10-K/A 1 v372746_10ka.htm FORM 10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2011

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-53223

GBS ENTERPRISES INCORPORATED

(Exact name of registrant as specified in its charter)

Nevada		27-3755055
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

585 Molly Lane

Woodstock, GA 30189

(Address of principal executive offices)

(404) 891-1711

Issuer’s telephone number

With a copy to:

Philip Magri, Esq.

The Magri Law Firm, PLLC

2642 NE 9^thAvenue

Fort Lauderdale, Florida 33334

T: (646) 502-5900

F: (646) 826-9200

pmagri@magrilaw.com

www.MagriLaw.com

Securities registered under Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
None		N/A

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No x

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

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. At June 30, 2012, the aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately $10,040,666, based on $0.40 (the closing sales price of the Company’s common stock on June 29, 2012).

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of March 31, 2014 , there were 31,904,291 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

		Page

	PART I	3
Item 1	Business	3
Item 1A	Risk Factors	11
Item 1B	Unresolved Staff Comments	23
Item 2	Properties	23
Item 3	Legal Proceedings	24

	PART II	24
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6	Selected Financial Data	25
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A	Quantitative and Qualitative Disclosure about Market Risk	37
Item 8	Financial Statements and Supplementary Data	37
Item 9	Change In and Disagreements with Accountants on Accounting and Financial Disclosure	37
Item 9A	Controls and Procedures	38
Item 9B	Other Information	40

	PART III	40
Item 10	Directors, Executive Officers and Corporate Governance	40
Item 11	Executive Compensation	45
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13	Certain Relationships and Related Transactions, and Director Independence	48
Item 14	Principal Accounting Fees and Services	48

	PART IV	49
Item 15	Exhibits, Financial Statement Schedules	49
Signatures		52

EXPLANATORY NOTE

As previously reported by the Company on a Form 8-K filed with the Commission on September 20, 2012, on September 19, 2012, the Company changed its fiscal year end from March 31st to December 31^st, commencing on December 31, 2012. Prior to this change, the Company’s subsidiaries, with the exception of SD Holdings, Ltd. had December 31^st fiscal year ends and in reporting the Company’s financial statements, the Company, incorrectly applied of Rule 3A-02 (“the 93-day rule”) promulgated under Regulation S-X by consolidating those subsidiaries without any adjustments for timing differences in the different period ends. With the change in Company’s fiscal year end, the Company is retroactively adjusting previously released financial statements to reflect this change, beginning with December 31, 2010. Accordingly, the financial statements for the fiscal year ends December 31, 2011 and 2012 have been restated to include the accounts of all consolidated companies for the same twelve month period. The restatement of the Company’s financial statements is not a change from one accounting policy that applies with GAAP to another accounting policy that complies with GAAP.

Forward Looking Statements

This Annual Report on Form 10-K contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” should,”” expect,” “plan,” “anticipate,” “believe”, “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” included herein that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. 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. The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to this annual report.

Unless otherwise noted, all references in this Annual Report on Form 10-K to “GBS Enterprises,” “GBS,” “GBSX,” the “Company,” “we,” “us,” “our” and similar terms and expressions shall mean GBS Enterprises Incorporated, a Nevada corporation, and its subsidiaries, including, but not limited to, GROUP Business Software AG.

PART I

Item 1. Business

Overview

GBS Enterprises Incorporated, a Nevada corporation (the “Company,” “GBS,” “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 software and consulting business is focused on serving IBM’s Lotus Notes and Domino market. GROUP caters primarily to mid-market and enterprise-size organizations with 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. Headquartered in Eisenach, Germany, GROUP has offices throughout Europe and North America. The Company maintains a website at www.gbsx.us. GROUP maintains a website at www.gbs.com. The information contained in the Company’s and GROUP’s websites is not incorporated by reference herein.

The Company’s Common Stock is quoted on the OTC Bulletin Board under the ticker symbol “GBSX.”

To that end, in 2011, we acquired and developed technologies that help organizations reduce the time, cost, resources and risks associated with these highly complex migration and modernization projects.

In 2012, in order to reduce overhead and administrative costs, we decided to restructure the Company’s multilevel subsidiary-structure. During the year ended December 31, 2012, we restructured several subsidiaries. Also, in 2012, we made changes in our management structure, appointed five independent members to our Board of Directors and formed Board committees, including an Audit Committee.

Products & Services

Historically, GBS has consolidated the fragmented Lotus Software market through the acquisition of companies with complementary product, technology or services offerings. Key success factors for this strategy are: enhanced portfolio, positioning the Company as the ‘one-stop-shop’ for Lotus applications and services, expanded customer support, fast code migration, and cloud enablement/XPages conversion of acquired applications.

Going forward, the Company may focus on potential acquisition targets in the following areas of software and services: Applications and Application Modernizations, 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.

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 a 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

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.

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 Software Integrators (SI) and channel partners, are able to rely on the company’s strategic and tactical advisory services for evaluating, planning, staffing and execution of any customer project. GBS Consulting Services’ global teams of consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client projects on time and with reduced risk.

We believe that our focus on recruiting and retaining top Lotus expertise positions our team to offer leading-edge Lotus Notes / Domino subject matter knowledge to our customers. 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 (Connect), 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.

Market Trends

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 Modernizing/Migrating technology.

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 modernized, web enabled (also named “cloud” or “cloud computing”) and migrated Lotus applications; and thus ultimately take the Lotus applications from legacy to the future. The foundation of the Modernizing/Migrating 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 Modernizing/Migrating was developed by GBS with assistance and guidance from IBM Corporation’s Software Group to ensure alignment with future releases of the IBM Lotus / Domino and XPages technology.

Revenue Model

GBS generates its revenue from the sale of internally created software, third-party developed software and the delivery of related services, including IT systems planning, administration, support, hosting, implementation and integration.

Our Customers

GBS, through its subsidiaries, caters primarily to mid-market and enterprise-size organizations, and has 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. The Company is a large supplier of applications for IBM’s Lotus Notes and Domino markets, and is heavily dependent on IBM for its revenue.

Key Strategic Acquisitions in 2011

During the fiscal year ended December 31, 2011, the Company made the following key strategic acquisitions:

Pavone AG

GroupWare, Inc.

IDC Global, Inc.

SD Holdings, Ltd.

Pavone AG. On April 1, 2011, we acquired 100% of the outstanding common stock of Pavone AG, a German corporation (“Pavone”), for $350,000 in cash and 1,000,000 shares of GBS common stock. The fair value of the GBS common stock was determined to be $4.90 per share, representing the market value at the end of trading on the date of the acquisition. The total value of the investment, including the assumption of $583,991 in debt, was $5,833,991. Pavone’s extensive workflow software for Lotus Notes and Domino along with their large customer base is believed to be well suited for GBS Enterprises’ portfolio strategy. We believe our acquisition of Pavone complements our majority ownership in GROUP, and that the acquisition further strengthens our industry position in the market of IBM Lotus Platforms. At December 31, 2012, Pavone had over 2,500 customers and over 150,000 users worldwide.

GroupWare, Inc. On June 1, 2011, we acquired 100% of the outstanding common stock of GroupWare, Inc., a Florida corporation (“GroupWare”), for $250,000 and 250,000 shares of GBS common stock. The fair value of the GBS common stock was determined to be $4.34 per share, representing the market value at the end of trading on the date of the acquisition. The total value of the investment, including the assumption of $694,617 in debt was $2,029,617. GroupWare's ePDF server delivers centralized, network-wide PDF solutions for messaging, workflow, document, content and data management. We believe that the acquisition strengthens our migration and modernization offerings 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, our 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.

IDC Global, Inc. On July 25, 2011, we acquired 100% of the outstanding common stock of IDC Global, Inc., a Delaware corporation (“IDC”), for 880,000 shares of GBS common stock and $775,000. The fair value of the GBS common stock was determined to be $3.70 per share, representing the market value at the end of trading on the date of the agreement. The total value of the investment, including $35,000 of debt assumption, was $4,066,000. IDC services include 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 Global includes two Data Center facilities located in the downtown Chicago area and Colocation facilities in three other Data Centers in New York, London, England and Frankfurt, Germany. IDC provides internet infrastructure Services (IaaS) to the business community helping customers make the transition from large, static and expensive on-premise computing to dynamic, flexible and cost-effective off-premise computing.

SD Holdings, Ltd. On November 1, 2011, we acquired 100% of the outstanding common stock of SD Holdings Ltd., a Mauritius corporation (“SYN”), for $525,529 and 612,874 shares of GBS common stock. The fair value of the GBS 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. SYN owns 100% of Synaptris, Inc., a California corporation (“Synaptris”), and Synaptris Decisions Private Limited, an India company.

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 employed 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

With the integration of the Synaptris product portfolio, we added another tier of Lotus Notes applications including reporting products, advanced dashboards, and email productivity solutions. Additionally, the Synaptris acquisition included a comprehensive search engine specialized for use with email that is faster and easier to use than other products in the market.

In addition to product synergy and additional revenue streams, we expect to derive operational synergy from this acquisition. Synaptris’ presence in India is anticipated to accelerate our plan to expand our product development team particularly for our strategic offerings in India.

Subsidiaries

At December 31, 2011, our direct and indirect subsidiaries consisted of the following entities:

					Date
					of the
		Ownership			First
		Percentage			Consolidation
	Headquarters	(%)			(MM/DD/YY)

ebVOKUS Software GmbH	Dresden		50.1	%*	01/11/2005
GROUP Business Software (UK) Ltd.	Manchester		50.1	%*	12/31/2005
GROUP Business Software Corp.	Woodstock		50.1	%*	12/31/2005

GROUP LIVE N.V.	Den Haag		50.1	%*	12/31/2005

GROUP Technologies GmbH	Karlsruhe		50.1	%*	01/10/2005
Permessa Corporation	Waltham		50.1	%*	09/22/2010
Relavis Corporation	New York		50.1	%*	01/08/2007
GROUP Business Software AG	Eisenach		50.1	%	01/06/2011
Pavone AG	Paderborn		100	%	01/04/2011
Pavone GmbH	Boeblingen		100	%	01/04/2011
Pavone Ltd.	North Yorkshire		100	%	01/04/2011
Groupware Inc.	Woodstock		100	%	01/06/2011
Groupware AG	Luebeck		100	%	01/06/2011
IDC Global, Inc.(1)	Chicago		100	%	07/25/2011
SD Holdings	Mauritius		100	%	09/27/2011
Synaptris Private Decisions Ltd.	Chennai		100	%	09/27/2011
Synaptris, Inc.	San Jose		100	%	09/27/2011

* Indirectly held through our 50.1% ownership of GROUP Business Software AG

Intellectual Property

We do not own any patents or trademarks.

We own the internet domain name, www.gbsx.us. GROUP owns www.gbs.com. The information contained in the Company’s and GROUP’s websites is not incorporated by reference herein.

We generally control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners, and our software is protected by U.S. and international copyright laws. Despite our efforts to protect our trade secrets and proprietary rights through intellectual property rights, licenses, and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and technology. In addition, the laws of some foreign countries in which we sell products do not protect our proprietary rights as fully as do the laws of the United States. There can be no assurance that our means of protecting our proprietary rights in the United States or abroad will be adequate or that competition will not independently develop similar technology.

We are also dependent on third-party suppliers for certain software which is embedded in some of our products. Although we believe that the functionality provided by software which is licensed from third parties is obtainable from multiple sources, or could be developed by us if any such third-party licenses were terminated, or not renewed, or if these third parties fail to develop new products in a timely manner, we could be required to develop an alternative approach to the use of such third party functionality, which could require payment of additional fees to third parties or internal development costs and delays that might not be successful in providing the same level of functionality. Such delays, increased costs, or reduced functionality could adversely affect our business, operating results, and financial condition.

Research and Development

We focus our research and development efforts on developing new products and needed technologies in our strategic areas and markets and to further enhance functionality, reliability, performance and flexibility of existing products. In 2010 and 2011, development teams around the globe, namely in the U.S., Canada, Germany, the United Kingdom, Denmark and India, have been working on the next generation offering, We incurred research and development expenses of approximately $5.0 million 2011.

Government Regulation

As the internet continues to evolve, increasing regulation by federal, state or foreign agencies and industry groups becomes more likely. For example, we believe increased regulation is likely with respect to the solicitation, collection, processing or use of personal, financial and consumer information as regulatory authorities around the world are considering a number of legislative and regulatory proposals concerning data protection, privacy and data security. In addition, the interpretation and application of consumer and data protection laws and industry standards in the United States, Europe and elsewhere are often uncertain and in flux. The application of existing laws to cloud-based solutions is particularly uncertain and cloud-based solutions may be subject to further regulation, the impact of which cannot be fully understood at this time. Moreover, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data and privacy practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our data and privacy practices, which could have an adverse effect on our business and results of operations. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business. Also, any new regulation, or interpretation of existing regulation, imposing greater fees or taxes on Web-based services, such as collaboration and data sharing services and audio services, or restricting information exchange over the Web, could result in a decline in the use and adversely affect sales of our Collaboration and Data products and our results of operations.

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 modern software technologies and application services to address the needs of Independent Software Vendors (ISV), data center and businesses of commercial and government organizations.

Growth Strategy

Based on current market demands for modern, Cloud-based and mobile-device capable business applications, we have acquired and developed a set of unique technologies that help organizations reduce the time, cost, resources and risks associated with modernizing or migrating their existing applications.

We generate revenue from subscription and usage fees and related services, including support and strategic consulting services. The subscription period is typically based on a yearly or multi-year contract with our customers. Another sector of our strategic portfolio is a suite of tools and methodologies we have developed to rapidly convert Lotus Notes applications into web and modern mobile applications. This portfolio includes a set of powerful analysis tools known as Insights that identify all of the Lotus Notes applications within an organization and provide metrics about the uses and users of those applications. Because of the nature of Lotus Notes and Domino, the applications within a customer environment tend to be highly distributed and number in the thousands. For many organizations, this fact alone makes it extremely difficult to plan for projects that involve modernizing these applications for use in a browser and on mobile devices or migrating them to another platform. Our technologies help them to dramatically reduce the cost, risk, time and resources associated with these highly complex projects.

We also believe there is significant revenue opportunity in licensing these tools to a network of global partners who also have existing presence and expertise in the Lotus Notes and Domino market. We have established partner agreements for the use of the analysis and conversion tools with partners in several countries and directly with IBM.

