Intangible assets, including intellectual property and a web site, have been recorded at their fair historical cost. Amortization is calculated on a straight line basis over the estimated useful life of three years. The Company periodically tests the carrying value for impairment as noted below.

LONG-LIVED ASSETS IMPAIRMENT
Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360, Property, Plant and Equipment. Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis.

REVENUE RECOGNITION

Revenue for the Company is recognized from three primary sources: Advertising Revenue, Publishing Sales and Creative Services. Revenue was processed through our Paypal Account and Project Wonderful accounts where applicable.

Advertising Revenue comes from the following sources and is stated at net after commissions:

* Keenspot: Revenue is earned on a net 90-day basis and is based upon traffic to Red Giant property Web sites. It is calculated on a Cost Per Thousand (CPM) of verified impressions and varies based upon bids by advertisers and other customary factors. In exchange for advertising, hosting, IT, and sales management, Keenspot takes 50% commission of ad revenue for their services.
* Project Wonderful: Revenue is recorded upon delivery of services and priced based upon bids by advertisers for a set amount of time at the prevailing highest winning rate. Project Wonderful takes a 25% commission of ad revenue for their services.

Publishing Revenue comes from the following sources:

* Kickstarter Campaigns: These are presales for books, and revenue is recognized when the books are shipped to the buyers.
* Direct Sales: Through our online store, we sell directly to clients and the transactions process through our Paypal account. All orders are shipped immediately and revenue is recognized upon shipment.

Creative Services are artwork, writing, advertising, and other creative endeavors we handle for outside clients. Revenue is recognized upon completion of the services and receipt of payment.

Shipping and Handling for purchases are paid directly by the consumer through PayPal.

36

COST OF SALES
Cost of sales includes the cost of creating services or artwork, advertising and books. During the year ended August 31, 2014, the Company recognized a charge of $80,629 as a lower of cost or market adjustment to inventory, which is also included in cost of sales.

ADVERTISING
Advertising costs are expensed as incurred. The Company expensed advertising costs of $130,258 and $88,001 for the years ending August 31, 2014 and 2013, respectively.

STOCK BASED COMPENSATION
The Company issues restricted stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of
(i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period.

INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of ASC 740-10,"Accounting for Income Taxes," which requires, among other things, an asset and a liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of ASC 740-10 related to accounting for uncertain income tax positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the positions that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable tax authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

The Company has adopted ASC 740-10-25, DEFINITION OF SETTLEMENT, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of August 31, 2014, the Company is delinquent in several of its tax filings. Therefore, tax years ended August 31, 2014, 2013, and 2012, along with any other tax years with delinquent filings are subject to audit.

37

EARNINGS (LOSS) PER SHARE
The Company follows ASC 260, Earnings Per Share, which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. There were approximately 2,693,271,000 common stock equivalents outstanding at August 31, 2014, related to the convertible debt arrangements and an additional 25,000,000 options (with exercise price greater than market value as of August 31, 2014). Due to losses, dilutive earnings per share is not presented, as the effect would be anti-dilutive.

RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, REVENUE FROM CONTRACTS WITH Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement; however, it believes that there will be no material effect on the consolidated financial statements.

In June 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-12 COMPENSATION -- STOCK COMPENSATION (TOPIC 718), ACCOUNTING FOR SHARE-BASED PAYMENTS WHEN THE TERMS OF AN AWARD PROVIDE THAT A PERFORMANCE TARGET COULD BE ACHIEVED AFTER THE REQUISITE SERVICE PERIOD. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, COMPENSATION -- STOCK COMPENSATION. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.

In August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15 PREPARATION OF FINANCIAL STATEMENTS - GOING CONCERN (SUBTOPIC 205-40), DISCLOSURE OF UNCERTAINTIES ABOUT AN ENTITY'S ABILITY TO CONTINUE AS A GOING CONCERN. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, PRESENTATION OF FINANCIAL STATEMENTS--LIQUIDATION BASIS OF ACCOUNTING. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU and future reports will include any additional disclosures required.

We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

38

NOTE 3 - MANAGEMENT STATEMENT REGARDING GOING CONCERN

The Company's revenues are insufficient to meet its operating expenses. The Company has incurred net losses of $9,563,903 and $1,741,752 for the years ending August 31, 2014 and 2013, respectively. Accumulated losses resulted in an accumulated deficit of $11,313,003. The Company has a net working capital deficit of $4,276,859 and cash used in operations of $1,019,528 as of and for the year ending August 31, 2014. Due to the financial position, and given the current economic environment and the continuing need to strengthen our cash position, management believes that there is substantial doubt about the Company's ability to continue as a going concern. Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities, as well as strategic other transactions, to obtain additional funding to continue the development of, and successfully commercialize, its products. There can be no assurance that the Company will be successful in its efforts and this raises substantial doubt about the Company's future. Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, the Company's business, results of operations, liquidity and financial condition would be materially and adversely harmed, and the Company would be unable to continue as a going concern.

The Company believes that its ability to execute its business plan, and therefore continue as a going concern, is dependent upon its ability to do the following:

* Obtain adequate sources of funding to fund long-term business operations;
* Enter into a licensing or other relationship that allows the Company to commercialize its products;
* Manage or control working capital requirements; and
* Develop new and enhance existing relationships with product distributors and other points of distribution for the Company's products.

There can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 - INVENTORY

As of August 31, 2014, inventory consisted of physical copies of published books, as well as artwork used for digitally distributed works for advertising revenue and future publications. The inventory is valued at the lower of the cost to produce, on a first-in-first-out (FIFO) basis, or market value..

The Company recorded a charge for inventory, in the amount of $80,629, related to inventory items with short shelf lives and in consideration of marginal operating margins (lower of cost or market) of its existing inventory at August 31, 2014. Total inventory was $6,990 and $52,107, as of August 31, 2014 and 2013, respectively.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of:

                                                            August 31,
                                                  -----------------------------
                                                    2014                 2013
                                                  --------             --------
Computers and equipment                           $ 20,103             $  3,333
Trade booth and equipment                            8,211                8,211
Office furniture                                     2,691                   --
                                                  --------             --------
Total property and equipment                      $ 31,005             $ 11,544

Less accumulated depreciation                       (5,103)                (996)
                                                  --------             --------
Property and equipment, net                       $ 25,902             $ 10,548
                                                  ========             ========

39

Depreciation for the years ended August 31, 2014 and 2013 was $4,107 and $640, respectively.

NOTE 6 - INTANGIBLE ASSETS

The Company's intangible assets consists of graphic novel artwork and was contributed by a shareholder to the Company in 2011 and valued at $29,250, which was determined based on the historical costs for artists and printing. The intangible was being amortized over its estimated life of five years. The Company acquired website and other intangible assets in the acquisition of a subsidiary in March 2013, valued at the fair market value of stock exchanged by a shareholder, valued in the amount of $45,000. The intangible was being amortized over its estimated life of three years.

                                                            August 31,
                                                  -----------------------------
                                                    2014                 2013
                                                  --------             --------
Intellectual property                             $ 29,250             $ 29,250
Website development                                 45,000               45,000
                                                  --------             --------
                                                    74,250               74,250
Less accumulated amortization                       43,950               23,100
                                                  --------             --------
                                                    30,300               51,150

Less impairment valuation                          (30,300)                  --
                                                  --------             --------
Intangible assets, net                            $     --             $ 51,150
                                                  ========             ========

Amortization cost for the periods ended August 31, 2013 and 2012 was $20,850 and $13,350, respectively. Due to considerations regarding recoverability, the Company recorded an impairment loss for the carrying value of the assets as of August 31, 2014, in the amount of $30,300.

NOTE 7 - CONVERTIBLE NOTES PAYABLE

The Company entered into several lending arrangements with lenders, each with convertible features. The Company evaluated the terms of the convertible notes in accordance with ASC Topic No. 815 - 40, DERIVATIVE AND HEDGING CONTRACTS - CONTRACTS IN ENTITIES' OWN STOCK and the underlying conversion features that are indexed to the Company's common stock. The Company determined that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. The Company evaluated the embedded conversion features and determined that the embedded option should be accounted for as a derivative liability. Therefore, the Company recorded a derivative liability and recognized a debt discount on the notes on the origination date. The debt discount was recorded as reduction (contra-liability) to the Convertible Notes Payable. The debt discount is being amortized over the life of the notes. Additionally, the notes called for an immediate withholding for service charges, which has been treated as an original issue discount or deferred financing costs, a contra-liability charge, which is amortized as finance cost over the life of the loan. Interest expense, in the amount of $1,472,364 and $479,559 was recognized for the derivative debt discounts and deferred financing costs for the period ended August 31, 2014 and 2013, respectively.

A derivative liability, in the amount of $3,518,650 and $1,339,599 has been recorded, as of August 31, 2014 and 2013, respectively, related to the notes. The derivative value was calculated using the Black-Scholes method. Assumptions used in the derivative valuation were as follows:

40

                                                            August 31,
                                                  -----------------------------
                                                    2014                 2013
                                                  --------             --------
Weighted Average:
  Dividend rate                                       0.00%                0.00%
  Risk-free interest rate                             0.05%                 .08%
  Expected lives (years)                               .375                 1.05
  Expected price volatility                          426.8%               288.2%
  Forfeiture Rate                                     0.00%                0.00%

The convertible notes have the following terms and conversion features:

Maturity dates                                   Six months to one year
Interest rate                                    6% to 12%, default rates to 22%
Conversion discounts                             30-49%
Basis of conversion
 Trading price (lowest during period)            10-20 trading days

The convertible notes outstanding as of August 31 are summarized below:

                                                        2013              2014
                                                      --------          --------
Total debt outstanding                                $677,000          $621,000
Add: accrual for penalty clauses in instruments         34,500                --
Less: unexpired derivative debt discounts and
 deferred finance costs discounts                      264,468           539,603
                                                      --------          --------
Total                                                 $447,032          $ 81,397
                                                      ========          ========

In accordance with terms of agreements, the Company has accrued an additional liability in the amount of $34,500 for defaults associated with provisions within the contracts. In association with these defaults, the Company has accrued $27,000 of additional interest and recorded an additional derivative, included in the above, of $293,022.

Unexpired debt discounts, as of August 31, 2014, in the amount of $264,468, will be recognized as interest expense in for the year ending August 31, 2015. If notes and accrued interest were converted as of August 31, 2014, there would be approximately 2,693,271,000 additional shares to be issued.

NOTE 8 - INCOME TAXES

Income taxes are provided based upon the liability method. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by accounting standards to allow recognition of such an asset.

At August 31, 2014 and 2013, the Company expected no net deferred tax assets to be recognized, resulting from net operating losses. Deferred tax assets were offset by a corresponding allowance of 100%.

41

For the tax year ended December 31, 2011, the predecessor entity to Red Giant Entertainment, Inc. was a limited liability company, and as such, all tax benefits and obligations passed through the entity to its members. No provisions have been made prior to December 31, 2011, nor does management believe that any tax modifications would have a material effect on the financials. The Company has accrued approximately $3,000 in penalties associated with delinquent filings.

Although Management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our tax provisions. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict.

The income tax provision consists of the following:

                                                            August 31,
                                                  -----------------------------
                                                    2014                 2013
                                                  --------             --------
Federal
  Current                                         $     --             $     --
  Deferred                                              --                   --
                                                  --------             --------
                                                  $     --             $     --
                                                  ========             ========
State and local
  Current                                         $     --             $     --
  Deferred                                              --                   --
                                                  --------             --------
Income tax provision                              $     --             $     --
                                                  ========             ========

Prior to May 9, 2012, our primary operating company was a limited liability company not subject to tax. At August 31, 2014, the Company had a net operating loss ("NOL") carry forward in the amount of approximately $1.4 million, available to offset future taxable income through 2034. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. The Company has not filed its federal tax returns since inception and therefore, the NOL's will not be available to offset future taxable income until the tax returns are filed with the respective federal tax authorities.

Deferred tax assets/liabilities were as follows:

                                                  August 31,          August 31,
                                                    2014                2013
                                                 ----------          ----------
Net operating loss carry forward                 $  534,000          $  166,000
Valuation allowance                                (534,000)           (166,000)
                                                 ----------          ----------
Total                                            $       --          $       --
                                                 ==========          ==========

The valuation allowance was increased by $368,000 during fiscal year ended August 31, 2014.

A reconciliation of the Company's effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended August 31, 2014 and 2013 is summarized below.

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                                                    2014                 2013
                                                  --------             --------
Federal statutory rate                               (34.0)%             (34.0)%
State income taxes, net of federal benefits           (3.7)%              (3.7)%
Derivatives, and other permanent differences           33.8%              28.4 %
Valuation allowance                                     3.9%                9.3%
                                                   --------            --------
Effective tax rate                                       --%                 --%
                                                   ========            ========

The Company may be assessed penalties and interest related to the non-filing of income tax returns. Such assessments would be treated as a provision of income tax expense on the financial statements. At August 31, 2014, the tax returns for 2011 through 2013 have not been filed and are therefore subject to future audit. No income tax expense has been realized as a result of operations and no income tax penalties and interest have been accrued related to uncertain tax positions.

NOTE 9 - CAPITAL STOCK

The Company has 100,000,000 shares of preferred stock authorized and none have been issued or designated as of August 31, 2014 and 2013. Subsequent to the year ended August 31, 2014, the Company designated a class of preferred stock. For a disclosure of the rights, liquidation preferences, and privileges of the preferred stock, see Note 13.

The Company has 3,000,000,000 shares of common stock authorized. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights.

During the year ending August 31, 2013 the Company entered into a stock buy-back plan, whereby 1,785,900 shares were repurchased for $55,000 cost. The shares remain in the name of the Company until such time as they are cancelled.

During year ending August 31, 2013 the Company issued warrants to purchase approximately 371,667,000 shares of common stock, at a strike price of $.0015 per share, in association with a financing arrangement. Warrants may be exercised in a cashless option. The company valued these warrants using the Black-Scholes method, resulting in an interest expense of $355,800 and a corresponding derivative liability. During the year ending August 31, 2014, the cashless option was exercised and 225,333,333 shares were issued, and $403,800 of derivative liability was reclassified to stockholders' deficit.

For the year ended August 31, 2014, the Company issued 14,541,570 shares of its common stock to employees and consultants, at the fair market value at the date of the grant based on the quoted market price. Compensation expenses were recognized in the amount of $148,324.

Stock compensation for the periods presented were issued for past services provided; accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions. The Company has issued shares and warrants to individuals for the purpose of compensation during the years ending August 31, 2014 and 2013, in the amounts of $268,271 and $355,800, respectively.

On March 27, 2014, the Company issued 25,000,000 options for services to its officers and directors under its 2013 Option Plan. The Company valued the options using the Black Scholes Model, which resulted in the recognition of $119,947 of compensation expense. Assumptions used in the calculation of the option value are as follows:

Weighted Average:
  Stock Price                                     $0.0048
  Strike Price                            $0.0048-$0.0053
  Dividend rate                                      0.0%
  Risk-free interest rate                           1.70%
  Expected lives (years)                              5.0
  Expected price volatility                       313.78%
  Forfeiture Rate                                   0.00%

During the year ended August 31, 2014, the Company exchanged 1,827,266,132 shares of its common stock for $1,065,630 of convertible notes payable and accrued interest at contractual rates, and $5,246,963 of derivative liability was reclassified to stockholders' deficit.

