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<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1.5pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>Registration No.&nbsp; 33-___________</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM S-1</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>GBS ENTERPRISES INCORPORATED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 34%; text-autospace: none; font-weight: bold; text-decoration: underline; text-align: center">Nevada</TD>
    <TD STYLE="width: 33%; text-autospace: none; font-weight: bold; text-decoration: underline; text-align: center">7370</TD>
    <TD STYLE="width: 33%; text-autospace: none; font-weight: bold; text-decoration: underline; text-align: center"><B><U>27-3755055</U></B></TD></TR>
<TR>
    <TD STYLE="text-autospace: none; text-align: center">(State of Incorporation)</TD>
    <TD STYLE="text-autospace: none; text-align: center">(Primary Standard Classification Code)</TD>
    <TD STYLE="text-autospace: none; text-align: center">(IRS Employer ID No.)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>585 Molly Lane<BR>
Woodstock, GA 30189<BR>
<U>(404) 474-7256<BR>
</U></B><FONT STYLE="color: black">(Address and Telephone Number of Registrant&rsquo;s Principal</FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Executive Offices and Principal Place&nbsp;of
Business)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Corporation Trust Company of Nevada</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>6100 Neil Road, Suite 500</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Reno, Nevada 89511</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(775) 688-3061</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name, Address and Telephone Number of Agent
for Service)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Copies to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Philip Magri, Esq.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The Sourlis Law Firm</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">130 Maple Avenue, Suite 9B2</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Red Bank, New Jersey 07701</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Direct Dial: (954)
303-8027</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">T: (732) 530-9007</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">F: (732) 530-9008</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">philmagri@sourlislaw.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">www.SourlisLaw.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box: <FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">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 &ldquo;large accelerated
filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule 12b-2 of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 25%; text-autospace: none">Large accelerated filer</TD>
    <TD STYLE="width: 2%; text-autospace: none; font-family: Wingdings">&uml;</TD>
    <TD STYLE="width: 46%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 0%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 25%; text-autospace: none">Accelerated filer</TD>
    <TD STYLE="width: 2%; text-autospace: none; font-family: Wingdings">&uml;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; font-family: Wingdings">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; font-family: Wingdings">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Non-accelerated filer</TD>
    <TD STYLE="text-autospace: none; font-family: Wingdings">&uml;</TD>
    <TD STYLE="text-autospace: none">(Do not check if a smaller reporting company)</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Smaller reporting company</TD>
    <TD STYLE="text-autospace: none; font-family: Wingdings">x</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Calculation of Registration Fee</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Proposed</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Proposed</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Maximum</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Amount</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Maximum</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Aggregate</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Amount of</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">Title&nbsp;of&nbsp;Each&nbsp;Class&nbsp;of&nbsp;Securities</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">to&nbsp;be</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Offering&nbsp;Price</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Offering</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Registration</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">to&nbsp;be&nbsp;Registered</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Registered (1)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Per&nbsp;Unit&nbsp;(2)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Price</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fee&nbsp;(3)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 32%">Common Stock, par value $0.001 per share (4)(5)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">6,044,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1.18</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">7,131,920</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">818</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Common Stock, par value $0.001 per share (5)(6)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,020,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1.18</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,383,600</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">274</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-left: 27pt; padding-bottom: 1pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">8,064,000</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&mdash;</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">9,515,520</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">1,092</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Pursuant to Rule 415 of the Securities Act, these securities are being offered by the Selling Stockholders named herein on
a delayed or continuous basis.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the
Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), based upon the average of the high and low price of the
Company&rsquo;s Common Stock, as reported on the OTC Bulletin Board on April 4, 2012.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD STYLE="text-align: justify">Calculated at a rate of $114.60 per million dollars (rounding up to nearest dollar) pursuant Commission
Fee Rate Advisory #3 for Fiscal Year 2012 (2011-195).</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD STYLE="text-align: justify">Represents the number of shares of Common Stock of the Registrant issuable upon the exercise of
an aggregate of 6,044,000 warrants underlying an aggregate of 6,044,000 Units sold to certain of the Selling Stockholders for $1.25
per Unit in a Regulation 506 Regulation D and Regulation S private placement offering consummated by the Company in March 2011
(the &ldquo;Private Placement&rdquo;). Each Unit consisted of one share of Common Stock and one warrant (the &ldquo;Private Placement
Warrant&rdquo;). Each Private Placement Warrant is exercisable by the holder thereof from the date of grant until the third anniversary
of the date of grant at $1.50 per share.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>These shares of Common Stock may be offered for sale by a Selling Stockholder pursuant to this registration statement on a
securities market such as the Over-the-Counter Bulletin Board or other securities exchange at prevailing market prices or privately
negotiated prices.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(6)</TD><TD>Represents the number of shares of Common Stock of the Registrant issuable upon the exercise of warrants sold by the Company
to five &ldquo;accredited investors&rdquo; to such investors in March 2012 pursuant to Section 4(2) of the Securities Act (the
&ldquo;Investor Warrants&rdquo;). Each Investor Warrant is exercisable for the three-year period commencing from the date of issuance
for $0.50 per share of Common Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with section&nbsp;8(a) of
the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant
to said section&nbsp;8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red"><B>The information in this
preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the U.S. Securities and Exchange Commission (&ldquo;SEC&rdquo;) is effective. This preliminary prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale
is not permitted.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PRELIMINARY PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>Subject to completion, dated April
9, 2012</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>GBS ENTERPRISES INCORPORATED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>8,064,000 Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus relates to the resale by the Selling Stockholders
identified in this prospectus (the &ldquo;Selling Stockholders&rdquo;) of up to 8,064,000 shares (the &ldquo;Shares&rdquo;) of
our common stock, par value $0.001 per share (the &ldquo;Common Stock&rdquo;). Of the Shares which are offered pursuant to this
prospectus, 6,044,000 are issuable upon the exercise of an aggregate of 6,044,000 warrants (the &ldquo;Private Placement Warrants&rdquo;)
sold to &ldquo;accredited investors&rdquo; (as that term is defined under Rule 501 of the Securities Act of 1933, as amended (the
&ldquo;Securities Act&rdquo;)) and non-U.S. residents in a private placement offering consummated by the Company in March 2011
which was exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 506 of Regulation
D and Regulation S of the Securities Act (the &ldquo;Private Placement&rdquo;). The Private Placement Warrants were included in
Units purchased by the Selling Stockholders in the Private Placement for $1.25 per Unit. Each Unit consisted of one share of Common
Stock of the Company and one Private Placement Warrant. Each Private Placement Warrant is exercisable to purchase one share of
Common Stock for $1.50 per Share from the date of issuance to the third anniversary date of the date of issuance. The remaining
2,020,000 Shares included in this prospectus are issuable upon the exercise of an aggregate of 2,020,000 warrants (collectively,
the &ldquo;Investor Warrants,&rdquo; and together with the Private Placement Warrants, the &ldquo;Warrants&rdquo;) issued to five
&ldquo;accredited investors&rdquo; in March 2012 pursuant to Section 4(2) of the Securities Act. Each Investor Warrant is exercisable
at $0.50 per Share from the date of issuance until the third anniversary date of the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Warrants are redeemable at any time by the Company for $0.05
per Warrant and the holders of the Warrants are obligated to fully exercise their Warrants in the event the Company&rsquo;s Common
Stock trades at $3.00 or more for a period of at least 20 consecutive trading days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders may offer all or part of their Shares
for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated
prices. We will not receive any of the proceeds from the Shares by the Selling Stockholders, but we will receive funds from the
exercise of the Warrants if and when those Warrants are exercised. Some of the Selling Stockholders have exercised their Warrants
but there is no assurance that any additional Warrants will be exercised or that all or any of the Shares will be sold. We are
paying all of the registration expenses incurred in connection with the registration of the Shares, but we will not pay any of
the selling commissions, brokerage fees and related expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Common Stock is quoted on the OTC Bulletin Board (the &ldquo;OTCBB&rdquo;)
under the symbol &ldquo;GBSX.&rdquo;&nbsp;On April 6, 2012, the last reported sale of our Common Stock quoted on the OTCBB was
$1.10 per share.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders, and any broker-dealer executing sell
orders on behalf of the Selling Stockholders, may be deemed to be &ldquo;underwriters&rdquo; within the meaning of the Securities
Act.&nbsp;&nbsp;Commissions received by any broker-dealer may be deemed underwriting commissions under the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black"><B>Investing in our Common
Stock involves a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page&nbsp;12 to read about factors you
should consider before investing in shares of our Common Stock.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Date of This Prospectus is __________,
2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 90%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 10%; text-autospace: none; font-weight: bold; text-align: right">Page No.</TD></TR>
<TR>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">PROSPECTUS SUMMARY</TD>
    <TD STYLE="text-autospace: none; text-align: right">5</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">RISK FACTORS</TD>
    <TD STYLE="text-autospace: none; text-align: right">12</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">20</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">SELLING STOCKHOLDERS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">21</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">BUSINESS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">27</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">DESCRIPTION OF PROPERTY</TD>
    <TD STYLE="text-autospace: none; text-align: right">35</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">LEGAL PROCEEDINGS</TD>
    <TD STYLE="text-autospace: none; text-align: right">35</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">CORPORATE STRUCTURE AND HISTORY</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND OTHER&nbsp;SHAREHOLDER&nbsp;MATTERS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">35</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION&nbsp;AND&nbsp;RESULTS&nbsp;OF&nbsp;OPERATIONS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">40</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING&nbsp;AND&nbsp;FINANCIAL&nbsp;DISCLOSURE&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">53</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">53</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">EXECUTIVE COMPENSATION&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">58</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL&nbsp;OWNERS&nbsp;AND&nbsp;MANAGEMENT&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">61</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">62</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">LEGAL MATTERS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">62</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">EXPERTS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">62</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">WHERE YOU CAN FIND MORE INFORMATION&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">62</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; text-decoration: none">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">64</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">____________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in"><B>You should rely only on the information
contained in this prospectus and in any free writing prospectus. Neither we nor the Selling Stockholders have authorized anyone
to provide you with information different from that contained in this prospectus. The Selling Stockholders are offering to sell,
and seeking offers to buy, shares of our Common Stock only in jurisdictions where offers and sales are permitted. The information
in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or
any sale of shares of our Common Stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>This summary highlights selected information
contained elsewhere in this prospectus.&nbsp;&nbsp;This summary does not contain all the information that you should consider before
investing in the Common Stock.&nbsp;&nbsp;You should carefully read the entire prospectus, including &ldquo;Risk Factors,&rdquo;
&ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and the financial statements
before making an investment decision.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>General </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Enterprises Incorporated, a Nevada
corporation (the Company,&rdquo; GBS,&rdquo; GBSX,&rdquo; we,&rdquo; us,&rdquo; our&rdquo; or similar expressions), through its
subsidiaries, is a global operating software and services company. We focus on cloud automation technology, commercial and governmental
application modernization and migration, and business application development, deployment and management, primarily in the IBM
Lotus Notes and Domino space. We help customers, such as commercial and government organization IT departments, system integrators,
ISV&rsquo;s and Data Center providers solve IT challenges such as:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Shaping IT strategy &amp; planning</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Deploying, developing, maintaining and managing business applications</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Automating business processes</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Optimizing system &amp; application performance</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Managing messaging systems &amp; ensuring messaging security &amp; compliance</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Simplifying application modernization, migration &amp; deployment.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Migrating and integrating messaging and application systems</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBSX is pursuing an aggressive growth strategy
which includes highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s main activities are
focused on serving IBM&rsquo;s Lotus Notes &amp; Domino market where it has become IBM&rsquo;s largest provider of business application
solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To serve the demand for modernization of
the applications run worldwide on the Domino platform the major innovation developed by the Company&rsquo;s concentration of talent
are certain specific software tools that allows IBM Lotus Software Group and its partners to rapidly and cost-effectively convert
their customers&rsquo; existing Lotus based rich-client applications into modern, web accessible and client independent applications,
avoiding any data migration and enabling their customers to improve user experience. The use of modern XPages based Lotus Software
applications allows customers to leverage self-service capabilities, benefit from IBM&rsquo;s latest Lotus release features, and
to be automatically &lsquo;cloud&rsquo; ready. This Application Transformation technology (GBS Transformer product suite) dramatically
increases IBM&rsquo;s Lotus Software solutions competitiveness against providers such as Google, Salesforce, Microsoft Sharepoint
and others.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s specific software tools
enable IBM, the IBM Lotus Notes/Domino partners, system integrators (SIs) or commercial or governmental organization-controlled
service units to solve the industry needs for efficient modernization of a Lotus environment, specifically for the highly distributed
and heavily used IBM Lotus Notes/Domino applications. The Company&rsquo;s modernization tools span the complete set of customer
requirements and demands for application modernization and migration:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Retire (automatically convert into full text searchable .pdf archived applications);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Renew (automatically convert into modern web 2.0 styled, access anywhere applications);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Rebuild (accelerate case-specific rebuilding into access anywhere applications); or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Replace (accelerate case-specific replacing with a different technology).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has also developed an innovative
Cloud Automation Platform (GroupLive) enabling the automation of the processes beyond virtualization or managing customer dedicated
or shared infrastructure, such as networks, servers and clients. GroupLive extends process automation for legacy applications,
including user management, user access and application deployment without the need of rewriting the entire application. Automation
is supposed to decrease IT labor by more than 50%, especially for application management and maintenance. GroupLive supports IT
consolidation, standardization, modernization, utilization and optimization, as well as centralization, monitoring, and reporting.
Customers gain more efficiency, reduce cost and free IT labor to refocus on strategic tasks rather than on overwhelming current
day-to-day workloads. GroupLive is currently deployed in IBM&rsquo;s Data Centers in Germany. This service is based on a non-exclusive
contract with the IBM Data Center and can be modified or replaced with other Data Center providers in the German market. GroupLive
is also being deployed in GBS data centers in the US.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since January 6, 2011, the Company owns
majority control (50.1%) of GROUP Business Software AG (GROUP&rdquo;), a Frankfurt, Germany listed publicly-traded company (INW).
GROUP is headquartered in Eisenach, Germany. GROUP&rsquo;s businesses served as the foundation for GBSX to achieve its strategic
objectives. In 2011, GBS added more companies to complete its cloud automation and application management focused offering. With
Pavone AG and Groupware AG the portfolio now includes cloud-enabled workflow management, as well as cloud-enabled application archiving.
With the acquisition of IDC Global, Inc., Chicago, a high end data center provider, GBSX is starting to offer the GroupLive technology
in the United States. The acquisition of SD Holdings, Inc., a specialized company in the area of analytics, business intelligence,
reporting and services, provides GBS with access to the Asian markets as well as access to cost-effective high quality consulting
resources. In addition, GBS plans to leverage SD&rsquo;s Indian subsidiary as the foundation for its strategic service delivery
factory.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS will leverage its technologies, partnerships
and customer base to develop its business strategy and existing operations in North America, Asia and Europe. In particular, the
Company will concentrate on rapidly evolving as a major provider of Cloud Automation Platform Technology software and IBM Lotus
Notes/Domino Application Modernization &amp; Migration Services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furthermore, the Company is currently negotiating
a Reseller Agreement with IBM&rsquo;s Lotus Software Division that would make it possible for IBM to bundle specific technology
developed by the Company and sell them as an integrated product solution through the IBM sales channel. The Reseller Agreement
would provide the Company with software license, subscription and service based revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, the Company also has the potential for dramatic growth from large strategic
partnerships such as with major OEM players, SIs, ISV&rsquo;s, data centers, as well as a variety of large enterprise class and
medium sized end users who are in the business of application modernization, migration and/or management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Revenue Model</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS generates revenue from software license
sales and related services, including maintenance and support, hosting, consulting and implementation services. The Company&rsquo;s
software products for business application and management addressing all matters running an IBM Lotus environment &ndash; are generally
sold with a perpetual license and a related maintenance contract. Service revenue is obtained from a wide range of consulting services,
such as application development, managed services, performance &amp; upgrade services and administration. Maintenance revenue is
received from its business application software customers for updates and supports, with contracts typically spanning two to three
years. GBS customers are now also able to purchase the business application and management software via subscription.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS generates revenue in the area of cloud
enablement and application migration &amp; modernization from subscription and usage fees and related services, including support,
hosting and strategic consulting services. The Company&rsquo;s offering among its cloud automation platform &ndash; is generally
sold on a usage base with a typically mid- to long-term subscription period; while its IBM Lotus Notes/Domino application modernization
and migration technologies are sold on a per application and transformation base, including related services, such as strategic
consulting, project management, delivery management, and application deployment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Strategy and Focus Areas</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is focused on developing a
portfolio of Cloud Computing software technologies and Application Services to address the needs of Independent Service Providers
(ISV&rsquo;s), Data Center providers, as well as commercial and government organizations. GBSX is pursuing an aggressive growth
strategy based upon highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, GBS also has the potential for dramatic growth from large strategic partnerships
such as with major Cloud platform/OEM players, data centers, ISV&rsquo;s as well as a variety of large enterprise class and medium
sized end users who are interested in having their own private clouds. GBS also intends pursue highly attractive opportunities
with a wide variety of other Cloud vendors including Computer Associates, Dell, HP, Accenture, and Amazon, as well as with specialized
distributors and system integrators.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>General Corporate History</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training. Simultaneously with SWAV&rsquo;s acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of
SWAV common stock to Joerg Ott, our CEO and Chairman, for an aggregate purchase price of $370,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company&rsquo;s Chief Executive Officer,
President and Chairman of the Board of Directors. On September 6, 2010, SWAV&rsquo;s name was changed to GBS Enterprises Incorporated.
On October 14, 2010, the Company&rsquo;s trading symbol on the OTC Bulletin Board was changed from SWAV to GBSX.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP Business Software AG, a Frankfurt-based
German software company (&ldquo;GROUP&rdquo;), pursuant to Share Purchase Agreements between the Company and several of GROUP&rsquo;s
stockholders, including Mr. Joerg Ott (also the Company&rsquo;s Chairman and Chief Executive Officer). Pursuant to the Share Purchase
Agreements, the Company acquired an aggregate of 7,115,500 shares of common stock of GROUP in consideration for an aggregate of
3,049,489 shares of the Company&rsquo;s common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 6, 2011, the Company acquired
an additional 5,525,735 shares of common stock of GROUP, representing approximately 21.9% of the issued and outstanding shares,
from several additional GROUP stockholders in consideration for an aggregate of 2,355,922 shares of the Company&rsquo;s common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP&rsquo;s outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 202.3pt; text-align: center; text-indent: -202.3pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 202.3pt; text-align: center; text-indent: -202.3pt"><B><U>Selected
Financial Data</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 202.3pt; text-indent: -202.3pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following summary financial data should be read in conjunction with &quot;Management's Discussion and Analysis of Financial Condition
and Results of Operations&quot; and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement
of operations and balance sheet data for the year ended March 31, 2011 is derived from our audited financial statements and the
interim financials for the period ending December 31, 2011 is derived from our unaudited financial statements. The following information
summarizes the more complete historical financial information included in the Consolidated Financial Statements included in this
prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">At&nbsp;December&nbsp;31,&nbsp;2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">At&nbsp;March&nbsp;31,&nbsp;2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Balance&nbsp;Sheet&nbsp;Data</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Unaudited)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Audited)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Restated)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-align: left; padding-left: 0.25in">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">3,537,517</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">8,530,864</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Debtors (Accounts receivable)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,544,023</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,698,320</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">264,611</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,097,370</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,423,281</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Other receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">796,454</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,222,887</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 27pt">Total current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,239,975</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,875,353</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 27pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 27pt">Total non-current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,470,995</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">58,990,576</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 27pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">86,710,970</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">76,865,929</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Liabilities and stockholders' equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 45pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,472,945</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16,345,733</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 45pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 45pt">Total non-current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,168,739</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,940,061</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 45pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 45pt">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,641,684</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">24,285,794</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 9; Value: 3 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Income&nbsp;Statement&nbsp;Data</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">For&nbsp;the&nbsp;Nine&nbsp;Months</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">For&nbsp;the&nbsp;Fiscal&nbsp;Year</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Ended&nbsp;December&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Ended&nbsp;March&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Unaudited)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Unaudited)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Audited)<BR> (Restated)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Audited)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">Revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; padding-left: 9pt">Products</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,980,202</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,339,747</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12,848,954</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12,479,629</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,340,149</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,619,891</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,858,272</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,105,103</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,320,351</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,959,638</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,707,226</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">31,584,732</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cost of goods sold</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Products</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,976,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,770,174</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,016,189</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,631,372</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,866,807</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,917,742</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,066,305</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,662,619</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,843,557</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,687,916</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,082,494</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,293,991</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Gross profit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,476,794</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,271,722</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,624,732</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,290,741</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,985,032</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,241,339</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,918,290</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,032,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Operating income (loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,508,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,969,617</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,293,558</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,228,022</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(5,121,694</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(337,813</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,637,306</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,419,438</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">Net earnings (loss) per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.119</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.043</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.119</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.038</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Where You Can Find Us</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our principal executive office is located at 585 Molly Lane,
Woodstock, Georgia 30189 and our telephone number is (404) 474-7256.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 33%; text-autospace: none; font-weight: bold">Common stock offered by Selling Stockholders</TD>
    <TD STYLE="width: 2%; text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 65%; text-autospace: none; text-align: justify">Up to 8,064,000 shares of Common Stock issuable upon the exercise of Warrants held by the Selling Stockholders exercisable for a three year period, commencing on the date of grant. Consists of 6,044,000 shares of Common Stock issuable upon the exercise of the Private Placement Warrants issued in March 2011 for $1.50 per Share and 2,020,000 shares of Common Stock issuable upon the exercise of the Investor Warrants issued in March 2012 for $0.50 per Share.</TD></TR>
<TR>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold">Terms of the Offering</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">The Selling Stockholders will determine when and how they will sell the Common Stock offered in this prospectus.</TD></TR>
<TR>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none; font-weight: bold">Termination of the Offering</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">The Offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to an effective registration statement, of which this prospectus forms a part, or (ii) such time as all of the Common Stock becomes eligible for resale pursuant to Rule 144 under the Securities Act or any other rule of similar effect.</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none; font-weight: bold">Use of Proceeds</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are not selling any shares
of the Common Stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We will, however,
receive proceeds in the event of the exercise of the Warrants by the Selling Stockholders. As of the date of this prospectus,
the Selling Stockholders have exercised an aggregate of 2,925,000 Warrants, consisting of 2,025,000 Private Placement Warrants
and 900,000 Investor Warrants, for gross proceeds to the Company of $3,487,500. Upon the full exercise of the remaining Warrants,
we will receive total gross proceeds of $10,076,000. However, there can be no assurances that any additional Warrants will be
exercised. To date, we have used the proceeds of the Warrants already exercised for general corporate working capital purposes.
We intend to use the proceeds from the exercise of any additional Warrants to increase marketing, advertising and Cloud and Transformer
service and development teams, acquisitions and for general corporate working capital purposes.&nbsp;</P></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold; text-align: justify">Common Stock Trading Symbol</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">GBSX.OB</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold">Risk Factors</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify"><FONT STYLE="color: black">The Common Stock offered hereby involves
a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See &ldquo;Risk
Factors&rdquo; beginning on page 12.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>You should carefully consider the risks described below together
with all of the other information included in this prospectus before making an investment decision with regard to our securities.
The statements contained in or incorporated into this offering that are not historic facts are forward-looking statements that
are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied
by forward-looking statements. If any of&nbsp;the following risks actually occurs, our business, financial condition or results
of operations could be harmed. In that case, the trading price of our Common Stock could decline, and you may lose all or part
of your investment.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black"><B>&nbsp;</B></FONT><B><U>Risks Related
to Our Business</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have a limited operational history.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have a limited history upon which an
evaluation of our prospects and future performance can be made. Our proposed operations are subject to all business risks associated
with new enterprises. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications,
and delays frequently encountered in connection with the expansion of a business operation in an emerging industry, and the continued
development of advertising, promotions, and a corresponding customer base. There is a possibility that we could sustain losses
in the future, and there are no assurances that we will ever operate profitably.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Ongoing uncertainty regarding the duration and extent
of the recovery from the recent economic downturn and in global economic conditions generally may reduce information technology
spending below current expectations and therefore adversely impact our revenues, impede end user adoption of new products and product
upgrades and adversely impact our competitive position.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our business depends on the overall demand for information technology
and on the economic health of our current and prospective customers. The purchase of our products is often discretionary and may
involve a significant commitment of capital and other resources. Weak economic conditions or significant uncertainty regarding
the recovery from the recent economic downturn could adversely impact our business, financial condition and results of operations
in a number of ways, including by lengthening sales cycles (for example, ELAs), lowering prices for our products and services,
reducing unit sales, decreasing or reversing quarterly growth in our revenues, reducing the rate of adoption of our products by
new customers and the willingness of current customers to purchase upgrades to our existing products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The recent global economic disruption also resulted in general
and ongoing tightening in the credit markets, lower levels of liquidity and increases in the rates of default and bankruptcy, while
the potential for extreme volatility in credit, equity and fixed income markets continues. As a result, current or potential customers
may be unable to fund software purchases, which could cause them to delay, decrease or cancel purchases of our products and services.
Even if customers are willing to purchase our products and services, if they do not meet our credit requirements, we may not be
able to record accounts receivable or deferred revenue or recognize revenues from these customers until we receive payment, which
could adversely affect the amount of revenues we are able to recognize in a particular period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our business could be adversely impacted by conditions
affecting the information technology market.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The demand for our products and services depends substantially
upon the general demand for business-related computer appliances and software, which fluctuates based on numerous factors, including
capital spending levels, the spending levels and growth of our current and prospective customers, and general economic conditions.
Fluctuations in the demand for our products and services could have a material adverse effect on our business, results of operations
and financial condition. Moreover, the purchase of our products is often discretionary and may involve a significant commitment
of capital and other resources. Future economic projections for the information technology sector are uncertain as companies continue
to reassess their spending for technology projects. If an uncertain environment for information technology spending continues,
it could negatively impact our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B><I>We face intense competition, which could result
in fewer customer orders and reduced revenues and margins.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We sell our products in intensely competitive markets. Some
of our competitors and potential competitors have significantly greater financial, technical, sales and marketing and other resources
than we do. As the markets for our products and services continue to develop, additional companies, including companies with significant
market presence in the computer appliances, software and networking industries, could enter the markets in which we compete and
further intensify competition. In addition, we believe price competition could become a more significant competitive factor in
the future. As a result, we may not be able to maintain our historic prices and margins, which could adversely affect our business,
results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are highly dependent on the services
of Joerg Ott, our President, CEO and Chairman, and other key personnel.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our success depends and will depend on the efforts and abilities
of key personnel, such as high qualified software developers, service consultants and management, especially Mr. Joerg Ott, our
President, Chief Executive Officer and Chairman. The loss of Mr. Ott would have a material adverse effect on us. Our success also
depends upon our ability to attract and retain qualified personnel required to fully implement our business plan. There can be
no assurance that we will be successful in these efforts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If our subsidiaries lose key personnel or cannot hire
enough qualified employees in certain areas of our business, our ability to manage our business could be adversely affected.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our success depends, in large part, upon the services of a number
of key employees in certain areas of our business. Except for certain key employees, we do not have long-term employment agreements
with any of our key personnel. Any officer or employee can terminate his or her relationship with us at any time. The effective
management of our growth, if any, could depend upon our ability to retain our highly-skilled managerial, technical, sales and services,
finance and marketing personnel in certain areas of our business. If any of those employees leave, we will need to attract and
retain replacements for them. We also may need to add key personnel in the future, including in certain key areas of our business.
The market for these qualified employees is competitive. We could find it difficult to successfully attract, assimilate or retain
sufficiently qualified personnel in sufficient numbers. Furthermore, we may hire key personnel in connection with our future acquisitions;
however, any of these employees will be able to terminate his or her relationship with us at any time. If we cannot retain and
add the necessary staff and resources for these acquired businesses, our ability to develop acquired products, markets and customers
could be adversely affected. Also, we may need to hire additional personnel to develop new products, product enhancements and technologies.
If we cannot add the necessary staff and resources, our ability to develop future enhancements and features to our existing or
future products could be delayed. Any delays could have a material adverse effect on our business, results of operations and financial
condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are highly dependent on IBM.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We, through our subsidiaries, are the world&rsquo;s
largest supplier of applications for IBM&rsquo;s Lotus Notes and Domino markets. For the fiscal year ended March 31, 2011 and 2010,
$ 4,610,152 (16.6%) in revenue and $ 2,502,765 (7.9%) in revenue, respectively, was derived from our business with IBM Licenses.
We expect much of our growth to come from our Transformer and GroupLive offerings. Should IBM choose not to promote its IBM Collaboration
and Social Software offerings or support positioning our products, we might not see the growth we are anticipating and our business
could be materially adversely affected resulting in the loss of some or all of your investment in our Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We may not be able to manage our growth effectively.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We must continually implement and improve our products and/or
services, operations, operating procedures and quality controls on a timely basis, as well as expand, train, motivate and manage
our work force in order to accommodate anticipated growth and compete effectively in our market area. Successful implementation
of our strategy also requires that we establish and manage a competent, dedicated work force and employ additional key employees
in corporate management, product design, client service and sales. We can give no assurance that our personnel, systems, procedures
and controls will be adequate to support our existing and future operations. If we fail to implement and improve these operations,
there could be a material, adverse effect on our business, operating results and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we do not develop new products and services or enhancements
to our existing products and services, our business, results of operations and financial condition could be adversely affected.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The markets for our products and services are characterized
by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>rapid technological change;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>evolving industry standards;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>fluctuations in customer demand;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>changes in customer requirements; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>frequent new product and service introductions and enhancements.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our future success depends on our ability to continually enhance
our current products and services and develop and introduce new products and services that our customers choose to buy. If we are
unable to keep pace with technological developments and customer demands by introducing new products and services and enhancements,
our business, results of operations and financial condition could be adversely affected. Our future success could be hindered by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>delays in our introduction of new products and services;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>delays in market acceptance of new products and services or new releases of our current products and services; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>our, or a competitor&rsquo;s, announcement of new product or service enhancements or technologies that could replace or shorten
the life cycle of our existing product and service offerings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In order for a number of our products to succeed in the future,
we believe the demand for technology will need to shift from the types of products and services we and our competitors have sold
in the past to a new generation of products we now offer. We cannot guarantee that we will be able to respond effectively to technological
changes or new product announcements by others. If we experience material delays or sales shortfalls with respect to our new products
and services or new releases of our current products and services, those delays or shortfalls could have a material adverse effect
on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We may be unable to effectively control our operating
expenses, which could negatively impact our profitability.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although we endeavor to effectively control our operating expenses,
these expenses, which are based on estimated revenue levels, are relatively fixed in the short term. We cannot assure you that
our operating expenses will be lower than our estimated or actual revenues in any given quarter or that we will not incur unanticipated
expenses. If we experience a shortfall in revenue in any given quarter or if we incur material unanticipated expenses, we likely
will not be able to further reduce operating expenses quickly in response. Any significant shortfall in revenue or the incurrence
of material unanticipated expenses could immediately and adversely affect our results of operations for that quarter. Also, due
to the fixed nature of many of our expenses and the challenges for revenue growth in the current environment, our income from operations
and cash flows from operating and investing activities could be lower than in recent years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, to the extent our revenue grows, if at all, we
believe that our cost of revenues and certain operating expenses could also increase. We believe that we could incur additional
costs as we develop, license or buy new technologies or enhancements to our existing products and services. These added costs and
royalties could increase our cost of revenues and operating expenses and lower our gross margins. However, we cannot currently
quantify the costs for such transactions that have not yet occurred or of these developing trends in our business. In addition,
we may need to use a substantial portion of our cash and investments or issue additional shares of our Common Stock to fund these
additional costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Acquisitions present many risks, and we may not realize
the financial and strategic goals we anticipate at the time of an acquisition.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our growth is dependent upon market growth, our ability to enhance
existing products and services, and our ability to introduce new products and services on a timely basis. We intend to continue
to address the need to develop new products and services and enhance existing products and services through acquisitions of other
companies, product lines and/or technologies. However, acquisitions, including those of high-technology companies, are inherently
risky. We cannot provide any assurance that any of our previous acquisitions or future acquisitions will be successful in helping
us reach our financial and strategic goals either for that acquisition or for us generally or that the combined company resulting
from any acquisition will continue to support the growth achieved by the companies separately.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The risks we may encounter in managing and integrating acquisitions
are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>difficulties and delays integrating the operations, technologies, and products of the acquired companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>undetected errors or unauthorized use of a third-party&rsquo;s code in products of the acquired companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>the diversion of management&rsquo;s attention from normal daily operations of the business;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>potential difficulties in completing projects associated with purchased in-process research and development;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>entry into markets in which we have no or limited direct prior experience and where competitors have stronger market positions
and which are highly competitive;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>the potential loss of key employees of the acquired company; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.35in">&bull;</TD><TD>an uncertain revenue and earnings stream from the acquired company, which could unexpectedly dilute our earnings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our failure to manage growth effectively and successfully integrate
acquired companies due to these or other factors could have a material adverse effect on our business, results of operations and
financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Attractive acquisition opportunities may not be available
to us, which could negatively affect the growth of our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our business strategy includes the selective acquisition of
businesses and technologies, such as our acquisition of GROUP in November 2010 and January 2011, and the acquisitions of other
Lotus Software &amp; Services companies or our data center acquisitions. We plan to continue to seek opportunities to expand our
product portfolio, customer base, technology, and technical talent through acquisitions. However, we may not have the opportunity
to make suitable acquisitions on favorable terms in the future, which could negatively impact the growth of our business. We expect
that other companies in our industry will compete with us to acquire compatible businesses. This competition could increase prices
for businesses and technologies that we would likely pursue, and our competitors may have greater resources than we do to complete
these acquisitions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We could change our licensing programs or subscription
renewal programs, which could negatively impact the timing of our recognition of revenue.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We continually re-evaluate our licensing programs and subscription
renewal programs, including specific license models, delivery methods, and terms and conditions, to market our current and future
products and services. We could implement new licensing programs and subscription renewal programs, including promotional trade-up
programs or offering specified enhancements to our current and future product and service lines. Such changes could result in deferring
revenue recognition until the specified enhancement is delivered or at the end of the contract term as opposed to upon the initial
shipment or licensing of our software product. We could implement different licensing models in certain circumstances, for which
we would recognize licensing fees over a longer period, including offering additional products in a software-as-a-service model.
Changes to our licensing programs and subscription renewal programs, including the timing of the release of enhancements, upgrades,
maintenance releases, the term of the contract, discounts, promotions and other factors, could impact the timing of the recognition
of revenue for our products, related enhancements and services and could adversely affect our operating results and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>As our international sales and operations grow, we could
become increasingly subject to additional risks that could harm our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We conduct significant sales and customer support, development
and engineering operations in countries outside of the United States. Our continued growth and profitability could require us to
further expand our international operations. To successfully expand international sales, we must establish additional foreign operations,
hire additional personnel and recruit additional international resellers. In addition, there is significant competition for entry
into high growth markets, such as China. Our international operations are subject to a variety of risks, which could cause fluctuations
in the results of our international operations. These risks include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>compliance with foreign regulatory and market requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>variability of foreign economic, political and labor conditions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by U.S. export laws;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>longer accounts receivable payment cycles;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>potentially adverse tax consequences;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>difficulties in protecting intellectual property;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>burdens of complying with a wide variety of foreign laws; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.6in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.3in"></TD><TD STYLE="width: 0.3in">&bull;</TD><TD>as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty transferring such funds to the
U.S. in a tax efficient manner.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our results of operations are also subject to fluctuations in
foreign currency exchange rates. In order to minimize the impact on our operating results, we generally initiate our hedging of
currency exchange risks one year in advance of anticipated foreign currency expenses for those currencies to which we have the
greatest exposure. When the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will
be partially offset by the gains realized from our hedging contracts. If the dollar is strong, foreign currency denominated expenses
will be lower. These lower expenses will in turn be partially offset by the losses incurred from our hedging contracts. There is
a risk that there will be fluctuations in foreign currency exchange rates beyond the one year timeframe for which we hedge our
risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our success depends, in part, on our ability to anticipate and
address these risks. We cannot guarantee that these or other factors will not adversely affect our business or operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Security vulnerabilities in our products could have a
material adverse impact on our results of operations.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Maintaining the security of computing devices and networks is
a critical issue for us and our customers. We devote significant resources to address security vulnerabilities in our products
and services through engineering more secure products and services, enhancing security and reliability features in our products
and services, deploying security updates to address security vulnerabilities and seeking to respond to known security incidents
in sufficient time to minimize any potential adverse impact. The cost of these measures could reduce our operating margins. Despite
these efforts, actual or perceived security vulnerabilities in our products and systems may lead to claims against us and harm
our reputation, and could lead some customers to seek to return products, to stop using certain products or services, to reduce
or delay future purchases of our products or services, or to use competing products or services. Customers may also increase their
expenditures on protecting their existing computer systems from attack, which could delay adoption of new technologies. Further,
if our customers suffer any losses or are otherwise harmed in connection with a security incident related to our products or services,
we could be subject to liability claims from our customers. Any of these actions by customers could adversely impact our results
of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our efforts to protect our intellectual property may not
be successful, which could materially and adversely affect our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We rely primarily on a combination of copyright, trademark,
patent and trade secret laws, confidentiality procedures and contractual provisions to protect our source code and other intellectual
property. The loss of any material trade secret, trademark, trade name, patent or copyright could have a material adverse effect
on our business. Despite our precautions, it could be possible for unauthorized third parties to copy, disclose or reverse engineer
certain portions of our products or to otherwise obtain and use our proprietary source code, in which case we could potentially
lose future trade secret protection for that source code. If we cannot protect our proprietary source code against unauthorized
copying, disclosure or use, unauthorized third parties could develop products similar to or better than ours.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any patents applied for by us could eventually not be granted
or any patent owned by us could be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether
or not being currently challenged, may not be issued with the scope we seek, if at all; and if issued, may not provide any meaningful
protection or competitive advantage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, our ability to protect our proprietary rights could
be affected by differences in international law and the enforceability of licenses. The laws of some foreign countries do not protect
our intellectual property to the same extent as do the laws of the United States and Canada. For example, we derive a significant
portion of our sales from licensing our products under &ldquo;click-to-accept&rdquo; license agreements that are not signed by
licensees and electronic enterprise customer licensing arrangements that are delivered electronically, all of which could be unenforceable
under the laws of many foreign jurisdictions in which we license our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our products, including products obtained through acquisitions,
could infringe third-party intellectual property rights, which could result in material litigation costs.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are increasingly subject to infringement claims and may in
the future be subject to claims alleging the unauthorized use of a third-party&rsquo;s code in our products. This may occur for
a variety of reasons, including the expansion of our product lines through product development and acquisitions; an increase in
patent infringement litigation commenced by non-practicing entities; the increase in the number of competitors in our industry
and the resulting increase in the number of related products and the overlap in the functionality of those products; and the unauthorized
use of a third-party&rsquo;s code in our product development process. Companies and inventors are more frequently seeking to patent
software despite recent developments in the law that may discourage or invalidate such patents. As a result, we could receive more
patent infringement claims. Responding to any infringement claim, regardless of its validity, could result in costly litigation
costs, monetary damages or injunctive relief or require us to obtain a license to intellectual property rights of those third parties.
Licenses may not be available on reasonable terms, on terms compatible with the protection of our proprietary rights, or at all.
In addition, attention to these claims could divert our management&rsquo;s time and attention from developing our business. If
a successful claim is made against us and we fail to develop or license a substitute technology or negotiate a suitable settlement
arrangement, our business, results of operations, financial condition and cash flows could be materially and adversely affected.
In particular, a material adverse impact on our financial statements could occur in the period in which the effect of an unfavorable
final outcome becomes probable and reasonably estimable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Security and reliability is the number one concern of
Cloud Computer users.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Lack of control augments consumers&rsquo; perception of Cloud
Computing security and reliability, including connectivity outages which could cause large lack of productivity and financial losses.
Although security risks may be minimized by having cloud computing in a smaller cloud, having a smaller cloud or clouds would likely
negate to many extents the cost and scalability effects of cloud computing. Cloud Computing flaws, whether actual or perceived,
could hinder our ability grow our Company&rsquo;s business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Risks related to the disclosure of confidential information
of core technology.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The independently developed technologies by us, contracts with
partners and agreements with cooperated system integrators are all confidential information. We have established strict access
limitation level for the personnel in the Company to review and use such information by signing Non-disclosure Agreements with
relevant people. The usage and disclosure of such information have been managed stringently by the Company. We also sign a long-term
engagement contract with the core technical people who may hold major technologies of the Company. Despite the foregoing measurements
adopted by the Company, we cannot assure the confidential information will not be disclosed definitely.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Systems failures could harm our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Temporary or permanent outages of our computers or software
equipment could have an adverse effect on our business. Although we have not experienced any catastrophic outages to date, we currently
do not have fully redundant systems for our web sites and other services at an alternate site. Therefore, our systems are vulnerable
to damage from break-ins, unauthorized access, vandalism, fire, earthquakes, power loss, telecommunications failures and similar
events. Although we maintain insurance against fires, earthquakes and general business interruptions, the amount of coverage might
not be sufficient which could adversely affect our business operations and the value of our Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Experienced computer programmers seeking to intrude or
cause harm, or hackers, may attempt to penetrate our network security from time to time.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Although we have not experienced any
catastrophic security breaches to date, if a hacker were to penetrate our network security, they could misappropriate proprietary
information, cause interruptions in our services, dilute the value of our offerings to customers and damage customer relationships.
We might be required to expend significant capital and resources to protect against, or to alleviate, problems caused by hackers.
We also may not have a timely remedy against a hacker who is able to penetrate our network security. In addition to purposeful
security breaches, the inadvertent transmission of computer viruses could expose us to system damage, operational disruption, loss
of data, litigation and other risks of loss or harm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B><I>We depend on continued performance
of and improvements to our computer network.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any failure of our computer systems that causes interruption
of our services could result in a loss of business. If sustained or repeated, these performance issues could reduce the attractiveness
of our services to consumers and our subscription products and services. Increases in the volume of our web site traffic could
also strain the capacity of our existing computer systems, which could lead to slower response times or system failures. We may
not be able to project accurately the rate, timing or cost of any increases in our business, or to expand and upgrade our systems
and infrastructure to accommodate any increases in a timely manner.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Internet commerce security threats could pose a risk to
our online sales and overall financial performance.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A significant barrier to online commerce is the secure transmission
of confidential information over public networks. We rely on encryption and authentication technology to provide the security and
authentication necessary to effect secure transmission of confidential information. There can be no assurance that advances in
computer capabilities; new discoveries in the field of cryptography or other developments will not result in a compromise or breach
of the algorithms used by us and our partners to protect consumer&rsquo;s transaction data. If any such compromise of security
were to occur, it could have a materially adverse effect on our business, prospects, financial condition and results of operations.
A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in
our operations. We may be required to expend significant capital and other resources to protect against such security breaches
or to alleviate problems caused by such breaches. Concerns over the security of transactions conducted on the Internet and the
privacy of users may also hinder the growth of online services generally, especially as a means of conducting commercial transactions.
To the extent that our activities, our partners or third-party contractors involve the storage and transmission of proprietary
information, such as credit card numbers, security breaches could damage our reputation and expose us to a risk of loss or litigation
and possible liability. There can be no assurance that our security measures will not prevent security breaches or that failure
to prevent such security breaches will not have a materially adverse effect on our business, prospects, financial condition and
results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Risk of Capacity Constraints; Reliance on Internally Developed
Systems; System Development Risks.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A key element of our strategy is to generate a high volume of
traffic on, and use of, our services across our network infrastructure and systems. Accordingly, the satisfactory performance,
reliability and availability of our software systems, transaction-processing systems and network infrastructure are critical to
our reputation and our ability to attract and retain customers, as well as maintain adequate customer service levels. Our revenues
depend on the number of visitors who sign up for our services. Any systems interruptions that result in the unavailability of our
software systems or network infrastructure would reduce the volume of sign ups and the attractiveness of our service offerings.
We may experience periodic systems interruptions from time to time. Any substantial increase in the volume of traffic on our software
systems or network infrastructure will require us to expand and upgrade further our technology, transaction-processing systems
and network infrastructure. There can be no assurance that we will be able to accurately project the rate or timing of increases,
if any, in the use of our Web site or timely expand and upgrade our systems and infrastructure to accommodate such increases. We
will use a combination of industry supplied software and internally developed software and systems for our search engine, distribution
network, and substantially all aspects of transaction processing, including order management, cash and credit card processing,
and accounting and financial systems. Any substantial disruptions or delays in any of our systems would have a materially adverse
effect on our business, prospects, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Storage of personal information about our customers could
pose a security threat.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our policy is not to willfully disclose any individually identifiable
information about any user to a third party without the user&rsquo;s consent. This policy is accessible to users of our services
when they initially register. Despite this policy, however, if third persons were able to penetrate our network security or otherwise
misappropriate our users&rsquo; personal information or credit card information, we could be subject to liability. These could
include claims for unauthorized purchases with credit card information, impersonation or other similar fraud claims. They could
also include claims for other misuses of personal information, such as for unauthorized marketing purposes. These claims could
result in litigation. In addition, the Federal Trade Commission and other states have been investigating certain Internet companies
regarding their use of personal information. We could incur additional expenses if new regulations regarding the use of personal
information are introduced or if they chose to investigate our privacy practices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have agreed to indemnify our officers
and directors against lawsuits to the fullest extent of the law.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are a Nevada corporation. Nevada law permits the indemnification
of officers and directors against expenses incurred in successfully defending against a claim. Pursuant to our Articles of Incorporation
and Bylaws, we have agreed to indemnify our officers and directors to the fullest extent possible under the Nevada law. In the
event that we are found liable for damage or other losses, we would incur substantial and protracted losses in paying any such
claims or judgments. Pursuant to those certain letter agreements entered into between the Company and their Officers and each independent
director of the Company&rsquo;s Board of Directors appointed as of March 1, 2012, the Company is also contractually obligated to
indemnify each independent director to the fullest extent possible under Nevada law and has obtained Director and Officer insurance
coverage in the amount of $5,000,000 per occurrence. There is no guarantee, however, that such coverage or that any insurance coverage
would protect us from any damages or loss claims filed against it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may engage in transactions that
present conflicts of interest.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our officers and members of our Board of Directors may enter
into agreements with the Company from time to time which may not be equivalent to similar transactions entered into with an independent
third party. A conflict of interest arises whenever a person has an interest on both sides of a transaction. While we believe that
it will take prudent steps to ensure that all transactions between the Company and any officer or director is fair, reasonable,
and no more than the amount it would otherwise pay to a third party in an &ldquo;arms-length&rdquo; transaction, there can be no
assurance that any transaction will meet these requirements in every instance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Risks Related to our Common Stock</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The application of the &ldquo;penny stock&rdquo; rules
could adversely affect the market price of our Common Stock and increase your transaction costs to sell those shares.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Securities and Exchange Commission adopted Rule 15g-9 which
generally defines &ldquo;penny stock&rdquo; to be any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain exceptions.&nbsp;If the trading price of our Common
Stock&nbsp;falls below $5.00 per share, the open-market trading of our Common Stock is subject to the penny stock rules, which
imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and &ldquo;accredited
investors&rdquo;.&nbsp;&nbsp;The term &ldquo;accredited investor&rdquo; refers generally to institutions with assets in excess
of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with
their spouse.&nbsp;&nbsp;The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about
penny stocks and the nature and level of risks in the penny stock market.&nbsp;&nbsp;The broker-dealer also must provide the customer
with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction
and monthly account statements showing the market value of each penny stock held in the customer&rsquo;s account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing before or with the customer&rsquo;s confirmation.&nbsp;&nbsp;In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt&nbsp;from these rules,
the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and
receive the purchaser&rsquo;s written agreement to the transaction.&nbsp;&nbsp;These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.&nbsp;&nbsp;Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities.&nbsp;&nbsp;We believe the penny stock
rules discourage investor interest in and limit the marketability of our Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>FINRA sales practice requirements may also limit a stockholder&rsquo;s
ability to buy and sell our stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to the &ldquo;penny stock&rdquo; rules described
above, FINRA adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer.&nbsp;&nbsp;Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer&rsquo;s
financial status, tax status, investment objectives and other information.&nbsp;&nbsp;Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.&nbsp;&nbsp;FINRA
requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit
your ability to buy and sell our stock and have an adverse effect on the market for our shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The price of our shares of Common Stock in the future
may be volatile.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The market price of our Common Stock could be volatile and could
fluctuate widely in price in response to various factors, many of which are beyond our control, including: technological innovations
or new products and services by us or our competitors; additions or departures of key personnel; sales of our Common Stock; our
ability to integrate operations, technology, products and services; our ability to execute our business plan; operating results
below expectations; loss of any strategic relationships; industry developments; economic and other external factors; and period-to-period
fluctuations in our financial results. Because we have a very limited operating history with no revenues to date, you may consider
any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above. In addition, the
securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our
Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Stockholders should have no expectation of any dividends.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The holders of our Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of funds legally available therefore.&nbsp;&nbsp;To date, we have not declared
or paid any cash dividends.&nbsp;&nbsp;The board of directors does not intend to declare any dividends in the foreseeable future,
but instead intends to retain all earnings, if any, for use in our business operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial results or prevent fraud.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are subject to reporting obligations under the U.S. securities
laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include
a management report on such company&rsquo;s internal controls over financial reporting in its Annual Report, which contains management&rsquo;s
assessment of the effectiveness of our internal controls over financial reporting. Our management may conclude that our internal
controls over our financial reporting are not effective. Our reporting obligations as a public company will place a significant
strain on our management, operational and financial resources and systems for the foreseeable future. Effective internal controls,
particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important
to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could
result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use
significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus contains forward-looking statements. All forward-looking
statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future
performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only
predictions and speak only as of the date hereof. Forward-looking statements usually contain the words &ldquo;estimate,&rdquo;
&ldquo;anticipate,&rdquo; &ldquo;believe,&rdquo; &ldquo;expect,&rdquo; or similar expressions, and are subject to numerous known
and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks
and uncertainties identified in this prospectus, including the matters set forth under the captions &ldquo;Risk Factors&rdquo;
and in the Company&rsquo;s other filings with the Securities and Exchange Commission (&ldquo;SEC&rdquo;). These risks and uncertainties
could cause the Company&rsquo;s actual results to differ materially from those indicated in the forward-looking statements. The
Company undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events
or developments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although forward-looking statements in this prospectus reflect
the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently,
forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially
from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, without limitation, those specifically addressed under the heading &ldquo;Risks
Relating to Our Business&rdquo; above, as well as those discussed elsewhere in this prospectus. Readers are urged not to place
undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We file reports with the
SEC. You can read and copy any materials we file with the SEC at the SEC&rsquo;s Public Reference Room, 100 F. Street, NE, Washington,
D.C.&nbsp;20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov)
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC, including the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>We undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may arise after the date of this prospectus. Readers are urged to
carefully review and consider the various disclosures made throughout the entirety of this prospectus, which attempt to advise
interested&nbsp;parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are not selling any shares of the Common
Stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We will, however, receive
proceeds in the event from the exercise of the Warrants by the Selling Stockholders. As of the date of this prospectus, the Selling
Stockholders have exercised an aggregate of 2,925,000 Warrants, consisting of 2,025,000 Private Placement Warrants and 900,000
Investor Warrants, for gross proceeds of $3,487,500. If all of the Warrants are exercised, we will have received gross proceeds
of $10,076,000. However, there can be no assurance that any additional Warrants will be exercised. To date, we have used the proceeds
of the Warrants already exercised for general corporate working capital purposes. We intend to use the proceeds from the exercise
of any additional Warrants to increase marketing, advertising and Cloud and Transformer service and development teams, acquisitions
and for general corporate working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below sets forth information
regarding Warrants as of the date of this prospectus:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Gross</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Proceeds&nbsp;from</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Gross&nbsp;Proceeds&nbsp;if</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Exercised</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Gross</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Unexercised</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">Unexercised</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">all&nbsp;Warrants&nbsp;are</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Warrants</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total&nbsp;Issued</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Warrants</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Proceeds</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Warrants</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Warrants</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Exercised</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%">PPM (EP=$1.50)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6,044,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,025,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,037,500.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,019,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,028,500.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">9,066,000.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">IW (EP=$0.50)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,020,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">900,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">450,000.00</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,120,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">560,000.00</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,010,000.00</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">8,064,000</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">2,925,000</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">3,487,500.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">5,139,000</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">6,588,500.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double">10,076,000.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Note: EP = Exercise Price</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board of Directors of the Company has
broad discretion as to use of the net proceeds from any exercise of the Warrants and may change the allocation of such proceeds
without shareholder notice or consent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>
<P STYLE="margin: 0"></P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SELLING STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">We are registering
for resale shares of our Common Stock that are issued and outstanding held by the Selling Stockholders identified below. We are
registering the shares to permit the Selling Stockholders and their pledgees, donees, transferees and other successors-in-interest
that receive their shares from a Selling Stockholder as a gift, partnership distribution or other non-sale related transfer after
the date of this prospectus to resell the shares when and as they deem appropriate in the manner described in the &ldquo;Plan of
Distribution.&rdquo;&nbsp;&nbsp;As of the date of this prospectus there are 28,211,664</FONT> <FONT STYLE="color: black">shares
of Common Stock issued and outstanding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9679;</TD><TD STYLE="text-align: justify">the name of the Selling Stockholders,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9679;</TD><TD STYLE="text-align: justify">the number of shares of our Common Stock that the Selling Stockholders beneficially owned prior
to the offering for resale of the shares under this prospectus,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9679;</TD><TD STYLE="text-align: justify">the maximum number of shares of our Common Stock that may be offered for resale for the account
of the Selling Stockholders under this prospectus (which includes the shares that would be issued on exercise of the warrants),
and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9679;</TD><TD STYLE="text-align: justify">the number and percentage of shares of our Common Stock to be beneficially owned by the Selling
Stockholders after the offering of the shares (assuming all of the offered shares are sold by the Selling Stockholders).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other than Stephen D. Baksa, who was appointed as a member of
the Board of Directors of the Company on March 1, 2012, none of the Selling Stockholders have been an officer or director of the
Company or any of its subsidiaries, predecessors or affiliates within the last three years nor have they had a material relationship
with the Company or any of its subsidiaries, predecessors or affiliates within the last three years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Each Selling Stockholder may offer for
sale all or part of the shares from time to time. The table below assumes that the Selling Stockholders will sell all of the shares
offered for sale, including those issuable on exercise of Warrants. A Selling Stockholder is under no obligation, however, to sell
any shares pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">Name&nbsp;of&nbsp;Selling<BR>
    Stockholder</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Number&nbsp;of&nbsp;Shares<BR>
    Beneficially&nbsp;Owned<BR> Prior&nbsp;to&nbsp;Offering<BR> (1)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Maximum<BR> Number&nbsp;of&nbsp;Shares<BR>
    to&nbsp;&nbsp;be&nbsp;Offering<BR> (2)</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Number&nbsp;of&nbsp;Shares<BR>
    Beneficially&nbsp;Owned<BR> After&nbsp;Offering</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Percentage<BR> Ownership&nbsp;After<BR>
    Offering&nbsp;<BR> (3)</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD STYLE="width: 38%"><FONT STYLE="font-size: 8pt">BAKSA, STEPHEN D.</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">2,435,000</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%"><FONT STYLE="font-size: 8pt">(4)</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">1,400,000</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">1,035,000</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">3.10</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">CASSERLY TRUST, GREG AND NOLA</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(5)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.20</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">CHIARELLO, ROBERT V.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">600,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(6)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">DEVITO, NICHOLAS</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(7)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">DONOHOE, MARK T.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">500,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(8)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">GILES, EDWARD M.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,320,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(9)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">880,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">440,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.32</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">GILES, EDWARD M. ROTH 2010 IRA</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">160,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(10)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">HAN GROUP SOLUTIONS, LLC (11)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">600,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(12)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">300,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">300,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">ISLES CAPITAL LP&nbsp; (13)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">840,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(14)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">560,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">280,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">JI, WEINING</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(15)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">--</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">MONOMOY PARTNERS (16)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(17)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.209</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">PERRIT EMERGING OPPORTUNITIES FUND (18)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(19)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">600,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">600,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.80</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">RATUOS ULC (20)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(21)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, GUY</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">184,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(22)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">92,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">92,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, HARRIET</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(23)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, KATHERINE</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">64,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(24)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">32,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">32,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, MARGARET</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">56,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(25)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">28,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">28,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, WILLIAM</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(26)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">RIEGEL, WILLIAM M. REVOCABLE TRUST</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">160,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(27)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">SULLIVAN, PIKE H.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(28)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">800,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.20</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">TERMINAL VENTURES (29)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(30)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">VALLUM INVESTMENT PARTNERS, L.P.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(31)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">VP BANK (SWITZERLAND) LTD.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,381,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(32)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">744,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">637,400</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.91</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 8pt">WARD, JOHN T.</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(33)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD><FONT STYLE="font-size: 8pt">WEISE, CARL</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 8pt">(34)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">*</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">YUAN, JINCHENG</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">740,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">(35)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">340,000</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">400,000</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1.20</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">TOTAL</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">14,336,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">8,064,000</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">6,272,400</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">18.80</FONT></TD>
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">* Represents less than 1%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%; text-autospace: none">(1)</TD>
    <TD STYLE="width: 83%; text-autospace: none; text-align: justify">&ldquo;Beneficial ownership&rdquo; is determined in accordance with the rules and regulations of the SEC. In computing the number of shares &ldquo;beneficially owned&rdquo; by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into shares of our Common Stock, or convertible or exercisable into shares of our Common Stock within 60 days of the date hereof are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder&rsquo;s name. The percentage of beneficial ownership is based on&nbsp;28,211,664 shares of Common Stock outstanding as of the date of this prospectus.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(2)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Consists of the number of shares
of Common Stock issued or issuable upon the exercise of the Warrants held by the Selling Stockholder.&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%; text-autospace: none">(3)</TD>
    <TD STYLE="width: 83%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on 33,350,664 shares of
Common Stock, consisting of (i) 28,211,664 shares of Common Stock and (ii) 5,139,000 shares of Common Stock issuable upon the
exercise of the Warrants not exercised as of the date of this prospectus but assuming such Warrants have been exercised.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(4)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes (i) 700,000 shares of
Common Stock issued upon the exercise of the Placement Agent Warrants on November 29, 2011, (ii) 250,000 shares of Common Stock
issued upon the issuance of Investor Warrants on March 26, 2012 and (iii) 450,000 shares of Common Stock issuable upon the exercise
of Investor Warrants. <FONT STYLE="color: black">Also includes 300,000 shares of Common Stock held by</FONT> two trusts for the
benefit of the Selling Stockholder&rsquo;s adult children of which he is a <FONT STYLE="color: black">co-trustee and of which
the Selling Stockholder disclaims beneficial ownership.</FONT>&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(5)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 400,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(6)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes (i) 200,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 5, 2011, (ii) 150,000 shares of Common Stock issued
upon the exercise of Investor Warrants on March 26, 2012 and (iii) 50,000 shares of Common Stock issuable upon the exercise of
Investor Warrants.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(7)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 100,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(8)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 250,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(9)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes (i) 440,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 8, 2011 (ii) 250,000 shares of Common Stock issued
upon the exercise of Investor Warrants and (iii) 190,000 shares of Common Stock issuable upon the exercise of Investor Warrants.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(10)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 80,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(11)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Anthony V. Milone has voting and dispositive control over HAN Group Solutions, LLC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(12)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 300,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(13)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Edward M. Giles has voting and dispositive control over Isles Capital, LP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(14)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes (i) 280,000 shares of Common Stock issued upon the exercise of Private Placement Warrants on December 8, 2011 and (ii) 280,000 shares of Common Stock issuable upon the exercise of Investor Warrants. &nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(15)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes 60,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants. Mr. Jincheng Yuan transferred 60,000 Private Placement Warrants
to Mr. Weining Ji on November 8, 2011.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(16)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Gavin Scotti has voting and dispositive control over Monomoy Partners.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(17)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 400,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(18)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Michael Corbett has voting and dispositive control over Perritt Emerging Opportunities&nbsp; Fund.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(19)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 600,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(20)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Ian A. Soutar has voting and dispositive control over Ratuos ULC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(21)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 100,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(22)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 92,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(23)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 20,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(24)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 32,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(25)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 28,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%; text-autospace: none">(26)</TD>
    <TD STYLE="width: 83%; text-autospace: none; text-align: justify">Includes 8,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(27)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 80,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(28)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes (i) 400,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 28, 2011 and (ii) 400,000 shares of Common Stock
issuable upon the exercise of Investor Warrants.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(29)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Jeffrey Pressman has voting and dispositive control over Terminal Ventures.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(31)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 200,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(32)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes (i) 5,000 shares of Common
Stock issued upon the (partial) exercise of Private Placement Warrants on February 28, 2012 and (ii) 739,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants.&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(33)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 40,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(34)</TD>
    <TD STYLE="text-autospace: none; text-align: justify">Includes 50,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">(35)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Includes 340,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants. Mr. Jincheng Yuan transferred 60,000 Private Placement Warrants
to Mr. Weining Ji on November 8, 2011.&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders and any of their pledgees, donees,
transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any
stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions.&nbsp;&nbsp;These
sales may be at fixed or negotiated prices.&nbsp;&nbsp;The Selling Stockholders may use any one or more of the following methods
when selling shares:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>purchases by a broker-dealer as principal and resale by the broker-dealer for its account;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>an exchange distribution in accordance with the rules of the applicable exchange;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>privately negotiated transactions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>through the writing of options on the shares;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>to cover short sales made after the date that this Registration Statement is declared effective by the Commission;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per
share; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>a combination of any such methods of sale.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders may also sell shares under Rule 144
of the Securities Act, if available, rather than under this prospectus.&nbsp;&nbsp;The Selling Stockholders shall have the sole
and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory
at any particular time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers
acting as agents for themselves or their customers.&nbsp;&nbsp;Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers of shares for whom such broker-dealers may act as
agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary
commissions.&nbsp;&nbsp;Market makers and block purchasers purchasing the shares will do so for their own account and at their
own risk.&nbsp;&nbsp;It is possible that a Selling Stockholder will attempt to sell shares of Common Stock in block transactions
to market makers or other purchasers at a price per share which may be below the then existing market price.&nbsp;&nbsp;We cannot
assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the Selling Stockholders.&nbsp;&nbsp;The
Selling Stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus,
may be deemed to be &ldquo;underwriters&rdquo; as that term is defined under the Securities Act, the Exchange Act and the rules
and regulations of such acts.&nbsp;&nbsp;In such event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the Selling Stockholders, but excluding brokerage commissions
or underwriter discounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders, alternatively, may sell all or any
part of the shares offered in this prospectus through an underwriter.&nbsp;&nbsp;The Selling Stockholders have not entered into
any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Selling Stockholders may pledge their shares to their brokers
under the margin provisions of customer agreements.&nbsp;&nbsp;If a Selling Stockholder defaults on a margin loan, the broker may,
from time to time, offer and sell the pledged shares.&nbsp;&nbsp;The Selling Stockholders and any other persons participating in
the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act, and the rules and regulations
under such act, including, without limitation, Regulation M.&nbsp;&nbsp;These provisions may restrict certain activities of, and
limit the timing of purchases and sales of any of the shares by, the Selling Stockholders or any other such person.&nbsp;&nbsp;In
the event that any of the Selling Stockholders are deemed an affiliated purchaser or distribution participant within the meaning
of Regulation M, then the Selling Stockholders will not be permitted to engage in short sales of Common Stock.&nbsp;&nbsp;Furthermore,
under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making
and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions.&nbsp;&nbsp;In addition, if a short sale is deemed to be a stabilizing activity,
then the Selling Stockholders will not be permitted to engage in a short sale of our Common Stock.&nbsp;&nbsp;All of these limitations
may affect the marketability of the shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If a Selling Stockholder notifies us that it has a material
arrangement with a broker-dealer for the resale of the Common Stock, then we would be required to amend the registration statement
of which this prospectus is a part, and file a prospectus supplement to describe the agreements between the Selling Stockholder
and the broker-dealer.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are authorized to issue 75,000,000 shares of $0.001 par value
Common Stock of which 28,211,664 shares were issued and outstanding as of March 30, 2012. Holders of Common Stock are entitled
to one vote per share on each matter submitted to a vote at any meeting of stockholders. Shares of Common Stock do not carry cumulative
voting rights and, therefore, holders of a majority of the outstanding shares of Common Stock will be able to elect the entire
board of directors, and, if they do so, minority stockholders would not be able to elect any members to the board of directors.
Our board of directors has authority, without action by the stockholders, to issue all or any portion of the authorized but unissued
shares of Common Stock, which would reduce the percentage ownership of the stockholders and which may dilute the book value of
the Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Stockholders have no pre-emptive rights to acquire additional
shares of Common Stock. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the
event of liquidation, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities.
The shares of Common Stock, when issued, will be fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Common Stock are entitled to receive dividends as
the board of directors may from time to time declare out of funds legally available for the payment of dividends. We have not paid
dividends on Common Stock and do not anticipate that the Company will pay dividends in the foreseeable future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All shares of the Common Stock now outstanding are duly authorized,
fully paid and non-assessable.&nbsp;&nbsp;The shares of Common Stock issuable upon exercise of the warrants are duly authorized
and upon payment of the exercise price will be fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Common Stock is currently quoted on
OTCBB under the symbol &ldquo;GBSX.&rdquo;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Private Placement Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Currently we have outstanding 6,044,000
Private Placement Warrants which are exercisable for an aggregate of 6,044,000 shares of our Common Stock at an exercise price
of $1.50 per share.&nbsp;&nbsp;The Private Placement Warrants, at the option of the holder, may be exercised by cash payment of
the exercise price, commencing on the date of issuance and ending on the third anniversary of the date of issuance.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Pursuant to the Private Placement Warrant,
in the event the Common Stock of the Company is trading at an average of at least $3.00 per share for a period of not less than
20 consecutive trading days, the Warrant holder shall be required to fully exercise the Private Placement Warrant within ten (10)
business days following the 20<SUP>th</SUP> trading day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Throughout the three-year exercise period,
the Company has the right to redeem the Private Placement Warrants for $0.05 per Share. In the event the Company elects to redeem
the Private Placement Warrants, the Company shall promptly notify the holder of the Warrant in writing, and such writing shall
be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid
and addressed, to such holder at the address shown for such holder on the books of the Company, or at such other address as shall
have been furnished to the Company by notice from such holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the Company at any time subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable upon the exercise
of the Private Placement Warrants into a greater number of shares, then, after the date of record for effecting such subdivision,
the exercise price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time
combines (by any reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock
acquirable upon the exercise of the Private Placement Warrants into a smaller number of shares, then, after the date of record
for effecting such combination, the exercise price in effect immediately prior to such subdivision will be proportionately increased.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon each adjustment of the exercise price of the Private Placement
Warrants pursuant to the provision above, the number of shares of Common Stock issuable upon exercise of the Private Placement
Warrants shall be adjusted by multiplying a number equal to the exercise price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Private Placement Warrants immediately prior to such adjustment
and dividing the product so obtained by the adjusted exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No adjustment of the exercise price shall be made in an amount
of less than 1% of the exercise price in effect at the time such adjustment is otherwise required to be made, but any such lesser
adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 1% of such exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Investor Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In March 2012, the Company issued warrants to five &ldquo;accredited
investors&rdquo; (as that term is defined by Rule 501(a) of Regulation D promulgated under the Securities Act), one of whom is
a member of the Board of Directors of the Company and all of whom invested in the Private Placement, to purchase an aggregate of
2,020,000 shares of Common Stock. Each Investor Warrant is exercisable for the three-year period commencing from the date of issuance
for $0.50 per Share and has the same terms as the Private Placement Warrants. The Investor Warrants were issued under the registration
exemptions of Section 4(2) under the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INTERESTS OF NAMED EXPERTS AND COUNSEL</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Sourlis Law Firm has assisted the Company in preparing and
filing the Company&rsquo;s Registration Statement on Form S-1 of which this prospectus forms a part and has rendered a legal opinion
as to the validity of the Warrants and the Shares. The offices of The Sourlis Law firm are located at The Courts of Red Bank, 130
Maple Avenue, Suite 9B2, Red Bank, New Jersey 07701. In consideration for legal services rendered by The Sourlis Law Firm in connection
with the sale and issuance of the Investor Warrants, on March 28, 2012, the Company issued to the partners of The Sourlis Firm
warrants to purchase an aggregate of 250,000 shares of Common Stock exercisable on a cashless basis for $1.10 per share for a three
year period commencing from the date of issuance until the third anniversary date of the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The consolidated financial statements included in this prospectus
and the registration statement for the Company&rsquo;s fiscal years ended March 31, 2010 and 2009 have been audited by K.R Margetson
Ltd., Chartered Accountant, located at 331 East 5<SUP>th</SUP> Street, North Vancouver, BC V7L 1M1, Canada (&ldquo;K.R. Margetson&rdquo;),&nbsp;to
the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are
included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. The consolidated
unaudited financial statements and notes thereto included in this prospectus and the registration statement for the Company&rsquo;s
fiscal quarter ended December 31, 2011 have been reviewed by K.R. Margetson.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other than disclosed above, no expert or counsel named in this
prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on
a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in
the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents
or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Enterprises Incorporated, a Nevada
corporation (the Company,&rdquo; GBS,&rdquo; GBSX,&rdquo; we,&rdquo; us,&rdquo; our&rdquo; or similar expressions), through its
subsidiaries is a global operating software and services company. We focus on cloud automation technology, commercial and governmental
application modernization and migration, and business application development, deployment and management, primary in the IBM Lotus
Notes and Domino space. We help customers, such as commercial and government organization IT departments, system integrators, ISV&rsquo;s,
Data Center providers, solve IT challenges such as:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Shaping IT strategy &amp; planning</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Deploying, developing, maintaining and managing business applications</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Automating business processes</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Optimizing system &amp; application performance</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Managing messaging systems &amp; ensuring messaging security &amp; compliance</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Simplifying application modernization, migration &amp; deployment.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.1in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD>Migrating and integrating messaging and application systems</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBSX is pursuing an aggressive growth strategy
which includes highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s main activities are
focused on serving IBM&rsquo;s Lotus Notes &amp; Domino market where it has become IBM&rsquo;s largest provider of business application
solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To serve the demand for modernization of
the applications run worldwide on the Domino platform the major innovation developed by the Company&rsquo;s concentration of talent
are certain specific software tools that allows IBM Lotus Software Group and its partners to rapidly and cost-effectively convert
their customers&rsquo; existing Lotus based rich-client applications into modern, web accessible and client independent applications,
avoiding any data migration and enable their customers to improve user experience. The use of modern XPages based Lotus Software
applications allows customers to leverage self-service capabilities, benefit from IBM&rsquo;s latest Lotus release features, and
to be automatically &lsquo;cloud&rsquo; ready. This Application Transformation technology (GBS Transformer product suite) dramatically
increases IBM&rsquo;s Lotus Software solutions competitiveness against providers such as Google, Salesforce, Microsoft Sharepoint
and others.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s specific software tools
enable IBM, the IBM Lotus Notes/Domino partners, system integrators (SIs) or commercial or governmental organization-controlled
service units to solve the industry needs for efficient modernization of a Lotus environment, specifically for the highly distributed
and heavily used IBM Lotus Notes/Domino applications. The Company&rsquo;s modernization tools span the complete set of customer
requirements and demands for application modernization and migration:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Retire (automatically convert into full text searchable .pdf archived applications);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Renew (automatically convert into modern web 2.0 styled, access anywhere applications);</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Rebuild (accelerate case-specific rebuilding into access anywhere applications); or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD>Replace (accelerate case-specific replacing with a different technology).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has also developed an innovative
Cloud Automation Platform (GroupLive) enabling the automation of the processes beyond virtualization or managing customer dedicated
or shared infrastructure, such as networks, servers and clients. GroupLive extends process automation for legacy applications,
including user management, user access and application deployment without the need of rewriting the entire application. Automation
is supposed to decrease IT labor by more than 50%, especially for application management and maintenance. GroupLive supports IT
consolidation, standardization, modernization, utilization and optimization, as well as centralization, monitoring, and reporting.
Customers gain more efficiency, reduce cost and free IT labor to refocus on strategic tasks rather than on overwhelming current
day-to-day workloads. GroupLive is currently deployed in IBM&rsquo;s Data Centers in Germany. This service is based on a non-exclusive
contract with the IBM Data Center and can be modified or replaced with other Data Center providers in the German market. GroupLive
is also being deployed in GBS data centers in the US.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since January 6, 2011, the Company owns
majority control (50.1%) of GROUP Business Software AG (GROUP&rdquo;), a Frankfurt listed publicly-traded company (INW). GROUP
is headquartered in Eisenach, Germany. GROUP&rsquo;s businesses served as the foundation for GBSX to achieve its strategic objectives.
In 2011, GBS has added more companies to complete its cloud automation and application management focused offering. With Pavone
AG and Groupware AG the portfolio now includes cloud-enabled workflow management, as well as cloud-enabled application archiving.
With the acquisition of IDC Global, Inc., Chicago, a high end data center provider, GBSX will start offering the GroupLive technology
in the United States in the next months. The acquisition of SD Holdings, Inc., a specialized company in the area of analytics,
business intelligence, reporting and services, provides GBS with access to the Asian markets as well as access to cost-effective
high quality consulting resources. In addition, GBS plans to leverage SD&rsquo;s Indian subsidiary as the foundation for its strategic
service delivery factory.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS will leverage its technologies, partnerships
and customer base to develop its successful business strategy and existing operations in North America, Asia and Europe. In particular,
the Company will concentrate on rapidly evolving as a major provider of Cloud Automation Platform Technology software and IBM Lotus
Notes/Domino Application Modernization &amp; Migration Services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furthermore, the Company is currently negotiating
a Reseller Agreement with IBM&rsquo;s Lotus Software Division that would make it possible for IBM to bundle specific technology
developed by the Company and sell them as an integrated product solution through IBM sales channel. The Reseller Agreement would
provide the Company with software license, subscription and service based revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, the Company also has the potential for dramatic growth from large strategic
partnerships such as with major OEM players, SIs, ISV&rsquo;s, data centers, as well as a variety of large enterprise class and
medium sized end users who are in the business of application modernization, migration and/or management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General Corporate History</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured goods.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training. Simultaneously with SWAV&rsquo;s acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of
SWAV common stock to Joerg Ott, our CEO and Chairman, for an aggregate purchase price of $370,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company&rsquo;s Chief Executive Officer,
President and Chairman of the Board of Directors. On September 6, 2010, SWAV&rsquo;s name was changed to GBS Enterprises Incorporated.