Dependence on IBM

Given our focus on the IBM Lotus® Notes and Domino market, significant portions of our revenue are dependent upon our customers’ willingness to make future investments in these platforms. We expect much of our growth to come from our strategic offerings, which are also highly dependent upon the health of the IBM Lotus brand and the cooperation of IBM to promote, sell and/or use the technologies encompassed in our strategic offerings. Should IBM choose not to: promote the Lotus brand; make further investments in the Notes and Domino platform technology itself; or, support the positioning of our products in the market, we might not see the growth we are anticipating and our business could be materially adversely affected.

Employees

At December 31, 2011, the Company had the following three executive officers: Joerg Ott (Chief Executive Officer), Gary D. MacDonald (Managing Director of Worldwide Operations, Executive VP and Chief Development Officer) and Ron J. Everett (Chief Financial Officer).

At December 31, 2011, we had 316 full-time employees and four part-time employees. The disclosure below pertains to the activities of all subsidiaries, including GROUP, our 50.1% subsidiary:

The breakdown into the individual departments can be taken from the following overview:

Department	At December 31, 2011		At December 31, 2010
Management and Administration		34		24
Marketing		19		5
Research & Development		106		49
Sales		60		32
Service		91		48
Trainee		6		3
TOTAL		316		161

We believe our relations with employees are good. In certain countries outside the United States, our relations with employees are governed by labor regulations that provide for specific terms of employment between our Company and our employees.

Seasonality

Although our business is not inherently seasonal in nature, historically, our revenue in the last quarter of the calendar year is higher than in each other of the remaining three quarters outside of any consolidation effects. We believe this is particularly due to the general spending behavior driven by most of our customer base.

General Corporate History

We were incorporated in Nevada on March 20, 2007 as SWAV Enterprises Ltd. (“SWAV”). SWAV had a different management team and was in a different industry.

On April 26, 2010, SWAV purchased certain technology assets of Lotus Holdings Ltd. (“Lotus”) in consideration for an aggregate of 2,265,240 shares of SWAV common stock. Also on April 26, 2010, Lotus (on behalf of the SPPEF Members as discussed below) purchased an aggregate of 11,984,770 shares of SWAV common stock from certain SWAV stockholders for $370,000. As a result of these transactions, Lotus acquired a total of 14,250,010 shares of SWAV common stock which represented approximately 95.0% of the 15,000,000 outstanding shares of SWAV common stock on April 26, 2010.

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.

About Lotus Holdings, Ltd.

Lotus is a holding company which was formed under the laws of Gibraltar for the purpose of financing merger and acquisition projects, specifically in the niche market of small or microcap companies listed on the Frankfurt Stock Exchange with complex shareholder structures and whose stock is trading below one Euro (€1.00) per share.

SPPEFs

Lotus typically finances its merger and acquisition projects through the use of Special Purpose Private Equity Funds (“SPPEFs”). Typically, SPPEFs are funded by a company’s major shareholders (the “Major Shareholders”) seeking to raise capital for projects and who fund at least 50% of the SPPEF, with the remaining portion being provided through the investment community and network of investors in Lotus. Each SPPEF is co-managed by a representative of the Major Shareholders (the “Representative Secretary”) and an attorney appointed by Lotus (the “Lotus Representative”).

On February 25, 2010, a group of shareholders (the “GROUP Major Shareholders”) of GROUP Software AG, a German public company trading on the Frankfurt Stock Exchange under the symbol “INW” (“GROUP”), engaged Lotus to provide financial consulting and advisory services, on a non-exclusive basis, for the primary task of establishing a SPPEF. On March 12, 2010, the GROUP Major Shareholders and Lotus established and funded a SPPEF with $1,400,000, consisting of $1,000,000 from the GROUP Major Shareholders and $400,000 from a Lotus investor (collectively, the “SPPEF Members”).

In early April 2010, the SPPEF Members decided to acquire SWAV. As disclosed above, on April 26, 2010, Lotus, on behalf of the SPPEF Members, acquired an aggregate of 11,984,770 shares of SWAV common stock from the selling shareholders of SWAV for an aggregate purchase price of $370,000. The 11,984,770 shares of SWAV common stock shares represented approximately 79.9% of the 15,000,000 outstanding shares of SWAV common stock on April 26, 2010.

Transactions following the April 26, 2010 Transaction

On November 1, 2010, the Company repurchased an aggregate of 3,043,985 of the 11,984,770 shares of the Company’s common stock originally purchased by Lotus on April 26, 2010. In consideration for these 3,043,985 shares, the Company issued to Lotus a Secured Demand Note, dated November 1, 2010 (the “First Demand Note”), for the principal amount of $300,000, bearing interest at the rate of 5% per annum. The First Demand Note was repaid in September 2011.

Effective December 30, 2010, pursuant to securities purchase agreements between the Company and six GROUP Major Shareholders, the Company purchased an aggregate of 7,115,500 shares of GROUP common stock from the six GROUP Major Shareholders in consideration for the 3,043,985 shares of GBS common stock (the “December 2010 Transaction”). As a result, the Company owned approximately 28.2% of the outstanding common stock of GROUP.

Reverse Merger

After the December 2010 Transaction was completed, the additional GROUP Major Shareholders decided to accept the share swap offer from the Company and to effectuate a reverse merger of GROUP and the Company. To effectuate the reverse merger, on January 5, 2011, the Company repurchased from Lotus an aggregate of 2,361,426 of the 11,984,770 shares of the Company’s common stock originally purchased by Lotus on April 26, 2010. In consideration for these 2,361,426 shares, the Company issued to Lotus a Secured Demand Note, dated January 5, 2011 (the “Second Demand Note”), for the principal amount of $200,000, bearing interest at the rate of 5% per annum. The Second Demand Note was repaid in November 2011.

Effective January 6, 2011, pursuant to securities purchase agreements between the Company and the remaining GROUP Major Shareholders, the Company purchased an aggregate of 5,525,735 shares of GROUP common stock from the remaining GROUP Major Shareholders in consideration for the 2,361,426 shares of GBS common stock (the “January 2011 Transaction”). These 5,525,735 GROUP shares represented approximately 21.9% of the outstanding shares of common stock of GROUP. As a result of the December 2010 Transaction and January 2011 Transaction, the Company had acquired an aggregate of 12,641,235 shares of GROUP common stock from the GROUP Major Shareholders in consideration for an aggregate of 5,405,411 shares of GBS common stock, resulting in GBS owning approximately 50.1% of the outstanding GROUP common stock and effectuating a reverse merger of the Company and GROUP whereby GROUP became the accounting acquirer.

Additional GROUP Acquisition

On February 27, 2012, the Company acquired an additional 883,765 shares of common stock of GROUP from GAVF LLC for an average purchase price of $0.07 per share, or approximately $619,000, after 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. By acquiring the new shares, 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.

Executive Offices

Our principal executive office is located at 585 Molly Lane, Woodstock, Georgia 30189 and our telephone number is (404) 891-1711. GROUP’s executive offices are located at Hospitalstrasse 6, 99817 Eisenach, Germany. We maintain a website at www.gbsx.us. GROUP maintains a website at www.gbs.com. The information contained in the Company’s and GROUP’s websites is not incorporated by reference herein.

Item 1A. Risk Factors

Our operating results and financial condition have varied in the past and could in the future vary significantly depending on a number of factors. From time to time, information provided by us or statements made by our employees contain “forward-looking” information that involves risks and uncertainties. In particular, statements contained in this Annual Report, and in the documents incorporated by reference into this Annual Report, that are not historical facts, constitute forward-looking statements and are made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are neither promises nor guarantees. Our actual results of operations and financial condition could vary materially from those stated in any forward-looking statements. The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K, in the documents incorporated by reference into this Annual Report on Form 10-K or presented elsewhere by our management from time to time. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We caution readers not to place undue reliance on any forward-looking statements, which only speak as of the date made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

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.

Our current operational strategy is dependent on IBM.

We, through our 50.1% ownership of GROUP Business Software AG, are a large supplier of applications for IBM’s Lotus Notes and Domino markets. We expect much of our growth in the near term to come from our migration and modernization solutions. Should IBM choose to no longer promote its Lotus Notes products, our anticipated growth avenues may be adversely affected. We would likely seek to shift our operations and have to concentrate more heavily on migration and modernization solutions.

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. 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 our current and prospective customers engage in restructuring and other efforts to cut costs they may significantly reduce their information technology expenditures. Fluctuations in the demand for our products and services could have a material adverse effect on our business, results of operations and financial condition.

Our failure to develop new products and services, integrate acquired products and services or enhance our existing products and services, could adversely affect our business, results of operations and financial condition.

The markets for our products and services are characterized by rapid technological changes, evolving industry standards, fluctuations in customer demand, changes in customer requirements and new product and services introductions and enhancements. Our future success depends on our ability to continually enhance our current products and services, integrate acquired products and services, and develop and introduce new products and services that our customers choose to buy. If we fail to keep pace with technological developments, expectations of the emerging markets and customer demands by introducing new products and services and enhancements, our business, results of operations and financial condition could be adversely affected. In addition, 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.

In order to be successful, we must attract, engage, retain and integrate key employees, and failure to do so could have an adverse effect on our ability to manage our business.

Our success depends, in large part, on our ability to attract, engage, retain, and integrate qualified executives and other key employees throughout all areas of our business. Identifying, developing internally or hiring externally, training and retaining highly-skilled managerial, technical, sales and services, finance and marketing personnel are critical to our future, and competition for experienced employees can be intense. In order to attract and retain executives and other key employees in a competitive marketplace, we must provide a competitive compensation package, including cash- and equity-based compensation. If we do not obtain the stockholder approval needed to granting equity compensation in a competitive manner, our ability to attract, retain, and motivate executives and key employees could be weakened. Failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. Further, changes in our management team may be disruptive to our business, and any failure to successfully integrate key new hires or promoted employees could adversely affect our business and results of operations.

Adverse changes in general global economic conditions could adversely affect our operating results.

As a globally operated company, we are subject to the risks arising from adverse changes in global economic and market conditions. The worldwide economy underwent unprecedented turmoil in the past four years and continues to experience stock market volatility, difficulties in the financial services sector, financial instability related to the sovereign debt situation in Europe, reduced corporate profits and capital spending, and economic uncertainties. Although some of these conditions appear to be abating, there are a number of mixed indicators, the severity and length of time these economic and market conditions may persist is unknown, and the rate and pace of recovery in individual economies is also uncertain. The continuing uncertainty about future global economic conditions could negatively impact our current and prospective customers and result in delays or reductions in technology purchases. As a result, we could experience fewer orders, longer sales cycles, slower adoption of new technologies and increased price competition, any of which could materially and adversely affect our business, results of operations and financial condition. Adverse economic conditions also may negatively impact our ability to obtain payment for outstanding debts owed to us by our customers or other parties with whom we do business.

We face intense competition, which could result in customer loss, fewer customer orders and reduced revenues and margins.

We sell our products and services 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. Existing or new products and services that provide alternatives to our products and services could materially impact our ability to compete in these markets. As the markets for our products and services, especially those products in early stages of development, continue to develop, additional companies, including companies with significant market presence in the computer hardware, software, cloud, mobile and related 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.

Industry consolidation may result in increased competition.

Some of our competitors have made acquisitions or entered into partnerships or other strategic relationships to offer a more comprehensive solution than they had previously offered. Additionally, as IT companies attempt to strengthen or maintain their market positions in the evolving desktop and application virtualization, collaboration and data sharing, mobility, cloud networking and cloud platform markets, these companies continue to seek to deliver comprehensive IT solutions to end users and combine enterprise-level hardware and software solutions that may compete with our virtualization, mobility and collaboration and data sharing solutions. These consolidators or potential consolidators may have significantly greater financial, technical and other resources than we do and may be better positioned to acquire and offer complementary products and services. The companies resulting from these possible combinations may create more compelling product and service offerings and be able to offer greater pricing flexibility or sales and marketing support for such offerings than we can. These heightened competitive pressures could result in a loss of customers or a reduction in our revenues or revenue growth rates, all of which could adversely affect our business, results of operations and financial condition.

Actual or perceived security vulnerabilities in our products and services or cyber-attacks on our networks could have a material adverse impact on our business and results of operations.

Use of our products and services may involve the transmission and/or storage of data, including in certain instances customers' business and personally identifiable information. Thus, maintaining the security of products, computers, computer networks and data storage resources is a critical issue for us and our customers, as security breaches could result in product or service vulnerabilities and loss of and/or unauthorized access to confidential information. 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. Experienced hackers, cybercriminals and perpetrators of advanced persistent threats may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions, product or service vulnerabilities or cause shutdowns. These perpetrators of cyber-attacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our products and services, our networks or otherwise exploit any security vulnerabilities of our products, services and networks. However, because techniques used to obtain unauthorized access to or sabotage systems change frequently and generally are not recognized until long after being launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. A breach of our security measures as a result of third-party action, malware, employee error, malfeasance or otherwise could result in:

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harm to our reputation or brand, which could lead some customers to seek to cancel subscriptions, stop using certain of our products or services, reduce or delay future purchases of our products or services, or use competing products or services;

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individual and/or class action lawsuits, which could result in financial judgments against us and which would cause us to incur legal fees and costs;

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state or federal enforcement action, which could result in fines and/or penalties and which would cause us to incur legal fees and costs; and/or

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additional costs associated with responding to cyber-attacks, such as the costs of providing individuals and/or data owners with notice of the breach, legal fees, the costs of any additional fraud detection activities required by credit card associations, and costs incurred by credit card issuers associated with the compromise and additional monitoring of systems for further fraudulent activity.

Any of these actions could materially adversely impact our business and results of operations.

Regulation of the Web and telecommunications, privacy and data security may adversely affect sales of our products and result in increased compliance costs.

Our products could contain errors that could delay the release of new products or that may not be detected until after our products are shipped.

Despite significant testing by us and by current and potential customers, our products, especially new products or releases or acquired products, could contain errors. In some cases, these errors may not be discovered until after commercial shipments have been made. Errors in our products could delay the development or release of new products and could adversely affect market acceptance of our products. Additionally, our products depend on third-party products, which could contain defects and could reduce the performance of our products or render them useless. Because our products are often used in mission-critical applications, errors in our products or the products of third parties upon which our products rely could give rise to warranty or other claims by our customers, which may have a material adverse effect on our business, financial condition and results of operations.