43

During the year ended August 31, 2014, the company settled accrued interest expense in the amount of $22,919 in exchange of 38,197,717 shares of common stock and recognized a loss of $22,918.

NOTE 10 - RELATED PARTIES

Benny R. Powell was an officer and director of both parties to the merger. (See Note 1). Mr. Powell continues as the Company's president, chief executive officer, and director post-merger. Mr. Powell also provides rent and other services to the Company through his other ventures.

The Company purchases print materials through a wholly owned entity, Active Media Publishing, Inc., ("AMPI") of Mr. Powell. AMPI has certain arrangements with overseas printing companies, whereby the printing is facilitated to the Company. Agreement with AMPI states processing is at near cost prices on a non-exclusive basis. During the years ended August 31, 2014 and 2013, the Company purchased print media in the amount of $33,360 and $165,540.

Keenspot Entertainment, LLC, a company owned by our director Chris Crosby, has been paid or accrued commissions in the amount of approximately $4,042 and $6,785 for the years ended August 31, 2014 and 2013.

As of August 31, 2014 and 2013, the Company was indebted to Mr. Powell for advances and payments made on behalf of the Company in support of operations, in the amount of $58,839 and $39,187, respectively.

The Company does not have employment contracts with its controlling shareholder who also is the Company's president and chief executive officer, although it has independent contractor agreements with its other officers.

We also from time to time have retained Glass House Graphics, a sole proprietorship owned by David Campiti, our Chief Operating Officer and a member of the Board, to provide creative services for us. We paid an aggregate of $56,660 and $2,035 to Glass House Graphics in the fiscal years ended August 31, 2014 and 2013, respectively.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

NOTE 11 - BUSINESS SEGMENTS

The Company generates revenues from three service offerings: Advertising, Book Publishing, and Creative. The Company's management measures its performance by revenue lines and does not allocate its selling, general and administrative expenses to each revenue offering. A summary of the lines of revenue are as follows:

                                                          August 31,
                                                -------------------------------
                                                   2014                 2013
                                                ----------           ----------
Revenues:
  Advertising                                   $       --           $    6,842
  Book publishing                                       --              253,146
  Creative                                              --              237,498
                                                ----------           ----------
                                                        --              497,486
                                                ----------           ----------
Cost of Sales:
  Advertising                                   $       --           $    5,843
  Book publishing                                       --              195,651
  Creative                                              --               74,196
  Inventory write-down to lower of
   cost or market                                   80,629                   --
                                                ----------           ----------
                                                $   80,629           $  275,690
                                                ==========           ==========

                                       44

                                                          August 31,
                                                -------------------------------
                                                   2014                 2013
                                                ----------           ----------

Gross Profit:
  Advertising                                   $       --           $      999
  Book publishing                                       --               57,495
  Creative                                              --              163,302
                                                ----------           ----------
  Inventory write-down to lower of
   cost or market                                  (80,629)             221,796
                                                ----------           ----------
                                                $  (80,629)          $  221,796
                                                ==========           ==========

NOTE 12 - COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may become a party to litigation matters involving claims against the Company. On May 13, 2013, George Sharp ("Plaintiff") filed a Complaint in San Diego Superior Court, Central District, Case No. 37-2013-00048310-CU-MC-CTL, against 14 companies, including us (collectively, "Defendants"). We were served with the Complaint on May 23, 2013. The Complaint alleges that the Plaintiff received unsolicited promotional emails being sent by Defendant, Victory Mark Corp. Ltd., discussing the other 13 corporate Defendants, including us. The Plaintiff is seeking liquidated damages in the amount of $1,000 for each email he received for a total of $1,204,000 collectively for all Defendants. The Company is defending this action vigorously and believes that the matter is without legal merit. The Company cannot determine the ultimate outcome of this matter at this time.

We are required to pay a $25,000 civil money penalty to the SEC based upon a finding that during the reporting period we violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-11 thereunder. The Order is available at www.sec.gov. IN THE MATTER OF RED GIANT ENTERTAINMENT, INC., SEC Admin. Proc. File No. 3-16249 (Nov. 5, 2014).

NOTE 13 - SUBSEQUENT EVENTS

ISSUANCES OF PREFERRED STOCK

As of November 6, 2014, the Company designated Series Z Preferred Stock and entered into a Securities Purchase Agreement (the "SPA") with Mark Fischbach under which we agreed to issue to Mr. Fischbach (i) 30,000,000 shares of our common stock (the "Common Shares"); and (ii) 5,000,000 shares of our proposed Series Z Preferred Stock, with rights, privileges and preferences as set forth below (the "Series Z Preferred Shares") (collectively with the Common Shares, the "Shares") for an aggregate price of $200,000 (the "Purchase Price"). We closed on this transaction on November 12, 2014. Mr. Fischbach is entitled appoint one member of our Board. Mr. Fischbach has been appointed to our Board contingent on the Closing pursuant to this right.

As of December 23, 2014, we entered into a Securities Purchase Agreement (the "SPA") with our director and officer Benny R. Powell under which we agreed to issue to Mr. Powell 5,000,000 shares of our Series Z Preferred Stock, with rights, privileges and preferences as set forth below (the "Shares") in exchange for payment of $150,000.00 (the "Purchase Price"). We closed on this transaction on December 22, 2014.

Each Series Z Preferred Share is entitled to a liquidation preference equal to the original purchase price of the Series Z Preferred Shares ($0.03 per share). In addition, subject to the applicable rules and published guidance of a national securities exchange or automated inter-dealer quotation system on which our common stock may in the future be listed or quoted (the "Listing Rules"), and for so long as investor continues to hold Series Z Preferred Shares, the holder will be entitled to 100:1 super-voting rights on all matters submitted to a vote of our stockholders, subject to adjustment. The Company retains the option of redeeming the Series Z Shares to the extent that we reasonably determine that the above rights would impede our ability to be listed or quoted under the Listing Rules.

45

CONVERSION OF DEBT, SHARE ISSUANCES

Since the year end, we converted notes and accrued interest of approximately $154,000 into 317,303,879 shares of our common stock at contractual rates.

In accordance with convertible note agreements, delinquent filings of our annual and quarterly reports are subject to default provisions. During the period from August 31, 2014 through the date of filing we estimate these costs to be approximately $152,000, which satisfaction will require additional issuance of common stock, in accordance with conversion terms of those agreements. We estimate that an additional 315,000,000 shares of common stock will be required to be issued in satisfaction of these terms.

46

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

Benny R. Powell, our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and a member of the Board, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of period covered by this Annual Report. Based upon such evaluation, Mr. Powell concluded that our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including Mr. Powell, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT 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 Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Management assessed our internal control over financial reporting as of August 31, 2014, the end of our fiscal-year. Management based its assessment on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was not effective as of the end of the fiscal-year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management's assessment with the Board.

A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified are disclosed below:

* We do not have an audit committee or any other governing body to oversee management.
* Documentation of proper accounting procedures is not present and fundamental elements of an effective control environment were not present as of August 31, 2014, including formalized monitoring procedures.
* While we have five officers, there is still no segregation of duties with respect to internal controls, no management oversight, and no additional persons reviewing control documentation, and no control documentation is being produced at this time.

47

* We were unable to complete our audit for the year-ended August 31, 2014 and the filing of this Annual Report within the time required by applicable securities regulations.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

Our management does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Because we are a smaller reporting company, the rules and regulations of the SEC do not require that we include a report of our independent registered public accounting firm regarding our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors are as follows:

    Name             Age                           Position
    ----             ---                           --------
Benny R. Powell      40      Chief Executive Officer, President, Chief Financial
                             Officer, Secretary, Director
David Campiti        56      Chief Operations Officer, Director
Chris Crosby         37      Chief Technology Officer, Director
Isen Robbins         46      Chief Intellectual Property Officer, Director
Aimee Schoof         43      Chief Business Development Officer, Director
Mark Fischbach       25      Director

The mailing address for all our officers and directors is 614 E. Hwy 50, Suite 235, Clermont, Florida 34711.

DUTIES, RESPONSIBILITIES AND EXPERIENCE

BENNY R. POWELL, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF FINANCIAL OFFICER, SECRETARY, AND DIRECTOR. Mr. Powell has served as our Chief Executive Officer, President, Chief Financial Officer, and Secretary, and as a member of the Board, since June 11, 2012. Mr. Powell was the founder of RGE (acquired by us in June

48

2012) and served as its Chief Executive Officer from formation in January 2011. He also founded and has served as Chief Executive Officer of Active Media Publishing, LLC ("Active Media") from May 2003 to present. From November 2002 to June 2007, Mr. Powell also served as CEO for Total Solutions Marketing, LLC, a full service marketing company. From January 1995 to February 1999, Mr. Powell worked as a writer at Marvel Comics Group. Mr. Powell is a co-owner of several of properties, including without limitation Duel Identity(TM), Katrina(TM), Wayward Sons(TM), and Wayward Sons: Legends(TM).

DAVID CAMPITI, CHIEF OPERATIONS OFFICER AND DIRECTOR. Mr. Campiti has served as our Chief Operations Officer and a member of the Board since March 5, 2013. He has also served as CEO and Global Talent Supervisor for Glass House Graphics, a sole proprietorship professional services firm dba Studio Sakka Graphics & Animation, Art & Comics Store, and The Academy of Comic Book Arts that provides development and organizational services as well as illustrators, writers, painters and designers, since 1993. Mr. Campiti oversees two Glass House Graphics offices in Brazil; one in Manila, Philippines; one in New Delhi, India; two locations in Indonesia, and one in Europe--coordinating creative services from a roster of more than 120 talents worldwide to produce animation, art, and digital graphics for scores of clients.

Mr. Campiti has over 30 years of experience in the comic book industry, including writing for DC Comics, and helped launch Amazing Comics, Wonder Color Comics, Pied Piper Press, Eternity Comics, New Sirius Productions (both Sirius Comics and Prelude Graphics), and other companies. Mr. Campiti is a co-owner of several properties featured on our website, including without limitation Banzai Girl(TM), Exposure(TM), Jade Warriors(TM), Pandora's Blog(TM), The Shadow Children(TM), and Journey to Magika(TM), which he also produced as an animated film. Journey to Magika previewed at Tribeca Film Festival and is due for release in 2014 (Trailer: http://nikothemovie.com/trailer.html).

CHRIS CROSBY, CHIEF TECHNOLOGY OFFICER AND DIRECTOR. Mr. Crosby has served as our Chief Technology Officer and a member of the Board since March 1, 2013. He has also co-founded Keenspot Entertainment, LLC, our strategic partner, in March 2000 and Blatant Comics, an independent comic book publisher, in July 1997. Mr. Crosby has served as CEO of Keenspot and as Vice President and Editor-in-Chief of Blatant Comics since such companies' respective founding dates. Mr. Crosby has over 20 years experience in the comic book industry, and in 1994 he became one of the first creators to step into the new world of online comics. In 1999, he launched one of the first daily online-exclusive comic strips, Superosity(TM). Mr. Crosby is the creator or co-creator of several properties featured on our website and owned by Keenspot and its affiliates, including without limitation Crow Scare(TM), The First Daughter(TM), Godmode(TM), Last Blood(TM), Sore Thumbs(TM), and Wicked Powered(TM).

ISEN ROBBINS, CHIEF INTELLECTUAL PROPERTY OFFICER AND DIRECTOR. Mr. Robbins has served as our Chief Intellectual Property Officer and a member of the Board since March 5, 2013. Mr. Robbins also co-founded Intrinsic in 1998 and has served as a Co-CEO of Intrinsic since that time. He has produced more than 30 feature films, including seven that premiered at the Sundance Film Festival, four at the Tribeca Film Festival, three at SXSW, and one at each of the Toronto, Venice, New Directors/ New Films, and Berlin Film Festivals. Intrinsic's films have been distributed worldwide and have won many awards and been honored with numerous accolades, including winning the Sundance Special Grand Jury prize, and being nominated for two Gotham and four Independent Spirit awards.

Mr. Robbins has received a producer credit on the following films: Blue Caprice (Isaiah Washington, Tim Blake Nelson, Joey Lauren Adams), Run (William Moseley, Kelsey Chow, Adrian Pasdar, Eric Roberts), Alphabet Killer (Eliza Dushku, Cary Elwes, Timothy Hutton), XX/XY (Mark Ruffalo, Kathlean Robertson), Skeptic (Zoe Saldana, Tom Arnold, Timothy Daly), Anything but Love (Andrew McCarthy, Eartha Kitt), Hebrew Hammer (Judy Greer, Adam Goldberg, Andy Dick, Mario Van Peebles), Brother to Brother (Anthony Mackie, Daniel Sunjata, Aunjanue Ellis) and M.I.A (Danny Glover, Ron Perlman, Linda Hamilton and David Strathairn).

AIMEE SCHOOF, CHIEF BUSINESS DEVELOPMENT OFFICER AND DIRECTOR. Ms. Schoof has served as our Chief Business Development Officer and a member of the Board since March 5, 2013. Ms. Schoof also co-founded Intrinsic in 1998 and has served as a Co-CEO of Intrinsic since that time. She has produced more than 30 feature films, including seven that premiered at the Sundance Film Festival, four at the Tribeca Film Festival, three at SXSW, and one at each of the Toronto, Venice, New Directors/ New Films, and Berlin Film Festivals. Intrinsic's films have been

49

distributed worldwide and have won many awards and been honored with numerous accolades, including winning the Sundance Special Grand Jury prize, and being nominated for two Gotham and four Independent Spirit awards.

Ms. Schoof has received a producer credit on the following films: Blue Caprice (Isiaiah Washington, Tim Blake Nelson, Joey Lauren Adams), Run (William Moseley, Kelsey Chow, Adrian Pasdar, Eric Roberts) Alphabet Killer (Eliza Dushku, Cary Elwes, Timothy Huton), XX/XY (Mark Ruffalo, Kathlean Robertson), Skeptic (Zoe Saldana, Tom Arnold, Timothy Daly), Anything but Love (Andrew McCarthy, Eartha Kitt), Hebrew Hammer (Judy Greer, Adam Goldberg, Andy Dick, Mario Van Peebles), Brother to Brother (Anthony Mackie, Daniel Sunjata, Aunjanue Ellis) and M.I.A (Danny Glover, Ron Perlman, Linda Hamilton and David Strathairn).

Ms. Schoof founded a nonprofit called AmaYoga in 2010 which creates yoga programs in homeless shelters and transitional housing around Los Angeles, California. Aimee has also mentored film students through The Film and Radio Recording Connection Mentoring program since 2009.

MARK FISCHBACH, DIRECTOR. Mr. Fischbach, 25, widely known under the alias "Markiplier," has built a YouTube subscriber base of more than 4.2 million subscribers and has generated over 1 billion views. Since July 2012, he has held monthly livestreams for charities, in which he sets a fundraising goal and plays continually until that goal is met. To date, he has raised $482,479 for charity. Mr. Fischbach has also served as the President and CEO and a director of 1 Shirt Inc., a California corporation, since its formation in June 2014.