On October 14, 2010, the Company&rsquo;s trading symbol on the OTC Bulletin Board was changed from SWAV to GBSX.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP Business Software AG, a Frankfurt-based
German software company (GROUP&rdquo;), pursuant to Share Purchase Agreements between the Company and several of GROUP&rsquo;s
stockholders, including Mr. Joerg Ott (also the Company&rsquo;s Chairman and Chief Executive Officer). Pursuant to the Share Purchase
Agreements, the Company acquired an aggregate of 7,115,500 shares of common stock of GROUP in consideration for an aggregate of
3,049,489 shares of the Company&rsquo;s common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 6, 2011, the Company acquired
an additional 5,525,735 shares of common stock of GROUP, representing approximately 21.9% of the issued and outstanding shares,
from several additional GROUP stockholders in consideration for an aggregate of 2,355,922 shares of the Company&rsquo;s common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP&rsquo;s outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Acquisitions of Subsidiary Companies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As previously reported by the Company,
during the nine month period ended December 31, 2011, the Company made four business acquisitions as described below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Pavone AG</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective April 1, 2011, the Company entered
into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000 in cash and
1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing the
market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption of
$11,261 in debt was $5,261,261. Pavone is a<FONT STYLE="color: black"> leader in business process management and optimization technologies.
Pavone&rsquo;s extensive workflow software for Lotus Notes and Domino along with their large customer base is well suited to GBS
Enterprises portfolio strategy. This acquisition of Pavone complements GBS's majority ownership in GROUP and further strengthens
their leading industry position on the IBM Lotus Platforms and expands their cloud computing technology offerings beyond the IBM
Lotus market. Pavone currently has offices in Germany and the UK. They have over 2,500 customers and over 150,000 users worldwide.
Some of their customers include Deutsche Bundes Bank, BMW, Linde AG, Philips, British Sugar and Mahle Industries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>GroupWare, Inc.</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective June 1, 2011, the Company acquired
100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As consideration the Company paid $250,000
and issued 250,000 shares of its common stock. The fair value of the common stock was determined to be $4.34 per share, representing
the market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption
of $219,902 in debt was $1,554,902. Upon the consummation of the acquisition, the management and board of GroupWare resigned and
Joerg Ott, the Company&rsquo;s Chief Executive Officer and sole director, was appointed as the Chief Executive Officer and sole
director of GroupWare. GroupWare is based in Lubeck, Germany with offices in St. Petersburg, Florida. GroupWare's ePDF server delivers
centralized, network-wide PDF solutions for messaging, workflow, document, content and data management.<FONT STYLE="color: black">
This acquisition strengthens the GBS Transformer offering, which helps bring IBM Lotus Notes client applications to the web, by
substituting traditional printing methods provided by the Notes client with simple-to-use print-to-PDF capabilities in the browser.
In addition, GroupWare provides a solution for applications that are ready to be retired. With the ePDF Server, GBS customers can
convert the entire contents of IBM Lotus Notes and Domino applications to a permanent and secure archive in PDF or PDF/A format,
while preserving their ability to be full-text searched and ensuring that the critical application data is accessible in the future,
when needed. GBS will deliver the application archiving capabilities via its GroupLive cloud, making it possible for customers
and partners to take advantage of elastic cloud computing resources to rapidly process the application contents without the need
to dedicate hardware on-site for temporary or intermittent processing jobs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>IDC Global, Inc.</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 25, 2011, the Company acquired
100% of the issued and outstanding shares of common stock of IDC Global, Inc. (IDC&rdquo;), a Delaware corporation with offices
in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company agreed to
issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement required
an additional payment to the management shareholders of 80,000 shares of common stock and signing bonuses to personnel of $35,000.
The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction. The fair
value of the common stock was determined to be $3.50 per share, representing the market value at the end of trading on the date
of the agreement. The total value of the investment, including $883,005 of debt assumption was $4,713.005. IDC is a privately held
company that provides nationwide network and data center services. IDC delivers customized, high availability technology solutions
for WAN, Wireless Services, Co-location &amp; Hosting, Managed Services, and Network Security. IDC has data centers in Chicago,
New York and London and other key cities. IDC is helping customers make the transition from large, static and expensive on-premise
computing to dynamic, flexible and cost-effective off-premise computing. The acquisition of IDC provides the Company with the infrastructure
needed to provide a comprehensive end-to-end solution for all customers regardless of their platforms. It proves especially beneficial
to IBM Lotus Domino and Notes customers who finally have the same options as other platforms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>SD Holdings, Ltd.</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. (&ldquo;SYN&rdquo;), a Mauritius corporation and the shareholders of
SYN (the &ldquo;Selling Shareholders&rdquo;) owning 100% of issued and outstanding shares of SYN. </FONT>SYN owns 100% of all issued
and outstanding shares of Synaptris, Inc. a California corporation (&ldquo;Synaptris&rdquo;), and 100% of all issued and outstanding
shares of Synaptris Decisions Private Limited, an India company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the acquisition agreement,
the Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN (&ldquo;SYN Shares&rdquo;) effective
November 1, 2011 in consideration for $525,529 and agreed to issue 700,000 shares of Common Stock, subject to adjustment. The fair
value of the common stock was determined to be $2.05 per share, representing the market value at the end of trading on the date
of the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Synaptris' product portfolio improves corporate decision-making
by providing real-time enterprise reporting, user defined dashboards, and comprehensive analytic capabilities for Lotus Notes /
Domino and Java/.NET environments. Synaptris employs 70 people and has operations in the US, Europe, and India, with over 2,500
customers in 80 countries, including over one hundred Fortune 1000 companies. &nbsp;&nbsp;Some of their client companies include
ABB, Goodyear Tire and Rubber, Standard Life Insurance, ABN Amro Bank, Dunlop, Caterpillar, Philips International BV, and Electrolux.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">With the integration of the Synaptris product portfolio, GBS
will add another tier of Lotus Notes applications including reporting products, advanced dashboards, and email productivity solutions.&nbsp;Additionally,
the Synaptris acquisition will bring a comprehensive search engine specialized for use with email that is faster and easier to
use than other products in the market and which is expected to be made available for XPage applications in the near future through
the GBS Transformer .&nbsp;The GBS Transformer is the only technology in the marketplace that can convert any legacy Lotus Notes
applications into a cloud ready format.&nbsp;There are over 18 million Lotus Notes applications worldwide.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to product synergy and additional revenue streams,
GBS expects to derive operational synergy from this acquisition.&nbsp;Synaptris' presence in India is anticipated to accelerate
GBS's plan to expand its Development &amp; Service Center operations for its Transformer 2.0 suite in India.&nbsp;Transformer 2.0
expedites the conversion of client-based applications to Web 2.0-based applications.&nbsp;The Development &amp; Service Center
should further enable GBS a cost-effective method to rapidly transform (web-enable) large volumes of Lotus Notes applications.&nbsp;In
addition, GBS plans to leverage Synaptris' 135 channel partners spanning 45 countries to expand its existing worldwide network
of partners.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The assets and liabilities of these companies
represent their values as of September 30, 2011 and are included in these consolidated financial statements. This timing approach
is allowed as per Regulation S-X Rule 3A-02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Products &amp; Services</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS has achieved significant growth by
consolidating the fragmented Lotus Software market through the successful merger &amp; acquisitions of companies with complementary
product, technology or services offerings. Based on its organic growth and growth by acquisition GBS has continuously developed
its software and service business to service and support GBS&rsquo;s expanding Lotus customer base.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, GROUP has achieved growth
through acquisition by targeting attractive, yet underperforming companies with complimentary operations and leveraging GROUP&rsquo;s
expertise to successfully turnaround and integrate these targets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Key success factors for this strategy are:
enhanced portfolio, positioning GROUP as the &lsquo;one-stop-shop&rsquo; for Lotus applications and services, expand customer support,
fast code migration, and cloud enablement/XPages conversion of acquired applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Going forward, the Company will focus on
potential acquisition targets in the following areas of software and services: Applications, Professional Services, Hosting/Outsourcing
Services, Administration and IT services, and XPages expertise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Core Business Division Overview</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Messaging and Business Application Software &amp; Solutions
product lines</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Messaging and Business Application
Software &amp; Solutions product lines include software and advisory services for email and Instant Messaging (IM) Management,
Security, Compliance, Archiving and Productivity, CRM Applications, Governance, Risk &amp; Compliance (GRC) Management software,
Workflow and Business Process Management software, ePDF Archiving &amp; Document Management and e-Banking solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS develops sells and installs well known
business process and management software suites based on Lotus Notes / Domino and IBM Portal technology, mainly for major international
companies and medium-sized customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Through GBS&rsquo;s comprehensive messaging
software product lines and associated services, Lotus Notes, Microsoft Exchange or SMTP-based-email customers, as well as Lotus
Sametime customers are able to provide their users with secure, efficient and centrally administered use of e-mail and IM while
maintaining control over their compliance with current legal requirements and corporate guidelines.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Consulting Services</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a leader in the IBM Lotus Notes Software
and Services business GBS provides high-end consulting services to its customers. GBS develops, sells and orchestrates customer-specific
Lotus Domino strategy and consulting services, such as CIO and IT department leader Strategic Advisory Services, Managed Services,
Outsourcing, Administration, Assessments and Implementations, Performance Improvements, Custom Application Development , Governance
and Security, Technical Support, and Training, as well as Email Migration Services. The talented team at GBS Experts has outstanding
skill sets in the areas of system architecture and evaluation, application integration, e-mail and Instant Messaging, administration,
application development, application migration, middleware deployments and licensing, outsourcing and hosting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on GBS&rsquo;s unique concentration
of industry talent and expertise, mainly in the areas inside and around IBM Lotus Notes/Domino, inside and around corporate messaging
(IBM, Microsoft, SMTP) and inside and around IT environmental and application assessment, analysis and reporting, commercial and
governmental customers, as well as SIs and channel partners are able to relay on the industry leading strategic and tactical advisory
services for evaluating, planning, staffing and execution of any customer project. GBS Consulting Services&rsquo; global team of
consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client
projects on time and with reduced risk</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">GBS&rsquo;s focus on recruiting and retaining top Lotus expertise,
positions our team to offer leading-edge Lotus Notes / Domino subject matter knowledge to our customers. As a testament to this
focus, GBS employs 10 of the top 20 most recognized &lsquo;market experts&rsquo; and thought-leaders in Lotus development and administration.
GBS consultants have an average of over 12 years&rsquo; experience each in Lotus Notes/Domino and its related products and are
routinely asked to present at IBM Lotus events including Lotusphere, an annual conference hosted by IBM Lotus Software.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 98%; text-autospace: none">As a Premier IBM Business Partner - GBS is one of the few partners that can sell and support licenses for all five IBM software brands: Lotus, WebSphere, Rational, Tivoli, and DB2</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.2pt; text-indent: -13.2pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.2pt; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Cloud Computing</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As IT departments face continuous budget reductions and constant
pressure for higher performance and efficiency, CIOs are focusing on modern technologies to support their need for increased scalability,
flexibility and lower costs. GBS has identified this demand as a strategic growth opportunity for the company and has placed a
significant focus on expanding its Cloud Computing and Modernizing/Migrating technology offerings. The strategic opportunities
is served by GBS with two distinct offerings:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">1)</TD>
    <TD COLSPAN="2" STYLE="text-autospace: none"><B>GROUP Live</B> - Cloud Automation Platform / Cloud Platform-as-a-Service (PaaS) software and services. And</TD></TR>
<TR>
    <TD STYLE="width: 1%; vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; vertical-align: top; text-autospace: none">2)</TD>
    <TD STYLE="width: 93%; vertical-align: top; text-autospace: none"><B>Transformer</B> - Lotus Notes modernization/migration services and technology accelerators</TD>
    <TD STYLE="width: 5%; text-autospace: none">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>GBS Cloud Computing</B> activities are
focused on cloud automation solutions and therefore the Company has made key acquisitions and R&amp;D investments to create an
award winning Cloud Platform-as-a-Service offering. Under the GROUP Live banner, the GBS PaaS offering has been sold to a variety
of enterprise customers, which use the PaaS software to host internal corporate clouds (Private cloud) and applications as-a-service
to their various internal user groups. GROUP Live has also be sold and implemented by a number of Independent Software Vendors
(ISVs), which are leveraging the platform to deliver their own Software-as-a-Service (SaaS) applications to their respective customer
bases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Both of these customer groups enjoy the
comprehensive nature of this platform agnostic PaaS solution and its exceptional change management capabilities enabling resource
flexibility, business agility, scalability and ease-of-use beyond that which is generally available in the market today.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 98%; text-autospace: none">2011 GBS and IBM sign strategic cooperation agreement to sell, deliver and support GROUP Live</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.2pt; text-indent: -13.2pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 98%; text-autospace: none">2011 Experton positioned GBS (GROUP Live) in the Leaders Quadrant for Cloud Management in their report:<I> Cloud Vendor Benchmark 2011</I></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.2pt; text-indent: -13.2pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 2%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 97%; text-autospace: none">2011 IBM Best Seller Award Winner: Best Cloud Solution Partner</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>GBS Lotus Application Modernization
and Migration</B> activities are focused on the IBM Lotus / Domino applications market and the offering spans from expert services
and accelerator technologies to modernize, web enable and migrate Lotus applications; and thus ultimately take the Lotus applications
from legacy to the future. The foundation of the Transformer Suite Software offering is GBS&rsquo;s significant R&amp;D investment
in a set of methodologies and key technology accelerators to automate the conversion of traditional Notes based client-server applications,
into the IBM XPages framework which enables Domino applications to be run and accessed via the Lotus client, a web browser or on
a mobile device. The patent-pending software that underpins Transformer was developed by GBS with the assistance and guidance from
IBM Corporation&rsquo;s Software Group to ensure alignment with future releases of the IBM Lotus / Domino and XPages technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 98%; text-autospace: none">When compared to manual redevelopment projects, Transformer 2.0 modernizes and web enables Notes applications at up to 55% lower cost, 75% time savings and with up to 80% fewer resources.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.2pt; text-indent: -13.2pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-family: Wingdings">&uuml;</TD>
    <TD STYLE="width: 98%; text-autospace: none">IBM has deemed the Transformer technology a &ldquo;game changer,&rdquo; and will be employing it to modernize their clients&rsquo; applications.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Revenue</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS&rsquo; software and service operations
and corresponding revenue streams are well diversified. For fiscal year 2012/ 2013, the Company expects to generate more than 85%
of its revenue from a combination of license sales, services and maintenance. Service and maintenance revenues, which are recurring
in nature and highly predictable year-over-year, account for nearly 60% of the Company&rsquo;s total revenue. The Company&rsquo;s
service revenues include strategic consulting, high-end project and delivery management, cloud computing integration and enablement,
offshore development, the design, implementation, integration and training for its collaboration management systems. Due to the
custom designed nature of the Company&rsquo;s products, essentially all clients utilize GBS&rsquo; skilled service team to implement
its systems. The other major component of the Company&rsquo;s recurring revenue, maintenance, is typically paid on an annual basis
and is typically negotiated under contracts for two to three years. The Company estimates approximately 80% of its installed base
maintain a maintenance contract for the Company&rsquo;s solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Customers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS, through its subsidiaries caters primarily
to mid-market and enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning four continents,
representing more than 5,000,000 active users of its products. The Company&rsquo;s customers include Abbot, Ernst &amp; Young,
Deutsche Bank, Bayer, HBSC, Merck and Toyota.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Dependence on IBM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is the world&rsquo;s largest
supplier of applications for IBM&rsquo;s Lotus Notes and Domino markets. Should IBM choose not to promote the underlying platform
technology and products (e.g. IBM Collaboration &amp; Social Software, IBM Lotus Software, XPages, Connections), we might not achieve
the revenue from our core business units we are anticipating and our business could be materially adversely affected as a result.
GBS also markets its Cloud Automation Platform (GroupLive) and IBM Lotus/Notes Application Modernization &amp; Migration tool set
(Transformer) . We expect much of our growth in the near term to come from our strategic business units GroupLive and Transformer.
Should IBM choose not to promote these products, we might not achieve the growth we are anticipating and our business could be
materially adversely affected as a result.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2012 and 2011, the Company
had three employees, all of whom were executive officers of the Company. Joerg Ott serves as the Chief Executive Officer and Chairman
of our Company.&nbsp;&nbsp;Mr. Ott is also a Co-Chief Executive Officer and director of GROUP.&nbsp;&nbsp;Ronald Everett served
as the Chief Financial Officer of the Company from August 2, 2010 to February 27, 2012. On February 24, 2012, Markus R. Ernst was
appointed as the Chief Financial Officer of the Company. Gary MacDonald serves in the capacity of Executive Vice President and
Chief Development Officer of the Company as well as GROUP.&nbsp;&nbsp;There are no other persons who work for the Company.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The disclosure below pertains to the research
and development activities of GROUP, our 50.1% subsidiary:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As of March 31, 2012 there
were 226 full-time employees working for the Company&rsquo;s subsidiaries (March 31, 2011: 161 full-time employees). There were
no part-time employees. The increase in the number of employees is due to the acquisitions undertaken by the Company and an increase
in employment necessary to support the strategic initiatives and the anticipated growth of the Company. The average employee numbers
include neither trainees nor Board members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The breakdown into the individual
departments can be taken from the following overview:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Department</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At March 31, 2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At March 31, 2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 58%; text-align: left">Management and Administration</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">28</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">24</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Research &amp; Development</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Sales</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">45</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Service</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Trainee</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">TOTAL</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">226</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">161</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 64.9pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Seasonal</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our business is not seasonal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Intellectual Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2011, the Company does not have any patents,
trademarks, licenses, franchises or concessions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Research and Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal years ended March 31, 2011
and 2010, GBSX did not spend any money in research and development.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The disclosure below pertains to the research
and development activities of all subsidiaries, including GROUP, our 50.1% subsidiary:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD STYLE="text-align: justify">The main focus of R&amp;D in 2010 was to provide for the future success of the GBS offering. Development
teams around the globe, namely in the U., Canada, Germany, the United Kingdom, Denmark and Bulgaria have been intensely working
on the next generation offering, especially for GBS Transformer and Group Live.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">n</FONT></TD><TD STYLE="text-align: justify">The overall R&amp;D spending by GROUP in 2010 (for the fiscal year ended March 31, 2011) was $4,924,148.
Due to the sale of Gedys IntraWare GmbH&rsquo;s business in early 2010 the amount in 2009 (for the fiscal year ended March 31,
2010) was slightly higher at $5,486,726.&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In our core business units we compete in
general with regionally organized and represented IBM Lotus channel partner and IBM Lotus specialized departments of more generic
ISVs, or SIs. In principal, these competitors are &lsquo;single&rsquo; solution focused and serve the same customer base as we
do. The average size of our competitors is around $2-5 million overall in annual revenue with a staffing between 5 and 35 employees,
including management, development, support and sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our main competitive advantages are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">a)</TD><TD>Our collection of talent, expertise &amp; knowledge,</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">b)</TD><TD>Our unique position as the market innovator and leader.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">c)</TD><TD>Our long-term relationship with our customers.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">d)</TD><TD>The ability to address all needs of any customer regarding their IBL Lotus environment.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">e)</TD><TD>The capacity of top-end professional resources to serve multiple long-term projects.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">f)</TD><TD>Our global presence and multilingual support offering.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in">g)</TD><TD>The Company&rsquo;s ability to keep pace with IBM&rsquo;s speed in developing new solutions for the Lotus market.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 41.8pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The market competition in which GBS operates
is described as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Essentially the market can seek out other Independent Software Vendors (ISVs) for 'point' solutions such as CRM. The Company&rsquo;s
strength is having the most complete portfolio of applications in the market coupled with the most Lotus Notes Applications experience
in the industry that is devoted to applications.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.65in; text-indent: -0.15in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>As the Lotus market matures, IBM could incorporate new features into the Lotus platform with the consequence of providing some
of the same functions that GBS is providing</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.65in; text-indent: -0.15in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>There are many companies that offer professional Information Technology services including IBM ISSL and many regional players
that contract out their programmers to provide application development services and support. The Company&rsquo;s advantage is the
extensive Lotus specific experience of our Experts who aside from having worked in this market for years are also some of the leading
'thought' leaders in the Lotus market (three of which were just recognized as &quot;IBM Champions&quot; by IBM for their knowledge,
innovation and contribution to the Lotus market.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.65in; text-indent: -0.15in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The competitive landscape in the cloud computing market is intense and changing, and we expect all of the very large, well-financed,
and aggressive competitors, each bringing its own new class of products to address this new market. We also expect to see acquisitions,
further industry consolidation, and new alliances among companies as they seek to serve the cloud computing market.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.65in; text-indent: -0.15in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In terms of the Company&rsquo;s cloud automation platform there are many competitors offering Cloud Management platforms including
VMWare, HP, Novell, Amazon and Salesforce.com.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.65in; text-indent: -0.15in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.15in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>There is no single technology capability like the Transformer tool set on the market. The only alternative for a customer to
convert from Lotus is to manually transform Lotus applications from Lotus into Java XPages. So competition in this market area
is based on &lsquo;brute-force&rsquo; development units provided by large SIs or offshore development vendors. Based on this environment,
the customer sometimes becomes the only competition.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Growth Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS was formed over the past 20 years through
a series of mergers &amp; acquisitions transactions, which developed the Company into the leading provider to IBM&rsquo;s Lotus
market. The Company expects to aggressively pursue acquisition opportunities to increase its suite of products, augment its market
execution ability through highly educated professional service teams and to leverage its leadership in the IBM Collaboration &amp;
Social Software markets. GBS&rsquo;management team has a track record of quickly integrating acquisitions and using additional
products and functionality to drive growth among both new and existing customers. The Company provides a corporate umbrella of
substantial industry experience and financial resources that serve as a solid foundation upon which smaller companies can grow.
Management&rsquo;s roll-up strategy of Lotus Notes &amp; Domino application developers has earned the Company substantial incremental
market share in Europe and the U.S. and the Company&rsquo;s management sees significant potential for similar acquisitive growth
in Asia and other parts of the Americas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS is focused on continuing to grow its
market share organically which will complement and enhance its acquisition strategy. To date, GBS, through its subsidiaries, has
focused its marketing efforts to the North American and European market, the most highly penetrated Lotus Notes market. With approximately
3% of the worldwide Lotus Notes users (based on electronic mailboxes), GROUP&rsquo;s organic growth strategy is to target the growing
markets of Asia, where Lotus Notes has a strong market presence or even dominance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Regulatory Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF PROPERTY </B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Offices</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s principal executive offices are located
at 585 Molly Lane, Woodstock, Georgia 30189.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2011, the Company relocated its executive offices
to a 10,000 square foot space located at 585 Molly Lane, Woodstock, Georgia 30189 pursuant to a lease agreement, dated June 16,
2011, between GBS and Thomas Hall Fowler/Fowler Corporate Partners, a non-affiliate of the Company. The term of the lease is from
August 1, 2011 to January 31, 2015. The rent from August 1, 2011 to August 31, 2011 is $8,333.33. From September 1, 2011 to December
31, 2011, the monthly rent is $4,166.67. From January 1, 2012 to July 21, 2012, the monthly rent is $8,333.33. From August 1, 2012
to July 31, 2013, the monthly rent is $8,750. From August 1, 2013 to January 31, 2015, the monthly rent is $9,166.67.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL PROCEEDINGS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We know of no material, active or pending legal proceedings
against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings
in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has
a material interest adverse to our interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MARKET FOR REGISTRANT&rsquo;S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Market Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> On September 16, 2010, SWAV Enterprises Ltd. changed its
name to GBS Enterprises Incorporated. On October 14, 2010, the trading symbol of the Company&rsquo;s Common Stock on the OTC Bulletin
Board was changed from &ldquo;SWAV&rdquo; to &ldquo;GBSX.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth, for the periods indicated, the
reported high and low closing bid quotations for our Common Stock as reported on the OTCBB. The bid prices reflect inter-dealer
quotations, do not include retail markups, markdowns or commissions and do not necessarily reflect actual transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none; font-weight: bold; border-bottom: Black 1pt solid">Fiscal Quarter &nbsp;</TD>
    <TD STYLE="text-autospace: none; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-autospace: none; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">High</TD>
    <TD STYLE="text-autospace: none; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-autospace: none; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-autospace: none; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Low</TD>
    <TD STYLE="text-autospace: none; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 77%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 2%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 8%; text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 8%; text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold; text-decoration: underline">2010</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">January 4<SUP>th</SUP> - March 31<SUP>st </SUP></TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.01</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.01</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">April 1<SUP>st</SUP> - June 30<SUP>th</SUP> </TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.075</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.01</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">July 1<SUP>st</SUP> - September 30<SUP>th</SUP></TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.10</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.075</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">October 1<SUP>st</SUP> - December 31<SUP>st</SUP></TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">1.70</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">0.075</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold; text-decoration: underline">2011</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">January 3<SUP>rd</SUP> - March 31<SUP>st</SUP> </TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">4.95</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">1.35</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">April 1<SUP>st</SUP> - June 30<SUP>th</SUP></TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">4.55</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">3.55</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">July 1<SUP>st</SUP> - September 30<SUP>th</SUP> </TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">3.55</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">1.90</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">October 1<SUP>st</SUP> - December 31<SUP>st</SUP> </TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">2.45</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">1.45</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold; text-decoration: underline">2012</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-autospace: none">January 1, 2012 - March 31, 2012</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD>
    <TD STYLE="text-autospace: none">$</TD>
    <TD STYLE="text-autospace: none; text-align: right">2.60</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">$</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: right">1.02</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Description of Common Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are authorized to issue 75,000,000 shares
of $0.001 par value Common Stock of which <FONT STYLE="color: black">28,211,664</FONT> shares were issued and outstanding as of
March 30, 2012. Holders of Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of
stockholders. Shares of Common Stock do not carry cumulative voting rights and, therefore, holders of a majority of the outstanding
shares of Common Stock will be able to elect the entire board of directors, and, if they do so, minority stockholders would not
be able to elect any members to the board of directors. Our board of directors has authority, without action by the stockholders,
to issue all or any portion of the authorized but unissued shares of Common Stock, which would reduce the percentage ownership
of the stockholders and which may dilute the book value of the Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Stockholders have no pre-emptive rights
to acquire additional shares of Common Stock. The Common Stock is not subject to redemption and carries no subscription or conversion
rights. In the event of liquidation, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction
of all liabilities. The shares of Common Stock, when issued, will be fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Holders of Common Stock are entitled to
receive dividends as the board of directors may from time to time declare out of funds legally available for the payment of dividends.
We have not paid dividends on Common Stock and do not anticipate that it will pay dividends in the foreseeable future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All shares of the Common Stock now outstanding
are duly authorized, fully paid and non-assessable.&nbsp;&nbsp;The shares of Common Stock issuable upon exercise of the warrants
are duly authorized and upon payment of the exercise price will be fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is currently authorized to
issue up to 25,000,000 &ldquo;blank check&rdquo; shares of Preferred Stock with all designations, rights and privileges as the
Company&rsquo;s Board of Directors may decide, from time to time, without stockholder approval. As of March 30, 2012, there are
no shares of Preferred Stock designated or issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Transfer Agent</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our transfer agent is Action Stock Transfer,
7069 South Highland Drive, Salt Lake City, UT 84121; Phone: 801-274-1088; Fax: 801-274-1099.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Holders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of April 6, 2012, we had 72 record holders of our Common
Stock (not including beneficial owners who hold shares at broker/dealers in &ldquo;street name&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Dividend Policy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">While there are no restrictions that limit our ability to pay
dividends, we have not paid, and do not currently intend to pay cash dividends on our Common Stock in the foreseeable future. Our
policy is to retain all earnings, if any, to provide funds for operation and expansion of our business. The declaration of dividends,
if any, will be subject to the discretion of our Board of Directors, which may consider such factors as our results of operations,
financial condition, capital needs and acquisition strategy, among others.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Securities Authorized for Issuance under Equity Compensation
Plans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>2011 Stock Option Plan</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the &ldquo;Plan&rdquo;), subject to stockholder approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Below is a summary of the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Purpose </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purpose of the Plan is to provide the
directors, officers, employees and consultants who make significant and extraordinary contributions to the long-term growth and
performance of the Company, with equity-based compensation incentives, and to attract and retain the employees and consultants.
The Company believes that increased share ownership by such persons will more closely align stockholder and employee interests
by encouraging a greater focus on the profitability of the Company. There is reserved for issuance under the Plan an aggregate
of five million (5,000,000) shares of the Company&rsquo;s Common Stock. All of such shares shall be issued pursuant to the exercise
of stock options granted under the Plan (&ldquo;Stock Options&rdquo;). Stock Options granted under the Plan may be options intended
to qualify as &quot;incentive stock options&quot; (&ldquo;ISOs&rdquo;) under Section 422 of the Internal Revenue Code of 1986,
as amended (the &quot;Code&quot;), or options not intended to qualify, so-called &ldquo;nonqualified stock options&rdquo; (&ldquo;NQSOs&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Plan Administration</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Plan is administered by our Board of
Directors (the &ldquo;Board&rdquo;) or a committee (the &quot;Committee&quot;) thereof, if appointed by the Board. The Board (or
Committee) will have full and complete authority, in its discretion, but subject to the express provisions of the Plan (a) to approve
the persons to be granted stock options (&ldquo;Optionee&rdquo;); (b) to determine the number of and type of Stock Options to be
granted to an Optionee; (c) to determine the time or times at which Stock Options will be granted; (d) to establish the terms and
conditions upon which Stock Options may be exercised; (d) to remove or adjust any restrictions and conditions upon Stock Options;
(e) to specify, at the time of grant, provisions relating to exercisability of Stock Options and to accelerate or otherwise modify
the exercisability of any Stock Options; and (f) to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of the 2011Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Plan Eligibility</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The group of individuals eligible to receive
Options will consist only of the following (the &ldquo;Eligible Participants&rdquo;):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">a. Directors and Officers
of the Company,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">b. Employees of the
Company and Management Company Employees, and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">c. Consultants of the
Company, except as provided herein,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">and includes a company of which 100% of
the share capital is beneficially owned by one or more individual Eligible Participants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Consultants will only be eligible to receive
Options if they have furnished bona fide services to the Company and such services are not in connection with the offer or sale
of securities in a capital-raising transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Shares Subject to this Plan</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The maximum number of shares of the Common
Stock that may be issued pursuant to Stock Options granted under the Plan is five million (5,000,000) shares of Common Stock, subject
to adjustment for any stock dividends, stock splits, reclassifications and similar changes in the capital structure of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Grants of Stock Options</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board, or if appointed, Committee,
has the discretion to grant Stock Options which qualify as &ldquo;incentive stock options&rdquo; (&ldquo;ISOs&rdquo;) under Section
422 of the <FONT STYLE="color: black">Internal Revenue Code of 1986, as amended (the &ldquo;Code&rdquo;) or </FONT>which do not
qualify, so-called &ldquo;nonqualified stock options&rdquo; (&ldquo;NQSOs&rdquo;). <FONT STYLE="color: black">To qualify as an
ISO under the Code, the Stock Option generally must (among other things) (x) be granted only to employees, (y) have an exercise
price equal to or greater than the Fair Market Value on the date of grant, and (z) terminate if not exercised within ten (10) years
from the date of grant (or five years if granted to an Optionee who, at the time the ISO is granted, directly or indirectly, holds
more than 10% of the total voting power of our Company).&nbsp;&nbsp;Except in certain limited instances (including termination
for cause, death, or disability), if any Optionee ceases to provide services to our Company, the Optionee&rsquo;s rights to exercise
vested ISOs will expire within three months following the date of termination.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the extent that the aggregate Fair Market
Value (determined at the time the option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year (under the Plan and all other Incentive Stock Option Plans of the Company)
exceed $100,000, such Options will be treated as NQSOs and will not qualify as ISOs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the case of an Incentive Stock Option
granted to an Eligible Participant who at the time of the grant of such Incentive Stock Option owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or any parent or subsidiary, such ISO may not be exercised
after the expiration of five (5) years from the date the ISO is granted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No ISOs will be granted under this Plan
more than ten (10) years after the date that the Plan is adopted or approved by the stockholders of the Company, whichever is earlier.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No ISO will be exercisable more than ten
(10) years from the date it is granted; provided, however, that the case of an Eligible Participant who at the time of grant owns
Common Stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any subsidiary,
the ISO Option may not be exercised after the expiration of five (5) years from the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Exercise Price</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to qualify as an ISO, a Stock
Option must have an exercise price equal to no less than the Fair Market Value of the Company&rsquo;s Common Stock as of the date
of grant. <FONT STYLE="color: black">In the case of an ISO granted to a Eligible Participant who at the time of the grant owns
Common Stock representing more than ten (10%) of the voting power of all classes of stock of the Company or any parent or subsidiary
of the Company, the per share exercise price will be no less than 110% of the Fair Market Value per share on the date of grant.
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Plan, the exercise price of an
NQSO granted under the Plan may not be less than:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(a)</TD><TD STYLE="text-align: justify">the Discounted Market Price (as defined by the exchange on which the Common Stock is listed) if
the Common Stock is listed on an established stock exchange at the time of the grant, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(b)</TD><TD STYLE="text-align: justify">85% of the Fair Market Value if the Common Stock is not listed on an established stock exchange,
but is listed or quoted, as the case may be, on the NASDAQ Small Cap Market, the NASD OTC electronic bulletin board or the National
Quotation Bureau pink sheets at the time of the grant of the Option.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If the shares of Common Stock become listed
on another stock exchange, then the exercise price will not be less than the exercise price permitted by such exchange. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Fair Market Value</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Plan, &quot;Fair Market Value&quot;
means, as of any date, the value of Common Stock determined as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2in; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(a)</TD><TD STYLE="text-align: justify">if the Common Stock is listed on an established stock exchange, exchanges, or the NASDAQ National
Market, the closing price per share on the last trading day immediately preceding such date on the principal exchange on which
the Common Stock is traded or as reported by NASDAQ;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-align: justify; text-indent: -40.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(b)</TD><TD STYLE="text-align: justify">if the Common Stock is not then listed on an established exchange or the NASDAQ National Market,
but is quoted on the NASDAQ Small Cap Market, the NASD OTC electronic bulletin board or the National Quotation Bureau pink sheets,
the average of the lowest and the highest prices per share for the Common Stock as quoted by NASDAQ, NASD or the National Quotation
Bureau, as the case may be, for the period of</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.25in">(i)</TD><TD STYLE="text-align: justify">10 trading days immediately preceding such date in case the collective trading volume of the Common
Stock during that 10 day period is greater than 1% of all issued and outstanding shares; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.25in">(ii)</TD><TD>60 trading days immediately preceding such date in case the collective trading volume of the Common Stock during that 60 day
period is greater than 1% of all issued and outstanding shares; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-indent: -0.25in">(iii) &nbsp;360 trading days immediately
preceding such date in case the collective trading volume of the Common Stock during that 360 day period is greater than 1% of
all issued and outstanding shares; or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">(iv) &nbsp;in
the event the collective trading volume in the last 12 months immediately preceding such date is below 1% of all issued and outstanding
shares, but during this period the Company issued new shares in the amount of at least 1% of all issued and outstanding shares
of the Company, the average between the price as determined in section l. (b) (ii) and the price per share issued, or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">(v) &nbsp;in
the event none of the aforementioned conditions l.(b) (i) to (iv) is met for the date in question, then an amount determined in
good faith by the Board of Directors of GBSX, or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in">(c)</TD><TD STYLE="text-align: justify">if there is no such reported market for the Common Stock for the date in question, then an amount
determined in good faith by the Board of Directors of GBSX.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify; text-indent: -0.25in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Option Period</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Stock Option period commences on the
date of grant of the Stock Option and will be exercisable for up to ten (10) years or such shorter period as is determined by the
Board, or Committee (if applicable).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Restrictions on Transfer</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Options granted under the Plans generally
are not transferable other than by will or the laws of descent and distribution, and may be exercised during the optionee's lifetime
only by the optionee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Vesting of Stock Options and Awards</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board (or Committee if appointed to
administer the Plan) has full authority, in its discretion to make each option or award granted subject to a vesting schedule whereby
an employee must remain employed by the Company for a given length of time in order to have the option or award fully vest. Employees
leaving the Company&rsquo;s employment before the option or award in fully vested will forfeit any unvested portion of an option
or award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Termination of Relationship</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No Option may be exercised after the Optionee,
if a Director or Officer, has ceased to be a Director or Officer or, if an Employee or other Eligible Participant, has left the
employ or service of the Company or an affiliate of the Company, except as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(a)</TD><TD STYLE="text-align: justify">To the extent provided in the Optionee&rsquo;s employment agreement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(b)</TD><TD STYLE="text-align: justify">In the case of the death of an Optionee, any vested Option held by him or her at the date of death
will become exercisable by the Optionee&rsquo;s lawful personal representatives, heirs or executors until the earlier of one year
after the date of death of such Optionee and the expiry date of such Option;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(c)</TD><TD STYLE="text-align: justify">Subject to the other provisions of the Plan, including the proviso below, vested Options will expire
ninety (90) days after the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the
Company or an affiliate of the Company, and all unvested Options will immediately terminate without right to exercise same; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(d)</TD><TD STYLE="text-align: justify">In the case of an Optionee being dismissed from employment or service for cause, such Optionee&rsquo;s
Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same, provided that
in no event may the term of the Option exceed 10 years.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Notwithstanding the provisions of subsection
(c), the Board or Committee may provide for the vesting of all or any part of the Optionee&rsquo;s Options that are unvested at
the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the Company or an affiliate,
and may extend the time period for exercise of an Option to a maximum of the original term of the Option, all as the Board or Committee
deems appropriate in the circumstances contemplated by subsection (c).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Consideration</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board or Committee will grant Stock
Options under the Plan in consideration for services rendered. There will be no other consideration received or to be received
by the Company or any of its subsidiaries for the granting or extension of Stock Option under the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Issuer Purchases of Equity Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDITION&nbsp;AND&nbsp;RESULTS&nbsp;OF&nbsp;OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Note Regarding Forward-Looking Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The following discussion and analysis
should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere
in this prospectus. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the &ldquo;Risk
Factors&rdquo;, &ldquo;Cautionary Notice Regarding Forward-Looking Statements&rdquo; and &ldquo;Description of Business&rdquo;
sections and elsewhere in this prospectus and in the Company&rsquo;s 10-K (as amended) for the fiscal year ended March 31<SUP>st</SUP>,
2011 and in the Company&rsquo;s 10-Q (as amended) for the fiscal quarter ended December 31, 2011. We use words such as &ldquo;anticipate,&rdquo;
&ldquo;estimate,&rdquo; &ldquo;plan,&rdquo; &ldquo;project,&rdquo; &ldquo;continuing,&rdquo; &ldquo;ongoing,&rdquo; &ldquo;expect,&rdquo;
&ldquo;believe,&rdquo; &ldquo;intend,&rdquo; &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;could,&rdquo;
&ldquo;predict,&rdquo; and similar expressions to identify forward-looking statements. Although we believe the expectations expressed
in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our
actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences
include, but are not limited to, those discussed in the &ldquo;Risk Factors&rdquo; section of this prospectus. We undertake no
obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other
events occur in the future. Except as required by applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully
review and consider the various disclosures made throughout the entirety of this prospectus, which attempt to advise interested
parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>OVERVIEW</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Enterprises Incorporated, a Nevada
corporation (the Company,&rdquo; GBSX,&rdquo; we,&rdquo; us,&rdquo; our&rdquo; or similar expressions), conducts its primary business
through its 50.1% owned subsidiary, GROUP Business Software AG (GROUP&rdquo;), a German-based public-company whose stock trades
on the Frankfurt Exchange under the stock symbol INW.&nbsp;&nbsp;GROUP&rsquo;s core business is focused on serving IBM&rsquo;s
Lotus Notes and Domino market where it has become IBM&rsquo;s largest provider of software and services business solutions worldwide.&nbsp;&nbsp;GROUP
caters primarily to mid-market and enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning
four continents, representing more than 5,000,000 active users of its products.&nbsp;&nbsp;GROUP&rsquo;s customers include Abbot,
Ernst &amp; Young, Deutsche Bank, Bayer, HBSC, Merck and Toyota.&nbsp;&nbsp;GROUP provides IBM Lotus Notes/Domino Application and
Transformation technology, and related Cloud Computing technology. Headquartered in Eisenach, Germany the Company has offices throughout
Europe and North America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>General Corporate History</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Simultaneously with SWAV&rsquo;s acquisition
of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock for an aggregate purchase price of
$370,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company&rsquo;s Chief Executive Officer,
President and Chairman of the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 6, 2010, SWAV&rsquo;s name
was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company&rsquo;s trading symbol on the OTC Bulletin Board
was changed from SWAV to GBSX.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP, pursuant to Share Purchase Agreements
between the Company and several of GROUP&rsquo;s stockholders, including Mr. Joerg Ott (also the Company&rsquo;s Chairman and Chief
Executive Officer). Pursuant to the Share Purchase Agreements, the Company acquired an aggregate of 7,115,500 shares of common
stock of GROUP in consideration for an aggregate of 3,043,985 shares of the Company&rsquo;s common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>

<P STYLE="margin: 0">&nbsp;</P>
<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 6, 2011, the Company acquired
an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361426 shares of common stock of the Company.
The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect of this transaction is
that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares. The value of this
additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value of $0.506 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP. The Company conducts its primary business through GROUP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP&rsquo;s outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Products and Services</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS has achieved significant growth by
consolidating the fragmented Lotus Software market through the successful merger &amp; acquisitions of companies with complementary
product, technology or services offerings. Based on its organic growth and growth by acquisition GBS has continuously developed
its software and service business to service and support GBS&rsquo;s expanding Lotus customer base.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, GROUP has achieved growth
through acquisition by targeting attractive, yet underperforming companies with complimentary operations and leveraging GROUP&rsquo;s
expertise to successfully turnaround and integrate these targets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Key success factors for this strategy are:
enhanced portfolio, positioning GROUP as the &lsquo;one-stop-shop&rsquo; for Lotus applications and services, expand customer support,
fast code migration, and cloud enablement/XPages conversion of acquired applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Going forward, the Company will focus on
potential acquisition targets in the following areas of software and services: Applications, Professional Services, Hosting/Outsourcing
Services, Administration and IT services, and XPages expertise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Messaging and Business Applications
Software &amp; Solutions</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Messaging and Business Application
Software &amp; Solutions product lines include software and advisory services for email and Instant Messaging (IM) Management,
Security, Compliance, Archiving and Productivity, CRM Applications, Governance, Risk &amp; Compliance (GRC) Management software,
Workflow and Business Process Management software, ePDF Archiving &amp; Document Management and e-Banking solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS develops, sells and installs well known
business process and management software suites based on Lotus Notes / Domino and IBM Portal technology, mainly for major international
companies and medium-sized customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Through GBS&rsquo;s comprehensive messaging
software product lines and associated services, Lotus Notes, Microsoft Exchange or SMTP-based-email customers, as well as Lotus
Sametime customers are able to provide their users with secure, efficient and centrally administered use of e-mail and IM while
maintaining control over their compliance with current legal requirements and corporate guidelines.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Consulting Services</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a leader in the IBM Lotus Notes Software
and Services business GBS provides high-end consulting services to its customers. GBS develops, sells and orchestrates customer-specific
Lotus Domino strategy and consulting services, such as CIO and IT department leader Strategic Advisory Services, Managed Services,
Outsourcing, Administration, Assessments and Implementations, Performance Improvements, Custom Application Development , Governance
and Security, Technical Support, and Training, as well as Email Migration Services. The talented team at GBS Experts has outstanding
skill sets in the areas of system architecture and evaluation, application integration, e-mail and Instant Messaging, administration,
application development, application migration, middleware deployments and licensing, outsourcing and hosting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on GBS&rsquo;s unique concentration
of industry talent and expertise, mainly in the areas inside and around IBM Lotus Notes/Domino, inside and around corporate messaging
(IBM, Microsoft, SMTP) and inside and around IT environmental and application assessment, analysis and reporting, commercial and
governmental customers, as well as SIs and channel partners are able to relay on the industry leading strategic and tactical advisory
services for evaluating, planning, staffing and execution of any customer project. GBS Consulting Services&rsquo; global team of
consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client
projects on time and with reduced risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS&rsquo;s focus on recruiting and retaining
top Lotus expertise, positions our team to offer leading-edge Lotus Notes / Domino subject matter knowledge to our customers. As
a testament to this focus, GBS employs 10 of the top 20 most recognized &lsquo;market experts&rsquo; and thought-leaders in Lotus
development and administration. GBS consultants have an average of over 12 years&rsquo; experience each in Lotus Notes/Domino and
its related products and are routinely asked to present at IBM Lotus events including Lotusphere, an annual conference hosted by
IBM Lotus Software.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a Premier IBM Business Partner - GBS
is one of the few partners that can sell and support licenses for all five IBM software brands: Lotus, WebSphere, Rational, Tivoli,
and DB2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Cloud Computing</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As IT departments face continuous budget
reductions and constant pressure for higher performance and efficiency, CIOs are focusing on modern technologies to support their
need for increased scalability, flexibility and lower costs. GBS has identified this demand as a strategic growth opportunity for
the company and has placed a significant focus on expanding its Cloud Computing and Modernizing/Migrating technology offerings.
The strategic opportunities are served by GBS with two distinct offerings:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.2in">1)</TD><TD>GROUP Live - Cloud Automation Platform / Cloud Platform-as-a-Service (PaaS) software and services. And</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.2in">2)</TD><TD>Transformer - Lotus Notes modernization/migration services and technology accelerators</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-align: justify; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Cloud Computing activities are focused
on cloud automation solutions and therefore the Company has made key acquisitions and R&amp;D investments to create an award winning
Cloud Platform-as-a-Service offering. Under the GROUP Live banner, the GBS PaaS offering has been sold to a variety of enterprise
customers, which use the PaaS software to host internal corporate clouds (Private cloud) and applications as-a-service to their
various internal user groups. GROUP Live has also be sold and implemented by a number of Independent Software Vendors (ISVs), which
are leveraging the platform to deliver their own Software-as-a-Service (SaaS) applications to their respective customer bases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Both of these customer groups enjoy the
comprehensive nature of this platform agnostic PaaS solution and its exceptional change management capabilities enabling resource
flexibility, business agility, scalability and ease-of-use beyond that which is generally available in the market today.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>GBS Lotus Application Modernization
and Migration</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Lotus Application Modernization and
Migration activities are focused on the IBM Lotus / Domino applications market and the offering spans from expert services and
accelerator technologies to modernize, web enable and migrate Lotus applications; and thus ultimately take the Lotus applications
from legacy to the future. The foundation of the Transformer Suite Software offering is GBS&rsquo;s significant R&amp;D investment
in a set of methodologies and key technology accelerators to automate the conversion of traditional Notes based client-server applications,
into the IBM XPages framework which enables Domino applications to be run and accessed via the Lotus client, a web browser or on
a mobile device. The patent-pending software that underpins Transformer was developed by GBS with the assistance and guidance from
IBM Corporation&rsquo;s Software Group to ensure alignment with future releases of the IBM Lotus / Domino and XPages technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">IBM has deemed the Transformer technology
a game changer,&rdquo; and will be employing it to modernize their clients&rsquo; applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The competitive landscape in the enterprise
data center market is intense and changing, and we expect there will be a new class of very large, well-financed, and aggressive
competitors, each bringing its own new class of products to address this new market. We also expect to see acquisitions, further
industry consolidation, and new alliances among companies as they seek to serve the enterprise data center market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is focused on developing a
portfolio of Cloud Computing software technologies and Application Services to address the needs of ISV&rsquo;s, Data Center providers,
as well as commercial and government organizations. GBSX is pursuing an aggressive growth strategy based upon highly targeted mergers
and acquisitions so as to build its portfolio of technologies, applications, and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Results of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Comparison of Consolidated Balance
Sheets at December 31, 2011 and March 31, 2011</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Total Assets increased from $76,865,929
at March 31, 2011 to $86,710,970 at December 31, 2011. Total Assets consists of Total Current Assets and Total Non-Current Assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011, our Total Current
Assets were $10,239,975, compared to $17,875,353 at March 31, 2011. Our cash and cash equivalents decreased from $8,530,864 at
March 31, 2011 to $3,537,517 at December 31, 2011. The decrease was primarily due to the Company&rsquo;s continued expenditures
in development of the Transformer and Cloud Application Platform technologies.&nbsp; Accounts Receivable decreased from $5,698,320
at March 31, 2011 to $4,544,023 at December 31, 2011. This decrease was primarily due to seasonality issues in that billings increase
at the beginning of the calendar year for recurring software maintenance and receivables decline during the year as these maintenance
receivables are collected. Inventories increased from $0 at March 31, 2011 to $264,611 at December 31, 2011 primarily as the result
of the accumulation of work-in-process labor which will be billed to clients when the projects are completed in the fourth quarter
ending March 31, 2012. Prepaid Expenses decreased from $1,423,281 at March 31, 2011 to $1,097,370 at December 31, 2011 and consisted
primarily of the expensing of prepaid items that consisted of office supplies and materials. Other receivables consisted of a receivable
for anticipated compensation for damages, security deposits and tax refund claims. Other receivables decreased from $2,222,887
at March 31, 2011 to $796,454 at December 31, 2011. The decrease was primarily due to the receipt of a cash payment of $1,901,522
from an insurance company for damages compensation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011, our Total Non-Current
Assets were $76,470,995, compared to $58,990,576 at March 31, 2011. Property, plant and equipment increased from $298,497 at March
31, 2011 to $2,133,969 at December 31, 2011 due to the acquisition of IDC whose property, plant and equipment assets consisted
primarily of computer equipment and leasehold improvements used in the datacenter operations of IDC. For additional details, see
Note 5 - Property, Plant and Equipment in the footnotes to the Interim Consolidated Financial Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Financial Assets increased from $837,480
at March 31, 2011 to $2,818,310 at December 31, 2011. The increase resulted from a loan from the Company to GROUP Business Software
AG. This loan would typically be classified as an intercompany loan and would be eliminated in consolidation; however, because
of the application of the 93-day Rule, the intercompany loan will not be eliminated until the fourth quarter ending March 31, 2012
due to the one quarter timing difference between the two companies&rsquo; financial statements as reflected in the consolidated
statements. Investment in related company was $290,973 at March 31, 2011 and decreased slightly to $285,908 at December 31, 2011.
This amount represents an equity investment in BERS, a Bulgarian development company. Non-current Prepaid expenses increased from
$-0- at March 31, 2011 to $725,178 at December 31, 2011 and consisted primarily of the reclassification of prepaid taxes to non-current
prepaid taxes relating to recent acquisitions. Deferred Tax Assets increased from $1,136,135 at March 31, 2010 to $3,385,350 at
December 31, 2011. The increase resulted from net operating loss carry forwards from the tax impact of recent losses relating to
the operations of GROUP Business Software, AG, and the Company. Goodwill increased from $39,688,967 at March 31, 2011 to $49,693,027
at December 31, 2011. The increase was primarily due to the purchase of Pavone, AG, Groupware, Inc., IDC and SD Holdings which
accounted for a total increase to Goodwill of approximately $9.98 million relating to these acquired companies. For additional
details, see Note 6 - Goodwill in the footnotes to the Interim Consolidated Financial Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Software increased from $16,514,894 at
March 31, 2011 to $17,110,114 at December 31, 2011 and the increase consists of capitalized development costs and software, product
rights and licenses acquired in recent acquisitions during the period. For additional details, see Note 7 - Software in the footnotes
to the Interim Consolidated Financial Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other Assets increased from $223,630 at
March 31, 2011 to $319,139 at December 31, 2011 and the increase consisted of additional reinsurance payments relating to an increase
in pension obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Liabilities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Total Liabilities increased from $24,285,794
at March 31, 2011 to $25,641,684 at March 31, 2011. Total Liabilities consists of Total Current Liabilities and Total Non-Current
Liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011, our Total Current
Liabilities were $18,472,945, compared to $16,345,733 at March 31, 2011. Notes Payable increased from $1,440,295 at March 31, 2011
to $1,462,560 at December 31, 2011. The increase is related to notes payable associated with GROUP Business Software, AG warrants
and the notes were paid off in January 2012. Liabilities to Bank decreased from $50,073 at March 31, 2011 to $39,073 at December
31, 2011 and the decrease consisted of payments made to reduce loan balances. The decrease from 2010 to 2011 was primarily due
to a reduction from the bank liabilities. Accounts Payable and Accrued Liabilities increased from $4,996,748 at March 31, 2011
to $5,489,528 at December 31, 2011 and consists of Trade payables, Tax accruals and other accruals. The increase was primarily
due to the acquisition of the four companies previously mentioned which accounts for most of the increase reflected in the corporate
consolidation. Deferred Income increased from $6,208,458 at March 31, 2011 to $7,200,058 at December 31, 2011 and consists mainly
of maintenance income collected in advance for the period after the end of the fiscal year. The increase was primarily due to the
fact that four new acquisitions reflecting additional deferred income are included in the corporate consolidation for the period.
Other Liabilities increased from $2,820,002 at March 31, 2011 to $3,507,192 at December 31, 2011 and the increase consists of the
liabilities assumed relating to the acquisitions of four companies during the period as previously mentioned. Due to related parties
decreased from $830,156 at March 31, 2011 to $475,579 at December 31, 2011 due to cash payments made to reduce the obligation during
the period. For additional details, see Note 8 - Related Party Transactions and Balance in the footnotes to the Interim Consolidated
Financial Statements. Shares payable balance reflects the obligation of the remaining shares owed to SD Holdings resulting from
the acquisition in December 2011. The amount was calculated based on 145,832 shares of the Company at $2.05 per share. For additional
details, see Note 9 - Share Payable in the footnotes to the Interim Consolidated Financial Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011 our Total Non-Current
Liabilities were $7,168,739, compared to $7,940,061 at March 31, 2011. The decrease was primarily due to the reclassification of
a portion of the balances to current liabilities. Non-Current Liabilities to Banks increased from $780,277 at March 31, 2011 to
$3,606,461 at December 31, 2011. The increase consists of a long-term loan obligation to Baden-W&uuml;rttembergische Bank used
for additional software development during the period relating to the Transformer and Cloud technologies. Deferred Tax Liabilities
decreased from $878,450 at March 31, 2011 to $611,849 at December 31, 2011 and consists of the Deferred Tax Liabilities from the
capitalization of software costs and the depreciation of property, plant and equipment assets. Retirement Benefit Obligation increased
from $153,962 at March 31, 2011 to $163,648 at December 31, 2011. The increase consisted of additional obligations for pension
plan benefits earned by the employees during the period. Other Non-Current Liabilities decreased from $6,127,373 at March 31, 2011
to $2,786,781 at December 31, 2011. The decrease was primarily the result of a reclassification of Non-Current Other Liabilities
to current other liabilities. Approximately $2.8 million of Non-Current Other Liabilities relating to the Lotus 911 and Permessa
acquisitions was reclassified to current liabilities during the nine month period ending December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Quarter and Nine Months Ended December
31, 2011 compared to Quarter and Nine Months ended December 31, 2010</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Revenues</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal quarter ended December 31,
2011, our Net Sales increased to $8,229,318 from $5,362,060 for the fiscal quarter ended December 31, 2010. The Company generates
nets sales from Licenses, Maintenance, Services, Third-Party Products and Other. This increase is mainly the result of increases
in Transformer sales activity and the impact of four acquisitions made by the Company during the nine month period ended December
31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the nine months ended December 31,
2011, our Net Sales increased to $21,320,351 from $17,959,639 for the first nine months ended December 31, 2010.&nbsp;&nbsp;The
Revenue with Products decreased from $7,339,748 to $6,980,202 in the first nine months of the fiscal year. That decrease is mainly
driven by a decrease in third party products with a decrease from $4,405,750 to $3,809,661 in the same time frame. As an impact
of the aforementioned acquisitions made by the Company during the nine months ended December 31, 2011 the Service Revenue increased
from $10,619,891 to $14,340,149.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cost of Goods Sold</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal quarter ended December 31,
2011, our Cost of Goods Sold increased to $4,693,603 from $2,718,728 for the fiscal quarter ended December 31, 2010. Cost of Goods
Sold consists of Cost for Services, Cost for Third-Party Products and Cost for Software Licenses. The increase was primarily due
to the increase in costs for Software Licenses based on a higher sales volume and a change in the third party product mix. In addition,
the cost of goods sold is higher because of the increase in salaries and related expenses to fulfill our business objectives in
GROUP Live, our cloud application platform, and our Transformer Business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the nine months ended December 31,
2011, our Cost of Goods Sold increased to $10,843,557 from $8,687,916 for the nine months ended December 31, 2010.&nbsp; The increase
from 2010 to 2011 was on the one hand due to raising the Cost for Software Licenses based on an increase in lower margin third
party products. As a result the COGS for Products increased from $3,770,174 to $3,976,750. On the other hand the Cost of Goods
Sold for Services are higher in 2011 compared to 2010 and increased from $4,917,743 to $6,866,807 because of the increase in salaries
and related expenses to fulfill our business objectives in our GROUP Live, our cloud application platform, and our Transformer
portfolio. As of December 31, 2011, there were 226 people employed by the Company (2010: 122). Approximately 36% (2010: 29%) were
employed in programming activities due to the extensive Lotus software development and licensing business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Operating Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal quarter ended December 31,
2011, our Operating Expenses increased to $6,058,183 from $3,148,526 for the fiscal quarter ended December 31, 2010. Operating
Expenses consist of Selling Expenses, Administrative Expenses and General Expenses. For the fiscal quarter ended December 31, 2011,
our Selling Expenses increased to $4,308,647 from $2,036,168 for the fiscal quarter ended December 31, 2010. Selling Expenses consist
of the cost for the Sales, Marketing and Service units. The increase was due to additional recruiting of sales personnel and additional
selling expenses relating to the four acquisitions previously described. For the fiscal quarter ended December 31, 2011, our Administrative
Expenses increased to $1,589,374 from $715,228 for the fiscal quarter ended December 31, 2010. Administrative Expenses consist
of costs for the management and administration units. The reason for the increase was primarily due to the additional administrative
expenses associated with the four acquisitions made during the nine month period ended December 31, 2011. For the fiscal quarter
ended December 31, 2011, our General Expenses decreased to $160,162 from $397,130 for the fiscal quarter ended December 31, 2010
due to cost cutting efforts made during the period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the nine months ended December 31,
2011, our Operating Expenses increased to $17,985,032 from $11,241,338 for the nine months ended December 31, 2010. For the nine
months ended December 31, 2011, our Selling Expenses increased to $12,277,502 from $7,537,061 for the nine months ended December
31, 2010. Selling Expenses consist of the cost for the Sales, Marketing and Service units. The increase was due to additional recruiting
of sales personnel and additional selling expenses relating to the four acquisitions previously described. $2,389,070 of this increase
is resulting from the aforementioned acquisitions made by the company in the nine months ended December 31, 2011. $2,706,754 of
this increase is resulting from additional sales activities around our CRM portfolio in the North American market. The sale of
the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding OY in 2010 accounted for a decrease of Selling Expenses
in the amount of $805,036 for the same nine months period. For the nine months ended December 31, 2011, our Administrative Expenses
increased to $4,846,513 from $2,724,305 for the nine months ended December 31, 2010. Administrative Expenses consist of costs for
the management and administration units. The reason for the increase was primarily due to the additional administrative expenses
associated with the four acquisitions made during the nine month period ended December 31, 2011 in the amount of $430,144 and an
increase in administrative operations by GBS Enterprises Inc. in the amount of $1,109,219. For the nine months ended December 31,
2011, our General Expenses decreased to $861,017 from $979,973 for the nine months ended December 31, 2010 due to cost cutting
efforts made during the period which exceeded the additional General Expenses due to the aforementioned acquisitions made by the
company in the amount of $108,451. Overall and due to increased business activities and as a result of the support of the dual
listing within GBS group the Auditing and Consulting Costs increased for the nine months ended December 31, 2011 to $925,184 from
$287,524 for the nine months ended December 31, 2010. The overall increase in marketing expenses for the nine months ended December
31, 2011 to $1,385,468 by 90.1% from $728,883 for the nine months ended December 31, 2010 and the increase in overall Travel Expenses
for the nine months ended December 31, 2011 to $987,684 from $661,801 for the nine months ended December 31, 2010 is also directly
a result of additional business activities and the growth of the company as a result of the aforementioned acquisitions. Due to
the increase in personnel to 226 employees from 122 employees Communications Costs increased to $432,934 from $269,206 in the same
nine months period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the nine-month period ended December
31, 2011, Other Income decreased to $ 64,916 from $888,513 for the nine-month period ended December 31, 2010.&nbsp;&nbsp;The reason
for the decrease was primarily due to earnings in the previous year in relation to the selling of the Assets of Gedys IntraWare
GmbH.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated Statements of Operations
also include expenses of $ 2.2 million directly relating to Group Live, the Company&rsquo;s cloud computing technology service,
and expenses of $ 2.1 million directly relating to the Transformer, the Company&rsquo;s Lotus Notes application conversion service,
for the first nine months 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Liquidity &amp; Capital Resources
at December 31, 2011</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011, we had $3,537,517
in cash and cash equivalents, compared to $8,530,864 at March 31, 2011. In March 2011, the Company consummated a private placement
offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.&nbsp;&nbsp;Each
Unit was comprised of&nbsp;one share of Common Stock and one three-year Warrant to purchase one share of Common Stock at an exercise
price of $1.50 per share. The Warrants are only exercisable by the payment of cash. Pursuant to the terms of the Warrants, the
holders of the Warrants are required to exercise their Warrants in the event our Common Stock trades at an average of at least
$3.00 per share for a period of not less than 20 consecutive trading days. Also, throughout the three year exercise period of the
Warrants, the Company has the right to redeem the Warrants for $0.05 per share. The Company has agreed to register the 6,044,000
shares of Common Stock issuable upon the exercise of the Warrants under the Securities Act of 1933, as amended, on a Registration
Statement on Form S-1. The Company has not filed such Registration Statement as of the date of this Form S-1. Upon the full exercise
of the Warrants, the Company would receive gross proceeds of $9,066,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the quarter ended December 31, 2011,
certain Warrant holders exercised their Warrants to purchase an aggregate of 2,020,000 shares of Common Stock for a total purchase
price of $3,030,000. The cost of issuance was $5,030, resulting in net proceeds of $3,024,970.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We intend to use the net proceeds of the
exercises of the Warrants to increase our marketing, advertising and Cloud and Transformer service development teams, acquisitions
and for general corporate working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes that the Company&rsquo;s
cash at December 31, 2011and available credit lines, plus outstanding exercisable warrants, will be sufficient to meet the Company&rsquo;s
working capital requirements for the next 12 month period. Management believes that as a result of the assets purchased to date,
it will generate additional funds and that it will be able to obtain additional capital as required to meet projected operational
requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash Flows</I></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: justify">For&nbsp;the&nbsp;Nine&nbsp;Month&nbsp;Periods&nbsp;Ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: justify">December&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Cash provided by operating activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">53,610</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,530,107</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Net cash provided by (used in) Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(7,201,629</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(4,998,857</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Net cash provided by (used in) Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,154,671</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,233,020</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Net increase (decrease) in cash and cash equivalents during the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(4,993,347</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(235,730</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Cash and cash equivalents, beginning of period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8,530,864</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,744,965</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Cash and cash equivalents, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,537,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,509,235</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash provided by operating activities for
the nine month period ending December 31, 2011 was approximately $54,000, which is about $3.4 million less than the comparative
period ending December 31, 2010. This change is primarily due to the expenditures made by the Company in developing the Transformer
and GROUP Live technologies. The cash used in investing activities during the nine month period ending December 31, 2011was approximately
$7.2 million, compared to cash used in investing activities in the comparative period ending December 31, 2010 of approximately
$5.0million. This increase was primarily due to the investments in the four acquisitions made during the nine month period ending
December 31, 2011 as previously described. Net cash used in financing activities increased from $1,233,020 for the nine month period
ended December 31, 2010 to $2,154,671 for the nine month period ended December 31, 2011. The increase was primarily due to the
exercise of warrants in December 2011 resulting in proceeds of $3,024,970 which was offset by a net decrease in borrowings of $870,299
resulting in net cash provided by financing activities of $2,154,671.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has no significant planned
commitments for capital expenditures and does not anticipate using either internal or external sources of funds for capital expenditure
programs. As a software and services firm, the Company is not capital intensive and historically has had minimal or no planned
capital expenditures. Therefore, the present or expected future impact on the Company&rsquo;s liquidity for capital expenditure
purposes is minimal and not material.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Fiscal Year Ended March 31, 2011
Compared to Fiscal Year Ended March 31, 2010</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Total Assets increased from $73,641,857
at March 31, 2010 to $76,865,929 at March 31, 2011.&nbsp;&nbsp;Total Assets consists of Total Current Assets and Total Non-Current
Assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2011, our Total Current Assets
were $17,875,353, compared to $18,949,425 at March 31, 2010. Our cash and cash equivalents increased from $1,744,965 at March 31,
2010 to $8,530,864 at March 31, 2011.&nbsp;&nbsp;The increase was primarily due to the Company&rsquo;s private placement offering
consummated in March 2011. On March 11, 2011 and March 29, 2011, the Company consummated a private placement offering of an aggregate
of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.&nbsp; Accounts Receivable increased
from $2,821,958 at March 31, 2010 to $5,698,321 at March 31, 2011.&nbsp;&nbsp;This increase was primarily due to the fact of that
two more business units are included in the basis of consolidation.&nbsp;&nbsp;&nbsp;Inventories decreased from $114,172 at March
31, 2010 to $0 at March 31, 2011.&nbsp;&nbsp;Deferred Tax Assets decreased from $12,284 at March 31, 2010 to $0 at March 31, 2011.&nbsp;&nbsp;Prepaid
Expenses decreased from $1,550,634 at March 31, 2010 to $1,423,281 at March 31, 2011 and consisted of a down payment toward a share
of sales in a basic technology of $1,201,779. The decrease from 2010 to 2011 was primarily due to the expenditure of material.&nbsp;&nbsp;Other
receivables consisted of a receivable for anticipated compensation for damage, security deposits, tax refund claims and increased
from $332,812 at March 31, 2010 to $2,222,887 at March 31, 2011.&nbsp;&nbsp;The increase was primarily due to the compensation
for damages of $1,901,522.&nbsp;&nbsp;Assets Held for Sale consist of the outgoing assets associated with the sale of the two subsidiaries,
Gedys IntraWare GmbH and GROUP Business Software Holding OY, and decreased from $12,372,600 at March 31, 2010 to $0 at March 31,
2011.&nbsp;&nbsp;The decrease from 2010 to 2011 was due to the sale of the two companies on February 28, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2011, our Total Non-Current
Assets were $58,990,576, compared to $54,692,432 at March 31, 2010.&nbsp;&nbsp;Our Financial Assets increased from $99,273 at March
31, 2010 to $837,481 at March 31, 2011 and consists of the value of the 50% interest in an associated company and the amount still
outstanding from the purchaser of GEDYS IntraWare GmbH due for monthly repayments. The increase from 2010 to 2011 was primarily
due to the recording of&nbsp;&nbsp;an obligation of $984,239 from the purchaser of GEDYS IntraWare GmbH. Our Deferred Tax Assets
decreased $4,968,740 at March 31, 2010 to $1,136,135 at March 31, 2011 and consisted of Deferred Tax Assets derived from Financial
Assets and Losses carried forward.&nbsp;&nbsp;The decrease from 2010 to 2011 was primarily due to losing the benefit of a tax carry
forward because of change in ownership in GROUP Business Software AG. Goodwill increased from $35,767,273 at March 31, 2010 to
$39,688,966 at March 31, 2011 and consisted of the Goodwill associated with eleven Business Units. The increase from 2010 to 2011
was primarily due to the purchase of Permessa Corp. on September 22, 2010 with Goodwill of $2,387,444.&nbsp;&nbsp;Software increased
from $13,028,818 at March 31, 2010 to $16,514,894 at March 31, 2011 and consist capitalized development cost, product rights and
licenses.&nbsp;&nbsp;The increase from 2010 to 2011 was primarily due to the purchase of assets of two Business Units. Other Assets
increased from $175,900 at March 31, 2010 to $223,630 at March 31, 2011 and consisted of the reinsurance relating to pension obligations.
The increase from 2010 to 2011 was primarily due to rising mortality estimates, based on actuarial assumptions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Liabilities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Total Liabilities increased from $23,815,824
at March 31, 2010 to $24,285,794 at March 31, 2011.&nbsp;&nbsp;Total Liabilities consists of Total Current Liabilities and Total
Non-Current Liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2011, our Total Current Liabilities
were $16,345,732, compared to $13,531,969 at March 31, 2010.&nbsp;&nbsp;Notes Payable increased from $0 at March 31, 2010 to $1,440,295
at March 31, 2011 and consisted of the external capital components of a convertible bond issue. The increase was based on the reclassification
from non-current to current because the term of the convertible bonds ends on December 31, 2011. Liabilities to Bank decreased
from $83,793 at March 31, 2010 to $50,073 at March 31, 2011 and consisted of a line of credit.&nbsp;&nbsp;The decrease from 2010
to 2011 was primarily due to a reduction from the bank liabilities.&nbsp;&nbsp;Accounts Payable and Accrued Liabilities increased
from $3,532,004 at March 31, 2010 to $4,996,748 at March 31, 2011 and consists of Trade payables, Tax accruals and other accruals.&nbsp;&nbsp;The
increase from 2010 to 2011 was primarily due to the fact that two more business units are included in the corporate consolidation.&nbsp;&nbsp;Other
Liabilities increased from $1,982,916 at March 31, 2010 to $2,820,002 at March 31, 2011 and consists of the liabilities from&nbsp;the
Purchase of assets, Tax liabilities, Loans and others.&nbsp;&nbsp;The increase from 2010 to 2011 was primarily due to the Purchase
of Assets from Lotus 911, Fastworks, Permessa and Salesplace.&nbsp;&nbsp;Deferred Income increased from $5,919,527 at March 31,
2010 to $6,208,458 at March 31, 2011 and consists mainly of maintenance income collected in advance for the period after the end
of the fiscal year. The increase from 2010 to 2011 was primarily due to the fact of two more business units are included in the
corporate consolidation.&nbsp;&nbsp;Liabilities Held for Sale decreased from $2,013,729 at March 31, 2010 to $0 at March 31, 2011
and consists of the outgoing assets associated with the sale of the two subsidiaries Gedys IntraWare GmbH and GROUP Business Software
Holding OY.&nbsp;&nbsp;The decrease from 2010 to 2011 was primarily due to sale of the two companies on February 28, 2010.&nbsp;&nbsp;Due
to related parties increased from $0 in 2010 to $830,156 in 2011 as explained in detail in Note 27 to the Consolidated Financial
Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2011, our Total Non-Current
Liabilities were $7,940,062, compared to $10,283,855 at March 31, 2010.&nbsp;&nbsp;Notes Payable decreased from $1,549,490 at
March 31, 2010 to $0 at March 31, 2011.&nbsp;&nbsp;The decrease from 2010 to 2011 was primarily due to the reclassification to
current liabilities.&nbsp;&nbsp;Liabilities to Banks decreased from $3,231,405 at March 31, 2010 to $780,277 at March 31, 2011
and consisted a long-term liabilities vis-&agrave;-vis Baden-W&uuml;rttembergische Bank.&nbsp;&nbsp;The decrease from 2010 to
2011 was primarily due to a positive cash-flow based on the sales of the two subsidiaries Gedys IntraWare GmbH and GROUP Business
Software Holding OY.&nbsp;&nbsp;Deferred Tax Liabilities decreased from $926,357 at March 31, 2010 to $878,450 at March 31, 2011
and consists of the Deferred Tax Liabilities from of capitalization of software expenses and Allocation of Assets from a purchase
price allocation.&nbsp;&nbsp;The decrease from 2010 to 2011 was primarily due to depreciation of Assets.&nbsp;&nbsp;Retirement
Benefit Obligation increased from $150,276 at March 31, 2010 to $153,962 at March 31, 2011, and consisted of retirement benefit
obligations.&nbsp;&nbsp;Other Liabilities increased from $4,426,326 at March 31, 2010 to $6,127,373 at March 31, 2011 and consisted
of&nbsp;liabilities relating to the purchase of business assets.&nbsp;&nbsp;This increase from 2010 to 2011 was primarily due
to the purchase of assets from Lotus 911, Fastworks, Permessa and Salesplace.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Revenues</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal year ended March 31, 2011,
our Net Sales decreased to $27,707,226 from $31,584,732 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;The Company generates
nets sales by Licenses, Maintenance, Services, Third-Party Products and Others.&nbsp;&nbsp; The resulting effect on the product
sales has been overcompensated through additional revenues. Our Product revenue increased from $12,479,629 to $12,848,954. The
decrease of Service revenue from $19,105,103 to $14,848,272 is mainly the result of the disposal of GROUP Business Software Holding
Oy and its subsidiary Gedys IntraWare GmbH. The sale was completed on March 1, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cost of Goods Sold</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal year ended March 31, 2011,
our Cost of Goods Sold increased to $14,082,494 from $11,323,991 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;Cost of Goods
Sold consists of Cost for Services, Cost for Third-Party Products and Cost for Software Licenses.&nbsp;&nbsp;&nbsp;The increase
from 2010 to 2011 was on the one hand due to raising the Cost for Software Licenses based on a higher sales volume. Thereof the
COGS for Products increased from $5,361,372 to $7,016,189. On the other hand the Cost of Goods Sold for Services is higher in 2011
compared to 2010 and increased from $5,962,619 to $7,066,305 because of the increase in salaries and related expenses to fulfill
our business objectives in GROUP Live, our cloud application platform, and our Transformer portfolio. As of March 31, 2011, there
were 158 people employed by the Company (2010: 190). Approximately 33% (2010: 29%) were employed in programming activities due
to the extensive Lotus software development and licensing business transacted by GBS AG.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The cost of goods sold is, in total, approximately
$2,759,000 higher than the previous year without the financial impact of the Gedys subsidiary for 10 months due to its disposal
on March 1, 2010. If we eliminate the Gedys cost of goods sold as reflected in the table below, the difference in our cost of goods
sold between 2009 and 2010 reflects an increase in the amount of $4,926,000. The reason for this increase was the increase relating
to 3rd party Lotus Notes sales volume and the corresponding increase in COGS of $3,704,000, as well as the additional COGS relating
to the Group Live business in an amount of $967,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Operating Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal year ended March 31, 2011,
our Operating Expenses decreased to $15,918,290 from $19,032,719 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;Operating
Expenses consist of Selling Expenses, Administrative Expenses and General Expenses.&nbsp;&nbsp;For the fiscal year ended March
31, 2011, our Selling Expenses decreased to $10,610,545 from $13,847,697 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;Selling
Expenses consist of costs for the Sales, Marketing and Service units.&nbsp;&nbsp;The decrease of $3,2 million in Selling Expenses
and $0.6 million in Administrative Expenses was due primarily to the&nbsp;&nbsp;disposal of GROUP Business Software Holding Oy
and its subsidiary Gedys IntraWare GmbH on March 1, 2010.&nbsp;&nbsp;&nbsp;&nbsp;For the fiscal year ended March 31, 2011, our
Administrative Expenses decreased to $3,853,532 from $4,481,893 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;Administrative
Expenses consist of costs for the management and administration units.&nbsp;&nbsp;The reason for the decrease from 2010 to 2011
was primarily due to the reduction of consultancy, investor relation and travel expenses.&nbsp;&nbsp;For the fiscal year ended
March 31, 2011, our General Expenses increased to $1,454,213 from $703,129 for the fiscal year ended March 31, 2010.&nbsp;&nbsp;General
Expenses were approximately $0.8 million higher than the previous year's amount. These expenses include the&nbsp;legal, accounting&nbsp;and
consulting costs relating to the merger and consolidation of two publicly-traded companies (the Company and GROUP).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Liquidity &amp; Capital Resources
at March 31, 2011</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2011, we had $8,530,864 in
cash and cash equivalents, compared to $1,774,965 at March 31, 2010.&nbsp;&nbsp;On March 11, 2011 and March 29, 2011, the Company
consummated a private placement offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds
of $7,555,000.&nbsp;&nbsp;Each Unit was comprised of&nbsp;one share of Common Stock and one three-year Warrant to purchase one
share of Common Stock at an exercise price of $1.50 per share. The Warrants are only exercisable by the payment of cash.&nbsp;&nbsp;Pursuant
to the terms of the Warrants, the holders of the Warrants are required to exercise their Warrants in the event our Common Stock
trades at an average of at least $3.00 per share for a period of not less than 20 consecutive trading days.&nbsp;&nbsp;Also, throughout
the three year exercise period of the Warrants, the Company has the right to redeem the Warrants for $0.05 per share.&nbsp;&nbsp;The
Company has agreed to register the 6,044,000 shares of Common Stock issuable upon the exercise of the Warrants under the Securities
Act of 1933, as amended, on a Registration Statement on Form S-1. This prospectus is a part of such S-1 Registration Statement.