We may experience outages, data loss and service disruptions of our products, which could significantly and adversely affect our financial condition and operating results.

Maintaining and expanding the capacity and geographic footprint of our infrastructure is expensive and complex. Inefficiencies or operational failures, including temporary service outages and temporary or permanent loss of customer data, could diminish the perceived quality and reliability of our services, and result in liability claims by customers and other third parties, damage to our reputation and loss of current and potential customers, any of which could materially and adversely affect our financial condition and results of operations.

Our success depends on our ability to attract and retain and further access large enterprise customers.

We must retain and continue to expand our ability to reach and access large enterprise customers by adding effective value-added distributors, or VADs, system integrators, or SIs and expanding our direct sales teams and consulting services. Our inability to attract and retain large enterprise customers could have a material adverse effect on our business, results of operations and financial condition. Large enterprise customers usually request special pricing and purchase of multiple years of subscription and maintenance up-front and generally have longer sales cycles, which could negatively impact our revenues. By allowing these customers to purchase multiple years of subscription or maintenance up-front and by granting special pricing, such as bundled pricing or discounts, to these large customers, we may have to defer recognition of some or all of the revenue from such sales. This deferral could reduce our revenues and operating profits for a given reporting period. Additionally, as we attempt to attract and penetrate large enterprise customers, we may need to invest in resources to coordinate among channel partners and internal sales, engineering and consulting resources and increase corporate branding and marketing activities, which could increase our operating expenses. These efforts may not proportionally increase our operating revenues and could reduce our profits.

Changes to our licensing or subscription renewal programs, or bundling of our products, 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 SaaS 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 we expand our international footprint, we could become 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 maintain and expand international sales, we may need to establish additional foreign operations, hire additional personnel and recruit additional international resellers. In addition, there is significant competition for entry into high growth markets where we may seek to expand, such as India. Our international operations are subject to a variety of risks, which could cause fluctuations in the results of our international operations. These risks include:

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compliance with foreign regulatory and market requirements;

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variability of foreign economic, political and labor conditions;

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changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by U.S. export laws;

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longer accounts receivable payment cycles;

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potentially adverse tax consequences;

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difficulties in protecting intellectual property;

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burdens of complying with a wide variety of foreign laws; and

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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 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 results of operations.

Our business could be harmed if we do not effectively manage our direct sales force alone and in combination with our distribution channels.

We utilize a direct sales force, as well as a network of distribution channels, to sell our products and services. We may experience difficulty in hiring, retaining and motivating our direct sales force team, and sales representatives will require substantial amounts of training, including regular updates to cover new and upgraded products and services, particularly in connection with our acquisitions. Moreover, our hires and sales personnel added through our acquisition activity may not become as productive as we would like, as in most cases it takes a significant period of time before they achieve full productivity.

Successfully managing the interaction of our direct sales force and channel partners to reach various potential customers for our products and services is a complex process. If we are unsuccessful in balancing the growth and expansion of our various sales channels, growth in one area might harm our relationships or efforts in another channel. In addition, each sales channel has distinct risks and costs, and therefore, our failure to implement the most advantageous balance in the sales model for our products and services could materially and adversely affect our revenue and profitability.

If we fail to effectively manage our growth, our future operating results could be adversely affected.

Historically, the scope of our operations, the number of our employees and the geographic area of our operations have grown rapidly. In addition, we have acquired both domestic and international companies. This growth and the assimilation of acquired operations and their employees could continue to place a significant strain on our managerial, operational and financial resources as our future acquisition activities accelerate our business expansion. We need to continue to implement and improve additional management and financial systems and controls. We may not be able to manage the current scope of our operations or future growth effectively and still exploit market opportunities for our products and services in a timely and cost-effective way and we may not meet our scalability expectations. Our future operating results could be adversely affected if we are unable to manage our expanding product lines, our marketing and sales organizations and our client support organization to the extent required for any increase in installations of our products.

If we do not generate sufficient cash flow from operations in the future, we may not be able to fund our product development efforts and acquisitions or fulfill our future obligations.

Our ability to generate sufficient cash flow from operations to fund our operations and product development efforts, including the payment of cash consideration in acquisitions and the payment of our other obligations, depends on a range of economic, competitive and business factors, many of which are outside of our control. We cannot assure you that our business will generate sufficient cash flow from operations, or that we will be able to liquidate our investments, repatriate cash and investments held in our overseas subsidiaries, sell assets or raise equity or debt financings when needed or desirable. An inability to fund our operations or fulfill outstanding obligations could have a material adverse effect on our business, financial condition and results of operations. For further information, please refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.”

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. In recent years, we have addressed and 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 acquisitions or future acquisitions will be successful in helping us reach our financial and strategic goals. The risks we commonly encounter in undertaking, managing and integrating acquisitions are:

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an uncertain revenue and earnings stream from the acquired company, which could dilute our earnings;

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difficulties and delays integrating the personnel, operations, technologies, products and systems of the acquired companies;

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our ongoing business may be disrupted and our management's attention may be diverted by acquisition, transition or integration activities;

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the need to implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition had lacked such controls, procedures and policies;

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difficulties managing or integrating an acquired company's technologies or lines of business;

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potential difficulties in completing projects associated with purchased in-process research and development;

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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;

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the potential loss of key employees of the acquired company;

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potential difficulties integrating the acquired products and services into our sales channel;

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assuming pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business;

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being subject to unfavorable revenue recognition or other accounting treatment as a result of an acquired company's practices; and

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intellectual property claims or disputes.

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. In addition, 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.

Natural disasters or other unanticipated catastrophes that result in a disruption of our operations could negatively impact our results of operations.

Our worldwide operations are dependent on our network infrastructure, internal technology systems and website. We have operations in various domestic and international locations that expose us to additional diverse risks. The occurrence of natural disasters, such as hurricanes, floods or earthquakes, or other unanticipated catastrophes, such as telecommunications failures, cyber-attacks, fires or terrorist attacks, at any of the locations in which we or our key partners, suppliers and customers do business, could cause interruptions in our operations. In addition, even in the absence of direct damage to our operations, large disasters, terrorist attacks or other casualty events could have a significant impact on our partners', suppliers' and customers' businesses, which in turn could result in a negative impact on our results of operations. Extensive or multiple disruptions in our operations, or our partners', suppliers' or customers' businesses, due to natural disasters or other unanticipated catastrophes could have a material adverse effect on our results of operations.

Changes or modifications in financial accounting standards may have a material adverse impact on our reported results of operations or financial condition.

From time to time, the Financial Accounting Standards Board, or FASB, either alone or jointly with the International Accounting Standards Board, or IASB, promulgates new accounting principles that could have a material adverse impact on our reported results of operations or financial condition. For example, FASB is currently working together with the IASB to converge certain accounting principles and facilitate more comparable financial reporting between companies who are required to follow Generally Accepted Accounting Principles, or GAAP, and those who are required to follow International Financial Reporting Standards, or IFRS. These efforts may result in different accounting principles under GAAP, which may have a material impact on the way in which we report financial results in areas including, among others, revenue recognition, and financial statement presentation. We expect the SEC to make a determination in the future regarding the incorporation of IFRS into the financial reporting system for U.S. companies. A change in accounting principles from GAAP to IFRS would be costly to implement and may have a material impact on our financial statements and may retroactively adversely affect previously reported transactions.

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 ensure 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 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.

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.

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 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 segments 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.

Perceived risks in Cloud Computing could negatively influence buyers.

As the Cloud market develops, adoption could be adversely affected due to concerns with data security and the reliability of third party IT infrastructures and software. Although security and reliability risks can be minimized or mitigated, the mere perception of these risks could hinder our ability to grow our 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 we have might be insufficient.

Experienced computer programmers seeking to intrude or cause harm, or hackers, may attempt to penetrate our network security from time to time.

We have not experienced any security breaches to date. However, 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.

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 are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and operating results.

Our sales revenue is derived from customers worldwide, and is therefore subject to foreign currency risk. Unstable currency exchange rates that result in dramatic fluctuations against the U.S. Dollar could adversely affect our financial condition and operating results. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and operating results could be adversely affected.

Liquidity is essential to our businesses and we rely on the planned success of our strategic product lines.

The liquidity of the Company is tight and that the valuation and validity of the intangible fixed assets and of the financial fixed assets are depending on the success of the strategic product lines especially but not limited to the area of Applications Modernization. Due to limited business history especially but not limited to Applications Modernization our business plan contains multiple risks and uncertainties. To achieve the planned success is material to us.

Our working capital requirements may negatively affect our liquidity and capital resources.

Our working capital requirements can vary significantly, depending in part on the level, variability and timing of our customers decisions especially but not limited to applications modernization projects and the payment terms with our customers. If our working capital needs exceed our cash flows from operations, we would look to our cash balances and availability for borrowings or other adequate financial resources to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all.

This could have a material adverse effect on our business, results of operations and financial condition up to a critical level.

We are dependent on major customers for future revenue. The loss of all or a substantial portion of our sales to any of these customers or the loss of market share by these customers could have a material adverse impact on us.

We highly depend for a substantial portion of our net sales especially but not limited to applications modernization projects. The loss of all or a substantial portion of our sales to any of our major customers could have a material adverse effect on our financial condition and results of operations by reducing cash flows and our ability to spread costs over a larger revenue base. We may make fewer sales to these customers for a variety of reasons, including but not limited to: (1) loss of awarded business; (2) reduced or delayed customer requirements; (3) strikes or other work stoppages affecting production by the customers; or (4) reduced demand for our customers’ products.

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.

In preparing our consolidated financial statements, our management determined that our disclosure controls and procedures and internal controls were ineffective as of December 31, 2011 and if they continue to be ineffective could result in material misstatements in our financial statements.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. As of December 31, 2011, our management has determined that our disclosure controls and procedures and internal controls were ineffective due to weaknesses in our financial closing process.

We intend to implement remedial measures designed to address the ineffectiveness of our disclosure controls and procedures and internal controls. If these remedial measures are insufficient to address the ineffectiveness of our disclosure controls and procedures and internal controls, or if material weaknesses or significant deficiencies in our internal control are discovered or occur in the future and the ineffectiveness of our disclosure controls and procedures and internal controls continues, we may fail to meet our future reporting obligations on a timely basis, our consolidated financial statements may contain material misstatements, we could be required to restate our prior period financial results, our operating results may be harmed, we may be subject to class action litigation, and our common stock could be removed from the OTCBB. Any failure to address the ineffectiveness of our disclosure controls and procedures could also continue to adversely affect the results of the periodic management evaluations regarding the effectiveness of our internal control over financial reporting and our disclosure controls and procedures that are required to be included in our annual report on Form 10-K. Internal control deficiencies and ineffective disclosure controls and procedures could also cause investors to lose confidence in our reported financial information. We can give no assurance that the measures we plan to take in the future will remediate the ineffectiveness of our disclosure controls and procedures or that any material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or adequate disclosure controls and procedures or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

If we continue to fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.

If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover additional material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be discovered in the future.

Our Common Stock price could continue to be volatile and you could lose the value of your investment.

Our stock price has been volatile and has fluctuated significantly in the past. The market price of our common stock could continue to 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.

Your investment in our stock could lose some or all of its value.

Item 1B. Unresolved Staff Comments

Disclosure by the Company is not required under Form 10-K due to the fact that the Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act.

Item 2. Properties

The Company maintains its executive offices in a 10,000 square foot office space located at 585 Molly Lane, Woodstock, Georgia 30189 pursuant to a lease agreement, dated June 16, 2011, between GROUP and a non-affiliated third party landlord. The term of the lease is from August 1, 2011 to January 31, 2015. Rent from August 1, 2011 to August 31, 2011 was $8,333, From September 1, 2011 to December 31, 2011, the rent was $4,167 per month. From January 1, 2012 to July 21, 2012, the rent is $8,333 per month. From August 1, 2012 to July 31, 2013, the rent is $8,750 per month. From August 1, 2013 to January 31, 2015, the rent is $9,166.67 per month. The Company believes its current office space is satisfactory for its current operations.

GROUP maintains its executive offices in a 5,828 square foot office space located at Hospitalstrasse 6, 99817 Eisenach, Germany. GROUP’s lease agreement for this office is from July 1, 2006 to June 30, 2013 for an annual rent of $46,589 and which can be renewed by GROUP.

Item 3. 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.

PART II

Item 5. Market for 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”). On September 16, 2010, SWAV 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 (OTCBB) was changed from SWAV to GBSX. The Company’s common stock is currently quoted on the OTC Markets’ OTCQB under the symbol GBSX.

The following table sets forth the reported high and low bid quotations for our common stock as reported by www.otcmarkets.com for each full quarterly period within the two most recent fiscal years. 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 3^rd - 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	$	5.00	$	1.75
April 1^st – June 30^th	$	4.90	$	1.91
July 1^st – September 30^th	$	4.00	$	1.90
October 1^st – December 31^st	$	2.55	$	1.50

Description of Common Stock

We are authorized to issue 75,000,000 shares, par value $0.001 per share, of common stock, of which 27,306,664 shares were issued and outstanding as of December 31, 2011. 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 we will pay dividends in the foreseeable future.

All shares of common stock now outstanding are duly authorized, 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 December 31, 2011, there are no shares of Preferred Stock designated or issued.

Transfer Agent

Action Stock Transfer Corporation

2469 E. Fort Union Blvd., Suite 214

Salt Lake City, UT 84121

Telephone: (801) 274-1088

Fax: (801) 274-1099

Email: justblank2000@yahoo.com

Website: www.actionstocktransfer.com

Holders

As of December 31, 2011, we had 83 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 the 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.

Issuer Purchases of Equity Securities

None

Item 6. Selected Financial Data.

Not applicable

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements that are included elsewhere in this Annual Report on Form 10-K. 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 annual report. 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 annual report. 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 annual report, 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,” “GBS,” “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 software and consulting business is focused on serving IBM’s Lotus Notes and Domino market. GROUP caters primarily to mid-market and enterprise-size organizations with 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. Headquartered in Eisenach, Germany, the Company has offices throughout Europe and North America. The Company maintains a website at www.gbsx.us. GROUP maintains a website at www.gbs.com. The information contained in the Company’s and GROUP’s websites is not incorporated by reference herein.