TERM OF OFFICE

Our by-laws provide that all directors hold office until the next annual stockholder's meeting or until their death, resignation, retirement, removal, disqualification, or until their successors have been elected and qualified. Our officers serve at the will of the Board.

Other than Mr. Fischbach, who was appointed pursuant to a Securities Purchase Agreement with the Company whereby Mr. Fischbach purchased all of our outstanding shares of Series Z Preferred Stock and has the right to appoint a member of our board of directors and remove such designated director, there are no agreements or understandings for any of our officers or directors to be selected as director or nominee.

Members of the Board serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected.

MEETINGS OF THE BOARD AND INFORMATION REGARDING COMMITTEES

There currently are no committees of the Board. We believe the functions of any audit, compensation or nominating and corporate governance committees can be adequately performed by the Board.

The Board held twenty-two meetings by teleconference in the fiscal year ended August 2014. All directors attended 100% of such meetings of the Board of Directors other than Mr. Fischbach, who was not appointed to the Board of Directors until November 2014.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

During the past five years, none of our officers or directors has been a party to or executive officer of an entity that has filed any bankruptcy petitions. During the past five years, none of our officers or directors have been convicted or been a named subject of any pending criminal proceedings. During the past five years, none of our officers or directors has been held to have violated any State or Federal Securities laws or any Federal commodities law or otherwise have been subject to any order, judgment or decree not subsequently reversed, suspended or vacated permanently enjoining such officer or director from the activities enumerated in Regulation S-K Item 4.01(f)(3).

CODE OF ETHICS

We have adopted a Code of Ethics for Senior Financial Officers to promote ethical conduct by our senior financial officers. Our sole senior financial officer is Benny R. Powell, our Chief Executive Officer and Chief Financial Officer. We expect our senior financial officer to act with honesty and integrity, including the ethical handling of actual or apparent conflicts of

50

interest between personal and professional relationships; to provide full, accurate, timely and understandable disclosure in reports and documents filed with the SEC as well as other public communications; to comply with all applicable laws, rules and regulations; and to promote adherence to our Code of Ethics. We will provide a copy of this document to any person, without charge, upon receipt of a request addressed to us at Red Giant Entertainment, Inc., 614 E. Hwy 50, Suite 235, Clermont, Florida 34711.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires that our officers and directors and persons who own more than 10% of our common stock, file reports of ownership and changes in ownership with the SEC. Based solely on our review of the SEC's EDGAR database, copies of such forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended August 31, 2014, the following delinquencies have occurred:

                                                              No. of Transactions
                                             No. of Late         Not Filed on          Known Failures
     Name and Affiliation                     Reports            Timely Basis             to File
     --------------------                     -------            ------------             -------
Benny R. Powell, Chief Executive                 5                     78                   None
Officer, President, Chief Financial
Officer, Secretary, Director

ITEM 11. EXECUTIVE COMPENSATION n($)

EXECUTIVE AND DIRECTOR COMPENSATION

GENERAL COMPENSATION DISCUSSION

All decisions regarding compensation for our executive officers and executive compensation programs are reviewed, discussed, and approved by the Board. All compensation decisions are determined following a detailed review and assessment of external competitive data, the individual's contributions to our success, any significant changes in role or responsibility, and internal equity of pay relationships.

SUMMARY COMPENSATION TABLE

Set forth below is a summary of compensation for our officers for all services rendered in all capacities to us. There have been no annuity, pension or retirement benefits ever paid to our officers, directors or employees.

With the exception of reimbursement of expenses incurred by our principal executive officer during the scope of his employment or service as a director, and unless expressly stated otherwise in a footnote below, our executive officers did not receive any other compensation.

                                                                      Stock         Option           All Other
   Name and Principal Position                 Year    Salary($)     Awards($)      Awards($)#    Compensation($)    Total($)
   ---------------------------                 ----    ---------     ---------      ----------    ---------------    --------
Benny R. Powell, Chief Executive Officer,      2014     $51,694         -0-          $23,989           -0-           $75,683
President, Chief Financial Officer,            2013     $48,781         -0-               -0-          -0- (1)       $48,781
Secretary, Director

David Campiti, Chief Operations Officer,       2014     $18,000         -0-          $23,990           -0-           $41,990
Director (2)                                   2013          -0- (3)    -0- (4)           -0-          -0- (1)            -0- (4)

Chris Crosby, Chief Technology Officer,        2014     $18,000         -0-          $23,990           -0-           $41,990
Director (5)                                   2013          -0- (3)    -0- (6)           -0-          -0-                -0- (6)

Isen Robbins, Chief Intellectual Property      2014     $18,000         -0-          $23,990           -0-           $41,990
Officer, Director (2)                          2013          -0- (3)    -0- (4)           -0-          -0-                -0- (4)

Aimee Schoof, Chief Business Development       2014     $18,000         -0-          $23,990           -0-           $41,990
Officer, Director (2)                          2013          -0- (3)    -0- (4)           -0-          -0-                -0- (4)

51


# The amounts reported in this column equal the grant date fair value of each award as computed in accordance with The Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification. A discussion of the assumptions used in calculating the grant date fair value of these stock options can be found under Note 2 to the Consolidated Financial Statements.
1. We have also transacted business with sole proprietorships run by, or entities controlled by, our officers as set forth under "Item 13. Certain Relationship and Related Transactions, and Director Independence."
2. Appointed as an officer and director on March 5, 2013.
3. We have entered into independent contractor agreements with each of Ms.
Schoof and Messrs. Campiti, Crosby and Robbins, each dated October 25, 2013, under which each such officer has accrued $18,000 per year in salary for services provided.
4. Each of Mr. Campiti, Mr. Isen and Ms. Schoof received 43,300,000 shares of our common stock directly from Mr. Powell for services to be rendered as a director.
5. Appointed as an officer and director on March 1, 2013.
6. Mr. Crosby received 34,140,000 shares of our common stock directly from Mr. Powell for services to be rendered as a director.

INDEPENDENT CONTRACTOR AGREEMENTS

As set forth above under "Item 9B. Other Information," we have entered into independent contractor agreements with David Campiti, Chris Crosby, Isen Robbins and Aimee Schoof on October 25, 2013. We have no written agreement with Benny R. Powell, but we have paid $51,694 in salary compensation to Mr. Powell for services provided in the fiscal year ended August 31, 2014. We contemplate paying Benny R. Powell a monthly salary of $5,000 per month in the future.

We reserve the right to engage our officers and directors, or their affiliates, to perform services to us and compensate them for such services, other than as required to be performed under any employment or independent contractor agreement with them, or as generally required of persons in their offices, at rates no greater than we expect to pay an unrelated third party with comparable experience and quality.

Furthermore, none of our officers or directors is required to spend all of their time and resources on us and each are involved in other companies. See "Executive Officers and Directors" in this Item.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth the stock options granted to our executive officers during the fiscal year ended August 31, 2014 under our 2013 Stock Option Plan.

                                                           Equity
                                                          Incentive
                                                         Plan Awards;
                    Number of          Number of          Number of
                   Securities         Securities         Securities
                   Underlying         Underlying         Underlying
                   Unexercised        Unexercised        Unexercised        Option         Option
                   Options (#)        Options (#)         Unearned         Exercise      Expiration
Name               Exercisable       Unexercisable       Options (#)        Price($)        Date
----               -----------       -------------       -----------        -----           ----
Benny R. Powell     5,000,000             -0-                -0-            $0.0053      03/27/2019
David Campiti       5,000,000             -0-                -0-            $0.0048      03/27/2024
Chris Crosby        5,000,000             -0-                -0-            $0.0048      03/27/2024
Isen Robbins        5,000,000             -0-                -0-            $0.0048      03/27/2024
Aimee Schoof        5,000,000             -0-                -0-            $0.0048      03/27/2024

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OTHER COMPENSATION

As of the date of this Annual Report, we do not have any annuity, pension, health, stock option, profit sharing retirement, or other similar benefit plans other than our 2013 Stock Option Plan; however, we may adopt such plans in the future. As of the date of this Annual Report, there are no personal benefits available to our officers and directors.

DIRECTOR COMPENSATION

Our directors do not receive any compensation for their service as directors. However, directors re reimbursed for their pre-approved travel expenses and for convention attendance-related expenses.

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

The following table sets forth certain information with respect to our equity securities owned of record or beneficially by (i) each of our named executive officers and directors; (ii) each person who owns beneficially more than 5% of each class of our outstanding equity securities; and (iii) all directors and officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock are deemed to be outstanding and to be beneficially owned by the person listed below for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person, if that person has the right to acquire beneficial ownership of such shares within 60 days of the date of this Annual Report.

Unless otherwise indicated below, the address of each beneficial owner is c/o Red Giant Entertainment, Inc., 614 Hwy. 50, Suite 235, Clermont, Florida 34711. Unless otherwise indicated below, we believe that each of the persons listed in the table (subject to applicable community property laws) has the sole power to vote and to dispose of the shares listed opposite the shareholder's name. All calculations are based on 2,887,564,631 shares of common stock outstanding as of February 22, 2015.

                                                         Number of             Percent of
                                                          Shares                 Shares
Name and Address of               Title                Beneficially           Beneficially
 Beneficial Owner                of Class                 Owned                  Owned
 ----------------                --------                 -----                  -----
Benny R. Powell                  Common                146,801,600 (1)           5.08%
                                 Preferred               5,000,000 (2)           50.0%

David Campiti                    Common                  43,300,000              1.49%

Chris Crosby                     Common                  34,640,000              1.19%

Isen Robbins                     Common                  43,300,000              1.49%

Aimee Schoof                     Common                  43,300,000              1.49%

Mark Fischbach                   Common                  75,000,000              2.59%
                                 Preferred                5,000,000 (2)         50.00%

All Directors and officers       Common                 386,341,600              14.4%
 as a group                      Preferred               10,000,000            100.00%

53

Typenex Co-Investment, LLC (3)   Common                 267,304,615              9.26%

JSJ Investments, LLC (4)         Common                 211,842,754              7.34%

WHC Capital, LLC (5)             Common                 160,201,973              5.55%


1. Includes 35,000,000 shares pledged as security to WHC to secure the Debenture. While Mr. Powell shares investment power over such shares, he retains voting rights in such shares unless we default on the 12% Secured Convertible Debenture.
2. Series Z Preferred shares have voting rights on all issues that common stock shareholders are entitled to vote. Series Z preferred shares have 100 votes for every preferred share owned.
3. From Typenex Schedule 13G/A filed Jan. 30, 2015. Consists of shares of common stock issuable upon exercise of the Typenex Warrants at an exercise price of $0.15. This calculation does not include shares issuable upon conversion at Typenex's option of up to $157,000 in principal and any interest under the Typenex Note at a conversion price equal to the average of the closing bid price of our common stock for the fifteen days immediately prior to December 21, 2013 Shares issuable under the Typenex Warrant and the Typenex Note are subject to a maximum beneficial ownership of 9.99%.
4. Based upon stock issuances reported in the Company's Forms 8-K filed Dec.
24, 2014 and Feb. 10, 2015. JSJ Investments, LLC, 2665 Villa Creek Drive, Suite 214, Dallas, TX 75234.
5. Based upon stock issuances reported in the Company's Forms 8-K filed April 22, 2014 and Aug. 29, 2014. WHC Capital, LLC, 303 Merrick Road, Suite 504, Lynbrook, NY 11563. Consists of shares of common stock issuable upon conversion at WHC's option of up to $166,000 in principal and any interest under the Debenture convertible into common stock at 60% of the lowest trading price during the ten consecutive trading days prior to the date of conversion, subject to a maximum beneficial ownership of 9.99% (the calculation in this Annual Report is based on a purchase price equal to $0.0029 per share (60% of $.0048, the lowest price for the ten trading days prior to December 3, 2013) and represents the maximum beneficial ownership of 9.99%). The calculation presented herein does not include interest convertible at the rate set forth above.

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

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have not entered into any material transactions with any director, executive officer, promoter, security holder who is a beneficial owner of 5% or more of our common stock, or any immediate family member of such persons other than as set forth below. In the future, we intend to enter into agreements with our officers and directors and their affiliates to obtain co-ownership or other rights to properties that our officers and their affiliates have allowed us to showcase on our website and will disclose any material agreements at the time we enter into any such agreements as required under the Exchange Act.

PRINTING AGREEMENT WITH ACTIVE MEDIA

On March 13, 2013, we entered into a Printing Agreement with Active Media, an entity controlled by our Chief Executive Officer, President, Chief Financial Officer, Secretary, and a member of the Board, Benny R. Powell. This Printing Agreement reduces to writing the oral understanding between us and Active Media under which Active Media agreed to provide printing services to us at near cost prices on a non-exclusive basis. We paid an aggregate of $115,665.28 to Active Media in the fiscal year ended August 31, 2013.

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EXCLUSIVE WEB PUBLISHING CONTRACT WITH KEENSPOT

We have published properties online through websites hosted by Keenspot Entertainment, LLC, under an Exclusive Web Publishing Contract dated June 30, 2010 between Benny R. Powell and Keenspot, a general partnership co-founded by Chris Crosby, our Chief Technology Officer and a member of the Board, co-founded, in which Mr. Crosby serves as Chief Executive Officer. Under this Agreement, Keenspot sells advertising on websites featuring our properties at an agreed upon cost per thousand verified impressions (CPM) to our Keenspot sites whereby advertisers pay based on the number of times the target audience is exposed to the advertisement. The particular CPM rate varies based upon bids by advertisers and other customary factors. In exchange for providing advertising, hosting, IT, and sales management services, Keenspot receives a 50% commission on advertising revenue. In the fiscal years ended August 31, 2013 and 2012, Keenspot received $6,785 and $9,975, respectively from this agreement.

STOCK EXCHANGE AGREEMENT WITH COMICGENESIS

In March 2013, we entered into a Stock Exchange Agreement with ComicGenesis, a limited liability company owned at that time by Chris Crosby, our Chief Technology Officer and member of the Board, under which we acquired 5,000,000 shares of ComicGenesis from Mr. Crosby in exchange for 500,000 shares of our common stock from shares held by our President, Benny R. Powell. ComicGenesis was not valued, as it was essentially an inactive entity.

Shares exchanged for ComicGenesis were valued at a fair market value of $45,000, the fair market value at the date of exchange. The shares exchanged were contributed by Mr. Powell and the related indebtedness was forgiven to the Company as a contribution of capital. The related investment in ComicGenesis is eliminated in consolidation.

OTHER ARRANGEMENTS WITH OFFICERS

During the year ending August 31, 2013, Benny R. Powell, our President and Chief Executive Officer, has advanced assets in the amount of $39,187 to us, which includes transfer of 3 million shares of common stock, personally held, to an unrelated vendor for securing services. Those services were valued at $36,000, per the agreement and the fair value of the stock at the date of the exchange. As of August 31, 2013 and 2012, we were indebted to Mr. Powell in the amount of $39,187 and $0, respectively.