As of March 31, 2011, none of the Warrants have been exercised or redeemed. Upon the full exercise of the Warrants, the Company
would receive gross proceeds of $9,066,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We intend to use the net proceeds of the
private placement offering of Units to increase our marketing, advertising and Cloud and Transformer service development teams,
acquisitions and for general corporate working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes that the Company&rsquo;s
cash at March 31, 2011 will be sufficient to meet the Company&rsquo;s working capital requirements for the next 12 month period.
Management believes that as a result of the assets purchased to date, it will generate additional funds and that it will be able
to obtain additional capital as required to meet projected operational requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Cash Flows</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Fiscal&nbsp;Year&nbsp;Ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">March&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Cash provided by operating activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,638,109</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,330,788</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Net cash provided by (used in) Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,193,099</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,553,395</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Net cash provided by (used in) Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,484,947</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137,908</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Effect of exchange rate changes on cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(144,058</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,097</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Net increase (decrease) in cash and cash equivalents during the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,785,899</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,007,602</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Cash and cash equivalents, beginning of period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,744,965</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,752,567</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Cash and cash equivalents, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,530,864</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,744,965</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash provided by operating activities was
approximately $2.64 million, which is about $1.69 million below the previous year's amount of $4.33 million. This change is primarily
due to the investments made by the Company in developing the GROUP Live business segment, amounting to $3.2 million in 2011 (2010:
$0.9 million). The cash used in investing activities in 2010 was approximately $6.55 million, compared to cash used in investing
activities in 2011 of about $3.2 million. In addition, the Company received cash proceeds (net of expenses) of $6.7 from a private
placement, as explained above, which accounts for most of the increase in Net cash provided by Financing Activities in 2011 compared
to 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had no significant planned
commitments for capital expenditures and does not anticipate using either internal or external sources of funds for capital expenditure
programs. As a software and services firm, the Company is not capital intensive and historically has had minimal or no planned
capital expenditures. Therefore, the present or expected future impact on the Company&rsquo;s&nbsp;liquidity for capital expenditure
purposes is minimal and not material.&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>CRITICAL ACCOUNTING POLICIES AND ESTIMATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Critical Accounting Policies and Estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.&nbsp;&nbsp;&nbsp;The areas where critical estimates were made that have significant importance
to the financial statements are as follow:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: black">(a)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: black">Allowance for doubtful accounts.&nbsp;&nbsp;The Company provides for
potential bad debts on an account by account basis.&nbsp;&nbsp;Bad debts have not been significant and our allowance has been accurate.&nbsp;&nbsp;Non
trade receivables are also scrutinized and allowed for based on expected recovery.&nbsp;&nbsp;One significant item ($1,902,000)
which was previously written off was re-evaluated and reinstated during fiscal 2011.&nbsp;&nbsp;The amount was subsequently paid.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: black">(b)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: black">Allocation of the price paid when acquiring subsidiaries.&nbsp;&nbsp;When
the Company acquires subsidiary companies an allocation of the purchase is required.&nbsp;&nbsp;The allocation is based on management&rsquo;s
analysis of the value of the net assets, and is based on estimated future cash flows that each component will produce.&nbsp;&nbsp;Such
components might include software, customer lists and other intangible assets that are not readily determinable.&nbsp;&nbsp;The
allocation will have significant impact on the future earnings of the Company as certain assets, customer lists for example, must
be amortized and charged to operations over time, while other assets, notably goodwill, do not.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: black">(c)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: black">Impairment testing on intangibles and goodwill.&nbsp;&nbsp;As noted
in more detail below, these areas involve numerous estimates as to expected cash flows, expected rates of return and other factors
that are difficult to determine and are often out of the Company&rsquo;s direct control.&nbsp;&nbsp;Accordingly, the Company adopts
a conservative approach and has experienced better than projected results.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: black">(d)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: black">Valuation of deferred tax credits.&nbsp;&nbsp;The Company provides an
allowance for tax recoveries arising from the application of losses carried forward.&nbsp;&nbsp;An allowance is provided where
management has determined that it is less than likely that the loss will be applied and income taxes recovered.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Comprehensive Income (Loss)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted FASB Codification topic
(&ldquo;ASC&rdquo;) 220, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements. Comprehensive income consists of net income and other gains and losses affecting
stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale,
foreign currency translation gains and losses and minimum pension liability. Since inception, the Company&rsquo;s other comprehensive
income represents foreign currency translation adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Net Income per Common Share</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">FASB Codification topic (&ldquo;ASC&rdquo;)
260, Earnings per share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the
numerator and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of
common stock outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential
common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase
earnings per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is
not presented where anti-dilutive. Accordingly, although the diluted weighted average number of common stock outstanding is disclosed
on the statements of operation, the calculated net loss per share is the same for bother basic and diluted as both are based on
the basic weighted average of common stock outstanding. There were no adjustments required to net income for the period presented
in the computation of diluted earnings per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Financial Instruments</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments consist of cash and
cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable and accrued liabilities
and other liabilities.&nbsp;&nbsp;As of the financial statement date, the Company does not hold any derivate financial instruments.
Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date.&nbsp;&nbsp;Changes
in fair value are recognized through profit and loss.&nbsp;&nbsp;Unless otherwise noted, it is management&rsquo;s opinion that
the Company is not exposed to significant interest or credit risks arising from these financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Currency Risk</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We use the US dollar as our reporting currency.&nbsp;&nbsp;The
functional currencies of our significant foreign subsidiaries are the local currency, which includes the Euro and the British pound.&nbsp;&nbsp;Accordingly,
some assets and liabilities are incurred in those currencies and we are subject to foreign currency risks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Fair Value Measurements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows FASB Codification topic
(&ldquo;ASC&rdquo;) 820, Fair Value Measurements and Disclosures, for all financial instruments and non-financial instruments accounted
for at fair value on a recurring basis. This new accounting standard establishes a single definition of fair value and a framework
for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has adopted FASB Codification
topic (&ldquo;ASC&rdquo;) 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments
and certain other items at fair value that are not required to be measured at fair value. The Company has not elected the fair
value option for any eligible financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Cash and Cash Equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Inventories</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to ASC 330 (Inventories), inventories
held for sale are recognized under inventories. Inventories were measured at the lower of cost or market. Cost is determined on
a first-in-first out basis, without any overhead component.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Intangible Assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets predominately comprise
goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for payment are
reflected as acquisition costs. If the development costs can be capitalized per ASC 985-20-25, these are reflected as ascribable
personnel and overhead costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Company created software can be intended
for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the expenses are recorded
with their effect on profit in the year in which they were incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GROUP amortizes intangible assets with
a limited useful life to the estimated residual book value in accordance with ASC regulations. In addition, in special circumstances
according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled amortization is considered.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The useful life of acquired software is
between three and five years and three years for Company-designed software.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets obtained as part of an
acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once a year as to their
recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization expense entry
is performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, an impairment test, whereby
the appraised fair value of the invested capital of the reporting segment, (as described in Note 14,) is compared with the carrying
(book) value of its invested capital amount, including goodwill.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If the appraised value of the reporting
unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying amount of the
reporting unit exceeds the appraised fair value, an impairment test based on use value is necessary in order to measure the amount
of impairment loss, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Use value is generally used in order to
determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan prepared by the
management serves as the basis for this policy. The planning assumptions are each adjusted for the current state of knowledge.
Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making these adjustments.
Future estimated cash flows are essentially determined based on the expected growth rates of the markets in question.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Property, Plant and Equipment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property, plant and equipment are valued
at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed assets are depreciated
on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based on useful lives of 3
to 10 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If fixed assets are sold, retired or scrapped,
the profit or loss arising from the difference between the net sales proceeds and the residual book value are included under other
operating earnings and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Impairment or Disposal of Long-Lived
Assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluates the recoverability
of its fixed assets and other assets in accordance with FASB Codification topic, 360.10. This guidance requires recognition of
impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows, it is considered
to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised
values. No impairment has been recognized in the accounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Revenue Recognition</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>License Revenues</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our license revenues consist of revenues earned from the licensing
of our software products. These products are generally licensed on a perpetual basis. Pricing models have generally been based
either upon the physical infrastructure, such as the number of physical desktop computers or servers, on which our software runs
or on a per user basis. License revenues are recognized when the elements of revenue recognition for the licensed software are
complete, generally upon electronic shipment of the software and the software key to provide full access to all functionalities
for our customers. In general our invoices reflect license, service and maintenance components. In the case of multi element contracts,
the revenues allocated to the software license represent the residual amount of the contract after the fair value of the other
elements has been determined. Certain products of our software offering are licensed on a subscription basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Software Maintenance Revenues</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Software maintenance revenues are recognized ratably on a pro-rata
basis over the range of the contract period. Our contract periods typically range from one to five years. Vendor-specific objective
evidence (&ldquo;VSOE&rdquo;) of fair value for software maintenance services is established by the rates charged in stand-alone
sales of software maintenance contracts or the stated renewal rate for software maintenance. Customers who are party to software
maintenance agreements with us are entitled to receive support, product updates and upgrades on a when-and-if-available basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Professional Services Revenues</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Professional services include pre-project consulting, software
design, customization, project management, implementation and training. Professional services are not considered essential to the
functionality of our products, as these services do not alter the product capabilities and may be performed by our customers or
by other vendors. Professional services engagements performed for a fixed fee, for which we are able to make reasonably dependable
estimates of progress toward completion, are recognized on a proportional performance basis based on hours incurred and estimated
hours of completion. Professional services engagements that are on a time and materials basis are recognized based on hours incurred.
Revenues on all other professional services engagements are recognized upon completion. Our professional services may be sold with
software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE) of fair value for professional services
is based upon the standard rates we charge for such services when sold separately.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Foreign Currency Translation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The functional currency of the Company
is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars. Assets and
liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated at the average
exchange rates and stockholders&rsquo; equity was translated at historical exchange rates. Any translation adjustments resulting
are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component
of stockholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Other Provisions</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to FASB ASC 450 Contingencies,
provisions are made whenever there is a current obligation to third parties resulting from a past event which is likely in the
future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already resulting in
an outflow of resources in the following year are recognized at their discounted settlement amount on the financial statement date.
The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases. Provisions
are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount, the provision
is proportionally reversed and the earnings are recognized in other operating earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Deferred Taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income taxes are provided in accordance
with FASB Codification topic 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry forwards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that, some portion or all of the deferred tax asset will
not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of
enactment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Recent Accounting Pronouncements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2010, the FASB issued Accounting
Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic 820, adding new requirements
for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements
and clarification of existing fair value disclosures.&nbsp; ASU 2010-06 is effective for interim and annual periods beginning after
December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a
gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company&rsquo;s fiscal year 2012);
early adoption is permitted.&nbsp; The Company does not expect the adoption of ASU 2010-06 to have a material impact on its results
of operations or financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2010, FASB issued ASU 2010-9
Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements (&quot;ASU 2010-9&quot;). ASU 2010-9
amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through
which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements.
ASU 2010-9 is effective for interim and annual periods ending after June&nbsp;15, 2010. The Company does not expect the adoption
of ASU 2010-09 to have a material impact on its results of operations or financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective July&nbsp;1, 2010, we adopted
the update to the accounting standard regarding derivatives and hedging (Topic 815). This update clarifies how to determine whether
embedded credit derivatives, including those interests held in collateralized debt obligations and synthetic collateralized debt
obligations, should be bifurcated and accounted for separately. The adoption of this standard did not have a significant impact
on our results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2010, the FASB issued Accounting
Standards Update ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805). The update
requires public companies to disclose pro forma information for business combinations that occur in the current reporting period.
The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition
date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. This
guidance is effective for business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December&nbsp;15, 2010, with early adoption permitted. The Company&rsquo;s adoption of FASB
ASU No.&nbsp;2010-29 effective December&nbsp;1, 2010 did not have an impact on the Company&rsquo;s consolidated results of operations
or financial position but did result in additional disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A variety of proposed or otherwise potential
accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the
tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed
standards would be material to the Company&rsquo;s consolidated financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Principles of Consolidation and Reverse
Acquisition</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As previously disclosed, the Company has
exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP. Although
the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form of a reverse merger,
whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure of the Corporation.
Accordingly, the accompanying consolidated financial statements reflect the historical consolidated financial statements of GROUP
for all periods presented, and do not include the historical financial statements of the Company. All costs associated with the
reverse merger transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were included in professional
fees in administrative expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has based its financial reporting
for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40 as it relates to reverse
acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred by the Company,
the acquiree, for financial reporting purposes, over the net amount of the Company&rsquo;s recognized identifiable assets and liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have recorded the acquired assets and
liabilities of GBSX on the acquisition date of January 6, 2011, at their fair value and the operations of GBSX have been included
in the consolidated financial statements since the acquisition date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The assets and liabilities of GROUP, the
acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at their precombination
carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling interest reflects
the non-controlling shareholders&rsquo; proportionate interest in the pre-combination carrying amounts of GROUP&rsquo;s net assets
even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">It should also be noted that the Company
and GROUP have different year-end reporting dates. The Company&rsquo;s fiscal year-end reporting date is March 31 and GROUP&rsquo;s
calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting purposes has been
performed without any adjustments for timing differences between these two reporting dates in accordance Regulation S-X Rule 3A-02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purpose of the acquisition was to allow
GROUP easier access to American financial markets. Goodwill recognized of $8,705 KUSD was recorded upon consolidation and was calculated
as the value of the consideration given less the value of the asset received. The resulting goodwill represents the benefit to
be gained by gaining entry into American financial markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>OFF BALANCE SHEET ARRANGEMENTS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as stockholder&rsquo;s equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development
services with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have had no changes in or disagreements with our accountants
on accounting and financial disclosures.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, Joerg Ott was appointed
to serve as the sole director of the Company and to serve as the Chief Executive Officer of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 30, 2010, the Company retained
the services of Gary MacDonald as the Company&rsquo;s Executive Vice President and Chief Corporate Development Officer. On December
2, 2011, Mr. Ott, in his capacity as the then sole director of the Board of Directors, increased the size of the Board to two
persons and appointed Mr. MacDonald as a member of the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a written consent in lieu of a meeting of the Board
of Directors the Company, as permitted under the Nevada Revised Statutes and the Bylaws of the Company, on March 1, 2012, the Board
unanimously voted to increase the size of the Board from two to seven members and appointed David M. Darsch, John A. Moore, Jr.,
Mohammad Shihadah, Stephen D. Baksa and Woody A Allen (each, a &ldquo;New Director&rdquo; or &ldquo;Independent Director&rdquo;
and collectively, the &ldquo;New Directors&rdquo; or &ldquo;Independent Directors&rdquo;) to fill the five vacancies created thereby
until the next annual meeting of stockholders of the Company or until his respective successor is elected and qualified.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board has determined that each New
Director qualifies as an &ldquo;Independent Director&rdquo; as defined by Section 10A(m)(3)(ii) of the Securities Exchange Act
of 1934, as amended (the &ldquo;Exchange Act&rdquo;) and Rule 5065(a)(2) of the NASDAQ Marketplace Rules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Directors hold office until the next annual
meeting of the stockholders or until their successors have been elected and qualified. Officers of the Company are appointed by
the Board of Directors and hold office until their death, resignation or removal from office. Executive Officers serve at the pleasure
of the Board and may be removed with or without cause at any time, subject to contractual obligations between the executive officer
and the Company, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below sets forth the names, title
and ages of our executive officers and directors. If applicable, the table also sets forth the date when a director commenced serving
on the Company&rsquo;s Board of Directors.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 18%; border-bottom: windowtext 1pt solid; font-weight: bold">Name:</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 51%; border-bottom: windowtext 1pt solid; text-align: center"><B>Position&nbsp;Held&nbsp;with&nbsp;the</B>&nbsp;<BR>
<B>Company:</B></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Age:</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 18%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Director&nbsp;Since</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Joerg Ott</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Chief Executive Officer and Chairman of
        the Board</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Principal Executive Officer)</P></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">47</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 26, 2010</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Markus R. Ernst</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Chief Financial Officer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Principal Financial and Accounting Officer)</P></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">44</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&mdash;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Gary MacDonald</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Executive Vice President and Chief Corporate Development Officer</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">57</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">December 2, 2011</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>David M. Darsch</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Independent Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">55</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 1, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John A. Moore, Jr.</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Independent Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">59</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 1, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Mohammad Shihadah</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Independent Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">59</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 1, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Stephen D. Baksa</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Independent Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">66</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 1, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Woody A. Allen</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Independent Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">64</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 1, 2012</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Business Experience</U></B><I>:</I></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Joerg Ott, Chief Executive Officer and Chairman of the Board
of Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since April 26, 2010, Mr. Ott has been
serving as the Company&rsquo;s Chief Executive Officer and Chairman of the Board. Since April 2002, Joerg has also been serving
as the Chief Executive Officer of GROUP Business Software AG, (a 50.1% subsidiary of the Company). GROUP Business Software AG
has been trading at Frankfurt Stock Exchange since early 2000. From December 2000 to October 2002, Joerg was the Chief Executive
Officer of Senator AG, a software company specializing in machine translation software. From October 1998 to December 2000, Joerg
was the founding General Manager of Global Words GmbH, a technology and services company focusing on multi-lingual telephone based
conference service. In 1997, Joerg founded OUTPUT! GmbH, a German based sales training company. Mr. Ott earned his MBA from University
of Passau, Germany, focusing on Operations Research and Finance. He is also a Harvard Business School alumnus, graduated in 2009.<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Markus R. Ernst, Chief Financial Officer</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal">Markus R. Ernst was appointed
as the Chief Financial Officer (CFO) of the Company on February 24, 2012. Mr. </FONT>Ernst has 20 years of experience in the financial
sector of several industries in public and private companies. He has extensive knowledge in both national and international finance
and mergers and acquisitions. Since July 201, Mr. Ernst has been serving as a professional consultant to the Management Board
of GROUP Business Software AG, a German-based public-company whose stock trades on the Frankfurt Exchange under the stock symbol
&ldquo;INW&rdquo; and which is a 50.1% owned subsidiary of the Company (&ldquo;GROUP&rdquo;). From August 2000 to June 2011, Mr.
Ernst served as the Chief Financial Officer of GROUP. In November 1995, Mr. Ernst worked as a Financial Analyst in corporate management
for Gesellschaft f&uuml;r Zahlungssysteme GmbH (&ldquo;GZS&rdquo;), a privately held banking transaction processing company that
now belongs to First Data Corp. (NYSE: FDC). As a senior executive and Head of Corporate Control for GZS, he was responsible for
corporate planning and control. From October 1994 to October 1995, Mr. Ernst worked as a Head of Financial Operations for Seagram
Germany, a subsidiary of Seagram Company Ltd., Montreal, Canada. From September 1992 to June 1994, Mr. Ernst worked as a Financial
Analyst for IBM in Mainz, Germany and San Jose, California. Mr. Ernst has long time management experience in accounting, budgeting,
board presentations, cash management, claims processing, financing, investments, information systems, regulatory relations and
strategic planning. In October 1994, Mr. Ernst earned a Master&rsquo;s Degree in International Management and Industrial Engineering
at the University of Applied Science located in Mannheim, Germany and at the University of Applied Science in Ludwigshafen, Germany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Gary MacDonald</B>, <B>Executive Vice President and Chief
Corporate Development Officer<BR STYLE="mso-special-character: line-break">
<BR STYLE="mso-special-character: line-break">
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since April 30, 2010, Gary MacDonald has been serving as the
Executive Vice President and Chief Corporate Development Officer of the Company.&nbsp; From September 2005 to February&nbsp;2008,
Gary served as the Chief Operating Officer of GROUP.&nbsp; Since then&nbsp;Mr. MacDonald has been serving as the Chief Corporate
Development Officer of GROUP.&nbsp; From November 2003 to August 2005, Mr. MacDonald served as the Vice President, Corporate Development
and Government Relations Officer at Raydiance, Inc., a privately held research company.&nbsp; From August 1994 to September 2003,
Mr. MacDonald served as the Senior Vice President of Sales and Marketing at Kingston Technology Company, a privately held company
in the computer hardware industry.&nbsp; From October 1991 to August 1994, Mr. MacDonald served as the Vice President and Principal
of Impediment Incorporated, a privately held company in the computer hardware industry.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>David M. Darsch &ndash; Independent Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Darsch has more than 30 years of experience as an entrepreneur
and managing executive of technology companies. With a strong trans-Atlantic and pan-European focus, Dave has active clients in
both the US and Europe. He mentors entrepreneurs and helps them develop business plans that accelerate revenue growth and/or external
infusion of capital. Mr. Darsch has been involved in more than ten transactions involving the purchase, sale, merger, or infusion
of capital into companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In 2005, Mr. Darsch founded the pan-European CEO Collaborative
Forum (CEO-CF) and has been serving as its President since its founding. CEO-CF is an exclusive consortium of high-performing CEO
peer groups from high growth companies across the European Union. It provides expert help, peer group collaboration, and coaching
for CEOs of European-based companies with pan-European, trans-Atlantic, and trans-Asian market strategies. Current membership and
alumni comprises approximately 200 CEOs from over 28 different nationalities and cultures, each sharing the common goal of scaling
their companies to significant stakeholder valuation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In 1979, Mr. Darsch founded and served as CEO of Data Management
Design, Inc. a privately held software development company located in Washington, DC, until a systems integrator acquired the company
in 1996. During his tenure, the company was recognized as one of the Inc. 500 fastest growing US companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dave has a B.S. in international finance from University of
Massachusetts. He has also been a guest lecturer at the MBA level, Dave has provided instruction at many European universities,
including INSEAD University in Fontainebleau, France, London School of Business, England, IESE Business School in Barcelona, Spain,
University of Chicago, USA, and ESADE University in Barcelona, Spain. He has also presented at the Europe&rsquo;s 500 Conference
and taught courses on entrepreneurship for the European Commission, BBVA, and Terra Lycos in Spain.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>John A. Moore, Jr. &ndash; Independent Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Mr. Moore has more than 30 years&rsquo;
experience in private and public company management for information technology firms. Mr. Moore has extensive experience in strategic
planning, corporate compliance, proposal preparation and pricing and SEC reporting. He has a deep knowledge of federal government
contracting and financial management. From April 1997 to June 2003, Mr. Moore served as the Executive Vice President and Chief
Financial Officer of ManTech International Corporation (NASDAQ: MANT) and was directly involved in taking ManTech public in 2002
as well as facilitating a secondary offering.</FONT> ManTech International is engaged in providing innovative technologies and
solutions for mission-critical national security programs for the intelligence community. <FONT STYLE="color: black">Since April
27, 2006, Mr. Moore has been serving as a member of the Board of Directors of Horne International, Inc. (OTCBB: HNIN) and Chairman
of its Board&rsquo;s audit and compensation committees. </FONT>Horne International is an engineering services company engaged in
providing integrated, systems approach based solutions to the energy and environmental sectors to both commercial customers and
to the U.S. federal government.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From April 2005 to September 2011, Mr. Moore served as a member
of the Board of Directors of Paradigm Holdings, Inc. (OTC Pink Sheets: PDHO), a public company engaged in cyber security and information
technology services. From 2006 to 2011, Mr. Moore served as the Chairman of the Board of Directors of MOJO Financial Services,
Inc., a privately held financial services company. From 2005 to 2007, Mr. Moore served as a member of the Board of Directors of
Global Secure Corporation, a privately held information technology services company. From 1994 to 2003, Mr. Moore served on the
Board of Directors of ManTech International Corporation. From 1997 to 2003, Mr. Moore served on the Board of Directors of GSE Systems
Inc. (AMEX: GVP), a public company engaged in simulation technology services. From 2003 to 2009 Mr. Moore served as a member of
the Board of Visitors for the University of Maryland&rsquo;s Smith School of Business. Mr. Moore earned an MBA from the University
of Maryland in 1979 and a B.S. Degree in accounting from LaSalle University located in Philadelphia, PA in 1974.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Mohammad Shihadah &mdash; Independent Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Mr. Shihadah has extensive experience
in technology companies incubation, establishing the vision, planning, managing the execution of the business plans, meeting the
growth goals and objective, creating value for shareholders and employees, and achieving a successful exit.</FONT> Mr. Shihadah
has 20 years of experience in the field of software design and development, project/program management, and technical consulting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In 1990, Mr. Shihadah founded Applications Technology, Inc.
(AppTek). AppTek, headquartered in McLean, Virginia, is a U.S. company specializing in software development for human language
technology (HLT). In <FONT STYLE="color: black">November 2011, AppTex acquired </FONT>Science Applications International Corporation.
<FONT STYLE="color: black">Since February 2002, Mr. Shihadah has been serving as a member of the Board of Directors of Ignite Media
Solutions, a privately held company engaged in providing </FONT>pay-per-performance based integrated multi-channel solutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Mr. Shihadah serves as a member of
the Board of Directors of Net2Voice, Inc., a privately held company engaged in the development of </FONT>multilingual voice-enabled
solutions for the Internet and telephone. <FONT STYLE="color: black">Mr. Shihadah is also an observer on the Board of Directors
of Pixelligent, a privately held entity engaged in nanotechnology.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Shihadah is currently the Managing Director of Bridge Holdings,
an investment fund directed for technology startup companies. Mr. Shihadah earned a Master&rsquo;s degree in 1991 from the University
of Oregon in Computer Information Science, and a holds a B.S. Degree in Mathematics from Portland State University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Stephen D. Baksa &mdash; Independent Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Since November 1, 2011, Mr. Baksa</FONT>
has been serving as a director of Single Touch Systems, Inc. (OTCBB: SITO), a public company engaged in providing innovative mobile
media solutions to retailers, advertisers and brands. Mr. Baksa was a General Partner at the Vertical Group from 1989 through 2010,
a private equity and venture capital firm focused on the fields of medical technology and biotechnology. He is currently employed
at the Vertical Group as an advisor/consultant. For more than 30 years, The Vertical Group has been an early stage investor and
major shareholder of some of the medical technology industry&rsquo;s most successful companies. Before Mr. Baksa joined The Vertical
Group, he was co-founder of Paddington Partners, a firm engaged in special situation investing focused on public health care equities.
Mr. Baksa holds an M.B.A. from The Rutgers School of Business (1969) and a B.A. in Economics from Gettysburg College (1967).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Woody A. Allen &ndash; Independent Director</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Allen<B> </B>is a business strategist, coach and mentor
to companies in the United States and Europe. He has more than 35 years&rsquo; experience as a C-level executive, including roles
as President, Executive Vice President, Chief Financial Officer and Chairman of the Board for publicly traded companies. He has
extensive boardroom experience, having served on the Boards of Directors of numerous companies in a wide variety of businesses,
ranging from radio broadcasting to semiconductor equipment manufacturing. In1992, Mr. Allen founded Allen Management Services,
a privately held company which offers financial guidance, and leadership and executive training, to mid and high level executives
of small to medium sized businesses, and has been serving as its President since its founding. Since 2001, Mr. Allen has been serving
as the Chief Financial Officer for BIA-Financial Network, a privately held company which offers research and consulting services
to local media. From February 2000 to October 2003, Mr. Allen served as the Chairman of the Board of Directors of Precision Auto
Care, Inc. (OTC Pink Sheets: PACI), a global franchisor of auto care centers. Since 1998 and through the present, Mr. Allen has
been serving as a member of the Board of Directors of Precision Auto Care and the Chairman of its audit committee. Since 2005,
Mr. Allen has been serving as a Board member for CEO-CF, a privately held European-based company specializing in facilitating collaboration
amongst entrepreneurial CEO&rsquo;s. Mr. Allen was also the Executive Vice President and Chief Financial Officer for EZ Communications
(EZCIA) from 1973 through 1992, and served on the Company&rsquo;s Board and was Chairman of its Audit Committee from 1979 through
1996, when the Company was sold. He is a certified Master Somatic Coach with Strozzi Institute, a California-based educational
organization, and has been published in an anthology entitled, &ldquo;Being Human at Work.&rdquo; Since 2008, Mr. Allen has also
been a colleague with Synthesis-LLC, a New York based training and development organization that mobilizes leadership teams to
create increased productivity, satisfaction and value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Family Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There are no family relationships between or among any of our
current directors, executive officers or persons nominated or charged by the Company to become directors or executive officers.
There are no family relationships among our officers and directors and the officers and directors of our direct and indirect subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Involvement in Certain Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None of the directors or executive officers has, during the
past ten years:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(a)</TD><TD>Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(b)</TD><TD>Been convicted in a criminal proceeding or subject to a pending criminal proceeding;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(c)</TD><TD>Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business,
securities, futures, commodities or banking activities; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(d)</TD><TD>Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Code of Ethics </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not yet adopted a Code of Ethics
due to our limited size but we intend to do so in the near future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Governance</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Board Committees<I>:</I></U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Audit Committee</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 1, 2012, the
Board established a standing Audit Committee comprised of two of the New Directors, John A. Moore, Jr. and Woody Allen, and Gary
MacDonald; and Mr. Moore was appointed the Chairman of the Audit Committee. Messrs. Moore and Allen each qualify as an &ldquo;Independent
Director&rdquo; as defined by Section 10A(m)(3)(ii) of the Exchange Act or Rule 5605(a)(2) of the NASDAQ Marketplace Rules. Mr.
MacDonald also serves as the Executive Vice President and Chief Development Officer of the Company and its 50.1% subsidiary, GROUP
Software AG, a German publicly-traded company, and therefore, does not qualify as an &ldquo;Independent Director.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Audit Committee
assists the Board in fulfilling its responsibility to oversee the conduct and integrity of the Company&rsquo;s financial reports,
internal controls and compliance with legal and regulatory requirements, with ultimate authority to: (i) select, appoint, dismiss,
oversee the compensation of and oversee the Company&rsquo;s independent auditors; (ii) preapprove all auditing and non-auditing
services to be provided by the independent auditors (other than nonauditing services that are de minimis); (iii) oversee the independence
and qualification of the Company&rsquo;s independent auditors; (iv) oversee the performance of the Company&rsquo;s internal audit
and surveillance functions; and (v) prepare any reports of the Committee that are required by the rules of the Securities and Exchange
Commission to be included in the Company&rsquo;s annual proxy statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Designation of &ldquo;Audit
Committee Financial Expert&rdquo;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 1, 2012, Mr.
Moore was unanimously designated by the Board as the &ldquo;audit committee financial expert&rdquo; as that term is defined under
Item 407(d)(5)(ii) of Regulation S-K based on Mr. Moore&rsquo;s business experience as reflected above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Compensation Committee</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 1, 2012, the
Board established a standing Compensation Committee comprised of the Independent Directors. On March 1, 2012, Mr. Allen was appointed
as the Chairman of the Compensation Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Compensation Committee
assists the Board in establishing and overseeing the Company&rsquo;s compensation philosophy, policies and practices, including
but not limited to those related to incentive compensation and equity-based plans, retention severance and retirement programs,
and any other employee benefit plans or programs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Corporate Governance,
Regulatory and Nominating Committee:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 1, 2012, the
Board established a standing Corporate Governance, Regulatory and Nominating Committee comprised of the Independent Directors.
On March 1, 2012, Mr. Allen was appointed as the Chairman of the Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purpose of the
<FONT STYLE="color: black">Corporate Governance, Regulatory and Nominating </FONT>Committee is to develop and recommend to the
Board the governance processes and principles applicable to the Company; oversee the periodic evaluation of the Board and committees;
and, generally, have a leadership role in shaping the Company&rsquo;s corporate governance policies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">The following table
sets forth all plan and non-plan compensation&nbsp;&nbsp;for the last two completed fiscal years paid to all individuals who served
as the Company&rsquo;s principal executive officer or acting in similar capacity during the last completed fiscal year (&ldquo;PEO&rdquo;),
regardless of compensation level,&nbsp;&nbsp;and other individuals as required by Item 402(m)(2) of Regulation S-K. We refer to
all of these individuals collectively as our &ldquo;named executive officers.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="37" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt">SUMMARY&nbsp;COMPENSATION&nbsp;TABLE</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Name&nbsp;and
    <BR>Principal <BR>Position</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Fiscal
    <BR>Year <BR>Ended <BR>March <BR>31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Salary
    <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Bonus
    <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Stock
    <BR>Awards <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Option
    <BR>Awards <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Non-Equity
    <BR>Incentive&nbsp;Plan <BR>Compensation <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Nonqualified
    <BR>Deferred <BR>Compensation <BR>Earnings <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">All&nbsp;Other
    <BR>Compensation <BR>($)(4)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Total
    <BR>($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 7pt">Joerg
                                 Ott</FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 7pt"><I>&mdash;Chief
                                                                                                                  Executive Officer
                                                                                                                  and Chairman
                                                                                                                  (PEO) </I></FONT></P></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 13%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">2011</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">120,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 7pt">120,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Significant Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other than our executive officers, GBSX did not have any significant
employees at March 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Outstanding Equity Awards at Fiscal
Year-End</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2011, we had not adopted
any equity compensation plan and no stock, options, or other equity securities were awarded to our principal executive officer
or two other most highly compensated executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>2011 Stock Option Plan</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the &ldquo;Plan&rdquo;), subject to stockholder approval.
As of the date of this prospectus, the Company stockholders have not approved of the Plan nor has the Company granted any awards
under the Plan. A summary of the Plan is contained in this prospectus in the section entitled, &ldquo;Market For Registrant&rsquo;s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements, Termination of Employment and Change-in-Control
Arrangements with our Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Markus R. Ernst</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">Mr. Ernst has
agreed to serve as the Chief Financial Officer of the Company pursuant to a Consultant Services Agreement, dated February 24, 2012
(the &ldquo;Agreement&rdquo;), between the Company and </FONT>Green Minds Venture GmbH<FONT STYLE="color: black">, a German corporation
wholly-owned by Mr. Ernst (the &ldquo;Vendor&rdquo;), for the initial term commencing on February 24, 2012 and terminating on March
31, 2012 (the &ldquo;Term&rdquo;), unless </FONT>terminated earlier be Mr. Ernst and/or the Company pursuant to the terms of the
Agreement. Pursuant to the Agreement, after the Term, Mr. Ernst will continue serving as the Company&rsquo;s CFO on a six-month
to six-month basis until either party provides the other party written notice at least thirty (30) days prior to expiration of
the applicable term.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In consideration of the services to be rendered
during the Term, the Company has agreed to pay the Vendor a base monthly fee (&ldquo;Base Payment&rdquo;) of $11,450 plus any taxes,
such as a valued added tax (&ldquo;VAT&rdquo;), which shall be adjusted from time to time as determined by the Company or the Board
based upon the Company's performance as well as the Vendor meeting certain performance objectives. During the term, Vendor will
be eligible to earn bonuses as determined by the Board based upon Vendor&rsquo;s and the Company&rsquo;s performance as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">(i) $20,000 plus any taxes
such as VAT, if the Company&rsquo;s stock is trading above $5.00 for a consecutive 3-month period prior to the end of the Company&rsquo;s
fiscal year ending March 31, 2012 and/or 2013;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">(ii) $30,000 plus any taxes
such as VAT, if the Company&rsquo;s stock is trading above $7.50 for a consecutive 3-month period prior to the end of Company&rsquo;s
fiscal year ending March 31, 2013 and/or 2014;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">(iii) $25,000 plus any taxes
such as VAT, if the Company is trading on the American Stock Exchange (AMEX) for a consecutive 3-month period, and $50,000 plus
any taxes such as VAT, if the Company&rsquo;s stock is trading on the NYSE or NASDAQ for a consecutive 3-month peirod;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.85pt; text-indent: 30.6pt">(iv) An annual cash payment
equal to 7% of the Company&rsquo;s fiscal year operating income (before taxes and bonuses) up to a maximum amount of $250,000 plus
any taxes such as VAT per each fiscal year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">The Company has also agreed to grant the
Vendor stock options to acquire 200,000 shares of the Company&rsquo;s common stock subject to the terms and conditions of the Company&rsquo;s
2011 ESOP. The options have not been granted as of the filing of this Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">The Company shall pay or reimburse Vendor
for all reasonable business expenses including, without limitation, cell phones, personal digital assistants (PDA) devices, business
travel expenses, reasonably incurred or paid by Vendor in the performance of his responsibilities in accordance with the Company's
prevailing policy and practice relating to reimbursements as modified from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">The Vendor may terminate the Agreement
upon six months&rsquo; prior written notice or by payment to the Company of an amount equal to the Base Salary in lieu of such
notice under the Agreement at any time for any reason. In the event of a termination of the Agreement by the Vendor, he shall be
entitled to the Accrued Payments (as defined in the Agreement)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 30.6pt">The Company may terminate the Agreement
with or without &ldquo;Cause&rdquo; (as defined in the Agreement) at any time upon prior written notice to Vendor. In the event
of a termination of the Agreement for Cause, Vendor shall be entitled only to the Accrued Payments. In the event the Company terminated
the Agreement without Cause or if the Vendor terminates the Agreement with &ldquo;Good Reason&rdquo; (as defined in the Agreement),
the Company has agreed to pay the Vendor all Accrued Expenses as well as a Compensation Package (as defined in the Agreement).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compensation of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the fiscal year ended March 31, 2011, we did not pay
any compensation or grant any stock options to our directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>General</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to letter agreements (referenced below) between the
Company and each New Director, the Company has agreed to pay each New Director an annual retainer of $10,000 payable on a quarterly
basis on the 15<SUP>th</SUP> day of each April, July, October and January of each year. The Chairman of the Audit Committee is
also to receive an annual retainer of $8,000, payable on a quarterly basis. The Chairmen of the Compensation Committee and the
Corporate Governance, Regulatory and Nominating Committee are each to receive an annual retainer of $1,000, payable on a quarterly
basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has agreed to pay each Independent Director $2,000
for each Board meeting (based on four meetings per year). The Company has agreed to pay each Independent Director serving on the
Audit Committee a fee of $2,000 for each Audit Committee meeting (based on four meetings per year). The Company has agreed to pay
each Independent Director serving on the Compensation Committee and/or the Corporate Governance, Regulatory and Nominating Committee
a fee of $2,000 for each meeting of the respective committee (based on one meeting per year).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>David M. Darsch </U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company agreed to pay Mr. Darsch an annual retainer fee of $10,000 in consideration for serving as an Independent Director
of the Board. The Company also agreed to issue Mr. Darsch stock options to purchase 25,000 shares of common stock of the Company
from the date of grant until the third anniversary from the date of grant for an exercise price equal to the Fair Market Value
(as that term is defined in the Company&rsquo;s 2011 Stock Option Plan) of the common stock on the date of grant. The Board adopted
the 2011 Stock Option Plan (the &ldquo;Plan&rdquo;) on March 30, 2011, subject to stockholder approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>John A. Moore, Jr</U>. </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Moore an annual retainer fee of $18,000 in consideration for serving as an Independent Director
of the Board and Chairman of the Audit Committee. The Company also agreed to issue stock options to Mr. Moore to purchase 25,000
shares of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise
price equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Mohammad Shihadah </U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Shihadah an annual retainer fee of $10,000 in consideration for serving as an Independent Director
of the Board. The Company also agreed to issue Mr. Shihadah stock options to purchase 25,000 shares of common stock of the Company
from the date of grant until the third anniversary from the date of grant for an exercise price equal to the Fair Market Value
(as that term is defined in the Plan) of the common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Stephen D. Baksa</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a letter agreement, dated February 24, 2012, as
amended, the Company has agreed to pay Mr. Baksa an annual retainer fee of $10,000 in consideration for serving as an Independent
Director of the Board.<FONT STYLE="color: black"> </FONT>The Company also agreed to issue Mr. Baksa stock options to purchase 25,000
shares of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise
price equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Woody A. Allen</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Allen an annual retainer fee of $12,000 in consideration for serving as an Independent Director
of the Board and as the Chairman of the Board&rsquo;s Compensation Committee and <FONT STYLE="color: black">Corporate Governance,
Regulatory and Nominating Committee. </FONT>The Company also agreed to issue Mr. Allen stock options to purchase 25,000 shares
of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise price
equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>STOCKHOLDER MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Securities Authorized for Issuance under Equity Compensation
Plan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the &ldquo;Plan&rdquo;), subject to stockholder approved,
and reserved for issuance an aggregate of 5,000,000 shares of Common Stock to be issued pursuant to awards granted under the Plan.
As of the date of this prospectus, the Company&rsquo;s stockholders have not approved on the Plan nor has the Company granted any
awards under the Plan. A summary of the Plan is contained in this prospectus in the section entitled, &ldquo;Market For Registrant&rsquo;s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Security Ownership of Certain Beneficial
Owners and Management</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">The following table sets forth certain
information regarding our Common Stock beneficially owned as of March 30, 2012, for (i) each stockholder known to be the beneficial
owner of 5% or more of our outstanding Common Stock, (ii) each executive officer and director, and (iii) all executive officers
and directors as a group. In general, a person is deemed to be a &ldquo;beneficial owner&rdquo; of a security if that person has
or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial
ownership within 60 days.&nbsp;&nbsp;Shares of Common Stock subject to options, warrants or convertible securities exercisable
or convertible within 60 days are deemed outstanding for computing the percentage of the person or entity holding such options,
warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. Percentages
are determined based on </FONT>28,211,664 shares of Common Stock of the Company issued and <FONT STYLE="color: black">outstanding
as of March 30, 2012. To the best of our knowledge, subject to community and marital property laws, all persons named have sole
voting and investment power with respect to such shares, except as otherwise noted.</FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name&nbsp;and&nbsp;Address&nbsp;of&nbsp;Beneficial&nbsp;Owner&nbsp;(1)</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: top">Number&nbsp;of&nbsp;Shares <BR>of&nbsp;Common&nbsp;Stock&nbsp;(2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left; vertical-align: top">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: top">%&nbsp;of&nbsp;Class&nbsp;of&nbsp;Stock<BR>Outstanding&nbsp;(3)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; font-style: italic; text-align: left">Executive Officers and Directors:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 62%; text-align: left">Joerg Ott <BR> <I>&mdash;Chairman and Chief Executive Officer (Principal Executive Officer)</I></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="width: 16%; text-align: right; vertical-align: top">1,850,000</TD><TD STYLE="width: 1%; text-align: left; vertical-align: top">(4)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="width: 16%; text-align: right; vertical-align: top">6.56</TD><TD STYLE="width: 1%; text-align: left; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Markus R. Ernst</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Chief Financial Officer (Principal Financial and Accounting Officer)</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&mdash;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Gary MacDonald</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Executive VP, Chief Development Officer and Director</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">100,000</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">*</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">David M. Darsch</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Director</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">-</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">John A. Moore, Jr.</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Director</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">-</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mohammad Shihadah</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Director</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">-</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Stephen D. Baksa</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Director</I></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">2 Woods Lane</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chatham, New Jersey 07928</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">2,435,000 (5)</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">8.41</TD><TD STYLE="text-align: left; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Woody A. Allen</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&mdash;Director</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&mdash;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic; text-align: left">All Officers and Directors as a group (8 persons)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">4,285,000 (4), (5)</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">14.80</TD><TD STYLE="text-align: left; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; font-style: italic">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; font-style: italic">5% Stockholders:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Edward M. Giles <BR>17 Heights Road <BR>Plandome, New York 11030</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">2,320,000 (6)</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">8.07</TD><TD STYLE="text-align: left; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">LVM Landwirstchaftlicher Versicherungsverei <BR>Vorstand Herr Herwig Kolde Ring 21 <BR>Muenster, Germany 4826</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">1,495,000</TD><TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">5.30</TD><TD STYLE="text-align: left; vertical-align: top">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* Less than 1%&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in">(1)</TD><TD>Unless otherwise indicated, the address of the named beneficial owner is c/o GBS Enterprises Incorporated, 585 Molly Lane,
Woodstock, GA 30189.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in">(2)</TD><TD>Security ownership information for named beneficial owners (other than executive officers and directors of the Company) is
taken from statements filed with the Securities and Exchange Commission pursuant to information made known by the Company and from
the Company&rsquo;s transfer agent.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in">(3)</TD><TD>Based on 28,211,664 shares of Common Stock outstanding as of March 30, 2012.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.9in; text-indent: -0.9in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in"><FONT STYLE="color: black">(4)</FONT></TD><TD>Consists of (i) 300,000 shares of Common Stock held directly by Mr. Ott and (ii) 1,550,000 shares of Common Stock held indirectly
by Mr. Ott through vbv Vitamin-B Venture GmbH, an entity of which Mr. Ott is the Managing Member.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in"><FONT STYLE="color: black">(5)</FONT></TD><TD>Consists of (i) 1,685,000 shares of Common Stock held directly, (ii) 300,000 shares of Common Stock indirectly held as co-trustee
of two trusts for his adult children, (iii) 450,000 shares of Common Stock issuable upon the exercise of 450,000 Investor Warrants.
Mr. Baksa disclaims beneficial ownership of the 300,000 shares of Common Stock held by the two-trusts for his adult children.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.9in"><FONT STYLE="color: black">(6)</FONT></TD><TD>Consists of: (i) 1,130,000 shares of Common Stock held directly by Edward M. Giles, (ii) 560,000 shares of Common Stock held
by Isles Capital, L.P., a limited partnership over which Mr. Giles exercises investment discretion, (iii) 80,000 shares of Common
Stock held by Edward M. Giles 2010 Roth IRA, (iv) 80,000 shares of Common Stock issuable upon the exercise of 80,000 Private Placement
Warrants held by Edward M. Giles 2010 Roth IRA, (v) 190,000 shares of Common Stock issuable upon the exercise of 190,000 Investor
Warrants and (vi) 280,000 shares of Common Stock issuable upon the exercise of 280,000 Investor Warrants held by Isles Capital,
L.P.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2011, the Company consummated
a private placement offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.
Each Unit was comprised of one share of Common Stock and one three-year Warrant to purchase one share of Common Stock at an exercise
price of $1.50 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the Offering, Stephen D. Baksa, member
of the Board of Directors of the Company, purchased an aggregate of 700,000 Units for total purchase price of $875,000. On November
29, 2011, Mr. Baksa exercised the 700,000 Warrants included in the Units for an aggregate exercise price of $1,050.000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2012, the Company sold an aggregate
of 2,020,000 Investor Warrants to five &ldquo;accredited investors,&rdquo; one of whom is Stephen D. Baksa, a member of the Board
of Directors. Mr. Baksa purchased 700,000 Investor Warrants for an aggregate of $10 on March 26, 2012. On March 26, 2012, Mr. Baksa
exercised 250,000 Investor Warrants to purchase 250,000 shares of Common Stock for an aggregate exercise price of $125,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The validity of the shares of our Common
Stock offered hereby has been passed upon for us by The Sourlis Law Firm located at The Courts of Red Bank, 130 Maple Avenue, Suite
9B2, Red Bank, New Jersey 07701.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Sourlis Law Firm located at The Courts
of Red Bank, 130 Maple Avenue, Suite 9B2, Red Bank, New Jersey 07701, assisted the Company in the preparation and filing of the
Registration Statement on Form S-1, of which this prospectus forms a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audited financial statements as of
and for the years ended March 31, 2011 and 2010&nbsp;have been included in this prospectus in reliance upon the report of K.R Margetson
Ltd., Chartered Accountant, located at 331 East 5<SUP>th</SUP> Street, North Vancouver, BC V7L 1M1, Canada,&nbsp;&nbsp;and their
authority as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have filed with the United States Securities
and Exchange Commission, 100 F. Street, N.E., Washington, D.C. 20549, a registration statement on Form S-1 under the Securities
Act for the Common Stock offered by this prospectus. We have not included in this prospectus all the information contained in the
registration statement and you should refer to the registration statement and its exhibits for further information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The registration statement and other information
may be read and copied at the SEC&rsquo;s Public Reference Room at 100 F. Street N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site (<I>
http://www.sec.gov</I> ) that contains the registration statements, reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC such as us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">You may also read and copy any reports,
statements or other information that we have filed with the SEC at the addresses indicated above and you may also access them electronically
at the web site set forth above. These SEC filings are also available to the public from commercial document retrieval services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Disclosure of Commission Position on
Indemnification of Securities Act Liabilities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s articles of incorporation
provides that to the fullest extent allowed by law, the directors and executive officers of the Company shall be entitled to indemnification
from the Company for acts or omissions taking place in connection with their activities in such capacities. The effect of this
provision of our articles of incorporation, is to eliminate our rights and the rights of our stockholders (through stockholders&rsquo;
derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of
care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain
situations defined by statute. We believe that the indemnification provisions in our articles of incorporation, are necessary to
attract and retain qualified persons as directors and officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS</B></FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 88%; text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 2%; text-autospace: none; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Page</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>No.:</B></P></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold">Unaudited Interim Consolidated Financial Statements for Fiscal Quarter Ended December 31, 2011</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated Balance Sheets &mdash; December 31, 2011 and March 31, 2011</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-1</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated Statements of Operations For the Three and Nine Month Periods Ended December 31, 2011 and 2010</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-3</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated statements of Cash Flows For the Nine Month Periods Ended December 31, 2011 and 2010</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-4</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">Notes</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-5</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none; font-weight: bold">Audited Consolidated Financial Statements for Fiscal Year Ended March 31, 2011</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-17</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated Balance Sheets - March 31, 2011 and 2010</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-18</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated Statements of Operations For the years ended March 31, 2011 and 2010</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-20</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated Statements of Equity For the period from April 1,2009 to March 31, 2011</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-21</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Consolidated statements of Cash Flows For the Years Ended March 31, 2011 and 2010</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-22</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-autospace: none">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-autospace: none">Notes</TD>
    <TD STYLE="vertical-align: top; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-autospace: none; text-align: center">F-23</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>



<P STYLE="margin: 0">GBS Enterprises Incorporated</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>December 31, 2011 and March 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, 2011</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">3,537,517</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">8,530,864</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Debtors (Accounts receivable)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,544,023</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,698,321</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">264,611</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,097,370</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,423,281</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">796,454</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,222,887</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt"><B>Total current assets</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">10,239,975</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">17,875,353</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Property, plant and equipment - Note 5</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,133,969</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,497</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Financial assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,818,310</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">837,481</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Investment in related company, at equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285,908</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,973</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">725,178</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,385,350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,136,135</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Goodwill - Note 6</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,693,027</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,688,966</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Software - Note 7</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,110,114</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,514,894</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">319,139</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">223,630</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt"><B>Total non-current assets</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">76,470,995</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">58,990,576</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 2.5pt"><B>Total assets</B></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">86,710,970</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: none; text-align: left; border-bottom: Black 1pt solid"><B>Liabilities and stockholders' equity</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><B>Current liabilities</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,462,560</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,440,295</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Liabilities to banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,073</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,073</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payables and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,489,528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,996,748</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,200,058</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,208,458</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,507,192</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,820,002</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Due to related parties - Note 8</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">475,579</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,156</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 1pt">Shares payable - Note 9</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">298,956</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,472,945</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">16,345,732</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Liabilities to banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,606,461</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">780,277</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred tax liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">611,849</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">878,450</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Retirement benefit obligation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">163,648</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">153,962</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,786,781</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,127,373</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total non-current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,168,739</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,940,062</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">25,641,684</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">24,285,794</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
</TABLE>

<!-- Field: Page; Sequence: 65; Options: NewSection; Value: 1 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>December 31, 2011 and March 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><B>Stockholders' equity</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Capital stock - Note 10</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Authorized:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 18pt">75,000,000 common shares of $.001 par value each</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 18pt">25,000,000 peferred shares of $.001 par value each</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 18pt">27,247,958 shares of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 18pt; width: 70%">(22,544,000 shares at March 31, 2011)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">27,248</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">22,544</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,325,971</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,894,661</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,888,488</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(322,519</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">73,951</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(13,639</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,538,682</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,581,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Noncontrolling interest in subsidiaries</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">16,530,604</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,999,088</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt"><B>Total stockholders' equity</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">61,069,286</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">52,580,135</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 2.5pt"><B>Total stockholders' equity and liabilities</B></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">86,710,970</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 66; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Statements of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>For the Three and Nine Month Periods Ended December 31, 2011
and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: black; text-align: center">For the three months</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: black; text-align: center">For the nine months</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center">&nbsp;Ended December 31 <FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center">&nbsp;Ended December 31 <FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">2011</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">2010</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">2011</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">2010</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">Revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; padding-left: 9pt">Products</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">2,606,206</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">2,187,721</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">6,980,202</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">7,339,747</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,623,112</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,174,339</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,340,149</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,619,891</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,229,318</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,362,060</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,320,351</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,959,638</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cost of goods sold</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Products</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,876,286</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,229,394</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,976,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,770,174</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,817,317</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,489,334</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,866,807</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,917,742</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,693,603</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,718,728</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,843,557</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,687,916</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Gross profit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,535,715</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,643,332</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,476,794</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,271,722</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Selling expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,308,647</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,036,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,277,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,537,061</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Administrative expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,589,374</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">715,228</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,846,513</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,724,305</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">General expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">160,161</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">397,130</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">861,017</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">979,973</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,058,183</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,148,526</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,985,032</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,241,339</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Operating income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,522,468</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(505,194</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,508,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,969,617</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Other Income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Other Income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(245,631</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(533,815</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,916</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">888,513</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,563</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,366</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,449</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,455</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(43,471</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">527,293</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(251,955</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">307,239</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(286,539</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,156</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(167,590</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,215,207</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,809,007</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(509,350</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,675,828</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(754,410</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Income tax (income) expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(971,062</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(456,672</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,554,134</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(416,597</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,837,945</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52,680</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,121,694</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(337,813</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Net income (loss) attributable to non controlling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(932,163</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">575</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,555,725</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(8,996</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net income (loss) attributable to stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(905,782</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(53,255</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,565,969</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(328,817</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">144,444</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174,831</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,572</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 18pt">attributable to non noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">72,078</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">87,240</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,777</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) and comprehensive income (loss) attributed to stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(833,416</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(53,255</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,478,378</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(324,022</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net earnings (loss) per share, basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.04</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Weighted average number of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">outstanding, basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,458,401</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,632,896</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 67; Value: 1 -->
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated statements of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>For the Nine Month Periods Ended December 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31, 2011</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31, 2010</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">Cash flow from operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Net loss / net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">(2,565,969</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">(328,817</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Adjustments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,515,815</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(485,886</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,462,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,125,805</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Earnings from equity investment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,065</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,282</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Minority interest losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,555,725</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,996</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Foreign exchange</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,831</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in operating assets and liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,181,463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,613,710</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Retirement benefit obligation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(95,510</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,149</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(264,611</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,510</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Accounts payable and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,227,834</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,465,629</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net cash provided by operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">53,610</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,530,107</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">Cash flow from investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,035,533</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,091,537</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of property, plant and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,186,029</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,278</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Purchase of financial assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,980,066</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">97,958</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(7,201,629</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(4,998,857</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><B>Cash flow from financing activities</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net borrowings - banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,815,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">772,958</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,330,906</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">460,062</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net proceeds from exercise of warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,024,970</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Loans from related party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(354,577</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,154,671</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,233,020</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net decrease in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,993,347</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(235,730</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Cash and cash equivalents - Beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">8,530,864</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 2.5pt">Cash and cash equivalents - End of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">3,537,517</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,509,235</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Note 11 - Supplemental Cash Flow Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 1 &ndash; INTERIM REPORTING</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements
prepared under the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America. They do not include all information and footnotes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, they include all adjustments, which are, in the opinion of management,
necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance
with accounting principles generally accepted in the United States of America. These interim financial statements follow the same
accounting policies and methods of their application as the Company&rsquo;s audited March 31, 2011 financial statements. All adjustments
are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company&rsquo;s
March 31, 2011 financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Operating results for the nine months ended
December 31, 2011 are not necessarily indicative of the results that can be expected for the year ending March 31, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 2 - OPERATIONS AND RESTRUCTURING</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GBS Enterprises Incorporated, a Nevada
corporation (sometimes referred to in these statements as the &ldquo;Company,&rdquo; &ldquo;GBSX,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo;
&ldquo;our&rdquo; or similar terms), conducts its primary business through its 50.1% owned subsidiary, GROUP Business Software
AG (&ldquo;GROUP&rdquo;), a German-based public-company whose stock trades on the Frankfurt Exchange under the stock symbol INW.
GROUP&rsquo;s core business is focused on serving IBM&rsquo;s Lotus Notes and Domino market where it has become IBM&rsquo;s largest
provider of business solutions worldwide. GROUP caters primarily to mid-market and enterprise-size organizations having over 3,500
customers in thirty-eight countries spanning four continents, representing more than 5,000,000 active users of its products. GROUP&rsquo;s
customers include Abbot, Ernst &amp; Young, Deutsche Bank, Bayer, HBSC, Merck and Toyota. GROUP provides Cloud Computing technology,
IBM Lotus Notes/Domino Application Transformation technology, Email Management software, Lotus Software Services, Customer Relationship
Management software and Risk &amp; Compliance Management solutions. Headquartered in Eisenach, Germany, GROUP has offices throughout
Europe and North America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">General Corporate History</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (&ldquo;SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (&ldquo;Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration for aggregate of
2,265,240 shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Simultaneously with SWAV&rsquo;s acquisition
of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock to Lotus, for an aggregate purchase
price of $370,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company&rsquo;s Chief Executive Officer,
President and Chairman of the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 6, 2010, SWAV&rsquo;s name
was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company&rsquo;s trading symbol on the OTC Bulletin Board
was changed from SWAV to GBSX.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 2 - OPERATIONS AND RESTRUCTURING
(continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 5, 2010, the Company entered
in to an agreement to acquire approximately 28.2% of the outstanding common shares of GROUP Business Software AG, (&ldquo;GROUP&rdquo;)
a German company, trading on the Frankfurt Stock Exchange under the symbol INW. The Company purchased 3,043,985 of its own shares
for $300,000 and then exchanged those shares for 7,115,500 shares of common stock of GROUP. Their fair value was calculated at
$0.5479 per share as determined by an independent valuation firm. The agreement was effective December 30, 2010. The acquisition
was a two-step transaction, culminating in a share exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 6, 2011, the Company acquired
an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361,426 shares of common stock of the Company.
The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect of this transaction is
that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares. The value of this
additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value of $0.506 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 3 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This summary of significant accounting
policies is presented to assist in understanding the financial statements. The financial statements and notes are the representations
of the Company&rsquo;s management, who is responsible for their integrity and objectivity<U>. </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There have been no changes in accounting
policies form those disclosed in the notes to the audited financial statements for March 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Use of Estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The financial statements above reflect all of the costs of doing business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Cash and Cash Equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For purposes of the Statement of Cash Flows,
management considers liquid investments with an original maturity of three months or less to be cash equivalents. As at December
31, 2011, the Company did not have any cash equivalents ($nil &ndash; 2010).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Comprehensive Income (Loss)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted FASB Codification topic
220, <I>Reporting Comprehensive Income</I>, which establishes standards for the reporting and display of comprehensive income and
its components in the financial statements. Comprehensive income consists of net income and other gains and losses affecting stockholder's
equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency
translation gains and losses and minimum pension liability. Since inception, the Company&rsquo;s other comprehensive income represents
foreign currency translation adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 3 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Net Income per Common Share</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">FASB Codification topic 260, <I>Earnings
per share,</I> requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator
and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of common stock
outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common
stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings
per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented
where anti-dilutive. There were no adjustments required to net income for the period presented in the computation of diluted earnings
per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Financial Instruments</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments consist of cash and
cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable and accrued liabilities
and other liabilities. As of the financial statement date, the Company does not hold any derivate financial instruments. Financial
assets and liabilities are measured upon first recognition and reviewed at the financial statement date. Changes in fair value
are recognized through profit and loss. Unless otherwise noted, it is management&rsquo;s opinion that the Company is not exposed
to significant interest or credit risks arising from these financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.75in"><U>Fair Value Measurements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows FASB Codification topic
820, <I>Fair Value Measurements and Disclosures</I>,<I> </I>for all financial instruments and non-financial instruments accounted
for at fair value on a recurring basis. This accounting standard establishes a single definition of fair value and a framework
for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has adopted FASB Codification
topic 825, <I>Financial Instruments, </I>which allows companies to choose to measure eligible financial instruments and certain
other items at fair value that are not required to be measured at fair value.<I> </I>The Company has not elected the fair value
option for any eligible financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Impairment of Long-Lived Assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluates the recoverability
of its fixed assets and other assets in accordance with FASB Codification topic, 360.10, <I>Property, Plant and Equipment, Impairment
or Disposal of Long-Lived Assets. </I>This guidance requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds its expected cash flows, it is considered to be impaired and is written down to fair value, which
is determined based on either discounted future cash flows or appraised values. No impairment has been recognized in the accounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 3 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Revenue Recognition</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue in accordance
with SEC Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. Under these guidelines, revenue is recognized when persuasive
evidence of an arrangement exists, shipment has occurred or services rendered, the price is fixed or determinable and payment is
reasonably assured. Customers take ownership at point of sale and bear the costs and risks of delivery. Maintenance earnings are
realized per FASB Codification topic 605 <I>Revenue Recognition</I> on a pro rata basis over the contractual service period. Consulting
and training services are realized upon provision of the service. Sales revenues are presented with deductions made for discounts,
customer bonuses, and rebates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Property, Plant and Equipment </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property, plant and equipment are valued
at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed assets are depreciated
on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based on useful lives of 3
to 10 years. If fixed assets are sold, retired or scrapped, the profit or loss arising from the difference between the net sales
proceeds and the residual book value are included under other operating earnings and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Intangible Assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets predominately comprise
goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for payment are
reflected as acquisition costs. If the development costs can be capitalized per FASB Codification topic 985-20-25, these are reflected
as ascribable personnel and overhead costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Company created software can be intended
for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the expenses are recorded
with their effect on profit in the year in which they were incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">GROUP amortizes intangible assets with
a limited useful life to the estimated residual book value in accordance with codification regulations. In addition, in special
circumstances according to FASB Codification topic 350-30, a recoverability test is performed and, if applicable, unscheduled amortization
is considered. The useful life of acquired software is between three and five years and three years for Company-designed software.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets obtained as part of an
acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once a year as to their
recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization expense entry
is performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Use value is generally used in order to
determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan prepared by the
management serves as the basis for this policy. The planning assumptions are each adjusted for the current state of knowledge.
Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making these adjustments.
Future estimated cash flows are essentially determined based on the expected growth rates of the markets in question.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 3 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Other Provisions</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to FASB Codification topic 450
<I>Contingencies</I>, provisions are made whenever there is a current obligation to third parties resulting from a past event which
is likely in the future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already
resulting in a outflow of resources in the following year are recognized at their discounted settlement amount on the financial
statement date. The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases.
Provisions are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount,
the provision is proportionally reversed and the earnings are recognized in other operating earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Foreign currency translation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The functional currency of the Company
is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars. Assets and
liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated at the average
exchange rates and stockholders&rsquo; equity was translated at historical exchange rates. Any translation adjustments resulting
are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component
of stockholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Deferred Taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income taxes are provided in accordance
with FASB Codification topic 740 <I>Accounting for Income Taxes. </I> A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry forwards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that, some portion or all of the deferred tax asset will
not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of
enactment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Stock Based Compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted the fair value recognition
provisions of FASB Codification topic 740 <I>Stock Compensation&rdquo;</I> under which the Company records stock-based compensation
expense for warrants and stock options granted to employees, directors and officers using the fair value method. Under this method,
stock-based compensation is recorded over the vesting period of the warrant and option based on the fair value of the warrant and
option as the grant date. The fair value of each warrant and option granted is estimated using the Black-Scholes option pricing
model that takes into account on the grant date, the exercise price, expected life of the warrant and/or option, the price of the
underlying security, the expected volatility, expected dividends on the underlying security, and the risk-free interest rate. Transactions
in which goods or services are received from non-employees in exchange for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably
measurable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Stock based compensation is recorded with
a corresponding increase to additional paid-in capital. Consideration received on the exercise of warrants and options, together
with the amount previously credited to additional-paid in capital, is recognized as an increase in common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 3 &ndash; SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Principles of Consolidation and Reverse
Acquisition</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As previously disclosed, the Company has
exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP. Although
the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form of a reverse merger,
whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure of the Corporation.
Accordingly, the accompanying consolidated interim financial statements reflect the historical consolidated financial statements
of GROUP for all periods presented prior to the merger of January 6, 2011. Only transactions and balances subsequent to that date
are included in these interim financial statements. Common stock and additional paid in capital are the only exceptions, as their
structure immediately after the merger were accounted for as being the initial balances at inception.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has based its financial reporting
for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40 as it relates to reverse
acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred by the Company,
the acquiree for financial reporting purposes, over the net amount of the Company&rsquo;s recognized identifiable assets and liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The assets and liabilities of GROUP, the
acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at their pre-combination
carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling interest reflects
the non-controlling shareholders&rsquo; proportionate interest in the pre-combination carrying amounts of GROUP&rsquo;s net assets
even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">It should also be noted that the Company
and GROUP have different year-end reporting dates. The Company&rsquo;s fiscal year-end reporting date is March 31 and GROUP&rdquo;s
calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting purposes has been
performed without any adjustments for timing differences between these two reporting dates in accordance Regulation S-X Rule 3A-02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Inventories</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to FASB Codification topic 330<I>
Inventories</I>, inventories held for sale are recognized under inventories. Inventories were measured at the lower of cost or
market. Cost is determined on a first-in-first out basis, without any overhead component.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Recent Accounting Pronouncements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopts new pronouncements relating
to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective
date. Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would
have a material effect on the accompanying financial statements<FONT STYLE="font-family: Times New Roman, Times, Serif">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 4 &ndash; SUBSIDIARY COMPANIES
ACQUIRED</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective April 1, 2011, the Company entered
into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000 in cash and
1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing the
market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption of
$11,261 in debt was $5,261,261.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective June 1, 2011, the Company
acquired 100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As consideration the
Company paid $250,000 and issued 250,000 shares of its common stock. The fair value of the common stock was determined to be
$4.34 per share, representing the market value at the end of trading on the date of the agreement. The total value of the
investment, including the assumption of $219,902 in debt was $1,554,902.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 25, 2011, the Company acquired
100% of the issued and outstanding shares of common stock of IDC Global, Inc. (&ldquo;IDC&rdquo;), a Delaware corporation with
offices in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company
agreed to issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement
required an additional payment to the management shareholders of 80,000 shares of common stock and pay signing bonuses to personnel
of $35,000. The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction.
The total value of the investment, including $883,005 of debt assumption was $4,713,005.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. (&ldquo;SYN&rdquo;), a Mauritius corporation and the shareholders of
SYN (the &ldquo;Selling Shareholders&rdquo;) owning 100% of issued and outstanding shares of SYN. Pursuant to the agreement, the
Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN (&ldquo;SYN Shares&rdquo;) effective November
1, 2011 in consideration for (i) 700,000 shares of common stock of GBS and (ii) $525,529.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The assets and liabilities of these companies
represent their values as of September 30, 2011 and are included in these consolidated financial statements. This timing approach
is allowed as per Regulation S-X Rule 3A-02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 5 &ndash; PROPERTY PLANT AND
EQUIPMENT</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Fixed assets are measured at cost less
scheduled straight-line depreciation. The specific useful life was based on those used uniformly at the parent company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation of the computer hardware listed
as office equipment is distributed over a period of three to five years. The depreciation period for other office equipment is
three to ten years. Office furnishings are depreciated over a period of eight to ten years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, 2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Net Book</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Net Book</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 28%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 9%; text-align: center">&nbsp;$</TD><TD STYLE="width: 1%; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;Equipment</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">5,747,500</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">3,613,532</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">2,133,968</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">4,857,380</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">4,558,883</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">298,497</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 6 &ndash; GOODWILL</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Goodwill results from business combinations
and is tested annually for recoverability as part of an impairment test. Goodwill arises from the following business acquisitions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">Affiliated Company</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Date of the First<BR>
 Consolidation</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Goodwill<BR>
 as of <BR>12.31.2009 <BR>in kUSD</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Goodwill <BR>YE in <BR>kUSD</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Goodwill <BR>Q2 in <BR>kUSD</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left">global words AG</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 12%; text-align: center">01/10/02</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">4,821.9</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">5,095.3</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">5,095.3</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP Technologies AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/09/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,239.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,479.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,479.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">GROUP Business Software Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">31/12/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,060.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,177.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,177.5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP LIVE N.V</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">31/12/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,253.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,324.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,324.2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Remaining goodwill from CRM</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">31/12/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,941.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,108.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,108.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP Business Software Ltd</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">31/12/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,616.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,765.1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,765.1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">ebVOKUS Software GmbH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/10/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">419.8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">443.6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">443.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GAP AG f&uuml;r GSM Applikationen und Produkte</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">31/12/05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,811.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,913.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,913.9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Relavis Corporation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/08/07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,897.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,288.3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,308.0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Permessa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">22/09/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,387.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,387.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">GROUP Business Software AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">06/01/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,705.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,705.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,705.5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Pavone AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/04/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,956.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Groupware Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/06/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">992.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>IDC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/07/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,496.2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">SD Holding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">01/10/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,538.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: right; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">35,767.3</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">39,689.0</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">49,693.0</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 7 &ndash; SOFTWARE</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Development costs</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The costs of developing new software products
and updating products already marketed by GROUP Business Software AG are generally recognized as expenses in the period in which
they arise. Provided they meet the conditions for capitalization as per FASB Codification 985-20-25, they are capitalized. Capitalized
development costs can be attributed to the defined products. These products are technically realizable and there is a target market
for them.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The development costs arising in the reporting
period result from the personnel costs to be attributed to the development work as well as overhead costs, provided that these
are related to the development work and do not represent general administrative costs. The ascribable overhead costs are directly
recognized. Capitalized development costs are generally amortized over a period of three years starting with the date of marketability
of the new products or major releases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Concessions, Industrial Property Rights,
Licenses</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The intangible financial assets carried
in this item are licenses acquired in exchange for payment. These financial assets are measured at acquisition cost less scheduled
straight-line amortization. The assets added in the scope of the cost price allocation of the business divisions acquired this
year. The useful life spans were based uniformly throughout the Corporation on those used by the parent company. Scheduled amortization
is performed over a period from three to ten years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 8 &ndash; RELATED PARTY TRANSACTIONS
AND BALANCES</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had the following transactions
with related parties for the nine months ending December 31, 2011 and 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2011</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2010</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;Expenses paid to related parties:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; padding-left: 0.25in">Wages</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">138,775</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">126,681</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,332</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,671</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Consulting fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">632,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">259,604</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,327</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Stock Base Compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The transactions between the Company and
the parties were consummated at the price agreed upon between the parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>The following balances were outstanding</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Dec 31</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">March 31</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2011</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2011</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;Due to (form) a director and shareholder, unsecured demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left; padding-left: 8.85pt">note payable, bearing interest at 5%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(24,421</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">117,250</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;Due to Lotus Holdings Ltd., a shareholder, demand notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.85pt">&nbsp;&nbsp;bearing interest at 5%, due October 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">-&nbsp;&nbsp;&nbsp;&nbsp; secured by shares in GROUP Business Software AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">-&nbsp;&nbsp;&nbsp;&nbsp; secured by OUTPUT Software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;Accrued interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,906</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">475,579</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">830,156</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 9 &ndash; SHARE PAYABLE</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">The account relates to shares to be
issued in connection with the purchase of 100% interest in SD Holdings. Amount consists of 145,832 shares of the company at $2.05
per shares, not yet issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 10 - CAPITAL STOCK</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following are changes to the Company&rsquo;s
capital stock from April 1, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 1, 2011, the Company issued 1,000,000
shares of common stock as partial payment for 100% of the issued and outstanding shares of Pavone AG. The fair value of the shares
issued was determined to be $4,900,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 1, 2011, the Company issued 250,000
shares of common stock as partial payment for 100% of the issued and outstanding shares of GroupWare, Inc. The fair value of the
shares issued was determined to be $1,085,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 10 - CAPITAL STOCK (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 25, 2011 the Company issued 880,000
shares of common stock as a partial payment for 100% of the issued and outstanding shares of IDC Global, Inc. The fair value of
the shares issued was determined to be $3,080,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 1, 2011 the Company issued
554,168 shares of common stock as a partial payment for 100% of the issued and outstanding shares of SD Holdings. The fair value
of the shares issued was determined to be $1,136,044.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 13, 2011 the Company issued
2,020,000 shares of common stock from the exercise of 2,020,000 warrants for total proceeds of $3,030,000. The cost of issuance
was $5,030, making net proceeds $3,024,970.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 11 &ndash; SUPPLEMENTAL CASH
FLOW INFORMATION</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Non cash transactions during the period
are described above in Note 4 &ndash; Subsidiary Companies Acquired and Note 9 &ndash; Capital Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31, 2011</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31, 2010</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: justify">Interest paid</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">251,954</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">307,239</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Income taxes paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">338,231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">54,543</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 12 &ndash; STOCK BASED COMPENSATION</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective April 1, 2011, a warrant to purchase
shares was granted to an officer of the Company. The warrant allowed the grantee to purchase 100,000 common shares of the Company
at $1.50. The warrant may be exercised any time before the third anniversary of the grant. This was the only compensation granted
in either of the nine month periods ending December 31, 2011 or December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Compensation was recorded at the fair value
of the warrant as at the grant date based on the Black-Scholes option pricing model, using the following assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 12%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Average risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">1.19</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Expected life</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">&nbsp;3 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">77.1</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the fair value method of accounting
for stock options (warrants) the Company recorded compensation expense for the six months ending December 31, 2011 of $34,000 ($nil
&ndash; 2010). This amount has been credited to additional paid in capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 13- WARRANTS</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has issued warrants to outside
consultants in payments for services provided as detailed in the following schedule. The warrants are issued as &ldquo;cashless&rdquo;
warrants and all have a three-year term with the exception of the warrant issued on October 10, 2010, which has a 30 month term.