The Company’s Common Stock is quoted on the OTC Bulletin Board under the ticker symbol “GBSX.”

Products and Services

Messaging and Business Applications Software & Solutions

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

We believe that our focus on recruiting and retaining top Lotus expertise positions our team to offer leading-edge Lotus Notes/Domino subject matter knowledge to our customers. 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 (Connect), 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.

Market Trends

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 modernized, web enabled (also named “cloud” or “cloud computing”) and migrated Lotus applications; and thus ultimately take the Lotus applications from legacy to the future. The foundation of the Modernizing/Migrating 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 Modernizing/Migrating was developed by GBS with assistance and guidance from IBM Corporation’s Software Group to ensure alignment with future releases of the IBM Lotus/Domino and XPages technology.

Revenue Model

Strategy and Focus Areas

We generate revenue with our analysis tools by charging a fee for the use of our technology and for the associated cost of the services to produce a report and set of recommendations for the customer. Additional revenues come from consulting services that result from helping our customers to implement those recommendations. For use of our conversion tools, referred to as Modernizing/Migrating, we charge a flat fee for the conversion and additional hourly rates to perform additional supporting development or testing as needed. We also believe there is significant revenue opportunity in licensing these tools to a network of global partners who also have existing presence and expertise in the Lotus Notes and Domino market. We have established partner agreements for the use of the analysis and conversion tools with partners in several countries and directly with IBM.

Change in Financial Condition

Fiscal Year Ended December 31, 2011 Compared to the Fiscal Year Ended December 31, 2010

Assets

Total Assets increased from $60,502,276 at December 31, 2010 to $68,703,394 at December 31, 2011. Total Assets consists of Total Current Assets and Total Non-Current Assets.

Total Current Assets

At December 31, 2011, our Total Current Assets were $9,982,991 compared to $10,988,106 at December 31, 2010. Total Current Assets consist of: Cash and Cash Equivalents; Accounts Receivable; Inventories; Prepaid Expenses, Other Receivables and Assets held for Sale.

Cash and Cash Equivalents increased from $1,872,068 at December 31, 2010, to $3,142,308 at December 31, 2011 as a result of our financing and investing activities during the reporting period.

Accounts Receivable decreased from $5,712,157 at December 31, 2010, to $4,850,507 at December 31, 2011, due to increased collections during the reporting period.

Inventories increased from $Nil at December 31, 2010, to $236,712 at December 31, 2011 from the purchase of Pavone AG, and related work in progress and products immediately available for purchase within this business entity.

Prepaid Expenses decreased from $1,420,662 at December 31, 2010, to $389,772 at December 31, 2011 due to the reclassification of prepaid license payments to a vendor into Intangible Assets.

Other Receivables decreased from $1,983,219 at December 31, 2010, to $680,693 at December 31, 2011 due to the reclassification of Other Current Receivables to Assets Held for Sale.

Assets Held for Sale were increased from $Nil at December 31, 2010, to $682,999 at December 31, 2011 due to the approval of the sale of GROUP Technologies GmbH.

Total Non-Current Assets

At December 31, 2011, our Total Non-Current Assets were $58,720,403, compared to $49,514,170 at December 31, 2010. Total Non-Current Assets consist of: Property (plant and equipment), Other Receivables (non-current), Investments in Related Company, Deferred Tax Assets, Goodwill, Software, Other Assets, and Assets held for sale.

Property (plant and equipment) increased from $297,011 at December 31, 2010, to $521,976 at December 31, 2011 due primarily to the acquisition of IDC Global, Inc. and their heavy concentration of fixed assets.

Other Receivables (non-current) decreased from $1,370,374 at December 31, 2010, to $548,909 at December 31, 2011 and consists of amounts due from the purchaser of GEDYS IntraWare GmbH.

Investments in Related Company increased from $Nil at December 31, 2010, to $244,219 at December 31, 2011 and consists of the value of the 50% interest in the associated company B.E.R.S. AD.

Deferred Tax Assets increased from $257,859 at December 31, 2010, to $2,451,800 at December 31, 2011 and consisted of Deferred Tax Assets derived from Financial Assets and Losses carried forward.

Goodwill increased from $31,004,262 at December 31, 2010, to $39,221,603 at December 31, 2011 and consisted of the goodwill associated with nine business entities and increased due to the purchase of IDC Global, Inc., Pavone AG, Groupware, Inc., and SD Holdings Ltd.

Software decreased from $16,360,884 at December 31, 2010, to $14,249,905 at December 31, 2011 and consists of capitalized development costs, product rights and licenses. The decrease is a result of the quarterly re-calculation of capitalized development costs, product rights and license for our expert business software, legacy business software and strategic business software all in the developmental or improvement stage.

Other Assets decreased from $223,780 at December 31, 2010, to $93,268 at December 31, 2011. This includes reinsurance claims, tax credits, and other deposits.

Assets held for Sale were increased from $Nil at December 31, 2010, to $1,388,723 at December 31, 2011 due to the approval of the sale of GROUP Technologies GmbH.

Liabilities

Total Liabilities increased from $22,396,941 at December 31, 2010, to $24,946,246 at December 31, 2011. Total Liabilities consists of Total Current Liabilities and Total Non-Current Liabilities.

Total Current Liabilities

At December 31, 2011 our Total Current Liabilities were $19,058,394, compared to $15,330,583 at December 31, 2010. Total Current Liabilities consist of: Notes Payable, Liabilities to Banks, Accounts Payable and Accrued Liabilities, Deferred Income, Other Liabilities, Amounts Due to Related Parties and Liabilities held for sale.

Notes Payable decreased from $1,441,263 at December 31, 2010, to $1,381,821 at December 31, 2011 and consisted of the exercise of capital components of a convertible bond issue.

Liabilities to Banks decreased from $50,358 at December 31, 2010, to $19,595 at December 31, 2011 on payments of a line of credit held by a subsidiary.

Accounts Payable and Accrued Liabilities increased from $4,804,434 at December 31, 2010, to $6,078,711 at December 31, 2011. This includes Trade payables, Tax Accruals and Other Accruals and increased primarily due to the aforementioned acquisitions made during the reporting period.

Deferred Income increased from $6,212,630 at December 31, 2010, to $6,341,575 at December 31, 2011 and consists mainly of maintenance income collected in advance of the contractual maintenance period.

Other Liabilities increased from $2,821,898 at December 31, 2010, to $4,252,240 at December 31, 2011 and comprised of obligations and payments currently due for the purchase of assets from Lotus 911, Permessa and Salesplace.

Amounts Due to Related Parties increased from $Nil at December 31, 2010 to $432,421 at December 31, 2011.

Liabilities held for sale increased from $Nil at December 31, 2010, to $552,031 at December 31, 2011 due to the approval of the sale of GROUP Technologies GmbH.

Total Non-Current Liabilities

At December 31, 2011, our Total Non-Current Liabilities were $5,887,852, compared to $7,066,358 at December 31, 2010. Total Non-Current Liabilities consist of: Liabilities to Banks, Retirement Benefit Obligation, Other Liabilities, and Liabilities held for sale.

Liabilities to Banks increased from $780,801 at December 31, 2010, to $3,463,483 at December 31, 2011 and consisted of long-term business line of credit due to the Baden-Württembergische Bank.

Retirement Benefit Obligation decreased from $154,065 at December 31, 2010, to $150,632 at December 31, 2011.

Other Liabilities decreased from $6,131,492 at December 31, 2010, to $2,266,075 at December 31, 2011 and consists of the amounts due on the purchase of Lotus911.

Liabilities held for sale increased from $Nil at December 31, 2010 to $7,662 at December 31, 2011 due to the approval of the sale of GROUP Technologies GmbH.

Results of Operations

For the Three Months Ended December 31, 2011 Compared to the Three Months Ended December 31, 2010

Revenues

The Company generates revenue from product Licenses, Maintenance, Third-Party Products, Services and Other Revenue. For the three months ended December 31, 2011, total revenue decreased $2,554,831 or 26.87%, from $9,507,572 at December 31, 2010 to $6,952,741. The decrease mainly resulted from a $1,858,634 or 22.81% decline in Product revenues, coupled with a decrease in Service revenues of $696,197 or 51.28% to $661,545 for the three months ended December 31, 2011 compared to $1,357,742 for the three months ended December 31, 2010.

Cost of Goods Sold

For the three months ended December 31, 2011, our Cost of Goods Sold decreased to $4,871,803 from $5,272,588. Cost of Goods Sold consists of Cost for Services, Cost for Third-Party Products and Cost for Software Licenses. Within Cost of Goods Sold costs associated with the Product division of revenue decreased $1,860,928 or 53.79%, from $3,459,926 at December 31, 2010, to $1,598,997 at December, 31 2011. The costs associated with the Service division of revenue increased $1,460,143 or 80.55%, from $1,812,662 at December 31, 2010, to $3,272,805 for the three months ended December 31, 2011. The Company’s achieved a gross profit margin of 29.93% for the three months ended December 31, 2011, a 14.61% decline from the 44.54% achieve in the three months ended December 31, 2010.

Operating Expenses

For the three months ended December 31, 2011, our Operating Expenses increased to $4,554,035 from $4,479,466 for the three months ended December 31, 2010. Operating Expenses consist of Selling Expenses, Administrative Expenses and General Expenses.

For the three months ended December 31, 2011, Selling Expenses increased $167,528 or 5.62%, to $3,149,098 from $2,981,570 for the three months ended December 31, 2010. Selling Expenses consist of costs for the Sales, Marketing and Service units.

For the three months ended December 31, 2011, Administrative Expenses increased $225,878 or 20.61%, to $1,321,724 from $1,095,845 for the three months ended December 31, 2010. Administrative Expenses consist of costs for the management and administration units and increased primarily due to the acquisition of subsidiary companies.

For the three months ended December 31, 2011, our General Expenses decreased $318,838 to $83,212 from $402,051 for the three months ended December 31, 2010, due to the newly administered budget procedures.

Other Income (Expense)

For the three months ended December 31, 2011, the Company experienced Other expense of $16,089,614 compared to Other Income of $1,344,947 for the three months ended December 31, 2010. Bad debt changes in this category increased for the write off of receivables primarily in our entities no longer functioning due to obsolete technology.

Fiscal Year Ended December 31, 2011 Compared to the Fiscal Year Ended December 31, 2010

Revenues

The Company generates revenue from product Licenses, Maintenance, Third-Party Products, Services and Other Revenue. For the fiscal year ended December 31, 2011, total revenue increased $805,881 or 2.93%, from $27,467,211 for the fiscal year ended December 31, 2010, to $28,273,092 for the fiscal year ended December 31, 2011. This mainly resulted from a $482,123 or 2.16% decline in the Product division of revenues, primarily due to decreased sales of third party products. Coupled with a $1,288,004 or 24.78% increase in the Service division of revenues, primarily due to additional revenues from recently acquired subsidiary companies.

Cost of Goods Sold

For the fiscal year ended December 31, 2011, Cost of Goods Sold increased $1,937,678 or 13.88% to $15,898,182 from $13,960,504 for the fiscal year ended December 31, 2010. The Company’s Cost of Goods Sold is segmented into two divisions. The first are costs related to the Product division of revenue which includes the total cost of materials and third party product material costs. The second are the costs related to the Service division of revenue which includes; other operating expenses, personnel expenses, depreciation and amortization expense.

Within the Costs of Goods Sold related to the Product division, the Company was able to achieve a $2,171,026 or 28.02% reduction from $7,746,773 for the fiscal year ended December 31, 2010, to $5,575,747 for the fiscal year ended December 31, 2011. The primary factor contributing to the Company’s reduction in Costs of Goods Sold related to the Product division of revenues was a reduction in third party product material costs due to lower third party product sales for the fiscal year ended December 31, 2011 compared to the fiscal year ended December 31, 2010.

Within the Costs of Goods Sold related to the Services division, the Company saw an increase of $4,108,703 or 66.72%, from $6,213,732 for the fiscal year ended December 31, 2010, to $10,322,435 for the fiscal year ended December 31, 2011. The Company experienced elevated service costs due to the increases in salaries and related expenses to fulfill our business objectives in our GROUP Live, cloud application platform, and our Transformer portfolio. Additionally, service salaries increased due to the aforementioned acquisition of subsidiary companies.

The Company’s increased Costs of Goods Sold resulted in a reduced gross profit margin, declining from 49.17% for the fiscal year ended December 31, 2010 to 43.77% for the fiscal year ended December 31, 2011.

Operating Expenses

For the fiscal year ended December 31, 2011, our Operating Expenses increased $7,026,568 or 45.37% to $22,513,690 from $15,487,241 for the fiscal year ended December 31, 2010. Operating Expenses consist of Selling Expenses, Administrative Expenses and General Expenses.

For the fiscal year ended December 31, 2011, our Selling Expenses increased $4,907,969 or 46.66% to $15,426,600 from $10,518,631 for the fiscal year ended December 31, 2010. Selling Expenses consist of costs for the Sales, Marketing and Service units and increased primarily due to the acquisition of subsidiary companies, additional recruiting of sales personnel and additional selling expenses relating to the aforementioned acquisitions

For the fiscal year ended December 31, 2011, our Administrative Expenses increased $2,340,811 or 61.28% to $6,160,961 from $3,820,150 for the fiscal year ended December 31, 2010. Administrative Expenses consist of costs for the management and administration units. Primary contributing factors were increases in personnel expense and other Administrative Expenses related to the Company’s acquisition of subsidiary companies and the increased compliance costs associated with restructuring.

For the fiscal year ended December 31, 2011, our General Expenses decreased $222,331 or 19.36% to $926,129 from $1,148,460 for the fiscal year ended December 31, 2010, due to newly administered budgeting procedures.

Other Income (Expense)

For the fiscal year ended December 31, 2011 Other expense was $16,267,197, compared to Other Income of $1,922,538 for the fiscal year ended December 31, 2010. Bad debt changes in this category increased for the write off of receivables primarily in our entities no longer functioning due to obsolete technology.

Liquidity & Capital Resources

At December 31, 2011, we had $3,142,308 in cash and cash equivalents, compared to $1,872,068 at December 31, 2010. At December 31, 2011, our accumulated stockholders’ deficit was $12,147,666 compared to $53,544 at December 31, 2010.