Our officers provide office and storage space to us at no charge through their other ventures. We also from time to time have retained Glass House Graphics, a sole proprietorship owned by David Campiti, our Chief Operating Officer and a member of the Board, to provide creative services for us. We paid an aggregate of $2,035 to Glass House Graphics in the fiscal year ended August 31, 2013.

On September 12, 2013, the Company received a loan from Benny Powell, an officer and director of the Company, in the amount of $4,000, $886.37 of which has been repaid as of December 5, 2013.

DIRECTOR INDEPENDENCE

We apply the definition of "independent director" provided under the Listing Rules of The NASDAQ Stock Market LLC ("NASDAQ"). Under NASDAQ rules, the Board has considered all relevant facts and circumstances regarding our directors and has affirmatively determined that none of the directors serving on the Board are independent of us under NASDAQ rules, as each director also serves as an officer of us.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under our Articles of Incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his or her position, if he or she acted in good faith and in a manner he or she reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he or she is to be indemnified, we must indemnify him or her against all

55

expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On April 5, 2013, we appointed Drake Klein Messineo, CPAs, PA ("DKM") as our independent registered public accounting firm. DKM has not issued any reports on our financial statements, but reviewed our Quarterly Report on Form 10-Q for the quarter ended February 28, 2013. On May 10, 2013, we notified DKM that DKM was dismissed as our independent registered public accounting firm. DKM has not issued any reports on our financial statements.

On May 10, 2013, we engaged Messineo & Co., CPAs, LLC ("M&Co") as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ended August 31, 2013, and to perform procedures related to the financial statements included in our quarterly reports on Form 10-Q, beginning with the quarter ended May 31, 2013. On July 9, 2014, we were informed that M&CO declined to stand for re-appointment. On July 9, 2014, the Company engaged D'Arelli Pruzansky, P.A. ("DP") as our new registered independent public accountant.

AUDIT FEES

DP was paid aggregate fees of approximately $25,000 for the year ended August 31, 2014. M&Co. was paid aggregate fees of approximately $17,200 for the year ended August 31, 2013 and $8,500 in review fees through engagement period for year August 31, 2014. DKM was paid aggregate fees of approximately $2,000 for the year ended August 31, 2013. Audit fees include all professional services rendered for the audit of our annual financial statements and for the reviews of the financial statements included in our quarterly reports on Form 10-Q during such fiscal years.

AUDIT RELATED FEES

Neither of our independent registered public accounting firms was paid additional fees for the years ended August 31, 2014 and August 31, 2013 for assurance and related services reasonably related to the performance of the audit or review of our financial statements.

TAX FEES

Neither of our independent registered public accounting firms was paid additional fees for the years ended August 31, 2014 and August 31, 2013 for professional services rendered for tax compliance, tax advice, and tax planning during this fiscal year period.

ALL OTHER FEES

Neither of our independent registered public accounting firms was paid any other fees for professional services during the years ended August 31, 2014 and August 31, 2013.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial Statements.

Our consolidated financial statements are included in Part II, Item 8 of this report:

                                                                           Page
                                                                           ----
Reports of Independent Registered Public Accounting Firms                   28
Consolidated Balance Sheets                                                 30
Consolidated Statements of Operations                                       31
Consolidated Statements of Changes in Stockholders' Deficit                 32
Consolidated Statements of Cash Flows                                       33
Notes to the Consolidated Financial Statements                              34

2. Financial Statement Schedules.

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

3. Exhibits.

A list of the exhibits filed or furnished with this report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by us) is provided in the Exhibit Index beginning on page 59 of this Annual Report. Those exhibits incorporated by reference herein are indicated as such by the information supplied in the parenthetical thereafter. Otherwise, the exhibits are filed herewith.

57

SIGNATURES

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.

RED GIANT ENTERTAINMENT, INC.

Dated: April 6, 2015                By: /s/ Benny R. Powell
                                        ----------------------------------------
                                        Benny R. Powell
                                        CEO, President, CFO, Secretary, Director
                                        (Principal Executive, Financial and
                                        Accounting Officer)

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

Dated: April 6, 2015           By: /s/ Benny R. Powell
                                   ---------------------------------------------
                                   Benny R. Powell
                                   CEO, President, CFO, Secretary, Director
                                   (Principal Executive, Financial and
                                   Accounting Officer)


Dated: April 6, 2015           By: /s/ David Campiti
                                   ---------------------------------------------
                                   David Campiti
                                   Chief Operations Officer, Director


Dated: April 6, 2015           By: /s/ Chris Crosby
                                   ---------------------------------------------
                                   Chris Crosby
                                   Chief Technology Officer, Director


Dated: April 6, 2015           By: /s/ Isen Robbins
                                   ---------------------------------------------
                                   Isen Robbins
                                   Chief Intellectual Property Officer, Director


Dated: April 6, 2015           By: /s/ Aimee Schoof
                                   ---------------------------------------------
                                   Aimee Schoof
                                   Chief Business Development Officer, Director

58

EXHIBIT INDEX

Exhibit                            Description
-------                            -----------

2.1      Share Exchange Agreement among the Registrant, Red Giant Entertainment,
         Inc., and Benny Powell dated June 6, 2012, which is incorporated herein
         by reference to Exhibit 10.1 to our Amendment Number 1 to Current
         Report on Form 8-K filed on November 6, 2012.

2.2      Stock Exchange Agreement between the Registrant and Chris Crosby dated
         March 4, 2013, which is incorporated herein by reference to Exhibit 2.2
         to our Annual Report on Form 10-K filed on December 5, 2013.

3(i).1   Amended and Restated Articles of Incorporation of the Registrant filed
         with the Nevada Secretary of State on August 23, 2010, which are
         incorporated herein by reference to Exhibit 3.1 to our Annual Report on
         Form 10-K filed on November 29, 2010.

3(i).2   Certificate of Amendment to Articles of Incorporation of the Registrant
         filed with the Nevada Secretary of State on June 26, 2012, which is
         incorporated herein by reference to Exhibit 3.3 to our Annual Report on
         Form 10-K filed on January 3, 2013.

3(i).3   Certificate of Amendment to Articles of Incorporation of the Registrant
         filed with the Nevada Secretary of State on January 29, 2014, which is
         incorporated herein by reference to Exhibit 3.1 to our Quarterly Report
         on Form 10-Q filed on April 21, 2014.

3(ii).1  Amended and Restated Bylaws of the Registrant, which are incorporated
         herein by reference to Exhibit 3.2 to our Annual Report on Form 10-K
         filed on November 29, 2010.

10.1     Exclusive Web Publishing Contract between Benny Powell and Keenspot
         Entertainment dated June 30, 2010, which is incorporated herein by
         reference to Exhibit 10.4 to our Current Report on Form 8-K/A filed on
         October 31, 2013.

10.2     Share Exchange Agreement with RGE and Benny Powell entered into on June
         6, 2012, which is incorporated by reference to Amendment Number 1 for
         the Form 8-K filed on November 6, 2012.

10.3     Printing Agreement between Active Media Publishing, LLC and the
         Registrant dated March 13, 2013, which is incorporated by reference to
         Exhibit 10.2 to our Annual Report on Form 10-K filed on December 5,
         2013.

10.4     Securities Purchase Agreement dated April 15, 2013 between the
         Registrant and Iconic Holdings, LLC, which is incorporated herein by
         reference to Exhibit 10.1 to our Current Report on Form 8-K filed on
         September 20, 2013.

10.5     Registration Rights Agreement dated April 15, 2013 between the
         Registrant and Iconic Holdings, LLC, which is incorporated herein by
         reference to Exhibit 10.2 to our Current Report on Form 8-K filed on
         September 20, 2013.

10.6     9.9% Secured Convertible Promissory Note dated April 15, 2013 between
         the Registrant and Iconic Holdings, LLC, which is incorporated herein
         by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on
         September 20, 2013.

10.7     6% Convertible Redeemable Note dated May 24, 2013 between the
         Registrant and GEL Properties, LLC, incorporated by reference to
         Exhibit 4.11 to our Annual Report on Form 10-K/A filed on February 20,
         2014.

                                       59

10.8     Back-End 6% Convertible Redeemable Secured Note dated May 24, 2013
         between the Registrant and GEL Properties, LLC, which is incorporated
         by reference to Exhibit 4.12 to our Annual Report on Form 10-K/A filed
         on February 20, 2014.

10.9     $75,000 Secured Promissory Note dated May 24, 2013 between GEL
         Properties, LLC and the Registrant, which is incorporated to Exhibit
         10.7 to Form 10-K/A filed on February 20, 2014.

10.10    Promissory Note dated June 11, 2013 between the Registrant and JMJ
         Financial, which is incorporated by reference to Exhibit 4.13 to our
         Annual Report on Form 10-K/A filed on February 20, 2014.

10.11    Securities Purchase Agreement between the Registrant and Typenex
         Co-Investment, LLC dated June 21, 2013, which is incorporated herein by
         reference to Exhibit 99.1 to our Current Report on Form 8-K filed on
         January 27, 2014.

10.12    Secured Convertible Promissory Note between the Registrant and Typenex
         Co-Investment, LLC dated June 21, 2013, which is incorporated herein by
         reference to Exhibit 99.2 to our Current Report on Form 8-K filed on
         January 27, 2014.

10.13    Warrant to Purchase Shares of Common Stock between the Registrant and
         Typenex Co-Investment, LLC dated June 21, 2013, which is incorporated
         herein by reference to Exhibit 99.3 to our Current Report on Form 8-K
         filed on January 27, 2014.

10.14    Secured Buyer Note #1 between Typenex Co-Investment, LLC and the
         Registrant dated June 21, 2013, which is incorporated herein by
         reference to Exhibit 99.4 to our Current Report on Form 8-K filed on
         January 27, 2014.

10.15    Secured Buyer Note #2 between Typenex Co-Investment, LLC and the
         Registrant dated June 21, 2013, which is incorporated herein by
         reference to Exhibit 99.5 to our Current Report on Form 8-K filed on
         January 27, 2014.

10.16    Buyer Note #3 between Typenex Co-Investment, LLC and the Registrant
         dated June 21, 2013, which is incorporated herein by reference to
         Exhibit 99.6 to our Current Report on Form 8-K filed on January 27,
         2014.

10.17    Buyer Note #4 between Typenex Co-Investment, LLC and the Registrant
         dated June 21, 2013, which is incorporated herein by reference to
         Exhibit 99.7 to our Current Report on Form 8-K filed on January 27,
         2014.

10.18    Membership Interest Pledge Agreement between the Registrant and Typenex
         Co-Investment, LLC dated June 21, 2013, which is incorporated herein by
         reference to Exhibit 99.8 to our Current Report on Form 8-K filed on
         January 27, 2014.

10.19    Security Agreement between the Registrant and Typenex Co-Investment,
         LLC dated June 21, 2013, which is incorporated herein by reference to
         Exhibit 99.9 to our Current Report on Form 8-K filed on January 27,
         2014.

10.20    Purchase Agreement dated August 1, 2013 between the Registrant and WHC
         Capital, LLC, which is incorporated herein by reference to Exhibit 4.4
         to our Annual Report on Form 10-K filed on December 5, 2013.

10.21    Pledge and Security Agreement dated August 1, 2013 between the
         Registrant and WHC Capital, LLC, which is incorporated herein by
         reference to Exhibit 4.5 to our Annual Report on Form 10-K filed on
         December 5, 2013.

                                       60

10.22    12% Secured Convertible Debenture dated August 1, 2013 between the
         Registrant and WHC Capital, LLC, which is incorporated herein by
         reference to Exhibit 4.6 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.23    Convertible Note dated August 5, 2013 between the Registrant and JSJ
         Investments, Inc., which is incorporated herein by reference to Exhibit
         4.7 to our Annual Report on Form 10-K filed on December 5, 2013.

10.24*   8% Convertible Note dated September 30, 2013 between the Registrant and
         Asher Enterprises, Inc.

10.25    9% Convertible Redeemable Note dated October 2, 2013 between the
         Registrant and LG Capital Funding, LLC, which is incorporated herein by
         reference to Exhibit 4.8 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.26    Service Agreement between the Registrant and Integrity Media, Inc.
         dated October 11, 2013, which is incorporated by reference to Exhibit
         10.13 to our Annual Report on Form 10-K/A filed on February 20, 2014.

10.27++  Independent Contractor Agreement between the Registrant and Isen
         Robbins dated October 25, 2013, which is incorporated herein by
         reference to Exhibit 10.3 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.28++  Independent Contractor Agreement between the Registrant and Christopher
         Charles Crosby dated October 25, 2013, which is incorporated herein by
         reference to Exhibit 10.4 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.29++  Independent Contractor Agreement between the Registrant and David
         Campiti dated October 25, 2013, which is incorporated herein by
         reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.30++  Independent Contractor Agreement between the Registrant and Aimee
         Schoof dated October 25, 2013, which is incorporated herein by
         reference to Exhibit 10.6 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.31    Securities Purchase Agreement dated November 11, 2013 between the
         Registrant and Asher Enterprises, Inc., which is incorporated herein by
         reference to Exhibit 4.10 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.32    Convertible Promissory Note dated November 11, 2013 between the
         Registrant and Asher Enterprises, Inc., which is incorporated herein by
         reference to Exhibit 4.9 to our Annual Report on Form 10-K filed on
         December 5, 2013.

10.33    Supply Agreement between the Registrant and Diamond Comic Distributors
         dated as of November 25, 2013, which is incorporated herein by
         reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on
         January 14, 2014.

10.34*   10% Convertible Promissory Note dated December 20, 2013 between
         Registrant and Iconic Holdings, LLC.

10.35    2013 Stock Option Plan, which is incorporated herein by reference to
         Exhibit C to our Definitive Information Statement Pursuant to Section
         14C of the Securities Exchange Act of 1934 filed on January 6, 2014.

                                       61

10.36    Settlement Agreement and Release between AGS Capital Group, LLC and the
         Registrant dated December 30, 2013, which is incorporated herein by
         reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q filed on
         April 21, 2014.

10.37    12% Convertible Promissory Note Dated December 30, 2013 between the
         Registrant and AGS Capital Group, LLC, which is incorporated herein by
         reference to Exhibit 4.2 to our Quarterly Report on Form 10- Q filed on
         April 21, 2014.

10.38*   8% Promissory Note and Securities Purchase Agreement dated January 7,
         2014 between Registrant and Asher Enterprises, Inc.

10.39    18% Convertible Promissory Note Dated January 8, 2014 between the
         Registrant and AGS Capital Group, LLC, which is incorporated herein by
         reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q filed on
         April 21, 2014.

10.40    Settlement Agreement and Release with IBC Funds, LLC dated February 5,
         2014, which is incorporated herein by reference to Exhibit 4.4 to our
         Quarterly Report on Form 10-Q filed on April 21, 2014.

10.41*   Court Order approving Settlement Agreement dated February 7, 2014
         between IBC Funds, LLC and the Registrant.