The warrants have been valued using a Black-Scholes option pricing model with appropriate volatility, equity value and interest
rate inputs as noted below. The valuation of the warrants is for disclosure purposes only as the charge is related to the cost
of issuing the shares and there is no impact to the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 13- WARRANTS (continued)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>Common Stock Warrants Issued</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Common</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Exercise</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Valuation</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Fair Value per</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Warrants'</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>to Outside Consultants</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Shares</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Price</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Date</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Warrant Share</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Fair Value</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%">Issued on October 1, 2010</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">2,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">4.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">10/1/2010</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Issued on March 14, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">707,280</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/14/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">240,475</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Issued on March 24, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/24/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">5,100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Total Warrant Value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">245,575</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the warrant as at the
grant date of October 1, 2010 was based on the Black-Scholes option pricing model, using the following assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 9%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Average risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.74</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Expected life</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">2.5 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">65.0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the warrant as at the
grant dates of March 14, and March 24, 2011 were based on the Black-Scholes option pricing model, using the following assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 88%; text-align: justify">Expected dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 9%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Average risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">1.07 &ndash; 1.19</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Expected life</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">3 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">77.2</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As at December 31, 2011, the number of
shares the warrants outstanding could purchase if exercised was as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Weighted</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Common</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Average</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="padding-bottom: 1pt; border-bottom: Black 1pt solid">Warrants</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Shares</TD><TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Price/sh</TD><TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 76%">Outstanding, beginning of period</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">8,766,280</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">2.07</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,020,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Expired</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Outstanding, end of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,846,280</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2.23</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>NOTE 14 &ndash; SEGMENT REPORTING</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reports segment information
based on the &ldquo;management&rdquo; approach. Operating segments are defined as components of an enterprise which separate financial
information is evaluated regularly by the chief decision maker in deciding how to allocate resources and assess performance. Because
of this management structure, the Company has only a single reporting unit which is the same as an operating or reportable segment,
which is also the same, in this case, as the entity as a whole (entity or consolidated level). In summary, the Company presents
its financial statements as a signle reporting unit because it directly reflects the way the entity manages its operations by the
chier operating decision maker. Since the company operates in one segment, all required financial segment information can be found
in the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Revenues by geographic area for the three
and nine months ended December 31, 2011 and 2010 are as follows (USD 000's).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">For the three months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">For the nine months ended</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid">December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid">December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 52%">US</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">2,398</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">1,242</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">6,442</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">4,190</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">5,831</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,120</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">14,878</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">13,770</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">8,229</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">5,362</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">21,320</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">17,960</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Long-lived assets by geographic area, which
primarily include property plant and equipment net as of December 31, 2011 and March 31, 2011 were as follows (USD).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">December <BR>
31,</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">March <BR>31,</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 76%">US</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">23,613</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">1,685</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,110,356</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">296,812</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">2,133,969</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">298,497</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>K. R. MARGETSON LTD.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Chartered Accountant</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-autospace: none">331 East 5<FONT STYLE="font-size: 10pt"><SUP>th</SUP></FONT> Street</TD>
    <TD STYLE="width: 50%; text-autospace: none; text-align: right">Tel 604.929.0819</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">North Vancouver BC</TD>
    <TD STYLE="text-autospace: none; text-align: right">Fax: 1.877.874.9583</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">V7L 1M1</TD>
    <TD STYLE="text-autospace: none; text-align: right">keith@krmargetson.com</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Canada</TD>
    <TD STYLE="text-autospace: none; text-align: right">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Stockholders of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">GSB Enterprises Incorporated:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have audited the consolidated balance sheet of GSB Enterprises
Incorporated and its subsidiaries as of March 31, 2011 and 2010 and the related consolidated statements of operations, equity and
cash flows for the years 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 audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In our opinion, based on our audits, these consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of GSB Enterprises Incorporated.
as of March 31, 2011 and 2010 and the results of its consolidated operations and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As discussed in Note 33 to the financial statements, the 2011
and 2010 financial statements have been restated to correct misstatements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 55%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 35%; text-autospace: none; text-align: center">/s/ K. R. MARGETSON LTD.</TD>
    <TD STYLE="width: 10%; text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">North Vancouver BC</TD>
    <TD STYLE="text-autospace: none; text-align: center">Chartered Accountant</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">November 3, 2011, except for Note 32&nbsp;as to which the date
is March 12, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>



<P STYLE="margin: 0">GBS Enterprises Incorporated</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>March 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-indent: -0.1in; padding-left: 0.1in">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 66%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Cash and cash equivalents (Note 5)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">8,530,864</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">1,744,965</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accounts receivable (Note 6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,698,321</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,821,958</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Inventories (Note 2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,172</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Deferred tax assets (Note 29)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,284</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Prepaid expenses (Note 7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,423,281</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,550,634</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Assets held for sale (Note 8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,372,600</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Other receivables (Note 9)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,222,887</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">332,812</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Total current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">17,875,353</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,949,425</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Property, plant and equipment (Note 10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,497</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,856</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Financial assets (Note 11)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">837,481</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99,273</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Investment in related company, at equity (Notes 4 &amp; 12)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,973</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">376,572</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Deferred tax assets (Note 29)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,136,135</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,968,740</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Goodwill (Note 13)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,688,966</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,767,273</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Software (Note 14)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,514,894</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,028,818</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Other assets (Note 15)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">223,630</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">175,900</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Total non-current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">58,990,576</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">54,692,432</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">73,641,857</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Liabilities and shareholders' equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Notes payable (Note 16)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,440,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Liabilities to banks (Note 17)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,073</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,793</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accounts payables and accrued liabilities (Note 18)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,996,748</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,532,004</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other liabilities (Note 19)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,820,002</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,982,916</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Deferred income (Note 20)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,208,458</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,919,527</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Liabilities held for sale (Note 21)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,013,729</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Due to related parties (Note 27)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">830,156</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">16,345,732</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">13,531,969</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Notes payable (Note 16)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,549,490</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Liabilities to banks (Note 22)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">780,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,231,405</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Deferred tax liabilities (Note 29)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">878,450</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">926,357</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Retirement benefit obligation (Note 28)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">153,962</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,276</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Other liabilities (Note 23)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,127,373</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,426,327</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Total non-current liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">7,940,062</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">10,283,855</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Total liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">24,285,794</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">23,815,824</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See Accompanying Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>March 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><U>Stockholders' equity</U></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Common stock (Note 24)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Authorized:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.45in">75,000,000 common shares, par value $.001</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.45in">25,000,000 preferred shares, par value $.001</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.45in; width: 66%">22,544,000 shares of common stock (16,500,000 in 2010)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">22,544</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">16,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,894,661</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,221,755</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Retained earnings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(322,519</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,642,728</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(13,639</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">130,419</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,581,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,011,402</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Noncontrolling interest in subsidiaries</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,999,088</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">20,814,631</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 1pt">Total equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">52,580,135</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">49,826,033</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Total equity and liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">73,641,857</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Commitment (Note 31)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Subsequent events (Note 32)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See Accompanying Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Statements of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>For the years ended March 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -0.1in; padding-left: 0.1in">Revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 66%; text-indent: -0.1in; padding-left: 16.2pt">Products</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">12,848,954</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">12,479,629</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">14,858,272</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">19,105,103</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">27,707,226</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">31,584,732</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cost of goods sold</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Products</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,016,189</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,631,372</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">Services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,066,305</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">5,662,619</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">14,082,494</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">11,293,991</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Gross profit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">13,624,732</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">20,290,741</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Selling expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,610,545</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,847,697</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Administrative expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,853,532</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,481,893</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 1pt">General expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,454,213</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">703,129</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">15,918,290</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">19,032,719</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Operating income (loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(2,293,558</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,228,022</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other Income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,393,821</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">454,486</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,626</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(471,282</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(263,590</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,939,343</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">235,522</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(354,215</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,463,544</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,283,091</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">44,106</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,637,306</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,419,438</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Net income (loss) attributable to noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,672,059</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">710,605</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Net income (loss) attributable to stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,965,247</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">708,833</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(287,542</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,626</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Other comprehensive income (loss) attributable to noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(143,484</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Other comprehensive income (loss) attributable to stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(144,058</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">38,626</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">Comprehensive income (loss) attributed to stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(2,109,306</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">747,458</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Net earnings (loss) per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Basic</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(0.119</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">0.043</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(0.119</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">0.038</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Weighted average number of common stock outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Basic</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">16,566,236</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">16,500,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">18,601,444</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">18,500,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See Accompanying Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated Statements of Equity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>For the period from April 1,2009 to March 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(Audited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">Common&nbsp;Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Equity</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Additional</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Other</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">attributable&nbsp;to</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Paid&nbsp;in</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Comprehensive</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">noncontrolling</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid">Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Capital</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Income&nbsp;(Loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">interests</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 16%; text-indent: -0.1in; padding-left: 0.1in">Balance April 1, 2009</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">16,500,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">16,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">27,221,755</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">91,794</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">933,895</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">20,104,026</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">48,367,970</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Net income for the year ended March 31, 2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">38,626</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">708,833</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">710,605</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,458,063</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Balance, March 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,221,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130,419</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,642,728</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,814,631</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,826,033</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Shares issued for cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,044,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,044</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,672,906</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,678,950</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Net loss for the year ended March 31, 2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(144,058</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,965,247</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,815,543</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(3,924,848</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">22,544,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">22,544</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">33,894,661</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(13,639</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(322,519</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">18,999,088</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">52,580,135</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See Accompanying Notes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consolidated statements of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>For the Years Ended March 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from operating activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 66%; text-align: left; padding-left: 9pt">Net income (loss) for the year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">(3,637,306</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">1,419,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Adjustments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Deferred income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,796,982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(167,191</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,035,732</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,894,795</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(109,195</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,448</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Loss on sale of assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266,269</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Loss from equity investment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,078</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Minority interest losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(143,736</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in operating assets and liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,529,889</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,812,836</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Retirement benefit obligation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,243</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,265</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Accounts payable and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,755,795</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(2,738,594</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash provided by operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,638,109</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,330,788</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from investing activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,941,612</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,560,821</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of property, plant and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(161,037</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(479,398</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Purchase of subsidiaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,513,176</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Proceeds from sale of subsidaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,588,035</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Increase in financial assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">321,515</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(3,193,099</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(6,553,395</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from financing activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net borrowings - banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,484,597</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,001</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,460,438</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(692,093</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Loans from related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,156</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt; padding-bottom: 1pt">Capital paid-in</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,678,950</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,484,947</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">137,908</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,929,957</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,084,699</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Effect of translation on cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(144,058</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,097</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Cash and cash equivalents - Beginning of the year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,752,567</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 2.5pt">Cash and cash equivalents - End of year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">8,530,864</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>See supplemental disclosures (See Note
30)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt"><B>Notes on the Annual Financial Statement
for the Business Year </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt"><B>ending March 31, 2011</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt"><B>GBS Enterprises Incorporated</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMPANY AND BACKGROUND </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">GBS Enterprises Incorporated,
a Nevada corporation (sometimes referred to in this annual report as the &ldquo;Company,&rdquo; &ldquo;GBSX,&rdquo; &ldquo;we,&rdquo;
&ldquo;us,&rdquo; &ldquo;our&rdquo; or similar terms), conducts its primary business through its 50.1% owned subsidiary, GROUP
Business Software AG (&ldquo;GROUP&rdquo;), a German-based public-company whose stock trades on the Frankfurt Exchange under the
stock symbol INW. GROUP&rsquo;s core business is focused on serving IBM&rsquo;s Lotus Notes and Domino market where it has become
IBM&rsquo;s largest provider of software and services for business solutions worldwide. GROUP caters primarily to mid-market and
enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning four continents, representing more
than 5,000,000 active users of its products. GROUP&rsquo;s customers include Abbot, Ernst &amp; Young, Deutsche Bank, Bayer, HBSC,
Merck and Toyota. GROUP provides IBM Lotus Notes/Domino Application and Transformation technology, and related Cloud Computing
technology. Headquartered in Eisenach, Germany, GROUP has offices throughout Europe and North America.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>General Corporate
History</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">We were incorporated
in Nevada on March 20, 2007 as SWAV Enterprises Ltd. (&ldquo;SWAV&rdquo;). SWAV was an importer and wholesaler of Chinese manufactured
goods.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">On April 26, 2010, SWAV
purchased certain assets of Lotus Holdings Limited (&ldquo;Lotus&rdquo;) pursuant to an Asset Purchase Agreement in consideration
for aggregate of 2,265,240 shares of SWAV common stock. Lotus is a holding company specializing in software technology and training
services, particularly in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR)
software, and sales training.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Simultaneously with
SWAV&rsquo;s acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock for an aggregate
purchase price of $370,000.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Upon the consummation
of the acquisition, the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company&rsquo;s
Chief Executive Officer, President and Chairman of the Board of Directors.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">On September 6, 2010,
SWAV&rsquo;s name was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company&rsquo;s trading symbol on the OTC
Bulletin Board was changed from SWAV to GBSX.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">On November 5, 2010,
the Company entered in to an agreement to acquire approximately 28.2% of the outstanding common shares of GROUP Business Software
AG, (&ldquo;GROUP&rdquo;) a German company, trading on the Frankfurt Stock Exchange under the symbol INW. The Company purchased
3,043,985 of its own shares for $300,000 and then exchanged those shares for 7,115,500 shares of common stock of GROUP. Their fair
value was calculated at $0.5479 per share as determined by an independent valuation firm, making the total value of the acquisition
$3,898,000, The agreement was effective December 30, 2010. The acquisition was a two-step transaction, culminating in a share exchange.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">On January 6, 2011,
the Company acquired an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361426 shares of common
stock of the Company. The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect
of this transaction is that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares.
The value of this additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value
of $0.506 per share.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACCOUNTING POLICIES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The financial statements
and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America,
the more significant of which are as follows:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Critical Accounting
Policies and Estimates</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Comprehensive Income
(Loss) </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company adopted
FASB Codification topic (&ldquo;ASC&rdquo;) 220, Reporting Comprehensive Income, which establishes standards for the reporting
and display of comprehensive income and its components in the financial statements. Comprehensive income consists of net income
and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses
on investments available for sale, foreign currency translation gains and losses and minimum pension liability. Since inception,
the Company&rsquo;s other comprehensive income represents foreign currency translation adjustments.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Net Income per Common
Share </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">ASC 260, Earnings per
share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator
of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of common stock outstanding.
If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common stock instruments
such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. Diluted
net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where anti-dilutive.
Accordingly, although the diluted weighted average number of common stock outstanding is disclosed on the statements of operation,
the calculated net loss per share is the same for bother basic and diluted as both are based on the basic weighted average of common
stock outstanding. There were no adjustments required to net income for the period presented in the computation of diluted earnings
per share.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Financial Instruments
</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Financial instruments
consist of cash and cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable
and accrued liabilities and other liabilities. As of the financial statement date, the Company does not hold any derivate financial
instruments. Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date.
Changes in fair value are recognized through profit and loss. Unless otherwise noted, it is management&rsquo;s opinion that the
Company is not exposed to significant interest or credit risks arising from these financial instruments.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Currency Risk</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">We use the US dollar
as our reporting currency. The functional currencies of our significant foreign subsidiaries are the local currency, which includes
the Euro and the British pound. Accordingly, some assets and liabilities are incurred in those currency and we are subject to foreign
currency risks.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Fair Value Measurements
</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company follows
ASC 820, Fair Value Measurements and Disclosures, for all financial instruments and non-financial instruments accounted for at
fair value on a recurring basis. This new accounting standard establishes a single definition of fair value and a framework for
measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company has adopted
ASC 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments and certain other items
at fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible
financial instruments.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Cash and cash equivalents</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company considers
all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Inventories</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Pursuant to ASC 330
(Inventories), inventories held for sale are recognized under inventories. Inventories were measured at the lower of cost or market.
Cost is determined on a first-in-first out basis, without any overhead component.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Intangible Assets</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Intangible assets predominately
comprise goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for
payment are reflected as acquisition costs. If the development costs can be capitalized per ASC 985-20-25, these are reflected
as ascribable personnel and overhead costs.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Company created software
can be intended for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the
expenses are recorded with their effect on profit in the year in which they were incurred.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">GROUP amortizes intangible
assets with a limited useful life to the estimated residual book value in accordance with ASC regulations. In addition, in special
circumstances according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled amortization is considered.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The useful life of acquired
software is between three and five years and three years for Company-designed software.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Intangible assets obtained
as part of an acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once
a year as to their recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization
expense entry is performed.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In addition, an impairment
test, whereby the appraised fair value of the invested capital of the reporting segment, (as described in Note 14,) is compared
with the carrying (book) value of its invested capital amount, including goodwill.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">If the appraised value
of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying
amount of the reporting unit exceeds the appraised fair value, an impairment test based on use value is necessary in order to measure
the amount of impairment loss, if any.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Use value is generally
used in order to determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan
prepared by the management serves as the basis for this policy. The planning assumptions are each adjusted for the current state
of knowledge. Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making
these adjustments. Future estimated cash flows are essentially determined based on the expected growth rates of the markets in
question.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Property, Plant and
Equipment</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Property, plant and
equipment are valued at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed
assets are depreciated on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based
on useful lives of 3 to 10 years.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">If fixed assets are
sold, retired or scrapped, the profit or loss arising from the difference between the net sales proceeds and the residual book
value are included under other operating earnings and expenses.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Impairment
or Disposal of Long-Lived Assets </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company evaluates
the recoverability of its fixed assets and other assets in accordance with ASC topic, 360.10. This guidance requires recognition
of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows, it is considered
to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised
values. No impairment has been recognized in the accounts.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Revenue Recognition
</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-indent: 35.4pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-indent: 35.4pt"><B><I>Sources of Revenues</I></B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-indent: 35.4pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-indent: 35.4pt">License revenues</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Our license revenues
consist of revenues earned from the licensing of our software products. These products are generally licensed on a perpetual basis.
Pricing models have generally been based either upon the physical infrastructure, such as the number of physical desktop computers
or servers, on which our software runs or on a per user basis. License revenues are recognized when the elements of revenue recognition
for the licensed software are complete, generally upon electronic shipment of the software and the software key to provide full
access to all functionalities for our customers. In general our invoices reflect license, service and maintenance components. In
the case of multi element contracts, the revenues allocated to the software license represent the residual amount of the contract
after the fair value of the other elements has been determined. Certain products of our software offering are licensed on a subscription
basis.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">Software
maintenance revenues</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Software maintenance
revenues are recognized ratably on a pro-rata basis over the range of the contract period. Our contract periods typically range
from one to five years. Vendor-specific objective evidence (&ldquo;VSOE&rdquo;) of fair value for software maintenance services
is established by the rates charged in stand-alone sales of software maintenance contracts or the stated renewal rate for software
maintenance. Customers who are party to software maintenance agreements with us are entitled to receive support, product updates
and upgrades on a when-and-if-available basis.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 9.95pt; text-align: justify; text-indent: 35.4pt">Professional
services revenues</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Professional services
include pre-project consulting, software design, customization, project management, implementation and training. Professional services
are not considered essential to the functionality of our products, as these services do not alter the product capabilities and
may be performed by our customers or by other vendors. Professional services engagements performed for a fixed fee, for which we
are able to make reasonably dependable estimates of progress toward completion, are recognized on a proportional performance basis
based on hours incurred and estimated hours of completion. Professional services engagements that are on a time and materials basis
are recognized based on hours incurred. Revenues on all other professional services engagements are recognized upon completion.
Our professional services may be sold with software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE)
of fair value for professional services is based upon the standard rates we charge for such services when sold separately.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Foreign Currency
Translation </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The functional currency
of the Company is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars.
Assets and liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated
at the average exchange rates and stockholders&rsquo; equity was translated at historical exchange rates. Any translation adjustments
resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income,
a component of stockholders&rsquo; equity<U>.</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Other Provisions</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">According to FASB ASC
450 Contingencies, provisions are made whenever there is a current obligation to third parties resulting from a past event which
is likely in the future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already
resulting in a outflow of resources in the following year are recognized at their discounted settlement amount on the financial
statement date. The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases.
Provisions are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount,
the provision is proportionally reversed and the earnings are recognized in other operating earnings.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Deferred Taxes </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Income taxes are provided
in accordance with FASB Codification topic 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting and net operating loss-carry forwards.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that, some portion or all of
the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax
laws and rates on the date of enactment.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Recent Accounting
Pronouncements </U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In January 2010, the
FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic
820, adding new requirements for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements
relating to Level 3 measurements and clarification of existing fair value disclosures.&nbsp; ASU 2010-06 is effective for interim
and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales,
issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company&rsquo;s
fiscal year 2012); early adoption is permitted.&nbsp; The Company does not expect the adoption of ASU 2010-06 to have a material
impact on its results of operations or financial position.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In February 2010, FASB
issued ASU 2010-9 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements (&quot;ASU 2010-9&quot;).
ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the
date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and
the SEC's requirements. ASU 2010-9 is effective for interim and annual periods ending after June&nbsp;15, 2010. The Company does
not expect the adoption of ASU 2010-09 to have a material impact on its results of operations or financial position.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Effective July&nbsp;1,
2010, we adopted the update to the accounting standard regarding derivatives and hedging (Topic 815). This update clarifies how
to determine whether embedded credit derivatives, including those interests held in collateralized debt obligations and synthetic
collateralized debt obligations, should be bifurcated and accounted for separately. The adoption of this standard did not have
a significant impact on our results of operations.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In December 2010, the
FASB issued Accounting Standards Update ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations
(Topic 805). The update requires public companies to disclose pro forma information for business combinations that occur in the
current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting
period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning
of the annual reporting period. This guidance is effective for business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December&nbsp;15, 2010, with early adoption permitted.
The Company&rsquo;s adoption of FASB ASU No.&nbsp;2010-29 effective December&nbsp;1, 2010 did not have an impact on the Company&rsquo;s
consolidated results of operations or financial position but did result in additional disclosures.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">A variety of proposed
or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory
agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation
of such proposed standards would be material to the Company&rsquo;s consolidated financial statements</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Off - Balance Sheet
Arrangements</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder&rsquo;s equity or
that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do
not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to
us or engages in leasing, hedging or research and development services with us.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Principles of Consolidation
and Reverse Acquisition</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As previously disclosed,
the Company has exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of
GROUP. Although the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form
of a reverse merger, whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure
of the Corporation. Accordingly, the accompanying consolidated financial statements reflect the historical consolidated financial
statements of GROUP for all periods presented, and do not include the historical financial statements of the Company. All costs
associated with the reverse merger transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were
included in professional fees in administrative expenses.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company has based
its financial reporting for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40
as it relates to reverse acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively
transferred by the Company, the acquiree, for financial reporting purposes, over the net amount of the Company&rsquo;s recognized
identifiable assets and liabilities.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">We have recorded the
acquired assets and liabilities of GBSX on the acquisition date of January 6, 2011, at their fair value and the operations of GBSX
have been included in the consolidated financial statements since the acquisition date.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The assets and liabilities
of GROUP, the acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at
their precombination carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling
interest reflects the non-controlling shareholders&rsquo; proportionate interest in the pre-combination carrying amounts of GROUP&rsquo;s
net assets even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition
date.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">It should also be noted
that the Company and GROUP have different year-end reporting dates. The Company&rsquo;s fiscal year-end reporting date is March
31 and GROUP&rdquo;s calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting
purposes has been performed without any adjustments for timing differences between these two reporting dates in accordance Regulation
S-X Rule 3A-02.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The purpose of the acquisition
was to allow GROUP easier access to American financial markets. Goodwill recognized of $8,705 KUSD was recorded upon consolidation
and was calculated as the value of the consideration given less the value of the asset received. The resulting goodwill represents
the benefit to be gained by gaining entry into American financial markets.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SUBSIDIARY COMPANIES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In the consolidated
financial statements of GROUP Business Software AG, the subsidiaries listed below were included in the basis of consolidation;
in the previous year, there were eight of these subsidiaries (KUSD = 1,000&rsquo;s of US Dollars).</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">Affiliated&nbsp;Company</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Headquarters</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Sockholders'&nbsp;Equity</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Percentage&nbsp;of</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Profit</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;Date</B>&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold"></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">as&nbsp;of</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Subscribed&nbsp;Capital</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">of&nbsp;the</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">of&nbsp;the</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold"></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">03.31.11</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Fiscal&nbsp;Year</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">First&nbsp;Consolidation</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">KUSD</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">KUSD</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">in&nbsp;%</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">KUSD</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 28%; text-align: left"><FONT STYLE="font-size: 8pt">ebVOKUS Software GmbH</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">Dresden</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">391</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">54</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">201</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">11.01.2005</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">GROUP Business Software (UK) Ltd.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Manchester</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-1.030</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">29</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-312</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.31.2005</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">GROUP Business Software Corp.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Milford</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-1.651</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-1.130</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.31.2005</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">GROUP LIVE N.V</FONT>.</TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Den Haag</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-2.013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">134</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.31.2005</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">GROUP Technologies GmbH</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Karlsruhe</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">72</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">33</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10.01.2005</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Permessa Corporation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Waltham</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-372</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">09.22.2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Relavis Corporation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">New York</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-486</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">99,5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">387</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">08.01.2007</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">GBS Enterprises Incorportated</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">Canton</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.489</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">22</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">reverse 50,1%</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-524</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">01.06.2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>



<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">GROUP Business Software
(UK) Ltd. is an indirect 100% shareholding.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">A domination and profit
transfer agreement is in place between GROUP Business Software AG as the dominating company and Group Technologies GmbH.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">Effective March 1, 2010,
the Company disposed of its interest in GROUP Business Software Holding OY and the latter's subsidiary Gedys IntraWare GmbH.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">On September 22, 2010,
GROUP Business Software AG acquired the initial 51% of the Permessa Corporation and the remaining shares <FONT STYLE="font-size: 10pt">on
November 23, 2010. </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RELATED COMPANY</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Due to the absence of
domination/control, B.E.R.S. AD, Varna, Bulgaria was treated an associated company in the consolidated financial statements. GROUP
Business Software AG's interest in B.E.R.S AD, with acquisition costs of 265,000.00 Euros, is 50%.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.43pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">Associated&nbsp;Companies</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Headquarters</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Total&nbsp;Value</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Debts</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Sales&nbsp;Revenues</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Annual&nbsp;Profit/Loss</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Assets</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">3.31.11</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">B.E.R.S. AD</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">Varna</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">186</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">379</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-118</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CASH AND CASH EQUIVALENTS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As of the financial
statement date, the Company&rsquo;s cash and cash equivalents totaled 8,531 KUSD (previous year: 1,745 KUSD). Included in that
amount are cash equivalents of 20 KUSD (previous year: 42 KUSD). 250 KUSD are in accounts that are subject to federal deposit insurance
as of the financial statement date. (No insurance in previous year.)</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACCOUNTS RECEIVABLE</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Receivables are generally
measured at their nominal value and taking into account all foreseeable risks. Probable default risks are handled with specific
allowances for bad debts. With regard to the trade receivables which are neither impaired nor delinquent, there are no indications
as of the financial statement date that the debtors will not meet their payment obligations.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">There were no expenses
incurred through derecognition of receivables in the 2011 and 2010 fiscal years.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The residual term of
the receivables is less than one year with the exception of deposits provided as security presented under other financial assets.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PREPAID EXPENSES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Prepaid expenses in
the amount of 1,423 KUSD (previous year: 1,551 KUSD) represent a down payment toward a share of sales in a basic technology in
the amount of 1,201 KUSD (previous year: 1,213 KUSD). Due to technical delays, the term of this license has been extended until
June 30, 2014.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ASSETS HELD FOR RESALE</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In fiscal 2010, the
outgoing assets associated with the sale of the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding OY,
were recognized under this category in the amount of 12,373 KUSD. A breakdown of the assets included is disclosed below. The ultimate
disposal in fiscal 2011 was not shown as a discontinued operation as there continues to be operations in the segment to which
it was grouped.&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify; text-indent: 81pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">KUSD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 82%; padding-left: 9pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">1,185.6</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Trade receivables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,847.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other receivables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">281.3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66.2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Goodwill</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,292.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other intangible assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">699.3</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">12,372.6</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTHER RECEIVABLES - CURRENT</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The largest individual
item under other receivables represents reinstatement of a receivable from previous management of a subsidiary company in the amount
of 1,902 KUSD (previous year: 0 KUSD). Also included herein are tax refund claims (44 KUSD; previous year: 229 KUSD), other loans
issued (0 KUSD; previous year: 59 KUSD) as well as security deposits (224 KUSD; previous year: 163 KUSD).</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PROPERTY PLANT AND EQUIPMENT</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Fixed assets are measured
at cost less scheduled straight-line depreciation. The specific useful life was based on those used uniformly at the parent company.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Depreciation of the
computer hardware listed as office equipment is distributed over a period of three to five years. The depreciation period for other
office equipment is three to ten years. Office furnishings are depreciated over a period of eight to ten years.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD 3.31.11</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD 3.31.10</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Net Book</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Net Book</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 16%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,494</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,196</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,262</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LONG TERM FINANCIAL ASSETS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The major components
of the Financial Assets include the following:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">KUSDS</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">KUSDS</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Receivable from sale of GEDYS IntraWare GmbH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; text-align: left; padding-left: 9pt">Balance outstanding, repayable in monthly instalments of $20,086, bearing interest at prime plus .25%, not be be greater than 2% per annum</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">984</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Current portion, included in other current receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">241</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">743</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;Other long term receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">95</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">99</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Balance, March 31</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">838</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">99</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INVESTMENT IN RELATED COMPANY </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The investment, representing
50% of B.E.R.S. AD has been accounted for on the equity basis, with the Company&rsquo;s proportionate share of income being recorded
in the consolidated statement of operations with a corresponding adjustment to the asset carrying value. In fiscal 2011, the proportion
share of the loss was 59 KUSD and in 2010 it was 46 KUSD.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GOODWILL</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Goodwill results from
business combinations and is tested annually for recoverability as part of an impairment test. Goodwill arises from the following
business acquisitions:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">Affiliated&nbsp;Company</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Date&nbsp;of&nbsp;the&nbsp;First<BR>
Consolidation</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Goodwill <BR>as&nbsp;of <BR>3.31.11&nbsp;in <BR>KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Goodwill <BR>as&nbsp;of <BR>3/.31.10&nbsp;in <BR>KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 52%; text-align: left">global words AG</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">01.10.02</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">5.095,3</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">4.821,9</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP Technologies AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">01.09.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.479,7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.239,4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">GROUP Business Software Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.12.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.177,5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.060,7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP LIVE N.V.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.12.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.324,2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.253,2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Retained Goodwillof CRM</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.12.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.108,4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.941,7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GROUP Business Software Ltd</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.12.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.765,1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.616,7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">ebVOKUS Software GmbH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">01.10.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">443,6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">419,8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">GAP AG f&uuml;r GSM Applikationen und Produkte</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.12.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.913,9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.811,2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Relavis Corporation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">01.08.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.288,3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.897,2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Permessa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.09.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.387,4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0,0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">GROUP Business Software AG</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">06.01.11</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.705,5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.705,5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">39.689,0</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">35.767,3</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="color: White">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><FONT STYLE="color: White"> </FONT><BR>
&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B></B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SOFTWARE </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Development costs</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The costs of developing
new software products and updating products already marketed by GROUP Business Software AG are generally recognized as expenses
in the period in which they arise. Provided they meet the conditions for capitalization as per FASB ASC 985-20-25, they are capitalized.
Capitalized development costs can be attributed to the defined products. These products are technically realizable and there is
a target market for them.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The development costs
arising in the reporting period result from the personnel costs to be attributed to the development work as well as overhead costs,
provided that these are related to the development work and do not represent general administrative costs. The ascribable overhead
costs are directly recognized.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Capitalized development
costs are generally amortized over a period of three years starting with the date of marketability of the new products or major
releases.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Concessions, Industrial
Property Rights, Licenses</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The intangible financial
assets carried in this item are licenses acquired in exchange for payment.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">These financial assets
are measured at acquisition cost less scheduled straight-line amortization. The assets added in the scope of the cost price allocation
of the business divisions acquired this year.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The useful life spans
were based uniformly throughout the Corporation on those used by the parent company. Scheduled amortization is performed over a
period from three to ten years.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The useful life of the
domain &ldquo;gbs.com&rdquo;, acquired during the previous year, was estimated as unlimited. This is because no other legal, contractual
or other factors exist which would limit its useful life. It is not systematically amortized, but rather annually and also, whenever
there are signs pointing to impairment, it is tested for its recoverability and if necessary written down to the amount which could
be obtained for it if sold.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Amortization of concessions,
industrial property rights and similar rights and assets as well as licenses to such rights and assets is presented in the profit
and loss statement under &quot;Depreciation and Amortization.&quot;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTHER ASSETS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Re-insurance claims
from life insurance (reinsurance of pension obligations) were recognized as actuarial reserves. Corresponding communications by
the insurance companies form the basis for the valuation. Earnings from interest on the financial assets were - according to the
cost of liabilities from pension obligations - presented in the pension plan costs.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTES PAYABLE</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">This item concerns the
outside capital components of the convertible bond issue in the amount of 1,440 KUSD (previous year: 0 KUSD; long term 1,550 KUSD).
The outside capital component of the convertible bond is carried at amortized cost according the effective interest method in compliance
with the categorization pursuant to FASB ASC 815-15. The effective interest rate used as a basis as of the financial statement
date is 6.16% (previous year: 6,61%). The debt is convertible at the rate of $1.44 debt to one share. The calculated value of the
conversion feature was not material.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The term of the convertible
bonds ends on December 31, 2011. In January, 2012, only $1,286 USD was converted into shares. The balance was repaid in cash.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LIABILITIES TO BANKS - CURRENT</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Short term liabilities
to bank represent an operating line of credit, bearing interest at 3.8%, with a credit limit of 80 KUSD. Security is disclosed
with the long term portion of bank debt. See Note 22.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACCOUNTS PAYABLE AND ACCRUED LIABILITIES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Trade payables</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As of the financial
statement date, trade accounts payable amounted to 2,043 KUSD (previous year: 1,403 KUSD). Trade payables are carried at their
repayment amount and all have a residual term of up to one year.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Tax accruals</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As of the financial
statement date, provisions for taxation were created in the amount of 112 KUSD (previous year: 45 KUSD).</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Other accrual</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Other provisions are
created in the amount necessary as of the financial statement date which is necessary, according to a reasonable commercial appraisal,
in order to cover future payment obligations, perceivable risks as well as uncertain liabilities of the Company. The amounts deemed
to be most likely in a careful assessment of the situation are accrued.&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">KUSD</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Status</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Currency</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Status</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">04.01.10</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Utilization</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Dissolution</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Increase</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Differences</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">03.31.11</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%">Salary</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1.004</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">895</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">118</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1.241</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1.241</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Vacation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">247</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">224</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">224</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Workers Compensation Insurance Association</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Compensation Levy for Non-Employment of Severely Handicapped Persons</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Outstanding Invoices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">282</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">794</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">889</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Annual Financial Statement Costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">232</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">199</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">205</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other Provisions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Warranties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Provision for Legal Costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Reclassification Held for Sale</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-352</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-237</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">116</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">2.083</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">1.739</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">282</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">2.734</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">21</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">2.817</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Provisions for salaries
include the provisions created for the variable salaries of the sales staff for the sales objectives reached in this business year
as well as the contractually stipulated guaranteed bonuses for the members of the Board of Directors for the business year.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Vacation provisions
include the obligations of GROUP&rsquo;s companies to their employees from remaining vacation claims for the reporting period.
The amount of the provision is based on the gross salary of the individual employee plus the employer contribution to social security
and the unused vacation days as of the financial statement date.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">For liabilities not
yet settled, a provision totaling 889 KUSD (previous year: 463 KUSD) was created.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Expenses for preparing
the annual financial statements and the consolidated financial statements, for the auditing of the Company and consolidated financial
statements were recognized at 205 KUSD (previous year: 232 KUSD.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">For warranty claims,
a provision was created depending on income from services.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTHER SHORT TERM LIABILITIES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">Other short-term liabilities
are comprised of the following:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; font-weight: bold; text-align: left">Other&nbsp;Short-Term&nbsp;Liabilities</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; font-weight: bold; text-align: center">3.31.11</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; font-weight: bold; text-align: center">3.31.10</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase Assets L911</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">745.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">505.1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Purchase Assets - Fastworks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase Assets &nbsp;- Permessa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">757.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Purchase Assets &nbsp;- Salesplace</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">504.8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Tax Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">603.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">635.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">770.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">2,820.0</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">1,982.9</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DEFERRED INCOME</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Accruals for future
periods leading to realization of sales after the financial statement date are reported under deferred income. The deferred income
items listed as of the financial statement date in the amount of 6,208 KUSD (previous year: 5,920 KUSD) mainly include maintenance
income collected in advance for the period after the end of the fiscal year which primarily accumulated in the parent company.
They are amortized on a straight-line basis over the respective contract terms.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LIABILITIES HELD FOR SALE</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In fiscal 2010, the
outgoing liabilities associated with the sale of the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding
OY, were recognized under this category in the amount of 2,013.7 KUSD. A breakdown of the liabilities included is disclosed below.
The ultimate disposal in fiscal 2011 was not shown as a discontinued operation as there continues to be operations in the segment
to which it was grouped.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">KUSD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Libility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 82%; text-align: left; padding-left: 9pt">Trade payables</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">1,178.6</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">790.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Deferred income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">44.7</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,013.7</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LIABILITIES TO BANKS &ndash; LONG TERM</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Liabilities to banks
represent bank facilities of GROUP AG with Baden-W&uuml;rttembergische Bank with a credit line totaling 4,017 KUSD and are collateralized
by a silent blanket agreement for GROUP AG&rsquo;s trade receivables. The term of the loan runs until June 30, 2014. The Company
has curtailed the risk of changing interest rates existing with regard to liabilities to banks due to variable interest rate agreements
by obtaining a fixed interest rate for half of its credit line. Accordingly, 2,008.5 KUSD is bearing interest at prime plus 1.5%
and 2,008.5 KUSD is fixed at 3.5%</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTHER LIABILITIES &ndash; LONG TERM</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">Other long-term liabilities
are made up of unsecured liabilities connected to the purchase of assets as follows:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; font-weight: bold; text-align: left">Other&nbsp;Long-Term&nbsp;Liabilities</TD><TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="width: 15%; font-weight: bold; text-align: center">3.31.11</TD><TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="width: 15%; font-weight: bold; text-align: center">3.31.10</TD><TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase Assets L911</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.448,2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.426,3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Purchase Assets Fastworks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">506,2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase Assets Permessa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.162,3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: none; text-align: left; padding-bottom: 1pt">Purchase Assets Salesplace</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.011,0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">6.127,7</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">4.426,3</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Expected payments over
the next 5 fiscal years stated in KUSD.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Purchase</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Purchase</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Purchase</TD><TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Purchase</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Assets</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Assets</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">Assets</TD><TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">Asset L911</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">Fastworks</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">Permessa</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">Salesplace</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 36%">Interset</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">4.50</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">5.50</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="text-align: left">Expiration date</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">Sep 30, 2013</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">April 15, 2013</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">June 30, 2013</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">Jan 15, 2013</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">745.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7 57.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5 04.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,004.3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">669.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,414.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">372.3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1 58.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3 41.5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Thereafter</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Total</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,194.1</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">625.4</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,920.2</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,515.8</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMMON STOCK</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Common stock belongs
to the legally purchasing company according to the principles of a Reverse Acquisition and therefore, the common stock as that
of GBS Enterprises Incorporated. The Company has authorized capital of 75,000,000 common shares and 25,000,000 preferred shares
each with a par value of $001. No preferred shares have been issued. As at March 31, 2011, there were 22,544,000 shares of common
stock issued. At the time of the Reverse Acquisition, there were 16,500,000 shares of common stock outstanding and, as the Reverse
Acquisition was accounted for as a recapitalization applied retroactively, this balance is recorded as the balance outstanding
since inception.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">During the reporting
period from the date of the Reverse Acquisition to March 31, 2011, the Company completed a private placement offering whereby it
raised $7,555,000 gross proceeds through the sale of 6,044,000 units at $1.25 per unit. Each unit represented one share of common
stock and one warrant. The warrant allows the holder to purchase one share of common stock of the Company from the date of the
grant until the third anniversary of the date of the grant for a purchase price of $1.50 per share.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Warrants and Options</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company has issued
warrants to outside consultants in payments for services provided as detailed in the following schedule. The warrants are issued
as &ldquo;cashless&rdquo; warrants and all have a three-year term with the exception of the Ventana Capital Partners&rsquo; warrant
which has a 30 month term. Each warrant is exercisable into one share of common stock. The warrants have been valued using a Black-Scholes
option pricing model with appropriate volatility, equity value and interest rate inputs. The valuation of the warrants is for disclosure
purposes only as the charge is related to the cost of issuing the shares and there is no impact to the financial statements. There
are no stock options issued by the Company to employees or other parties.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>Valuation of Common
Stock Purchase Warrants</B></P>

<P STYLE="color: #003366; font: 10pt/150% Times New Roman, Times, Serif; margin: 0pt 70.9pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">Summary of Warrants Issued</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Stock Value at</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Warrant</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Outside Consultants</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Grant Size</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Strike Price</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Val. Date</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Warrant Date</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Value</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%; text-align: left">Ventana Capital Partners</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">10/1/2010</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.03</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Frank J. Pena</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">117,880</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/14/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">GarWood Securities, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">117,880</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/14/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Jackson E. Spears</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">421,520</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/14/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">William Gregozeski</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/14/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Frank J. Pena</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/24/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">GarWood Securities, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/24/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Jackson E. Spears</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3/24/2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.91</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="color: #003366; font: 10pt/150% Times New Roman, Times, Serif; margin: 0pt 70.9pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Common</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Valuation</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Fair Value per</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Warrants'</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Common Stock Warrants Issued to Outside Consultants</B>&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Date</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Warrant
    Share</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair
                                                                                                                           Value</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 49%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">Common Stock Warrants Issued on October
    1, 2010</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">2,000,000</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">10/1/2010</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">0.00</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;$</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; width: 10%"><FONT STYLE="font-size: 8pt">0</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">Common Stock Warrants Issued on March 14, 2011</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">707,280</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">3/14/2011</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">0.34</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;$</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">240,475</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">Common Stock Warrants Granted on March 24, 2011</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">3/24/2011</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">0.34</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;$</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">5,100</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD COLSPAN="5" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Total
                                                               Warrants' Fair Value</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;$</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">245,575</FONT></TD></TR>
</TABLE>



<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SEGMENT REPORTING</B></P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company reports
segment information based on the &ldquo;management&rsquo; approach. Segment management is performed at the level of chief operating
decision maker. Operating segments are defined as components of an enterprise about which separate financial information is evaluated
regularly by the CODM in deciding how to allocate resources and assess performance. Because of this management structure, the Company
has only one reporting unit which is the same as an operating or reportable segment, which is no different in this case, as the
entity as a whole (entity or consolidated level). In summary, the Company presents its financial statements as a single reporting
unit because it directly reflects the way the entity manages its operations by the chief operating decision maker.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Gross revenue may be
broken down by the following products.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; font-weight: bold; text-align: left">Sales&nbsp;Revenues</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; font-weight: bold; text-align: center">3.31.11</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; font-weight: bold; text-align: center">3.31.10</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Licenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,981</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,272</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Maintenance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,616</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Partner Contribution</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Service</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,243</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,992</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Third-Party Products</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,062</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,344</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">LND Third-Party Products</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,502</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Others</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">173</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">223</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; padding-bottom: 1pt"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">27,707</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">31,585</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Revenues by geographic
area for the year ended March 31, 2011 and 2010 are as follows:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="width: 10%; text-align: center; border-bottom: Black 1pt solid">3.31.11</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="width: 10%; text-align: center; border-bottom: Black 1pt solid">3.31.10</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>US</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,768</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,426</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Germany</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,213</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,251</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">United Kingdom</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">726</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">793</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">115</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">27,707</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">31,585</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Long-lived assets by
geographic area, which primarily include property plant and equipment as at March 31, 2011 and 2010 are as follows:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%">US</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">71</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">15</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Germany</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">224</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">261</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">United Kingdom</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">298</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">391</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OTHER INCOME</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Other income of 2,394
KUSD (previous year: 454 KUSD) relate within 1,902 KUSD (previous year: 0 KUSD) from the reinstatement of a receivable from the
former managers of a subsidiary as disclosed in Note 9 &ndash; other current receivables.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RELATED PARTY TRANSACTIONS AND BALANCES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Related parties basically
refer to the Board of Directors, Supervisory Board, stockholders and associated companies.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Business transactions
between the companies and its subsidiaries which are also considered to be related companies were eliminated through the consolidation
and are not reflected within these footnotes to the consolidated statements.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Remuneration of the
management occupying key positions in the Corporation subject to disclosure include the remuneration of the Board of Directors
and that of the Supervisory Board. With regard to their remuneration, please see Section VIII.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 9.35pt">In addition, the following
transactions took place in the fiscal year:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 25%; font-weight: bold; text-align: left">Company</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; font-weight: bold; text-align: center">Related</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 28%; font-weight: bold; text-align: center">Transaction</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 10%; font-weight: bold; text-align: center">Amount&nbsp;in&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 18%; font-weight: bold; text-align: center">Comment</TD></TR>
<TR>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Party</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">GROUP Business Software AG</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Joerg Ott</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Rental Agreement as Landlord and Owner of Hospitalstra&szlig;e 6, 99817 Eisenach</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">58</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Rental Expenses 2011</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">60</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Rental Expenses 2010</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">18</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Remaining term</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">GROUP Business Softwar AG</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt">Board of&nbsp;Directors</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Remuneration</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">891</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Expense in 2011</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">971</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Expense in 2010</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">GBS Enterprises Incorporated</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Joerg Ott</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Interest on demand note</TD>
    <TD></TD>
    <TD NOWRAP STYLE="text-align: right">2</TD>
    <TD></TD>
    <TD NOWRAP STYLE="text-align: left">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt">&nbsp;Expense
in 2011</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: left">GBS Enterprises Incorporated</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Lotus Holdings Ltd.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Interest on demand note</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">8</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">Expense in 2011</TD></TR>
</TABLE>
<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 9.35pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 9.35pt">The following related
party balances existed as at March 31, 2011 (None in 2010)</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 9.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">KUSD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 77%; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Due to a director and shareholder, unsecured demand note payable, bearing interest at 5%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">152</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Due to to related company, bearing interest at 5% due October 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">- secured by 3,049,489 shares of GROUP AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">- secured by 2,000,000 shares of GROUP AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">- secured by 500,000 shares of GROUP AG</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">- secured by software</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">78</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">830</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-indent: 9.35pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>NOTE
28&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PENSION PLAN OBLIGATIONS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company has a non-contributory
defined benefit pension plan (&ldquo;Qualified Plans&rdquo;). The Qualified Plans provide retirement benefits for certain employees
meeting certain age and service requirements. Benefits for the Qualified Plans are funded from assets held in the plans&rsquo;
trusts.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt"><B><I>Benefit Obligations and Funded Status</I></B></P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt">&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"><FONT STYLE="color: Black">The
following table presents the status of GROUP AG&rsquo;s pension plan. The benefit obligation for pension plans represents the
projected benefit obligation. GROUP AG&rsquo;s benefit obligations and plan assets are measured each year as of March 31.</FONT></P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"></P>

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<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Pension benefits in USD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Change in benefit obligation:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Benefit obligation at beginning of year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">139,572</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">143,191</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Service cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,676</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,874</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Actuarial loss (gain)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,714</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(789</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Curtailment (gain) loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Plan amendments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Foreign exchange rate changes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Participant contributions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Benefits paid</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Benefit obligation at end of year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">153,962</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">150,276</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Change in plan assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value of plan assets at beginning of year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,095</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,767</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Actual return on plan assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,207</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Employer contributions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Participant contributions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Benefits paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Foreign exchange rate changes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Fair value of plan assets at end of year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">93,035</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">97,973</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Funded status at end of the year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(60,927</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(52,303</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Pension benefits in USD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amounts recognized in the Balance Sheets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Non current asset</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">223,630</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">175900</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(153,962</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(150,276</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">69,668</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">25,624</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amounts recognized in other accumulated comprehensive earnings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net actuarial loss (gain)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,431</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,292</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Prior service cost (credit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">16,431</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">10,292</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The following table
presents the components of net periodic benefit cost and other comprehensive earnings for Group AG&rsquo;s pension plan.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Pension benefits in USD</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net periodic benefit cost:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Service cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Interest cost</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7,676</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7,874</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Recognition of net actuarial loss (gain)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,714</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-789</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Recognition of prior service cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">14,390</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,085</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total net periodic benefit cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other comprehensive earnings:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Actuarial (gain) loss arising in current year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,207</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Prior service cost (credit) arising in current year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Recognition of net actuarial (loss) gain in net periodic benefit cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Recognition of prior service cost, including curtailment,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">in net periodic benefit cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total other comprehensive earnings (loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,041</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,207</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total recognized</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">16,431</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">10,292</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B><I>Assumptions</I></B></P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The following table
presents the weighted average actuarial assumptions that were used to determine benefit obligations and net periodic benefit costs.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Pension Benefits</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Assumption to determine benefit obligations:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Discount rate</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">5.7</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6.0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Rate of compensation increase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">N/A</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">N/A</P></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Assumptions to determine net periodic benefit cost:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Discount rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected return on plan assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">N/A</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left"><P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">N/A&nbsp;</P></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Rate of compensation increase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">N/A</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">N/A</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt; text-indent: 24.5pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"><I>Discount rate</I>
&mdash; Future pension obligations are discounted at the end of each year based on the rate at which obligations could be effectively
settled, considering the timing of estimated future cash flows related to the plans. This rate is based on high-quality bond yields,
after allowing for call and default risk. High quality corporate bond yield indices are considered when selecting the discount
rate.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"><I>Rate of compensation
increase</I> &mdash; The expected DBO for end of 2011/ 2012 is estimated to increase from $ 153,962 in 2010/ 2011 to $ 169,857.
The expected increase of the assets is estimated end of 2011/ 2012 by $ 4,143.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt"><I>Expected return on plan assets</I> &mdash;
The expected rate of return on plan assets was determined by evaluating input from external consultants and economists as well
as long-term inflation assumptions. The Company expects the long-term asset allocation to approximate the targeted allocation.
Therefore, the expected long-term rate of return on plan assets is based on the target allocation of investment types in such assets.
See plan assets discussion below for more information on GROUP AG&rsquo;s target allocations.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt"><B><I>Pension Plan Assets</I></B></P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">GROUP AG&rsquo;s overall
investment objective for its pension plans&rsquo; is to eliminate further risks. Therefore, all permitted benefits are reinsuranced.
In total, the benefits from the permitted pension correspond to the benefits of the reinsurances which have been signed for these
pension promises.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
29&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DEFERRED INCOME TAXES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">As a result of the change
in the majority ownership of GROUP Business Software in 2011 and based on the current legal situation, management has determined
it is more likely than not that the tax losses carried forward will be available as a deduction to determine taxable income. Therefore,
the deferred tax assets from the losses carried forward for GROUP Business Software AG in an amount of 3,691 KUSD was written off
this year and included in income tax expense.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The following schedule
details the reconciliation of the Consolidated Earnings Before Taxes to the Income Tax Expense per the Consolidated Profit and
Loss Statement:</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">March 31</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="text-align: left">Statutory rate</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">23.0% - 34.0%</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">23.0% - 34.0%</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%; text-align: left">Expected income taxes recovery at the statutory rate</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">(118,198</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">440,023</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Effect of change in tax rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(71,536</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(47,458</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Permanent differences</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(347,871</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(259,483</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Temporary differences</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208,005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(14,259</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Price allocation from consolidation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,795</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(146,787</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Change in deferred income tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,349,211</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">67,626</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">90,685</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,445</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense (recovery) recognized</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,283,091</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">44,106</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; font-style: italic; text-align: left">Income tax expense (recovery) is comprised of:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.12in">Current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">116,248</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 0.12in">Future</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,242,539</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(72,143</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
</TABLE>


<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The following schedule
reflects a summary of the basic components of the Deferred Tax Liability as presented in the Company&rsquo;s Consolidated Balance
Sheet.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">March 31</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%; text-align: left">Intangible assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">64,277</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">121,121</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Non-capital losses availiable for future periods</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">587,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,088,599</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Price allocation from consolidation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(251,173</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(102,376</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">401,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,107,344</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(143,362</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(52,677</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">257,685</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,054,667</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="color: #003366; font: 10pt/150% Times New Roman, Times, Serif; margin: 0pt 70.9pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The balances have been dislcosed as follows:</P>

<P STYLE="color: #003366; font: 10pt/150% Times New Roman, Times, Serif; margin: 0pt 70.9pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">USD</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">March 31</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%; text-align: left">Short term asset</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">12,284</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Long term assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,136,135</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,968,740</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Long term liability</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(878,450</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(926,357</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">257,685</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,054,667</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">The Company also has
incurred losses for income tax purposes of approximately 1,996 KUSD which may be applied in future years to reduce taxable income.
The ability to apply this loss expires starting in 2015.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
30&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SUPPLEMENTAL CASH FLOW DISCLOSURES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">USD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">USD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash paid for</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 68%; text-align: left; padding-left: 9pt">Interest paid</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">471,282</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">263,590</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Taxes paid (recovered)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">116,248</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The significant non-cash
transactions for the year ended March 31, 2011 and 2010 were as follows:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.35pt; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">a)</TD><TD STYLE="text-align: justify">On October 9, 2009, the Company purchased L911 Assets for 4,753 KUSD. The Company paid 234 KUSD
upon signing and financed the remainder. The financed balance is disclosed in Notes 19 &amp; 23, Other Liabilities.</TD></TR></TABLE>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.35pt; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">b)</TD><TD STYLE="text-align: justify">On May 10, 2010, the Company purchased Fastworks Assets for 1,305KUSD. The Company paid 502 KUSD
upon signing and financed the balance. The balance is disclosed in Notes 19 &amp; 23, Other Liabilities.</TD></TR></TABLE>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.35pt; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">c)</TD><TD STYLE="text-align: justify">On September 17, 2010, the Company purchased Permessa Assets for 3,079 KUSD. The Company paid 535
KUSD upon signing and financed the balance. The balance is disclosed in Notes 19 &amp; 23, Other Liabilities</TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.35pt; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left">d)</TD><TD STYLE="text-align: justify">On September 22, 2010, the Company purchased Salesplace
Assets for 3,341 KUSD. The Company paid 1,332 KUSD upon signing and financed the balance. The balance is disclosed in Note 19
&amp; 23, Other Liabilities.</TD>
</TR></TABLE>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
31&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">The Company has the
following commitments as at March 31, 2011:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;<B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">Other Financial Obligations</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">1 Year</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Over 1 year</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Total</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">KUSD</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">Liabilities from Rental Agreements</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">700</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Previous Year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">636</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">673</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,309</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Liabilities from Vehicle Lease Agreements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">525</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Previous Year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">222</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">355</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Liabilities from other Lease Agreements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Previous Year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">121</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Lease agreement - subsequent to year end</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">100</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">250</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Year - 2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">678</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">993</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,672</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Previous Year - 2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">818</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">967</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,785</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
32&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SUBSEQUENT EVENTS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Pavone AG</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Effective April 1, 2011, the
Company entered into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000
in cash and 1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing
the market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption
of $11,261 in debt was $5,261,261.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>Group Ware AG</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Effective June 1, 2011,
the Company acquired 100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As
consideration the Company paid $250,000 and issued 250,000 shares of its common stock. The fair value of the common stock was
determined to be $4.34 per share, representing the market value at the end of trading on the date of the agreement. The total
value of the investment, including the assumption of $219,902 in debt was $1,554,902.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>IDC Global, Inc.</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">On July 25, 2011, the Company
acquired 100% of the issued and outstanding shares of common stock of IDC Global, Inc. (&ldquo;IDC&rdquo;), a Delaware corporation
with offices in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company
agreed to issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement
required an additional payment to the management shareholders of 80,000 shares of common stock and pay signing bonuses to personnel
of $35,000. The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction.
The total value of the investment, including $883,005 of debt assumption was $4,713,005.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><U>SD Holdings Ltd.
and Synaptris, Inc.</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt">On September 27, 2011, the Company entered into
an acquisition agreement with SD Holdings Ltd. (&ldquo;SYN&rdquo;), a Mauritius corporation and the shareholders of SYN (the &ldquo;Selling
Shareholders&rdquo;) owning 100% of issued and outstanding shares of SYN. Pursuant to the agreement, the Company purchased one
hundred percent (100%) of the issued and outstanding shares of SYN (&ldquo;SYN Shares&rdquo;) effective November 1, 2011 in consideration
for (i) 700,000 shares of common stock of GBS and (ii) $525,529. The fair value of the common stock was determined to be $2.05
per share, representing the market value at the end of trading on the date of the agreement.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt"><U>GROUP Business Software AG</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">On February 27, 2012, GROUP
increased its share capital with an investment in kind of 1,750,000 shares. The investment in kind related to a conversion of the
long-term loan given from Lotus Holdings Ltd. to GROUP in conclusion with the Lotus 911 purchase. As such, the shares issued by
GROUP increased to 26,982,000.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">Simultaneously and effective
February 27, 2012, the Company increased its participation in GROUP by 883,765 shares to a total amount of 13,525,000 shares or
50.1%</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><U>Notes Payable</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">In January, 2012, $1,286
of the convertible notes payable were converted into shares. The balance was repaid in cash.</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

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<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;&nbsp;</P>

<P STYLE="color: #003366; font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 81.35pt; text-align: justify; text-indent: -0.5in"><B>Note
33&#9;CORRECTION OF ERRORS ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>Restatement of Balance
Sheet &ndash; March 31, 2010</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>



<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>As Previously</B></TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">As</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><B>Issued</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restatement</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"><U>Assets</U></TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 42%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">1,744,965</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">1,744,965</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,821,958</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,821,958</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,172</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,284</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,550,634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,550,634</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Assets held for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">332,812</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,039,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,372,600</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">12,372,600</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">(12,039,788</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">332,812</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,949,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,949,425</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Non-current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">54,692,431</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">54,692,431</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">73,641,856</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">73,641,856</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">There were no other
adjustments to the liabilities and stockholders&rsquo; equity as at March 31, 2010.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>Restatement of Balance
Sheet &ndash; March 31, 2011</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">As Previously</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Issued</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Corrections</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">As restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"><U>Assets</U></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 49%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">8,530,864</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">8,530,864</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,698,321</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,698,321</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,423,281</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,423,281</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Assets held for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other receivables</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,981,887</TD><TD STYLE="text-align: left; padding-bottom: 1pt">(1)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">241,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,222,887</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">17,634,353</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">17,875,353</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Property, plant and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,497</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,497</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Financial assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,369,454</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(531,973</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">837,481</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Investment in related company, at equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,973</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,973</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,136,135</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,136,135</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Goodwill</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,688,966</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,688,966</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,514,894</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,514,894</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">223,630</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">223,630</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total non-current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">59,231,576</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">58,990,576</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"><U>Liabilities and shareholders' equity</U></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,440,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,440,295</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Liabilities to banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,324</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(251</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,073</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payables and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,972,833</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,915</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,996,748</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,674,073</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(854,071</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,820,002</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,208,458</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,208,458</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Due to related parties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">(1)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">830,156</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">830,156</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,345,983</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,345,732</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Long term liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,940,062</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,940,062</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">24,286,045</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">24,285,794</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"><U>Stockholders' equity</U></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,544</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,544</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,894,661</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,894,661</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Retained earnings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(174,959</TD><TD NOWRAP STYLE="text-align: left">)(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(147,560</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(322,519</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(13,639</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(13,639</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,728,607</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,581,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Noncontrolling interest in subsidiaries</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,851,277</TD><TD STYLE="text-align: left; padding-bottom: 1pt">(2)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">147,811</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">18,999,088</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Total equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">52,579,884</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">52,580,135</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in; padding-bottom: 2.5pt">Total equity and liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">76,865,929</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>



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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(1)</TD><TD STYLE="text-align: justify">Re-allocation arising from previously unidentified related party balances.</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(2)</TD><TD STYLE="text-align: justify">Restatement required to correct over allocation of amounts allocated to noncontrolling interest
in subsidiaries. This re-allocation also required restatement of the Consolidated Statement of Operations, as noted below.</TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><B>Restatement of Consolidated
Statement of Operations &ndash; for the year ended March 31, 2011</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">As</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Previously filed</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Corrections</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">As Restated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">$</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 52%; font-weight: bold; text-align: left">Net income (loss)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">(3,637,306</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">(3,637,306</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net income (loss) attributable to noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,963,354</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">291,295</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,672,059</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net income (loss) attibutable to stockolders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,817,687</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">(147,560</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(1,965,247</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(144,159</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(143,383</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(287,542</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt; text-indent: -9pt">Other comprehensive income (loss) attributable to noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">(143,484</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(143,484</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt; text-indent: -9pt">Other comprehensive income (loss attributable to stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(144,159</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(144,058</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Comprehesive income (loss) attributed to stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(1,961,746</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 2.5pt">(147,560</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(2,109,306</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>Restatement of Cash
Flow Statements for the years ended March 31, 2011 and 2010</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="logo.jpg">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>GBS Enterprises
Incorporated</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>Consolidated statements
of cash flows</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify"><B>For the Years Ended
March 31, 2011</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 45.35pt">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, 2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, 2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">As</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">As</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">As</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">As</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Previously filed</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Previously filed</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">$</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from operating activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; padding-left: 9pt">Net income (loss) for the year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(3,637,306</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(3,637,306</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,419,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,419,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Adjustments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Deferred income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,239,283</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,796,982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(167,191</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(167,191</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,036,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,035,732</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,894,795</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,894,795</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(109,195</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,448</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Loss on sale of assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266,269</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Loss from equity investment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,078</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,078</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Minority interest losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9,188</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(143,736</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in operating assets and liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,310,427</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,529,889</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,893,241</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,812,836</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Retirement benefit obligation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,730</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,243</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,243</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,265</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,265</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; padding-bottom: 1pt">Accounts payable and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,440,602</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,755,795</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(2,084,566</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(2,738,594</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash provided by operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,773,741</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,638,109</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,984,773</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,330,788</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from investing activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,865,982</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,941,612</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,560,821</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,560,821</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of property, plant and eq.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(161,037</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(161,037</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(479,398</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(479,398</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Purchase of subsidiaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(251,751</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,513,176</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,513,176</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Proceeds from sale of subsidaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,052,424</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,588,035</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Increase in financial assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">321,515</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">773,654</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(3,193,099</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(6,553,395</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(6,553,395</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flow from financing activties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net borrowings - banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,221,567</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,484,597</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,001</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,460,438</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(489,629</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(692,093</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Loans from related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,156</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt; padding-bottom: 1pt">Capital paid-in</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,678,950</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,678,950</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt; padding-bottom: 1pt">Net cash used in financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,537,617</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,484,947</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">340,372</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">137,908</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,085,012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,929,957</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,228,250</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,084,699</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Effect of translation on cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(299,113</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(144,058</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,648</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,097</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Cash and cash equivalents beginning of the year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,752,567</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,752,567</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents end of the year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">8,530,864</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">8,530,864</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,744,965</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">Restatements in both
years arise out of changes in cash flow analysis of subsidiaries.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>8,064,000 Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>GBS ENTERPRISES INCORPORATED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Until ninety days after the date this
registration statement is declared effective, all dealers that effect transactions in these securities whether or not participating
in this offering, may be required to deliver a Prospectus. This is in addition to the dealer's obligation to deliver a Prospectus
when acting as underwriters and with respect to their unsold allotments or subscriptions. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II &ndash; INFORMATION NOT REQUIRED
IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 13. Other Expenses of Issuance and Distribution.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">Securities and Exchange Commission Registration Fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,092</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Printing Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,500</TD><TD STYLE="text-align: left">*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accounting fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; padding-bottom: 1pt">Legal fees and expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">TOTAL</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">17,592</TD><TD STYLE="font-weight: bold; text-align: left">*</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">* estimated</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All amounts are estimates other than the
Commission&rsquo;s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will
be borne by the Selling Stockholders. The Selling Stockholders, however, will pay any other expenses incurred in selling their
Common Stock, including any brokerage commissions or costs of sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 14. Indemnification of Directors
and Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The statutes, charter provisions, by-laws, contracts or other
arrangements under which any of our controlling person, director or officer is or may be insured or indemnified against any liability
which he may incur in that capacity, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sections
78.037, 78.7502, 78.751, and 78.752 of the Nevada Revised Statutes offer limitation of liability protection for officers and directors,
indemnification protection of officers, directors, employees and agents of a Nevada corporation, and provide that Nevada corporations
may purchase insurance to protect directors, officers, employees and agents. They generally provide that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.1in">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a
Nevada corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys&rsquo; fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith
and in&nbsp;a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.1in">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a
Nevada corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys&rsquo; fees actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals there from, to be
liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper;
and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.1in">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to
the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, the corporation shall
indemnify him against expenses, including attorneys&rsquo; fees, actually and reasonably incurred by him in connection with the
defense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&rsquo;s articles of incorporation provides that to the fullest extent allowed by law, the directors and executive officers
of the Company shall be entitled to indemnification from the Company for acts or omissions taking place in connection with their
activities in such capacities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&rsquo;s by-laws provides indemnification rights to the Company&rsquo;s officers, directors or controlling persons in a
manner similar to the Nevada statutes described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in"><FONT STYLE="color: black">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company </FONT>has obtained Director and Officer insurance coverage in the amount of $5,000,000 per occurrence <FONT STYLE="color: black">that
insures our officers, directors or controlling persons against liabilities that may arise against them.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These indemnification provisions may be sufficiently broad to
permit indemnification of the registrant&rsquo;s executive officers and directors for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act of 1933.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">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 SEC such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors,
executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending
or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Insofar as indemnification for liabilities under the Securities
Act may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, we have been
informed that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 15. Recent Sales of Unregistered
Securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>March 2011 Private Placement Offering</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 11, 2011, GBS Enterprises Incorporated
(OTCBB: GBSX), a Nevada corporation (the &ldquo;Company&rdquo;), consummated a private placement offering (the &ldquo;Private Placement&rdquo;)
involving the sale of an aggregate of 5,894,000 Units at a subscription price of $1.25 per Unit, for gross proceeds of $7,367,500.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 29, 2011, the Company consummated
the second and final closing of the Private Placement involving the sale of an additional 150,000 Units at a subscription price
of $1.25 per Unit, for gross proceeds of $187,500.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In total, the Company sold 6,044,000 Units
in the Private Placement for gross proceeds of $7,555,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Each Unit sold in the Offering consisted
of one share of the Company&rsquo;s Common Stock and one warrant (the &ldquo;Private Placement Warrant&rdquo;) to purchase one
share of Common Stock of the Company from the date of grant until the third anniversary date of the date of grant for a purchase
price of $1.50 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company sold the Units and the securities
underlying the Units pursuant to the exemptions from the registration requirements of the Securities Act afforded the Company under
Section 4(2) and Rule 506 of Regulation D and Regulation S promulgated under the Securities Act due to the fact that offers and
sales of the Units were made only to U.S. &ldquo;accredited investors,&rdquo; as that term is defined in Rule 501 of Regulation
D, and to non-U.S. residents, based on representations and warranties provided by the purchasers of the Units in their respective
subscription agreements entered into between each purchaser and the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In total, the Company sold an aggregate
of 6,044,000 Units in the Private Placement, for gross proceeds of $7,555,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, the Company issued to
the Placement Agent and certain consultants three-year warrants to purchase an aggregate of 460,000 shares of our Common Stock,
822,280 of which are exercisable at an exercise price of $1.50 per share and 2,000,000 are exercisable at $4.00 per share (collectively,
the &ldquo;Consultant Warrants&rdquo;). The issuance of the Consultant Warrants, and the issuance of shares of Common Stock upon
exercise thereof, have been determined to be exempt from registration under the Securities Act, in reliance on Section&nbsp;4(2)
thereof and Rule&nbsp;506 of Regulation&nbsp;D promulgated thereunder as a transaction by an issuer not involving a public offering,
in which the investors are accredited and have acquired the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">The table below
reflects the investors in the Private Placement who have exercised their Private Placement Warrants as of the date of this registration
statement. Each investor is an &ldquo;accredited investor&rdquo; as that term is defined under Rule 501(a) of Regulation D under
the Securities Act and each issuance was made by the Company in reliance upon the registration exemption provided by </FONT>Section
4(2) and Rule 506 of Regulation D and Regulation S promulgated under the Securities Act.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 29.7pt"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 29.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 29.7pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Date&nbsp;of&nbsp;Exercise</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Shares&nbsp;Purchased</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Gross&nbsp;Proceeds&nbsp;&nbsp;($1.50 <BR>per&nbsp;Share)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 58%">November 30, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 16%; text-align: right">200,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">300,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>December 7, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">400,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>December 8, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">420,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>December 8, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">440,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">660,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>December 29, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">700,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,050,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">February 28, 2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">5,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,500</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Total:</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">2,025,000</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">3,037,500.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 29.7pt"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Pavone AG Acquisition</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 1, 2011, the Company acquired 100% of the issued and
outstanding shares of capital stock of Pavone, AG, a German corporation (&ldquo;Pavone&rdquo;), from the stockholders of Pavone
in consideration for 1,000,000 shares of Common Stock of the Company and an aggregate of $350,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued the foregoing shares of the Company&rsquo;s
Common Stock pursuant to the exemption from the registration requirements of the Securities Act afforded the Company under Section
4(2) of Regulation D promulgated under the Securities Act due to the fact that the issuances were isolated and did not involve
a public offering of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>GroupWare AG Acquisition</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 9, 2011, the Company acquired GroupWare AG, a Florida
corporation (&ldquo;GroupWare&rdquo;) pursuant to an Acquisition Agreement, dated June 1, 2011 (the &ldquo;GroupWare Agreement&rdquo;),
by and among the Company, GroupWare and the holder of 100% of the issued and outstanding shares of common stock of GroupWare (the
&ldquo;GroupWare Stockholder&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In consideration for one hundred percent (100%) of the outstanding
shares of GroupWare, the Company issued to the GroupWare Stockholder an aggregate of 250,000 shares of unregistered Common Stock
of the Company and paid the GroupWare Stockholder a sum of $250,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued the 250,000 shares of the Company&rsquo;s
Common Stock pursuant to the exemption from the registration requirements of the Securities Act afforded the Company under Section
4(2) promulgated under the Securities Act due to the fact that the issuances were isolated and did not involve a public offering
of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>IDC Global Inc. Acquisition</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 25, 2011, the Company issued 880,000
shares of common stock as a partial payment for 100% of the issued and outstanding shares of IDC Global, Inc.&nbsp;&nbsp;The fair
value of the shares issued was determined to be $3,080,000. The Company relied on the registration exemption provided under Section
4(2) of the Securities Act due to the fact that it was an isolated issuance and did not involve a public offering of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><BR>
<I><U>SD Holdings Ltd. Acquisition</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. (&ldquo;SYN&rdquo;), a Mauritius corporation and the shareholders of
SYN (the &ldquo;Selling Shareholders&rdquo;) owning 100% of issued and outstanding shares of SYN. </FONT>SYN owns 100% of all issued
and outstanding shares of Synaptris, Inc. a California corporation (&ldquo;Synaptris&rdquo;), and 100% of all issued and outstanding
shares of Synaptris Decisions Private Limited, an India company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the acquisition agreement,
the Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN (&ldquo;SYN Shares&rdquo;) effective
November 1, 2011 in consideration for (i) $525,529 and (ii) agreed to issue 700,000 shares of Common Stock, subject to adjustment.