In principal, the Company's cash flow depends on the timely and successful market entry of its strategic offerings. The dependency accounts for revenue generated from direct customers engagements, as well as for revenue generated through the partner channel network.

Especially for strategic offerings for paradigm shifting technologies, the management's budget plan is based on a series of assumptions regarding market acceptance, readiness and pricing. While management's assumptions are based on market research and customer surveys, assumptions bear the risk of being incorrect and may result in a delay in customer projects and consequently a delay or a reduction in the related strategic offering invoicing. In case these delays have an impact on the Company's liquidity and therefore its ability to support its operations with the necessary cash flow, the Company depends on its ability to generate cash flow from other resources, such as debt financing from related or independent resources or as equity financing from existing shareholders or through the stock market.

To date, we have funded our operations from private financings and operations. In March 2011, we consummated a private placement of Units for $1.25 per Unit for total gross proceeds of $7,555,000 (the “Private Placement”). The net proceeds of this offering were $6,839,327.25. Each Unit consisted of one share of common stock and one warrant exercisable to purchase one share of common stock from the date of grant until the third anniversary of the date of grant for $1.50 per share (the “Private Placement Warrants”). As of December 31, 2012, warrant holders exercised an aggregate of 2,025,000 Private Placement Warrants for gross proceeds to the Company of $3,037,500. If the remaining 4,019,000 Private Placement Warrants were exercised, of which there can be no assurance, the Company would receive $6,028,000 in additional gross proceeds.

The Company is in continual constant contact with internal and external sources for financing. These sources provided the necessary funds to support the working capital needs of the Company; mainly to finance the Company’s strategic offering. There can be no assurances, however, that the Company will be able to obtain additional funds from these or any other sources or that such funds will be sufficient to permit the Company to implement its intended business strategy. In the event, the Company is not able to generate additional funds, management will postpone any strategic investment until the financing will be sufficient. However, management believes as a result of the assets purchased and sold to date, in accordance with the above-mentioned statement, the Company will be able to provide sufficient cash flow to support its standard operations for the next 12 months.

Cash Flows

	Fiscal Year Ended December 31, 2011			Fiscal Year Ended December 31, 2010

Net cash provided (used in) Operating Activities	$	(17,698,974	)	$	11,749,668
Net cash provided (used in) Investing Activities	$	7,369,475		$	(7,476,234	)
Net cash provided (used in) Financing Activities	$	12,728,818		$	(1,023,048	)
Net cash provided (used in) Discontinued Operations	$	(990,050	)	$	-
Effect of exchange rate changes on cash	$	(139,029	)	$	(3,087,089	)
Net increase (decrease) in cash and cash equivalents during the period	$	1,270,240		$	163,297
Cash and cash equivalents, beginning of period	$	1,872,068		$	1,708,771

Cash and cash equivalents, end of period	$	3,142,308		$	1,872,068

Cash used in operating activities was $17,698,974, a reduction of $29,448,642 from cash provided by operating activities during the fiscal year ended December 31, 2010 of $11,749,668. The reduction of cash used in operating activities can be attributed to the Company experiencing $3,054,276 of cash provided by increases in Depreciation and Amortization and Consulting expense, being offset by cash used in operating activities totaling $32,502,918 caused by decrease in Net Income, Deferred Income Taxes, Accounts Receivable and Other Assets, Retirement Benefit Obligation, Inventories, Accounts Payable and Other Liabilities.

Cash provided by investing activities was $7,369,475, an increase of $14,845,709 from the previous year’s cash used in investing activities of $7,476,234. This change is primarily due to $15,941,046 of cash provided by the increase of Financial Assets and Sale Intangible Assets being offset by $1,095,338 of cash used in investing activities by the Purchase of Equity Investments, and Subsidiaries for the fiscal year ended December 31, 2011 compared to the fiscal year ended December 31, 2010.

Cash provided by financing activities was $12,728,818, an increase of $13,751,866 from the previous year’s cash used in financing activities of $1,023,048. This change is primarily due to a $15,252,571 increase in Borrowings from Banks, Capital Paid-in, and Borrowings from Related Parties being offset by a decrease of $1,500,705 in Other Borrowings for the fiscal year ended December 31, 2011 compared to the fiscal year ended December 31, 2010.

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 follows:

i. 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.

ii. 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 has a 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, does not.

iii. 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.

iv. 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 and small net actuarial losses on pension plans.

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.

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, the British pound, the Bulgarian lev and the Indian rupee. 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 (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.

Goodwill and other Intangible Assets

Intangible assets predominately include goodwill, acquired software and capitalized software development. Intangible assets acquired in exchange for payment are reflected at 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.

The Company 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. Goodwill is reviewed once a year during an impairment test, whereby the appraised fair value of the invested capital of the reporting unit, is compared with the carrying (book) value of its invested capital amount (including goodwill.) Use value is generally applied in order to determine the recoverability of goodwill and intangible assets with an indefinite useful life. The projected financial plan prepared by the management serves as the basis for this determination of use value and 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 determined based on the expected growth rates of the markets in question.

If the carrying amount of the reporting unit exceeds the appraised fair value, the impairment based on use value measures the amount of loss, if any, and an unscheduled amortization expense is recorded. If the appraised value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired.

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. Leasehold improvements are depreciated up to 40 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 or appraised value In this instance, the asset is considered to be impaired and is written down to fair value.

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 in most cases 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.

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 July 2012, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. With the objective of reducing the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-loved asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles – Goodwill and Other – General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having the likelihood of more than 50 percent. The amendments are effective for annual and interim impairment tests performed beginning April 1, 2013. Adoption of this new standard is not expected to have significant impact to the Company’s financial statement.

Principles of Consolidation and Reverse Acquisition

As previously disclosed, the Company originally exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP (and retained its 50.1% shareholding by acquiring an additional 883,765 shares of GROUP on February 27, 2012). 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 became the accounting acquirer and was 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.

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.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk.

Nor applicable

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements and related financial statement schedule, together with the report of independent registered public accounting firm, appear at pages F-1 through F-43 of this Annual Report on Form 10-K for the year ended December 31, 2011.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There have been no changes in or disagreements with our independent registered public accountants on accounting or financial disclosure matters during our two most recent fiscal years.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2011,our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer), evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2011, our disclosure controls and procedures were not effective in ensuring that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting (ICFR)

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”), as such term is defined in Rule 13a-15(f) of the Exchange Act. ICFR refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”), and includes those policies and procedures that:

(i)

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

(ii)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)

Provide reasonable assurance regarding prevention or timely detection of an unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

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

A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

Management has evaluated the effectiveness of the Company’s ICFR as of December 31, 2011. Management based its assessment on the framework set forth in COSO’s Internal Control – Integrated Framework (1992) in conjunction with SEC Release No. 33-8810 entitled “Commission Guidance Regarding Management’s Report on Internal Control Over Financial Reporting Under Section 13(a) or 15(d) of the Securities and Exchange Commission” (17 CFR PART 241; Effective June 27, 2007)

Because of the material weaknesses described below, management concluded that the Company’s ICFR was not effective as of December 31, 2011:

· LACK OF SEGREGATION OF DUTIES OF INTERNAL ACCOUNTING AND SEC REPORTING DEPARTMENTS.

· LACK OF AUDIT COMMITTEE AND OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS. We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

· LIMITED KNOWLEDGE OF U.S. GAAP BY THE COMPANY’S BOARD OF DIRECTORS AND ACCOUNTING AND REPORTING DEPARTMENTS. Our Board of Directors, as of December 31, 2011, had one director, Joerg Ott, who also served as the Chief Executive Officer of the Company. Mr. Ott has limited knowledge of U.S. GAAP, and the Certifying Officers believe that this limited knowledge constitutes a material weakness of the Company’s internal controls over financial reporting. The Company’s internal accounting and reporting departments also have limited knowledge of U.S. GAAP, which the Certifying Officers also believe, constitutes a material weakness of the Company’s internal control over financial reporting.

As previously reported by the Company, in September 2012 the Company’s Board of Directors changed the fiscal year end of the Company from March 31^st to December 31^st , commencing on December 31, 2012. Prior to this change, the Company’s subsidiaries, with the exception of SD Holdings, Ltd. had December 31^st fiscal year ends and in reporting the Company’s financial statements, the Company, incorrectly applied Rule 3A-02 (“the 93-day rule”) promulgated under Regulation S-X by consolidating those subsidiaries without any adjustments for timing differences in the different period ends. With the change in the Company’s fiscal year end, the Company is retroactively adjusting previously released financial statements to reflect this change, beginning with December 31, 2010. This has caused a delay in the filing of the Company’s SEC report, including this Form 10K for the fiscal year ended December 31, 2011.

In 2012, management took the following corrective measures to strengthen its control environment and ICFR:

(a)

In February 2012, we hired a new full-time Chief Financial Officer who performs the following:

assists with documentation and implementation of policies and procedures and monitoring of controls;

prepares budgets; and

prepares financial statements, account reconciliations and journal entries.

(b) In March 2012, we created a position within the Company’s accounting and finance team to segregate duties consistent with its control objectives and we increased our personnel resources and technical accounting expertise within the accounting function.

(c) In March 2012, our Board of Directors was increased to seven members and five “independent directors” (as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules), to the Board of Directors were appointed.

(d) In March 2012, our Board of Directors established a standing Audit Committee (comprised of two independent directors and our Interim Chief Executive Officer).

The duties of the Audit Committee include, but are not limited to, ensuring that the Company maintains adequate internal control structures, monitoring relevant aspects of compliance, review and assessment of any potentially significant legal matters facing the Company, the appointment and monitoring of an independent auditor, and final review of the independently audited financial statements. The Audit Committee reports any and all findings to the Company’s Board of Directors, which maintains all final decision making authority regarding any of the aforementioned activities

The Audit Committee met four times in 2012. The purpose of these meetings included, along with the above listed activities, drafting and presenting to the Board for ratification an Audit Committee charter, and to ensure that all duties tasked to the Committee have been fulfilled.

The Company believes that the appointment of the new Directors, each of whom qualifies as an “independent director” (as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules), as well as the establishment of a standing Audit Committee comprised of a majority of independent directors, one of whom who has been appointed an “audit committee financial expert” (as defined by Item 407(d)(5)(ii) of Regulation S-K) will aid in correcting the material weaknesses which had existed prior to March 1, 2012.

While these remedial actions have been implemented, they were not in place for a sufficient period of time to help us certify that material weaknesses have been fully remediated as of the end of calendar year 2012. If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future and we may continue to be delinquent in our filings.

Changes in Internal Control Over Financial Reporting (ICFR)

During the fourth quarter ended December 31, 2011, there were no changes in our ICFR that have materially affected, or are reasonably likely to materially affect, our ICFR.

This annual report does not include an attestation report of our registered public accounting firm regarding ICFR. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Item 9B. Other Information.

On April 1, 2012, we sold SYN and its wholly-owned subsidiaries, Synaptris and Synaptris India, to Lotus for $1,877,232. On July 1, 2012, the Company entered into a purchase agreement with SYN for $1,877,232, which transferred all SYN’s assets, including intellectual property rights, and liabilities of the IntelliPRINT and FewClix product lines, customer contracts and certain employees for operations in a new subsidiary, GBS India Private Limited, an Indian company (“GBS India”). A royalty fee in the amount of approximately $350,000 has been agreed upon for the benefit the Company. Additionally a profit based fee of up to $700,000 may be earned based on license and revenue recognized from the sold IntelliVIEW and IntelliVIEW NXT products. On August 1, 2012, the Company acquired 100% of the outstanding capital stock of GBS India. We anticipate GBS India’s presence in India to accelerate our plan to expand our product development team particularly for our strategic offerings in India.

On February 1, 2013, we sold 100% of IDC to a cloud network provider in consideration for $4,600,000, subject to certain holdback provisions.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information below sets forth the names, title and ages of our current directors and executive officers. Directors hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. 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.

Changes in Corporate Governance in 2012

On February 24, 2012, Markus R. Ernst was appointed as the Company’s Chief Financial Officer.

On March 1, 2012, the size of the Board was increased to seven members and the Board 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”) as members of the Board until the next annual meeting of stockholders of the Company or until his respective successor is elected and qualified. On March 1, 2012, the Board formed the following committees and appointed the following directors to serve on such committees:

Audit Committee: John A. Moore, Jr. (Chairman), Woody A, Allen and Gary D. MacDonald

Compensation Committee: Woody A. Allen (Chairman), David M. Darsch, John A. Moore, Jr., Mohammad Shihadah and Stephen D. Baksa

Corporate Governance, Regulatory and Nominating Committee: Woody A. Allen (Chairman), David M. Darsch, John A. Moore, Jr., Mohammad Shihadah and Stephen D. Baksa

On July 11, 2012, Joerg Ott resigned as the Chief Executive Officer of the Company. His resignation was not due to a dispute or any disagreements with the Company. He retained his membership on the Company’s Board of Directors (the “Board”), and since July 11, 2012, Mr. Ott has been serving as the Board’s Chairman. Mr. Ott also serves as the Chief Executive Officer of GROUP. On July 10, 2013, the Board of Directors reappointed Joerg Ott as the Chief Executive Officer.

From July 11, 2012 to July 10, 2013, Gary D. MacDonald served as the Company’s Interim Chief Executive Officer and Managing Director of Worldwide Operations. Mr. MacDonald resigned from the Company and Board on August 2, 2013.

Name:	Position Held with the Company:	Age:	Director Since:
Joerg Ott	Chairman of the Board, Chief Executive Officer^	50	April 26, 2010


Markus R. Ernst	Chief Financial Officer (Principal Financial and Accounting Officer)	46	--

Woody A. Allen	Director*#^	66	March 1, 2012

Stephen D. Baksa	Director	67	March 1, 2012

David M. Darsch	Director#^	57	March 1, 2012

John A. Moore, Jr.	Director*	61	March 1, 2012

Mohammad A. Shihadah	Director#	61	March 1, 2012

*Audit Committee Member

#Compensation Committee Member

^Corporate Governance, Regulatory and Nominating Committee Member

Business Experience:

Joerg Ott. Since April 26, 2010, Mr. Ott has been serving as the Company’s Chairman of the Board. From April 26, 2010 to July 11, 2012, Mr. Ott served as the Company’s Chief Executive Officer. On July 10, 2013, the Board of Directors reappointed Joerg Ott as the Chief Executive Officer. 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.