10.42    8% Convertible, Redeemable Note between the Registrant and LG Capital
         Funding, LLC dated as March 5, 2014, which is incorporated herein by
         reference to Exhibit 4.5 to our Quarterly Report on Form 10-Q filed on
         April 21, 2014.

10.43    8% Convertible Redeemable Note dated April 28, 2014 between the
         Registrant and GEL Properties, LLC, which is incorporated herein by
         reference to Exhibit 4.1 to our Current Report on Form 8-K filed on
         July 11, 2014.

10.44    Form of Collateralized Secured Promissory Note between GEL Properties,
         LLC and the Registrant dated April 28, 2014, which is incorporated
         herein by reference to Exhibit 99.1 to our Current Report on Form 8-K
         filed on July 11, 2014.

10.45    9% Convertible Note dated May 30, 2014 between the Registrant and LG
         Capital Funding, LLC (first LG Note), which is incorporated herein by
         reference to Exhibit 4.3 to our Current Report on Form 8-K filed on
         July 11, 2014.

10.46    9% Convertible Note dated May 30, 2014 between the Registrant and LG
         Capital Funding, LLC (second LG Note), which is incorporated herein by
         reference to Exhibit 4.4 to our Current Report on Form 8-K filed on
         July 11, 2014.

10.47    Securities Purchase Agreement dated May 30, 2014 between the Registrant
         and LG Capital Funding, LLC, which is incorporated herein by reference
         to Exhibit 4.2 to our Current Report on Form 8-K filed on July 11,
         2014.

10.48    Form of Collateralized Secured Promissory Note between LG Capital
         Funding, LLC and the Registrant May 30, 2014, which is incorporated
         herein by reference to Exhibit 99.2 to our Current Report on Form 8-K
         filed on July 11, 2014.

10.49    12% Convertible Note dated June 10, 2014 between the Registrant and JSJ
         Investments, Inc., which is incorporated herein by reference to Exhibit
         4.5 to our Current Report on Form 8-K filed on July 11, 2014.

                                       62

10.50*   22 % Amended Convertible Note (formerly 12 %) dated July 11, 2014
         between the Registrant and JSJ Investments, Inc.

10.51    Promotion Agreement between the Registrant and Toys "R" Us - Delaware,
         Inc. dated as of June 16, 2014, which is incorporated herein by
         reference to Exhibit 99.1 to our Current Report on Form 8-K filed on
         July 11, 2014.

10.52    22% Convertible Note between the Registrant and JSJ Investments, Inc.
         dated July 25, 2014, which is incorporated herein by reference to
         Exhibit 4.1 to our Current Report on Form 8-K filed on August 1, 2014.

10.53    Form of Amendment to Notes to JSJ Investments, Inc. dated July 25,
         2014, which is incorporated herein by reference to Exhibit 4.2 to our
         Current Report on Form 8-K filed on August 1, 2014.

10.54    22% Convertible Note between the Registrant and JSJ Investments, Inc.
         dated August 20, 2014, which is incorporated herein by reference to
         Exhibit 4.1 to our Current Report on Form 8-K filed on August 29, 2014.

14       Code of Ethics for Senior Financial Officers, which is incorporated
         herein by reference to Exhibit 14.1 to our Annual Report on Form 10-K
         filed on November 29, 2010.

16       Letter from Messineo & Co., CPAs, LLC, dated July 9, 2014, regarding
         Change in Certifying Accountant, which is incorporated herein by
         reference to Exhibit 16.1 to our Current Report on Form 8-K filed on
         July 9, 2014.

21*      List of Subsidiaries.

31.1*    Chief Executive Officer Section 302 Certification.

31.2*    Chief Financial Officer Section 302 Certification.

32*      Chief Executive Officer and Chief Financial Officer Section 906
         Certification.

101*     The following materials from our Annual Report on Form 10-K for the
         fiscal year ended August 31, 2014 formatted in Extensible Business
         Reporting Language (XBRL): (i) the Condensed Consolidated Balance
         Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii)
         the Condensed Consolidated Statements of Cash Flows, and (iv) related
         notes.

----------

* Filed herewith.
+ Confidential Treatment has been requested with respect to certain provisions of this agreement. Omitted portions have been filed separately with the SEC.
++ Management contract or compensatory plan or arrangement.

63

Exhibit 10.24

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

PRINCIPAL AMOUNT: $53,000.00 ISSUE DATE: SEPTEMBER 30, 2013
PURCHASE PRICE: $53,000.00

CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, RED GIANT ENTERTAINMENT, INC., a Nevada corporation (hereinafter called the "Borrower"), hereby promises to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the "Holder") the sum of $53,000.00 together with any interest as set forth herein, on October 2, 2014 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the "Interest Rate") per annum from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid ("Default Interest"). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 par value per share (the "Common Stock") in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used


herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of:
(i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and nonassessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion"); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date"). The term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the

2

principal amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder's option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

1.2 Conversion Price.

(a) Calculation of Conversion Price. The conversion price (the "Conversion Price") shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 58% multiplied by the Market Price (as defined herein) (representing a discount rate of 42%). "Market Price" means the average of the lowest three
(3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

(b) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of
(x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section
1.2(a). For purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover

3

scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Borrower's obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4 Method of Conversion.

(a) Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower.

(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, PRIMA

4

FACIE, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

(c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

(d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline") (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

(e) Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00
p.m., New York, New York time, on such date.

5

(f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this
Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.

(g) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this
Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

6

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

1.6 Effect of Certain Events.

(a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

(b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common

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Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

(d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this
Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

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The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options") and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of such Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

(e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this
Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the "Maximum Share Amount"), which shall be 9.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to

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have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this Note.

1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date which is thirty (30) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional Prepayment Notice") shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional Prepayment Date"), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Optional Prepayment Amount") equal to 120%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this
Section 1.9.

Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31) days following the issue date and ending on the date which is sixty (60) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Second Optional Prepayment Amount") equal to 125%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

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Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days following the issue date and ending on the date which is ninety (90) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Third Optional Prepayment Amount") equal to 130%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from the issue date and ending one hundred twenty (120) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Fourth Optional Prepayment Amount") equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one (121) day from the issue date and ending one hundred fifty (150) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3)

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Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Fifth Optional Prepayment Amount") equal to 140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred fifty-one (151) day from the issue date and ending one hundred eighty (180) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Sixth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Sixth Optional Prepayment Amount") equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Sixth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

After the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment.

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ARTICLE II. CERTAIN COVENANTS

2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by a majority of the Borrower's disinterested directors.

2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.

2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

ARTICLE III. EVENTS OF DEFAULT

If any of the following events of default (each, an "Event of Default") shall occur:

3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

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3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower's transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

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3.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

3.8 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

3.10 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its debts as they become due.

3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

3.15 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

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3.16 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or
(ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately

17

become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

ARTICLE IV. MISCELLANEOUS

4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:
RED GIANT ENTERTAINMENT, INC.
614 E. Highway 50 - Suite 235
Clermont, FL 34711

Attn: BENNY R. POWELL, Chief Executive Officer facsimile:

With a copy by fax only to (which copy shall not constitute notice): [enter name of law firm]
Attn: [attorney name]

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[enter address line 1]
[enter city, state, zip] facsimile: [enter fax number]

If to the Holder:
ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021

Attn: Curt Kramer, President
facsimile: 516-498-9894

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


Naidich Wurman Birnbaum & Maday, LLP
80 Cuttermill Road, Suite 410
Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq. facsimile: 516-466-3555

4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.

4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon FORUM NON CONVENIENS. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not

19

affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating

20

the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this September 30, 2013.

RED GIANT ENTERTAINMENT, INC.

By: /s/ Benny R. Powell
   -------------------------------------
   BENNY R. POWELL
   Chief Executive Officer


EXHIBIT A -- NOTICE OF CONVERSION

The undersigned hereby elects to convert $______________________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of RED GIANT ENTERTAINMENT, INC., a Nevada corporation (the "Borrower") according to the conditions of the convertible note of the Borrower dated as of September 30, 2013 (the "Note"), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").

Name of DTC Prime Broker:
Account Number:

The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder's calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021

Attention: Certificate Delivery (516) 498-9890

Date of Conversion:                                      _____________
Applicable Conversion Price:                             $____________
Number of Shares of Common Stock to be Issued
Pursuant to Conversion of the Notes:                     _____________
Amount of Principal Balance Due remaining
Under the Note after this conversion:                    _____________

ASHER ENTERPRISES, INC.

By:____________________________
Name: Curt Kramer
Title: President
Date: _______________________
1 Linden Pl., Suite 207
Great Neck, NY. 11021

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Exhibit 10.34

NOTE: DECEMBER 20, 2013

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQIDREMENTS OF THE SECURITIES ACT.

THIS NOTE DOES NOT REQIDRE PHYSICAL SURRENDER OF mE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH BELOW.

10% CONVERTIBLE PROMISSORY NOTE

OF

RED GIANT ENTERTAINMENT INC.

Issuance Date: December 20, 2013
Beginning Value of this Note: $17,500
Original Issue Discount: $7,500
Total Face Value of Note: $25,000

THIS NOTE ("Note" or "Note") is a duly authorized Convertible Promissory Note of RED GIANT ENTERTAINMENT INC. a corporation duly organized and existing under the laws of the State of Nevada (the "Company"), designated as the Company's 10% Convertible Promissory Note Due December 20, 2014 ("Maturity Date"}in the principal amount of Twenty Five Thousand Dollars ($25,000) (the "Note").

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of Iconic Holdings, LLC or its registered assigns or successors-in-interest ("Holder") the principal sum of Twenty Five Thousand Dollars ($25,000) together with all accrued but unpaid interest, if any, on the Maturity Date, to the extent such principal amount and interest has not been repaid or converted into the Company's Common Stock, $0.0001 par value per share (the "Common Stock"), in accordance with the terms hereof.

The initial Purchase Price will be seventeen thousand five hundred dollars ($17,500) of consideration upon execution of the Note Purchase Agreement and all supporting documentation. The sum of seventeen thousand five hundred dollars ($17,500) shall be remitted and delivered to the Company, and seven thousand five hundred dollars ($7,500) shall be retained by the Purchaser through an original issue discount for due diligence and legal bills related to this

1

transaction. The Holder reserves the right to pay additional consideration at any time and in any amount it desires, at its sole discretion. The principle sum owed by the Company shall be prorated to the amount of consideration paid by the Holder and only the consideration received by the Company, plus prorated interest, fees and original issue discount, shall be deemed owed by the Company. The original issue discount is set at ten percent (10%) of any consideration paid. The Company is not responsible to repay any unfunded portion of this Note.

Interest on any outstanding principal balance shall accrue at a rate of I 0% per annum. In the Event of Default pursuant to Section 2(f), interest will accrue at the rate equal to the lower of twenty (20%) per annum or the highest rate permitted by law (the "Default Rate").

This Note may not be prepaid in whole or in part except as otherwise provided herein. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day.

For purposes hereof the following terms shall have the meanings ascribed to them below:

"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

"CONVERSION PRICE" shall be equal to the lower of $.0033 or sixty percent (60%) of the lowest trading price of the Company's common stock during the twenty (20) consecutive trading days prior to the date on which Holder elects to convert all or part ofthe Note. If the Company is placed on "chilled" status with the Depository Trust Company ("DTC"), the discount will be increased by ten percent (10%) until such chill is remedied.

"PRINCIPAL AMOUNT" shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest hereunder, and (iii) any default payments owing under the Agreements but not previously paid or added to the Principal Amount.

"TRADING DAY" shall mean a day on which there is trading on the PrincipalMarket.

"UNDERLYING SHARES" means the shares . of common stock into which o the Note is convertible (including interest or principal payments in common stock as set forth herein) in accordance with the terms hereof.

The following terms and conditions shall apply to this Note:

SECTION 1.00 CONVERSION.

(a) Conversion Right. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's option, at any time to convert the outstanding Principal Amount and Interest under this Note in whole or in part.

2

(b) The date of any Conversion Notice hereunder and any Payment Date shall be referred to herein as the "Conversion Date".

(i) Stock Certificates or DWAC. The Company will deliver to the Holder, or Holder's authorized designee, no later than two (2) Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in the DTC Fast Automated Securities Transfer ("FAST") program, upon request of the Holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder's (or such designee's) prime broker with DTC through its Deposits and Withdrawal at Custodian (DWAC) program (provided that the same time periods herein as for stock certificates shall apply).

If the Company fails to deliver to the Holder such certificate or certificates (or shares through DTC) pursuant to this Section (free of any restrictions on transfer or legends) prior to the third Trading Day after the Conversion Date, the Company shall pay to the Holder as liquidated damages, in cash, an amount equal to Two Thousand Dollars ($2,000) per day, until such certificate or certificates are delivered. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder'sactual damages and costs resulting from a failure to deliver the Common stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Such liquidated damages will be added to the principal value ofthe.Note.

(c) Reservation and Issuance. of Underlying Securities. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note (including repayments in stock), free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than three times (3x) the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section! but without regard to any ownership limitations contained herein) upon the conversiono of this Note in Common Stock. These shares shall be reserved in proportion with the Consideration actually received by the Company and the total reserve will be increased with future payments of consideration by Bolder. The Company covenants that all shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable. The Company agrees that this is a material term ofthis Note.

(d) Conversion Limitation. The holder will not submit a conversion to the Company that would result in the Holder owning more than 9.99% of the total outstanding shares ofthe Company.

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SECTION 2.00 DEFAULTS AND REMEDIES.

(e) Events of Default. An "EVENT OF DEFAULT" is: (i) a default in payment of any amount due hereunder which default continues for more than five (5) business days after the due date; (ii) a default in the timely issuance of underlying shares upon and in accordance with terms hereof, which default continues for three (3) Business Days after the Company has received notice informing the Company that it has failed to issue shares or deliver stock certificates within the third erd) day following the Conversion Date; (iii) failure by the Company for three (3) days after notice has been received by the Company to comply with any material provision of the Exchange Agreement (including without limitation the failure to issue the requisite number of shares of Common Stock upon conversion hereof; (iv) a material breach by the Company of its representations or warranties in the Exchange Agreement; (v) any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $7,500 or for money borrowed the repayment of which is guaranteed by the Company in excess of $7,500, whether such indebtedness or guarantee now exists or shall be created hereafter; (vi) any failure of the Company to satisfy its "filing" obligations under the rules and guidelines issued by OTC Markets News Service, OTC Markets.com and their affiliates; (vii) Any failure of the Company to provide the Holder with information related to the corporate structure including, but not limited to, the number of authorized and outstanding shares, public float, etc. within one (1) day of request by Holder;
(viii) failure to have sufficiento number of authorized but unissued shares of the Company's Common Stock available for any conversion; (ix) failure of Company's stock to maintain a bid price in its trading market which occurs for at least three (3) consecutive days; (x) any delisting for any reason; (xi) failure by Company to pay any of its Transfer Agent fees or to maintain a Transfer Agent of record; (xii) any trading suspension imposed by the Securities and Exchange Commission under Sections 12G) or 12(k) of the 1934 Act; (xiii) if the Company is subject to any Bankruptcy Event; (xiv) failure of the Company to remain compliant with DTC, thus incurring a "chilled" status with DTC; or (xv) failure of the Company to abide by the terms of the right of first refusal contained in Section 3.00 (i).