The fair value of the common stock was determined to be $2.05 per share, representing the market value at the end of trading on
the date of the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 16, 2011, the issued an aggregate
of 554,168 shares of Common Stock of the Company to the Selling Shareholders pursuant to the acquisition agreement. On March 29,
2012, the Company issued an aggregate of 28,706 shares of Common Stock of the Company to the Selling Shareholders pursuant to the
acquisition agreement. The Company issued a total of 612,874 shares of Common Stock pursuant to the exemption from the registration
requirement of the Securities Act provided under Section 4(2) under the Securities Act due to the fact that the share issuances
were isolated, not advertised and did not involve a public offering of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Investor Warrants </U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">In March 2012, the Company issued
an aggregate of 2,020,000 warrants (collectively, the &ldquo;Investor Warrants&rdquo;) to five &ldquo;accredited investors&rdquo;
(as that term is defined under Rule 501(a) of Regulation D under the Securities Act), one of whom is a member of the Company&rsquo;s
Board of Directors and all of whom are investors in the Private Placement, in consideration for $10.00 from investor. Each Investor
Warrant is exercisable at $0.50 per share of Common Stock from the date of issuance until the third anniversary date of the date
of issuance. The terms of the Investor Warrants are identical to the terms of the Private Placement Warrants. </FONT>The Company
sold the Investor Warrants pursuant to the exemptions from the registration requirements of the Securities Act afforded the Company
under Section 4(2) and promulgated under the Securities Act due to the fact that sales of the Warrants were made only to U.S. &ldquo;accredited
investors,&rdquo; as that term is defined in Rule 501 of Regulation D under the Securities Act, and did not involve a public offering
of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 29.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 16.&nbsp;&nbsp;Exhibits and Financial
Statement Schedules</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; text-autospace: none">Exhibit No.</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 89%; text-autospace: none">Description:</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">3.1</TD>
    <TD STYLE="text-autospace: none">&nbsp;&nbsp;&nbsp;</TD>
    <TD STYLE="text-autospace: none">Articles of Incorporation [Filed as an Exhibit to the Company&rsquo;s Form SB-2 filed with the Commission on January 14, 2008 and incorporated by reference herein.]</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; text-autospace: none">3.1.1</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 89%; text-autospace: none">Certificate of Amendment to Articles of Incorporation, effective September 6, 2010 [Filed as an Exhibit to Amendment No. 2 to the Company&rsquo;s Form 10-K for the fiscal year ended March 31, 2011 filed with the Commission on November 7, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">3.1.2</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Certificate of Amendment to Articles of Incorporation, effective November 22, 2010 [Filed as an Exhibit to Amendment No. 2 to the Company&rsquo;s Form 10-K for the fiscal year ended March 31, 2011 filed with the Commission on November 7, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">3.2</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Bylaws [Filed as an Exhibit to the Company&rsquo;s Form SB-2 filed with the Commission on January 14, 2008 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">4.1*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Form of Private Placement Warrant</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">4.2</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Form of Investor Warrant [Filed as an Exhibit to the Company&rsquo;s Form 8-K filed with the Commission on March 30, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">5.1*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Legal Opinion of The Sourlis Law Firm</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.1</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Subsidiary Stock Purchase Agreement, dated September 21, 2009, between SWAV Enterprises Ltd. and Pui Shan Lam [Filed as an Exhibit to the Company&rsquo;s Form 8-K filed with the Commission on September 21, 2009 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.2</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Asset Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Lotus Holdings Limited [Filed as an Exhibit to the Company&rsquo;s Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.3</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Non-Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott [Filed an Exhibit to the Company&rsquo;s Form Company&rsquo;s Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.4</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott [Filed an Exhibit to the Company&rsquo;s Form Company&rsquo;s Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.5</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Subsidiary Stock Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Pui Shan Lam [[Filed an Exhibit to the Company&rsquo;s Form Company&rsquo;s Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.6</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and LVM Landwirtschaftlicher Versicherungsverein AG [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.7</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and MPire Capital City [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.8</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Stone Mountain Ltd. [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.9</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and Tuomo Tilman [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.10</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and vbv Vitamin B Venture GmbH [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.11</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Jyrki Salminen [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.12</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and Delta Consult LP [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; text-autospace: none">10.13</TD>
    <TD STYLE="width: 1%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 89%; text-autospace: none">Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and GAVF LLC [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.14</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and K Group [Filed as an Exhibit to the Company&rsquo;s Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.15</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd. [Filed as an Exhibit to the Company&rsquo;s Form 8-K filed with the Securities and Exchange Commission on October 4, 2011 and incorporated by reference herein].</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.16*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Amendment, dated October 31, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.17*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Amendment, dated November 30, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.18*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Amendment, dated December 16, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.19</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Acquisition Agreement, dated June 1, 2011, by and among GBS Enterprises Incorporated, GroupWare AG and the Selling Stockholder of GroupWare AG [Filed as an Exhibit to the Company&rsquo;s Form 8-K filed with the Securities and Exchange Commission on June 27, 2011 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.20</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Acquisition Agreement, dated July 15, 2011, by and among GBS Enterprises Incorporated, IDC Global, Inc., the IDC Shareholders&rsquo; Representative and Management Shareholders&rsquo; Representative Filed as an Exhibit to the Company&rsquo;s Form 8-K [Filed with the Securities and Exchange Commission on July 28, 2011 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.21**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Consultant Services Agreement, dated February 24, 2012, between GBS Enterprises Incorporated and Green Minds Venture GmbH [Filed with the Securities and Exchange Commission on February 28, 2012 and incorporated by reference herein].</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.22**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Offer Letter, dated January 26, 2012, between the Company and David M. Darsch, as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.23**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Offer Letter, dated January 26, 2012, between the Company and John A. Moore, Jr., as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.24**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Offer Letter, dated January 26, 2012, between the Company and<FONT STYLE="color: black"><I> </I>Mohammad Shihadah, as amended </FONT>[Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.25**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Offer Letter, dated February 24, 2012, between the Company and<FONT STYLE="color: black"> Stephen D. Baksa, as amended </FONT>[Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">10.26**</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Offer Letter, dated January 26, 2012, between the Company and Woody A. Allen, as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">23.1*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Consent of the Independent Public Auditor</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">23.2*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Consent of The Sourlis Law Firm (Included in Exhibit 5.1 and incorporated by reference herein)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">24.1*</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Power of Attorney (included on the signature page of this Registration Statement)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">*Filed herewith.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black"><B>**</B></FONT>Management Contracts
and Compensatory Plans, Contracts or Arrangements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 17. Undertakings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Undertaking Required by Item 512 of Regulation
S-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(a) The undersigned registrant hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">(1) To file, during
any period in which it offers or sells securities, a post-effective amendment to this registration statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">(ii) to
reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify; text-indent: 49.5pt">(iii) to
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">(2) That, for the
purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">(3) To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(b) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such date of first use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, the registrant has 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Woodstock, State of Georgia, on&nbsp;April 9, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">GBS ENTERPRISES INCORPORATED</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 53%; border-bottom: white 1pt solid">&nbsp;</TD>
    <TD STYLE="width: 3%">By:</TD>
    <TD STYLE="width: 40%; border-bottom: black 1pt solid">/s/&nbsp;Joerg Ott</TD>
    <TD STYLE="width: 4%; border-bottom: white 1pt solid">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom">Name: &nbsp;Joerg Ott</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Title:&nbsp;&nbsp;&nbsp; Chairman of the Board of Directors,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">President and Chief Executive Officer&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Principal Executive Officer)</P></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each person whose signature appears below appoints Joerg Ott
and Markus R. Ernst, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him her and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement
(including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the capacities and on the dates indicated.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%; text-autospace: none; font-weight: bold">Signature:</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 43%; text-autospace: none; font-weight: bold">Title:</TD>
    <TD STYLE="width: 1%; text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 20%; text-autospace: none; font-weight: bold">Date:</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Joerg Ott</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">President, Chief Executive Officer and Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April&nbsp;6, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Joerg Ott</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">(Principal Executive Officer)</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Markus R. Ernst</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Chief Financial Officer</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Markus R. Ernst</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">(Principal Financial and Accounting Officer)</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Gary MacDonald</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Executive Vice President and Chief Development</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Gary MacDonald</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Officer, and Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ David M. Darsch</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">David M. Darsch</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ John A. Moore, Jr.</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">John A. Moore, Jr.</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Mohammad Shihadah&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Mohammad Shihadah</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none"></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Stephen D. Baksa&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Stephen D. Baksa</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-autospace: none">/s/ Woody A. Allen</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">Director</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">April 9, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Woody A. Allen</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD STYLE="text-autospace: none">&nbsp;</TD></TR>
</TABLE>
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[{"type": "S-1", "sequence": "1", "filename": "v308489_s1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1449278}]
{"company-data": {"conformed-name": "GBS Enterprises Inc", "cik": "0001413754", "assigned-sic": "5020", "irs-number": "000000000", "state-of-incorporation": "NV", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-180626", "film-number": "12749656"}, "business-address": {"street1": "585 MOLLY LANE", "city": "WOODSTOCK", "state": "GA", "zip": "30189", "phone": "404-474-7256"}, "mail-address": {"street1": "585 MOLLY LANE", "city": "WOODSTOCK", "state": "GA", "zip": "30189"}, "former-company": {"former-conformed-name": "Swav Enterprises Ltd.", "date-changed": "20070928"}}
Registration No.  33-___________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
GBS ENTERPRISES INCORPORATED
(Exact name of registrant as specified in
its charter)
Nevada
7370
27-3755055
(State of Incorporation)
(Primary Standard Classification Code)
(IRS Employer ID No.)
585 Molly Lane
Woodstock, GA 30189
(404) 474-7256
(Address and Telephone Number of Registrant's Principal
Executive Offices and Principal Place of
Business)
The Corporation Trust Company of Nevada
6100 Neil Road, Suite 500
Reno, Nevada 89511
(775) 688-3061
(Name, Address and Telephone Number of Agent
for Service)
Copies to:
Philip Magri, Esq.
The Sourlis Law Firm
130 Maple Avenue, Suite 9B2
Red Bank, New Jersey 07701
Direct Dial: (954)
303-8027
T: (732) 530-9007
F: (732) 530-9008
philmagri@sourlislaw.com
www.SourlisLaw.com
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box:
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated
filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
Smaller reporting company
x
Calculation of Registration Fee
Proposed
Proposed
Maximum
Amount
Maximum
Aggregate
Amount of
Title of Each Class of Securities
to be
Offering Price
Offering
Registration
to be Registered
Registered (1)
Per Unit (2)
Price
Fee (3)
Common Stock, par value $0.001 per share (4)(5)
6,044,000
$
1.18
$
7,131,920
$
818
Common Stock, par value $0.001 per share (5)(6)
2,020,000
$
1.18
$
2,383,600
$
274
Total
8,064,000
—
$
9,515,520
$
1,092
(1)
Pursuant to Rule 415 of the Securities Act, these securities are being offered by the Selling Stockholders named herein on
a delayed or continuous basis.
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the
Securities Act of 1933, as amended (the "Securities Act"), based upon the average of the high and low price of the
Company's Common Stock, as reported on the OTC Bulletin Board on April 4, 2012.
(3)
Calculated at a rate of $114.60 per million dollars (rounding up to nearest dollar) pursuant Commission
Fee Rate Advisory #3 for Fiscal Year 2012 (2011-195).
(4)
Represents the number of shares of Common Stock of the Registrant issuable upon the exercise of
an aggregate of 6,044,000 warrants underlying an aggregate of 6,044,000 Units sold to certain of the Selling Stockholders for $1.25
per Unit in a Regulation 506 Regulation D and Regulation S private placement offering consummated by the Company in March 2011
(the "Private Placement"). Each Unit consisted of one share of Common Stock and one warrant (the "Private Placement
Warrant"). Each Private Placement Warrant is exercisable by the holder thereof from the date of grant until the third anniversary
of the date of grant at $1.50 per share.
(5)
These shares of Common Stock may be offered for sale by a Selling Stockholder pursuant to this registration statement on a
securities market such as the Over-the-Counter Bulletin Board or other securities exchange at prevailing market prices or privately
negotiated prices.
(6)
Represents the number of shares of Common Stock of the Registrant issuable upon the exercise of warrants sold by the Company
to five "accredited investors" to such investors in March 2012 pursuant to Section 4(2) of the Securities Act (the
"Investor Warrants"). Each Investor Warrant is exercisable for the three-year period commencing from the date of issuance
for $0.50 per share of Common Stock.
The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant
to said section 8(a), may determine.
The information in this
preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the U.S. Securities and Exchange Commission ("SEC") is effective. This preliminary prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale
is not permitted.
PRELIMINARY PROSPECTUS
Subject to completion, dated April
9, 2012
GBS ENTERPRISES INCORPORATED
8,064,000 Shares of Common Stock
This prospectus relates to the resale by the Selling Stockholders
identified in this prospectus (the "Selling Stockholders") of up to 8,064,000 shares (the "Shares") of
our common stock, par value $0.001 per share (the "Common Stock"). Of the Shares which are offered pursuant to this
prospectus, 6,044,000 are issuable upon the exercise of an aggregate of 6,044,000 warrants (the "Private Placement Warrants")
sold to "accredited investors" (as that term is defined under Rule 501 of the Securities Act of 1933, as amended (the
"Securities Act")) and non-U.S. residents in a private placement offering consummated by the Company in March 2011
which was exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 506 of Regulation
D and Regulation S of the Securities Act (the "Private Placement"). The Private Placement Warrants were included in
Units purchased by the Selling Stockholders in the Private Placement for $1.25 per Unit. Each Unit consisted of one share of Common
Stock of the Company and one Private Placement Warrant. Each Private Placement Warrant is exercisable to purchase one share of
Common Stock for $1.50 per Share from the date of issuance to the third anniversary date of the date of issuance. The remaining
2,020,000 Shares included in this prospectus are issuable upon the exercise of an aggregate of 2,020,000 warrants (collectively,
the "Investor Warrants," and together with the Private Placement Warrants, the "Warrants") issued to five
"accredited investors" in March 2012 pursuant to Section 4(2) of the Securities Act. Each Investor Warrant is exercisable
at $0.50 per Share from the date of issuance until the third anniversary date of the date of issuance.
The Warrants are redeemable at any time by the Company for $0.05
per Warrant and the holders of the Warrants are obligated to fully exercise their Warrants in the event the Company's Common
Stock trades at $3.00 or more for a period of at least 20 consecutive trading days.
The Selling Stockholders may offer all or part of their Shares
for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated
prices. We will not receive any of the proceeds from the Shares by the Selling Stockholders, but we will receive funds from the
exercise of the Warrants if and when those Warrants are exercised. Some of the Selling Stockholders have exercised their Warrants
but there is no assurance that any additional Warrants will be exercised or that all or any of the Shares will be sold. We are
paying all of the registration expenses incurred in connection with the registration of the Shares, but we will not pay any of
the selling commissions, brokerage fees and related expenses.
Our Common Stock is quoted on the OTC Bulletin Board (the "OTCBB")
under the symbol "GBSX." On April 6, 2012, the last reported sale of our Common Stock quoted on the OTCBB was
$1.10 per share.
The Selling Stockholders, and any broker-dealer executing sell
orders on behalf of the Selling Stockholders, may be deemed to be "underwriters" within the meaning of the Securities
Act.  Commissions received by any broker-dealer may be deemed underwriting commissions under the Securities Act.
Investing in our Common
Stock involves a high degree of risk. See "Risk Factors" beginning on page 12 to read about factors you
should consider before investing in shares of our Common Stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of This Prospectus is __________,
2012
3
TABLE OF CONTENTS
Page No.
PROSPECTUS SUMMARY
5
RISK FACTORS
12
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
20
SELLING STOCKHOLDERS
21
BUSINESS
27
DESCRIPTION OF PROPERTY
35
LEGAL PROCEEDINGS
35
CORPORATE STRUCTURE AND HISTORY
MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
40
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
53
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
53
EXECUTIVE COMPENSATION
58
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
61
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
62
LEGAL MATTERS
62
EXPERTS
62
WHERE YOU CAN FIND MORE INFORMATION
62
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
64
____________________
You should rely only on the information
contained in this prospectus and in any free writing prospectus. Neither we nor the Selling Stockholders have authorized anyone
to provide you with information different from that contained in this prospectus. The Selling Stockholders are offering to sell,
and seeking offers to buy, shares of our Common Stock only in jurisdictions where offers and sales are permitted. The information
in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or
any sale of shares of our Common Stock.
4
PROSPECTUS SUMMARY
This summary highlights selected information
contained elsewhere in this prospectus.  This summary does not contain all the information that you should consider before
investing in the Common Stock.  You should carefully read the entire prospectus, including "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements
before making an investment decision.
General
GBS Enterprises Incorporated, a Nevada
corporation (the Company," GBS," GBSX," we," us," our" or similar expressions), through its
subsidiaries, is a global operating software and services company. We focus on cloud automation technology, commercial and governmental
application modernization and migration, and business application development, deployment and management, primarily in the IBM
Lotus Notes and Domino space. We help customers, such as commercial and government organization IT departments, system integrators,
ISV's and Data Center providers solve IT challenges such as:
§
Shaping IT strategy & planning
§
Deploying, developing, maintaining and managing business applications
§
Automating business processes
§
Optimizing system & application performance
§
Managing messaging systems & ensuring messaging security & compliance
§
Simplifying application modernization, migration & deployment.
§
Migrating and integrating messaging and application systems
GBSX is pursuing an aggressive growth strategy
which includes highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.
The Company's main activities are
focused on serving IBM's Lotus Notes & Domino market where it has become IBM's largest provider of business application
solutions.
5
To serve the demand for modernization of
the applications run worldwide on the Domino platform the major innovation developed by the Company's concentration of talent
are certain specific software tools that allows IBM Lotus Software Group and its partners to rapidly and cost-effectively convert
their customers' existing Lotus based rich-client applications into modern, web accessible and client independent applications,
avoiding any data migration and enabling their customers to improve user experience. The use of modern XPages based Lotus Software
applications allows customers to leverage self-service capabilities, benefit from IBM's latest Lotus release features, and
to be automatically 'cloud' ready. This Application Transformation technology (GBS Transformer product suite) dramatically
increases IBM's Lotus Software solutions competitiveness against providers such as Google, Salesforce, Microsoft Sharepoint
and others.
The Company's specific software tools
enable IBM, the IBM Lotus Notes/Domino partners, system integrators (SIs) or commercial or governmental organization-controlled
service units to solve the industry needs for efficient modernization of a Lotus environment, specifically for the highly distributed
and heavily used IBM Lotus Notes/Domino applications. The Company's modernization tools span the complete set of customer
requirements and demands for application modernization and migration:
n
Retire (automatically convert into full text searchable .pdf archived applications);
n
Renew (automatically convert into modern web 2.0 styled, access anywhere applications);
n
Rebuild (accelerate case-specific rebuilding into access anywhere applications); or
n
Replace (accelerate case-specific replacing with a different technology).
The Company has also developed an innovative
Cloud Automation Platform (GroupLive) enabling the automation of the processes beyond virtualization or managing customer dedicated
or shared infrastructure, such as networks, servers and clients. GroupLive extends process automation for legacy applications,
including user management, user access and application deployment without the need of rewriting the entire application. Automation
is supposed to decrease IT labor by more than 50%, especially for application management and maintenance. GroupLive supports IT
consolidation, standardization, modernization, utilization and optimization, as well as centralization, monitoring, and reporting.
Customers gain more efficiency, reduce cost and free IT labor to refocus on strategic tasks rather than on overwhelming current
day-to-day workloads. GroupLive is currently deployed in IBM's Data Centers in Germany. This service is based on a non-exclusive
contract with the IBM Data Center and can be modified or replaced with other Data Center providers in the German market. GroupLive
is also being deployed in GBS data centers in the US.
Since January 6, 2011, the Company owns
majority control (50.1%) of GROUP Business Software AG (GROUP"), a Frankfurt, Germany listed publicly-traded company (INW).
GROUP is headquartered in Eisenach, Germany. GROUP's businesses served as the foundation for GBSX to achieve its strategic
objectives. In 2011, GBS added more companies to complete its cloud automation and application management focused offering. With
Pavone AG and Groupware AG the portfolio now includes cloud-enabled workflow management, as well as cloud-enabled application archiving.
With the acquisition of IDC Global, Inc., Chicago, a high end data center provider, GBSX is starting to offer the GroupLive technology
in the United States. The acquisition of SD Holdings, Inc., a specialized company in the area of analytics, business intelligence,
reporting and services, provides GBS with access to the Asian markets as well as access to cost-effective high quality consulting
resources. In addition, GBS plans to leverage SD's Indian subsidiary as the foundation for its strategic service delivery
factory.
GBS will leverage its technologies, partnerships
and customer base to develop its business strategy and existing operations in North America, Asia and Europe. In particular, the
Company will concentrate on rapidly evolving as a major provider of Cloud Automation Platform Technology software and IBM Lotus
Notes/Domino Application Modernization & Migration Services.
Furthermore, the Company is currently negotiating
a Reseller Agreement with IBM's Lotus Software Division that would make it possible for IBM to bundle specific technology
developed by the Company and sell them as an integrated product solution through the IBM sales channel. The Reseller Agreement
would provide the Company with software license, subscription and service based revenues.
In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, the Company also has the potential for dramatic growth from large strategic
partnerships such as with major OEM players, SIs, ISV's, data centers, as well as a variety of large enterprise class and
medium sized end users who are in the business of application modernization, migration and/or management.
6
Revenue Model
GBS generates revenue from software license
sales and related services, including maintenance and support, hosting, consulting and implementation services. The Company's
software products for business application and management addressing all matters running an IBM Lotus environment – are generally
sold with a perpetual license and a related maintenance contract. Service revenue is obtained from a wide range of consulting services,
such as application development, managed services, performance & upgrade services and administration. Maintenance revenue is
received from its business application software customers for updates and supports, with contracts typically spanning two to three
years. GBS customers are now also able to purchase the business application and management software via subscription.
GBS generates revenue in the area of cloud
enablement and application migration & modernization from subscription and usage fees and related services, including support,
hosting and strategic consulting services. The Company's offering among its cloud automation platform – is generally
sold on a usage base with a typically mid- to long-term subscription period; while its IBM Lotus Notes/Domino application modernization
and migration technologies are sold on a per application and transformation base, including related services, such as strategic
consulting, project management, delivery management, and application deployment.
Strategy and Focus Areas
The Company is focused on developing a
portfolio of Cloud Computing software technologies and Application Services to address the needs of Independent Service Providers
(ISV's), Data Center providers, as well as commercial and government organizations. GBSX is pursuing an aggressive growth
strategy based upon highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.
In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, GBS also has the potential for dramatic growth from large strategic partnerships
such as with major Cloud platform/OEM players, data centers, ISV's as well as a variety of large enterprise class and medium
sized end users who are interested in having their own private clouds. GBS also intends pursue highly attractive opportunities
with a wide variety of other Cloud vendors including Computer Associates, Dell, HP, Accenture, and Amazon, as well as with specialized
distributors and system integrators.
General Corporate History
We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV"). SWAV was an importer and wholesaler of Chinese manufactured goods.
On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus") pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training. Simultaneously with SWAV's acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of
SWAV common stock to Joerg Ott, our CEO and Chairman, for an aggregate purchase price of $370,000.
7
Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company's Chief Executive Officer,
President and Chairman of the Board of Directors. On September 6, 2010, SWAV's name was changed to GBS Enterprises Incorporated.
On October 14, 2010, the Company's trading symbol on the OTC Bulletin Board was changed from SWAV to GBSX.
Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP Business Software AG, a Frankfurt-based
German software company ("GROUP"), pursuant to Share Purchase Agreements between the Company and several of GROUP's
stockholders, including Mr. Joerg Ott (also the Company's Chairman and Chief Executive Officer). Pursuant to the Share Purchase
Agreements, the Company acquired an aggregate of 7,115,500 shares of common stock of GROUP in consideration for an aggregate of
3,049,489 shares of the Company's common stock.
On January 6, 2011, the Company acquired
an additional 5,525,735 shares of common stock of GROUP, representing approximately 21.9% of the issued and outstanding shares,
from several additional GROUP stockholders in consideration for an aggregate of 2,355,922 shares of the Company's common
stock.
In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP.
On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP's outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.
8
Selected
Financial Data
The
following summary financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement
of operations and balance sheet data for the year ended March 31, 2011 is derived from our audited financial statements and the
interim financials for the period ending December 31, 2011 is derived from our unaudited financial statements. The following information
summarizes the more complete historical financial information included in the Consolidated Financial Statements included in this
prospectus.
At December 31, 2011
At March 31, 2011
Balance Sheet Data
(Unaudited)
(Audited)
(Restated)
Assets
Current Assets
Cash and cash equivalents
$
3,537,517
$
8,530,864
Debtors (Accounts receivable)
4,544,023
5,698,320
Inventories
264,611
-
Prepaid expenses
1,097,370
1,423,281
Other receivables
796,454
2,222,887
Total current assets
$
10,239,975
$
17,875,353
Total non-current assets
$
76,470,995
58,990,576
Total assets
$
86,710,970
$
76,865,929
Liabilities and stockholders' equity
Total current liabilities
$
18,472,945
$
16,345,733
Total non-current liabilities
$
7,168,739
$
7,940,061
Total liabilities
$
25,641,684
$
24,285,794
9
Income Statement Data
For the Nine Months
For the Fiscal Year
Ended December 31,
Ended March 31,
2011
2010
2011
2010
(Unaudited)
(Unaudited)
(Audited)
(Restated)
(Audited)
Revenues
Products
$
6,980,202
$
7,339,747
$
12,848,954
$
12,479,629
Services
14,340,149
10,619,891
14,858,272
19,105,103
$
21,320,351
$
17,959,638
$
27,707,226
$
31,584,732
Cost of goods sold
Products
$
3,976,750
$
3,770,174
$
7,016,189
$
5,631,372
Services
6,866,807
4,917,742
7,066,305
5,662,619
$
10,843,557
$
8,687,916
$
14,082,494
$
11,293,991
Gross profit
$
10,476,794
$
9,271,722
$
13,624,732
$
20,290,741
Operating expenses
$
17,985,032
$
11,241,339
$
15,918,290
$
19,032,719
Operating income (loss)
$
(7,508,238
)
$
(1,969,617
)
$
(2,293,558
)
$
1,228,022
Net income (loss)
$
(5,121,694
)
$
(337,813
)
$
(3,637,306
)
$
1,419,438
Net earnings (loss) per share
Basic
$
(0.10
)
$
(0.02
)
$
(0.119
)
$
0.043
Diluted
$
(0.10
)
$
(0.02
)
$
(0.119
)
$
0.038
Where You Can Find Us
Our principal executive office is located at 585 Molly Lane,
Woodstock, Georgia 30189 and our telephone number is (404) 474-7256.
10
The Offering
Common stock offered by Selling Stockholders
Up to 8,064,000 shares of Common Stock issuable upon the exercise of Warrants held by the Selling Stockholders exercisable for a three year period, commencing on the date of grant. Consists of 6,044,000 shares of Common Stock issuable upon the exercise of the Private Placement Warrants issued in March 2011 for $1.50 per Share and 2,020,000 shares of Common Stock issuable upon the exercise of the Investor Warrants issued in March 2012 for $0.50 per Share.
Terms of the Offering
The Selling Stockholders will determine when and how they will sell the Common Stock offered in this prospectus.
Termination of the Offering
The Offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to an effective registration statement, of which this prospectus forms a part, or (ii) such time as all of the Common Stock becomes eligible for resale pursuant to Rule 144 under the Securities Act or any other rule of similar effect.
Use of Proceeds
We are not selling any shares
of the Common Stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We will, however,
receive proceeds in the event of the exercise of the Warrants by the Selling Stockholders. As of the date of this prospectus,
the Selling Stockholders have exercised an aggregate of 2,925,000 Warrants, consisting of 2,025,000 Private Placement Warrants
and 900,000 Investor Warrants, for gross proceeds to the Company of $3,487,500. Upon the full exercise of the remaining Warrants,
we will receive total gross proceeds of $10,076,000. However, there can be no assurances that any additional Warrants will be
exercised. To date, we have used the proceeds of the Warrants already exercised for general corporate working capital purposes.
We intend to use the proceeds from the exercise of any additional Warrants to increase marketing, advertising and Cloud and Transformer
service and development teams, acquisitions and for general corporate working capital purposes.
Common Stock Trading Symbol
GBSX.OB
Risk Factors
The Common Stock offered hereby involves
a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk
Factors" beginning on page 12.
11
RISK FACTORS
You should carefully consider the risks described below together
with all of the other information included in this prospectus before making an investment decision with regard to our securities.
The statements contained in or incorporated into this offering that are not historic facts are forward-looking statements that
are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied
by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results
of operations could be harmed. In that case, the trading price of our Common Stock could decline, and you may lose all or part
of your investment.
Risks Related
to Our Business
We have a limited operational history.
We have a limited history upon which an
evaluation of our prospects and future performance can be made. Our proposed operations are subject to all business risks associated
with new enterprises. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications,
and delays frequently encountered in connection with the expansion of a business operation in an emerging industry, and the continued
development of advertising, promotions, and a corresponding customer base. There is a possibility that we could sustain losses
in the future, and there are no assurances that we will ever operate profitably.
Ongoing uncertainty regarding the duration and extent
of the recovery from the recent economic downturn and in global economic conditions generally may reduce information technology
spending below current expectations and therefore adversely impact our revenues, impede end user adoption of new products and product
upgrades and adversely impact our competitive position.
Our business depends on the overall demand for information technology
and on the economic health of our current and prospective customers. The purchase of our products is often discretionary and may
involve a significant commitment of capital and other resources. Weak economic conditions or significant uncertainty regarding
the recovery from the recent economic downturn could adversely impact our business, financial condition and results of operations
in a number of ways, including by lengthening sales cycles (for example, ELAs), lowering prices for our products and services,
reducing unit sales, decreasing or reversing quarterly growth in our revenues, reducing the rate of adoption of our products by
new customers and the willingness of current customers to purchase upgrades to our existing products.
The recent global economic disruption also resulted in general
and ongoing tightening in the credit markets, lower levels of liquidity and increases in the rates of default and bankruptcy, while
the potential for extreme volatility in credit, equity and fixed income markets continues. As a result, current or potential customers
may be unable to fund software purchases, which could cause them to delay, decrease or cancel purchases of our products and services.
Even if customers are willing to purchase our products and services, if they do not meet our credit requirements, we may not be
able to record accounts receivable or deferred revenue or recognize revenues from these customers until we receive payment, which
could adversely affect the amount of revenues we are able to recognize in a particular period.
Our business could be adversely impacted by conditions
affecting the information technology market.
The demand for our products and services depends substantially
upon the general demand for business-related computer appliances and software, which fluctuates based on numerous factors, including
capital spending levels, the spending levels and growth of our current and prospective customers, and general economic conditions.
Fluctuations in the demand for our products and services could have a material adverse effect on our business, results of operations
and financial condition. Moreover, the purchase of our products is often discretionary and may involve a significant commitment
of capital and other resources. Future economic projections for the information technology sector are uncertain as companies continue
to reassess their spending for technology projects. If an uncertain environment for information technology spending continues,
it could negatively impact our business, results of operations and financial condition.
We face intense competition, which could result
in fewer customer orders and reduced revenues and margins.
We sell our products in intensely competitive markets. Some
of our competitors and potential competitors have significantly greater financial, technical, sales and marketing and other resources
than we do. As the markets for our products and services continue to develop, additional companies, including companies with significant
market presence in the computer appliances, software and networking industries, could enter the markets in which we compete and
further intensify competition. In addition, we believe price competition could become a more significant competitive factor in
the future. As a result, we may not be able to maintain our historic prices and margins, which could adversely affect our business,
results of operations and financial condition.
12
We are highly dependent on the services
of Joerg Ott, our President, CEO and Chairman, and other key personnel.
Our success depends and will depend on the efforts and abilities
of key personnel, such as high qualified software developers, service consultants and management, especially Mr. Joerg Ott, our
President, Chief Executive Officer and Chairman. The loss of Mr. Ott would have a material adverse effect on us. Our success also
depends upon our ability to attract and retain qualified personnel required to fully implement our business plan. There can be
no assurance that we will be successful in these efforts.
If our subsidiaries lose key personnel or cannot hire
enough qualified employees in certain areas of our business, our ability to manage our business could be adversely affected.
Our success depends, in large part, upon the services of a number
of key employees in certain areas of our business. Except for certain key employees, we do not have long-term employment agreements
with any of our key personnel. Any officer or employee can terminate his or her relationship with us at any time. The effective
management of our growth, if any, could depend upon our ability to retain our highly-skilled managerial, technical, sales and services,
finance and marketing personnel in certain areas of our business. If any of those employees leave, we will need to attract and
retain replacements for them. We also may need to add key personnel in the future, including in certain key areas of our business.
The market for these qualified employees is competitive. We could find it difficult to successfully attract, assimilate or retain
sufficiently qualified personnel in sufficient numbers. Furthermore, we may hire key personnel in connection with our future acquisitions;
however, any of these employees will be able to terminate his or her relationship with us at any time. If we cannot retain and
add the necessary staff and resources for these acquired businesses, our ability to develop acquired products, markets and customers
could be adversely affected. Also, we may need to hire additional personnel to develop new products, product enhancements and technologies.
If we cannot add the necessary staff and resources, our ability to develop future enhancements and features to our existing or
future products could be delayed. Any delays could have a material adverse effect on our business, results of operations and financial
condition.
We are highly dependent on IBM.
We, through our subsidiaries, are the world's
largest supplier of applications for IBM's Lotus Notes and Domino markets. For the fiscal year ended March 31, 2011 and 2010,
$ 4,610,152 (16.6%) in revenue and $ 2,502,765 (7.9%) in revenue, respectively, was derived from our business with IBM Licenses.
We expect much of our growth to come from our Transformer and GroupLive offerings. Should IBM choose not to promote its IBM Collaboration
and Social Software offerings or support positioning our products, we might not see the growth we are anticipating and our business
could be materially adversely affected resulting in the loss of some or all of your investment in our Common Stock.
We may not be able to manage our growth effectively.
We must continually implement and improve our products and/or
services, operations, operating procedures and quality controls on a timely basis, as well as expand, train, motivate and manage
our work force in order to accommodate anticipated growth and compete effectively in our market area. Successful implementation
of our strategy also requires that we establish and manage a competent, dedicated work force and employ additional key employees
in corporate management, product design, client service and sales. We can give no assurance that our personnel, systems, procedures
and controls will be adequate to support our existing and future operations. If we fail to implement and improve these operations,
there could be a material, adverse effect on our business, operating results and financial condition.
If we do not develop new products and services or enhancements
to our existing products and services, our business, results of operations and financial condition could be adversely affected.
The markets for our products and services are characterized
by:
•
rapid technological change;
•
evolving industry standards;
•
fluctuations in customer demand;
•
changes in customer requirements; and
•
frequent new product and service introductions and enhancements.
13
Our future success depends on our ability to continually enhance
our current products and services and develop and introduce new products and services that our customers choose to buy. If we are
unable to keep pace with technological developments and customer demands by introducing new products and services and enhancements,
our business, results of operations and financial condition could be adversely affected. Our future success could be hindered by:
•
delays in our introduction of new products and services;
•
delays in market acceptance of new products and services or new releases of our current products and services; and
•
our, or a competitor's, announcement of new product or service enhancements or technologies that could replace or shorten
the life cycle of our existing product and service offerings.
In order for a number of our products to succeed in the future,
we believe the demand for technology will need to shift from the types of products and services we and our competitors have sold
in the past to a new generation of products we now offer. We cannot guarantee that we will be able to respond effectively to technological
changes or new product announcements by others. If we experience material delays or sales shortfalls with respect to our new products
and services or new releases of our current products and services, those delays or shortfalls could have a material adverse effect
on our business, results of operations and financial condition.
We may be unable to effectively control our operating
expenses, which could negatively impact our profitability.
Although we endeavor to effectively control our operating expenses,
these expenses, which are based on estimated revenue levels, are relatively fixed in the short term. We cannot assure you that
our operating expenses will be lower than our estimated or actual revenues in any given quarter or that we will not incur unanticipated
expenses. If we experience a shortfall in revenue in any given quarter or if we incur material unanticipated expenses, we likely
will not be able to further reduce operating expenses quickly in response. Any significant shortfall in revenue or the incurrence
of material unanticipated expenses could immediately and adversely affect our results of operations for that quarter. Also, due
to the fixed nature of many of our expenses and the challenges for revenue growth in the current environment, our income from operations
and cash flows from operating and investing activities could be lower than in recent years.
In addition, to the extent our revenue grows, if at all, we
believe that our cost of revenues and certain operating expenses could also increase. We believe that we could incur additional
costs as we develop, license or buy new technologies or enhancements to our existing products and services. These added costs and
royalties could increase our cost of revenues and operating expenses and lower our gross margins. However, we cannot currently
quantify the costs for such transactions that have not yet occurred or of these developing trends in our business. In addition,
we may need to use a substantial portion of our cash and investments or issue additional shares of our Common Stock to fund these
additional costs.
Acquisitions present many risks, and we may not realize
the financial and strategic goals we anticipate at the time of an acquisition.
Our growth is dependent upon market growth, our ability to enhance
existing products and services, and our ability to introduce new products and services on a timely basis. We intend to continue
to address the need to develop new products and services and enhance existing products and services through acquisitions of other
companies, product lines and/or technologies. However, acquisitions, including those of high-technology companies, are inherently
risky. We cannot provide any assurance that any of our previous acquisitions or future acquisitions will be successful in helping
us reach our financial and strategic goals either for that acquisition or for us generally or that the combined company resulting
from any acquisition will continue to support the growth achieved by the companies separately.
The risks we may encounter in managing and integrating acquisitions
are:
•
difficulties and delays integrating the operations, technologies, and products of the acquired companies;
•
undetected errors or unauthorized use of a third-party's code in products of the acquired companies;
•
the diversion of management's attention from normal daily operations of the business;
•
potential difficulties in completing projects associated with purchased in-process research and development;
•
entry into markets in which we have no or limited direct prior experience and where competitors have stronger market positions
and which are highly competitive;
•
the potential loss of key employees of the acquired company; and
14
•
an uncertain revenue and earnings stream from the acquired company, which could unexpectedly dilute our earnings.
Our failure to manage growth effectively and successfully integrate
acquired companies due to these or other factors could have a material adverse effect on our business, results of operations and
financial condition.
Attractive acquisition opportunities may not be available
to us, which could negatively affect the growth of our business.
Our business strategy includes the selective acquisition of
businesses and technologies, such as our acquisition of GROUP in November 2010 and January 2011, and the acquisitions of other
Lotus Software & Services companies or our data center acquisitions. We plan to continue to seek opportunities to expand our
product portfolio, customer base, technology, and technical talent through acquisitions. However, we may not have the opportunity
to make suitable acquisitions on favorable terms in the future, which could negatively impact the growth of our business. We expect
that other companies in our industry will compete with us to acquire compatible businesses. This competition could increase prices
for businesses and technologies that we would likely pursue, and our competitors may have greater resources than we do to complete
these acquisitions.
We could change our licensing programs or subscription
renewal programs, which could negatively impact the timing of our recognition of revenue.
We continually re-evaluate our licensing programs and subscription
renewal programs, including specific license models, delivery methods, and terms and conditions, to market our current and future
products and services. We could implement new licensing programs and subscription renewal programs, including promotional trade-up
programs or offering specified enhancements to our current and future product and service lines. Such changes could result in deferring
revenue recognition until the specified enhancement is delivered or at the end of the contract term as opposed to upon the initial
shipment or licensing of our software product. We could implement different licensing models in certain circumstances, for which
we would recognize licensing fees over a longer period, including offering additional products in a software-as-a-service model.
Changes to our licensing programs and subscription renewal programs, including the timing of the release of enhancements, upgrades,
maintenance releases, the term of the contract, discounts, promotions and other factors, could impact the timing of the recognition
of revenue for our products, related enhancements and services and could adversely affect our operating results and financial condition.
As our international sales and operations grow, we could
become increasingly subject to additional risks that could harm our business.
We conduct significant sales and customer support, development
and engineering operations in countries outside of the United States. Our continued growth and profitability could require us to
further expand our international operations. To successfully expand international sales, we must establish additional foreign operations,
hire additional personnel and recruit additional international resellers. In addition, there is significant competition for entry
into high growth markets, such as China. Our international operations are subject to a variety of risks, which could cause fluctuations
in the results of our international operations. These risks include:
•
compliance with foreign regulatory and market requirements;
•
variability of foreign economic, political and labor conditions;
•
changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by U.S. export laws;
•
longer accounts receivable payment cycles;
•
potentially adverse tax consequences;
•
difficulties in protecting intellectual property;
•
burdens of complying with a wide variety of foreign laws; and
•
as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty transferring such funds to the
U.S. in a tax efficient manner.
Our results of operations are also subject to fluctuations in
foreign currency exchange rates. In order to minimize the impact on our operating results, we generally initiate our hedging of
currency exchange risks one year in advance of anticipated foreign currency expenses for those currencies to which we have the
greatest exposure. When the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will
be partially offset by the gains realized from our hedging contracts. If the dollar is strong, foreign currency denominated expenses
will be lower. These lower expenses will in turn be partially offset by the losses incurred from our hedging contracts. There is
a risk that there will be fluctuations in foreign currency exchange rates beyond the one year timeframe for which we hedge our
risk.
15
Our success depends, in part, on our ability to anticipate and
address these risks. We cannot guarantee that these or other factors will not adversely affect our business or operating results.
Security vulnerabilities in our products could have a
material adverse impact on our results of operations.
Maintaining the security of computing devices and networks is
a critical issue for us and our customers. We devote significant resources to address security vulnerabilities in our products
and services through engineering more secure products and services, enhancing security and reliability features in our products
and services, deploying security updates to address security vulnerabilities and seeking to respond to known security incidents
in sufficient time to minimize any potential adverse impact. The cost of these measures could reduce our operating margins. Despite
these efforts, actual or perceived security vulnerabilities in our products and systems may lead to claims against us and harm
our reputation, and could lead some customers to seek to return products, to stop using certain products or services, to reduce
or delay future purchases of our products or services, or to use competing products or services. Customers may also increase their
expenditures on protecting their existing computer systems from attack, which could delay adoption of new technologies. Further,
if our customers suffer any losses or are otherwise harmed in connection with a security incident related to our products or services,
we could be subject to liability claims from our customers. Any of these actions by customers could adversely impact our results
of operations.
Our efforts to protect our intellectual property may not
be successful, which could materially and adversely affect our business.
We rely primarily on a combination of copyright, trademark,
patent and trade secret laws, confidentiality procedures and contractual provisions to protect our source code and other intellectual
property. The loss of any material trade secret, trademark, trade name, patent or copyright could have a material adverse effect
on our business. Despite our precautions, it could be possible for unauthorized third parties to copy, disclose or reverse engineer
certain portions of our products or to otherwise obtain and use our proprietary source code, in which case we could potentially
lose future trade secret protection for that source code. If we cannot protect our proprietary source code against unauthorized
copying, disclosure or use, unauthorized third parties could develop products similar to or better than ours.
Any patents applied for by us could eventually not be granted
or any patent owned by us could be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether
or not being currently challenged, may not be issued with the scope we seek, if at all; and if issued, may not provide any meaningful
protection or competitive advantage.
In addition, our ability to protect our proprietary rights could
be affected by differences in international law and the enforceability of licenses. The laws of some foreign countries do not protect
our intellectual property to the same extent as do the laws of the United States and Canada. For example, we derive a significant
portion of our sales from licensing our products under "click-to-accept" license agreements that are not signed by
licensees and electronic enterprise customer licensing arrangements that are delivered electronically, all of which could be unenforceable
under the laws of many foreign jurisdictions in which we license our products.
Our products, including products obtained through acquisitions,
could infringe third-party intellectual property rights, which could result in material litigation costs.
We are increasingly subject to infringement claims and may in
the future be subject to claims alleging the unauthorized use of a third-party's code in our products. This may occur for
a variety of reasons, including the expansion of our product lines through product development and acquisitions; an increase in
patent infringement litigation commenced by non-practicing entities; the increase in the number of competitors in our industry
and the resulting increase in the number of related products and the overlap in the functionality of those products; and the unauthorized
use of a third-party's code in our product development process. Companies and inventors are more frequently seeking to patent
software despite recent developments in the law that may discourage or invalidate such patents. As a result, we could receive more
patent infringement claims. Responding to any infringement claim, regardless of its validity, could result in costly litigation
costs, monetary damages or injunctive relief or require us to obtain a license to intellectual property rights of those third parties.
Licenses may not be available on reasonable terms, on terms compatible with the protection of our proprietary rights, or at all.
In addition, attention to these claims could divert our management's time and attention from developing our business. If
a successful claim is made against us and we fail to develop or license a substitute technology or negotiate a suitable settlement
arrangement, our business, results of operations, financial condition and cash flows could be materially and adversely affected.
In particular, a material adverse impact on our financial statements could occur in the period in which the effect of an unfavorable
final outcome becomes probable and reasonably estimable.
16
Security and reliability is the number one concern of
Cloud Computer users.
Lack of control augments consumers' perception of Cloud
Computing security and reliability, including connectivity outages which could cause large lack of productivity and financial losses.
Although security risks may be minimized by having cloud computing in a smaller cloud, having a smaller cloud or clouds would likely
negate to many extents the cost and scalability effects of cloud computing. Cloud Computing flaws, whether actual or perceived,
could hinder our ability grow our Company's business.
Risks related to the disclosure of confidential information
of core technology.
The independently developed technologies by us, contracts with
partners and agreements with cooperated system integrators are all confidential information. We have established strict access
limitation level for the personnel in the Company to review and use such information by signing Non-disclosure Agreements with
relevant people. The usage and disclosure of such information have been managed stringently by the Company. We also sign a long-term
engagement contract with the core technical people who may hold major technologies of the Company. Despite the foregoing measurements
adopted by the Company, we cannot assure the confidential information will not be disclosed definitely.
Systems failures could harm our business.
Temporary or permanent outages of our computers or software
equipment could have an adverse effect on our business. Although we have not experienced any catastrophic outages to date, we currently
do not have fully redundant systems for our web sites and other services at an alternate site. Therefore, our systems are vulnerable
to damage from break-ins, unauthorized access, vandalism, fire, earthquakes, power loss, telecommunications failures and similar
events. Although we maintain insurance against fires, earthquakes and general business interruptions, the amount of coverage might
not be sufficient which could adversely affect our business operations and the value of our Common Stock.
Experienced computer programmers seeking to intrude or
cause harm, or hackers, may attempt to penetrate our network security from time to time.
Although we have not experienced any
catastrophic security breaches to date, if a hacker were to penetrate our network security, they could misappropriate proprietary
information, cause interruptions in our services, dilute the value of our offerings to customers and damage customer relationships.
We might be required to expend significant capital and resources to protect against, or to alleviate, problems caused by hackers.
We also may not have a timely remedy against a hacker who is able to penetrate our network security. In addition to purposeful
security breaches, the inadvertent transmission of computer viruses could expose us to system damage, operational disruption, loss
of data, litigation and other risks of loss or harm.
We depend on continued performance
of and improvements to our computer network.
Any failure of our computer systems that causes interruption
of our services could result in a loss of business. If sustained or repeated, these performance issues could reduce the attractiveness
of our services to consumers and our subscription products and services. Increases in the volume of our web site traffic could
also strain the capacity of our existing computer systems, which could lead to slower response times or system failures. We may
not be able to project accurately the rate, timing or cost of any increases in our business, or to expand and upgrade our systems
and infrastructure to accommodate any increases in a timely manner.
Internet commerce security threats could pose a risk to
our online sales and overall financial performance.
A significant barrier to online commerce is the secure transmission
of confidential information over public networks. We rely on encryption and authentication technology to provide the security and
authentication necessary to effect secure transmission of confidential information. There can be no assurance that advances in
computer capabilities; new discoveries in the field of cryptography or other developments will not result in a compromise or breach
of the algorithms used by us and our partners to protect consumer's transaction data. If any such compromise of security
were to occur, it could have a materially adverse effect on our business, prospects, financial condition and results of operations.
A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in
our operations. We may be required to expend significant capital and other resources to protect against such security breaches
or to alleviate problems caused by such breaches. Concerns over the security of transactions conducted on the Internet and the
privacy of users may also hinder the growth of online services generally, especially as a means of conducting commercial transactions.
To the extent that our activities, our partners or third-party contractors involve the storage and transmission of proprietary
information, such as credit card numbers, security breaches could damage our reputation and expose us to a risk of loss or litigation
and possible liability. There can be no assurance that our security measures will not prevent security breaches or that failure
to prevent such security breaches will not have a materially adverse effect on our business, prospects, financial condition and
results of operations.
17
Risk of Capacity Constraints; Reliance on Internally Developed
Systems; System Development Risks.
A key element of our strategy is to generate a high volume of
traffic on, and use of, our services across our network infrastructure and systems. Accordingly, the satisfactory performance,
reliability and availability of our software systems, transaction-processing systems and network infrastructure are critical to
our reputation and our ability to attract and retain customers, as well as maintain adequate customer service levels. Our revenues
depend on the number of visitors who sign up for our services. Any systems interruptions that result in the unavailability of our
software systems or network infrastructure would reduce the volume of sign ups and the attractiveness of our service offerings.
We may experience periodic systems interruptions from time to time. Any substantial increase in the volume of traffic on our software
systems or network infrastructure will require us to expand and upgrade further our technology, transaction-processing systems
and network infrastructure. There can be no assurance that we will be able to accurately project the rate or timing of increases,
if any, in the use of our Web site or timely expand and upgrade our systems and infrastructure to accommodate such increases. We
will use a combination of industry supplied software and internally developed software and systems for our search engine, distribution
network, and substantially all aspects of transaction processing, including order management, cash and credit card processing,
and accounting and financial systems. Any substantial disruptions or delays in any of our systems would have a materially adverse
effect on our business, prospects, financial condition and results of operations.
Storage of personal information about our customers could
pose a security threat.
Our policy is not to willfully disclose any individually identifiable
information about any user to a third party without the user's consent. This policy is accessible to users of our services
when they initially register. Despite this policy, however, if third persons were able to penetrate our network security or otherwise
misappropriate our users' personal information or credit card information, we could be subject to liability. These could
include claims for unauthorized purchases with credit card information, impersonation or other similar fraud claims. They could
also include claims for other misuses of personal information, such as for unauthorized marketing purposes. These claims could
result in litigation. In addition, the Federal Trade Commission and other states have been investigating certain Internet companies
regarding their use of personal information. We could incur additional expenses if new regulations regarding the use of personal
information are introduced or if they chose to investigate our privacy practices.
We have agreed to indemnify our officers
and directors against lawsuits to the fullest extent of the law.
We are a Nevada corporation. Nevada law permits the indemnification
of officers and directors against expenses incurred in successfully defending against a claim. Pursuant to our Articles of Incorporation
and Bylaws, we have agreed to indemnify our officers and directors to the fullest extent possible under the Nevada law. In the
event that we are found liable for damage or other losses, we would incur substantial and protracted losses in paying any such
claims or judgments. Pursuant to those certain letter agreements entered into between the Company and their Officers and each independent
director of the Company's Board of Directors appointed as of March 1, 2012, the Company is also contractually obligated to
indemnify each independent director to the fullest extent possible under Nevada law and has obtained Director and Officer insurance
coverage in the amount of $5,000,000 per occurrence. There is no guarantee, however, that such coverage or that any insurance coverage
would protect us from any damages or loss claims filed against it.
We may engage in transactions that
present conflicts of interest.
Our officers and members of our Board of Directors may enter
into agreements with the Company from time to time which may not be equivalent to similar transactions entered into with an independent
third party. A conflict of interest arises whenever a person has an interest on both sides of a transaction. While we believe that
it will take prudent steps to ensure that all transactions between the Company and any officer or director is fair, reasonable,
and no more than the amount it would otherwise pay to a third party in an "arms-length" transaction, there can be no
assurance that any transaction will meet these requirements in every instance.
18
Risks Related to our Common Stock
The application of the "penny stock" rules
could adversely affect the market price of our Common Stock and increase your transaction costs to sell those shares.
The Securities and Exchange Commission adopted Rule 15g-9 which
generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain exceptions. If the trading price of our Common
Stock falls below $5.00 per share, the open-market trading of our Common Stock is subject to the penny stock rules, which
imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited
investors".  The term "accredited investor" refers generally to institutions with assets in excess
of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with
their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about
penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer
with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction
and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules,
the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to the transaction.  These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe the penny stock
rules discourage investor interest in and limit the marketability of our Common Stock.
FINRA sales practice requirements may also limit a stockholder's
ability to buy and sell our stock.
In addition to the "penny stock" rules described
above, FINRA adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's
financial status, tax status, investment objectives and other information.  Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  FINRA
requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit
your ability to buy and sell our stock and have an adverse effect on the market for our shares.
The price of our shares of Common Stock in the future
may be volatile.
The market price of our Common Stock could be volatile and could
fluctuate widely in price in response to various factors, many of which are beyond our control, including: technological innovations
or new products and services by us or our competitors; additions or departures of key personnel; sales of our Common Stock; our
ability to integrate operations, technology, products and services; our ability to execute our business plan; operating results
below expectations; loss of any strategic relationships; industry developments; economic and other external factors; and period-to-period
fluctuations in our financial results. Because we have a very limited operating history with no revenues to date, you may consider
any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above. In addition, the
securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our
Common Stock.
Stockholders should have no expectation of any dividends.
The holders of our Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of funds legally available therefore.  To date, we have not declared
or paid any cash dividends.  The board of directors does not intend to declare any dividends in the foreseeable future,
but instead intends to retain all earnings, if any, for use in our business operations.
If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial results or prevent fraud.
We are subject to reporting obligations under the U.S. securities
laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include
a management report on such company's internal controls over financial reporting in its Annual Report, which contains management's
assessment of the effectiveness of our internal controls over financial reporting. Our management may conclude that our internal
controls over our financial reporting are not effective. Our reporting obligations as a public company will place a significant
strain on our management, operational and financial resources and systems for the foreseeable future. Effective internal controls,
particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important
to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could
result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use
significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley
Act.
19
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking statements. All forward-looking
statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future
performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only
predictions and speak only as of the date hereof. Forward-looking statements usually contain the words "estimate,"
"anticipate," "believe," "expect," or similar expressions, and are subject to numerous known
and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks
and uncertainties identified in this prospectus, including the matters set forth under the captions "Risk Factors"
and in the Company's other filings with the Securities and Exchange Commission ("SEC"). These risks and uncertainties
could cause the Company's actual results to differ materially from those indicated in the forward-looking statements. The
Company undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events
or developments.
Although forward-looking statements in this prospectus reflect
the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently,
forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially
from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks
Relating to Our Business" above, as well as those discussed elsewhere in this prospectus. Readers are urged not to place
undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We file reports with the
SEC. You can read and copy any materials we file with the SEC at the SEC's Public Reference Room, 100 F. Street, NE, Washington,
D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov)
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC, including the Company.
We undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may arise after the date of this prospectus. Readers are urged to
carefully review and consider the various disclosures made throughout the entirety of this prospectus, which attempt to advise
interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
USE OF PROCEEDS
We are not selling any shares of the Common
Stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We will, however, receive
proceeds in the event from the exercise of the Warrants by the Selling Stockholders. As of the date of this prospectus, the Selling
Stockholders have exercised an aggregate of 2,925,000 Warrants, consisting of 2,025,000 Private Placement Warrants and 900,000
Investor Warrants, for gross proceeds of $3,487,500. If all of the Warrants are exercised, we will have received gross proceeds
of $10,076,000. However, there can be no assurance that any additional Warrants will be exercised. To date, we have used the proceeds
of the Warrants already exercised for general corporate working capital purposes. We intend to use the proceeds from the exercise
of any additional Warrants to increase marketing, advertising and Cloud and Transformer service and development teams, acquisitions
and for general corporate working capital purposes.
The table below sets forth information
regarding Warrants as of the date of this prospectus:
Gross
Proceeds from
Gross Proceeds if
Exercised
Gross
Unexercised
Unexercised
all Warrants are
Warrants
Total Issued
Warrants
Proceeds
Warrants
Warrants
Exercised
PPM (EP=$1.50)
6,044,000
2,025,000
$
3,037,500.00
4,019,000
$
6,028,500.00
$
9,066,000.00
IW (EP=$0.50)
2,020,000
900,000
$
450,000.00
1,120,000
$
560,000.00
$
1,010,000.00
Total
8,064,000
2,925,000
$
3,487,500.00
5,139,000
$
6,588,500.00
$
10,076,000.00
Note: EP = Exercise Price
The Board of Directors of the Company has
broad discretion as to use of the net proceeds from any exercise of the Warrants and may change the allocation of such proceeds
without shareholder notice or consent.
20
SELLING STOCKHOLDERS
We are registering
for resale shares of our Common Stock that are issued and outstanding held by the Selling Stockholders identified below. We are
registering the shares to permit the Selling Stockholders and their pledgees, donees, transferees and other successors-in-interest
that receive their shares from a Selling Stockholder as a gift, partnership distribution or other non-sale related transfer after
the date of this prospectus to resell the shares when and as they deem appropriate in the manner described in the "Plan of
Distribution."  As of the date of this prospectus there are 28,211,664
shares
of Common Stock issued and outstanding.
The following table sets forth:
●
the name of the Selling Stockholders,
●
the number of shares of our Common Stock that the Selling Stockholders beneficially owned prior
to the offering for resale of the shares under this prospectus,
●
the maximum number of shares of our Common Stock that may be offered for resale for the account
of the Selling Stockholders under this prospectus (which includes the shares that would be issued on exercise of the warrants),
and
●
the number and percentage of shares of our Common Stock to be beneficially owned by the Selling
Stockholders after the offering of the shares (assuming all of the offered shares are sold by the Selling Stockholders).
Other than Stephen D. Baksa, who was appointed as a member of
the Board of Directors of the Company on March 1, 2012, none of the Selling Stockholders have been an officer or director of the
Company or any of its subsidiaries, predecessors or affiliates within the last three years nor have they had a material relationship
with the Company or any of its subsidiaries, predecessors or affiliates within the last three years.
Each Selling Stockholder may offer for
sale all or part of the shares from time to time. The table below assumes that the Selling Stockholders will sell all of the shares
offered for sale, including those issuable on exercise of Warrants. A Selling Stockholder is under no obligation, however, to sell
any shares pursuant to this prospectus.
21
Name of Selling
Stockholder
Number of Shares
Beneficially Owned
Prior to Offering
(1)
Maximum
Number of Shares
to  be Offering
(2)
Number of Shares
Beneficially Owned
After Offering
Percentage
Ownership After
Offering
(3)
BAKSA, STEPHEN D.
2,435,000
(4)
1,400,000
1,035,000
3.10
%
CASSERLY TRUST, GREG AND NOLA
800,000
(5)
400,000
400,000
1.20
%
CHIARELLO, ROBERT V.
600,000
(6)
400,000
200,000
*
DEVITO, NICHOLAS
200,000
(7)
100,000
100,000
*
DONOHOE, MARK T.
500,000
(8)
250,000
250,000
*
GILES, EDWARD M.
1,320,000
(9)
880,000
440,000
1.32
%
GILES, EDWARD M. ROTH 2010 IRA
160,000
(10)
80,000
80,000
*
HAN GROUP SOLUTIONS, LLC (11)
600,000
(12)
300,000
300,000
*
ISLES CAPITAL LP  (13)
840,000
(14)
560,000
280,000
*
JI, WEINING
60,000
(15)
60,000
0
--
MONOMOY PARTNERS (16)
800,000
(17)
400,000
400,000
1.209
%
PERRIT EMERGING OPPORTUNITIES FUND (18)
1,200,000
(19)
600,000
600,000
1.80
%
RATUOS ULC (20)
200,000
(21)
100,000
100,000
*
RIEGEL, GUY
184,000
(22)
92,000
92,000
*
RIEGEL, HARRIET
40,000
(23)
20,000
20,000
*
RIEGEL, KATHERINE
64,000
(24)
32,000
32,000
*
RIEGEL, MARGARET
56,000
(25)
28,000
28,000
*
RIEGEL, WILLIAM
16,000
(26)
8,000
8,000
*
RIEGEL, WILLIAM M. REVOCABLE TRUST
160,000
(27)
80,000
80,000
*
SULLIVAN, PIKE H.
1,200,000
(28)
800,000
400,000
1.20
%
TERMINAL VENTURES (29)
400,000
(30)
200,000
200,000
*
VALLUM INVESTMENT PARTNERS, L.P.
200,000
(31)
100,000
100,000
*
VP BANK (SWITZERLAND) LTD.
1,381,400
(32)
744,000
637,400
1.91
%
WARD, JOHN T.
80,000
(33)
40,000
40,000
*
WEISE, CARL
100,000
(34)
50,000
50,000
*
YUAN, JINCHENG
740,000
(35)
340,000
400,000
1.20
%
TOTAL
14,336,400
8,064,000
6,272,400
18.80
%
* Represents less than 1%.
(1)
"Beneficial ownership" is determined in accordance with the rules and regulations of the SEC. In computing the number of shares "beneficially owned" by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into shares of our Common Stock, or convertible or exercisable into shares of our Common Stock within 60 days of the date hereof are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder's name. The percentage of beneficial ownership is based on 28,211,664 shares of Common Stock outstanding as of the date of this prospectus.
(2)
Consists of the number of shares
of Common Stock issued or issuable upon the exercise of the Warrants held by the Selling Stockholder.
22
(3)
Based on 33,350,664 shares of
Common Stock, consisting of (i) 28,211,664 shares of Common Stock and (ii) 5,139,000 shares of Common Stock issuable upon the
exercise of the Warrants not exercised as of the date of this prospectus but assuming such Warrants have been exercised.
(4)
Includes (i) 700,000 shares of
Common Stock issued upon the exercise of the Placement Agent Warrants on November 29, 2011, (ii) 250,000 shares of Common Stock
issued upon the issuance of Investor Warrants on March 26, 2012 and (iii) 450,000 shares of Common Stock issuable upon the exercise
of Investor Warrants.
Also includes 300,000 shares of Common Stock held by
two trusts for the
benefit of the Selling Stockholder's adult children of which he is a
co-trustee and of which
the Selling Stockholder disclaims beneficial ownership.
(5)
Includes 400,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(6)
Includes (i) 200,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 5, 2011, (ii) 150,000 shares of Common Stock issued
upon the exercise of Investor Warrants on March 26, 2012 and (iii) 50,000 shares of Common Stock issuable upon the exercise of
Investor Warrants.
(7)
Includes 100,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(8)
Includes 250,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(9)
Includes (i) 440,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 8, 2011 (ii) 250,000 shares of Common Stock issued
upon the exercise of Investor Warrants and (iii) 190,000 shares of Common Stock issuable upon the exercise of Investor Warrants.
(10)
Includes 80,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(11)
Anthony V. Milone has voting and dispositive control over HAN Group Solutions, LLC.
(12)
Includes 300,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(13)
Edward M. Giles has voting and dispositive control over Isles Capital, LP.
(14)
Includes (i) 280,000 shares of Common Stock issued upon the exercise of Private Placement Warrants on December 8, 2011 and (ii) 280,000 shares of Common Stock issuable upon the exercise of Investor Warrants.
(15)
Includes 60,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants. Mr. Jincheng Yuan transferred 60,000 Private Placement Warrants
to Mr. Weining Ji on November 8, 2011.
(16)
Gavin Scotti has voting and dispositive control over Monomoy Partners.
(17)
Includes 400,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(18)
Michael Corbett has voting and dispositive control over Perritt Emerging Opportunities  Fund.
(19)
Includes 600,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(20)
Ian A. Soutar has voting and dispositive control over Ratuos ULC.
(21)
Includes 100,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(22)
Includes 92,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(23)
Includes 20,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(24)
Includes 32,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(25)
Includes 28,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
23
(26)
Includes 8,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(27)
Includes 80,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(28)
Includes (i) 400,000 shares of
Common Stock issued upon the exercise of Private Placement Warrants on December 28, 2011 and (ii) 400,000 shares of Common Stock
issuable upon the exercise of Investor Warrants.
(29)
Jeffrey Pressman has voting and dispositive control over Terminal Ventures.
(31)
Includes 200,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(32)
Includes (i) 5,000 shares of Common
Stock issued upon the (partial) exercise of Private Placement Warrants on February 28, 2012 and (ii) 739,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants.
(33)
Includes 40,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(34)
Includes 50,000 shares of Common Stock issuable upon the exercise of Private Placement Warrants.
(35)
Includes 340,000 shares of Common
Stock issuable upon the exercise of Private Placement Warrants. Mr. Jincheng Yuan transferred 60,000 Private Placement Warrants
to Mr. Weining Ji on November 8, 2011.
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, donees,
transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any
stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions.  These
sales may be at fixed or negotiated prices.  The Selling Stockholders may use any one or more of the following methods
when selling shares:
n
ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;
n
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
n
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
n
an exchange distribution in accordance with the rules of the applicable exchange;
n
privately negotiated transactions;
n
through the writing of options on the shares;
n
to cover short sales made after the date that this Registration Statement is declared effective by the Commission;
n
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per
share; and
n
a combination of any such methods of sale.
The Selling Stockholders may also sell shares under Rule 144
of the Securities Act, if available, rather than under this prospectus.  The Selling Stockholders shall have the sole
and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory
at any particular time.
24
The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers
acting as agents for themselves or their customers.  Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers of shares for whom such broker-dealers may act as
agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary
commissions.  Market makers and block purchasers purchasing the shares will do so for their own account and at their
own risk.  It is possible that a Selling Stockholder will attempt to sell shares of Common Stock in block transactions
to market makers or other purchasers at a price per share which may be below the then existing market price.  We cannot
assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the Selling Stockholders.  The
Selling Stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus,
may be deemed to be "underwriters" as that term is defined under the Securities Act, the Exchange Act and the rules
and regulations of such acts.  In such event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the Selling Stockholders, but excluding brokerage commissions
or underwriter discounts.
The Selling Stockholders, alternatively, may sell all or any
part of the shares offered in this prospectus through an underwriter.  The Selling Stockholders have not entered into
any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.
The Selling Stockholders may pledge their shares to their brokers
under the margin provisions of customer agreements.  If a Selling Stockholder defaults on a margin loan, the broker may,
from time to time, offer and sell the pledged shares.  The Selling Stockholders and any other persons participating in
the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act, and the rules and regulations
under such act, including, without limitation, Regulation M.  These provisions may restrict certain activities of, and
limit the timing of purchases and sales of any of the shares by, the Selling Stockholders or any other such person.  In
the event that any of the Selling Stockholders are deemed an affiliated purchaser or distribution participant within the meaning
of Regulation M, then the Selling Stockholders will not be permitted to engage in short sales of Common Stock.  Furthermore,
under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making
and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions.  In addition, if a short sale is deemed to be a stabilizing activity,
then the Selling Stockholders will not be permitted to engage in a short sale of our Common Stock.  All of these limitations
may affect the marketability of the shares.
If a Selling Stockholder notifies us that it has a material
arrangement with a broker-dealer for the resale of the Common Stock, then we would be required to amend the registration statement
of which this prospectus is a part, and file a prospectus supplement to describe the agreements between the Selling Stockholder
and the broker-dealer.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 75,000,000 shares of $0.001 par value
Common Stock of which 28,211,664 shares were issued and outstanding as of March 30, 2012. Holders of Common Stock are entitled
to one vote per share on each matter submitted to a vote at any meeting of stockholders. Shares of Common Stock do not carry cumulative
voting rights and, therefore, holders of a majority of the outstanding shares of Common Stock will be able to elect the entire
board of directors, and, if they do so, minority stockholders would not be able to elect any members to the board of directors.
Our board of directors has authority, without action by the stockholders, to issue all or any portion of the authorized but unissued
shares of Common Stock, which would reduce the percentage ownership of the stockholders and which may dilute the book value of
the Common Stock.
Stockholders have no pre-emptive rights to acquire additional
shares of Common Stock. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the
event of liquidation, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities.
The shares of Common Stock, when issued, will be fully paid and non-assessable.
Holders of Common Stock are entitled to receive dividends as
the board of directors may from time to time declare out of funds legally available for the payment of dividends. We have not paid
dividends on Common Stock and do not anticipate that the Company will pay dividends in the foreseeable future.
All shares of the Common Stock now outstanding are duly authorized,
fully paid and non-assessable.  The shares of Common Stock issuable upon exercise of the warrants are duly authorized
and upon payment of the exercise price will be fully paid and non-assessable.
The Common Stock is currently quoted on
OTCBB under the symbol "GBSX."
25
Private Placement Warrants
Currently we have outstanding 6,044,000
Private Placement Warrants which are exercisable for an aggregate of 6,044,000 shares of our Common Stock at an exercise price
of $1.50 per share.  The Private Placement Warrants, at the option of the holder, may be exercised by cash payment of
the exercise price, commencing on the date of issuance and ending on the third anniversary of the date of issuance.
Pursuant to the Private Placement Warrant,
in the event the Common Stock of the Company is trading at an average of at least $3.00 per share for a period of not less than
20 consecutive trading days, the Warrant holder shall be required to fully exercise the Private Placement Warrant within ten (10)
business days following the 20
th
trading day.
Throughout the three-year exercise period,
the Company has the right to redeem the Private Placement Warrants for $0.05 per Share. In the event the Company elects to redeem
the Private Placement Warrants, the Company shall promptly notify the holder of the Warrant in writing, and such writing shall
be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid
and addressed, to such holder at the address shown for such holder on the books of the Company, or at such other address as shall
have been furnished to the Company by notice from such holder.
If the Company at any time subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable upon the exercise
of the Private Placement Warrants into a greater number of shares, then, after the date of record for effecting such subdivision,
the exercise price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time
combines (by any reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock
acquirable upon the exercise of the Private Placement Warrants into a smaller number of shares, then, after the date of record
for effecting such combination, the exercise price in effect immediately prior to such subdivision will be proportionately increased.
Upon each adjustment of the exercise price of the Private Placement
Warrants pursuant to the provision above, the number of shares of Common Stock issuable upon exercise of the Private Placement
Warrants shall be adjusted by multiplying a number equal to the exercise price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Private Placement Warrants immediately prior to such adjustment
and dividing the product so obtained by the adjusted exercise price.
No adjustment of the exercise price shall be made in an amount
of less than 1% of the exercise price in effect at the time such adjustment is otherwise required to be made, but any such lesser
adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 1% of such exercise price.
Investor Warrants
In March 2012, the Company issued warrants to five "accredited
investors" (as that term is defined by Rule 501(a) of Regulation D promulgated under the Securities Act), one of whom is
a member of the Board of Directors of the Company and all of whom invested in the Private Placement, to purchase an aggregate of
2,020,000 shares of Common Stock. Each Investor Warrant is exercisable for the three-year period commencing from the date of issuance
for $0.50 per Share and has the same terms as the Private Placement Warrants. The Investor Warrants were issued under the registration
exemptions of Section 4(2) under the Securities Act.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The Sourlis Law Firm has assisted the Company in preparing and
filing the Company's Registration Statement on Form S-1 of which this prospectus forms a part and has rendered a legal opinion
as to the validity of the Warrants and the Shares. The offices of The Sourlis Law firm are located at The Courts of Red Bank, 130
Maple Avenue, Suite 9B2, Red Bank, New Jersey 07701. In consideration for legal services rendered by The Sourlis Law Firm in connection
with the sale and issuance of the Investor Warrants, on March 28, 2012, the Company issued to the partners of The Sourlis Firm
warrants to purchase an aggregate of 250,000 shares of Common Stock exercisable on a cashless basis for $1.10 per share for a three
year period commencing from the date of issuance until the third anniversary date of the date of issuance.
The consolidated financial statements included in this prospectus
and the registration statement for the Company's fiscal years ended March 31, 2010 and 2009 have been audited by K.R Margetson
Ltd., Chartered Accountant, located at 331 East 5
th
Street, North Vancouver, BC V7L 1M1, Canada ("K.R. Margetson"), to
the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are
included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. The consolidated
unaudited financial statements and notes thereto included in this prospectus and the registration statement for the Company's
fiscal quarter ended December 31, 2011 have been reviewed by K.R. Margetson.
26
Other than disclosed above, no expert or counsel named in this
prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on
a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in
the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents
or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
BUSINESS
GBS Enterprises Incorporated, a Nevada
corporation (the Company," GBS," GBSX," we," us," our" or similar expressions), through its
subsidiaries is a global operating software and services company. We focus on cloud automation technology, commercial and governmental
application modernization and migration, and business application development, deployment and management, primary in the IBM Lotus
Notes and Domino space. We help customers, such as commercial and government organization IT departments, system integrators, ISV's,
Data Center providers, solve IT challenges such as:
§
Shaping IT strategy & planning
§
Deploying, developing, maintaining and managing business applications
§
Automating business processes
§
Optimizing system & application performance
§
Managing messaging systems & ensuring messaging security & compliance
§
Simplifying application modernization, migration & deployment.
§
Migrating and integrating messaging and application systems
GBSX is pursuing an aggressive growth strategy
which includes highly targeted mergers and acquisitions so as to build its portfolio of technologies, applications, and services.
The Company's main activities are
focused on serving IBM's Lotus Notes & Domino market where it has become IBM's largest provider of business application
solutions.
27
To serve the demand for modernization of
the applications run worldwide on the Domino platform the major innovation developed by the Company's concentration of talent
are certain specific software tools that allows IBM Lotus Software Group and its partners to rapidly and cost-effectively convert
their customers' existing Lotus based rich-client applications into modern, web accessible and client independent applications,
avoiding any data migration and enable their customers to improve user experience. The use of modern XPages based Lotus Software
applications allows customers to leverage self-service capabilities, benefit from IBM's latest Lotus release features, and
to be automatically 'cloud' ready. This Application Transformation technology (GBS Transformer product suite) dramatically
increases IBM's Lotus Software solutions competitiveness against providers such as Google, Salesforce, Microsoft Sharepoint
and others.