Key Attributes, Experience and Skills: Mr. Ott brings his strategic vision for our Company to the Board together with his leadership, business experience and investor relations skills. Mr. Ott has an immense knowledge of our Company, GROUP and other subsidiaries which is beneficial to the Board. Mr. Ott’s service as Chairman bridges a critical gap between the Company’s management and the Board, enabling the Board to benefit from management’s perspective on the Company’s business while the Board performs its oversight function.

Markus R. Ernst. Since February 24, 2012, Mr. Ernst has been serving as the Chief Financial Officer of the Company. 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 2011, 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.

Key Attributes, Experience and Skills: Mr. Ernst has extensive experience managing financial operations for publicly traded companies since 2000. He also has extensive knowledge regarding various accounting practices and compliance requirements especially in the United States, Germany and the European Union. Due to the fact that the Company and its subsidiaries are traded in the United States and in Germany, we rely heavily on this expertise.

Woody A. Allen. Since March 1, 2012, Mr. Allen has been serving as a member of the Company’s Board of Directors. 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.

Key Attributes, Experience and Skills: Mr. Allen brings to the Board his extensive leadership and managerial skills as an executive and board member of publicly traded companies for more than 35 years. Mr. Allen also brings to the Board his ability to provide financial and leadership guidance obtained by Mr. Allen’s experience with Allen Management Services.

Stephen D. Baksa. Since March 1, 2012, Mr. Baksa has been serving as a member of the Company’s Board of Directors. 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).

Key Attributes, Experience and Skills: Mr. Baksa brings to the Board his operating and management expertise and entrepreneurial and financial acumen gained through his directorship of a public company as well as being a the General Partner at a private equity and venture capital firm.

David M. Darsch. Since March 1, 2012, Mr. Darsch has been serving as a member of the Company’s Board of Directors. 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.

David 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.

Key Attributes, Experience and Skills: Mr. Darsch brings to the Board his vast entrepreneurial and managerial experience Board as exemplified by his role with CEO-CF as well as his keen knowledge of the software development industry and ability to advise the Company in achieving substantial growth as exemplified by his transactional experience and role as CEO of Data Management Design, Inc.

John A. Moore, Jr. Since March 1, 2012, Mr. Moore has been serving as a member of the Company’s Board of Directors. Mr. Moore has more than 30 years’ experience in private and public company management for information technology firms. 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, 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.

Key Attributes, Experience and Skills: Mr. Moore brings to the Board his extensive experience in strategic planning, financial management, corporate compliance, proposal preparation and pricing and SEC reporting obtained through his prior experiences as a member of the Board of Directors of several publicly traded companies.

Mohammad A. Shihadah. Since March 1, 2012, Mr. Shihadah has been serving as a member of the Company’s Board of Directors. 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, AppTek was acquired by Science Applications International Corporation (SAIC). 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.

Key Attributes, Experience and Skills: Mr. Shihadah brings to the Board his broad experience in technology companies incubations, establishing the vision, planning and managing the execution of business plans, meeting 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.

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 executive officers and directors and the executive officers and directors of our direct and indirect subsidiaries.

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.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, the following officers and directors failed to file their Section 16(a) forms on a timely basis or at all in 2011.

Item 11. Executive Compensation

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 (“PEO”) during the fiscal years ended December 31, 2011 and 2010, 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.”

	Fiscal Year
	Ended
Name and Principal Position	December 31,		Salary ($)		Bonus ($)		Total ($)

Joerg Ott
Chairman and CEO ( PEO)		2011		480,000		0		480,000

Ronald J. Everett
CFO (1)		2011		124,750		0		124,750

(1) Mr. Everett served as the Company’s Chief Financial Officer from August 2, 2010 to his resignation on February 27, 2012.

Significant Employees

Other than our executive officers, the Company did not have any significant employees at December 31, 2011.

Outstanding Equity Awards at Fiscal Year-End

As of December 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.

Employment Agreements, Termination of Employment and Change-in-Control Arrangements with our Executive Officers

At December 31, 2011, we did not have any employment agreements with any of our executive officers, nor do we have any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control.

Compensation of Directors

Directors of our Company may be paid for their expenses incurred in attending each meeting of the directors. In addition to expenses, directors may be paid a sum for attending each meeting of the directors or may receive a stated salary as director. No payment precludes any director from serving our Company in any other capacity and being compensated for such service. Members of special or standing committees may be allowed similar reimbursement and compensation for attending committee meetings. During the year ended December 31, 2011, we did not pay any compensation or grant any stock options to our directors.

Director Agreements

None at December 31, 2011.

Term of Office

Our directors are elected to hold office for a one year term or until his successor is elected and qualified.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding our Common Stock beneficially owned as of March 31, 2014 , 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 31,904,291 shares of Common Stock of the Company issued and outstanding as of March 31, 2014 . 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.

	Number of Shares			% of Class of
Name and Address of Beneficial Owner (1)	of Common Stock (2)			Stock Outstanding (3)
Executive Officers and Directors:
Joerg Ott-Chairman and Chief Executive Officer		2,170,000	(4)		6.7	%

Markus R. Ernst - CFO		60,000	(5)		*

Woody A. Allen -Director		0

Stephen D. Baksa - Director		3,835,000	(6)		12.2	%

David M. Darsch -Director		0

John A. Moore, Jr.-Director		450,960			1.5	%

Mohammad A. Shihadah - Director		50,000	(7)		*

All Officers and Directors as a group (8 persons)		6,665,960	(4) - (7)		20.0	%

* 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 31,904,291 shares of Common Stock outstanding as of March 31, 2014.

(4) Consists of (i) 420,000 shares of Common Stock held directly by Mr. Ott, (ii) 1,550,000 shares of Common Stock held indirectly by Mr. Ott through Vitamin-B Venture GmbH, an entity of which Mr. Ott is the Managing Member and has voting and dispositive control, (iii) 100,000 shares of Common Stock issuable upon the exercise a Warrant held by Mr. Ott and currently exercisable until April 16, 2015 for $1.50 per share, and (iv) 100,000 shares of Common Stock issuable upon the exercise of a Warrant held indirectly by Mr. Ott through Vitamin-B Venture GmbH and currently exercisable until April 30, 2016 for $0.25 per share.

(5) Consists of (i) 30,000 shares of Common Stock and (ii) 30,000 shares of Common Stock issuable pursuant to the exercise of a Warrant currently exercisable until May 10, 2015 for $1.50 per share.

(6) Consists of (i) 3,285,000 shares of Common Stock held directly by Mr. Baksa, (ii) 300,000 shares of Common Stock indirectly held by Mr. Baksa as co-trustee of two trusts for his adult children, (iii) 450,000 shares of Common Stock issuable upon the exercise of a Warrant held by Mr. Baksa and currently exercisable until March 2015 for $0.50 per share, (iv) 100,000 shares of Common Stock held by Mr. Baksa issuable upon the exercise a Warrant currently until April 30, 2016 for $0.25 per share. Mr. Baksa disclaims beneficial ownership of the 300,000 shares of Common Stock held by the two-trusts for his adult children.

(7) Consists of 50,000 shares of Common Stock issuable pursuant to the exercise of a Warrant currently exercisable until July 5, 2015 for $0.50 per share.

Changes in Control

We are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may result in a change in control of the Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

See Note 21 to the Financial Statements.

Independent Directors

None at December 31, 2011.

Item 14. Principal Accounting Fees and Services

K. R. Margetson Ltd., Chartered Accountant (“K.R. Margetson”) is the Company’s independent public accountant. The aggregate fees billed for the two most recently completed fiscal years ended December 31, 2012 and 2011 for professional services rendered by K.R. Margetson were as follows:

	2011		2010

Audit Fees and Audit Related Fees		57,500		57,500
Tax Fees		-		-
All Other Fees		17,360		7,360
Total	$	64,860	$	64,860

Policy on Pre-Approval by the Board of Services Performed by Independent Auditors

We do not use K.R. Margetson Ltd. for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage K.R. Margetson Ltd. to provide compliance outsourcing services.

PART IV

Item 15. Exhibits, Financial Statement Schedules

Exhibit No.:	Description:	Filed an Exhibit to the following Company SEC Filing and Incorporated by Reference herein:
3.1	Articles of Incorporation	Form SB-2 (File No: 333-146748) filed January 14, 2008
3.1.1	Certificate of Amendment to Articles of Incorporation, effective September 6, 2010	Form 10-K filed July 16, 2012
3.1.2	Certificate of Amendment to Articles of Incorporation, effective November 22, 2010	Form 10-K/A filed November 7, 2011
3.1.3	Certificate of Incorporation, dated June 5, 2012, of GBS India Private Limited	Form 10-Q filed September 13, 2012
3.2	Bylaws	Form SB-2 (File No: 333-146748) filed January 14, 2008
4.1	Form of Private Placement Warrant	Form S-1(File No.: 333-180626) filed April 9, 2012
4.2	Form of Investor Warrant	Form 8-K filed March 30, 2012
4.3	Warrant, dated April 16, 2012, issued to Joerg Ott	Form 10-K filed April 16, 2012
7.1	Letter from Grant Thornton GmbH, addressed to the Securities and Exchange Commission, dated August 27, 2012.	Form 8-K/A filed August 28, 2012
10.1	Subsidiary Stock Purchase Agreement, dated September 21, 2009, between SWAV Enterprises Ltd. and Pui Shan Lam	Form 8-K filed September 21, 2009
10.2	Asset Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Lotus Holdings Limited	Form 8-K filed April 26, 2010
10.3	Non-Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott	Form 8-K filed April 26, 2010
10.4	Affiliate Stock Purchase Agreement, dated April 26, 2010, between the Selling Stockholders and Joerg Ott	Form 8-K filed April 26, 2010
10.5	Subsidiary Stock Purchase Agreement, dated April 26, 2010, between SWAV Enterprises Ltd. and Pui Shan Lam	Form 8-K filed April 26, 2010
10.6	Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and LVM Landwirtschaftlicher Versicherungsverein AG	Form 10-Q/A filed May 20, 2011
10.7	Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and MPire Capital City	Form 10-Q/A filed May 20, 2011
10.8	Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Stone Mountain Ltd.	Form 10-Q/A filed May 20, 2011
10.9	Stock Purchase Agreement, dated November 3, 2010, between GBS Enterprises Incorporated and Tuomo Tilman	Form 10-Q/A filed May 20, 2011
10.10	Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and vbv Vitamin B Venture	Form 10-Q/A filed May 20, 2011
10.11	Stock Purchase Agreement, dated November 5, 2010, between GBS Enterprises Incorporated and Jyrki Salminen	Form 10-Q/A filed May 20, 2011
10.12	Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and Delta Consult LP	Form 10-Q/A filed May 20, 2011
10.13	Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and GAVF LLC	Form 10-Q/A filed May 20, 2011
10.14	Stock Purchase Agreement, dated January 5, 2011, between GBS Enterprises Incorporated and K Group	Form 10-Q/A filed May 20, 2011
10.15	Acquisition Agreement, dated September 27, 2011, by and between GBS Enterprises Incorporated, SD Holdings, Ltd. and the Shareholders of SD Holdings Ltd.	Form 8-K filed October 4, 2011
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.	Form S-1(File No.: 333-180626) filed April 9, 2012
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.	Form S-1(File No.: 333-180626) filed April 9, 2012

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.	Form S-1(File No.: 333-180626) filed April 9, 2012
10.19	Acquisition Agreement, dated June 1, 2011, by and among GBS Enterprises Incorporated, GroupWare AG and the Selling Stockholder of GroupWare AG	Form 8-K filed June 27, 2011
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	Form 8-K filed July 28, 2011
10.21*	Consultant Services Agreement, dated February 24, 2012, between GBS Enterprises Incorporated and Green Minds Venture GmbH	Form 8-K filed February 28, 2012
10.22*	Offer Letter, dated January 26, 2012, between the Company and David M. Darsch, as amended	Form 8-K filed March 6, 2012
10.23*	Offer Letter, dated January 26, 2012, between the Company and John A. Moore, Jr., as amended	Form 8-K filed March 6, 2012
10.24*	Offer Letter, dated January 26, 2012, between the Company and Mohammad Shihadah, as amended	Form 8-K filed March 6, 2012
10.25*	Offer Letter, dated February 24, 2012, between the Company and Stephen D. Baksa, as amended	Form 8-K filed March 6, 2012
10.26*	Offer Letter, dated January 23, 2012, between the Company and Woody A. Allen, as amended	Form 8-K filed March 6, 2012
10.27	Securities Purchase Agreement, dated April 16, 2012, between GBS Enterprises Incorporated and Joerg Ott	Form 10-K filed April 16, 2012
10.28	Note Purchase and Security Agreement, dated August 13, 2012, by and between GBS Enterprises Incorporated and John A. Moore, Jr. and Annedenise M. Moore	Form 8-K filed August 16, 2012
10.29	Purchase Agreement, dated June 6, 2012, between GBS Enterprises Incorporated (as Purchaser) and SD Holdings, Ltd. (as Seller)	Form 10-Q filed September 13, 2012
10.30	Purchase Agreement, dated April 2, 2012, between GBS Enterprises Incorporated (as Seller) and Lotus Holdings, Ltd. (as Purchaser)	Form 10-Q filed September 13, 2012
10.31	Transfer Agreement, dated May 21, 2012 (effective as of July 1, 2012), between Synaptris Decisions Private Limited and GBS India Private Limited	Form 10-Q filed September 13, 2012
10.32	Note Purchase and Security Agreement, dated October 26, 2012, by and between GBS Enterprises Incorporated and Stephen D. Baksa	Form 8-K filed November 2, 2012
10.33	Secured Promissory Note, dated October 26,2012, by and between GBS Enterprises Incorporated and Stephen D. Baksa	Form 8-K filed November 2, 2012
10.34	Common Stock Purchase Warrant, issued October 26, 2012, by GBS Enterprises Incorporated to Stephen D. Baksa	Form 8-K filed November 2, 2012
10.35	Note Purchase Agreement, dated October 29, 2012, by and between Group Business Software AG and GBS Enterprises Incorporated	Form 8-K filed November 2, 2012
10.36	Promissory Note, dated October 29, 2012, by and between GROUP Business Software AG and GBS Enterprises Incorporated	Form 8-K filed November 2, 2012
10.37	Note Purchase Agreement, dated November 14, 2012, by and between Group Business Software AG and GBS Enterprises Incorporated	Form 8-K filed November 20, 2012
10.38	Promissory Note, dated November 14, 2012, by and between GROUP Business Software AG and GBS Enterprises Incorporated	Form 8-K filed November 20, 2012