Remedies. If an Event of Default occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal Amount of this Note, including any interest due thereon, to be due and payable immediately without further action or notice. In the event of such acceleration, the amount due and owing to the Holder shall be increased to one hundred and fifty percent (150%) of the outstanding Principal Amount of the Note held by the Holder plus all accrued and unpaid interest, fees, and liquidated damages, if any. Additionally, this Note shall bear interest on any unpaid principal from and after the occurrence and during the continuance of an Event of Default at a rate of twenty percent (20%). Finally, the Note will accrue liquidated damages of one thousand dollars ($1,000) per day from and after the occurrence and during the continuance of an Event of Default. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder's actual damages and costs resulting from an Event of Default and any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. The remedies under this Note shall be cumulative and added to the principal value of the Note.

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SECTION 3.00 GENERAL.

(f) Payment of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

(g) Assignment, Etc. The Holder may assign or transfer this Note to any transferee at its sole discretion. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

(h) Governing Law; Jurisdiction.

(I) GOVERNING LAW. This note will be governed by and construed in accordance with the laws of the state of California without regard to any conflicts of laws or provisions thereof that would otherwise require the application of the law of any other jurisdiction.

(II) JURISDICTION. Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto shall be settled by binding arbitration in San Diego, California. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association ("AAA"). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable judgement in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

(II) . NO JURY TRIAL. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial byjury with respect to any litigation based on, or arising out of, under, or in connection with, this note.

(i) Right of .first Refusal From and after the date of this Note and at all times hereafter while the Note is outstanding, the Parties agree that in the event that the Company receives any written or oral proposal (the "Proposal") containing one or more offers to provide additional capital or financing in an amount equal to or exceeding an aggregate of fifty thousand dollars ($7,500.00) (the "Financing Amount"), the Company agrees that it shall provide a copy of all documents received relating to the Proposal together with a complete and accurate description of the Proposal to the Holder and all amendments, revisions, and supplements thereto (the "Proposal Documents") no later than three (3). business days from the receipt of the Proposal Documents. Following receipt of the Proposal Documents from the Company, the Holder shall have the right (the "Right of First Refusal"), for a period of five (5) business days thereafter (the "Exercise Period"), to invest, at similar or better terms to the Company, in an amount equal to or greater than the Financing Amount, upon written notice to the Company that the Holder is exercising the Right of First Refusal provided hereby. In furtherance of the Right of First Refusal, the Company agrees that it will cooperate and assist Holder in conducting a due diligence investigation of the Company and its corporate and financial affairs and provide Holder with information and documents that Holder may reasonably

5

request so as to allow the Holder to make an informed investment decision. However, the Company and Holder agree that Holder shall have no more than five
(5) calendar days from and after the expiration of the Exercise Period to exercise its Right of First Refusal hereunder. This Right of First Refusal shall extend to all purchases of debt held by current shareholders, vendors, or creditors.

IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed on the day and in the year first above written.

RED GIANT ENTERTAINMENT INC

By: /s/ Benny R. Powell
   ----------------------------------------
Name:  Benny R. Powell
Title: CEO
Date:  Dec 20, 2013

This Note is acknowledged as: Note of December 20, 2013

6

EXHIBIT A

FORM OF CONVERSION NOTICE

(To be  executed  by the  Holder  in  order  to  convert  that  certain  $25,000
Convertible Promissory Note identified as the Note)

DATE:
       ------------------------------------
FROM:  Iconic Holdings, LLC

Re: $25,000 Convertible Promissory Note (this "Note") originally issued by RED GIANT ENTERTAINMENT INC., a Nevada corporation, to Iconic Holdings, LLC on December 20,2013.

The undersigned on behalf of ICONIC HOLDINGS, LLC, hereby elects to convert $____________ of the aggregate outstanding Principal Amount (as defined in the Note) indicated below of this Note into shares of Common Stock, $0.0001 par value per share, of RED GIANT ENTERTAINMENT INC (the "Company") according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any. The undersigned represents as ofthe date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice, the undersigned will not exceed the "Restricted Ownership Percentage" contained in this Note.

Conversion information:


Date to Effect Conversion


Aggregate Principal Amount of Note Being Converted


Aggregate Interest on Amount Being Converted


Number of Shares of Common Stock to be Issued


Applicable Conversion Price


Signature


Name


Address

7

NOTARIZED CERTIFICATE OF CORPORATE SECRETARY

OF
RED GIANT ENTERTAINMENT INC.

(Two Pages)

The undersigned, Benny R. Powell is the duly elected Corporate Secretary of Red Giant Entertainment Inc., a Neva a corporation (the "Company").

I hereby warrant and represent that I have undertaken a complete and thorough review of the Company's corporate and financial books and records including, but not limited to, the Company's records relating to the following:

(A) that certain issuance of that certain convertible promissory note dated December 20, 2013 (the "Note Issuance Date") issued to Iconic Holdings, LLC (the "Holder") in the stated original principal amount of twenty five thousand dollars ($25,000) (the "Note");

(B) the Company's Board of Directors duly approved the issuance of the Note to the Holder.

(C) The Company has not received and does not contemplate receiving any new consideration from any persons in connection with any later conversion of the Note and the issuance of the Company's Common Stock upon any said conversion.

(D) To my best knowledge and after completing the aforementioned review of the Company's shareholder and corporate records, I am able to certify that the Holder (and the persons affiliated with the Holder) are not officers, directors, or directly or indirectly, ten percent(IO.OO%) or more stockholders of the Company and none of said persons have had any such status in the one hundred (100) days immediately preceding the date of this Certificate.

(E) The Company's Board of Directors have approved duly adopted resolutions approving the Irrevocable Instructions to the Company's Stock Transfer Agent attached to the Note Purchase Agreement, dated December 20, 2013.

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(F) The Company is not, nor has ever been, a "shell company" as described in Rule 144(i)(l)(i) of the Securities Act of 1933, as amended.

(G) I understand the constraints imposed under Rule 144 on those persons who are or may be deemed to be "affiliates," as that term is defined in Rule 144(a)(l) of the Securities Act of 1933.

(H) I understand that all of the representations set forth in this Certificate will be relied upon by counsel to Iconic Holdings, LLC in connection with the preparation of a legal opinion.

I HEREBY AFFIX MY SIGNATURE TO THIS NOTARIZED CERTIFICAT AND HEREBY CONFIRM

THE ACCURACY OF THE STATEMENTS MADE HEREIN.

SIGNED: /s/ Benny R. Powell                           DATE:
       --------------------------------------               --------------------

Name:  Benny R. Powell                                Title:
       --------------------------------------               --------------------

SUBSCRIBED AND SWORN TO BEFORE ME ON THIS _____DAY OF ;2013.

Commission Expires:

Notary Public

2

NOTE PURCHASE AGREEMENT

This Note Purchase Agreement (the "Agreement") is made as of December 20, 2013 by and between Red Giant Entertainment Inc. a Nevada corporation with principal offices at 614 E. Hwy 50, Suite 235, Clermont FL 34711 (the "Company") and Iconic Holdings, LLC, a Delaware LLC with principal offices at 7200 Wisconsin Ave. Suite 206, Bethesda, MD 20814 (the "Purchaser"). As used herein, the term "Parties" shall be used to refer to the Company and Purchaser jointly.

WHEREAS:

A. The Parties jointly warrant and represent that they have a pre-existing relationship prior to the date of this Agreement.

B. Purchaser warrants and represents that it is sophisticated and experienced in acquiring the debt instruments issued by small early-stage companies that have not achieve profitability, positive cash flow or both.

C. Purchaser warrants and represents that it is an "accredited investor," as that term is defined in Rule 501 of the Securities Act of 1933, as amended (the "1933 Act").

D. Purchaser warrants and represents that prior to entering into this Agreement that it has received and completed its review ofthe Company's corporate and financial statements as included in the filings and disclosures as listed for the Company with the Securities and Exchange Commission which has allowed Purchaser to. make an informed investment decision with respect to purchase of that certain Convertible Promissory Note in the stated original principal amount of Twenty Five Thousand Dollars ($25,000.00) (the "Note") attached in Exhibit A and dated December 20, 2013.

E. The Purchaser acknowledges and agrees that it is acquiring the Note for investment purposes only and not with a view to a distribution.

F. The Purchaser acknowledges and agrees that: (i) the Note is a "restricted security," as that tennis defined inthe 1933 Act and (ii) no registration rights have been granted to Purchaser to register the Note.

NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:

Section 1. SALE AND ISSUANCE OF THE NOTE. In consideration of the Company's receipt of the initial sum of Seventeen Thousand Five Hundred Dollars ($17,500.00) at Closing (as defined in Section 2.1), the Company shall sell to the Purchaser, and the Purchaser shall purchase from the Company (the "Issuance") the Note upon the terms set forth in this Agreement. In addition, a

1

copy of that certain Action of the Board of Directors, dated December 20, 2013 (the "ACTION OF THE BOARD OF DIRECTORS") is attached in Exhibit A, attached hereto.

SECTION 2. THE CLOSING.

2.1. PLACE OF CLOSING AND PROCEDURE AT CLOSING. The closing of the issuance ofthe Note to the Purchaser (the "CLOSING") shall take place simultaneously with and upon the satisfaction of the following conditions:

(1) the Company's execution and delivery to the Purchaser of the following:
(a) an executed copy of this Agreement; (b) an executed copy of the Note; (c) a signed copy of the Irrevocable Instructions to the Transfer Agent; and (d) the signed Action of the Board of Directors.

(2) the Purchaser's execution of a wire transfer to the Company no later than one (1) business day following the Closing as follows: the sum of seventeen thousand five hundred dollars ($17,500.00) in cash shall be remitted and delivered to the Company and seven thousand five hundred dollars ($7,500.00) shall be retained by the Purchaser through an original issue discount for due diligence and legal bills related to this transaction.

(3) the Purchaser reserves the right to pay additional consideration at any time and in any amount it desires, at its sole discretion.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser as follows:

3.1. ORGANIZATION. The Company is duly organized, validly existing and in good standing under the laws of the State of Nevada and is qualified to conduct its business as a foreign corporation in each jurisdiction where the failure to be so qualified would have a material adverse effect on the Company.

3.2. AUTHORIZATION OF AGREEMENT, ETC, The execution, delivery. and performance by the Company of this Agreement, the Note, and each other document or instrument contemplated hereby or thereby (collectively, the "FINANCING DOCUMENTS") have been duly authorized by all requisite corporate action by the Company and delivered by the Company. Each of the Financing Documents, when executed and delivered by the Company, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights and remedies generally, and subject as to enforceability to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

SECTION 4.. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser hereby represents and warrants to the Company as follows:

4.1. AUTHORIZATION OF THE DOCUMENTS. Purchaser has all requisite power and authority(corporate or otherwise) to execute, deliver and perform the Financing

2

Documents to which it is a party and the transactions contemplated thereby, and the execution, delivery and performance by such Purchaser of the Financing Documents to which it is a party have been duly authorized by all requisite action by such Purchaser and each such Financing Document, when executed and delivered by the Purchaser, constitutes a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

4.2. INVESTMENT REPRESENTATIONS. The Purchaser warrants and represents that:

(a) the Purchaser is an accredited investor (as that term is defined in Rule 50l(a)(l) of Regulation D ofthe 1933 Act;

(b) the Purchaser is sophisticated and experienced in acquiring the securities of small public companies;

(c) the Purchaser has reviewed the Company's Annual and Quarterly Reports together with the audited financial statements contained therein;

(d) the Purchaser has had sufficient opportunity to review and evaluate the risks and uncertainties associated with the purchase ofthe Company's securities;

(e) the Purchaser is acquiring the Note from the Company for investment purposes only o and not with a view to a distribution.

4.3 RESTRICTED SECURITY. Purchaser understands and acknowledges that the Note has not been, and when issued will not be, registered with the Securities and Exchange Commission. Purchaser warrants and represents that it has fully reviewed the restricted securities legend and the terms thereof with its financial, legal, investment, and business advisors and that it has not relied upon the Company or any other person for any advice in connection with the purchase of the Note, this Agreement, or both of them.

4.4 LEGAL COUNSEL. Purchaser has consulted with its own independent legal, tax, investment, and other advisors of its own choosing prior to entering into this Agreement.

4.5 ABSENCE OF REGISTRATION RIGHTS. Purchaser understands and agrees that it is not acquiring and has not been granted any registration rights with respect to the Note. The Note is a restricted security and the Purchaser understands that there is no trading market for the Note and no such market will likely ever develop.

SECTION 5. BROKERS AND FINDERS.

The Company shall not be obligated, unless previously detailed in Section 2.1(2), to pay any commission, brokerage fee or finder's fee based on any alleged agreement or understanding between the Purchaser and a third person in

3

respect of the transactions contemplated hereby. The Purchaser hereby agrees to indemnify the Company against any claim by any third person for any commission, brokerage or finder's fee or other payment with respect to this Agreement or the transactions contemplated hereby based on any alleged agreement or understanding between the Purchaser and such third person, whether express or implied from the actions of the Purchaser.

SECTION 6. SUCCESSORS AND ASSIGNS.

This Agreement shall bind and inure to the benefit of the Company, the Purchaser and their respective successors and assigns.

SECTION 7. ENTIRE AGREEMENT.

This Agreement and the other writings and agreements referred to in this Agreement or delivered pursuant to this Agreement contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings among the parties with respect thereto.

SECTION 8. NOTICES.

All notices, demands and requests of any kind to be delivered to any party in connection with this Agreement shall be personally served, sent via facsimile or e-mail, or sent in writing via an internationally recognized overnight courier or by registered or certified mail, return receipt requested and postage prepaid to the address of each party listed on the first page of this Agreement or to such other address as the party to whom notice is to be given may have furnished to the other parties to this Agreement in writing in accordance with the provisions of this Section 8. Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of facsimile or e-mail, immediately (iii) in the case of an internationally-recognized overnight courier, on the next business day after the date when sent and (iv) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

SECTION 9. AMENDMENTS.

This Agreement may not be modified or amended, or any of the provisions of this Agreement waived, except by written agreement of the Company and the Purchaser.

SECTION 10. ATTORNEYS' FEES.

In the event of a dispute between the parties concerning the enforcement or interpretation of this Agreement, the prevailing party in such dispute, whether by legal proceedings or otherwise, shall be reimbursed immediately for the reasonably incurred attorneys' fees and other costs and expenses by the other parties to the dispute.

SECTION LL. GOVERNING LAW AND ARBITRATION.

(A) All questions concerning the construction, interpretation and validity of this Agreement shall be governed by and construed and enforced in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether in the State of California

4

or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. In furtherance of the foregoing, the internal law of the State of California will control the interpretation and construction of this Agreement, even if under such jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily or necessarily apply.

SECTION 12. CAPTIONS AND EXHIBIT A.