The Company's specific software tools
enable IBM, the IBM Lotus Notes/Domino partners, system integrators (SIs) or commercial or governmental organization-controlled
service units to solve the industry needs for efficient modernization of a Lotus environment, specifically for the highly distributed
and heavily used IBM Lotus Notes/Domino applications. The Company's modernization tools span the complete set of customer
requirements and demands for application modernization and migration:
n
Retire (automatically convert into full text searchable .pdf archived applications);
n
Renew (automatically convert into modern web 2.0 styled, access anywhere applications);
n
Rebuild (accelerate case-specific rebuilding into access anywhere applications); or
n
Replace (accelerate case-specific replacing with a different technology).
The Company has also developed an innovative
Cloud Automation Platform (GroupLive) enabling the automation of the processes beyond virtualization or managing customer dedicated
or shared infrastructure, such as networks, servers and clients. GroupLive extends process automation for legacy applications,
including user management, user access and application deployment without the need of rewriting the entire application. Automation
is supposed to decrease IT labor by more than 50%, especially for application management and maintenance. GroupLive supports IT
consolidation, standardization, modernization, utilization and optimization, as well as centralization, monitoring, and reporting.
Customers gain more efficiency, reduce cost and free IT labor to refocus on strategic tasks rather than on overwhelming current
day-to-day workloads. GroupLive is currently deployed in IBM's Data Centers in Germany. This service is based on a non-exclusive
contract with the IBM Data Center and can be modified or replaced with other Data Center providers in the German market. GroupLive
is also being deployed in GBS data centers in the US.
Since January 6, 2011, the Company owns
majority control (50.1%) of GROUP Business Software AG (GROUP"), a Frankfurt listed publicly-traded company (INW). GROUP
is headquartered in Eisenach, Germany. GROUP's businesses served as the foundation for GBSX to achieve its strategic objectives.
In 2011, GBS has added more companies to complete its cloud automation and application management focused offering. With Pavone
AG and Groupware AG the portfolio now includes cloud-enabled workflow management, as well as cloud-enabled application archiving.
With the acquisition of IDC Global, Inc., Chicago, a high end data center provider, GBSX will start offering the GroupLive technology
in the United States in the next months. The acquisition of SD Holdings, Inc., a specialized company in the area of analytics,
business intelligence, reporting and services, provides GBS with access to the Asian markets as well as access to cost-effective
high quality consulting resources. In addition, GBS plans to leverage SD's Indian subsidiary as the foundation for its strategic
service delivery factory.
GBS will leverage its technologies, partnerships
and customer base to develop its successful business strategy and existing operations in North America, Asia and Europe. In particular,
the Company will concentrate on rapidly evolving as a major provider of Cloud Automation Platform Technology software and IBM Lotus
Notes/Domino Application Modernization & Migration Services.
Furthermore, the Company is currently negotiating
a Reseller Agreement with IBM's Lotus Software Division that would make it possible for IBM to bundle specific technology
developed by the Company and sell them as an integrated product solution through IBM sales channel. The Reseller Agreement would
provide the Company with software license, subscription and service based revenues.
In addition to the significant growth potential
anticipated through its multiple partnerships with IBM, the Company also has the potential for dramatic growth from large strategic
partnerships such as with major OEM players, SIs, ISV's, data centers, as well as a variety of large enterprise class and
medium sized end users who are in the business of application modernization, migration and/or management.
28
General Corporate History
We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV"). SWAV was an importer and wholesaler of Chinese manufactured goods.
On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus") pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training. Simultaneously with SWAV's acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of
SWAV common stock to Joerg Ott, our CEO and Chairman, for an aggregate purchase price of $370,000.
Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company's Chief Executive Officer,
President and Chairman of the Board of Directors. On September 6, 2010, SWAV's name was changed to GBS Enterprises Incorporated.
On October 14, 2010, the Company's trading symbol on the OTC Bulletin Board was changed from SWAV to GBSX.
Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP Business Software AG, a Frankfurt-based
German software company (GROUP"), pursuant to Share Purchase Agreements between the Company and several of GROUP's
stockholders, including Mr. Joerg Ott (also the Company's Chairman and Chief Executive Officer). Pursuant to the Share Purchase
Agreements, the Company acquired an aggregate of 7,115,500 shares of common stock of GROUP in consideration for an aggregate of
3,049,489 shares of the Company's common stock.
On January 6, 2011, the Company acquired
an additional 5,525,735 shares of common stock of GROUP, representing approximately 21.9% of the issued and outstanding shares,
from several additional GROUP stockholders in consideration for an aggregate of 2,355,922 shares of the Company's common
stock.
In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP.
On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP's outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.
Acquisitions of Subsidiary Companies
As previously reported by the Company,
during the nine month period ended December 31, 2011, the Company made four business acquisitions as described below:
Pavone AG
Effective April 1, 2011, the Company entered
into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000 in cash and
1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing the
market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption of
$11,261 in debt was $5,261,261. Pavone is a
leader in business process management and optimization technologies.
Pavone's extensive workflow software for Lotus Notes and Domino along with their large customer base is well suited to GBS
Enterprises portfolio strategy. This acquisition of Pavone complements GBS's majority ownership in GROUP and further strengthens
their leading industry position on the IBM Lotus Platforms and expands their cloud computing technology offerings beyond the IBM
Lotus market. Pavone currently has offices in Germany and the UK. They have over 2,500 customers and over 150,000 users worldwide.
Some of their customers include Deutsche Bundes Bank, BMW, Linde AG, Philips, British Sugar and Mahle Industries.
29
GroupWare, Inc.
Effective June 1, 2011, the Company acquired
100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As consideration the Company paid $250,000
and issued 250,000 shares of its common stock. The fair value of the common stock was determined to be $4.34 per share, representing
the market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption
of $219,902 in debt was $1,554,902. Upon the consummation of the acquisition, the management and board of GroupWare resigned and
Joerg Ott, the Company's Chief Executive Officer and sole director, was appointed as the Chief Executive Officer and sole
director of GroupWare. GroupWare is based in Lubeck, Germany with offices in St. Petersburg, Florida. GroupWare's ePDF server delivers
centralized, network-wide PDF solutions for messaging, workflow, document, content and data management.
This acquisition strengthens the GBS Transformer offering, which helps bring IBM Lotus Notes client applications to the web, by
substituting traditional printing methods provided by the Notes client with simple-to-use print-to-PDF capabilities in the browser.
In addition, GroupWare provides a solution for applications that are ready to be retired. With the ePDF Server, GBS customers can
convert the entire contents of IBM Lotus Notes and Domino applications to a permanent and secure archive in PDF or PDF/A format,
while preserving their ability to be full-text searched and ensuring that the critical application data is accessible in the future,
when needed. GBS will deliver the application archiving capabilities via its GroupLive cloud, making it possible for customers
and partners to take advantage of elastic cloud computing resources to rapidly process the application contents without the need
to dedicate hardware on-site for temporary or intermittent processing jobs.
IDC Global, Inc.
On July 25, 2011, the Company acquired
100% of the issued and outstanding shares of common stock of IDC Global, Inc. (IDC"), a Delaware corporation with offices
in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company agreed to
issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement required
an additional payment to the management shareholders of 80,000 shares of common stock and signing bonuses to personnel of $35,000.
The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction. The fair
value of the common stock was determined to be $3.50 per share, representing the market value at the end of trading on the date
of the agreement. The total value of the investment, including $883,005 of debt assumption was $4,713.005. IDC is a privately held
company that provides nationwide network and data center services. IDC delivers customized, high availability technology solutions
for WAN, Wireless Services, Co-location & Hosting, Managed Services, and Network Security. IDC has data centers in Chicago,
New York and London and other key cities. IDC is helping customers make the transition from large, static and expensive on-premise
computing to dynamic, flexible and cost-effective off-premise computing. The acquisition of IDC provides the Company with the infrastructure
needed to provide a comprehensive end-to-end solution for all customers regardless of their platforms. It proves especially beneficial
to IBM Lotus Domino and Notes customers who finally have the same options as other platforms.
SD Holdings, Ltd.
On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. ("SYN"), a Mauritius corporation and the shareholders of
SYN (the "Selling Shareholders") owning 100% of issued and outstanding shares of SYN.
SYN owns 100% of all issued
and outstanding shares of Synaptris, Inc. a California corporation ("Synaptris"), and 100% of all issued and outstanding
shares of Synaptris Decisions Private Limited, an India company.
Pursuant to the acquisition agreement,
the Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN ("SYN Shares") effective
November 1, 2011 in consideration for $525,529 and agreed to issue 700,000 shares of Common Stock, subject to adjustment. The fair
value of the common stock was determined to be $2.05 per share, representing the market value at the end of trading on the date
of the agreement.
Synaptris' product portfolio improves corporate decision-making
by providing real-time enterprise reporting, user defined dashboards, and comprehensive analytic capabilities for Lotus Notes /
Domino and Java/.NET environments. Synaptris employs 70 people and has operations in the US, Europe, and India, with over 2,500
customers in 80 countries, including over one hundred Fortune 1000 companies.   Some of their client companies include
ABB, Goodyear Tire and Rubber, Standard Life Insurance, ABN Amro Bank, Dunlop, Caterpillar, Philips International BV, and Electrolux.
With the integration of the Synaptris product portfolio, GBS
will add another tier of Lotus Notes applications including reporting products, advanced dashboards, and email productivity solutions. Additionally,
the Synaptris acquisition will bring a comprehensive search engine specialized for use with email that is faster and easier to
use than other products in the market and which is expected to be made available for XPage applications in the near future through
the GBS Transformer . The GBS Transformer is the only technology in the marketplace that can convert any legacy Lotus Notes
applications into a cloud ready format. There are over 18 million Lotus Notes applications worldwide.
In addition to product synergy and additional revenue streams,
GBS expects to derive operational synergy from this acquisition. Synaptris' presence in India is anticipated to accelerate
GBS's plan to expand its Development & Service Center operations for its Transformer 2.0 suite in India. Transformer 2.0
expedites the conversion of client-based applications to Web 2.0-based applications. The Development & Service Center
should further enable GBS a cost-effective method to rapidly transform (web-enable) large volumes of Lotus Notes applications. In
addition, GBS plans to leverage Synaptris' 135 channel partners spanning 45 countries to expand its existing worldwide network
of partners.
The assets and liabilities of these companies
represent their values as of September 30, 2011 and are included in these consolidated financial statements. This timing approach
is allowed as per Regulation S-X Rule 3A-02.
30
Our Products & Services
GBS has achieved significant growth by
consolidating the fragmented Lotus Software market through the successful merger & acquisitions of companies with complementary
product, technology or services offerings. Based on its organic growth and growth by acquisition GBS has continuously developed
its software and service business to service and support GBS's expanding Lotus customer base.
Historically, GROUP has achieved growth
through acquisition by targeting attractive, yet underperforming companies with complimentary operations and leveraging GROUP's
expertise to successfully turnaround and integrate these targets.
Key success factors for this strategy are:
enhanced portfolio, positioning GROUP as the 'one-stop-shop' for Lotus applications and services, expand customer support,
fast code migration, and cloud enablement/XPages conversion of acquired applications.
Going forward, the Company will focus on
potential acquisition targets in the following areas of software and services: Applications, Professional Services, Hosting/Outsourcing
Services, Administration and IT services, and XPages expertise.
Core Business Division Overview
Messaging and Business Application Software & Solutions
product lines
GBS Messaging and Business Application
Software & Solutions product lines include software and advisory services for email and Instant Messaging (IM) Management,
Security, Compliance, Archiving and Productivity, CRM Applications, Governance, Risk & Compliance (GRC) Management software,
Workflow and Business Process Management software, ePDF Archiving & Document Management and e-Banking solutions.
GBS develops sells and installs well known
business process and management software suites based on Lotus Notes / Domino and IBM Portal technology, mainly for major international
companies and medium-sized customers.
Through GBS's comprehensive messaging
software product lines and associated services, Lotus Notes, Microsoft Exchange or SMTP-based-email customers, as well as Lotus
Sametime customers are able to provide their users with secure, efficient and centrally administered use of e-mail and IM while
maintaining control over their compliance with current legal requirements and corporate guidelines.
Consulting Services
As a leader in the IBM Lotus Notes Software
and Services business GBS provides high-end consulting services to its customers. GBS develops, sells and orchestrates customer-specific
Lotus Domino strategy and consulting services, such as CIO and IT department leader Strategic Advisory Services, Managed Services,
Outsourcing, Administration, Assessments and Implementations, Performance Improvements, Custom Application Development , Governance
and Security, Technical Support, and Training, as well as Email Migration Services. The talented team at GBS Experts has outstanding
skill sets in the areas of system architecture and evaluation, application integration, e-mail and Instant Messaging, administration,
application development, application migration, middleware deployments and licensing, outsourcing and hosting.
Based on GBS's unique concentration
of industry talent and expertise, mainly in the areas inside and around IBM Lotus Notes/Domino, inside and around corporate messaging
(IBM, Microsoft, SMTP) and inside and around IT environmental and application assessment, analysis and reporting, commercial and
governmental customers, as well as SIs and channel partners are able to relay on the industry leading strategic and tactical advisory
services for evaluating, planning, staffing and execution of any customer project. GBS Consulting Services' global team of
consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client
projects on time and with reduced risk
GBS's focus on recruiting and retaining top Lotus expertise,
positions our team to offer leading-edge Lotus Notes / Domino subject matter knowledge to our customers. As a testament to this
focus, GBS employs 10 of the top 20 most recognized 'market experts' and thought-leaders in Lotus development and administration.
GBS consultants have an average of over 12 years' experience each in Lotus Notes/Domino and its related products and are
routinely asked to present at IBM Lotus events including Lotusphere, an annual conference hosted by IBM Lotus Software.
ü
As a Premier IBM Business Partner - GBS is one of the few partners that can sell and support licenses for all five IBM software brands: Lotus, WebSphere, Rational, Tivoli, and DB2
31
Cloud Computing
As IT departments face continuous budget reductions and constant
pressure for higher performance and efficiency, CIOs are focusing on modern technologies to support their need for increased scalability,
flexibility and lower costs. GBS has identified this demand as a strategic growth opportunity for the company and has placed a
significant focus on expanding its Cloud Computing and Modernizing/Migrating technology offerings. The strategic opportunities
is served by GBS with two distinct offerings:
1)
GROUP Live
- Cloud Automation Platform / Cloud Platform-as-a-Service (PaaS) software and services. And
2)
Transformer
- Lotus Notes modernization/migration services and technology accelerators
GBS Cloud Computing
activities are
focused on cloud automation solutions and therefore the Company has made key acquisitions and R&D investments to create an
award winning Cloud Platform-as-a-Service offering. Under the GROUP Live banner, the GBS PaaS offering has been sold to a variety
of enterprise customers, which use the PaaS software to host internal corporate clouds (Private cloud) and applications as-a-service
to their various internal user groups. GROUP Live has also be sold and implemented by a number of Independent Software Vendors
(ISVs), which are leveraging the platform to deliver their own Software-as-a-Service (SaaS) applications to their respective customer
bases.
Both of these customer groups enjoy the
comprehensive nature of this platform agnostic PaaS solution and its exceptional change management capabilities enabling resource
flexibility, business agility, scalability and ease-of-use beyond that which is generally available in the market today.
ü
2011 GBS and IBM sign strategic cooperation agreement to sell, deliver and support GROUP Live
ü
2011 Experton positioned GBS (GROUP Live) in the Leaders Quadrant for Cloud Management in their report:
Cloud Vendor Benchmark 2011
ü
2011 IBM Best Seller Award Winner: Best Cloud Solution Partner
GBS Lotus Application Modernization
and Migration
activities are focused on the IBM Lotus / Domino applications market and the offering spans from expert services
and accelerator technologies to modernize, web enable and migrate Lotus applications; and thus ultimately take the Lotus applications
from legacy to the future. The foundation of the Transformer Suite Software offering is GBS's significant R&D investment
in a set of methodologies and key technology accelerators to automate the conversion of traditional Notes based client-server applications,
into the IBM XPages framework which enables Domino applications to be run and accessed via the Lotus client, a web browser or on
a mobile device. The patent-pending software that underpins Transformer was developed by GBS with the assistance and guidance from
IBM Corporation's Software Group to ensure alignment with future releases of the IBM Lotus / Domino and XPages technology.
ü
When compared to manual redevelopment projects, Transformer 2.0 modernizes and web enables Notes applications at up to 55% lower cost, 75% time savings and with up to 80% fewer resources.
ü
IBM has deemed the Transformer technology a "game changer," and will be employing it to modernize their clients' applications.
Revenue
GBS' software and service operations
and corresponding revenue streams are well diversified. For fiscal year 2012/ 2013, the Company expects to generate more than 85%
of its revenue from a combination of license sales, services and maintenance. Service and maintenance revenues, which are recurring
in nature and highly predictable year-over-year, account for nearly 60% of the Company's total revenue. The Company's
service revenues include strategic consulting, high-end project and delivery management, cloud computing integration and enablement,
offshore development, the design, implementation, integration and training for its collaboration management systems. Due to the
custom designed nature of the Company's products, essentially all clients utilize GBS' skilled service team to implement
its systems. The other major component of the Company's recurring revenue, maintenance, is typically paid on an annual basis
and is typically negotiated under contracts for two to three years. The Company estimates approximately 80% of its installed base
maintain a maintenance contract for the Company's solutions.
Our Customers
GBS, through its subsidiaries caters primarily
to mid-market and enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning four continents,
representing more than 5,000,000 active users of its products. The Company's customers include Abbot, Ernst & Young,
Deutsche Bank, Bayer, HBSC, Merck and Toyota.
32
Dependence on IBM
The Company is the world's largest
supplier of applications for IBM's Lotus Notes and Domino markets. Should IBM choose not to promote the underlying platform
technology and products (e.g. IBM Collaboration & Social Software, IBM Lotus Software, XPages, Connections), we might not achieve
the revenue from our core business units we are anticipating and our business could be materially adversely affected as a result.
GBS also markets its Cloud Automation Platform (GroupLive) and IBM Lotus/Notes Application Modernization & Migration tool set
(Transformer) . We expect much of our growth in the near term to come from our strategic business units GroupLive and Transformer.
Should IBM choose not to promote these products, we might not achieve the growth we are anticipating and our business could be
materially adversely affected as a result.
Employees
At March 31, 2012 and 2011, the Company
had three employees, all of whom were executive officers of the Company. Joerg Ott serves as the Chief Executive Officer and Chairman
of our Company.  Mr. Ott is also a Co-Chief Executive Officer and director of GROUP.  Ronald Everett served
as the Chief Financial Officer of the Company from August 2, 2010 to February 27, 2012. On February 24, 2012, Markus R. Ernst was
appointed as the Chief Financial Officer of the Company. Gary MacDonald serves in the capacity of Executive Vice President and
Chief Development Officer of the Company as well as GROUP.  There are no other persons who work for the Company.
The disclosure below pertains to the research
and development activities of GROUP, our 50.1% subsidiary:
As of March 31, 2012 there
were 226 full-time employees working for the Company's subsidiaries (March 31, 2011: 161 full-time employees). There were
no part-time employees. The increase in the number of employees is due to the acquisitions undertaken by the Company and an increase
in employment necessary to support the strategic initiatives and the anticipated growth of the Company. The average employee numbers
include neither trainees nor Board members.
The breakdown into the individual
departments can be taken from the following overview:
Department
At March 31, 2012
At March 31, 2011
Management and Administration
28
24
Marketing
12
5
Research & Development
68
49
Sales
45
32
Service
69
48
Trainee
4
3
TOTAL
226
161
Seasonal
Our business is not seasonal.
Intellectual Property
As of March 31, 2011, the Company does not have any patents,
trademarks, licenses, franchises or concessions.
Research and Development
For the fiscal years ended March 31, 2011
and 2010, GBSX did not spend any money in research and development.
The disclosure below pertains to the research
and development activities of all subsidiaries, including GROUP, our 50.1% subsidiary:
n
The main focus of R&D in 2010 was to provide for the future success of the GBS offering. Development
teams around the globe, namely in the U., Canada, Germany, the United Kingdom, Denmark and Bulgaria have been intensely working
on the next generation offering, especially for GBS Transformer and Group Live.
n
The overall R&D spending by GROUP in 2010 (for the fiscal year ended March 31, 2011) was $4,924,148.
Due to the sale of Gedys IntraWare GmbH's business in early 2010 the amount in 2009 (for the fiscal year ended March 31,
2010) was slightly higher at $5,486,726.
33
Competition
In our core business units we compete in
general with regionally organized and represented IBM Lotus channel partner and IBM Lotus specialized departments of more generic
ISVs, or SIs. In principal, these competitors are 'single' solution focused and serve the same customer base as we
do. The average size of our competitors is around $2-5 million overall in annual revenue with a staffing between 5 and 35 employees,
including management, development, support and sales.
Our main competitive advantages are:
a)
Our collection of talent, expertise & knowledge,
b)
Our unique position as the market innovator and leader.
c)
Our long-term relationship with our customers.
d)
The ability to address all needs of any customer regarding their IBL Lotus environment.
e)
The capacity of top-end professional resources to serve multiple long-term projects.
f)
Our global presence and multilingual support offering.
g)
The Company's ability to keep pace with IBM's speed in developing new solutions for the Lotus market.
The market competition in which GBS operates
is described as follows:
·
Essentially the market can seek out other Independent Software Vendors (ISVs) for 'point' solutions such as CRM. The Company's
strength is having the most complete portfolio of applications in the market coupled with the most Lotus Notes Applications experience
in the industry that is devoted to applications.
·
As the Lotus market matures, IBM could incorporate new features into the Lotus platform with the consequence of providing some
of the same functions that GBS is providing
·
There are many companies that offer professional Information Technology services including IBM ISSL and many regional players
that contract out their programmers to provide application development services and support. The Company's advantage is the
extensive Lotus specific experience of our Experts who aside from having worked in this market for years are also some of the leading
'thought' leaders in the Lotus market (three of which were just recognized as "IBM Champions" by IBM for their knowledge,
innovation and contribution to the Lotus market.
·
The competitive landscape in the cloud computing market is intense and changing, and we expect all of the very large, well-financed,
and aggressive competitors, each bringing its own new class of products to address this new market. We also expect to see acquisitions,
further industry consolidation, and new alliances among companies as they seek to serve the cloud computing market.
·
In terms of the Company's cloud automation platform there are many competitors offering Cloud Management platforms including
VMWare, HP, Novell, Amazon and Salesforce.com.
·
There is no single technology capability like the Transformer tool set on the market. The only alternative for a customer to
convert from Lotus is to manually transform Lotus applications from Lotus into Java XPages. So competition in this market area
is based on 'brute-force' development units provided by large SIs or offshore development vendors. Based on this environment,
the customer sometimes becomes the only competition.
Growth Strategy
GBS was formed over the past 20 years through
a series of mergers & acquisitions transactions, which developed the Company into the leading provider to IBM's Lotus
market. The Company expects to aggressively pursue acquisition opportunities to increase its suite of products, augment its market
execution ability through highly educated professional service teams and to leverage its leadership in the IBM Collaboration &
Social Software markets. GBS'management team has a track record of quickly integrating acquisitions and using additional
products and functionality to drive growth among both new and existing customers. The Company provides a corporate umbrella of
substantial industry experience and financial resources that serve as a solid foundation upon which smaller companies can grow.
Management's roll-up strategy of Lotus Notes & Domino application developers has earned the Company substantial incremental
market share in Europe and the U.S. and the Company's management sees significant potential for similar acquisitive growth
in Asia and other parts of the Americas.
34
GBS is focused on continuing to grow its
market share organically which will complement and enhance its acquisition strategy. To date, GBS, through its subsidiaries, has
focused its marketing efforts to the North American and European market, the most highly penetrated Lotus Notes market. With approximately
3% of the worldwide Lotus Notes users (based on electronic mailboxes), GROUP's organic growth strategy is to target the growing
markets of Asia, where Lotus Notes has a strong market presence or even dominance
Regulatory Overview
None
DESCRIPTION OF PROPERTY
Our Offices
The Company's principal executive offices are located
at 585 Molly Lane, Woodstock, Georgia 30189.
In August 2011, the Company relocated its executive offices
to a 10,000 square foot space located at 585 Molly Lane, Woodstock, Georgia 30189 pursuant to a lease agreement, dated June 16,
2011, between GBS and Thomas Hall Fowler/Fowler Corporate Partners, a non-affiliate of the Company. The term of the lease is from
August 1, 2011 to January 31, 2015. The rent from August 1, 2011 to August 31, 2011 is $8,333.33. From September 1, 2011 to December
31, 2011, the monthly rent is $4,166.67. From January 1, 2012 to July 21, 2012, the monthly rent is $8,333.33. From August 1, 2012
to July 31, 2013, the monthly rent is $8,750. From August 1, 2013 to January 31, 2015, the monthly rent is $9,166.67.
LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings
against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings
in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has
a material interest adverse to our interest.
MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV"). SWAV was an importer and wholesaler of Chinese manufactured goods.
On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus") pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock.
On September 16, 2010, SWAV Enterprises Ltd. changed its
name to GBS Enterprises Incorporated. On October 14, 2010, the trading symbol of the Company's Common Stock on the OTC Bulletin
Board was changed from "SWAV" to "GBSX."
The following table sets forth, for the periods indicated, the
reported high and low closing bid quotations for our Common Stock as reported on the OTCBB. The bid prices reflect inter-dealer
quotations, do not include retail markups, markdowns or commissions and do not necessarily reflect actual transactions.
Fiscal Quarter
High
Low
2010
January 4
th
- March 31
st
$
0.01
$
0.01
April 1
st
- June 30
th
$
0.075
$
0.01
July 1
st
- September 30
th
$
0.10
$
0.075
October 1
st
- December 31
st
$
1.70
$
0.075
2011
January 3
rd
- March 31
st
$
4.95
$
1.35
April 1
st
- June 30
th
$
4.55
$
3.55
July 1
st
- September 30
th
$
3.55
$
1.90
October 1
st
- December 31
st
$
2.45
$
1.45
2012
January 1, 2012 - March 31, 2012
$
2.60
$
1.02
35
Description of Common Stock
We are authorized to issue 75,000,000 shares
of $0.001 par value Common Stock of which
28,211,664
shares were issued and outstanding as of
March 30, 2012. Holders of Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of
stockholders. Shares of Common Stock do not carry cumulative voting rights and, therefore, holders of a majority of the outstanding
shares of Common Stock will be able to elect the entire board of directors, and, if they do so, minority stockholders would not
be able to elect any members to the board of directors. Our board of directors has authority, without action by the stockholders,
to issue all or any portion of the authorized but unissued shares of Common Stock, which would reduce the percentage ownership
of the stockholders and which may dilute the book value of the Common Stock.
Stockholders have no pre-emptive rights
to acquire additional shares of Common Stock. The Common Stock is not subject to redemption and carries no subscription or conversion
rights. In the event of liquidation, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction
of all liabilities. The shares of Common Stock, when issued, will be fully paid and non-assessable.
Holders of Common Stock are entitled to
receive dividends as the board of directors may from time to time declare out of funds legally available for the payment of dividends.
We have not paid dividends on Common Stock and do not anticipate that it will pay dividends in the foreseeable future.
All shares of the Common Stock now outstanding
are duly authorized, fully paid and non-assessable.  The shares of Common Stock issuable upon exercise of the warrants
are duly authorized and upon payment of the exercise price will be fully paid and non-assessable.
Preferred Stock
The Company is currently authorized to
issue up to 25,000,000 "blank check" shares of Preferred Stock with all designations, rights and privileges as the
Company's Board of Directors may decide, from time to time, without stockholder approval. As of March 30, 2012, there are
no shares of Preferred Stock designated or issued.
Transfer Agent
Our transfer agent is Action Stock Transfer,
7069 South Highland Drive, Salt Lake City, UT 84121; Phone: 801-274-1088; Fax: 801-274-1099.
Holders
As of April 6, 2012, we had 72 record holders of our Common
Stock (not including beneficial owners who hold shares at broker/dealers in "street name").
Dividend Policy
While there are no restrictions that limit our ability to pay
dividends, we have not paid, and do not currently intend to pay cash dividends on our Common Stock in the foreseeable future. Our
policy is to retain all earnings, if any, to provide funds for operation and expansion of our business. The declaration of dividends,
if any, will be subject to the discretion of our Board of Directors, which may consider such factors as our results of operations,
financial condition, capital needs and acquisition strategy, among others.
Securities Authorized for Issuance under Equity Compensation
Plans
2011 Stock Option Plan
On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the "Plan"), subject to stockholder approval.
Below is a summary of the Plan.
36
Purpose
The purpose of the Plan is to provide the
directors, officers, employees and consultants who make significant and extraordinary contributions to the long-term growth and
performance of the Company, with equity-based compensation incentives, and to attract and retain the employees and consultants.
The Company believes that increased share ownership by such persons will more closely align stockholder and employee interests
by encouraging a greater focus on the profitability of the Company. There is reserved for issuance under the Plan an aggregate
of five million (5,000,000) shares of the Company's Common Stock. All of such shares shall be issued pursuant to the exercise
of stock options granted under the Plan ("Stock Options"). Stock Options granted under the Plan may be options intended
to qualify as "incentive stock options" ("ISOs") under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or options not intended to qualify, so-called "nonqualified stock options" ("NQSOs").
Plan Administration
The Plan is administered by our Board of
Directors (the "Board") or a committee (the "Committee") thereof, if appointed by the Board. The Board (or
Committee) will have full and complete authority, in its discretion, but subject to the express provisions of the Plan (a) to approve
the persons to be granted stock options ("Optionee"); (b) to determine the number of and type of Stock Options to be
granted to an Optionee; (c) to determine the time or times at which Stock Options will be granted; (d) to establish the terms and
conditions upon which Stock Options may be exercised; (d) to remove or adjust any restrictions and conditions upon Stock Options;
(e) to specify, at the time of grant, provisions relating to exercisability of Stock Options and to accelerate or otherwise modify
the exercisability of any Stock Options; and (f) to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of the 2011Plan.
Plan Eligibility
The group of individuals eligible to receive
Options will consist only of the following (the "Eligible Participants"):
a. Directors and Officers
of the Company,
b. Employees of the
Company and Management Company Employees, and
c. Consultants of the
Company, except as provided herein,
and includes a company of which 100% of
the share capital is beneficially owned by one or more individual Eligible Participants.
Consultants will only be eligible to receive
Options if they have furnished bona fide services to the Company and such services are not in connection with the offer or sale
of securities in a capital-raising transaction.
Shares Subject to this Plan
The maximum number of shares of the Common
Stock that may be issued pursuant to Stock Options granted under the Plan is five million (5,000,000) shares of Common Stock, subject
to adjustment for any stock dividends, stock splits, reclassifications and similar changes in the capital structure of the Company.
Grants of Stock Options
The Board, or if appointed, Committee,
has the discretion to grant Stock Options which qualify as "incentive stock options" ("ISOs") under Section
422 of the
Internal Revenue Code of 1986, as amended (the "Code") or
which do not
qualify, so-called "nonqualified stock options" ("NQSOs").
To qualify as an
ISO under the Code, the Stock Option generally must (among other things) (x) be granted only to employees, (y) have an exercise
price equal to or greater than the Fair Market Value on the date of grant, and (z) terminate if not exercised within ten (10) years
from the date of grant (or five years if granted to an Optionee who, at the time the ISO is granted, directly or indirectly, holds
more than 10% of the total voting power of our Company).  Except in certain limited instances (including termination
for cause, death, or disability), if any Optionee ceases to provide services to our Company, the Optionee's rights to exercise
vested ISOs will expire within three months following the date of termination.
To the extent that the aggregate Fair Market
Value (determined at the time the option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year (under the Plan and all other Incentive Stock Option Plans of the Company)
exceed $100,000, such Options will be treated as NQSOs and will not qualify as ISOs.
In the case of an Incentive Stock Option
granted to an Eligible Participant who at the time of the grant of such Incentive Stock Option owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or any parent or subsidiary, such ISO may not be exercised
after the expiration of five (5) years from the date the ISO is granted.
No ISOs will be granted under this Plan
more than ten (10) years after the date that the Plan is adopted or approved by the stockholders of the Company, whichever is earlier.
No ISO will be exercisable more than ten
(10) years from the date it is granted; provided, however, that the case of an Eligible Participant who at the time of grant owns
Common Stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any subsidiary,
the ISO Option may not be exercised after the expiration of five (5) years from the date of grant.
37
Exercise Price
In order to qualify as an ISO, a Stock
Option must have an exercise price equal to no less than the Fair Market Value of the Company's Common Stock as of the date
of grant.
In the case of an ISO granted to a Eligible Participant who at the time of the grant owns
Common Stock representing more than ten (10%) of the voting power of all classes of stock of the Company or any parent or subsidiary
of the Company, the per share exercise price will be no less than 110% of the Fair Market Value per share on the date of grant.
Under the Plan, the exercise price of an
NQSO granted under the Plan may not be less than:
(a)
the Discounted Market Price (as defined by the exchange on which the Common Stock is listed) if
the Common Stock is listed on an established stock exchange at the time of the grant, or
(b)
85% of the Fair Market Value if the Common Stock is not listed on an established stock exchange,
but is listed or quoted, as the case may be, on the NASDAQ Small Cap Market, the NASD OTC electronic bulletin board or the National
Quotation Bureau pink sheets at the time of the grant of the Option.
If the shares of Common Stock become listed
on another stock exchange, then the exercise price will not be less than the exercise price permitted by such exchange.
Fair Market Value
Under the Plan, "Fair Market Value"
means, as of any date, the value of Common Stock determined as follows:
(a)
if the Common Stock is listed on an established stock exchange, exchanges, or the NASDAQ National
Market, the closing price per share on the last trading day immediately preceding such date on the principal exchange on which
the Common Stock is traded or as reported by NASDAQ;
(b)
if the Common Stock is not then listed on an established exchange or the NASDAQ National Market,
but is quoted on the NASDAQ Small Cap Market, the NASD OTC electronic bulletin board or the National Quotation Bureau pink sheets,
the average of the lowest and the highest prices per share for the Common Stock as quoted by NASDAQ, NASD or the National Quotation
Bureau, as the case may be, for the period of
(i)
10 trading days immediately preceding such date in case the collective trading volume of the Common
Stock during that 10 day period is greater than 1% of all issued and outstanding shares; or
(ii)
60 trading days immediately preceding such date in case the collective trading volume of the Common Stock during that 60 day
period is greater than 1% of all issued and outstanding shares; or
(iii)  360 trading days immediately
preceding such date in case the collective trading volume of the Common Stock during that 360 day period is greater than 1% of
all issued and outstanding shares; or
(iv)  in
the event the collective trading volume in the last 12 months immediately preceding such date is below 1% of all issued and outstanding
shares, but during this period the Company issued new shares in the amount of at least 1% of all issued and outstanding shares
of the Company, the average between the price as determined in section l. (b) (ii) and the price per share issued, or
(v)  in
the event none of the aforementioned conditions l.(b) (i) to (iv) is met for the date in question, then an amount determined in
good faith by the Board of Directors of GBSX, or
(c)
if there is no such reported market for the Common Stock for the date in question, then an amount
determined in good faith by the Board of Directors of GBSX.
Option Period
The Stock Option period commences on the
date of grant of the Stock Option and will be exercisable for up to ten (10) years or such shorter period as is determined by the
Board, or Committee (if applicable).
Restrictions on Transfer
Options granted under the Plans generally
are not transferable other than by will or the laws of descent and distribution, and may be exercised during the optionee's lifetime
only by the optionee.
38
Vesting of Stock Options and Awards
The Board (or Committee if appointed to
administer the Plan) has full authority, in its discretion to make each option or award granted subject to a vesting schedule whereby
an employee must remain employed by the Company for a given length of time in order to have the option or award fully vest. Employees
leaving the Company's employment before the option or award in fully vested will forfeit any unvested portion of an option
or award.
Termination of Relationship
No Option may be exercised after the Optionee,
if a Director or Officer, has ceased to be a Director or Officer or, if an Employee or other Eligible Participant, has left the
employ or service of the Company or an affiliate of the Company, except as follows:
(a)
To the extent provided in the Optionee's employment agreement;
(b)
In the case of the death of an Optionee, any vested Option held by him or her at the date of death
will become exercisable by the Optionee's lawful personal representatives, heirs or executors until the earlier of one year
after the date of death of such Optionee and the expiry date of such Option;
(c)
Subject to the other provisions of the Plan, including the proviso below, vested Options will expire
ninety (90) days after the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the
Company or an affiliate of the Company, and all unvested Options will immediately terminate without right to exercise same; and
(d)
In the case of an Optionee being dismissed from employment or service for cause, such Optionee's
Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same, provided that
in no event may the term of the Option exceed 10 years.
Notwithstanding the provisions of subsection
(c), the Board or Committee may provide for the vesting of all or any part of the Optionee's Options that are unvested at
the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the Company or an affiliate,
and may extend the time period for exercise of an Option to a maximum of the original term of the Option, all as the Board or Committee
deems appropriate in the circumstances contemplated by subsection (c).
Consideration
The Board or Committee will grant Stock
Options under the Plan in consideration for services rendered. There will be no other consideration received or to be received
by the Company or any of its subsidiaries for the granting or extension of Stock Option under the Plan.
Issuer Purchases of Equity Securities
None
39
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
The following discussion and analysis
should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere
in this prospectus. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk
Factors", "Cautionary Notice Regarding Forward-Looking Statements" and "Description of Business"
sections and elsewhere in this prospectus and in the Company's 10-K (as amended) for the fiscal year ended March 31
st
,
2011 and in the Company's 10-Q (as amended) for the fiscal quarter ended December 31, 2011. We use words such as "anticipate,"
"estimate," "plan," "project," "continuing," "ongoing," "expect,"
"believe," "intend," "may," "will," "should," "could,"
"predict," and similar expressions to identify forward-looking statements. Although we believe the expectations expressed
in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our
actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences
include, but are not limited to, those discussed in the "Risk Factors" section of this prospectus. We undertake no
obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other
events occur in the future. Except as required by applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully
review and consider the various disclosures made throughout the entirety of this prospectus, which attempt to advise interested
parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.
OVERVIEW
GBS Enterprises Incorporated, a Nevada
corporation (the Company," GBSX," we," us," our" or similar expressions), conducts its primary business
through its 50.1% owned subsidiary, GROUP Business Software AG (GROUP"), a German-based public-company whose stock trades
on the Frankfurt Exchange under the stock symbol INW.  GROUP's core business is focused on serving IBM's
Lotus Notes and Domino market where it has become IBM's largest provider of software and services business solutions worldwide.  GROUP
caters primarily to mid-market and enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning
four continents, representing more than 5,000,000 active users of its products.  GROUP's customers include Abbot,
Ernst & Young, Deutsche Bank, Bayer, HBSC, Merck and Toyota.  GROUP provides IBM Lotus Notes/Domino Application and
Transformation technology, and related Cloud Computing technology. Headquartered in Eisenach, Germany the Company has offices throughout
Europe and North America.
General Corporate History
We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. (SWAV"). SWAV was an importer and wholesaler of Chinese manufactured goods.
On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited (Lotus") pursuant to an Asset Purchase Agreement in consideration for aggregate of 2,265,240
shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training.
Simultaneously with SWAV's acquisition
of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock for an aggregate purchase price of
$370,000.
Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company's Chief Executive Officer,
President and Chairman of the Board of Directors.
On September 6, 2010, SWAV's name
was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company's trading symbol on the OTC Bulletin Board
was changed from SWAV to GBSX.
Effective December 30, 2010, the Company
acquired approximately 28.2% of the issued and outstanding shares of common stock of GROUP, pursuant to Share Purchase Agreements
between the Company and several of GROUP's stockholders, including Mr. Joerg Ott (also the Company's Chairman and Chief
Executive Officer). Pursuant to the Share Purchase Agreements, the Company acquired an aggregate of 7,115,500 shares of common
stock of GROUP in consideration for an aggregate of 3,043,985 shares of the Company's common stock.
40
On January 6, 2011, the Company acquired
an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361426 shares of common stock of the Company.
The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect of this transaction is
that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares. The value of this
additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value of $0.506 per share.
In total, the Company purchased an aggregate
of 12,641,235 shares of common stock of GROUP from a total of nine GROUP stockholders in consideration for a total of 5,405,411
shares of common stock of the Company, resulting in the Company owning a controlling equity interest of approximately 50.1% in
GROUP. The Company conducts its primary business through GROUP.
On February 27, 2012, the Company acquired
an additional 883,765 shares of common stock of GROUP to maintain its 50.1% ownership of GROUP. On February 27, 2012, an outstanding
loan of GROUP was converted into an aggregate of 1,750,000 shares of GROUP common stock, thereby increasing GROUP's outstanding
common stock to 26,982,000 shares. As a result of the foregoing increase in the number of outstanding shares of GROUP common stock,
the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately 50.1%
of the outstanding common stock of GROUP. The Company purchased the 883,765 shares of GROUP common stock from GAVF LLC for an average
purchase price of $0.70 per share, or approximately $619,000.
Products and Services
GBS has achieved significant growth by
consolidating the fragmented Lotus Software market through the successful merger & acquisitions of companies with complementary
product, technology or services offerings. Based on its organic growth and growth by acquisition GBS has continuously developed
its software and service business to service and support GBS's expanding Lotus customer base.
Historically, GROUP has achieved growth
through acquisition by targeting attractive, yet underperforming companies with complimentary operations and leveraging GROUP's
expertise to successfully turnaround and integrate these targets.
Key success factors for this strategy are:
enhanced portfolio, positioning GROUP as the 'one-stop-shop' for Lotus applications and services, expand customer support,
fast code migration, and cloud enablement/XPages conversion of acquired applications.
Going forward, the Company will focus on
potential acquisition targets in the following areas of software and services: Applications, Professional Services, Hosting/Outsourcing
Services, Administration and IT services, and XPages expertise.
Messaging and Business Applications
Software & Solutions
GBS Messaging and Business Application
Software & Solutions product lines include software and advisory services for email and Instant Messaging (IM) Management,
Security, Compliance, Archiving and Productivity, CRM Applications, Governance, Risk & Compliance (GRC) Management software,
Workflow and Business Process Management software, ePDF Archiving & Document Management and e-Banking solutions.
GBS develops, sells and installs well known
business process and management software suites based on Lotus Notes / Domino and IBM Portal technology, mainly for major international
companies and medium-sized customers.
Through GBS's comprehensive messaging
software product lines and associated services, Lotus Notes, Microsoft Exchange or SMTP-based-email customers, as well as Lotus
Sametime customers are able to provide their users with secure, efficient and centrally administered use of e-mail and IM while
maintaining control over their compliance with current legal requirements and corporate guidelines.
Consulting Services
As a leader in the IBM Lotus Notes Software
and Services business GBS provides high-end consulting services to its customers. GBS develops, sells and orchestrates customer-specific
Lotus Domino strategy and consulting services, such as CIO and IT department leader Strategic Advisory Services, Managed Services,
Outsourcing, Administration, Assessments and Implementations, Performance Improvements, Custom Application Development , Governance
and Security, Technical Support, and Training, as well as Email Migration Services. The talented team at GBS Experts has outstanding
skill sets in the areas of system architecture and evaluation, application integration, e-mail and Instant Messaging, administration,
application development, application migration, middleware deployments and licensing, outsourcing and hosting.
Based on GBS's unique concentration
of industry talent and expertise, mainly in the areas inside and around IBM Lotus Notes/Domino, inside and around corporate messaging
(IBM, Microsoft, SMTP) and inside and around IT environmental and application assessment, analysis and reporting, commercial and
governmental customers, as well as SIs and channel partners are able to relay on the industry leading strategic and tactical advisory
services for evaluating, planning, staffing and execution of any customer project. GBS Consulting Services' global team of
consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client
projects on time and with reduced risk.
41
GBS's focus on recruiting and retaining
top Lotus expertise, positions our team to offer leading-edge Lotus Notes / Domino subject matter knowledge to our customers. As
a testament to this focus, GBS employs 10 of the top 20 most recognized 'market experts' and thought-leaders in Lotus
development and administration. GBS consultants have an average of over 12 years' experience each in Lotus Notes/Domino and
its related products and are routinely asked to present at IBM Lotus events including Lotusphere, an annual conference hosted by
IBM Lotus Software.
As a Premier IBM Business Partner - GBS
is one of the few partners that can sell and support licenses for all five IBM software brands: Lotus, WebSphere, Rational, Tivoli,
and DB2.
Cloud Computing
As IT departments face continuous budget
reductions and constant pressure for higher performance and efficiency, CIOs are focusing on modern technologies to support their
need for increased scalability, flexibility and lower costs. GBS has identified this demand as a strategic growth opportunity for
the company and has placed a significant focus on expanding its Cloud Computing and Modernizing/Migrating technology offerings.
The strategic opportunities are served by GBS with two distinct offerings:
1)
GROUP Live - Cloud Automation Platform / Cloud Platform-as-a-Service (PaaS) software and services. And
2)
Transformer - Lotus Notes modernization/migration services and technology accelerators
GBS Cloud Computing activities are focused
on cloud automation solutions and therefore the Company has made key acquisitions and R&D investments to create an award winning
Cloud Platform-as-a-Service offering. Under the GROUP Live banner, the GBS PaaS offering has been sold to a variety of enterprise
customers, which use the PaaS software to host internal corporate clouds (Private cloud) and applications as-a-service to their
various internal user groups. GROUP Live has also be sold and implemented by a number of Independent Software Vendors (ISVs), which
are leveraging the platform to deliver their own Software-as-a-Service (SaaS) applications to their respective customer bases.
Both of these customer groups enjoy the
comprehensive nature of this platform agnostic PaaS solution and its exceptional change management capabilities enabling resource
flexibility, business agility, scalability and ease-of-use beyond that which is generally available in the market today.
GBS Lotus Application Modernization
and Migration
GBS Lotus Application Modernization and
Migration activities are focused on the IBM Lotus / Domino applications market and the offering spans from expert services and
accelerator technologies to modernize, web enable and migrate Lotus applications; and thus ultimately take the Lotus applications
from legacy to the future. The foundation of the Transformer Suite Software offering is GBS's significant R&D investment
in a set of methodologies and key technology accelerators to automate the conversion of traditional Notes based client-server applications,
into the IBM XPages framework which enables Domino applications to be run and accessed via the Lotus client, a web browser or on
a mobile device. The patent-pending software that underpins Transformer was developed by GBS with the assistance and guidance from
IBM Corporation's Software Group to ensure alignment with future releases of the IBM Lotus / Domino and XPages technology.
IBM has deemed the Transformer technology
a game changer," and will be employing it to modernize their clients' applications.
Competition
The competitive landscape in the enterprise
data center market is intense and changing, and we expect there will be a new class of very large, well-financed, and aggressive
competitors, each bringing its own new class of products to address this new market. We also expect to see acquisitions, further
industry consolidation, and new alliances among companies as they seek to serve the enterprise data center market.
The Company is focused on developing a
portfolio of Cloud Computing software technologies and Application Services to address the needs of ISV's, Data Center providers,
as well as commercial and government organizations. GBSX is pursuing an aggressive growth strategy based upon highly targeted mergers
and acquisitions so as to build its portfolio of technologies, applications, and services.
42
Results of Operations
Comparison of Consolidated Balance
Sheets at December 31, 2011 and March 31, 2011
Assets
Total Assets increased from $76,865,929
at March 31, 2011 to $86,710,970 at December 31, 2011. Total Assets consists of Total Current Assets and Total Non-Current Assets.
At December 31, 2011, our Total Current
Assets were $10,239,975, compared to $17,875,353 at March 31, 2011. Our cash and cash equivalents decreased from $8,530,864 at
March 31, 2011 to $3,537,517 at December 31, 2011. The decrease was primarily due to the Company's continued expenditures
in development of the Transformer and Cloud Application Platform technologies.  Accounts Receivable decreased from $5,698,320
at March 31, 2011 to $4,544,023 at December 31, 2011. This decrease was primarily due to seasonality issues in that billings increase
at the beginning of the calendar year for recurring software maintenance and receivables decline during the year as these maintenance
receivables are collected. Inventories increased from $0 at March 31, 2011 to $264,611 at December 31, 2011 primarily as the result
of the accumulation of work-in-process labor which will be billed to clients when the projects are completed in the fourth quarter
ending March 31, 2012. Prepaid Expenses decreased from $1,423,281 at March 31, 2011 to $1,097,370 at December 31, 2011 and consisted
primarily of the expensing of prepaid items that consisted of office supplies and materials. Other receivables consisted of a receivable
for anticipated compensation for damages, security deposits and tax refund claims. Other receivables decreased from $2,222,887
at March 31, 2011 to $796,454 at December 31, 2011. The decrease was primarily due to the receipt of a cash payment of $1,901,522
from an insurance company for damages compensation.
At December 31, 2011, our Total Non-Current
Assets were $76,470,995, compared to $58,990,576 at March 31, 2011. Property, plant and equipment increased from $298,497 at March
31, 2011 to $2,133,969 at December 31, 2011 due to the acquisition of IDC whose property, plant and equipment assets consisted
primarily of computer equipment and leasehold improvements used in the datacenter operations of IDC. For additional details, see
Note 5 - Property, Plant and Equipment in the footnotes to the Interim Consolidated Financial Statements.
Our Financial Assets increased from $837,480
at March 31, 2011 to $2,818,310 at December 31, 2011. The increase resulted from a loan from the Company to GROUP Business Software
AG. This loan would typically be classified as an intercompany loan and would be eliminated in consolidation; however, because
of the application of the 93-day Rule, the intercompany loan will not be eliminated until the fourth quarter ending March 31, 2012
due to the one quarter timing difference between the two companies' financial statements as reflected in the consolidated
statements. Investment in related company was $290,973 at March 31, 2011 and decreased slightly to $285,908 at December 31, 2011.
This amount represents an equity investment in BERS, a Bulgarian development company. Non-current Prepaid expenses increased from
$-0- at March 31, 2011 to $725,178 at December 31, 2011 and consisted primarily of the reclassification of prepaid taxes to non-current
prepaid taxes relating to recent acquisitions. Deferred Tax Assets increased from $1,136,135 at March 31, 2010 to $3,385,350 at
December 31, 2011. The increase resulted from net operating loss carry forwards from the tax impact of recent losses relating to
the operations of GROUP Business Software, AG, and the Company. Goodwill increased from $39,688,967 at March 31, 2011 to $49,693,027
at December 31, 2011. The increase was primarily due to the purchase of Pavone, AG, Groupware, Inc., IDC and SD Holdings which
accounted for a total increase to Goodwill of approximately $9.98 million relating to these acquired companies. For additional
details, see Note 6 - Goodwill in the footnotes to the Interim Consolidated Financial Statements.
Software increased from $16,514,894 at
March 31, 2011 to $17,110,114 at December 31, 2011 and the increase consists of capitalized development costs and software, product
rights and licenses acquired in recent acquisitions during the period. For additional details, see Note 7 - Software in the footnotes
to the Interim Consolidated Financial Statements.
Other Assets increased from $223,630 at
March 31, 2011 to $319,139 at December 31, 2011 and the increase consisted of additional reinsurance payments relating to an increase
in pension obligations.
Liabilities
Total Liabilities increased from $24,285,794
at March 31, 2011 to $25,641,684 at March 31, 2011. Total Liabilities consists of Total Current Liabilities and Total Non-Current
Liabilities.
At December 31, 2011, our Total Current
Liabilities were $18,472,945, compared to $16,345,733 at March 31, 2011. Notes Payable increased from $1,440,295 at March 31, 2011
to $1,462,560 at December 31, 2011. The increase is related to notes payable associated with GROUP Business Software, AG warrants
and the notes were paid off in January 2012. Liabilities to Bank decreased from $50,073 at March 31, 2011 to $39,073 at December
31, 2011 and the decrease consisted of payments made to reduce loan balances. The decrease from 2010 to 2011 was primarily due
to a reduction from the bank liabilities. Accounts Payable and Accrued Liabilities increased from $4,996,748 at March 31, 2011
to $5,489,528 at December 31, 2011 and consists of Trade payables, Tax accruals and other accruals. The increase was primarily
due to the acquisition of the four companies previously mentioned which accounts for most of the increase reflected in the corporate
consolidation. Deferred Income increased from $6,208,458 at March 31, 2011 to $7,200,058 at December 31, 2011 and consists mainly
of maintenance income collected in advance for the period after the end of the fiscal year. The increase was primarily due to the
fact that four new acquisitions reflecting additional deferred income are included in the corporate consolidation for the period.
Other Liabilities increased from $2,820,002 at March 31, 2011 to $3,507,192 at December 31, 2011 and the increase consists of the
liabilities assumed relating to the acquisitions of four companies during the period as previously mentioned. Due to related parties
decreased from $830,156 at March 31, 2011 to $475,579 at December 31, 2011 due to cash payments made to reduce the obligation during
the period. For additional details, see Note 8 - Related Party Transactions and Balance in the footnotes to the Interim Consolidated
Financial Statements. Shares payable balance reflects the obligation of the remaining shares owed to SD Holdings resulting from
the acquisition in December 2011. The amount was calculated based on 145,832 shares of the Company at $2.05 per share. For additional
details, see Note 9 - Share Payable in the footnotes to the Interim Consolidated Financial Statements.
43
At December 31, 2011 our Total Non-Current
Liabilities were $7,168,739, compared to $7,940,061 at March 31, 2011. The decrease was primarily due to the reclassification of
a portion of the balances to current liabilities. Non-Current Liabilities to Banks increased from $780,277 at March 31, 2011 to
$3,606,461 at December 31, 2011. The increase consists of a long-term loan obligation to Baden-Württembergische Bank used
for additional software development during the period relating to the Transformer and Cloud technologies. Deferred Tax Liabilities
decreased from $878,450 at March 31, 2011 to $611,849 at December 31, 2011 and consists of the Deferred Tax Liabilities from the
capitalization of software costs and the depreciation of property, plant and equipment assets. Retirement Benefit Obligation increased
from $153,962 at March 31, 2011 to $163,648 at December 31, 2011. The increase consisted of additional obligations for pension
plan benefits earned by the employees during the period. Other Non-Current Liabilities decreased from $6,127,373 at March 31, 2011
to $2,786,781 at December 31, 2011. The decrease was primarily the result of a reclassification of Non-Current Other Liabilities
to current other liabilities. Approximately $2.8 million of Non-Current Other Liabilities relating to the Lotus 911 and Permessa
acquisitions was reclassified to current liabilities during the nine month period ending December 31, 2011.
Quarter and Nine Months Ended December
31, 2011 compared to Quarter and Nine Months ended December 31, 2010
Revenues
For the fiscal quarter ended December 31,
2011, our Net Sales increased to $8,229,318 from $5,362,060 for the fiscal quarter ended December 31, 2010. The Company generates
nets sales from Licenses, Maintenance, Services, Third-Party Products and Other. This increase is mainly the result of increases
in Transformer sales activity and the impact of four acquisitions made by the Company during the nine month period ended December
31, 2011.
For the nine months ended December 31,
2011, our Net Sales increased to $21,320,351 from $17,959,639 for the first nine months ended December 31, 2010.  The
Revenue with Products decreased from $7,339,748 to $6,980,202 in the first nine months of the fiscal year. That decrease is mainly
driven by a decrease in third party products with a decrease from $4,405,750 to $3,809,661 in the same time frame. As an impact
of the aforementioned acquisitions made by the Company during the nine months ended December 31, 2011 the Service Revenue increased
from $10,619,891 to $14,340,149.
Cost of Goods Sold
For the fiscal quarter ended December 31,
2011, our Cost of Goods Sold increased to $4,693,603 from $2,718,728 for the fiscal quarter ended December 31, 2010. Cost of Goods
Sold consists of Cost for Services, Cost for Third-Party Products and Cost for Software Licenses. The increase was primarily due
to the increase in costs for Software Licenses based on a higher sales volume and a change in the third party product mix. In addition,
the cost of goods sold is higher because of the increase in salaries and related expenses to fulfill our business objectives in
GROUP Live, our cloud application platform, and our Transformer Business.
For the nine months ended December 31,
2011, our Cost of Goods Sold increased to $10,843,557 from $8,687,916 for the nine months ended December 31, 2010.  The increase
from 2010 to 2011 was on the one hand due to raising the Cost for Software Licenses based on an increase in lower margin third
party products. As a result the COGS for Products increased from $3,770,174 to $3,976,750. On the other hand the Cost of Goods
Sold for Services are higher in 2011 compared to 2010 and increased from $4,917,743 to $6,866,807 because of the increase in salaries
and related expenses to fulfill our business objectives in our GROUP Live, our cloud application platform, and our Transformer
portfolio. As of December 31, 2011, there were 226 people employed by the Company (2010: 122). Approximately 36% (2010: 29%) were
employed in programming activities due to the extensive Lotus software development and licensing business.
Operating Expenses
For the fiscal quarter ended December 31,
2011, our Operating Expenses increased to $6,058,183 from $3,148,526 for the fiscal quarter ended December 31, 2010. Operating
Expenses consist of Selling Expenses, Administrative Expenses and General Expenses. For the fiscal quarter ended December 31, 2011,
our Selling Expenses increased to $4,308,647 from $2,036,168 for the fiscal quarter ended December 31, 2010. Selling Expenses consist
of the cost for the Sales, Marketing and Service units. The increase was due to additional recruiting of sales personnel and additional
selling expenses relating to the four acquisitions previously described. For the fiscal quarter ended December 31, 2011, our Administrative
Expenses increased to $1,589,374 from $715,228 for the fiscal quarter ended December 31, 2010. Administrative Expenses consist
of costs for the management and administration units. The reason for the increase was primarily due to the additional administrative
expenses associated with the four acquisitions made during the nine month period ended December 31, 2011. For the fiscal quarter
ended December 31, 2011, our General Expenses decreased to $160,162 from $397,130 for the fiscal quarter ended December 31, 2010
due to cost cutting efforts made during the period.
44
For the nine months ended December 31,
2011, our Operating Expenses increased to $17,985,032 from $11,241,338 for the nine months ended December 31, 2010. For the nine
months ended December 31, 2011, our Selling Expenses increased to $12,277,502 from $7,537,061 for the nine months ended December
31, 2010. Selling Expenses consist of the cost for the Sales, Marketing and Service units. The increase was due to additional recruiting
of sales personnel and additional selling expenses relating to the four acquisitions previously described. $2,389,070 of this increase
is resulting from the aforementioned acquisitions made by the company in the nine months ended December 31, 2011. $2,706,754 of
this increase is resulting from additional sales activities around our CRM portfolio in the North American market. The sale of
the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding OY in 2010 accounted for a decrease of Selling Expenses
in the amount of $805,036 for the same nine months period. For the nine months ended December 31, 2011, our Administrative Expenses
increased to $4,846,513 from $2,724,305 for the nine months ended December 31, 2010. Administrative Expenses consist of costs for
the management and administration units. The reason for the increase was primarily due to the additional administrative expenses
associated with the four acquisitions made during the nine month period ended December 31, 2011 in the amount of $430,144 and an
increase in administrative operations by GBS Enterprises Inc. in the amount of $1,109,219. For the nine months ended December 31,
2011, our General Expenses decreased to $861,017 from $979,973 for the nine months ended December 31, 2010 due to cost cutting
efforts made during the period which exceeded the additional General Expenses due to the aforementioned acquisitions made by the
company in the amount of $108,451. Overall and due to increased business activities and as a result of the support of the dual
listing within GBS group the Auditing and Consulting Costs increased for the nine months ended December 31, 2011 to $925,184 from
$287,524 for the nine months ended December 31, 2010. The overall increase in marketing expenses for the nine months ended December
31, 2011 to $1,385,468 by 90.1% from $728,883 for the nine months ended December 31, 2010 and the increase in overall Travel Expenses
for the nine months ended December 31, 2011 to $987,684 from $661,801 for the nine months ended December 31, 2010 is also directly
a result of additional business activities and the growth of the company as a result of the aforementioned acquisitions. Due to
the increase in personnel to 226 employees from 122 employees Communications Costs increased to $432,934 from $269,206 in the same
nine months period.
For the nine-month period ended December
31, 2011, Other Income decreased to $ 64,916 from $888,513 for the nine-month period ended December 31, 2010.  The reason
for the decrease was primarily due to earnings in the previous year in relation to the selling of the Assets of Gedys IntraWare
GmbH.
The consolidated Statements of Operations
also include expenses of $ 2.2 million directly relating to Group Live, the Company's cloud computing technology service,
and expenses of $ 2.1 million directly relating to the Transformer, the Company's Lotus Notes application conversion service,
for the first nine months 2011.
Liquidity & Capital Resources
at December 31, 2011
At December 31, 2011, we had $3,537,517
in cash and cash equivalents, compared to $8,530,864 at March 31, 2011. In March 2011, the Company consummated a private placement
offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.  Each
Unit was comprised of one share of Common Stock and one three-year Warrant to purchase one share of Common Stock at an exercise
price of $1.50 per share. The Warrants are only exercisable by the payment of cash. Pursuant to the terms of the Warrants, the
holders of the Warrants are required to exercise their Warrants in the event our Common Stock trades at an average of at least
$3.00 per share for a period of not less than 20 consecutive trading days. Also, throughout the three year exercise period of the
Warrants, the Company has the right to redeem the Warrants for $0.05 per share. The Company has agreed to register the 6,044,000
shares of Common Stock issuable upon the exercise of the Warrants under the Securities Act of 1933, as amended, on a Registration
Statement on Form S-1. The Company has not filed such Registration Statement as of the date of this Form S-1. Upon the full exercise
of the Warrants, the Company would receive gross proceeds of $9,066,000.
During the quarter ended December 31, 2011,
certain Warrant holders exercised their Warrants to purchase an aggregate of 2,020,000 shares of Common Stock for a total purchase
price of $3,030,000. The cost of issuance was $5,030, resulting in net proceeds of $3,024,970.
We intend to use the net proceeds of the
exercises of the Warrants to increase our marketing, advertising and Cloud and Transformer service development teams, acquisitions
and for general corporate working capital purposes.
Management believes that the Company's
cash at December 31, 2011and available credit lines, plus outstanding exercisable warrants, will be sufficient to meet the Company's
working capital requirements for the next 12 month period. Management believes that as a result of the assets purchased to date,
it will generate additional funds and that it will be able to obtain additional capital as required to meet projected operational
requirements.
45
Cash Flows
For the Nine Month Periods Ended
December 31,
2011
2010
Cash provided by operating activities
$
53,610
$
3,530,107
Net cash provided by (used in) Investing Activities
$
(7,201,629
)
$
(4,998,857
)
Net cash provided by (used in) Financing Activities
$
2,154,671
$
1,233,020
Net increase (decrease) in cash and cash equivalents during the period
$
(4,993,347
)
$
(235,730
)
Cash and cash equivalents, beginning of period
$
8,530,864
$
1,744,965
Cash and cash equivalents, end of period
$
3,537,517
$
1,509,235
Cash provided by operating activities for
the nine month period ending December 31, 2011 was approximately $54,000, which is about $3.4 million less than the comparative
period ending December 31, 2010. This change is primarily due to the expenditures made by the Company in developing the Transformer
and GROUP Live technologies. The cash used in investing activities during the nine month period ending December 31, 2011was approximately
$7.2 million, compared to cash used in investing activities in the comparative period ending December 31, 2010 of approximately
$5.0million. This increase was primarily due to the investments in the four acquisitions made during the nine month period ending
December 31, 2011 as previously described. Net cash used in financing activities increased from $1,233,020 for the nine month period
ended December 31, 2010 to $2,154,671 for the nine month period ended December 31, 2011. The increase was primarily due to the
exercise of warrants in December 2011 resulting in proceeds of $3,024,970 which was offset by a net decrease in borrowings of $870,299
resulting in net cash provided by financing activities of $2,154,671.
The Company has no significant planned
commitments for capital expenditures and does not anticipate using either internal or external sources of funds for capital expenditure
programs. As a software and services firm, the Company is not capital intensive and historically has had minimal or no planned
capital expenditures. Therefore, the present or expected future impact on the Company's liquidity for capital expenditure
purposes is minimal and not material.
Fiscal Year Ended March 31, 2011
Compared to Fiscal Year Ended March 31, 2010
Assets
Total Assets increased from $73,641,857
at March 31, 2010 to $76,865,929 at March 31, 2011.  Total Assets consists of Total Current Assets and Total Non-Current
Assets.
At March 31, 2011, our Total Current Assets
were $17,875,353, compared to $18,949,425 at March 31, 2010. Our cash and cash equivalents increased from $1,744,965 at March 31,
2010 to $8,530,864 at March 31, 2011.  The increase was primarily due to the Company's private placement offering
consummated in March 2011. On March 11, 2011 and March 29, 2011, the Company consummated a private placement offering of an aggregate
of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.  Accounts Receivable increased
from $2,821,958 at March 31, 2010 to $5,698,321 at March 31, 2011.  This increase was primarily due to the fact of that
two more business units are included in the basis of consolidation.   Inventories decreased from $114,172 at March
31, 2010 to $0 at March 31, 2011.  Deferred Tax Assets decreased from $12,284 at March 31, 2010 to $0 at March 31, 2011.  Prepaid
Expenses decreased from $1,550,634 at March 31, 2010 to $1,423,281 at March 31, 2011 and consisted of a down payment toward a share
of sales in a basic technology of $1,201,779. The decrease from 2010 to 2011 was primarily due to the expenditure of material.  Other
receivables consisted of a receivable for anticipated compensation for damage, security deposits, tax refund claims and increased
from $332,812 at March 31, 2010 to $2,222,887 at March 31, 2011.  The increase was primarily due to the compensation
for damages of $1,901,522.  Assets Held for Sale consist of the outgoing assets associated with the sale of the two subsidiaries,
Gedys IntraWare GmbH and GROUP Business Software Holding OY, and decreased from $12,372,600 at March 31, 2010 to $0 at March 31,
2011.  The decrease from 2010 to 2011 was due to the sale of the two companies on February 28, 2010.
At March 31, 2011, our Total Non-Current
Assets were $58,990,576, compared to $54,692,432 at March 31, 2010.  Our Financial Assets increased from $99,273 at March
31, 2010 to $837,481 at March 31, 2011 and consists of the value of the 50% interest in an associated company and the amount still
outstanding from the purchaser of GEDYS IntraWare GmbH due for monthly repayments. The increase from 2010 to 2011 was primarily
due to the recording of  an obligation of $984,239 from the purchaser of GEDYS IntraWare GmbH. Our Deferred Tax Assets
decreased $4,968,740 at March 31, 2010 to $1,136,135 at March 31, 2011 and consisted of Deferred Tax Assets derived from Financial
Assets and Losses carried forward.  The decrease from 2010 to 2011 was primarily due to losing the benefit of a tax carry
forward because of change in ownership in GROUP Business Software AG. Goodwill increased from $35,767,273 at March 31, 2010 to
$39,688,966 at March 31, 2011 and consisted of the Goodwill associated with eleven Business Units. The increase from 2010 to 2011
was primarily due to the purchase of Permessa Corp. on September 22, 2010 with Goodwill of $2,387,444.  Software increased
from $13,028,818 at March 31, 2010 to $16,514,894 at March 31, 2011 and consist capitalized development cost, product rights and
licenses.  The increase from 2010 to 2011 was primarily due to the purchase of assets of two Business Units. Other Assets
increased from $175,900 at March 31, 2010 to $223,630 at March 31, 2011 and consisted of the reinsurance relating to pension obligations.
The increase from 2010 to 2011 was primarily due to rising mortality estimates, based on actuarial assumptions.
46
Liabilities
Total Liabilities increased from $23,815,824
at March 31, 2010 to $24,285,794 at March 31, 2011.  Total Liabilities consists of Total Current Liabilities and Total
Non-Current Liabilities.
At March 31, 2011, our Total Current Liabilities
were $16,345,732, compared to $13,531,969 at March 31, 2010.  Notes Payable increased from $0 at March 31, 2010 to $1,440,295
at March 31, 2011 and consisted of the external capital components of a convertible bond issue. The increase was based on the reclassification
from non-current to current because the term of the convertible bonds ends on December 31, 2011. Liabilities to Bank decreased
from $83,793 at March 31, 2010 to $50,073 at March 31, 2011 and consisted of a line of credit.  The decrease from 2010
to 2011 was primarily due to a reduction from the bank liabilities.  Accounts Payable and Accrued Liabilities increased
from $3,532,004 at March 31, 2010 to $4,996,748 at March 31, 2011 and consists of Trade payables, Tax accruals and other accruals.  The
increase from 2010 to 2011 was primarily due to the fact that two more business units are included in the corporate consolidation.  Other
Liabilities increased from $1,982,916 at March 31, 2010 to $2,820,002 at March 31, 2011 and consists of the liabilities from the
Purchase of assets, Tax liabilities, Loans and others.  The increase from 2010 to 2011 was primarily due to the Purchase
of Assets from Lotus 911, Fastworks, Permessa and Salesplace.  Deferred Income increased from $5,919,527 at March 31,
2010 to $6,208,458 at March 31, 2011 and consists mainly of maintenance income collected in advance for the period after the end
of the fiscal year. The increase from 2010 to 2011 was primarily due to the fact of two more business units are included in the
corporate consolidation.  Liabilities Held for Sale decreased from $2,013,729 at March 31, 2010 to $0 at March 31, 2011
and consists of the outgoing assets associated with the sale of the two subsidiaries Gedys IntraWare GmbH and GROUP Business Software
Holding OY.  The decrease from 2010 to 2011 was primarily due to sale of the two companies on February 28, 2010.  Due
to related parties increased from $0 in 2010 to $830,156 in 2011 as explained in detail in Note 27 to the Consolidated Financial
Statements.
At March 31, 2011, our Total Non-Current
Liabilities were $7,940,062, compared to $10,283,855 at March 31, 2010.  Notes Payable decreased from $1,549,490 at
March 31, 2010 to $0 at March 31, 2011.  The decrease from 2010 to 2011 was primarily due to the reclassification to
current liabilities.  Liabilities to Banks decreased from $3,231,405 at March 31, 2010 to $780,277 at March 31, 2011
and consisted a long-term liabilities vis-à-vis Baden-Württembergische Bank.  The decrease from 2010 to
2011 was primarily due to a positive cash-flow based on the sales of the two subsidiaries Gedys IntraWare GmbH and GROUP Business
Software Holding OY.  Deferred Tax Liabilities decreased from $926,357 at March 31, 2010 to $878,450 at March 31, 2011
and consists of the Deferred Tax Liabilities from of capitalization of software expenses and Allocation of Assets from a purchase
price allocation.  The decrease from 2010 to 2011 was primarily due to depreciation of Assets.  Retirement
Benefit Obligation increased from $150,276 at March 31, 2010 to $153,962 at March 31, 2011, and consisted of retirement benefit
obligations.  Other Liabilities increased from $4,426,326 at March 31, 2010 to $6,127,373 at March 31, 2011 and consisted
of liabilities relating to the purchase of business assets.  This increase from 2010 to 2011 was primarily due
to the purchase of assets from Lotus 911, Fastworks, Permessa and Salesplace.
Revenues
For the fiscal year ended March 31, 2011,
our Net Sales decreased to $27,707,226 from $31,584,732 for the fiscal year ended March 31, 2010.  The Company generates
nets sales by Licenses, Maintenance, Services, Third-Party Products and Others.   The resulting effect on the product
sales has been overcompensated through additional revenues. Our Product revenue increased from $12,479,629 to $12,848,954. The
decrease of Service revenue from $19,105,103 to $14,848,272 is mainly the result of the disposal of GROUP Business Software Holding
Oy and its subsidiary Gedys IntraWare GmbH. The sale was completed on March 1, 2010.
Cost of Goods Sold
For the fiscal year ended March 31, 2011,
our Cost of Goods Sold increased to $14,082,494 from $11,323,991 for the fiscal year ended March 31, 2010.  Cost of Goods
Sold consists of Cost for Services, Cost for Third-Party Products and Cost for Software Licenses.   The increase
from 2010 to 2011 was on the one hand due to raising the Cost for Software Licenses based on a higher sales volume. Thereof the
COGS for Products increased from $5,361,372 to $7,016,189. On the other hand the Cost of Goods Sold for Services is higher in 2011
compared to 2010 and increased from $5,962,619 to $7,066,305 because of the increase in salaries and related expenses to fulfill
our business objectives in GROUP Live, our cloud application platform, and our Transformer portfolio. As of March 31, 2011, there
were 158 people employed by the Company (2010: 190). Approximately 33% (2010: 29%) were employed in programming activities due
to the extensive Lotus software development and licensing business transacted by GBS AG.
47
The cost of goods sold is, in total, approximately
$2,759,000 higher than the previous year without the financial impact of the Gedys subsidiary for 10 months due to its disposal
on March 1, 2010. If we eliminate the Gedys cost of goods sold as reflected in the table below, the difference in our cost of goods
sold between 2009 and 2010 reflects an increase in the amount of $4,926,000. The reason for this increase was the increase relating
to 3rd party Lotus Notes sales volume and the corresponding increase in COGS of $3,704,000, as well as the additional COGS relating
to the Group Live business in an amount of $967,000.
Operating Expenses
For the fiscal year ended March 31, 2011,
our Operating Expenses decreased to $15,918,290 from $19,032,719 for the fiscal year ended March 31, 2010.  Operating
Expenses consist of Selling Expenses, Administrative Expenses and General Expenses.  For the fiscal year ended March
31, 2011, our Selling Expenses decreased to $10,610,545 from $13,847,697 for the fiscal year ended March 31, 2010.  Selling
Expenses consist of costs for the Sales, Marketing and Service units.  The decrease of $3,2 million in Selling Expenses
and $0.6 million in Administrative Expenses was due primarily to the  disposal of GROUP Business Software Holding Oy
and its subsidiary Gedys IntraWare GmbH on March 1, 2010.    For the fiscal year ended March 31, 2011, our
Administrative Expenses decreased to $3,853,532 from $4,481,893 for the fiscal year ended March 31, 2010.  Administrative
Expenses consist of costs for the management and administration units.  The reason for the decrease from 2010 to 2011
was primarily due to the reduction of consultancy, investor relation and travel expenses.  For the fiscal year ended
March 31, 2011, our General Expenses increased to $1,454,213 from $703,129 for the fiscal year ended March 31, 2010.  General
Expenses were approximately $0.8 million higher than the previous year's amount. These expenses include the legal, accounting and
consulting costs relating to the merger and consolidation of two publicly-traded companies (the Company and GROUP).