10.39	Note Purchase and Security Agreement, dated November 30, 2012, by and between GBS Enterprises Incorporated and Pike H. Sullivan	Form 8-K filed December 12, 2012
10.40	Secured Promissory Note, dated November 30, 2012, by and between GBS Enterprises Incorporated and Pike H. Sullivan	Form 8-K filed December 12, 2012
10.41	Common Stock Purchase Warrant, issued November 30, 2012, by GBS Enterprises Incorporated to Pike H. Sullivan	Form 8-K filed December 12, 2012
10.42	Secured Promissory Note, dated April 29, 2013, by and between GBS Enterprises Incorporated and Stephen D. Baksa	Form 8-K filed May 2, 2012
10.43	Common Stock Purchase Warrant, issued April 29, 2013, by GBS Enterprises Incorporated to Stephen D. Baksa	Form 8-K filed May 2, 2012
10.44	Common Stock Purchase Warrant, issued April 29, 2013, by GBS Enterprises Incorporated to Stephen D. Baksa	Form 8-K filed May 2, 2012
10.45	Secured Promissory Note, dated April 29, 2013, by and between GBS Enterprises Incorporated and Vitamin B Venture GmbH	Form 8-K filed May 2, 2012
10.46	Common Stock Purchase Warrant, issued April 29, 2013, by GBS Enterprises Incorporated to Vitamin B Venture GmbH	Form 8-K filed May 2, 2012
10.47	Common Stock Purchase Warrant, issued April 29, 2013, by GBS Enterprises Incorporated to Vitamin B Venture GmbH	Form 8-K filed May 2, 2012
21.1(1)	List of Subsidiaries	—
31.1(1)	Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer	—
31.2(1)	Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial and Accounting Officer	—
32.1(1)	Section 1350 Certification of Principal Executive Officer	—
32.2(1)	Section 1350 Certification of Principal Financial and Accounting Officer	—
101.INS(2)	XBRL Instance Document	—
101.SCH(2)	XBRL Schema Document	—
101.CAL(2)	XBRL Calculation Linkbase Document	—
101.DEF(2)	XBRL Definition Linkbase Document	—
101.LAB(2)	XBRL Label Linkbase Document	—
101.PRE(2)	XBRL Presentation Linkbase Document	—

Management Contracts and Compensatory Plans, Contracts or Arrangements.

(1)

Filed herewith.

(2)

Furnished herewith. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability.

SIGNATURES

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

	GBS ENTERPRISES INCORPORATED

	By: /s/ Joerg Ott
	Joerg Ott
	Chief Executive Officer
	(Principal Executive Officer)

	Date: March 31, 2014

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

Signature:	Title:	Date:

/s/ Joerg Ott	Chairman of the Board of Directors, Chief Executive Officer	March 31, 2014
Joerg Ott	(Principal Executive Officer)

/s/ Markus R. Ernst	Chief Financial Officer	March 31, 2014
Markus R. Ernst	(Principal Financial and Accounting Officer)

/s/ Woody A. Allen	Director	March 31, 2014
Woody A. Allen

/s/ Stephen D. Baksa	Director	March 31, 2014
Stephen D. Baksa

/s/ David M. Darsch	Director	March 31, 2014
David M. Darsch

/s/ John A. Moore, Jr.	Director	March 31, 2014
John A. Moore, Jr.

/s/ Mohammad A. Shihadah	Director	March 31, 2014
Mohammad A. Shihadah

K. R. MARGETSON LTD.	*Chartered Accountants*
210, 905 West Pender Street
Vancouver BC V6C 1L6
Tel: 604.641.4450
Fax: 1.855.603.3228

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

To the Stockholders of

GBS Enterprises Incorporated:

We have audited the consolidated balance sheet of GBS Enterprises Incorporated as of December 31, 2011 and the related consolidated statements of operations, equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express and opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit 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 . An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluation the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit these consolidated financial statements referred to above, present fairly, in all material respects, the consolidated financial position of GBS Enterprises Incorporated as of December 31, 2011 and the results of its consolidated operations, changes in equity and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As disclosed in Note 3, the Company changed its fiscal year end from March 31 to December 31. Prior to this change, certain entities included in these consolidated statements reported with December 31 year ends without any adjustments for timing differences in the year end.. These consolidated financial statements retroactively apply this change so all entities included in these consolidated statements have December 31 year ends. In doing so, these consolidated statements each include a twelve month period of consolidated operations, changes in equity and cash flows, starting at January 1 and ending December 31.

Without qualifying our report, and because of the relative significance of the assets, we note that the reported values of goodwill and other intangibles is contingent upon the Company attaining projected revenues from new product lines. Accordingly, failure to attain those projections would negatively affect those reported values.

Vancouver, Canada	/s/ K. R. Margetson Ltd.
February 28, 2014	Chartered Accountants

F-1

GBS Enterprises Incorporated
Annual Consolidated Balance Sheets
December 31, 2011 (Audited) and December 31, 2010 (Unaudited)
Restated	Restated			Restated
	December 31,			December 31,
	2011			2010
	$			$
Assets

Current Assets
Cash and cash equivalents - Note 6		3,142,308			1,872,068
Accounts Receivable - Note 7		4,850,507			5,712,157
Inventories - Note 2		236,712			-
Prepaid expenses - Note 8		389,772			1,420,662
Other current receivables - Note 10		680,693			1,983,219
Assets held for sale - Note 9		682,999			-
Total current assets		9,982,991			10,988,106

Non-Current Assets
Property, plant and equipment - Note 11		521,976			297,011
Other non-current receivables - Note 12		548,909			1,370,374
Investments in related company, at equity - Note 5		244,219			-
Deferred tax assets - Note 28		2,451,800			257,859
Goodwill - Note 13		39,221,603			31,004,262
Software - Note 14		14,249,905			16,360,884
Other assets - Note 15		93,268			223,780
Assets held for sale - Note 9		1,388,723			-
Total non-current assets		58,720,403			49,514,170

Total assets		68,703,394			60,502,276

Liabilities and stockholders' equity

Current liabilities
Notes payable - Note 16		1,381,821			1,441,263
Liabilities to banks - Note 17		19,595			50,358
Accounts payables and accrued liabilities - Note 18		6,078,711			4,804,434
Deferred income - Note 19		6,341,575			6,212,630
Other short term liabilities - Note 20		4,252,240			2,821,898
Due to related parties - Note 21		432,421			-
Liabilities held for sale - Note 9		552,031			-
Total current liabilities		19,058,394			15,330,583

Non - Current liabilities
Liabilities to banks - Note 22		3,463,483			780,801
Retirement benefit obligation - Note 27		150,632			154,065
Other long term liabilities - Note 23		2,266,075			6,131,492
Liabilities held for sale - Note 9		7,662			-
Total non-current liabilities		5,887,852			7,066,358

Total liabilities		24,946,246			22,396,941

Stockholders' equity

Capital stock - Note 24
Authorized:
75,000,000 common shares of $.001 par value each
25,000,000 preferred shares of $.001 par value each
Issued and outstanding:
27,306,664 shares of common stock		27,307			33,462,416
Additional paid in capital		47,446,318			4,335,986
Accumulated deficit		(12,147,666	)		(53,544	)
Other comprehensive income		494,206			366,377
		35,820,165			38,111,235
Noncontrolling interest in subsidiaries		7,936,983			(5,900	)

Total stockholders' equity		43,757,148			38,105,335

Total stockholders' equity and liabilities		68,703,394			60,502,276

Subsequent events - Note 31

F-2

GBS Enterprises Incorporated

Annual Consolidated Statements of Operations and Comprehensive Income/(Loss)

For the year ended December 31, 2011 (Audited) and December 31, 2010 (Unaudited)

Restated

	For the Three Months Ended						For the Twelve Months Ended
	Restated			Restated			Restated			Restated
	December 31			December 31			December 31			December 31
	2011			2010			2011			2010
	$			$			$			$

Revenues - Note 25
Products		6,291,196			8,149,829			21,787,910			22,270,033
Services		661,545			1,357,742			6,485,182			5,197,178
		6,952,741			9,507,572			28,273,092			27,467,211
Cost of goods sold
Products		1,598,997			3,459,926			5,575,747			7,746,773
Services		3,272,805			1,812,662			10,322,435			6,213,732
		4,871,803			5,272,588			15,898,182			13,960,504
Gross profit		2,080,938			4,234,984			12,374,910			13,506,707

Operating expenses
Selling expenses		3,149,098			2,981,570			15,426,600			10,518,631
Administrative expenses		1,321,724			1,095,845			6,160,961			3,820,150
General expenses		83,212			402,051			926,129			1,148,460
		4,554,035			4,479,466			22,513,690			15,487,241

Operating income (loss)		(2,473,096	)		(244,483	)		(10,138,780	)		(1,980,534	)

Other Income (expense) - Note 26
Other Income (expense)		(15,959,654	)		1,507,708			(15,894,738	)		2,373,085
Interest income		14,694			(2,801	)		33,948			16,653
Interest expense		(144,654	)		(159,960	)		(406,407	)		(467,199	)
		(16,089,613	)		1,344,947			(16,267,197	)		1,922,538

Income (loss) before income taxes		(18,562,709	)		1,100,464			(26,405,977	)		(57,996	)

Income tax (income) expense		(45,472	)		3,671,248			(2,151,211	)		3,254,651

Income before extraordinary items, discontinued operations		(18,517,237	)		(2,570,783	)		(24,254,766	)		(3,312,647	)

Discontinued operations		521,979			0			521,979			0

Net income (loss) before extraordinary items		(17,995,258	)		(2,570,783	)		(23,732,787	)		(3,312,647	)

Extraordinary items		0			0			0			0

Net income (loss)		(17,995,258	)		(2,570,783	)		(23,732,787	)		(3,312,647	)

Net Loss attributable to noncontrolling Interest		(9,075,158	)		(112	)		(11,567,489	)		(9,108	)
Net income (loss) attributable to stockholders		(8,920,100	)		(2,570,671	)		(12,165,298	)		(3,303,539	)

Net earnings (loss) per share, basic and diluted		(0.349	)		*			(0.449	)		*

Weighted average number of common stock outstanding, basic and diluted		25,139,198			*			27,247,958			*

Statement of Comprehensive Income (Loss)

Net Income (loss)		(17,995,258	)		(2,570,783	)		(23,732,787	)		(3,312,647	)
Foreign Currency Translation Adjustment		295,718			0			(125,751	)		0

Comprehensive income (loss)		(17,699,540	)		(2,570,783	)		(23,858,538	)		(3,312,647	)

Less: Net Income (Loss) attributable to noncontrolling interest		(9,075,158	)		(112	)		(11,567,489	)		(9,108	)
Less: Other Comprehensive Income (Loss) attributable to noncontrolling interest		147,563			0			(62,750	)		0

Total Comprehensive income (loss) attributed to stockholders		(8,771,945	)		(2,570,671	)		(12,228,299	)		(3,303,539	)

* N/A. No determination of weighted average or earnings per shares was calculated as this was a predecessor company and comparison is not relevant.

F-3

GBS Enterprises Incorporated
Annual Consolidated Statements of Cash Flows
For the twelve months ended December 31, 2011 (Audited ) and December 31, 2010 (Unaudited)
Restated	Restated			Restated
	December 31, 2011			December 31, 2010
	$			$

Cash flow from operating activities
Net loss / net income		(23,732,787	)		(3,312,647	)
Loss from discontinued operations		(521,979	)		-
Adjustments:
Deferred income taxes		(2,193,941	)		3,760,469
Depreciation and amortization		5,840,688			2,820,412
Consulting expense		34,000			-
Changes in operating assets and liabilities:
Accounts receivable and other assets		4,147,043			6,926,260
Retirement benefit obligation		(3,433	)		4,683
Inventories		(236,712	)		113,491
Accounts payable and other liabilities		(1,031,853	)		1,437,000

Net cash provided (used) by operating activities		(17,698,974	)		11,749,668

Cash flow from investing activities
Purchase or Sale of Intangible assets		(3,941,396	)		(6,416,824	)
Purchase of Equity Investment		(244,219	)		-
Purchase or Sale of Subsidiaries		(1,910,529	)		(1,059,410	)
Increase (Decrease) in Financial assets		13,465,619			-

Net cash provided (used) in investing activities		7,369,475			(7,476,234	)

Cash flow from financing activities
Net borrowings - banks		2,651,919			(2,464,311	)
Other borrowings		(59,442	)		1,441,263
Capital paid-in		9,703,920			-
Net Borrowings from related party		432,421			-

Net cash provided (used) in financing activities		12,728,818			(1,023,048	)

Cash flow from discontinued operations
Net cash provided by (used in) operating activities		(990,050	)		-

		(990,050	)		-

Effect of exchange rate changes on cash		(139,029	)		(3,087,089	)

Net increase (decrease) in cash		1,270,240			163,297
Cash and cash equivalents - Beginning of year		1,872,068			1,708,771

Cash and cash equivalents - End of year		3,142,308			1,872,068

F-4

GBS Enterprises Incorporated

Annual Consolidated Statements of Equity

For the year ended December 31, 2011 (Audited) and December 31, 2010 (Unaudited)

Restated

							Accumulated						Equity
					Additional		Other						Attributable
	Common Stock				Paid in		Comprehensive			Accumulated			to Noncontrolling
	Shares		Amount		Capital		Income (Loss)			Deficit			Interest			Equity
	#		$		$		$			$			$			$

Balance, December 31, 2010		16,500,000		16,500		27,221,755		557,207			17,632			19,567,222			47,380,316

March 28, 2011, issued with sale of units at $1.25 /unit		6,044,000		6,044		6,672,906											6,678,950

April 1, 2011, issued on purchase of Pavone AG		999,790		1,000		4,899,000											4,900,000

April 1, 2011, Warrants issued for services		-		-		34,000											34,000

June 1, 2011, issued on purchase of GroupWare, Inc.		250,000		250		1,084,750											1,085,000

July 1, 2011, issued on purchase of IDC Global, Inc.		880,000		880		3,255,120											3,256,000

December 13, 2011, warrants exercised at $1.50 /sh		2,020,000		2,020		3,022,950											3,024,970

December 23, 2011, issued on purchase of SD Holdings Ltd.		612,874		613		1,255,837											1,256,450

Net comprehensive loss for the year								(63,001	)		(12,165,298	)		(11,630,239	)		(23,858,538	)

Balance, December 31, 2011		27,306,664		27,307		47,446,318		494,206			(12,147,666	)		7,936,983			43,757,148

F-5

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 1

COMPANY AND BACKGROUND

Overview

The Company’s Common Stock is quoted on the OTC Bulletin Board under the ticker symbol “GBSX.”