The captions by which the sections and subsections of this Agreement are identified are for convenience only, and shall have no effect whatsoever upon its interpretation. Exhibit A is attached hereto and each of the attachments listed in Exhibit A are each with Exhibit A incorporated by reference herein.

SECTION 13. SEVERANCE.

If any provision of this Agreement is held to be illegal or invalid by a court of competent jurisdiction, such provision shall be deemed to be severed and deleted; and neither such provision, nor its severance and deletion, shall affect the validity of the remaining provisions.

SECTION 14. COUNTERPARTS.

This Agreement may be executed in any number of counterparts, and each such counterpart of this Agreement shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Facsimile counterpart signatures . to this Agreement shall be acceptable and binding.

[The remainder of this page has been left intentionally blank.]

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IN WITNESS WHEREOF, each of the undersigned has duly executed this Note Purchase Agreement as of the date first written above.

FOR THE COMPANY:

RED GIANT ENTERTAINMENT INC.

By: /s/ Benny R. Powell
   ---------------------------------------
Name: Benny R. Powell
Its:  CEO

FOR THE PURCHASER:
ICONIC HOLDINGS, LLC

By:
Name:

Title: Managing Member

[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]

[The remainder of this page has been left intentionally blank.]

6

EXHIBIT A

(COPY OF CONVERTIBLE PROMISSORY NOTE, BOARD RESOLUTION, AND IRREVOCABLE
INSTRUCTIONS TO STOCK TRANSFER AGENT, ARE EACH ATTACHED HERETO.)

1. Copy of Convertible Promissory Note

2. Copy of the Board Resolution of the Borrower

3. Copy of Irrevocable Instructions to Stock Transfer Agent

[The remainder of this page has been left intentionally blank.]

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ATTACHED TO NOTE PURCHASE AGREEMENT

Irrevocable Transfer Agent Instructions

DATE: December 20, 2013

Holladay Stock Transfer
2939 N 67th Place
Scottsdale, AZ 85251

Ladies and Gentlemen:

On behalf of Red Giant Entertainment Inc., a Nevada corporation (the "COMPANY"), reference is made to that certain Note Purchase Agreement, dated as of December 20, 2013, and the Convertible Note with principle value of $25,000 (the "NOTE"), dated December 20, 2013 (both of which are jointly referred to as the "AGREEMENT"), by and between the Company and ICONIC HOLDINGS, LLC, a Delaware limited liability company (the "HOLDER"). A copy of each of the above are attached hereto. Pursuant to the terms of the Note the holder is given the the right to convert all or any portion of the Note into shares of common stock (the "SHARES") of the Company, par value $0.0001 per share (the "COMMON STOCK" or "SUBJECT SHARES"). We ask that you familiarize yourself with your issuance and delivery obligations as Transfer Agent, contained herein.

You are hereby irrevocably authorized and instructed to reserve a sufficient number of shares of common stock ("Common Stock") of the Company (initially 20,000,000 shares) for issuance upon partial or full conversion of the Note in accordance with the terms thereof (the "RESERVE SHARES"). Following the submission of any conversion notice for the Note by the Holder, this reserve amount shall automatically be increased back to 20,000,000 shares until the Note has been fully retired, at which point this reserve will be extinguished. In the event that the amount of Reserve Shares are exhausted prior to the full conversion of the Note, for any reason, you are authorized and instructed to immediately issue, upon receipt of a Conversion Notice for any remaining portion of the Note such additional shares of Common Stock due and owing to Holder and arising out of said conversion from the remaining authorized and unissued common stock of the company. o

The ability to convert the Note in a timely manner is a material obligation of the Company pursuant to. the Note. Your firm is hereby irrevocably authorized and instructed to issue shares of Common Stock of the Company (without any restrictive legend)to the Investor without any further action or confirmation by the Company upon your receipt from the Investor of (a) a notice of conversion ("Conversion Notice") executed by the Investor; and (b) an opinion of counsel of the Investor, in form, substance and. scope customary for opinions of counsel in comparable transactions (and satisfactory to the transfer agent), to the effect that the shares of Common Stock of the Company issued to the Investor pursuant

1

to the Conversion Notice are not "restricted securities" as defined in Rule 144 and should be issued to the Investor without any restrictive legend.

The Company hereby requests that your firm act immediately, without delay and without the need for any action or confirmation by the Company with respect to the issuance of Common Stock pursuant to any Conversion Notices received from the Investor. Your firm will not delay in processing any Conversion Notices owing to the fact that the Company is in arrears of its fees and other monies owed to your firm, provided that the Investor agrees that each time a Conversion Notice is delivered to your firm, the Investor agrees to pay the cost of processing the Conversion Notice a sum not to exceed $150.00 for each such transaction.

The Company hereby directs you, upon request by the Investor or Investor's broker dealer, to. immediately provide any capitalization structure information pertaining to the number of common shares of the Company that are issued and outstanding, authorized, reserved, or in the public float.

The Company shall indemnify you and your officers, directors, principals, partners, agents and representatives, and hold each of them harmless from and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements of its attorneys) incurred by or asserted against you or any of them arising out of or in connection with the instructions set forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder as to matters in respect of which it is determined that you have acted with gross negligence or in bad faith (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable order, judgri:lent, decree or ruling of a court of competent jurisdiction). You shall have no liability to the Company in respect to any action taken or any failure to act in respect of this if such action was taken or omitted to be taken in good faith, and you shall be entitled to rely in this regard on theo advice of counsel.

The Board of Directors of the Company has approved the foregoing (irrevocable instructions) and does hereby extend the Company's irrevocable agreement to indemnify your firm for all loss, liability or expense in carrying out the authority and direction herein contained on the terms herein set forth.

The Company agrees that in the event that the Transfer Agent resigns as the Company's transfer agent, the Company shall engage a suitable replacement transfer agent that will agree to serve as transfer agent for the Company and be bound by the terms and conditions of these Irrevocable Instructions within five (5}business days.

The Investor .is intended to be and are third party beneficiaries hereof, and no amendment or modification to the instructions set forth herein may be made without the consent of the Investor.

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Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions and return a copy of this agreement to the Company and to the Holder.

Very truly yours,

RED GIANT ENTERTAINMENT INC.

By: /s/ Benny R. Powell
   ---------------------------------------
Name:  Benny R. Powell
Title: CEO

ACKNOWLEDGED AND AGREED:

HOLLADAY STOCK TRANSFER

By:                                                    Date:
   ---------------------------------------                  -------------------

Name:
Title:
Date:

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MEMORANDUM

TO: Iconic Holdings, LLC
FROM: Red Giant Entertainment Inc.
DATE: December 20,2013
RE: Disbursement of Funds

Pursuant to that certain Note Purchase Agreement between the parties listed above dated December 20, 2013, a disbursement of funds will take place in the amount and manner described below:

PLEASE DISBURSE TO:

Amount to disburse:                  $17,500
                                     ---------------------------------------
Form of distribution                 Wire
                                     ---------------------------------------
Name                                 Red Giant Entertainment Inc.
                                     ---------------------------------------
Address
                                     ---------------------------------------

                                     ---------------------------------------

                                     ---------------------------------------

Wire Instructions:

ACCOUNT:
Bank
ABA Routing Number:
Account Number: SWIFT
Code:
Account Name:
Phone:

By: /s/ Benny R. Powell
   ---------------------------------------             Dated: December 20,2013
   Name:
   Red Giant Entertainment Inc.


Exhibit 10.38

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Principal Amount: $32,500.00 Issue Date: January 7, 2014 Purchase Price: $32,500.00

CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, RED GIANT ENTERTAINMENT, INC., a Nevada corporation (hereinafter called the "Borrower"), hereby promises to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the "Holder") the sum of $32,500.00 together with any interest as set forth herein, on January 9, 2015 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the "Interest Rate") per annum from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate oftwenty two percent (22%) per annum from the due date thereof until . the same is paid ("Default Interest"). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 par value per share (the "Common Stock") in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeedingo day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used


herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of:
(i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion"); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1), the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days'. prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined bythe Holder, as may be specified ino such noticeo of waiver). The number. of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date"). The term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the

2

principal amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder's option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

1.2 Conversion Price.

(a) Calculation of Conversion Price. The conversion price (the "Conversion Price") shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 58% multiplied by the Market Price (as defined herein) (representing a discount rate of 42%). "Market Price" means the average of the lowest three
(3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded,

(b) Conversion Price During Maior Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii}any person, group or entity (including the Borrower}publicly announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x}the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section
1.2(a). For purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover

3

scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times (once the Borrower completes is share increase later this month) the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Borrower's obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii}agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions ofthis Note.

If, at any time theo Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4 Method of Conversion.

(a) Mechanics of Conversion. o Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00p.m., New York, New York time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower.

(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof; the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as notto require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima

4

facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

(c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

(d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1 A, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline") (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. o

(e) Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on. such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same; any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower; and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specifiedo in the Notice of Conversion shall be the Conversion Date. so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

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(f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this
Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.

(g) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the . parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

1.5 . Concerningo the Shares. o The shares of Common . Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effectthatthe shares to be sold or transferred may be sold or transferred pursuant to an exemption from. such registration or (iii) .such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this
Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions st forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under. the Actor otherwise may be sold pursuant to RuleJ44 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

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"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer. is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

1.6 Effect of Certain Events.

(a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than

50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article
III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the DefaultAmount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof.. "Person" shall mean any individual, o corporation, limited liability company, partnership, association, trust or other entity or organization.

(b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization,

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reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets}to holders of Common Stock a ra dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin off)) (a "Distribution"), then the .Holder of this Note shall beo entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder ofsuch shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

(d) Adjustment Due to Dilutive Issuance.. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a . consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date. of such issuance (or deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

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The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options") and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of such Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

Additionally; the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or noto immediately convertible (other than where the same are issuable upon .the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share, For the purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities .first become convertible or exchangeable, by (ii) the maximum total number of shares of Common. Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance. of such Common Stock upon conversion or exchange of such Convertible Securities.

(e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein)immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Commono Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this
Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the "Maximum Share Amount"), which shall be 9.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails. to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-:regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieuo of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

1.8 Status.o as Shareholder. Upon submission of a Notice .of Conversion by. a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock ando (ii) the Holder's rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because o of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (1Oth) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then(unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted; In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to

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have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this Note.

1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date which is thirty (30) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional Prepayment Notice") shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional Prepayment Date"), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Optional Prepayment Amount") equal to 120%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 13 and 1.4(g) hereof. If the Borrower. delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this
Section 1.9.

Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31) days. following the issue date and ending on the date which is sixty (60) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the. Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder .of an amount in cash (the "Second Optional Prepayment Amount").equal to 125%, multiplied by the sum .of: (w) the then outstanding principal amount of this Note plus (x)accrued and unpaid interest on the o unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus {z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two
(2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

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Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days following the issue date and ending on the date which is ninety (90) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Third Optional Prepayment Amount") equal to 130%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from the issue date and ending one hundred twenty (120) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full,. in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to or upon the. order of the Holder as specified by the Holder in writing to the Borrower at least one (l) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Fourth Optional Prepayment Amount") equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest,ifany, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to thiso Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one (121) day from the issue date and ending one hundred fifty (150) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3)

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Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Fifth Optional Prepayment Amount") equal to 140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred fifty-one (151) day from the issue date and eriding one hundred eighty (180) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued. interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and(2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Sixth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior. to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Sixth Optional Prepayment Amount") equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this. Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus(z) any amounts owed to the Holder pursuant to SeCtions 1.3 and 1.4(g) hereof. Ifthe Borrower delivers an Optional Prepayment Notice and fails to pay the Sixth Optional Prepayment Amount due to the Holder of the Note within two
(2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

After the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment.

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ARTICLE II. CERTAIN COVENANTS

2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by a majority of the Borrower's disinterested directors.

2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred o in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.

2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, lend money, give credit or make advances to .any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which th;e Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of$100,000.

ARTICLE III. EVENTS OF DEFAULT

If any of the following events of default (each, an "Event of Default")shall occur:

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3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower's transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its

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property or other assets for more than $50,000, and shall remain unvacated, unhanded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

3.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

3.8 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

3.10 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its debts as they become due.

3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

3.15 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

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3.16 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3.15 exercisable through the delivery of written notice to the Borrower by such Holders (the "Default Notice"), and. upon the occurrence of an Event of Default specified the remaining sections of Articles Ill (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment(the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z}any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or
(ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the

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Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

ARTICLE IV. MISCELLANEOUS

4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or. number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:
RED GIANTENTERTAINMENT, INC.
614 E. Highway 50- Suite 235
Clermont, FL 34711

Attn: BENNY R POWELL, Chief Executive Officer facsimile:

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

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[enter name of law firm]
Attn: [attorney name]
[enter address line 1]
[enter city, state, zip]
facsimile: [enter fax number]

If to the Holder:
ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021

Attn: Curt Kramer, President facsimile: 516-498-9894

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


Naidich Wurman Birnbaum & Maday, LLP
80 Cuttermill Road, Suite 410
Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.

4.6 Governing Law, This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and

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shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent to shareholders).. In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation; dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

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4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an iJUunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

IN WI1NESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this January 7, 2014.

RED GIANT ENTERTAINMENT INC.

By: /s/ Benny R. Powell
   ---------------------------------------
   Benny R. Powell
   Chief Executive Officer

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EXIDBIT A-- NOTICE OF CONVERSION

The undersigned hereby elects to convert $________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of RED GIANT ENTERTAINMENT, INC., a Nevada corporation (the "Borrower") according to the conditions of the convertible note of the Borrower dated as of January 7, 2014 (the "Note"), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

[ ] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").

Name of DTC Prime Broker: Account Number:

[ ] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numb rs are based on the Holder's calculation attached hereto) in thename(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021

Attention: Certificate Delivery (516) 498-9890

Date of Conversion:

Applicable Conversion Price: $ Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Notes: Amount of Principal Balance Due remaining Under the Note after this conversion:

ASHER ENTERPRISES, INC.
By:

Name: Curt Kramer
Title: President
Date:
1 Linden Pl., Suite 207
Great Neck, NY. 11021

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Exhibit 10.41

IN THE CIRCUIT COURT IN THE TWELFTH JUDICIAL CIRCUIT
IN AND FOR SARASOTA COUNTY, FLORIDA

IBC Funds, LLC, CIVIL ACTION NO.
a Nevada Limited Liability Company, 2014 CA 000725 CA Plaintiff,
-against-

Red Giant Entertainment, Inc.,
a Nevada Corporation,
Defendant.