Liquidity & Capital Resources
at March 31, 2011
At March 31, 2011, we had $8,530,864 in
cash and cash equivalents, compared to $1,774,965 at March 31, 2010.  On March 11, 2011 and March 29, 2011, the Company
consummated a private placement offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds
of $7,555,000.  Each Unit was comprised of one share of Common Stock and one three-year Warrant to purchase one
share of Common Stock at an exercise price of $1.50 per share. The Warrants are only exercisable by the payment of cash.  Pursuant
to the terms of the Warrants, the holders of the Warrants are required to exercise their Warrants in the event our Common Stock
trades at an average of at least $3.00 per share for a period of not less than 20 consecutive trading days.  Also, throughout
the three year exercise period of the Warrants, the Company has the right to redeem the Warrants for $0.05 per share.  The
Company has agreed to register the 6,044,000 shares of Common Stock issuable upon the exercise of the Warrants under the Securities
Act of 1933, as amended, on a Registration Statement on Form S-1. This prospectus is a part of such S-1 Registration Statement.
As of March 31, 2011, none of the Warrants have been exercised or redeemed. Upon the full exercise of the Warrants, the Company
would receive gross proceeds of $9,066,000.
We intend to use the net proceeds of the
private placement offering of Units to increase our marketing, advertising and Cloud and Transformer service development teams,
acquisitions and for general corporate working capital purposes.
Management believes that the Company's
cash at March 31, 2011 will be sufficient to meet the Company's working capital requirements for the next 12 month period.
Management believes that as a result of the assets purchased to date, it will generate additional funds and that it will be able
to obtain additional capital as required to meet projected operational requirements.
Cash Flows
Fiscal Year Ended
March 31,
2011
2010
Cash provided by operating activities
$
2,638,109
$
4,330,788
Net cash provided by (used in) Investing Activities
(3,193,099
)
(6,553,395
)
Net cash provided by (used in) Financing Activities
7,484,947
137,908
Effect of exchange rate changes on cash
(144,058
)
77,097
Net increase (decrease) in cash and cash equivalents during the period
$
6,785,899
$
(2,007,602
)
Cash and cash equivalents, beginning of period
$
1,744,965
$
3,752,567
Cash and cash equivalents, end of period
$
8,530,864
$
1,744,965
Cash provided by operating activities was
approximately $2.64 million, which is about $1.69 million below the previous year's amount of $4.33 million. This change is primarily
due to the investments made by the Company in developing the GROUP Live business segment, amounting to $3.2 million in 2011 (2010:
$0.9 million). The cash used in investing activities in 2010 was approximately $6.55 million, compared to cash used in investing
activities in 2011 of about $3.2 million. In addition, the Company received cash proceeds (net of expenses) of $6.7 from a private
placement, as explained above, which accounts for most of the increase in Net cash provided by Financing Activities in 2011 compared
to 2010.
48
The Company had no significant planned
commitments for capital expenditures and does not anticipate using either internal or external sources of funds for capital expenditure
programs. As a software and services firm, the Company is not capital intensive and historically has had minimal or no planned
capital expenditures. Therefore, the present or expected future impact on the Company's liquidity for capital expenditure
purposes is minimal and not material.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical Accounting Policies and Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.   The areas where critical estimates were made that have significant importance
to the financial statements are as follow:
(a)
Allowance for doubtful accounts.  The Company provides for
potential bad debts on an account by account basis.  Bad debts have not been significant and our allowance has been accurate.  Non
trade receivables are also scrutinized and allowed for based on expected recovery.  One significant item ($1,902,000)
which was previously written off was re-evaluated and reinstated during fiscal 2011.  The amount was subsequently paid.
(b)
Allocation of the price paid when acquiring subsidiaries.  When
the Company acquires subsidiary companies an allocation of the purchase is required.  The allocation is based on management's
analysis of the value of the net assets, and is based on estimated future cash flows that each component will produce.  Such
components might include software, customer lists and other intangible assets that are not readily determinable.  The
allocation will have significant impact on the future earnings of the Company as certain assets, customer lists for example, must
be amortized and charged to operations over time, while other assets, notably goodwill, do not.
(c)
Impairment testing on intangibles and goodwill.  As noted
in more detail below, these areas involve numerous estimates as to expected cash flows, expected rates of return and other factors
that are difficult to determine and are often out of the Company's direct control.  Accordingly, the Company adopts
a conservative approach and has experienced better than projected results.
(d)
Valuation of deferred tax credits.  The Company provides an
allowance for tax recoveries arising from the application of losses carried forward.  An allowance is provided where
management has determined that it is less than likely that the loss will be applied and income taxes recovered.
Comprehensive Income (Loss)
The Company adopted FASB Codification topic
("ASC") 220, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements. Comprehensive income consists of net income and other gains and losses affecting
stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale,
foreign currency translation gains and losses and minimum pension liability. Since inception, the Company's other comprehensive
income represents foreign currency translation adjustments.
Net Income per Common Share
FASB Codification topic ("ASC")
260, Earnings per share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the
numerator and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of
common stock outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential
common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase
earnings per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is
not presented where anti-dilutive. Accordingly, although the diluted weighted average number of common stock outstanding is disclosed
on the statements of operation, the calculated net loss per share is the same for bother basic and diluted as both are based on
the basic weighted average of common stock outstanding. There were no adjustments required to net income for the period presented
in the computation of diluted earnings per share.
49
Financial Instruments
Financial instruments consist of cash and
cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable and accrued liabilities
and other liabilities.  As of the financial statement date, the Company does not hold any derivate financial instruments.
Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date.  Changes
in fair value are recognized through profit and loss.  Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Currency Risk
We use the US dollar as our reporting currency.  The
functional currencies of our significant foreign subsidiaries are the local currency, which includes the Euro and the British pound.  Accordingly,
some assets and liabilities are incurred in those currencies and we are subject to foreign currency risks.
Fair Value Measurements
The Company follows FASB Codification topic
("ASC") 820, Fair Value Measurements and Disclosures, for all financial instruments and non-financial instruments accounted
for at fair value on a recurring basis. This new accounting standard establishes a single definition of fair value and a framework
for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.
The Company has adopted FASB Codification
topic ("ASC") 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments
and certain other items at fair value that are not required to be measured at fair value. The Company has not elected the fair
value option for any eligible financial instruments.
Cash and Cash Equivalents
The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
Inventories
Pursuant to ASC 330 (Inventories), inventories
held for sale are recognized under inventories. Inventories were measured at the lower of cost or market. Cost is determined on
a first-in-first out basis, without any overhead component.
Intangible Assets
Intangible assets predominately comprise
goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for payment are
reflected as acquisition costs. If the development costs can be capitalized per ASC 985-20-25, these are reflected as ascribable
personnel and overhead costs.
Company created software can be intended
for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the expenses are recorded
with their effect on profit in the year in which they were incurred.
GROUP amortizes intangible assets with
a limited useful life to the estimated residual book value in accordance with ASC regulations. In addition, in special circumstances
according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled amortization is considered.
The useful life of acquired software is
between three and five years and three years for Company-designed software.
Intangible assets obtained as part of an
acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once a year as to their
recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization expense entry
is performed.
In addition, an impairment test, whereby
the appraised fair value of the invested capital of the reporting segment, (as described in Note 14,) is compared with the carrying
(book) value of its invested capital amount, including goodwill.
50
If the appraised value of the reporting
unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying amount of the
reporting unit exceeds the appraised fair value, an impairment test based on use value is necessary in order to measure the amount
of impairment loss, if any.
Use value is generally used in order to
determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan prepared by the
management serves as the basis for this policy. The planning assumptions are each adjusted for the current state of knowledge.
Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making these adjustments.
Future estimated cash flows are essentially determined based on the expected growth rates of the markets in question.
Property, Plant and Equipment
Property, plant and equipment are valued
at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed assets are depreciated
on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based on useful lives of 3
to 10 years.
If fixed assets are sold, retired or scrapped,
the profit or loss arising from the difference between the net sales proceeds and the residual book value are included under other
operating earnings and expenses.
Impairment or Disposal of Long-Lived
Assets
The Company evaluates the recoverability
of its fixed assets and other assets in accordance with FASB Codification topic, 360.10. This guidance requires recognition of
impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows, it is considered
to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised
values. No impairment has been recognized in the accounts.
Revenue Recognition
License Revenues
Our license revenues consist of revenues earned from the licensing
of our software products. These products are generally licensed on a perpetual basis. Pricing models have generally been based
either upon the physical infrastructure, such as the number of physical desktop computers or servers, on which our software runs
or on a per user basis. License revenues are recognized when the elements of revenue recognition for the licensed software are
complete, generally upon electronic shipment of the software and the software key to provide full access to all functionalities
for our customers. In general our invoices reflect license, service and maintenance components. In the case of multi element contracts,
the revenues allocated to the software license represent the residual amount of the contract after the fair value of the other
elements has been determined. Certain products of our software offering are licensed on a subscription basis.
Software Maintenance Revenues
Software maintenance revenues are recognized ratably on a pro-rata
basis over the range of the contract period. Our contract periods typically range from one to five years. Vendor-specific objective
evidence ("VSOE") of fair value for software maintenance services is established by the rates charged in stand-alone
sales of software maintenance contracts or the stated renewal rate for software maintenance. Customers who are party to software
maintenance agreements with us are entitled to receive support, product updates and upgrades on a when-and-if-available basis.
Professional Services Revenues
Professional services include pre-project consulting, software
design, customization, project management, implementation and training. Professional services are not considered essential to the
functionality of our products, as these services do not alter the product capabilities and may be performed by our customers or
by other vendors. Professional services engagements performed for a fixed fee, for which we are able to make reasonably dependable
estimates of progress toward completion, are recognized on a proportional performance basis based on hours incurred and estimated
hours of completion. Professional services engagements that are on a time and materials basis are recognized based on hours incurred.
Revenues on all other professional services engagements are recognized upon completion. Our professional services may be sold with
software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE) of fair value for professional services
is based upon the standard rates we charge for such services when sold separately.
51
Foreign Currency Translation
The functional currency of the Company
is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars. Assets and
liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated at the average
exchange rates and stockholders' equity was translated at historical exchange rates. Any translation adjustments resulting
are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component
of stockholders' equity.
Other Provisions
According to FASB ASC 450 Contingencies,
provisions are made whenever there is a current obligation to third parties resulting from a past event which is likely in the
future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already resulting in
an outflow of resources in the following year are recognized at their discounted settlement amount on the financial statement date.
The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases. Provisions
are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount, the provision
is proportionally reversed and the earnings are recognized in other operating earnings.
Deferred Taxes
Income taxes are provided in accordance
with FASB Codification topic 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry forwards.
Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that, some portion or all of the deferred tax asset will
not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of
enactment.
Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting
Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic 820, adding new requirements
for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements
and clarification of existing fair value disclosures.  ASU 2010-06 is effective for interim and annual periods beginning after
December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a
gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company's fiscal year 2012);
early adoption is permitted.  The Company does not expect the adoption of ASU 2010-06 to have a material impact on its results
of operations or financial position.
In February 2010, FASB issued ASU 2010-9
Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements ("ASU 2010-9"). ASU 2010-9
amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through
which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements.
ASU 2010-9 is effective for interim and annual periods ending after June 15, 2010. The Company does not expect the adoption
of ASU 2010-09 to have a material impact on its results of operations or financial position.
Effective July 1, 2010, we adopted
the update to the accounting standard regarding derivatives and hedging (Topic 815). This update clarifies how to determine whether
embedded credit derivatives, including those interests held in collateralized debt obligations and synthetic collateralized debt
obligations, should be bifurcated and accounted for separately. The adoption of this standard did not have a significant impact
on our results of operations.
In December 2010, the FASB issued Accounting
Standards Update ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805). The update
requires public companies to disclose pro forma information for business combinations that occur in the current reporting period.
The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition
date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. This
guidance is effective for business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2010, with early adoption permitted. The Company's adoption of FASB
ASU No. 2010-29 effective December 1, 2010 did not have an impact on the Company's consolidated results of operations
or financial position but did result in additional disclosures.
A variety of proposed or otherwise potential
accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the
tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed
standards would be material to the Company's consolidated financial statements
52
Principles of Consolidation and Reverse
Acquisition
As previously disclosed, the Company has
exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP. Although
the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form of a reverse merger,
whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure of the Corporation.
Accordingly, the accompanying consolidated financial statements reflect the historical consolidated financial statements of GROUP
for all periods presented, and do not include the historical financial statements of the Company. All costs associated with the
reverse merger transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were included in professional
fees in administrative expenses.
The Company has based its financial reporting
for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40 as it relates to reverse
acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred by the Company,
the acquiree, for financial reporting purposes, over the net amount of the Company's recognized identifiable assets and liabilities.
We have recorded the acquired assets and
liabilities of GBSX on the acquisition date of January 6, 2011, at their fair value and the operations of GBSX have been included
in the consolidated financial statements since the acquisition date.
The assets and liabilities of GROUP, the
acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at their precombination
carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling interest reflects
the non-controlling shareholders' proportionate interest in the pre-combination carrying amounts of GROUP's net assets
even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date.
It should also be noted that the Company
and GROUP have different year-end reporting dates. The Company's fiscal year-end reporting date is March 31 and GROUP's
calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting purposes has been
performed without any adjustments for timing differences between these two reporting dates in accordance Regulation S-X Rule 3A-02.
The purpose of the acquisition was to allow
GROUP easier access to American financial markets. Goodwill recognized of $8,705 KUSD was recorded upon consolidation and was calculated
as the value of the consideration given less the value of the asset received. The resulting goodwill represents the benefit to
be gained by gaining entry into American financial markets.
OFF BALANCE SHEET ARRANGEMENTS
We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as stockholder's equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development
services with us.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
We have had no changes in or disagreements with our accountants
on accounting and financial disclosures.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
On April 26, 2010, Joerg Ott was appointed
to serve as the sole director of the Company and to serve as the Chief Executive Officer of the Company.
On April 30, 2010, the Company retained
the services of Gary MacDonald as the Company's Executive Vice President and Chief Corporate Development Officer. On December
2, 2011, Mr. Ott, in his capacity as the then sole director of the Board of Directors, increased the size of the Board to two
persons and appointed Mr. MacDonald as a member of the Board of Directors.
Pursuant to a written consent in lieu of a meeting of the Board
of Directors the Company, as permitted under the Nevada Revised Statutes and the Bylaws of the Company, on March 1, 2012, the Board
unanimously voted to increase the size of the Board from two to seven members and appointed David M. Darsch, John A. Moore, Jr.,
Mohammad Shihadah, Stephen D. Baksa and Woody A Allen (each, a "New Director" or "Independent Director"
and collectively, the "New Directors" or "Independent Directors") to fill the five vacancies created thereby
until the next annual meeting of stockholders of the Company or until his respective successor is elected and qualified.
53
The Board has determined that each New
Director qualifies as an "Independent Director" as defined by Section 10A(m)(3)(ii) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and Rule 5065(a)(2) of the NASDAQ Marketplace Rules.
Directors hold office until the next annual
meeting of the stockholders or until their successors have been elected and qualified. Officers of the Company are appointed by
the Board of Directors and hold office until their death, resignation or removal from office. Executive Officers serve at the pleasure
of the Board and may be removed with or without cause at any time, subject to contractual obligations between the executive officer
and the Company, if any.
The table below sets forth the names, title
and ages of our executive officers and directors. If applicable, the table also sets forth the date when a director commenced serving
on the Company's Board of Directors.
Name:
Position Held with the
Company:
Age:
Director Since
Joerg Ott
Chief Executive Officer and Chairman of
        the Board
(Principal Executive Officer)
47
April 26, 2010
Markus R. Ernst
Chief Financial Officer
(Principal Financial and Accounting Officer)
44
—
Gary MacDonald
Executive Vice President and Chief Corporate Development Officer
57
December 2, 2011
David M. Darsch
Independent Director
55
March 1, 2012
John A. Moore, Jr.
Independent Director
59
March 1, 2012
Mohammad Shihadah
Independent Director
59
March 1, 2012
Stephen D. Baksa
Independent Director
66
March 1, 2012
Woody A. Allen
Independent Director
64
March 1, 2012
Business Experience
:
Joerg Ott, Chief Executive Officer and Chairman of the Board
of Director
Since April 26, 2010, Mr. Ott has been
serving as the Company's Chief Executive Officer and Chairman of the Board. Since April 2002, Joerg has also been serving
as the Chief Executive Officer of GROUP Business Software AG, (a 50.1% subsidiary of the Company). GROUP Business Software AG
has been trading at Frankfurt Stock Exchange since early 2000. From December 2000 to October 2002, Joerg was the Chief Executive
Officer of Senator AG, a software company specializing in machine translation software. From October 1998 to December 2000, Joerg
was the founding General Manager of Global Words GmbH, a technology and services company focusing on multi-lingual telephone based
conference service. In 1997, Joerg founded OUTPUT! GmbH, a German based sales training company. Mr. Ott earned his MBA from University
of Passau, Germany, focusing on Operations Research and Finance. He is also a Harvard Business School alumnus, graduated in 2009.
Markus R. Ernst, Chief Financial Officer
Markus R. Ernst was appointed
as the Chief Financial Officer (CFO) of the Company on February 24, 2012. Mr.
Ernst has 20 years of experience in the financial
sector of several industries in public and private companies. He has extensive knowledge in both national and international finance
and mergers and acquisitions. Since July 201, Mr. Ernst has been serving as a professional consultant to the Management Board
of GROUP Business Software AG, a German-based public-company whose stock trades on the Frankfurt Exchange under the stock symbol
"INW" and which is a 50.1% owned subsidiary of the Company ("GROUP"). From August 2000 to June 2011, Mr.
Ernst served as the Chief Financial Officer of GROUP. In November 1995, Mr. Ernst worked as a Financial Analyst in corporate management
for Gesellschaft für Zahlungssysteme GmbH ("GZS"), a privately held banking transaction processing company that
now belongs to First Data Corp. (NYSE: FDC). As a senior executive and Head of Corporate Control for GZS, he was responsible for
corporate planning and control. From October 1994 to October 1995, Mr. Ernst worked as a Head of Financial Operations for Seagram
Germany, a subsidiary of Seagram Company Ltd., Montreal, Canada. From September 1992 to June 1994, Mr. Ernst worked as a Financial
Analyst for IBM in Mainz, Germany and San Jose, California. Mr. Ernst has long time management experience in accounting, budgeting,
board presentations, cash management, claims processing, financing, investments, information systems, regulatory relations and
strategic planning. In October 1994, Mr. Ernst earned a Master's Degree in International Management and Industrial Engineering
at the University of Applied Science located in Mannheim, Germany and at the University of Applied Science in Ludwigshafen, Germany.
54
Gary MacDonald
,
Executive Vice President and Chief
Corporate Development Officer
Since April 30, 2010, Gary MacDonald has been serving as the
Executive Vice President and Chief Corporate Development Officer of the Company.  From September 2005 to February 2008,
Gary served as the Chief Operating Officer of GROUP.  Since then Mr. MacDonald has been serving as the Chief Corporate
Development Officer of GROUP.  From November 2003 to August 2005, Mr. MacDonald served as the Vice President, Corporate Development
and Government Relations Officer at Raydiance, Inc., a privately held research company.  From August 1994 to September 2003,
Mr. MacDonald served as the Senior Vice President of Sales and Marketing at Kingston Technology Company, a privately held company
in the computer hardware industry.  From October 1991 to August 1994, Mr. MacDonald served as the Vice President and Principal
of Impediment Incorporated, a privately held company in the computer hardware industry.
David M. Darsch – Independent Director
Mr. Darsch has more than 30 years of experience as an entrepreneur
and managing executive of technology companies. With a strong trans-Atlantic and pan-European focus, Dave has active clients in
both the US and Europe. He mentors entrepreneurs and helps them develop business plans that accelerate revenue growth and/or external
infusion of capital. Mr. Darsch has been involved in more than ten transactions involving the purchase, sale, merger, or infusion
of capital into companies.
In 2005, Mr. Darsch founded the pan-European CEO Collaborative
Forum (CEO-CF) and has been serving as its President since its founding. CEO-CF is an exclusive consortium of high-performing CEO
peer groups from high growth companies across the European Union. It provides expert help, peer group collaboration, and coaching
for CEOs of European-based companies with pan-European, trans-Atlantic, and trans-Asian market strategies. Current membership and
alumni comprises approximately 200 CEOs from over 28 different nationalities and cultures, each sharing the common goal of scaling
their companies to significant stakeholder valuation.
In 1979, Mr. Darsch founded and served as CEO of Data Management
Design, Inc. a privately held software development company located in Washington, DC, until a systems integrator acquired the company
in 1996. During his tenure, the company was recognized as one of the Inc. 500 fastest growing US companies.
Dave has a B.S. in international finance from University of
Massachusetts. He has also been a guest lecturer at the MBA level, Dave has provided instruction at many European universities,
including INSEAD University in Fontainebleau, France, London School of Business, England, IESE Business School in Barcelona, Spain,
University of Chicago, USA, and ESADE University in Barcelona, Spain. He has also presented at the Europe's 500 Conference
and taught courses on entrepreneurship for the European Commission, BBVA, and Terra Lycos in Spain.
John A. Moore, Jr. – Independent Director
Mr. Moore has more than 30 years'
experience in private and public company management for information technology firms. Mr. Moore has extensive experience in strategic
planning, corporate compliance, proposal preparation and pricing and SEC reporting. He has a deep knowledge of federal government
contracting and financial management. From April 1997 to June 2003, Mr. Moore served as the Executive Vice President and Chief
Financial Officer of ManTech International Corporation (NASDAQ: MANT) and was directly involved in taking ManTech public in 2002
as well as facilitating a secondary offering.
ManTech International is engaged in providing innovative technologies and
solutions for mission-critical national security programs for the intelligence community.
Since April
27, 2006, Mr. Moore has been serving as a member of the Board of Directors of Horne International, Inc. (OTCBB: HNIN) and Chairman
of its Board's audit and compensation committees.
Horne International is an engineering services company engaged in
providing integrated, systems approach based solutions to the energy and environmental sectors to both commercial customers and
to the U.S. federal government.
From April 2005 to September 2011, Mr. Moore served as a member
of the Board of Directors of Paradigm Holdings, Inc. (OTC Pink Sheets: PDHO), a public company engaged in cyber security and information
technology services. From 2006 to 2011, Mr. Moore served as the Chairman of the Board of Directors of MOJO Financial Services,
Inc., a privately held financial services company. From 2005 to 2007, Mr. Moore served as a member of the Board of Directors of
Global Secure Corporation, a privately held information technology services company. From 1994 to 2003, Mr. Moore served on the
Board of Directors of ManTech International Corporation. From 1997 to 2003, Mr. Moore served on the Board of Directors of GSE Systems
Inc. (AMEX: GVP), a public company engaged in simulation technology services. From 2003 to 2009 Mr. Moore served as a member of
the Board of Visitors for the University of Maryland's Smith School of Business. Mr. Moore earned an MBA from the University
of Maryland in 1979 and a B.S. Degree in accounting from LaSalle University located in Philadelphia, PA in 1974.
55
Mohammad Shihadah — Independent Director
Mr. Shihadah has extensive experience
in technology companies incubation, establishing the vision, planning, managing the execution of the business plans, meeting the
growth goals and objective, creating value for shareholders and employees, and achieving a successful exit.
Mr. Shihadah
has 20 years of experience in the field of software design and development, project/program management, and technical consulting.
In 1990, Mr. Shihadah founded Applications Technology, Inc.
(AppTek). AppTek, headquartered in McLean, Virginia, is a U.S. company specializing in software development for human language
technology (HLT). In
November 2011, AppTex acquired
Science Applications International Corporation.
Since February 2002, Mr. Shihadah has been serving as a member of the Board of Directors of Ignite Media
Solutions, a privately held company engaged in providing
pay-per-performance based integrated multi-channel solutions.
Mr. Shihadah serves as a member of
the Board of Directors of Net2Voice, Inc., a privately held company engaged in the development of
multilingual voice-enabled
solutions for the Internet and telephone.
Mr. Shihadah is also an observer on the Board of Directors
of Pixelligent, a privately held entity engaged in nanotechnology.
Mr. Shihadah is currently the Managing Director of Bridge Holdings,
an investment fund directed for technology startup companies. Mr. Shihadah earned a Master's degree in 1991 from the University
of Oregon in Computer Information Science, and a holds a B.S. Degree in Mathematics from Portland State University.
Stephen D. Baksa — Independent Director
Since November 1, 2011, Mr. Baksa
has been serving as a director of Single Touch Systems, Inc. (OTCBB: SITO), a public company engaged in providing innovative mobile
media solutions to retailers, advertisers and brands. Mr. Baksa was a General Partner at the Vertical Group from 1989 through 2010,
a private equity and venture capital firm focused on the fields of medical technology and biotechnology. He is currently employed
at the Vertical Group as an advisor/consultant. For more than 30 years, The Vertical Group has been an early stage investor and
major shareholder of some of the medical technology industry's most successful companies. Before Mr. Baksa joined The Vertical
Group, he was co-founder of Paddington Partners, a firm engaged in special situation investing focused on public health care equities.
Mr. Baksa holds an M.B.A. from The Rutgers School of Business (1969) and a B.A. in Economics from Gettysburg College (1967).
Woody A. Allen – Independent Director
Mr. Allen
is a business strategist, coach and mentor
to companies in the United States and Europe. He has more than 35 years' experience as a C-level executive, including roles
as President, Executive Vice President, Chief Financial Officer and Chairman of the Board for publicly traded companies. He has
extensive boardroom experience, having served on the Boards of Directors of numerous companies in a wide variety of businesses,
ranging from radio broadcasting to semiconductor equipment manufacturing. In1992, Mr. Allen founded Allen Management Services,
a privately held company which offers financial guidance, and leadership and executive training, to mid and high level executives
of small to medium sized businesses, and has been serving as its President since its founding. Since 2001, Mr. Allen has been serving
as the Chief Financial Officer for BIA-Financial Network, a privately held company which offers research and consulting services
to local media. From February 2000 to October 2003, Mr. Allen served as the Chairman of the Board of Directors of Precision Auto
Care, Inc. (OTC Pink Sheets: PACI), a global franchisor of auto care centers. Since 1998 and through the present, Mr. Allen has
been serving as a member of the Board of Directors of Precision Auto Care and the Chairman of its audit committee. Since 2005,
Mr. Allen has been serving as a Board member for CEO-CF, a privately held European-based company specializing in facilitating collaboration
amongst entrepreneurial CEO's. Mr. Allen was also the Executive Vice President and Chief Financial Officer for EZ Communications
(EZCIA) from 1973 through 1992, and served on the Company's Board and was Chairman of its Audit Committee from 1979 through
1996, when the Company was sold. He is a certified Master Somatic Coach with Strozzi Institute, a California-based educational
organization, and has been published in an anthology entitled, "Being Human at Work." Since 2008, Mr. Allen has also
been a colleague with Synthesis-LLC, a New York based training and development organization that mobilizes leadership teams to
create increased productivity, satisfaction and value.
Family Relationships
There are no family relationships between or among any of our
current directors, executive officers or persons nominated or charged by the Company to become directors or executive officers.
There are no family relationships among our officers and directors and the officers and directors of our direct and indirect subsidiaries.
56
Involvement in Certain Legal Proceedings
None of the directors or executive officers has, during the
past ten years:
(a)
Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time;
(b)
Been convicted in a criminal proceeding or subject to a pending criminal proceeding;
(c)
Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business,
securities, futures, commodities or banking activities; or
(d)
Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.
Code of Ethics
We have not yet adopted a Code of Ethics
due to our limited size but we intend to do so in the near future.
Corporate Governance
Board Committees
:
Audit Committee
On March 1, 2012, the
Board established a standing Audit Committee comprised of two of the New Directors, John A. Moore, Jr. and Woody Allen, and Gary
MacDonald; and Mr. Moore was appointed the Chairman of the Audit Committee. Messrs. Moore and Allen each qualify as an "Independent
Director" as defined by Section 10A(m)(3)(ii) of the Exchange Act or Rule 5605(a)(2) of the NASDAQ Marketplace Rules. Mr.
MacDonald also serves as the Executive Vice President and Chief Development Officer of the Company and its 50.1% subsidiary, GROUP
Software AG, a German publicly-traded company, and therefore, does not qualify as an "Independent Director."
The Audit Committee
assists the Board in fulfilling its responsibility to oversee the conduct and integrity of the Company's financial reports,
internal controls and compliance with legal and regulatory requirements, with ultimate authority to: (i) select, appoint, dismiss,
oversee the compensation of and oversee the Company's independent auditors; (ii) preapprove all auditing and non-auditing
services to be provided by the independent auditors (other than nonauditing services that are de minimis); (iii) oversee the independence
and qualification of the Company's independent auditors; (iv) oversee the performance of the Company's internal audit
and surveillance functions; and (v) prepare any reports of the Committee that are required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
Designation of "Audit
Committee Financial Expert"
On March 1, 2012, Mr.
Moore was unanimously designated by the Board as the "audit committee financial expert" as that term is defined under
Item 407(d)(5)(ii) of Regulation S-K based on Mr. Moore's business experience as reflected above.
Compensation Committee
On March 1, 2012, the
Board established a standing Compensation Committee comprised of the Independent Directors. On March 1, 2012, Mr. Allen was appointed
as the Chairman of the Compensation Committee.
The Compensation Committee
assists the Board in establishing and overseeing the Company's compensation philosophy, policies and practices, including
but not limited to those related to incentive compensation and equity-based plans, retention severance and retirement programs,
and any other employee benefit plans or programs.
Corporate Governance,
Regulatory and Nominating Committee:
On March 1, 2012, the
Board established a standing Corporate Governance, Regulatory and Nominating Committee comprised of the Independent Directors.
On March 1, 2012, Mr. Allen was appointed as the Chairman of the Committee.
57
The purpose of the
Corporate Governance, Regulatory and Nominating
Committee is to develop and recommend to the
Board the governance processes and principles applicable to the Company; oversee the periodic evaluation of the Board and committees;
and, generally, have a leadership role in shaping the Company's corporate governance policies.
EXECUTIVE COMPENSATION
The following table
sets forth all plan and non-plan compensation  for the last two completed fiscal years paid to all individuals who served
as the Company's principal executive officer or acting in similar capacity during the last completed fiscal year ("PEO"),
regardless of compensation level,  and other individuals as required by Item 402(m)(2) of Regulation S-K. We refer to
all of these individuals collectively as our "named executive officers."
SUMMARY COMPENSATION TABLE
Name and
Principal
Position
Fiscal
Year
Ended
March
31,
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)(4)
Total
($)
Joerg
                                 Ott
—Chief
                                                                                                                  Executive Officer
                                                                                                                  and Chairman
                                                                                                                  (PEO)
2011
$
120,000
—
—
—
—
—
—
$
120,000
2010
—
—
—
—
—
—
—
—
Significant Employees
Other than our executive officers, GBSX did not have any significant
employees at March 31, 2011.
Outstanding Equity Awards at Fiscal
Year-End
As of March 31, 2011, we had not adopted
any equity compensation plan and no stock, options, or other equity securities were awarded to our principal executive officer
or two other most highly compensated executive officers.
2011 Stock Option Plan
On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the "Plan"), subject to stockholder approval.
As of the date of this prospectus, the Company stockholders have not approved of the Plan nor has the Company granted any awards
under the Plan. A summary of the Plan is contained in this prospectus in the section entitled, "Market For Registrant's
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
Employment Agreements, Termination of Employment and Change-in-Control
Arrangements with our Executive Officers
Markus R. Ernst
Mr. Ernst has
agreed to serve as the Chief Financial Officer of the Company pursuant to a Consultant Services Agreement, dated February 24, 2012
(the "Agreement"), between the Company and
Green Minds Venture GmbH
, a German corporation
wholly-owned by Mr. Ernst (the "Vendor"), for the initial term commencing on February 24, 2012 and terminating on March
31, 2012 (the "Term"), unless
terminated earlier be Mr. Ernst and/or the Company pursuant to the terms of the
Agreement. Pursuant to the Agreement, after the Term, Mr. Ernst will continue serving as the Company's CFO on a six-month
to six-month basis until either party provides the other party written notice at least thirty (30) days prior to expiration of
the applicable term.
In consideration of the services to be rendered
during the Term, the Company has agreed to pay the Vendor a base monthly fee ("Base Payment") of $11,450 plus any taxes,
such as a valued added tax ("VAT"), which shall be adjusted from time to time as determined by the Company or the Board
based upon the Company's performance as well as the Vendor meeting certain performance objectives. During the term, Vendor will
be eligible to earn bonuses as determined by the Board based upon Vendor's and the Company's performance as follows:
58
(i) $20,000 plus any taxes
such as VAT, if the Company's stock is trading above $5.00 for a consecutive 3-month period prior to the end of the Company's
fiscal year ending March 31, 2012 and/or 2013;
(ii) $30,000 plus any taxes
such as VAT, if the Company's stock is trading above $7.50 for a consecutive 3-month period prior to the end of Company's
fiscal year ending March 31, 2013 and/or 2014;
(iii) $25,000 plus any taxes
such as VAT, if the Company is trading on the American Stock Exchange (AMEX) for a consecutive 3-month period, and $50,000 plus
any taxes such as VAT, if the Company's stock is trading on the NYSE or NASDAQ for a consecutive 3-month peirod;
(iv) An annual cash payment
equal to 7% of the Company's fiscal year operating income (before taxes and bonuses) up to a maximum amount of $250,000 plus
any taxes such as VAT per each fiscal year.
The Company has also agreed to grant the
Vendor stock options to acquire 200,000 shares of the Company's common stock subject to the terms and conditions of the Company's
2011 ESOP. The options have not been granted as of the filing of this Form 8-K.
The Company shall pay or reimburse Vendor
for all reasonable business expenses including, without limitation, cell phones, personal digital assistants (PDA) devices, business
travel expenses, reasonably incurred or paid by Vendor in the performance of his responsibilities in accordance with the Company's
prevailing policy and practice relating to reimbursements as modified from time to time.
The Vendor may terminate the Agreement
upon six months' prior written notice or by payment to the Company of an amount equal to the Base Salary in lieu of such
notice under the Agreement at any time for any reason. In the event of a termination of the Agreement by the Vendor, he shall be
entitled to the Accrued Payments (as defined in the Agreement)
The Company may terminate the Agreement
with or without "Cause" (as defined in the Agreement) at any time upon prior written notice to Vendor. In the event
of a termination of the Agreement for Cause, Vendor shall be entitled only to the Accrued Payments. In the event the Company terminated
the Agreement without Cause or if the Vendor terminates the Agreement with "Good Reason" (as defined in the Agreement),
the Company has agreed to pay the Vendor all Accrued Expenses as well as a Compensation Package (as defined in the Agreement).
Compensation of Directors
During the fiscal year ended March 31, 2011, we did not pay
any compensation or grant any stock options to our directors.
Director Agreements
General
Pursuant to letter agreements (referenced below) between the
Company and each New Director, the Company has agreed to pay each New Director an annual retainer of $10,000 payable on a quarterly
basis on the 15
th
day of each April, July, October and January of each year. The Chairman of the Audit Committee is
also to receive an annual retainer of $8,000, payable on a quarterly basis. The Chairmen of the Compensation Committee and the
Corporate Governance, Regulatory and Nominating Committee are each to receive an annual retainer of $1,000, payable on a quarterly
basis.
The Company has agreed to pay each Independent Director $2,000
for each Board meeting (based on four meetings per year). The Company has agreed to pay each Independent Director serving on the
Audit Committee a fee of $2,000 for each Audit Committee meeting (based on four meetings per year). The Company has agreed to pay
each Independent Director serving on the Compensation Committee and/or the Corporate Governance, Regulatory and Nominating Committee
a fee of $2,000 for each meeting of the respective committee (based on one meeting per year).
David M. Darsch
Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company agreed to pay Mr. Darsch an annual retainer fee of $10,000 in consideration for serving as an Independent Director
of the Board. The Company also agreed to issue Mr. Darsch stock options to purchase 25,000 shares of common stock of the Company
from the date of grant until the third anniversary from the date of grant for an exercise price equal to the Fair Market Value
(as that term is defined in the Company's 2011 Stock Option Plan) of the common stock on the date of grant. The Board adopted
the 2011 Stock Option Plan (the "Plan") on March 30, 2011, subject to stockholder approval.
59
John A. Moore, Jr
.
Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Moore an annual retainer fee of $18,000 in consideration for serving as an Independent Director
of the Board and Chairman of the Audit Committee. The Company also agreed to issue stock options to Mr. Moore to purchase 25,000
shares of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise
price equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.
Mohammad Shihadah
Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Shihadah an annual retainer fee of $10,000 in consideration for serving as an Independent Director
of the Board. The Company also agreed to issue Mr. Shihadah stock options to purchase 25,000 shares of common stock of the Company
from the date of grant until the third anniversary from the date of grant for an exercise price equal to the Fair Market Value
(as that term is defined in the Plan) of the common stock on the date of grant.
Stephen D. Baksa
Pursuant to a letter agreement, dated February 24, 2012, as
amended, the Company has agreed to pay Mr. Baksa an annual retainer fee of $10,000 in consideration for serving as an Independent
Director of the Board.
The Company also agreed to issue Mr. Baksa stock options to purchase 25,000
shares of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise
price equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.
Woody A. Allen
Pursuant to a letter agreement, dated January 26, 2012, as amended,
the Company has agreed to pay Mr. Allen an annual retainer fee of $12,000 in consideration for serving as an Independent Director
of the Board and as the Chairman of the Board's Compensation Committee and
Corporate Governance,
Regulatory and Nominating Committee.
The Company also agreed to issue Mr. Allen stock options to purchase 25,000 shares
of common stock of the Company from the date of grant until the third anniversary from the date of grant for an exercise price
equal to the Fair Market Value (as that term is defined in the Plan) of the common stock on the date of grant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Securities Authorized for Issuance under Equity Compensation
Plan
On March 30, 2011, the Board of Directors
adopted a stock incentive program entitled the 2011 Stock Option Plan (the "Plan"), subject to stockholder approved,
and reserved for issuance an aggregate of 5,000,000 shares of Common Stock to be issued pursuant to awards granted under the Plan.
As of the date of this prospectus, the Company's stockholders have not approved on the Plan nor has the Company granted any
awards under the Plan. A summary of the Plan is contained in this prospectus in the section entitled, "Market For Registrant's
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
60
Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth certain
information regarding our Common Stock beneficially owned as of March 30, 2012, for (i) each stockholder known to be the beneficial
owner of 5% or more of our outstanding Common Stock, (ii) each executive officer and director, and (iii) all executive officers
and directors as a group. In general, a person is deemed to be a "beneficial owner" of a security if that person has
or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial
ownership within 60 days.  Shares of Common Stock subject to options, warrants or convertible securities exercisable
or convertible within 60 days are deemed outstanding for computing the percentage of the person or entity holding such options,
warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. Percentages
are determined based on
28,211,664 shares of Common Stock of the Company issued and
outstanding
as of March 30, 2012. To the best of our knowledge, subject to community and marital property laws, all persons named have sole
voting and investment power with respect to such shares, except as otherwise noted.
Name and Address of Beneficial Owner (1)
Number of Shares
of Common Stock (2)
% of Class of Stock
Outstanding (3)
Executive Officers and Directors:
Joerg Ott
—Chairman and Chief Executive Officer (Principal Executive Officer)
1,850,000
(4)
6.56
%
Markus R. Ernst
—Chief Financial Officer (Principal Financial and Accounting Officer)
0
—
Gary MacDonald
—Executive VP, Chief Development Officer and Director
100,000
*
David M. Darsch
—Director
0
-
John A. Moore, Jr.
—Director
0
-
Mohammad Shihadah
—Director
0
-
Stephen D. Baksa
—Director
2 Woods Lane
Chatham, New Jersey 07928
2,435,000 (5)
8.41
%
Woody A. Allen
—Director
0
—
All Officers and Directors as a group (8 persons)
4,285,000 (4), (5)
14.80
%
5% Stockholders:
Edward M. Giles
17 Heights Road
Plandome, New York 11030
2,320,000 (6)
8.07
%
LVM Landwirstchaftlicher Versicherungsverei
Vorstand Herr Herwig Kolde Ring 21
Muenster, Germany 4826
1,495,000
5.30
%
* Less than 1%
(1)
Unless otherwise indicated, the address of the named beneficial owner is c/o GBS Enterprises Incorporated, 585 Molly Lane,
Woodstock, GA 30189.
(2)
Security ownership information for named beneficial owners (other than executive officers and directors of the Company) is
taken from statements filed with the Securities and Exchange Commission pursuant to information made known by the Company and from
the Company's transfer agent.
(3)
Based on 28,211,664 shares of Common Stock outstanding as of March 30, 2012.
(4)
Consists of (i) 300,000 shares of Common Stock held directly by Mr. Ott and (ii) 1,550,000 shares of Common Stock held indirectly
by Mr. Ott through vbv Vitamin-B Venture GmbH, an entity of which Mr. Ott is the Managing Member.
(5)
Consists of (i) 1,685,000 shares of Common Stock held directly, (ii) 300,000 shares of Common Stock indirectly held as co-trustee
of two trusts for his adult children, (iii) 450,000 shares of Common Stock issuable upon the exercise of 450,000 Investor Warrants.
Mr. Baksa disclaims beneficial ownership of the 300,000 shares of Common Stock held by the two-trusts for his adult children.
61
(6)
Consists of: (i) 1,130,000 shares of Common Stock held directly by Edward M. Giles, (ii) 560,000 shares of Common Stock held
by Isles Capital, L.P., a limited partnership over which Mr. Giles exercises investment discretion, (iii) 80,000 shares of Common
Stock held by Edward M. Giles 2010 Roth IRA, (iv) 80,000 shares of Common Stock issuable upon the exercise of 80,000 Private Placement
Warrants held by Edward M. Giles 2010 Roth IRA, (v) 190,000 shares of Common Stock issuable upon the exercise of 190,000 Investor
Warrants and (vi) 280,000 shares of Common Stock issuable upon the exercise of 280,000 Investor Warrants held by Isles Capital,
L.P.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
In March 2011, the Company consummated
a private placement offering of an aggregate of 6,044,000 Units at a purchase price of $1.25 per Unit, for gross proceeds of $7,555,000.
Each Unit was comprised of one share of Common Stock and one three-year Warrant to purchase one share of Common Stock at an exercise
price of $1.50 per share.
In the Offering, Stephen D. Baksa, member
of the Board of Directors of the Company, purchased an aggregate of 700,000 Units for total purchase price of $875,000. On November
29, 2011, Mr. Baksa exercised the 700,000 Warrants included in the Units for an aggregate exercise price of $1,050.000.
In March 2012, the Company sold an aggregate
of 2,020,000 Investor Warrants to five "accredited investors," one of whom is Stephen D. Baksa, a member of the Board
of Directors. Mr. Baksa purchased 700,000 Investor Warrants for an aggregate of $10 on March 26, 2012. On March 26, 2012, Mr. Baksa
exercised 250,000 Investor Warrants to purchase 250,000 shares of Common Stock for an aggregate exercise price of $125,000.
LEGAL MATTERS
The validity of the shares of our Common
Stock offered hereby has been passed upon for us by The Sourlis Law Firm located at The Courts of Red Bank, 130 Maple Avenue, Suite
9B2, Red Bank, New Jersey 07701.
EXPERTS
The Sourlis Law Firm located at The Courts
of Red Bank, 130 Maple Avenue, Suite 9B2, Red Bank, New Jersey 07701, assisted the Company in the preparation and filing of the
Registration Statement on Form S-1, of which this prospectus forms a part.
Our audited financial statements as of
and for the years ended March 31, 2011 and 2010 have been included in this prospectus in reliance upon the report of K.R Margetson
Ltd., Chartered Accountant, located at 331 East 5
th
Street, North Vancouver, BC V7L 1M1, Canada,  and their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the United States Securities
and Exchange Commission, 100 F. Street, N.E., Washington, D.C. 20549, a registration statement on Form S-1 under the Securities
Act for the Common Stock offered by this prospectus. We have not included in this prospectus all the information contained in the
registration statement and you should refer to the registration statement and its exhibits for further information.
The registration statement and other information
may be read and copied at the SEC's Public Reference Room at 100 F. Street N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site (
http://www.sec.gov
) that contains the registration statements, reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC such as us.
You may also read and copy any reports,
statements or other information that we have filed with the SEC at the addresses indicated above and you may also access them electronically
at the web site set forth above. These SEC filings are also available to the public from commercial document retrieval services.
62
Disclosure of Commission Position on
Indemnification of Securities Act Liabilities
The Company's articles of incorporation
provides that to the fullest extent allowed by law, the directors and executive officers of the Company shall be entitled to indemnification
from the Company for acts or omissions taking place in connection with their activities in such capacities. The effect of this
provision of our articles of incorporation, is to eliminate our rights and the rights of our stockholders (through stockholders'
derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of
care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain
situations defined by statute. We believe that the indemnification provisions in our articles of incorporation, are necessary to
attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable.
63
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
Page
No.:
Unaudited Interim Consolidated Financial Statements for Fiscal Quarter Ended December 31, 2011
Consolidated Balance Sheets — December 31, 2011 and March 31, 2011
F-1
Consolidated Statements of Operations For the Three and Nine Month Periods Ended December 31, 2011 and 2010
F-3
Consolidated statements of Cash Flows For the Nine Month Periods Ended December 31, 2011 and 2010
F-4
Notes
F-5
Audited Consolidated Financial Statements for Fiscal Year Ended March 31, 2011
Report of Independent Registered Public Accounting Firm
F-17
Consolidated Balance Sheets - March 31, 2011 and 2010
F-18
Consolidated Statements of Operations For the years ended March 31, 2011 and 2010
F-20
Consolidated Statements of Equity For the period from April 1,2009 to March 31, 2011
F-21
Consolidated statements of Cash Flows For the Years Ended March 31, 2011 and 2010
F-22
Notes
F-23
64
GBS Enterprises Incorporated
Consolidated Balance Sheets
December 31, 2011 and March 31, 2011
(Unaudited)
December 31, 2011
March 31, 2011
$
$
Assets
Current Assets
Cash and cash equivalents
3,537,517
8,530,864
Debtors (Accounts receivable)
4,544,023
5,698,321
Inventories
264,611
-
Prepaid expenses
1,097,370
1,423,281
Other receivables
796,454
2,222,887
Total current assets
10,239,975
17,875,353
Property, plant and equipment - Note 5
2,133,969
298,497
Financial assets
2,818,310
837,481
Investment in related company, at equity
285,908
290,973
Prepaid expenses
725,178
-
Deferred tax assets
3,385,350
1,136,135
Goodwill - Note 6
49,693,027
39,688,966
Software - Note 7
17,110,114
16,514,894
Other assets
319,139
223,630
Total non-current assets
76,470,995
58,990,576
Total assets
86,710,970
76,865,929
Liabilities and stockholders' equity
Current liabilities
Notes payable
1,462,560
1,440,295
Liabilities to banks
39,073
50,073
Accounts payables and accrued liabilities
5,489,528
4,996,748
Deferred income
7,200,058
6,208,458
Other liabilities
3,507,192
2,820,002
Due to related parties - Note 8
475,579
830,156
Shares payable - Note 9
298,956
-
Total current liabilities
18,472,945
16,345,732
Liabilities to banks
3,606,461
780,277
Deferred tax liabilities
611,849
878,450
Retirement benefit obligation
163,648
153,962
Other liabilities
2,786,781
6,127,373
Total non-current liabilities
7,168,739
7,940,062
Total liabilities
25,641,684
24,285,794
F-
1
GBS Enterprises Incorporated
Consolidated Balance Sheets
December 31, 2011 and March 31, 2011
(Unaudited)
December 31, 2011
March 31, 2011
$
$
Stockholders' equity
Capital stock - Note 10
Authorized:
75,000,000 common shares of $.001 par value each
25,000,000 peferred shares of $.001 par value each
Issued and outstanding
27,247,958 shares of common stock
(22,544,000 shares at March 31, 2011)
27,248
22,544
Additional paid in capital
47,325,971
33,894,661
Deficit
(2,888,488
)
(322,519
)
Other comprehensive income
73,951
(13,639
)
44,538,682
33,581,047
Noncontrolling interest in subsidiaries
16,530,604
18,999,088
Total stockholders' equity
61,069,286
52,580,135
Total stockholders' equity and liabilities
86,710,970
76,865,929
F-
2
GBS Enterprises Incorporated
Consolidated Statements of Operations
For the Three and Nine Month Periods Ended December 31, 2011
and 2010
(Unaudited)
For the three months
For the nine months
Ended December 31
Ended December 31
2011
2010
2011
2010
$
$
$
$
Revenues
Products
2,606,206
2,187,721
6,980,202
7,339,747
Services
5,623,112
3,174,339
14,340,149
10,619,891
8,229,318
5,362,060
21,320,351
17,959,638
Cost of goods sold
Products
1,876,286
1,229,394
3,976,750
3,770,174
Services
2,817,317
1,489,334
6,866,807
4,917,742
4,693,603
2,718,728
10,843,557
8,687,916
Gross profit
3,535,715
2,643,332
10,476,794
9,271,722
Operating expenses
Selling expenses
4,308,647
2,036,168
12,277,502
7,537,061
Administrative expenses
1,589,374
715,228
4,846,513
2,724,305
General expenses
160,161
397,130
861,017
979,973
6,058,183
3,148,526
17,985,032
11,241,339
Operating income
(2,522,468
)
(505,194
)
(7,508,238
)
(1,969,617
)
Other Income (expense)
Other Income (expense)
(245,631
)
(533,815
)
64,916
888,513
Interest income
2,563
2,366
19,449
19,455
Interest expense
(43,471
)
527,293
(251,955
)
307,239
(286,539
)
(4,156
)
(167,590
)
1,215,207
Income (loss) before income taxes
(2,809,007
)
(509,350
)
(7,675,828
)
(754,410
)
Income tax (income) expense
(971,062
)
(456,672
)
(2,554,134
)
(416,597
)
Net income (loss)
(1,837,945
)
(52,680
)
(5,121,694
)
(337,813
)
Net income (loss) attributable to non controlling interest
(932,163
)
575
(2,555,725
)
(8,996
)
Net income (loss) attributable to stockholders
(905,782
)
(53,255
)
(2,565,969
)
(328,817
)
Other comprehensive income
144,444
-
174,831
9,572
Other comprehensive income
attributable to non noncontrolling interest
72,078
-
87,240
4,777
Net income (loss) and comprehensive income (loss) attributed to stockholders
(833,416
)
(53,255
)
(2,478,378
)
(324,022
)
Net earnings (loss) per share, basic and diluted
$
(0.04
)
$
0.00
$
(0.10
)
$
(0.02
)
Weighted average number of common stock
outstanding, basic and diluted
25,458,401
16,500,000
24,632,896
16,500,000
F-
3
GBS Enterprises Incorporated
Consolidated statements of Cash Flows
For the Nine Month Periods Ended December 31, 2011 and 2010
(Unaudited)
December 31, 2011
December 31, 2010
$
$
Cash flow from operating activities
Net loss / net income
(2,565,969
)
(328,817
)
Adjustments
Deferred income taxes
(2,515,815
)
(485,886
)
Depreciation and amortization
3,462,047
3,125,805
Earnings from equity investment
5,065
12,282
Minority interest losses
(2,555,725
)
(8,996
)
Stock based compensation
34,000
-
Foreign exchange
140,831
-
Changes in operating assets and liabilities
Accounts receivable and other assets
2,181,463
2,613,710
Retirement benefit obligation
(95,510
)
75,149
Inventories
(264,611
)
(7,510
)
Accounts payable and other liabilities
2,227,834
(1,465,629
)
Net cash provided by operating activities
53,610
3,530,107
Cash flow from investing activities
Purchase of intangible assets
(3,035,533
)
(5,091,537
)
Purchase of property, plant and equipment
(2,186,029
)
(5,278
)
Purchase of financial assets
(1,980,066
)
97,958
Net cash used in investing activities
(7,201,629
)
(4,998,857
)
Cash flow from financing activities
Net borrowings - banks
2,815,184
772,958
Other borrowings
(3,330,906
)
460,062
Net proceeds from exercise of warrants
3,024,970
-
Loans from related party
(354,577
)
-
Net cash used in financing activities
2,154,671
1,233,020
Net decrease in cash
(4,993,347
)
(235,730
)
Cash and cash equivalents - Beginning of period
8,530,864
1,744,965
Cash and cash equivalents - End of period
3,537,517
1,509,235
Note 11 - Supplemental Cash Flow Information
F-
4
NOTE 1 – INTERIM REPORTING
The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements
prepared under the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America. They do not include all information and footnotes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, they include all adjustments, which are, in the opinion of management,
necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance
with accounting principles generally accepted in the United States of America. These interim financial statements follow the same
accounting policies and methods of their application as the Company's audited March 31, 2011 financial statements. All adjustments
are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company's
March 31, 2011 financial statements.
Operating results for the nine months ended
December 31, 2011 are not necessarily indicative of the results that can be expected for the year ending March 31, 2012.
NOTE 2 - OPERATIONS AND RESTRUCTURING
GBS Enterprises Incorporated, a Nevada
corporation (sometimes referred to in these statements as the "Company," "GBSX," "we," "us,"
"our" or similar terms), conducts its primary business through its 50.1% owned subsidiary, GROUP Business Software
AG ("GROUP"), a German-based public-company whose stock trades on the Frankfurt Exchange under the stock symbol INW.
GROUP's core business is focused on serving IBM's Lotus Notes and Domino market where it has become IBM's largest
provider of business solutions worldwide. GROUP caters primarily to mid-market and enterprise-size organizations having over 3,500
customers in thirty-eight countries spanning four continents, representing more than 5,000,000 active users of its products. GROUP's
customers include Abbot, Ernst & Young, Deutsche Bank, Bayer, HBSC, Merck and Toyota. GROUP provides Cloud Computing technology,
IBM Lotus Notes/Domino Application Transformation technology, Email Management software, Lotus Software Services, Customer Relationship
Management software and Risk & Compliance Management solutions. Headquartered in Eisenach, Germany, GROUP has offices throughout
Europe and North America.
General Corporate History
We were incorporated in Nevada on March
20, 2007 as SWAV Enterprises Ltd. ("SWAV"). SWAV was an importer and wholesaler of Chinese manufactured goods.
On April 26, 2010, SWAV purchased certain
assets of Lotus Holdings Limited ("Lotus") pursuant to an Asset Purchase Agreement in consideration for aggregate of
2,265,240 shares of SWAV common stock. Lotus is a holding company specializing in software technology and training services, particularly
in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR) software, and sales
training.
Simultaneously with SWAV's acquisition
of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock to Lotus, for an aggregate purchase
price of $370,000.
Upon the consummation of the acquisition,
the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company's Chief Executive Officer,
President and Chairman of the Board of Directors.
On September 6, 2010, SWAV's name
was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company's trading symbol on the OTC Bulletin Board
was changed from SWAV to GBSX.
F-
5
NOTE 2 - OPERATIONS AND RESTRUCTURING
(continued)
On November 5, 2010, the Company entered
in to an agreement to acquire approximately 28.2% of the outstanding common shares of GROUP Business Software AG, ("GROUP")
a German company, trading on the Frankfurt Stock Exchange under the symbol INW. The Company purchased 3,043,985 of its own shares
for $300,000 and then exchanged those shares for 7,115,500 shares of common stock of GROUP. Their fair value was calculated at
$0.5479 per share as determined by an independent valuation firm. The agreement was effective December 30, 2010. The acquisition
was a two-step transaction, culminating in a share exchange.
On January 6, 2011, the Company acquired
an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361,426 shares of common stock of the Company.
The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect of this transaction is
that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares. The value of this
additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value of $0.506 per share.
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This summary of significant accounting
policies is presented to assist in understanding the financial statements. The financial statements and notes are the representations
of the Company's management, who is responsible for their integrity and objectivity
.
There have been no changes in accounting
policies form those disclosed in the notes to the audited financial statements for March 31, 2011.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The financial statements above reflect all of the costs of doing business.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows,
management considers liquid investments with an original maturity of three months or less to be cash equivalents. As at December
31, 2011, the Company did not have any cash equivalents ($nil – 2010).
Comprehensive Income (Loss)
The Company adopted FASB Codification topic
220,
Reporting Comprehensive Income
, which establishes standards for the reporting and display of comprehensive income and
its components in the financial statements. Comprehensive income consists of net income and other gains and losses affecting stockholder's
equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency
translation gains and losses and minimum pension liability. Since inception, the Company's other comprehensive income represents
foreign currency translation adjustments.
F-
6
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Net Income per Common Share
FASB Codification topic 260,
Earnings
per share,
requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator
and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of common stock
outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common
stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings
per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented
where anti-dilutive. There were no adjustments required to net income for the period presented in the computation of diluted earnings
per share.
Financial Instruments
Financial instruments consist of cash and
cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable and accrued liabilities
and other liabilities. As of the financial statement date, the Company does not hold any derivate financial instruments. Financial
assets and liabilities are measured upon first recognition and reviewed at the financial statement date. Changes in fair value
are recognized through profit and loss. Unless otherwise noted, it is management's opinion that the Company is not exposed
to significant interest or credit risks arising from these financial instruments.
Fair Value Measurements
The Company follows FASB Codification topic
820,
Fair Value Measurements and Disclosures
,
for all financial instruments and non-financial instruments accounted
for at fair value on a recurring basis. This accounting standard establishes a single definition of fair value and a framework
for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.
The Company has adopted FASB Codification
topic 825,
Financial Instruments,
which allows companies to choose to measure eligible financial instruments and certain
other items at fair value that are not required to be measured at fair value.
The Company has not elected the fair value
option for any eligible financial instruments.
Impairment of Long-Lived Assets
The Company evaluates the recoverability
of its fixed assets and other assets in accordance with FASB Codification topic, 360.10,
Property, Plant and Equipment, Impairment
or Disposal of Long-Lived Assets.
This guidance requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds its expected cash flows, it is considered to be impaired and is written down to fair value, which
is determined based on either discounted future cash flows or appraised values. No impairment has been recognized in the accounts.
F-
7
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Revenue Recognition
The Company recognizes revenue in accordance
with SEC Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. Under these guidelines, revenue is recognized when persuasive
evidence of an arrangement exists, shipment has occurred or services rendered, the price is fixed or determinable and payment is
reasonably assured. Customers take ownership at point of sale and bear the costs and risks of delivery. Maintenance earnings are
realized per FASB Codification topic 605
Revenue Recognition
on a pro rata basis over the contractual service period. Consulting
and training services are realized upon provision of the service. Sales revenues are presented with deductions made for discounts,
customer bonuses, and rebates.
Property, Plant and Equipment
Property, plant and equipment are valued
at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed assets are depreciated
on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based on useful lives of 3
to 10 years. If fixed assets are sold, retired or scrapped, the profit or loss arising from the difference between the net sales
proceeds and the residual book value are included under other operating earnings and expenses.
Intangible Assets
Intangible assets predominately comprise
goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for payment are
reflected as acquisition costs. If the development costs can be capitalized per FASB Codification topic 985-20-25, these are reflected
as ascribable personnel and overhead costs.
Company created software can be intended
for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the expenses are recorded
with their effect on profit in the year in which they were incurred.
GROUP amortizes intangible assets with
a limited useful life to the estimated residual book value in accordance with codification regulations. In addition, in special
circumstances according to FASB Codification topic 350-30, a recoverability test is performed and, if applicable, unscheduled amortization
is considered. The useful life of acquired software is between three and five years and three years for Company-designed software.
Intangible assets obtained as part of an
acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once a year as to their
recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization expense entry
is performed.
Use value is generally used in order to
determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan prepared by the
management serves as the basis for this policy. The planning assumptions are each adjusted for the current state of knowledge.
Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making these adjustments.
Future estimated cash flows are essentially determined based on the expected growth rates of the markets in question.
F-
8
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Other Provisions
According to FASB Codification topic 450
Contingencies
, provisions are made whenever there is a current obligation to third parties resulting from a past event which
is likely in the future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already
resulting in a outflow of resources in the following year are recognized at their discounted settlement amount on the financial
statement date. The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases.
Provisions are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount,
the provision is proportionally reversed and the earnings are recognized in other operating earnings.
Foreign currency translation
The functional currency of the Company
is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars. Assets and
liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated at the average
exchange rates and stockholders' equity was translated at historical exchange rates. Any translation adjustments resulting
are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component
of stockholders' equity.
Deferred Taxes
Income taxes are provided in accordance
with FASB Codification topic 740
Accounting for Income Taxes.
A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry forwards.
Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that, some portion or all of the deferred tax asset will
not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of
enactment.
Stock Based Compensation
The Company adopted the fair value recognition
provisions of FASB Codification topic 740
Stock Compensation"
under which the Company records stock-based compensation
expense for warrants and stock options granted to employees, directors and officers using the fair value method. Under this method,
stock-based compensation is recorded over the vesting period of the warrant and option based on the fair value of the warrant and
option as the grant date. The fair value of each warrant and option granted is estimated using the Black-Scholes option pricing
model that takes into account on the grant date, the exercise price, expected life of the warrant and/or option, the price of the
underlying security, the expected volatility, expected dividends on the underlying security, and the risk-free interest rate. Transactions
in which goods or services are received from non-employees in exchange for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably
measurable.
Stock based compensation is recorded with
a corresponding increase to additional paid-in capital. Consideration received on the exercise of warrants and options, together
with the amount previously credited to additional-paid in capital, is recognized as an increase in common stock.
F-
9
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Principles of Consolidation and Reverse
Acquisition
As previously disclosed, the Company has
exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP. Although
the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form of a reverse merger,
whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure of the Corporation.
Accordingly, the accompanying consolidated interim financial statements reflect the historical consolidated financial statements
of GROUP for all periods presented prior to the merger of January 6, 2011. Only transactions and balances subsequent to that date
are included in these interim financial statements. Common stock and additional paid in capital are the only exceptions, as their
structure immediately after the merger were accounted for as being the initial balances at inception.
The Company has based its financial reporting
for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40 as it relates to reverse
acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred by the Company,
the acquiree for financial reporting purposes, over the net amount of the Company's recognized identifiable assets and liabilities.
The assets and liabilities of GROUP, the
acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at their pre-combination
carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling interest reflects
the non-controlling shareholders' proportionate interest in the pre-combination carrying amounts of GROUP's net assets
even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date.
It should also be noted that the Company
and GROUP have different year-end reporting dates. The Company's fiscal year-end reporting date is March 31 and GROUP"s
calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting purposes has been
performed without any adjustments for timing differences between these two reporting dates in accordance Regulation S-X Rule 3A-02.
Inventories
Pursuant to FASB Codification topic 330
Inventories
, inventories held for sale are recognized under inventories. Inventories were measured at the lower of cost or
market. Cost is determined on a first-in-first out basis, without any overhead component.
Recent Accounting Pronouncements
The Company adopts new pronouncements relating
to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective
date. Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would
have a material effect on the accompanying financial statements
.
F-
10
NOTE 4 – SUBSIDIARY COMPANIES
ACQUIRED
Effective April 1, 2011, the Company entered
into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000 in cash and
1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing the
market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption of
$11,261 in debt was $5,261,261.
Effective June 1, 2011, the Company
acquired 100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As consideration the
Company paid $250,000 and issued 250,000 shares of its common stock. The fair value of the common stock was determined to be
$4.34 per share, representing the market value at the end of trading on the date of the agreement. The total value of the
investment, including the assumption of $219,902 in debt was $1,554,902.
On July 25, 2011, the Company acquired
100% of the issued and outstanding shares of common stock of IDC Global, Inc. ("IDC"), a Delaware corporation with
offices in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company
agreed to issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement
required an additional payment to the management shareholders of 80,000 shares of common stock and pay signing bonuses to personnel
of $35,000. The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction.
The total value of the investment, including $883,005 of debt assumption was $4,713,005.
On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. ("SYN"), a Mauritius corporation and the shareholders of
SYN (the "Selling Shareholders") owning 100% of issued and outstanding shares of SYN. Pursuant to the agreement, the
Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN ("SYN Shares") effective November
1, 2011 in consideration for (i) 700,000 shares of common stock of GBS and (ii) $525,529.
The assets and liabilities of these companies
represent their values as of September 30, 2011 and are included in these consolidated financial statements. This timing approach
is allowed as per Regulation S-X Rule 3A-02.
NOTE 5 – PROPERTY PLANT AND
EQUIPMENT
Fixed assets are measured at cost less
scheduled straight-line depreciation. The specific useful life was based on those used uniformly at the parent company.
Depreciation of the computer hardware listed
as office equipment is distributed over a period of three to five years. The depreciation period for other office equipment is
three to ten years. Office furnishings are depreciated over a period of eight to ten years.
December 31, 2011
March 31, 2011
Accumulated
Net Book
Accumulated
Net Book
Cost
Amortization
Value
Cost
Amortization
Value
$
$
$
$
$
$
Equipment
5,747,500
3,613,532
2,133,968
4,857,380
4,558,883
298,497
F-
11
NOTE 6 – GOODWILL
Goodwill results from business combinations
and is tested annually for recoverability as part of an impairment test. Goodwill arises from the following business acquisitions:
Affiliated Company
Date of the First
Consolidation
Goodwill
as of
12.31.2009
in kUSD
Goodwill
YE in
kUSD
Goodwill
Q2 in
kUSD
global words AG
01/10/02
4,821.9
5,095.3
5,095.3
GROUP Technologies AG
01/09/05
4,239.4
4,479.7
4,479.7
GROUP Business Software Inc.
31/12/05
2,060.7
2,177.5
2,177.5
GROUP LIVE N.V
31/12/05
1,253.2
1,324.2
1,324.2
Remaining goodwill from CRM
31/12/05
2,941.7
3,108.4
3,108.4
GROUP Business Software Ltd
31/12/05
2,616.7
2,765.1
2,765.1
ebVOKUS Software GmbH
01/10/05
419.8
443.6
443.6
GAP AG für GSM Applikationen und Produkte
31/12/05
1,811.2
1,913.9
1,913.9
Relavis Corporation
01/08/07
6,897.2
7,288.3
7,308.0
Permessa
22/09/10
0.0
2,387.4
2,387.4
GROUP Business Software AG
06/01/11
8,705.5
8,705.5
8,705.5
Pavone AG
01/04/11
4,956.7
Groupware Inc.
01/06/11
992.8
IDC
01/07/11
2,496.2
SD Holding
01/10/11
1,538.6
35,767.3
39,689.0
49,693.0
NOTE 7 – SOFTWARE
Development costs
The costs of developing new software products
and updating products already marketed by GROUP Business Software AG are generally recognized as expenses in the period in which
they arise. Provided they meet the conditions for capitalization as per FASB Codification 985-20-25, they are capitalized. Capitalized
development costs can be attributed to the defined products. These products are technically realizable and there is a target market
for them.
The development costs arising in the reporting
period result from the personnel costs to be attributed to the development work as well as overhead costs, provided that these
are related to the development work and do not represent general administrative costs. The ascribable overhead costs are directly
recognized. Capitalized development costs are generally amortized over a period of three years starting with the date of marketability
of the new products or major releases.
Concessions, Industrial Property Rights,
Licenses
The intangible financial assets carried
in this item are licenses acquired in exchange for payment. These financial assets are measured at acquisition cost less scheduled
straight-line amortization. The assets added in the scope of the cost price allocation of the business divisions acquired this
year. The useful life spans were based uniformly throughout the Corporation on those used by the parent company. Scheduled amortization
is performed over a period from three to ten years.
F-
12
NOTE 8 – RELATED PARTY TRANSACTIONS
AND BALANCES
The Company had the following transactions
with related parties for the nine months ending December 31, 2011 and 2010:
2011
2010
$
$
Expenses paid to related parties:
Wages
138,775
126,681
Rent
30,332
28,671
Consulting fees
632,984
259,604
Interest
23,327
-
Stock Base Compensation
34,000
-
The transactions between the Company and
the parties were consummated at the price agreed upon between the parties.
The following balances were outstanding
Dec 31
March 31
2011
2011
Due to (form) a director and shareholder, unsecured demand
note payable, bearing interest at 5%
$
(24,421
)
$
117,250
Due to Lotus Holdings Ltd., a shareholder, demand notes
bearing interest at 5%, due October 30, 2012
-     secured by shares in GROUP Business Software AG
500,000
600,000
-     secured by OUTPUT Software
-
105,000
Accrued interest
-
7,906
$
475,579
$
830,156
NOTE 9 – SHARE PAYABLE
The account relates to shares to be
issued in connection with the purchase of 100% interest in SD Holdings. Amount consists of 145,832 shares of the company at $2.05
per shares, not yet issued.
NOTE 10 - CAPITAL STOCK
The following are changes to the Company's
capital stock from April 1, 2010.
On April 1, 2011, the Company issued 1,000,000
shares of common stock as partial payment for 100% of the issued and outstanding shares of Pavone AG. The fair value of the shares
issued was determined to be $4,900,000.
On June 1, 2011, the Company issued 250,000
shares of common stock as partial payment for 100% of the issued and outstanding shares of GroupWare, Inc. The fair value of the
shares issued was determined to be $1,085,000.
F-
13
NOTE 10 - CAPITAL STOCK (continued)
On July 25, 2011 the Company issued 880,000
shares of common stock as a partial payment for 100% of the issued and outstanding shares of IDC Global, Inc. The fair value of
the shares issued was determined to be $3,080,000
On November 1, 2011 the Company issued
554,168 shares of common stock as a partial payment for 100% of the issued and outstanding shares of SD Holdings. The fair value
of the shares issued was determined to be $1,136,044.
On December 13, 2011 the Company issued
2,020,000 shares of common stock from the exercise of 2,020,000 warrants for total proceeds of $3,030,000. The cost of issuance
was $5,030, making net proceeds $3,024,970.
NOTE 11 – SUPPLEMENTAL CASH
FLOW INFORMATION
Non cash transactions during the period
are described above in Note 4 – Subsidiary Companies Acquired and Note 9 – Capital Stock.
December 31, 2011
December 31, 2010
Interest paid
$
251,954
$
307,239
Income taxes paid
$
338,231
$
54,543
NOTE 12 – STOCK BASED COMPENSATION
Effective April 1, 2011, a warrant to purchase
shares was granted to an officer of the Company. The warrant allowed the grantee to purchase 100,000 common shares of the Company
at $1.50. The warrant may be exercised any time before the third anniversary of the grant. This was the only compensation granted
in either of the nine month periods ending December 31, 2011 or December 31, 2010.
Compensation was recorded at the fair value
of the warrant as at the grant date based on the Black-Scholes option pricing model, using the following assumptions:
Expected dividend yield
0
%
Average risk-free interest rate
1.19
%
Expected life
3 years
Expected volatility
77.1
%
Under the fair value method of accounting
for stock options (warrants) the Company recorded compensation expense for the six months ending December 31, 2011 of $34,000 ($nil
– 2010). This amount has been credited to additional paid in capital.
NOTE 13- WARRANTS
The Company has issued warrants to outside
consultants in payments for services provided as detailed in the following schedule. The warrants are issued as "cashless"
warrants and all have a three-year term with the exception of the warrant issued on October 10, 2010, which has a 30 month term.
The warrants have been valued using a Black-Scholes option pricing model with appropriate volatility, equity value and interest
rate inputs as noted below. The valuation of the warrants is for disclosure purposes only as the charge is related to the cost
of issuing the shares and there is no impact to the financial statements.
F-
14
NOTE 13- WARRANTS (continued)
Common Stock Warrants Issued
Common
Exercise
Valuation
Fair Value per
Warrants'
to Outside Consultants
Shares
Price
Date
Warrant Share
Fair Value
Issued on October 1, 2010
2,000,000
$
4.00
10/1/2010
$
-
$
-
Issued on March 14, 2011
707,280
$
1.50
3/14/2011
$
0.34
$
240,475
Issued on March 24, 2011
15,000
$
1.50
3/24/2011
$
0.34
$
5,100
Total Warrant Value
$
245,575
The fair value of the warrant as at the
grant date of October 1, 2010 was based on the Black-Scholes option pricing model, using the following assumptions:
Expected dividend yield
0
%
Average risk-free interest rate
0.74
%
Expected life
2.5 years
Expected volatility
65.0
%
The fair value of the warrant as at the
grant dates of March 14, and March 24, 2011 were based on the Black-Scholes option pricing model, using the following assumptions:
Expected dividend yield
0
%
Average risk-free interest rate
1.07 – 1.19
%
Expected life
3 years
Expected volatility
77.2
%
As at December 31, 2011, the number of
shares the warrants outstanding could purchase if exercised was as follows:
Weighted
Common
Average
Warrants
Shares
Price/sh
Outstanding, beginning of period
8,766,280
$
2.07
Issued
100,000
$
1.50
Exercised
(2,020,000
)
$
1.50
Expired
-
$
-
Outstanding, end of period
6,846,280
$
2.23
F-
15
NOTE 14 – SEGMENT REPORTING
The Company reports segment information
based on the "management" approach. Operating segments are defined as components of an enterprise which separate financial
information is evaluated regularly by the chief decision maker in deciding how to allocate resources and assess performance. Because
of this management structure, the Company has only a single reporting unit which is the same as an operating or reportable segment,
which is also the same, in this case, as the entity as a whole (entity or consolidated level). In summary, the Company presents
its financial statements as a signle reporting unit because it directly reflects the way the entity manages its operations by the
chier operating decision maker. Since the company operates in one segment, all required financial segment information can be found
in the consolidated financial statements.
Revenues by geographic area for the three
and nine months ended December 31, 2011 and 2010 are as follows (USD 000's).
For the three months ended
For the nine months ended
December 31,
December 31,
2011
2010
2011
2010
US
2,398
1,242
6,442
4,190
Other
5,831
4,120
14,878
13,770
8,229
5,362
21,320
17,960
Long-lived assets by geographic area, which
primarily include property plant and equipment net as of December 31, 2011 and March 31, 2011 were as follows (USD).
December
31,
March
31,
2011
2011
US
23,613
1,685
Other
2,110,356
296,812
2,133,969
298,497
F-
16
K. R. MARGETSON LTD.
Chartered Accountant
331 East 5
th
Street
Tel 604.929.0819
North Vancouver BC
Fax: 1.877.874.9583
V7L 1M1
keith@krmargetson.com
Canada
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
GSB Enterprises Incorporated:
We have audited the consolidated balance sheet of GSB Enterprises
Incorporated and its subsidiaries as of March 31, 2011 and 2010 and the related consolidated statements of operations, equity and
cash flows for the years 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 audits.
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, these consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of GSB Enterprises Incorporated.
as of March 31, 2011 and 2010 and the results of its consolidated operations and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note 33 to the financial statements, the 2011
and 2010 financial statements have been restated to correct misstatements.
/s/ K. R. MARGETSON LTD.
North Vancouver BC
Chartered Accountant
November 3, 2011, except for Note 32 as to which the date
is March 12, 2012
F-
17
GBS Enterprises Incorporated
Consolidated Balance Sheets
March 31, 2011 and 2010
2011
2010
$
$
Restated
Restated
Assets
Current Assets
Cash and cash equivalents (Note 5)
8,530,864
1,744,965
Accounts receivable (Note 6)
5,698,321
2,821,958
Inventories (Note 2)
-
114,172
Deferred tax assets (Note 29)
-
12,284
Prepaid expenses (Note 7)
1,423,281
1,550,634
Assets held for sale (Note 8)
-
12,372,600
Other receivables (Note 9)
2,222,887
332,812
Total current assets
17,875,353
18,949,425
Property, plant and equipment (Note 10)
298,497
275,856
Financial assets (Note 11)
837,481
99,273
Investment in related company, at equity (Notes 4 & 12)
290,973
376,572
Deferred tax assets (Note 29)
1,136,135
4,968,740
Goodwill (Note 13)
39,688,966
35,767,273
Software (Note 14)
16,514,894
13,028,818
Other assets (Note 15)
223,630
175,900
Total non-current assets
58,990,576
54,692,432
Total assets
76,865,929
73,641,857
Liabilities and shareholders' equity
Current liabilities
Notes payable (Note 16)
1,440,295
-
Liabilities to banks (Note 17)
50,073
83,793
Accounts payables and accrued liabilities (Note 18)
4,996,748
3,532,004
Other liabilities (Note 19)
2,820,002
1,982,916
Deferred income (Note 20)
6,208,458
5,919,527
Liabilities held for sale (Note 21)
-
2,013,729
Due to related parties (Note 27)
830,156
-
Total current liabilities
16,345,732
13,531,969
Notes payable (Note 16)
-
1,549,490
Liabilities to banks (Note 22)
780,277
3,231,405
Deferred tax liabilities (Note 29)
878,450
926,357
Retirement benefit obligation (Note 28)
153,962
150,276
Other liabilities (Note 23)
6,127,373
4,426,327
Total non-current liabilities
7,940,062
10,283,855
Total liabilities
24,285,794
23,815,824
See Accompanying Notes
F-
18
GBS Enterprises Incorporated
Consolidated Balance Sheets
March 31, 2011 and 2010
2011
2010
$
$
Restated
Restated
Stockholders' equity
Common stock (Note 24)
Authorized:
75,000,000 common shares, par value $.001
25,000,000 preferred shares, par value $.001
Issued and outstanding
22,544,000 shares of common stock (16,500,000 in 2010)
22,544
16,500
Additional paid in capital
33,894,661
27,221,755
Retained earnings
(322,519
)
1,642,728
Other comprehensive income
(13,639
)
130,419
33,581,047
29,011,402
Noncontrolling interest in subsidiaries
18,999,088
20,814,631
Total equity
52,580,135
49,826,033
Total equity and liabilities
76,865,929
73,641,857
Commitment (Note 31)
Subsequent events (Note 32)
See Accompanying Notes
F-
19
GBS Enterprises Incorporated
Consolidated Statements of Operations
For the years ended March 31, 2011 and 2010
2011
2010
$
$
Restated
Revenues
Products
12,848,954
12,479,629
Services
14,858,272
19,105,103
27,707,226
31,584,732
Cost of goods sold
Products
7,016,189
5,631,372
Services
7,066,305
5,662,619
14,082,494
11,293,991
Gross profit
13,624,732
20,290,741
Operating expenses
Selling expenses
10,610,545
13,847,697
Administrative expenses
3,853,532
4,481,893
General expenses
1,454,213
703,129
15,918,290
19,032,719
Operating income (loss)
(2,293,558
)
1,228,022
Other Income (expense)
Other income
2,393,821
454,486
Interest income
16,804
44,626
Interest expense
(471,282
)
(263,590
)
1,939,343
235,522
Income (loss) before income taxes
(354,215
)
1,463,544
Income tax expense
3,283,091
44,106
Net income (loss)
(3,637,306
)
1,419,438
Net income (loss) attributable to noncontrolling interest
(1,672,059
)
710,605
Net income (loss) attributable to stockholders
(1,965,247
)
708,833
Other comprehensive income (loss)
(287,542
)
38,626
Other comprehensive income (loss) attributable to noncontrolling interest
(143,484
)
-
Other comprehensive income (loss) attributable to stockholders
(144,058
)
38,626
Comprehensive income (loss) attributed to stockholders
(2,109,306
)
747,458
Net earnings (loss) per share
Basic
(0.119
)
0.043
Diluted
(0.119
)
0.038
Weighted average number of common stock outstanding
Basic
16,566,236
16,500,000
Diluted
18,601,444
18,500,000
See Accompanying Notes
F-
20
GBS Enterprises Incorporated
Consolidated Statements of Equity
For the period from April 1,2009 to March 31, 2011
(Audited)
Common Stock
Accumulated
Equity
Additional
Other
attributable to
Paid in
Comprehensive
Accumulated
noncontrolling
Shares
Amount
Capital
Income (Loss)
Deficit
interests
Equity
$
$
$
$
$
$
Balance April 1, 2009
16,500,000
16,500
27,221,755
91,794
933,895
20,104,026
48,367,970
Net income for the year ended March 31, 2010
-
-
-
38,626
708,833
710,605
1,458,063
Balance, March 31, 2010
16,500,000
16,500
27,221,755
130,419
1,642,728
20,814,631
49,826,033
Shares issued for cash
6,044,000
6,044
6,672,906
-
-
-
6,678,950
Net loss for the year ended March 31, 2011
-
-
-
(144,058
)
(1,965,247
)
(1,815,543
)
(3,924,848
)
22,544,000
22,544
33,894,661
(13,639
)
(322,519
)
18,999,088
52,580,135
See Accompanying Notes
F-
21
GBS Enterprises Incorporated
Consolidated statements of Cash Flows
For the Years Ended March 31, 2011 and 2010
2011
2010
$
$
Restated
Restated
Cash flow from operating activties
Net income (loss) for the year
(3,637,306
)
1,419,438
Adjustments
Deferred income taxes
3,796,982
(167,191
)
Depreciation and amortization
4,035,732
2,894,795
Interest expense
(109,195
)
80,448
Loss on sale of assets
266,269
-
Loss from equity investment
85,599
31,078
Minority interest losses
(143,736
)
-
Changes in operating assets and liabilities
Accounts receivable and other assets
(4,529,889
)
2,812,836
Retirement benefit obligation
3,686
10,243
Inventories
114,172
(12,265
)
Accounts payable and other liabilities
2,755,795
(2,738,594
)
Net cash provided by operating activities
2,638,109
4,330,788
Cash flow from investing activties
Purchase of intangible assets
(5,941,612
)
(4,560,821
)
Purchase of property, plant and equipment
(161,037
)
(479,398
)
Purchase of subsidiaries
-
(1,513,176
)
Proceeds from sale of subsidaries
2,588,035
-
Increase in financial assets
321,515
-
Net cash used in investing activities
(3,193,099
)
(6,553,395
)
Cash flow from financing activties
Net borrowings - banks
(2,484,597
)
830,001
Other borrowings
2,460,438
(692,093
)
Loans from related party
830,156
-
Capital paid-in
6,678,950
-
Net cash used in financing activities
7,484,947
137,908
Net increase in cash
6,929,957
(2,084,699
)
Effect of translation on cash and cash equivalents
(144,058
)
77,097
Cash and cash equivalents - Beginning of the year
1,744,965
3,752,567
Cash and cash equivalents - End of year
8,530,864
1,744,965
See supplemental disclosures (See Note
30)
F-
22
Notes on the Annual Financial Statement
for the Business Year
ending March 31, 2011
GBS Enterprises Incorporated
F-
23
Note
1          COMPANY AND BACKGROUND
GBS Enterprises Incorporated,
a Nevada corporation (sometimes referred to in this annual report as the "Company," "GBSX," "we,"
"us," "our" or similar terms), conducts its primary business through its 50.1% owned subsidiary, GROUP
Business Software AG ("GROUP"), a German-based public-company whose stock trades on the Frankfurt Exchange under the
stock symbol INW. GROUP's core business is focused on serving IBM's Lotus Notes and Domino market where it has become
IBM's largest provider of software and services for business solutions worldwide. GROUP caters primarily to mid-market and
enterprise-size organizations having over 3,500 customers in thirty-eight countries spanning four continents, representing more
than 5,000,000 active users of its products. GROUP's customers include Abbot, Ernst & Young, Deutsche Bank, Bayer, HBSC,
Merck and Toyota. GROUP provides IBM Lotus Notes/Domino Application and Transformation technology, and related Cloud Computing
technology. Headquartered in Eisenach, Germany, GROUP has offices throughout Europe and North America.
General Corporate
History
We were incorporated
in Nevada on March 20, 2007 as SWAV Enterprises Ltd. ("SWAV"). SWAV was an importer and wholesaler of Chinese manufactured
goods.
On April 26, 2010, SWAV
purchased certain assets of Lotus Holdings Limited ("Lotus") pursuant to an Asset Purchase Agreement in consideration
for aggregate of 2,265,240 shares of SWAV common stock. Lotus is a holding company specializing in software technology and training
services, particularly in the areas of advanced software development tools, innovative point-of-care electronic health record (EHR)
software, and sales training.
Simultaneously with
SWAV's acquisition of Lotus, the SWAV stockholders sold an aggregate of 11,984,770 shares of SWAV common stock for an aggregate
purchase price of $370,000.
Upon the consummation
of the acquisition, the then executive officers and directors of SWAV resigned and Joerg Ott was appointed as the Company's
Chief Executive Officer, President and Chairman of the Board of Directors.
On September 6, 2010,
SWAV's name was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company's trading symbol on the OTC
Bulletin Board was changed from SWAV to GBSX.
On November 5, 2010,
the Company entered in to an agreement to acquire approximately 28.2% of the outstanding common shares of GROUP Business Software
AG, ("GROUP") a German company, trading on the Frankfurt Stock Exchange under the symbol INW. The Company purchased
3,043,985 of its own shares for $300,000 and then exchanged those shares for 7,115,500 shares of common stock of GROUP. Their fair
value was calculated at $0.5479 per share as determined by an independent valuation firm, making the total value of the acquisition
$3,898,000, The agreement was effective December 30, 2010. The acquisition was a two-step transaction, culminating in a share exchange.
F-
24
On January 6, 2011,
the Company acquired an additional aggregate of 5,525,735 shares of common stock of GROUP in exchange for 2,361426 shares of common
stock of the Company. The acquisition represents approximately 21.9% of the issued and outstanding shares of GROUP. The effect
of this transaction is that the Company gained a 50.1% controlling interest of GROUP with an aggregate of 12,641,235 common shares.
The value of this additional purchase, using the same techniques as the previous acquisition, was $2,796,000, based on a value
of $0.506 per share.
Note
2          ACCOUNTING POLICIES
The financial statements
and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America,
the more significant of which are as follows:
Critical Accounting
Policies and Estimates
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Comprehensive Income
(Loss)
The Company adopted
FASB Codification topic ("ASC") 220, Reporting Comprehensive Income, which establishes standards for the reporting
and display of comprehensive income and its components in the financial statements. Comprehensive income consists of net income
and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses
on investments available for sale, foreign currency translation gains and losses and minimum pension liability. Since inception,
the Company's other comprehensive income represents foreign currency translation adjustments.
F-
25
Net Income per Common
Share
ASC 260, Earnings per
share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator
of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of common stock outstanding.
If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common stock instruments
such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. Diluted
net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where anti-dilutive.
Accordingly, although the diluted weighted average number of common stock outstanding is disclosed on the statements of operation,
the calculated net loss per share is the same for bother basic and diluted as both are based on the basic weighted average of common
stock outstanding. There were no adjustments required to net income for the period presented in the computation of diluted earnings
per share.
Financial Instruments
Financial instruments
consist of cash and cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable
and accrued liabilities and other liabilities. As of the financial statement date, the Company does not hold any derivate financial
instruments. Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date.
Changes in fair value are recognized through profit and loss. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest or credit risks arising from these financial instruments.
Currency Risk
We use the US dollar
as our reporting currency. The functional currencies of our significant foreign subsidiaries are the local currency, which includes
the Euro and the British pound. Accordingly, some assets and liabilities are incurred in those currency and we are subject to foreign
currency risks.
Fair Value Measurements
The Company follows
ASC 820, Fair Value Measurements and Disclosures, for all financial instruments and non-financial instruments accounted for at
fair value on a recurring basis. This new accounting standard establishes a single definition of fair value and a framework for
measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.
F-
26
The Company has adopted
ASC 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments and certain other items
at fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible
financial instruments.
Cash and cash equivalents
The Company considers
all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
Inventories
Pursuant to ASC 330
(Inventories), inventories held for sale are recognized under inventories. Inventories were measured at the lower of cost or market.
Cost is determined on a first-in-first out basis, without any overhead component.
Intangible Assets
Intangible assets predominately
comprise goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for
payment are reflected as acquisition costs. If the development costs can be capitalized per ASC 985-20-25, these are reflected
as ascribable personnel and overhead costs.
Company created software
can be intended for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the
expenses are recorded with their effect on profit in the year in which they were incurred.
GROUP amortizes intangible
assets with a limited useful life to the estimated residual book value in accordance with ASC regulations. In addition, in special
circumstances according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled amortization is considered.
The useful life of acquired
software is between three and five years and three years for Company-designed software.
Intangible assets obtained
as part of an acquisition which do not meet the criteria for a separate entry are identified as goodwill and are reviewed once
a year as to their recoverability in the form of an impairment test. If they are no longer recoverable, an unscheduled amortization
expense entry is performed.
In addition, an impairment
test, whereby the appraised fair value of the invested capital of the reporting segment, (as described in Note 14,) is compared
with the carrying (book) value of its invested capital amount, including goodwill.
If the appraised value
of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying
amount of the reporting unit exceeds the appraised fair value, an impairment test based on use value is necessary in order to measure
the amount of impairment loss, if any.
Use value is generally
used in order to determine the recoverability of goodwill and intangible assets with an indefinite useful life. The current plan
prepared by the management serves as the basis for this policy. The planning assumptions are each adjusted for the current state
of knowledge. Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making
these adjustments. Future estimated cash flows are essentially determined based on the expected growth rates of the markets in
question.
F-
27
Property, Plant and
Equipment
Property, plant and
equipment are valued at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed
assets are depreciated on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based
on useful lives of 3 to 10 years.
If fixed assets are
sold, retired or scrapped, the profit or loss arising from the difference between the net sales proceeds and the residual book
value are included under other operating earnings and expenses.
Impairment
or Disposal of Long-Lived Assets
The Company evaluates
the recoverability of its fixed assets and other assets in accordance with ASC topic, 360.10. This guidance requires recognition
of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows, it is considered
to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised
values. No impairment has been recognized in the accounts.
Revenue Recognition
Sources of Revenues
License revenues
Our license revenues
consist of revenues earned from the licensing of our software products. These products are generally licensed on a perpetual basis.
Pricing models have generally been based either upon the physical infrastructure, such as the number of physical desktop computers
or servers, on which our software runs or on a per user basis. License revenues are recognized when the elements of revenue recognition
for the licensed software are complete, generally upon electronic shipment of the software and the software key to provide full
access to all functionalities for our customers. In general our invoices reflect license, service and maintenance components. In
the case of multi element contracts, the revenues allocated to the software license represent the residual amount of the contract
after the fair value of the other elements has been determined. Certain products of our software offering are licensed on a subscription
basis.
Software
maintenance revenues
Software maintenance
revenues are recognized ratably on a pro-rata basis over the range of the contract period. Our contract periods typically range
from one to five years. Vendor-specific objective evidence ("VSOE") of fair value for software maintenance services
is established by the rates charged in stand-alone sales of software maintenance contracts or the stated renewal rate for software
maintenance. Customers who are party to software maintenance agreements with us are entitled to receive support, product updates
and upgrades on a when-and-if-available basis.
F-
28
Professional
services revenues
Professional services
include pre-project consulting, software design, customization, project management, implementation and training. Professional services
are not considered essential to the functionality of our products, as these services do not alter the product capabilities and
may be performed by our customers or by other vendors. Professional services engagements performed for a fixed fee, for which we
are able to make reasonably dependable estimates of progress toward completion, are recognized on a proportional performance basis
based on hours incurred and estimated hours of completion. Professional services engagements that are on a time and materials basis
are recognized based on hours incurred. Revenues on all other professional services engagements are recognized upon completion.
Our professional services may be sold with software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE)
of fair value for professional services is based upon the standard rates we charge for such services when sold separately.
Foreign Currency
Translation
The functional currency
of the Company is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars.
Assets and liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated
at the average exchange rates and stockholders' equity was translated at historical exchange rates. Any translation adjustments
resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income,
a component of stockholders' equity
.
Other Provisions
According to FASB ASC
450 Contingencies, provisions are made whenever there is a current obligation to third parties resulting from a past event which
is likely in the future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already
resulting in a outflow of resources in the following year are recognized at their discounted settlement amount on the financial
statement date. The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases.
Provisions are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount,
the provision is proportionally reversed and the earnings are recognized in other operating earnings.
F-
29
Deferred Taxes
Income taxes are provided
in accordance with FASB Codification topic 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting and net operating loss-carry forwards.
Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that, some portion or all of
the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax
laws and rates on the date of enactment.
Recent Accounting
Pronouncements
In January 2010, the
FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic
820, adding new requirements for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements
relating to Level 3 measurements and clarification of existing fair value disclosures.  ASU 2010-06 is effective for interim
and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales,
issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company's
fiscal year 2012); early adoption is permitted.  The Company does not expect the adoption of ASU 2010-06 to have a material
impact on its results of operations or financial position.
In February 2010, FASB
issued ASU 2010-9 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements ("ASU 2010-9").
ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the
date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and
the SEC's requirements. ASU 2010-9 is effective for interim and annual periods ending after June 15, 2010. The Company does
not expect the adoption of ASU 2010-09 to have a material impact on its results of operations or financial position.
Effective July 1,
2010, we adopted the update to the accounting standard regarding derivatives and hedging (Topic 815). This update clarifies how
to determine whether embedded credit derivatives, including those interests held in collateralized debt obligations and synthetic
collateralized debt obligations, should be bifurcated and accounted for separately. The adoption of this standard did not have
a significant impact on our results of operations.
F-
30
In December 2010, the
FASB issued Accounting Standards Update ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations
(Topic 805). The update requires public companies to disclose pro forma information for business combinations that occur in the
current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting
period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning
of the annual reporting period. This guidance is effective for business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.
The Company's adoption of FASB ASU No. 2010-29 effective December 1, 2010 did not have an impact on the Company's
consolidated results of operations or financial position but did result in additional disclosures.
A variety of proposed
or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory
agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation
of such proposed standards would be material to the Company's consolidated financial statements
Off - Balance Sheet
Arrangements
We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity or
that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do
not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to
us or engages in leasing, hedging or research and development services with us.
Principles of Consolidation
and Reverse Acquisition
As previously disclosed,
the Company has exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of
GROUP. Although the Company was the legal acquirer, the transaction was accounted for as a recapitalization of GROUP in the form
of a reverse merger, whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted the capital structure
of the Corporation. Accordingly, the accompanying consolidated financial statements reflect the historical consolidated financial
statements of GROUP for all periods presented, and do not include the historical financial statements of the Company. All costs
associated with the reverse merger transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were
included in professional fees in administrative expenses.
F-
31
The Company has based
its financial reporting for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40
as it relates to reverse acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively
transferred by the Company, the acquiree, for financial reporting purposes, over the net amount of the Company's recognized
identifiable assets and liabilities.
We have recorded the
acquired assets and liabilities of GBSX on the acquisition date of January 6, 2011, at their fair value and the operations of GBSX
have been included in the consolidated financial statements since the acquisition date.
The assets and liabilities
of GROUP, the acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at
their precombination carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling
interest reflects the non-controlling shareholders' proportionate interest in the pre-combination carrying amounts of GROUP's
net assets even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition
date.
It should also be noted
that the Company and GROUP have different year-end reporting dates. The Company's fiscal year-end reporting date is March
31 and GROUP"s calendar year-end reporting date is December 31. The consolidation of these entities for financial reporting
purposes has been performed without any adjustments for timing differences between these two reporting dates in accordance Regulation
S-X Rule 3A-02.
The purpose of the acquisition
was to allow GROUP easier access to American financial markets. Goodwill recognized of $8,705 KUSD was recorded upon consolidation
and was calculated as the value of the consideration given less the value of the asset received. The resulting goodwill represents
the benefit to be gained by gaining entry into American financial markets.
F-
32
Note
3          SUBSIDIARY COMPANIES
In the consolidated
financial statements of GROUP Business Software AG, the subsidiaries listed below were included in the basis of consolidation;
in the previous year, there were eight of these subsidiaries (KUSD = 1,000's of US Dollars).
Affiliated Company
Headquarters
Sockholders' Equity
Percentage of
Profit
Date
as of
Subscribed Capital
of the
of the
03.31.11
Fiscal Year
First Consolidation
KUSD
KUSD
in %
KUSD
ebVOKUS Software GmbH
Dresden
391
54
100,0
%
201
11.01.2005
GROUP Business Software (UK) Ltd.
Manchester
-1.030
29
100,0
%
-312
12.31.2005
GROUP Business Software Corp.
Milford
-1.651
1
100,0
%
-1.130
12.31.2005
GROUP LIVE N.V
.
Den Haag
-2.013
134
100,0
%
8
12.31.2005
GROUP Technologies GmbH
Karlsruhe
72
33
100,0
%
0
10.01.2005
Permessa Corporation
Waltham
-372
0
100,0
%
50
09.22.2010
Relavis Corporation
New York
-486
1
99,5
%
387
08.01.2007
GBS Enterprises Incorportated
Canton
12.489
22
reverse 50,1%
-524
01.06.2011
GROUP Business Software
(UK) Ltd. is an indirect 100% shareholding.
A domination and profit
transfer agreement is in place between GROUP Business Software AG as the dominating company and Group Technologies GmbH.
Effective March 1, 2010,
the Company disposed of its interest in GROUP Business Software Holding OY and the latter's subsidiary Gedys IntraWare GmbH.
On September 22, 2010,
GROUP Business Software AG acquired the initial 51% of the Permessa Corporation and the remaining shares
on
November 23, 2010.
Note
4          RELATED COMPANY
Due to the absence of
domination/control, B.E.R.S. AD, Varna, Bulgaria was treated an associated company in the consolidated financial statements. GROUP
Business Software AG's interest in B.E.R.S AD, with acquisition costs of 265,000.00 Euros, is 50%.
Associated Companies
Headquarters
Total Value
Debts
Sales Revenues
Annual Profit/Loss
Assets
3.31.11
KUSD
KUSD
KUSD
KUSD
B.E.R.S. AD
Varna
186
59
379
-118
F-
33
Note
5          CASH AND CASH EQUIVALENTS
As of the financial
statement date, the Company's cash and cash equivalents totaled 8,531 KUSD (previous year: 1,745 KUSD). Included in that
amount are cash equivalents of 20 KUSD (previous year: 42 KUSD). 250 KUSD are in accounts that are subject to federal deposit insurance
as of the financial statement date. (No insurance in previous year.)
Note
6          ACCOUNTS RECEIVABLE
Receivables are generally
measured at their nominal value and taking into account all foreseeable risks. Probable default risks are handled with specific
allowances for bad debts. With regard to the trade receivables which are neither impaired nor delinquent, there are no indications
as of the financial statement date that the debtors will not meet their payment obligations.
There were no expenses
incurred through derecognition of receivables in the 2011 and 2010 fiscal years.
The residual term of
the receivables is less than one year with the exception of deposits provided as security presented under other financial assets.
Note
7          PREPAID EXPENSES
Prepaid expenses in
the amount of 1,423 KUSD (previous year: 1,551 KUSD) represent a down payment toward a share of sales in a basic technology in
the amount of 1,201 KUSD (previous year: 1,213 KUSD). Due to technical delays, the term of this license has been extended until
June 30, 2014.
Note
8          ASSETS HELD FOR RESALE
In fiscal 2010, the
outgoing assets associated with the sale of the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding OY,
were recognized under this category in the amount of 12,373 KUSD. A breakdown of the assets included is disclosed below. The ultimate
disposal in fiscal 2011 was not shown as a discontinued operation as there continues to be operations in the segment to which
it was grouped.
KUSD
2010
Asset
Cash
1,185.6
Trade receivables
2,847.6
Other receivables
281.3
Equipment
66.2
Goodwill
7,292.6
Other intangible assets
699.3
12,372.6
F-
34
Note
9          OTHER RECEIVABLES - CURRENT
The largest individual
item under other receivables represents reinstatement of a receivable from previous management of a subsidiary company in the amount
of 1,902 KUSD (previous year: 0 KUSD). Also included herein are tax refund claims (44 KUSD; previous year: 229 KUSD), other loans
issued (0 KUSD; previous year: 59 KUSD) as well as security deposits (224 KUSD; previous year: 163 KUSD).
Note
10          PROPERTY PLANT AND EQUIPMENT
Fixed assets are measured
at cost less scheduled straight-line depreciation. The specific useful life was based on those used uniformly at the parent company.
Depreciation of the
computer hardware listed as office equipment is distributed over a period of three to five years. The depreciation period for other
office equipment is three to ten years. Office furnishings are depreciated over a period of eight to ten years.
KUSD 3.31.11
KUSD 3.31.10
Accumulated
Net Book
Accumulated
Net Book
Cost
Depreciation
Value
Cost
Depreciation
Value
Equipment
4,494
4,196
298
4,538
4,262
276
Note
11          LONG TERM FINANCIAL ASSETS
The major components
of the Financial Assets include the following:
KUSDS
KUSDS
2011
2010
Receivable from sale of GEDYS IntraWare GmbH
Balance outstanding, repayable in monthly instalments of $20,086, bearing interest at prime plus .25%, not be be greater than 2% per annum
984
-
Current portion, included in other current receivables
241
-
743
-
Other long term receivables
95
99
Balance, March 31
838
99
Note
12          INVESTMENT IN RELATED COMPANY
The investment, representing
50% of B.E.R.S. AD has been accounted for on the equity basis, with the Company's proportionate share of income being recorded
in the consolidated statement of operations with a corresponding adjustment to the asset carrying value. In fiscal 2011, the proportion
share of the loss was 59 KUSD and in 2010 it was 46 KUSD.
F-
35
Note
13          GOODWILL
Goodwill results from
business combinations and is tested annually for recoverability as part of an impairment test. Goodwill arises from the following
business acquisitions:
Affiliated Company
Date of the First
Consolidation
Goodwill
as of
3.31.11 in
KUSD
Goodwill
as of
3/.31.10 in
KUSD
global words AG
01.10.02
5.095,3
4.821,9
GROUP Technologies AG
01.09.05
4.479,7
4.239,4
GROUP Business Software Inc.
31.12.05
2.177,5
2.060,7
GROUP LIVE N.V.
31.12.05
1.324,2
1.253,2
Retained Goodwillof CRM
31.12.05
3.108,4
2.941,7
GROUP Business Software Ltd
31.12.05
2.765,1
2.616,7
ebVOKUS Software GmbH
01.10.05
443,6
419,8
GAP AG für GSM Applikationen und Produkte
31.12.05
1.913,9
1.811,2
Relavis Corporation
01.08.07
7.288,3
6.897,2
Permessa
22.09.10
2.387,4
0,0
GROUP Business Software AG
06.01.11
8.705,5
8.705,5
39.689,0
35.767,3
Note
14          SOFTWARE
Development costs
The costs of developing
new software products and updating products already marketed by GROUP Business Software AG are generally recognized as expenses
in the period in which they arise. Provided they meet the conditions for capitalization as per FASB ASC 985-20-25, they are capitalized.
Capitalized development costs can be attributed to the defined products. These products are technically realizable and there is
a target market for them.
The development costs
arising in the reporting period result from the personnel costs to be attributed to the development work as well as overhead costs,
provided that these are related to the development work and do not represent general administrative costs. The ascribable overhead
costs are directly recognized.
Capitalized development
costs are generally amortized over a period of three years starting with the date of marketability of the new products or major
releases.
Concessions, Industrial
Property Rights, Licenses
The intangible financial
assets carried in this item are licenses acquired in exchange for payment.
These financial assets
are measured at acquisition cost less scheduled straight-line amortization. The assets added in the scope of the cost price allocation
of the business divisions acquired this year.
The useful life spans
were based uniformly throughout the Corporation on those used by the parent company. Scheduled amortization is performed over a
period from three to ten years.
F-
36
The useful life of the
domain "gbs.com", acquired during the previous year, was estimated as unlimited. This is because no other legal, contractual
or other factors exist which would limit its useful life. It is not systematically amortized, but rather annually and also, whenever
there are signs pointing to impairment, it is tested for its recoverability and if necessary written down to the amount which could
be obtained for it if sold.
Amortization of concessions,
industrial property rights and similar rights and assets as well as licenses to such rights and assets is presented in the profit
and loss statement under "Depreciation and Amortization."
Note
15          OTHER ASSETS
Re-insurance claims
from life insurance (reinsurance of pension obligations) were recognized as actuarial reserves. Corresponding communications by
the insurance companies form the basis for the valuation. Earnings from interest on the financial assets were - according to the
cost of liabilities from pension obligations - presented in the pension plan costs.
Note
16          NOTES PAYABLE
This item concerns the
outside capital components of the convertible bond issue in the amount of 1,440 KUSD (previous year: 0 KUSD; long term 1,550 KUSD).
The outside capital component of the convertible bond is carried at amortized cost according the effective interest method in compliance
with the categorization pursuant to FASB ASC 815-15. The effective interest rate used as a basis as of the financial statement
date is 6.16% (previous year: 6,61%). The debt is convertible at the rate of $1.44 debt to one share. The calculated value of the
conversion feature was not material.
The term of the convertible
bonds ends on December 31, 2011. In January, 2012, only $1,286 USD was converted into shares. The balance was repaid in cash.
Note
17          LIABILITIES TO BANKS - CURRENT
Short term liabilities
to bank represent an operating line of credit, bearing interest at 3.8%, with a credit limit of 80 KUSD. Security is disclosed
with the long term portion of bank debt. See Note 22.
Note
18          ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables
As of the financial
statement date, trade accounts payable amounted to 2,043 KUSD (previous year: 1,403 KUSD). Trade payables are carried at their
repayment amount and all have a residual term of up to one year.
Tax accruals
As of the financial
statement date, provisions for taxation were created in the amount of 112 KUSD (previous year: 45 KUSD).
F-
37
Other accrual
Other provisions are
created in the amount necessary as of the financial statement date which is necessary, according to a reasonable commercial appraisal,
in order to cover future payment obligations, perceivable risks as well as uncertain liabilities of the Company. The amounts deemed
to be most likely in a careful assessment of the situation are accrued.
KUSD
Status
Currency
Status
04.01.10
Utilization
Dissolution
Increase
Differences
03.31.11
Salary
1.004
895
118
1.241
10
1.241
Vacation
245
247
0
224
2
224
Workers Compensation Insurance Association
20
20
0
15
0
15
Compensation Levy for Non-Employment of Severely Handicapped Persons
16
16
0
17
0
17
Outstanding Invoices
463
282
86
794
0
889
Annual Financial Statement Costs
232
199
11
182
1
205
Other Provisions
254
221
26
49
9
66
Warranties
133
90
0
82
0
125
Provision for Legal Costs
70
6
40
13
0
36
Reclassification Held for Sale
-352
-237
0
116
0
0
Total
2.083
1.739
282
2.734
21
2.817
Provisions for salaries
include the provisions created for the variable salaries of the sales staff for the sales objectives reached in this business year
as well as the contractually stipulated guaranteed bonuses for the members of the Board of Directors for the business year.
Vacation provisions
include the obligations of GROUP's companies to their employees from remaining vacation claims for the reporting period.
The amount of the provision is based on the gross salary of the individual employee plus the employer contribution to social security
and the unused vacation days as of the financial statement date.
For liabilities not
yet settled, a provision totaling 889 KUSD (previous year: 463 KUSD) was created.
Expenses for preparing
the annual financial statements and the consolidated financial statements, for the auditing of the Company and consolidated financial
statements were recognized at 205 KUSD (previous year: 232 KUSD.
For warranty claims,
a provision was created depending on income from services.
F-
38
Note
19          OTHER SHORT TERM LIABILITIES
Other short-term liabilities
are comprised of the following:
Other Short-Term Liabilities
3.31.11
3.31.10
KUSD
KUSD
Purchase Assets L911
745.9
505.1
Purchase Assets - Fastworks
119.2
-
Purchase Assets  - Permessa
757.9
-
Purchase Assets  - Salesplace
504.8
-
Tax Liabilities
603.9
635.4
Loans
-
72.4
Other Liabilities
88,3
770.0
2,820.0
1,982.9
Note
20          DEFERRED INCOME
Accruals for future
periods leading to realization of sales after the financial statement date are reported under deferred income. The deferred income
items listed as of the financial statement date in the amount of 6,208 KUSD (previous year: 5,920 KUSD) mainly include maintenance
income collected in advance for the period after the end of the fiscal year which primarily accumulated in the parent company.
They are amortized on a straight-line basis over the respective contract terms.
Note
21          LIABILITIES HELD FOR SALE
In fiscal 2010, the
outgoing liabilities associated with the sale of the two subsidiaries, Gedys IntraWare GmbH and GROUP Business Software Holding
OY, were recognized under this category in the amount of 2,013.7 KUSD. A breakdown of the liabilities included is disclosed below.
The ultimate disposal in fiscal 2011 was not shown as a discontinued operation as there continues to be operations in the segment
to which it was grouped.
KUSD
2010
Libility
Trade payables
1,178.6
Other liabilities
790.4
Deferred income
44.7
2,013.7
Note
22          LIABILITIES TO BANKS – LONG TERM
Liabilities to banks
represent bank facilities of GROUP AG with Baden-Württembergische Bank with a credit line totaling 4,017 KUSD and are collateralized
by a silent blanket agreement for GROUP AG's trade receivables. The term of the loan runs until June 30, 2014. The Company
has curtailed the risk of changing interest rates existing with regard to liabilities to banks due to variable interest rate agreements
by obtaining a fixed interest rate for half of its credit line. Accordingly, 2,008.5 KUSD is bearing interest at prime plus 1.5%
and 2,008.5 KUSD is fixed at 3.5%
F-
39
Note
23          OTHER LIABILITIES – LONG TERM
Other long-term liabilities
are made up of unsecured liabilities connected to the purchase of assets as follows:
Other Long-Term Liabilities
3.31.11
3.31.10
KUSD
KUSD
Purchase Assets L911
3.448,2
4.426,3
Purchase Assets Fastworks
506,2
Purchase Assets Permessa
1.162,3
Purchase Assets Salesplace
1.011,0
6.127,7
4.426,3
Expected payments over
the next 5 fiscal years stated in KUSD.
Purchase
Purchase
Purchase
Purchase
Assets
Assets
Assets
Asset L911
Fastworks
Permessa
Salesplace
Interset
4.50
%
5.50
%
0.00
%
0.00
%
Expiration date
Sep 30, 2013
April 15, 2013
June 30, 2013
Jan 15, 2013
2012
745.9
119.2
7 57.9
5 04.8
2013
33.5
133.9
1,004.3
669.6
2014
3,414.7
372.3
1 58.0
3 41.5
2015
-
-
-
-
2016
-
-
-
-
Thereafter
-
-
-
-
Total
4,194.1
625.4
1,920.2
1,515.8
Note
24          COMMON STOCK
Common stock belongs
to the legally purchasing company according to the principles of a Reverse Acquisition and therefore, the common stock as that
of GBS Enterprises Incorporated. The Company has authorized capital of 75,000,000 common shares and 25,000,000 preferred shares
each with a par value of $001. No preferred shares have been issued. As at March 31, 2011, there were 22,544,000 shares of common
stock issued. At the time of the Reverse Acquisition, there were 16,500,000 shares of common stock outstanding and, as the Reverse
Acquisition was accounted for as a recapitalization applied retroactively, this balance is recorded as the balance outstanding
since inception.
During the reporting
period from the date of the Reverse Acquisition to March 31, 2011, the Company completed a private placement offering whereby it
raised $7,555,000 gross proceeds through the sale of 6,044,000 units at $1.25 per unit. Each unit represented one share of common
stock and one warrant. The warrant allows the holder to purchase one share of common stock of the Company from the date of the
grant until the third anniversary of the date of the grant for a purchase price of $1.50 per share.
F-
40
Warrants and Options
The Company has issued
warrants to outside consultants in payments for services provided as detailed in the following schedule. The warrants are issued
as "cashless" warrants and all have a three-year term with the exception of the Ventana Capital Partners' warrant
which has a 30 month term. Each warrant is exercisable into one share of common stock. The warrants have been valued using a Black-Scholes
option pricing model with appropriate volatility, equity value and interest rate inputs. The valuation of the warrants is for disclosure
purposes only as the charge is related to the cost of issuing the shares and there is no impact to the financial statements. There
are no stock options issued by the Company to employees or other parties.
Valuation of Common
Stock Purchase Warrants
Summary of Warrants Issued
Stock Value at
Warrant
Outside Consultants
Grant Size
Strike Price
Val. Date
Warrant Date
Value
Ventana Capital Partners
2,000,000
$
4.00
10/1/2010
$
0.03
$
0.00
Frank J. Pena
117,880
$
1.50
3/14/2011
$
0.91
$
0.34
GarWood Securities, LLC
117,880
$
1.50
3/14/2011
$
0.91
$
0.34
Jackson E. Spears
421,520
$
1.50
3/14/2011
$
0.91
$
0.34
William Gregozeski
50,000
$
1.50
3/14/2011
$
0.91
$
0.34
Frank J. Pena
3,000
$
1.50
3/24/2011
$
0.91
$
0.34
GarWood Securities, LLC
2,400
$
1.50
3/24/2011
$
0.91
$
0.34
Jackson E. Spears
9,600
$
1.50
3/24/2011
$
0.91
$
0.34
Common
Valuation
Fair Value per
Warrants'
Common Stock Warrants Issued to Outside Consultants
Shares
Date
Warrant
    Share
Fair
                                                                                                                           Value
Common Stock Warrants Issued on October
    1, 2010
2,000,000
10/1/2010
$
0.00
$
0
Common Stock Warrants Issued on March 14, 2011
707,280
3/14/2011
$
0.34
$
240,475
Common Stock Warrants Granted on March 24, 2011
15,000
3/24/2011
$
0.34
$
5,100
Total
                                                               Warrants' Fair Value
$
245,575
F-
41
Note
25          SEGMENT REPORTING
The Company reports
segment information based on the "management' approach. Segment management is performed at the level of chief operating
decision maker. Operating segments are defined as components of an enterprise about which separate financial information is evaluated
regularly by the CODM in deciding how to allocate resources and assess performance. Because of this management structure, the Company
has only one reporting unit which is the same as an operating or reportable segment, which is no different in this case, as the
entity as a whole (entity or consolidated level). In summary, the Company presents its financial statements as a single reporting
unit because it directly reflects the way the entity manages its operations by the chief operating decision maker.
Gross revenue may be
broken down by the following products.
Sales Revenues
3.31.11
3.31.10
KUSD
KUSD
Licenses
4,981
6,272
Maintenance
9,616
12,114
Partner Contribution
21
138
Service
5,243
6,992
Third-Party Products
3,062
3,344
LND Third-Party Products
4,610
2,502
Others
173
223
27,707
31,585
Revenues by geographic
area for the year ended March 31, 2011 and 2010 are as follows:
3.31.11
3.31.10
KUSD
KUSD
US
7,768
2,426
Germany
19,213
28,251
United Kingdom
726
793
Other
-
115
27,707
31,585
Long-lived assets by
geographic area, which primarily include property plant and equipment as at March 31, 2011 and 2010 are as follows:
F-
42
2011
2010
KUSD
KUSD
US
71
15
Germany
224
261
United Kingdom
3
-
298
391
Note
26          OTHER INCOME
Other income of 2,394
KUSD (previous year: 454 KUSD) relate within 1,902 KUSD (previous year: 0 KUSD) from the reinstatement of a receivable from the
former managers of a subsidiary as disclosed in Note 9 – other current receivables.
Note
27          RELATED PARTY TRANSACTIONS AND BALANCES
Related parties basically
refer to the Board of Directors, Supervisory Board, stockholders and associated companies.
Business transactions
between the companies and its subsidiaries which are also considered to be related companies were eliminated through the consolidation
and are not reflected within these footnotes to the consolidated statements.
Remuneration of the
management occupying key positions in the Corporation subject to disclosure include the remuneration of the Board of Directors
and that of the Supervisory Board. With regard to their remuneration, please see Section VIII.
In addition, the following
transactions took place in the fiscal year:
F-
43
Company
Related
Transaction
Amount in
Comment
Party
KUSD
GROUP Business Software AG
Joerg Ott
Rental Agreement as Landlord and Owner of Hospitalstraße 6, 99817 Eisenach
58
Rental Expenses 2011
60
Rental Expenses 2010
18
Remaining term
GROUP Business Softwar AG
Board of Directors
Remuneration
891
Expense in 2011
971
Expense in 2010
GBS Enterprises Incorporated
Joerg Ott
Interest on demand note
2
Expense
in 2011
GBS Enterprises Incorporated
Lotus Holdings Ltd.
Interest on demand note
8
Expense in 2011
The following related
party balances existed as at March 31, 2011 (None in 2010)
KUSD
2011
Due to a director and shareholder, unsecured demand note payable, bearing interest at 5%
152
Due to to related company, bearing interest at 5% due October 31, 2011
- secured by 3,049,489 shares of GROUP AG
300
- secured by 2,000,000 shares of GROUP AG
200
- secured by 500,000 shares of GROUP AG
100
- secured by software
78
830
NOTE
28          PENSION PLAN OBLIGATIONS
The Company has a non-contributory
defined benefit pension plan ("Qualified Plans"). The Qualified Plans provide retirement benefits for certain employees
meeting certain age and service requirements. Benefits for the Qualified Plans are funded from assets held in the plans'
trusts.
Benefit Obligations and Funded Status
The
following table presents the status of GROUP AG's pension plan. The benefit obligation for pension plans represents the
projected benefit obligation. GROUP AG's benefit obligations and plan assets are measured each year as of March 31.
F-
44
Pension benefits in USD
2011
2010
Change in benefit obligation:
Benefit obligation at beginning of year
139,572
143,191
Service cost
-
-
Interest cost
7,676
7,874
Actuarial loss (gain)
6,714
(789
)
Curtailment (gain) loss
-
-
Plan amendments
-
-
Foreign exchange rate changes
-
-
Participant contributions
-
-
Benefits paid
-
-
Benefit obligation at end of year
153,962
150,276
Change in plan assets:
Fair value of plan assets at beginning of year
90,095
94,767
Actual return on plan assets
2,041
3,207
Employer contributions
-
-
Participant contributions
-
-
Benefits paid
-
-
Foreign exchange rate changes
-
-
Fair value of plan assets at end of year
93,035
97,973
Funded status at end of the year
(60,927
)
(52,303
)
Pension benefits in USD
2011
2010
Amounts recognized in the Balance Sheets
Non current asset
223,630
175900
Current liabilities
(153,962
)
(150,276
)
Net
69,668
25,624
Amounts recognized in other accumulated comprehensive earnings
Net actuarial loss (gain)
16,431
10,292
Prior service cost (credit
-
-
Net
16,431
10,292
The following table
presents the components of net periodic benefit cost and other comprehensive earnings for Group AG's pension plan.
Pension benefits in USD
2011
2010
Net periodic benefit cost:
Service cost
-
-
Interest cost
7,676
7,874
Recognition of net actuarial loss (gain)
6,714
-789
Recognition of prior service cost
-
-
14,390
7,085
Total net periodic benefit cost
Other comprehensive earnings:
Actuarial (gain) loss arising in current year
2,041
3,207
Prior service cost (credit) arising in current year
-
-
Recognition of net actuarial (loss) gain in net periodic benefit cost
-
-
Recognition of prior service cost, including curtailment,
in net periodic benefit cost
-
-
Total other comprehensive earnings (loss)
2,041
3,207
Total recognized
16,431
10,292
F-
45
Assumptions
The following table
presents the weighted average actuarial assumptions that were used to determine benefit obligations and net periodic benefit costs.
Pension Benefits
2011
2010
Assumption to determine benefit obligations:
Discount rate
5.7
%
6.0
%
Rate of compensation increase
N/A
N/A
Assumptions to determine net periodic benefit cost:
Discount rate
6.0
%
6.0
%
Expected return on plan assets
N/A
N/A
Rate of compensation increase
N/A
N/A
Discount rate
— Future pension obligations are discounted at the end of each year based on the rate at which obligations could be effectively
settled, considering the timing of estimated future cash flows related to the plans. This rate is based on high-quality bond yields,
after allowing for call and default risk. High quality corporate bond yield indices are considered when selecting the discount
rate.
Rate of compensation
increase
— The expected DBO for end of 2011/ 2012 is estimated to increase from $ 153,962 in 2010/ 2011 to $ 169,857.
The expected increase of the assets is estimated end of 2011/ 2012 by $ 4,143.
Expected return on plan assets
—
The expected rate of return on plan assets was determined by evaluating input from external consultants and economists as well
as long-term inflation assumptions. The Company expects the long-term asset allocation to approximate the targeted allocation.
Therefore, the expected long-term rate of return on plan assets is based on the target allocation of investment types in such assets.
See plan assets discussion below for more information on GROUP AG's target allocations.
Pension Plan Assets
GROUP AG's overall
investment objective for its pension plans' is to eliminate further risks. Therefore, all permitted benefits are reinsuranced.
In total, the benefits from the permitted pension correspond to the benefits of the reinsurances which have been signed for these
pension promises.
Note
29          DEFERRED INCOME TAXES
As a result of the change
in the majority ownership of GROUP Business Software in 2011 and based on the current legal situation, management has determined
it is more likely than not that the tax losses carried forward will be available as a deduction to determine taxable income. Therefore,
the deferred tax assets from the losses carried forward for GROUP Business Software AG in an amount of 3,691 KUSD was written off
this year and included in income tax expense.
F-
46
The following schedule
details the reconciliation of the Consolidated Earnings Before Taxes to the Income Tax Expense per the Consolidated Profit and
Loss Statement:
USD
USD
March 31
2011
2010
Statutory rate
23.0% - 34.0%
23.0% - 34.0%
Expected income taxes recovery at the statutory rate
(118,198
)
440,023
Effect of change in tax rate
(71,536
)
(47,458
)
Permanent differences
(347,871
)
(259,483
)
Temporary differences
208,005
(14,259
)
Price allocation from consolidation
172,795
(146,787
)
Change in deferred income tax asset
3,349,211
67,626
Valuation allowance
90,685
4,445
Income tax expense (recovery) recognized
3,283,091
44,106
Income tax expense (recovery) is comprised of:
Current
40,552
116,248
Future
3,242,539
(72,143
)
The following schedule
reflects a summary of the basic components of the Deferred Tax Liability as presented in the Company's Consolidated Balance
Sheet.
USD
USD
March 31
2011
2010
Intangible assets
64,277
121,121
Non-capital losses availiable for future periods
587,943
4,088,599
Price allocation from consolidation
(251,173
)
(102,376
)
401,047
4,107,344
Valuation allowance
(143,362
)
(52,677
)
257,685
4,054,667
The balances have been dislcosed as follows:
USD
USD
March 31
2011
2010
Short term asset
-
12,284
Long term assets
1,136,135
4,968,740
Long term liability
(878,450
)
(926,357
)
257,685
4,054,667
The Company also has
incurred losses for income tax purposes of approximately 1,996 KUSD which may be applied in future years to reduce taxable income.
The ability to apply this loss expires starting in 2015.
F-
47
Note
30           SUPPLEMENTAL CASH FLOW DISCLOSURES
2011
2010
USD
USD
Cash paid for
Interest paid
471,282
263,590
Taxes paid (recovered)
40,552
116,248
The significant non-cash
transactions for the year ended March 31, 2011 and 2010 were as follows:
a)
On October 9, 2009, the Company purchased L911 Assets for 4,753 KUSD. The Company paid 234 KUSD
upon signing and financed the remainder. The financed balance is disclosed in Notes 19 & 23, Other Liabilities.
b)
On May 10, 2010, the Company purchased Fastworks Assets for 1,305KUSD. The Company paid 502 KUSD
upon signing and financed the balance. The balance is disclosed in Notes 19 & 23, Other Liabilities.
c)
On September 17, 2010, the Company purchased Permessa Assets for 3,079 KUSD. The Company paid 535
KUSD upon signing and financed the balance. The balance is disclosed in Notes 19 & 23, Other Liabilities
d)
On September 22, 2010, the Company purchased Salesplace
Assets for 3,341 KUSD. The Company paid 1,332 KUSD upon signing and financed the balance. The balance is disclosed in Note 19
& 23, Other Liabilities.
F-
48
Note
31          COMMITMENTS
The Company has the
following commitments as at March 31, 2011:
Other Financial Obligations
1 Year
Over 1 year
Total
KUSD
KUSD
KUSD
Liabilities from Rental Agreements
350
350
700
Previous Year
636
673
1,309
Liabilities from Vehicle Lease Agreements
175
350
525
Previous Year
133
222
355
Liabilities from other Lease Agreements
54
44
98
Previous Year
49
72
121
Lease agreement - subsequent to year end
100
250
0
Current Year - 2011
678
993
1,672
Previous Year - 2010
818
967
1,785
Note
32          SUBSEQUENT EVENTS
Pavone AG
Effective April 1, 2011, the
Company entered into an agreement to acquire 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000
in cash and 1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing
the market value at the end of trading on the date of the agreement. The total value of the investment, including the assumption
of $11,261 in debt was $5,261,261.
Group Ware AG
Effective June 1, 2011,
the Company acquired 100% of the outstanding common shares of GroupWare, Inc., a State of Florida corporation. As
consideration the Company paid $250,000 and issued 250,000 shares of its common stock. The fair value of the common stock was
determined to be $4.34 per share, representing the market value at the end of trading on the date of the agreement. The total
value of the investment, including the assumption of $219,902 in debt was $1,554,902.
IDC Global, Inc.
On July 25, 2011, the Company
acquired 100% of the issued and outstanding shares of common stock of IDC Global, Inc. ("IDC"), a Delaware corporation
with offices in Chicago, New York, London and other key cities. Pursuant to the acquisition agreement of July 15, 2011, the Company
agreed to issue the shareholders an aggregate of 800,000 shares of common stock and make a cash payment of $750,000. The agreement
required an additional payment to the management shareholders of 80,000 shares of common stock and pay signing bonuses to personnel
of $35,000. The Company also agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction.
The total value of the investment, including $883,005 of debt assumption was $4,713,005.
F-
49
SD Holdings Ltd.
and Synaptris, Inc.
On September 27, 2011, the Company entered into
an acquisition agreement with SD Holdings Ltd. ("SYN"), a Mauritius corporation and the shareholders of SYN (the "Selling
Shareholders") owning 100% of issued and outstanding shares of SYN. Pursuant to the agreement, the Company purchased one
hundred percent (100%) of the issued and outstanding shares of SYN ("SYN Shares") effective November 1, 2011 in consideration
for (i) 700,000 shares of common stock of GBS and (ii) $525,529. The fair value of the common stock was determined to be $2.05
per share, representing the market value at the end of trading on the date of the agreement.
GROUP Business Software AG
On February 27, 2012, GROUP
increased its share capital with an investment in kind of 1,750,000 shares. The investment in kind related to a conversion of the
long-term loan given from Lotus Holdings Ltd. to GROUP in conclusion with the Lotus 911 purchase. As such, the shares issued by
GROUP increased to 26,982,000.
Simultaneously and effective
February 27, 2012, the Company increased its participation in GROUP by 883,765 shares to a total amount of 13,525,000 shares or
50.1%
Notes Payable
In January, 2012, $1,286
of the convertible notes payable were converted into shares. The balance was repaid in cash.
F-
50
Note
33	CORRECTION OF ERRORS ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Restatement of Balance
Sheet – March 31, 2010
As Previously
As
Issued
Restatement
Restated
$
$
$
Assets
Current Assets
Cash and cash equivalents
1,744,965
1,744,965
Accounts receivable
2,821,958
2,821,958
Inventories
114,172
114,172
Deferred tax assets
12,284
12,284
Prepaid expenses
1,550,634
1,550,634
Assets held for sale
332,812
12,039,788
12,372,600
Other receivables
12,372,600
(12,039,788
)
332,812
Total current assets
18,949,425
18,949,425
Non-current assets
54,692,431
54,692,431
Total assets
73,641,856
73,641,856
There were no other
adjustments to the liabilities and stockholders' equity as at March 31, 2010.
Restatement of Balance
Sheet – March 31, 2011
F-
51
As Previously
Issued
Corrections
As restated
$
$
$
Assets
Current Assets
Cash and cash equivalents
8,530,864
8,530,864
Accounts receivable
5,698,321
5,698,321
Prepaid expenses
1,423,281
1,423,281
Assets held for sale
-
Other receivables
1,981,887
(1)
241,000
2,222,887
Total current assets
17,634,353
17,875,353
Property, plant and equipment
298,497
-
298,497
Financial assets
1,369,454
(1)
(531,973
)
837,481
Investment in related company, at equity
(1)
290,973
290,973
Deferred tax assets
1,136,135
1,136,135
Goodwill
39,688,966
39,688,966
Software
16,514,894
16,514,894
Other assets
223,630
223,630
Total non-current assets
59,231,576
58,990,576
Total assets
76,865,929
76,865,929
Liabilities and shareholders' equity
Current liabilities
Notes payable
1,440,295
1,440,295
Liabilities to banks
50,324
(2)
(251
)
50,073
Accounts payables and accrued liabilities
4,972,833
(1)
23,915
4,996,748
Other liabilities
3,674,073
(1)
(854,071
)
2,820,002
Deferred income
6,208,458
6,208,458
Due to related parties
(1)
830,156
830,156
Total current liabilities
16,345,983
16,345,732
Long term liabilities
7,940,062
7,940,062
Total liabilities
24,286,045
24,285,794
Stockholders' equity
Common stock
22,544
22,544
Additional paid in capital
33,894,661
33,894,661
Retained earnings
(174,959
)(2)
(147,560
)
(322,519
)
Other comprehensive income
(13,639
)
(13,639
)
33,728,607
33,581,047
Noncontrolling interest in subsidiaries
18,851,277
(2)
147,811
18,999,088
Total equity
52,579,884
52,580,135
Total equity and liabilities
76,865,929
76,865,929
(1)
Re-allocation arising from previously unidentified related party balances.
(2)
Restatement required to correct over allocation of amounts allocated to noncontrolling interest
in subsidiaries. This re-allocation also required restatement of the Consolidated Statement of Operations, as noted below.
F-
52
Restatement of Consolidated
Statement of Operations – for the year ended March 31, 2011
As
Previously filed
Corrections
As Restated
$
$
Net income (loss)
(3,637,306
)
(3,637,306
)
Net income (loss) attributable to noncontrolling interest
(1,963,354
)
291,295
(1,672,059
)
Net income (loss) attibutable to stockolders
(1,817,687
)
(147,560
)
(1,965,247
)
Other comprehensive income (loss)
(144,159
)
(143,383
)
(287,542
)
Other comprehensive income (loss) attributable to noncontrolling interest
-
(143,484
)
(143,484
)
Other comprehensive income (loss attributable to stockholders
(144,159
)
(144,058
)
Comprehesive income (loss) attributed to stockholders
(1,961,746
)
(147,560
)
(2,109,306
)
Restatement of Cash
Flow Statements for the years ended March 31, 2011 and 2010
F-
53
GBS Enterprises
Incorporated
Consolidated statements
of cash flows
For the Years Ended
March 31, 2011
March 31, 2011
March 31, 2010
As
As
As
As
Previously filed
Restated
Previously filed
Restated
$
$
$
$
Cash flow from operating activties
Net income (loss) for the year
(3,637,306
)
(3,637,306
)
1,419,438
1,419,438
Adjustments
Deferred income taxes
3,239,283
3,796,982
(167,191
)
(167,191
)
Depreciation and amortization
4,036,047
4,035,732
2,894,795
2,894,795
Interest expense
-
(109,195
)
-
80,448
Loss on sale of assets
-
266,269
-
-
Loss from equity investment
-
85,599
31,078
31,078
Minority interest losses
(9,188
)
(143,736
)
-
-
Changes in operating assets and liabilities
Accounts receivable and other assets
(5,310,427
)
(4,529,889
)
1,893,241
2,812,836
Retirement benefit obligation
14,730
3,686
10,243
10,243
Inventories
-
114,172
(12,265
)
(12,265
)
Accounts payable and other liabilities
3,440,602
2,755,795
(2,084,566
)
(2,738,594
)
Net cash provided by operating activities
1,773,741
2,638,109
3,984,773
4,330,788
Cash flow from investing activties
Purchase of intangible assets
(3,865,982
)
(5,941,612
)
(4,560,821
)
(4,560,821
)
Purchase of property, plant and eq.
(161,037
)
(161,037
)
(479,398
)
(479,398
)
Purchase of subsidiaries
(251,751
)
-
(1,513,176
)
(1,513,176
)
Proceeds from sale of subsidaries
5,052,424
2,588,035
-
-
Increase in financial assets
-
321,515
-
-
Net cash used in investing activities
773,654
(3,193,099
)
(6,553,395
)
(6,553,395
)
Cash flow from financing activties
Net borrowings - banks
(2,221,567
)
(2,484,597
)
830,001
830,001
Other borrowings
80,234
2,460,438
(489,629
)
(692,093
)
Loans from related party
-
830,156
-
-
Capital paid-in
6,678,950
6,678,950
-
-
Net cash used in financing activities
4,537,617
7,484,947
340,372
137,908
Net increase in cash
7,085,012
6,929,957
(2,228,250
)
(2,084,699
)
Effect of translation on cash and cash equivalents
(299,113
)
(144,058
)
220,648
77,097
Cash and cash equivalents beginning of the year
1,744,965
1,744,965
3,752,567
3,752,567
Cash and cash equivalents end of the year
8,530,864
8,530,864
1,744,965
1,744,965
Restatements in both
years arise out of changes in cash flow analysis of subsidiaries.
F-
54
8,064,000 Shares
Common Stock
GBS ENTERPRISES INCORPORATED
PROSPECTUS
Until ninety days after the date this
registration statement is declared effective, all dealers that effect transactions in these securities whether or not participating
in this offering, may be required to deliver a Prospectus. This is in addition to the dealer's obligation to deliver a Prospectus
when acting as underwriters and with respect to their unsold allotments or subscriptions.
65
PART II – INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission Registration Fee
$
1,092
Printing Fees
2,500
*
Accounting fees
4,000
*
Legal fees and expenses
10,000
*
TOTAL
$
17,592
*
* estimated
All amounts are estimates other than the
Commission's registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will
be borne by the Selling Stockholders. The Selling Stockholders, however, will pay any other expenses incurred in selling their
Common Stock, including any brokerage commissions or costs of sale.
Item 14. Indemnification of Directors
and Officers
The statutes, charter provisions, by-laws, contracts or other
arrangements under which any of our controlling person, director or officer is or may be insured or indemnified against any liability
which he may incur in that capacity, are as follows:
(1)           Sections
78.037, 78.7502, 78.751, and 78.752 of the Nevada Revised Statutes offer limitation of liability protection for officers and directors,
indemnification protection of officers, directors, employees and agents of a Nevada corporation, and provide that Nevada corporations
may purchase insurance to protect directors, officers, employees and agents. They generally provide that:
(a)           a
Nevada corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful;
(b)           a
Nevada corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals there from, to be
liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper;
and
(c)           to
the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, the corporation shall
indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the
defense.
(2)           The
Company's articles of incorporation provides that to the fullest extent allowed by law, the directors and executive officers
of the Company shall be entitled to indemnification from the Company for acts or omissions taking place in connection with their
activities in such capacities.
(3)           The
Company's by-laws provides indemnification rights to the Company's officers, directors or controlling persons in a
manner similar to the Nevada statutes described above.
66
(4)           The
Company
has obtained Director and Officer insurance coverage in the amount of $5,000,000 per occurrence
that
insures our officers, directors or controlling persons against liabilities that may arise against them.
These indemnification provisions may be sufficiently broad to
permit indemnification of the registrant's executive officers and directors for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act of 1933.
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 SEC such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors,
executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending
or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.
Insofar as indemnification for liabilities under the Securities
Act may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, we have been
informed that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
Item 15. Recent Sales of Unregistered
Securities.
March 2011 Private Placement Offering
On March 11, 2011, GBS Enterprises Incorporated
(OTCBB: GBSX), a Nevada corporation (the "Company"), consummated a private placement offering (the "Private Placement")
involving the sale of an aggregate of 5,894,000 Units at a subscription price of $1.25 per Unit, for gross proceeds of $7,367,500.
On March 29, 2011, the Company consummated
the second and final closing of the Private Placement involving the sale of an additional 150,000 Units at a subscription price
of $1.25 per Unit, for gross proceeds of $187,500.
In total, the Company sold 6,044,000 Units
in the Private Placement for gross proceeds of $7,555,000
Each Unit sold in the Offering consisted
of one share of the Company's Common Stock and one warrant (the "Private Placement Warrant") to purchase one
share of Common Stock of the Company from the date of grant until the third anniversary date of the date of grant for a purchase
price of $1.50 per share.
The Company sold the Units and the securities
underlying the Units pursuant to the exemptions from the registration requirements of the Securities Act afforded the Company under
Section 4(2) and Rule 506 of Regulation D and Regulation S promulgated under the Securities Act due to the fact that offers and
sales of the Units were made only to U.S. "accredited investors," as that term is defined in Rule 501 of Regulation
D, and to non-U.S. residents, based on representations and warranties provided by the purchasers of the Units in their respective
subscription agreements entered into between each purchaser and the Company.
In total, the Company sold an aggregate
of 6,044,000 Units in the Private Placement, for gross proceeds of $7,555,000.
In addition, the Company issued to
the Placement Agent and certain consultants three-year warrants to purchase an aggregate of 460,000 shares of our Common Stock,
822,280 of which are exercisable at an exercise price of $1.50 per share and 2,000,000 are exercisable at $4.00 per share (collectively,
the "Consultant Warrants"). The issuance of the Consultant Warrants, and the issuance of shares of Common Stock upon
exercise thereof, have been determined to be exempt from registration under the Securities Act, in reliance on Section 4(2)
thereof and Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering,
in which the investors are accredited and have acquired the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
The table below
reflects the investors in the Private Placement who have exercised their Private Placement Warrants as of the date of this registration
statement. Each investor is an "accredited investor" as that term is defined under Rule 501(a) of Regulation D under
the Securities Act and each issuance was made by the Company in reliance upon the registration exemption provided by
Section
4(2) and Rule 506 of Regulation D and Regulation S promulgated under the Securities Act.
67
Date of Exercise
Shares Purchased
Gross Proceeds  ($1.50
per Share)
November 30, 2011
200,000
$
300,000
December 7, 2011
400,000
$
600,000
December 8, 2011
280,000
$
420,000
December 8, 2011
440,000
$
660,000
December 29, 2011
700,000
$
1,050,000
February 28, 2012
5,000
$
7,500
Total:
2,025,000
$
3,037,500.00
Pavone AG Acquisition
On April 1, 2011, the Company acquired 100% of the issued and
outstanding shares of capital stock of Pavone, AG, a German corporation ("Pavone"), from the stockholders of Pavone
in consideration for 1,000,000 shares of Common Stock of the Company and an aggregate of $350,000.
The Company issued the foregoing shares of the Company's
Common Stock pursuant to the exemption from the registration requirements of the Securities Act afforded the Company under Section
4(2) of Regulation D promulgated under the Securities Act due to the fact that the issuances were isolated and did not involve
a public offering of securities.
68
GroupWare AG Acquisition
On June 9, 2011, the Company acquired GroupWare AG, a Florida
corporation ("GroupWare") pursuant to an Acquisition Agreement, dated June 1, 2011 (the "GroupWare Agreement"),
by and among the Company, GroupWare and the holder of 100% of the issued and outstanding shares of common stock of GroupWare (the
"GroupWare Stockholder").
In consideration for one hundred percent (100%) of the outstanding
shares of GroupWare, the Company issued to the GroupWare Stockholder an aggregate of 250,000 shares of unregistered Common Stock
of the Company and paid the GroupWare Stockholder a sum of $250,000.
The Company issued the 250,000 shares of the Company's
Common Stock pursuant to the exemption from the registration requirements of the Securities Act afforded the Company under Section
4(2) promulgated under the Securities Act due to the fact that the issuances were isolated and did not involve a public offering
of securities.
IDC Global Inc. Acquisition
On July 25, 2011, the Company issued 880,000
shares of common stock as a partial payment for 100% of the issued and outstanding shares of IDC Global, Inc.  The fair
value of the shares issued was determined to be $3,080,000. The Company relied on the registration exemption provided under Section
4(2) of the Securities Act due to the fact that it was an isolated issuance and did not involve a public offering of securities.
SD Holdings Ltd. Acquisition
On September 27, 2011, the Company
entered into an acquisition agreement with SD Holdings Ltd. ("SYN"), a Mauritius corporation and the shareholders of
SYN (the "Selling Shareholders") owning 100% of issued and outstanding shares of SYN.
SYN owns 100% of all issued
and outstanding shares of Synaptris, Inc. a California corporation ("Synaptris"), and 100% of all issued and outstanding
shares of Synaptris Decisions Private Limited, an India company.
Pursuant to the acquisition agreement,
the Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN ("SYN Shares") effective
November 1, 2011 in consideration for (i) $525,529 and (ii) agreed to issue 700,000 shares of Common Stock, subject to adjustment.
The fair value of the common stock was determined to be $2.05 per share, representing the market value at the end of trading on
the date of the agreement.
On December 16, 2011, the issued an aggregate
of 554,168 shares of Common Stock of the Company to the Selling Shareholders pursuant to the acquisition agreement. On March 29,
2012, the Company issued an aggregate of 28,706 shares of Common Stock of the Company to the Selling Shareholders pursuant to the
acquisition agreement. The Company issued a total of 612,874 shares of Common Stock pursuant to the exemption from the registration
requirement of the Securities Act provided under Section 4(2) under the Securities Act due to the fact that the share issuances
were isolated, not advertised and did not involve a public offering of securities.
Investor Warrants
In March 2012, the Company issued
an aggregate of 2,020,000 warrants (collectively, the "Investor Warrants") to five "accredited investors"
(as that term is defined under Rule 501(a) of Regulation D under the Securities Act), one of whom is a member of the Company's
Board of Directors and all of whom are investors in the Private Placement, in consideration for $10.00 from investor. Each Investor
Warrant is exercisable at $0.50 per share of Common Stock from the date of issuance until the third anniversary date of the date
of issuance. The terms of the Investor Warrants are identical to the terms of the Private Placement Warrants.
The Company
sold the Investor Warrants pursuant to the exemptions from the registration requirements of the Securities Act afforded the Company
under Section 4(2) and promulgated under the Securities Act due to the fact that sales of the Warrants were made only to U.S. "accredited
investors," as that term is defined in Rule 501 of Regulation D under the Securities Act, and did not involve a public offering
of securities.
Item 16.  Exhibits and Financial
Statement Schedules
Exhibit No.
Description:
3.1
Articles of Incorporation [Filed as an Exhibit to the Company's Form SB-2 filed with the Commission on January 14, 2008 and incorporated by reference herein.]
69
3.1.1
Certificate of Amendment to Articles of Incorporation, effective September 6, 2010 [Filed as an Exhibit to Amendment No. 2 to the Company's Form 10-K for the fiscal year ended March 31, 2011 filed with the Commission on November 7, 2011 and incorporated by reference herein.]
3.1.2
Certificate of Amendment to Articles of Incorporation, effective November 22, 2010 [Filed as an Exhibit to Amendment No. 2 to the Company's Form 10-K for the fiscal year ended March 31, 2011 filed with the Commission on November 7, 2011 and incorporated by reference herein.]
3.2
Bylaws [Filed as an Exhibit to the Company's Form SB-2 filed with the Commission on January 14, 2008 and incorporated by reference herein]
4.1*
Form of Private Placement Warrant
4.2
Form of Investor Warrant [Filed as an Exhibit to the Company's Form 8-K filed with the Commission on March 30, 2012 and incorporated by reference herein]
5.1*
Legal Opinion of The Sourlis Law Firm
10.1
Subsidiary Stock Purchase Agreement, dated September 21, 2009, between SWAV Enterprises Ltd. and Pui Shan Lam [Filed as an Exhibit to the Company's Form 8-K filed with the Commission on September 21, 2009 and incorporated by reference herein.]
10.2
Asset Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Lotus Holdings Limited [Filed as an Exhibit to the Company's Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]
10.3
Non-Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott [Filed an Exhibit to the Company's Form Company's Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]
10.4
Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott [Filed an Exhibit to the Company's Form Company's Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]
10.5
Subsidiary Stock Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Pui Shan Lam [[Filed an Exhibit to the Company's Form Company's Form 8-K filed with the Commission on April 26, 2010 and incorporated by reference herein.]
10.6
Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and LVM Landwirtschaftlicher Versicherungsverein AG [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.7
Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and MPire Capital City [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.8
Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Stone Mountain Ltd. [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.9
Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and Tuomo Tilman [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.10
Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and vbv Vitamin B Venture GmbH [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.11
Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Jyrki Salminen [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.12
Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and Delta Consult LP [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
70
10.13
Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and GAVF LLC [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.14
Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and K Group [Filed as an Exhibit to the Company's Form 10-Q/A Amendment No. 2 for the quarter ended December 31, 2010 filed with the Commission on May 20, 2011 and incorporated by reference herein.]
10.15
Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd. [Filed as an Exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on October 4, 2011 and incorporated by reference herein].
10.16*
Amendment, dated October 31, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.
10.17*
Amendment, dated November 30, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.
10.18*
Amendment, dated December 16, 2011, to that certain Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.
10.19
Acquisition Agreement, dated June 1, 2011, by and among GBS Enterprises Incorporated, GroupWare AG and the Selling Stockholder of GroupWare AG [Filed as an Exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on June 27, 2011 and incorporated by reference herein]
10.20
Acquisition Agreement, dated July 15, 2011, by and among GBS Enterprises Incorporated, IDC Global, Inc., the IDC Shareholders' Representative and Management Shareholders' Representative Filed as an Exhibit to the Company's Form 8-K [Filed with the Securities and Exchange Commission on July 28, 2011 and incorporated by reference herein]
10.21**
Consultant Services Agreement, dated February 24, 2012, between GBS Enterprises Incorporated and Green Minds Venture GmbH [Filed with the Securities and Exchange Commission on February 28, 2012 and incorporated by reference herein].
10.22**
Offer Letter, dated January 26, 2012, between the Company and David M. Darsch, as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]
10.23**
Offer Letter, dated January 26, 2012, between the Company and John A. Moore, Jr., as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]
10.24**
Offer Letter, dated January 26, 2012, between the Company and
Mohammad Shihadah, as amended
[Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]
10.25**
Offer Letter, dated February 24, 2012, between the Company and
Stephen D. Baksa, as amended
[Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]
10.26**
Offer Letter, dated January 26, 2012, between the Company and Woody A. Allen, as amended [Filed with the Securities and Exchange Commission on March 6, 2012 and incorporated by reference herein]
23.1*
Consent of the Independent Public Auditor
23.2*
Consent of The Sourlis Law Firm (Included in Exhibit 5.1 and incorporated by reference herein)
24.1*
Power of Attorney (included on the signature page of this Registration Statement)
*Filed herewith.
**
Management Contracts
and Compensatory Plans, Contracts or Arrangements.
Item 17. Undertakings.
Undertaking Required by Item 512 of Regulation
S-K.
(a) The undersigned registrant hereby undertakes:
(1) To file, during
any period in which it offers or sells securities, a post-effective amendment to this registration statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
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(ii) to
reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) to
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2) That, for the
purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(b) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such date of first use.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, the registrant has 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Woodstock, State of Georgia, on April 9, 2012.
GBS ENTERPRISES INCORPORATED
By:
/s/ Joerg Ott
Name:  Joerg Ott
Title:    Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Each person whose signature appears below appoints Joerg Ott
and Markus R. Ernst, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him her and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement
(including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature:
Title:
Date:
/s/ Joerg Ott
President, Chief Executive Officer and Director
April 6, 2012
Joerg Ott
(Principal Executive Officer)
/s/ Markus R. Ernst
Chief Financial Officer
April 9, 2012
Markus R. Ernst
(Principal Financial and Accounting Officer)
/s/ Gary MacDonald
Executive Vice President and Chief Development
April 9, 2012
Gary MacDonald
Officer, and Director
/s/ David M. Darsch
Director
April 9, 2012
David M. Darsch
/s/ John A. Moore, Jr.
Director
April 9, 2012
John A. Moore, Jr.
/s/ Mohammad Shihadah
Director
April 9, 2012
Mohammad Shihadah
/s/ Stephen D. Baksa
Director
April 9, 2012
Stephen D. Baksa
/s/ Woody A. Allen
Director
April 9, 2012
Woody A. Allen
73