----------------------------/

ORDER GRANTING APPROVAL OF
SETTLEMENT AGREEM ENT AND STIPULATION

This matter having come on for a hearing on the 7th day of February, 2014, to approve the Settlement Agreement entered into as of February 5, 2014 between Plaintiff, IBC Funds, LLC ("Plaintiff') and Defendant, Red Giant Entertainment, Inc. ("Defendant" and collectively with Plaintiff, the "Parties"), and the Court having held a hearing as to the fairness of the terms and conditions of the Settlement Agreement and Stipulation and being otherwise fully advised in the prenlises, the Court hereby finds as follows:

1. The Court has been advised that the Parties intend that the sale of the Shares (as defined by the Settlement Agreement and, hereinafter, the "Shares") to and the resale of the Shares by Plaintiff in the United States, assuming satisfaction of all other applicable securities laws and regulations, will be exempt from registration under the Securities Act of 1933 (the "Securities Act") in reliance upon Section 3(a)(10) of the Securities Act based upon this Court's finding herein that the terms and conditions of the issuance of the Shares by Defendant to Plaintiff are fair to Plaintiff;


2. The hearing having been scheduled upon the consent of Plaintiff and Defendant, Plaintiff has had adequate notice of the hearing and Plaintiff is the only party to whom Shares will be issued pursuant to the Settlement Agreement;

3. The terms and conditions of the issuance of the Shares in exchange for the release of certain claims as set forth in the Settlement Agreement are fair to Plaintiff, the only party to whom the Shares will be issued;

4. The fairness hearing was open to Plaintiff. Plaintiff was represented by counsel at the hearing who acknowledged that adequate notice of the hearing was given and consented to the entry of this Order.

It is hereby ORDERED AND ADJUDGED that the Settlement Agreement and Stipulation is hereby approved as fair to the party to whom the Shares will be issued, within the meaning of Section 3(a)(l 0) of the Securities Act and that the sale of the Shares to Plaintiff and the resale of the Shares in the United States by Plaintiff, assuming satisfaction of all other applicable securities laws and regulations, will be exempt from registration under the Securities Act of 1933.

SO ORDERED, this ___ day of _______________, 2014.


The Honorable

Conformed copies to:
Charles N. Cleland, Jr., Esq.
Michael G. Brown, Esq.


Exhibit 10.50

NEITHER THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE BORROWER UPON CONVERSION HEREOF (COLLECTIVELY, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED:
(i) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE SECURITIES LAWS; OR (ii) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (iii) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

22% AMENDED CONVERTIBLE NOTE

                        Maturity date of January 11, 2015

$50,000.00                                   July 11, 2014 (the "Issuance Date")

                      July 25, 2014 (the "Amendment Date")

This FIRST AMENDMENT TO THE CONVERTIBLE NOTE DATED JULY 11, 2014 (the "Amendment") is dated effective as of the 25TH day of July, 2013, by and between Red Giant Entertainment Inc., a Nevada corporation (the "Company") and JSJ Investments, Inc., an accredited investor and Texas Corporation (the "Holder").

WHEREAS, the Company and the Holder desire to amend the Convertible Note dated July 11, 2014 (the "Original Note");

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:

1. The Interest Rate shall be adjusted from the rate of Twelve Percent (12%) per annum from the Issue Date stipulated in the Original Note to the rate of Twenty-Two Percent (22%) per annum from the Issue Date of the Original Note.

2. The Default Interest rate shall be adjusted from the rate of Twelve Percent (12%) per annum from the Maturity Date stipulated in the Original Note to the rate of Twenty-Two Percent (22%) per annum from the Maturity Date of the Original Note.

Effect on Original Note. Except as expressly amended by this Amendment, all of the terms and provisions of the Original Note shall remain and continue in full force and effect after the execution of this Amendment, are hereby ratified and confirmed, and incorporated herein by this reference.

1

Waiver. This Amendment shall not be deemed or construed in any manner as a waiver by the Holder of any claims, defaults, events of default, breaches or misrepresentations by the Borrowers under the Original Note, or any of Holder's rights or remedies in connection therewith.

[SUBSTANCE OF ORIGINAL NOTE TO FOLLOW AFTER SIGNATURES]

/s/ Sameer Hirji                                /s/ Benny Powell
--------------------------------                --------------------------------
July 25, 2014                                   Date:
Sameer Hirji, President                         Benny Powell, CEO
JSJ Investments, Inc.                           Red Giant Entertainment Inc.

FOR VALUE RECEIVED, RED GIANT ENTERTAINMENT, INC., A NEVADA Corporation (the "Company") doing business in CLERMONT, FL hereby promises to pay to the order of JSJ Investments Inc., an accredited investor and Texas Corporation, or its assigns (the "Holder") the principal amount of FIFTY THOUSAND DOLLARS ($50,000), on demand of the Holder (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof at the rate of TWELVE PERCENT (12%) per annum (the "Interest Rate") from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise; PROVIDED, that any amount of principal or interest on this Note which is not paid when due shall bear interest at such rate on the unpaid principal balance hereof plus the Default Amount (as defined in Article 7, INFRA) from the due date thereof until the same is paid in full. Interest shall commence accruing on the Issuance Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed and shall accrue quarterly

1. Payments of Principal and Interest.

(a) Payment of Principal. Upon the Maturity Date, this note has a cash redemption premium of 150% of the principal amount only upon approval and acceptance by JSJ Investments Inc. This provision only may be exercised if the consent of the Note holder is obtained. The principal balance of this Note shall be paid to the Holder hereof on demand.

(b) Default Interest. Any amount of principal on this Note which is not paid when due shall bear TWELVE PERCENT (12%) interest per annum from the date thereof until the same is paid ("Default Interest") and the Holder, at the Holder's sole discretion, may include any accrued but unpaid Default Interest in the Conversion Amount.

(c) General Payment Provisions. This Note shall be made in lawful money of the United States of America by check to such account as the Holder may from

2

time to time designate by written notice to the Company in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. For purposes of this Note, "Business Day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of Texas are authorized or required by law or executive order to remain closed.

2. Conversion of Note. At any time prior to the Maturity Date, this Note shall be convertible into shares of the Company's common stock, share (the "Common Stock"), on the terms and conditions set forth in this Paragraph 2.

(a) Certain Defined Terms. For purposes of this Note, the following terms shall have the following meanings:

(1) "Conversion Amount" means the sum of (A) the principal amount of this Note to be converted with respect to which this determination is being made, and (B) Default Interest, if any, on unpaid interest and principal, if so included at the Holder's sole discretion.

(2) "Conversion Price" means 45% discount to the average of the three lowest trades on the previous twenty (20) trading days to the date of Conversion, or 45% discount to the average of the three lowest trades on the previous twenty (20) trading days that would be obtained if the conversion were to be made on the date that this note was executed.

(3) "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(4) "Shares" means the Shares into which any balance on this Note may be converted upon submission of a Conversion Notice.

(b) Holder's Conversion Right. At any time or times on or after the Issuance Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.

(c) Conversion Amount. Loan shall be converted pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) as promulgated by the Securities and

3

Exchange Commission under the Securities Act of 1933, as amended, into free-trading shares at the Conversion Price.

(d) Mechanics of Conversion. The conversion of this Note shall be conducted in the following manner:

(1) Holder's Conversion Requirements. To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the Holder (the "Conversion Date"), the Holder hereof shall transmit by email, facsimile or otherwise deliver, for receipt on or prior to 11:59 p.m., Eastern Time on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit 2(e)(1) (the "Conversion Notice") to the Company.

(2) Company's Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice, send, via email, facsimile or overnight courier, a confirmation of receipt of such Conversion Notice to such Holder indicating that the Company will process such Conversion Notice in accordance with the terms herein. Within two (2) Business Days after the date of the Conversion Confirmation, the Company shall have issued and surrendered to FedEx for delivery the next day to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled.

(3) Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

(4) Timely Response by Company. Upon receipt by Company of a Conversion Notice, Company shall respond in a timely manner to Holder by provision within one business day of the Shares requested in the Conversion Notice.

(5) Penalty for Delinquent Response. If Company fails to deliver for whatever reason (including any neglect or failure by, E.G. the Company, its counsel or the transfer agent) to Holder the Shares as requested in a Conversion Notice and within three business days of the receipt thereof, there shall accrue a penalty of Additional Shares due to Holder equal to 25% of the number stated in the Conversion Notice beginning on the Fourth business day after the date of the Notice. The Additional Shares shall be issued and the amount of the Note retired will not be reduced beyond that stated in the Conversion Notice. Each additional business day beyond the Fourth business day after the date of this Notice shall accrue an additional 25% penalty for delinquency, without any corresponding reduction in the amount due under the Note, for so long as Company fails to provide the Shares so demanded.

3. Other Rights of Holders. Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization,

4

reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "Organic Change." Prior to the consummation of any (i) Organic Change or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the "Acquiring Entity") a written agreement (in form and substance reasonably satisfactory to the Holder) to deliver to Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Note, and reasonably satisfactory to the Holder. Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the Holders of a majority of the Conversion Amount of the Notes then outstanding) to ensure that each of the Holders will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such Holder's Note, such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the conversion of such Holder's Note as of the date of such Organic Change (without taking into account any limitations or restrictions on the convertibility of the Note). All provisions of this Note must be included to the satisfaction of Holder in any new Note created pursuant to this section.

4. Issuance of Common Stock Equivalents. If the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock ("Convertible Securities"), other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold (collectively, the "Common Stock Equivalents") and the aggregate of the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the "Aggregate Per Common Share Price") shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be adjusted as provided in the first sentence of subsection (vi) of this Section 3.5(a) on the basis that (1) the maximum number of Additional Shares of Common Stock issuable pursuant to all such Common Stock Equivalents shall be deemed to have been issued (whether or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable in whole or in part) as of the earlier of (A) the date on which the Company shall enter into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion Price shall be made under this subsection (vii) upon the issuance of any Convertible Security which is issued pursuant to the exercise of any warrants or other subscription or purchase

5

rights therefor, if any adjustment shall previously have been made to the exercise price of such warrants then in effect upon the issuance of such warrants or other rights pursuant to this subsection (vii). No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

5. Reservation of Shares. The Company shall at all times, so long as any principal amount of the Note is outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Note, such number of shares of Common Stock as shall at all times be sufficient to effect the conversion of all of the principal amount of the Note then outstanding; provided that the number of shares of Common Stock so reserved shall at no time be less than two hundred (200%) of the number of shares of Common Stock for which the principal amount of the Note are at any time convertible. The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the Holders of the Note based on the principal amount of the Notes held by each Holder at the time of issuance of the Notes or increase in the number of reserved shares, as the case may be. In the event a Holder shall sell or otherwise transfer any of such Holder's Note, each transferee shall be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Note shall be allocated to the remaining Holders, pro rata based on the principal amount of the Note then held by such Holders.

6. Voting Rights. Holders of this Note shall have no voting rights, except as required by law.

7. Reissuance of Note. In the event of a conversion or redemption pursuant to this Note of less than all of the Conversion Amount represented by this Note, the Company shall promptly cause to be issued and delivered to the Holder, upon tender by the Holder of the Note converted or redeemed, a new note of like tenor representing the remaining principal amount of this Note which has not been so converted or redeemed and which is in substantially the same form as this Note, as set forth above in Section 1(e)(2).

8. Defaults and Remedies.

(a) Events of Default. An "Event of Default" is: (i) default for ten (10) days in payment of interest or Default Interest on this Note; (ii) default in payment of the principal amount of this Note when due; (iii) failure by the Company for thirty (30) days after notice to it to comply with any other material provision of this Note; (iv) if the Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; or (vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (I) is for relief against the Company in an involuntary case; (2) appoints a Custodian of the Company or for all or substantially all of its property; or (3) orders the liquidation of the Company

6

or any subsidiary, and the order or decree remains unstayed and in effect for thirty (30) days. The Term "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal or State Law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

(b) Remedies. If an Event of Default occurs and is continuing, the Holder of this Note may declare all of this Note, including any interest and Default Interest and other amounts due, to be due and payable immediately.

9. Vote to Change the Terms of this Note. This Note and any provision hereof may only be amended by an instrument in writing signed by the Company and holders of a majority of the aggregate Conversion Amount of the Notes then outstanding.

10. Lost or Stolen Note. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in a form reasonably acceptable to the Company and, in the case of mutilation, upon surrender and cancellation of the Notes, the Company shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note; provided, however, the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests the Company to convert such remaining principal amount into Common Stock.

11. Payment of Collection, Enforcement and Other Costs. If: (i) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (ii) an attorney is retained to represent the Holder of this Note in any bankruptcy, reorganization, receivership or other proceedings affecting creditors' rights and involving a claim under this Note, then the Company shall pay to the Holder all reasonable attorneys' fees, costs and expenses incurred in connection therewith, in addition to all other amounts due hereunder.

12. Cancellation. After all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

13. Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.

14. Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the laws of the State of Texas, without giving effect to provisions thereof regarding conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in Texas for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is

7

brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by sending by certified mail or overnight courier a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenants to each Holder of Notes that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).

16. Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and all Holders and shall not be construed against any person as the drafter hereof.

17. Failure or Indulgence Not Waiver. No failure or delay on the part of this Note in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

IN WITNESS WHEREOF, the Company has caused this Note to be signed by its CEO, on and as of the Issuance Date.

By: /s/ Benny Powell
   --------------------------------------
DATE:
     Benny Powell
     President, CEO
     Red Giant Entertainment Inc.

8

EXHIBIT 1
CONVERSION NOTICE

Reference is made to the Convertible Note issued by RED GIANT ENTERTAINMENT INC. (the "Note").

In accordance with and pursuant to the Note, the undersigned hereby elects to convert a portion (or all) of the principal balance of the Note, indicated below into shares of Common Stock (the "Common Stock"), of the Company, by tendering the Note specified below as of the date specified below.

Date of Conversion:

Principal Amount to be converted: $__________________

Please confirm the following information:

Conversion Amount:
Conversion Price:
Number of shares of Common Stock to be issued:

Please issue the Common Stock into which the Note is being converted in the name of the Holder of the Note and to the following address:

Authorization:

Holder:

By:_________________________________
Sameer Hirji, President
JSJ Investments Inc.

Accepted by:

By: ________________________________ Benny Powell
CEO

Red Giant Entertainment Inc.

Accepted as of:

9

Exhibit 21

List of Subsidiaries

The Registrant has two subsidiaries:

1. Red Giant Entertainment, Inc., a Florida corporation; and

2. ComicGenesis, LLC, a Nevada limited liability company.


Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14(a) AND 15d-14(a) AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benny R. Powell, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended August 31, 2014 of Red Giant Entertainment, Inc. (the "registrant").

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

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

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

a. Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

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

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 6, 2015                  /s/ Benny R. Powell
                                     -------------------------------------------
                                     Benny R. Powell,
                                     CEO
                                     (Principal Executive and Financial Officer)


Echibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14(a) AND 15d-14(a) AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benny R. Powell, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended August 31, 2014 of Red Giant Entertainment, Inc. (the "registrant").

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

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

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

a. Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

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

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 6, 2015                  /s/ Benny R. Powell
                                     -------------------------------------------
                                     Benny R. Powell,
                                     CEO
                                     (Principal Executive and Financial Officer)


Exhibit 32

CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Red Giant Entertainment, Inc. (the "Company") on Form 10-K for the period ending August 31, 2014 as filed with the Securities and Exchange Commission on the date hereof, the undersigned, Benny R. Powell, CEO, President, and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: April 6, 2015                  /s/ Benny R. Powell
                                     -------------------------------------------
                                     Benny R. Powell,
                                     CEO, President, Chief Financial Officer
                                     (Principal Executive and Financial Officer)