Products & Services

GBS has grown by consolidating the fragmented Lotus Software market through the acquisition of companies with complementary product, technology or services offerings. GBS has continuously developed its software and service business to service and support GBS’s expanding Lotus customer base.

F-6

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Messaging and Business Applications Software & Solutions

GBS develops, sells and installs 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 and centrally administered use of e-mail and IM while maintaining control over their compliance with current legal requirements and corporate guidelines.

Consulting Services

GBS develops, sells and orchestrates customer-specific Lotus Domino strategy and consulting services.

GBS Consulting Services’ global teams of consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies to complete client projects on time and with reduced risk.

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.

F-7

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

GBS Lotus Application Modernization and Migration

Revenue Model

General Corporate History

GBS Enterprises Incorporated was incorporated in Nevada on March 20, 2007 as SWAV Enterprises Ltd. (“SWAV”). SWAV had a different management team and was in a different industry.

F-8

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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.

About Lotus Holdings, Ltd.

SPPEFs

F-9

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Transactions following the April 26, 2010 Transaction

Reverse Merger

F-10

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Acquisition/Dissolution of Subsidiary Companies

Pavone AG

Effective April 1, 2011, the Company acquired 100% of the outstanding common stock of Pavone AG, a German corporation (“Pavone”), for $350,000 in cash and 1,000,000 shares of GBS common stock. The fair value of the GBS common stock was determined to be $4.90 per share, representing the market value at the end of trading on the date of the acquisition. The total value of the investment, including the assumption of $583,991 in debt, was $5,833,991. Pavone’s workflow software for Lotus Notes and Domino along with their customer base is well suited to GBS Enterprises portfolio strategy.

F-11

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

GroupWare, Inc.

Effetive June 1, 2011, the Company acquired 100% of the outstanding common stock of GroupWare, Inc., a Florida corporation (“GroupWare”), for $250,000 and 250,000 shares of GBS common stock. The fair value of the GBS common stock was determined to be $4.34 per share, representing the market value at the end of trading on the date of the acquisition. The total value of the investment, including the assumption of $694,617 in debt was $2,029,617. 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's ePDF server delivers centralized, network-wide PDF solutions for messaging, workflow, document, content and data management.

IDC Global, Inc.

On July 25, 2011, the Company acquired 100% of the outstanding common stock of IDC Global, Inc., a Delaware corporation (“IDC”), for 880,000 shares of GBS common stock and made a cash payment of $775,000. The fair value of the GBS common stock was determined to be $3.70 per share, representing the market value at the end of trading on the date of the agreement. The total value of the investment, including $35,000 of debt assumption, was $4,066,000. IDC was a privately held company that provides nationwide network and data center services.

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 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, a company formed in India (“Synaptris India”). 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. Actual shares issued were 612,874. 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.

In accordance with ASC Topic 805, presented below are the unaudited pro forma results of the aforementioned acquisitions and combined entities for the 2011 interim periods and the year-end restated results for December 31, 2010. To disclose the effect on our consolidated results of operations, acquisitions completed during the fiscal year ended December 31, 2011 are presented as if they had occurred at the beginning of the reporting period (i.e., as of January 1, 2011).

F-12

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Unaudited Supplemental Pro Forma

2011 Interim Results & Fiscal Year Ended December 31, 2010 Results

	Pre-Combination						Post Combination						Annual
Subsidiary	Date	Revenue		Earnings			Date	Revenue		Earnings			Date		Revenue		Earnings
	Interim 2011	($)		($)			Interim 2011	($)		($)			2010		($)		($)
Pavone AG	1/1/2011 - 3/31/2011		1,041,409		176,369		4/1/2011 - 12/31/2011		132,429		18,477			1/1/2010 - 12/31/2010		3,445,246		(337,770	)

GroupWare, Inc.	1/1/2011 - 5/31/2011		201,333		(83,901	)	6/1/2011 - 12/31/2011		-		-			1/1/2010 - 12/31/2010		861,853		63,131

IDC Global, Inc.	1/1/2011 - 7/24/2011		3,030,934		80,316		7/25/2011 - 12/31/2011		2,169,988		455,188			1/1/2010 - 12/31/2010		5,025,883		127,145

SD Holdings, Ltd.	1/1/2011 - 9/30/2011		1,394,096		(653,760	)	10/1/2011 - 12/31/2011		239,781		(38,617	)		1/1/2010 - 12/31/2010		2,500,457		(1,244,249	)

Unaudited Supplemental Pro Forma
Combined Entity Figures
Year End 2011 & 2010
	Consolidated Figures
	Date *	Revenue		Comprehensive Income (Loss)
		($)		($)
GBS Enterprises	1/1/2011 - 12/31/2011		28,273,092		-23,858,538

GBS Enterprises	1/1/2010 - 12/31/2010		27,467,211		-3,312,647
*Restated for 2010 and 2011

In accordance with ASC Topic 805-30-50-2, presented below are the purchase price allocations for the acquistions made during the fiscal year:

	IDC			Pavone			GroupWare			SD Holdings

Purchase price paid
Value GBS shares	$	3,256,000		$	4,900,000		$	1,085,000		$	1,256,392
Cash	$	775,000		$	350,000		$	250,000		$	525,529
Assumed debt / Other liabilities	$	(35,000	)	$	(583,991	)	$	(694,617	)	$	(853,116	)
Total purchase consideration	$	4,066,000		$	5,833,991		$	2,029,617		$	2,635,037


Assets Acquired
Working capital	$	883,005					$	721,506		$	326,405
Trademarks / Tradenames				$	319,700		$	95,900
Customer relationships	$	188,595		$	557,900		$	218,100
Goodwill	$	2,994,400		$	4,956,391		$	994,111		$	2,308,632
TOTAL Enterprise Value	$	4,066,000		$	5,833,991		$	2,029,617		$	2,635,037

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:

F-13

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Critical Accounting Policies and Estimates

Segment Reporting

The Financial Accounting Standards Board (“FASB”) authoritative guidance regarding segment reporting establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company has determined that it operates in only one segment – the development and maintenance of computer software programs and support products.

Comprehensive Income (Loss)

The Company adopted the 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 and small net actuarial losses on pension plans.

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 both the 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.

F-14

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Financial Instruments

Financial instruments consist of cash and cash equivalents, accounts and other receivable, financial assets, notes payable, liabilities to banks, accounts payable, accrued liabilities and other liabilities, due to related parties and retirement benefit obligations. 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 United States dollar as our reporting currency. The functional currencies of our significant foreign subsidiaries are the local currency, which includes the Euro, the British Pound, the Indian Rupee, and the Bulgarian Lev. Accordingly, some assets and liabilities are incurred in those currencies 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-15

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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

Goodwill and other Intangible Assets

Intangible assets predominately comprise goodwill, acquired software and capitalized software development services. Intangible assets acquired in exchange for payment are reflected at acquisition costs. If the development costs can be capitalized per ASC 985-20-25, these are reflected as ascribable personnel and overhead costs.

The useful life of acquired software is between three and five years and three years for Company created software.

F-16

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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 for property, plant and equipment is based on useful lives of 3 to 10 years. Leasehold Improvements are depreciated up to 40 years.

Impairment or Disposal of Long-Lived Assets

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 in most cases 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.

F-17

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Software maintenance revenues

Professional services revenues

Foreign Currency Translation

The functional currency of the Company is US dollars. For financial reporting purposes, the financial statements of the subsidiary companies whose functional currency is other than US dollars were translated into US dollars using the current rate method. Assets and liabilities were translated at the exchange rates at the balance sheet dates, 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.

F-18

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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, 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

Off - Balance Sheet Arrangements

F-19

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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 periods presented prior to January 6, 2011. 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 the FASB 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 Group Business Software Enterprises, Inc. on the acquisition date of January 6, 2011, at their fair value and the operations of Group Business Software Enterprises, Inc. 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, 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.

Note 3 CHANGE IN ACCOUNTING POLICIES

Fiscal reporting

Effective September 19, 2012, the Company changed its fiscal year end from March 31 to December 31. Prior to this change, the Company’s subsidiaries, with the exception of SD Holdings, Ltd. had fiscal year ends of December 31 and in reporting its financial statements, the Company, through the use of Regulation S-X Rule 3A-02 (“the 93 day rule”), consolidated those subsidiaries without any adjustments for timing differences in the period ends. This application was in error. With the change in year end, the Company retroactively adjusted previously released financial statements to reflect this change beginning December 31, 2010. Accordingly, the financial statements for the quarter ended September 30, 2011 and 2010, include the accounts of all consolidated companies for the same three month period beginning January 1, 2011 and 2010 respectively. The Balance Sheets as at December 31, 2011 and December 31, 2010 have also been adjusted to include the accounts of all consolidated companies as of those dates.

F-20

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

In accordance with ASC 250, effects of this restatement to the respective statements are shown below:

	For the twelve months ended
	Restated (Audited)			Unaudited (Original Filing)
	December 31, 2011			March 31, 2012			Difference
	$			$			$
Assets
Current Assets
Cash and cash equivalents		3,142,308			1,502,977			1,639,331
Accounts receivable		4,850,507			4,936,887			(86,380	)
Inventories		236,712			236,712
Prepaid expenses		389,772			459,363			(69,591	)
Other receivables		680,693			1,474,929			(794,236	)
Assets held for sale		682,999			24,107
Total current assets		9,982,991			8,634,975			1,348,016

Equity investments in related parties		244,219			244,219			0
Property, plant and equipment		521,976			1,597,326			(1,075,350	)
other non-current receivables		548,909			1,998,194			(1,449,285	)
Deferred tax assets		2,451,800			3,945,272			(1,493,472	)
Goodwill		39,221,603			39,744,686			(523,083	)
Software		14,249,905			14,039,149			210,756
Other assets		93,268			246,140			(152,872	)
Assets held for sale		1,388,723			0			1,388,723
Total non-current assets		58,720,403			61,814,986			(3,094,583	)

Total assets		68,703,394			70,449,961			(1,746,567	)

Liabilities and shareholders' equity
Current liabilities
Notes payable		1,381,821			1,381,821			0
Liabilities to banks		19,595			19,651			(56	)
Accounts payable and accrued liabilities		6,078,711			5,919,788			158,923
Other liabilities		4,252,240			4,237,071			15,169
Deferred income		6,341,575			6,421,502			(79,927	)
Due to related parties		432,421			1,175,103			(742,682	)
Liabilities held for sale		552,031			0			552,031
Total current liabilities		19,058,394			19,154,936			(96,542	)

Liabilities to banks		3,463,483			3,463,483			0
Deferred tax liabilities		0			1,196,472			(1,196,472	)
Retirement benefit obligation		150,632			150,632			0
Other liabilities		2,266,075			2,906,238			(640,163	)
Liabilities held for sale		7,662			0			7,662
Total non-current liabilities		5,887,852			7,716,825			(1,828,973	)

Total liabilities		24,946,246			26,871,761			(1,925,515	)

Shareholders' equity
Capital Stock
Authorized:
75,000,000 common shares and
25,000,000 preferred shares each with a
par value of $.001
Issued and outstanding

		27,307			28,212			(905	)
Additional paid in capital		47,446,318			47,902,913			(456,595	)
Accumulated deficit		(12,147,666	)		(12,970,652	)		822,986
Other comprehensive income		494,206			476,773			17,433
Total shareholders' equity		35,820,165			35,437,246			382,919

Noncontrolling interest in subsidiaries		7,936,983			8,140,954			(203,971	)

Total equity and liabilities		68,703,394			70,449,961			(1,746,567	)

F-21

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

	For the twelve months ended
	Restated (Audited)			Unaudited (Original Filing)
	December 31, 2011			March 31, 2012			Difference
	$			$			$
Net sales		28,273,092			31,941,812			(3,668,720	)
Cost of goods sold		15,898,182			18,047,203			(2,149,021	)
Gross profit		12,374,910			13,894,609			(1,519,699	)

Operating expenses
Selling expenses		15,426,600			16,671,489			(1,244,889	)
Administrative expenses		6,160,961			6,647,636			(486,675	)
General expenses		926,129			830,087			96,042
		22,513,690			24,149,212			(1,635,522	)

Operating income		(10,138,780	)		(10,254,603	)		115,823

Other Income (expense)
Other Income (expense)		(15,894,738	)		(15,910,392	)		15,654
Interest income		33,948			33,942			6
Interest expense		(406,407	)		(408,872	)		2,465
		(16,267,197	)		(16,285,322	)		18,125

Income (loss) before income taxes		(26,405,977	)		(26,539,925	)		133,948

Income tax (income) expense		(2,151,211	)		(2,545,711	)		394,500

Net income (loss)		(24,254,766	)		(23,994,214	)		(260,552	)

Discontinued operations (net of tax)		521,979			0			521,979

Net income (loss) attributable to non-controlling interest		(11,567,489	)		(11,346,081	)		(221,408	)

Net income (loss) attributable to shareholders		(12,165,298	)		(12,648,133	)		482,835

Other comprehensive income (loss)		(125,751	)		978,359			(1,104,110	)

Net income (loss) and comprehensive income (loss) attributed to shareholders		(12,228,299	)		(12,157,721	)		(70,578	)

Basic and diluted income (loss) per share		(0.449	)		(0.509	)		0.060

Weighted average number of shares outstanding		27,247,958			24,847,525			2,400,433

F-22

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

	For the twelve months ended
	Restated (Audited)			Unaudited (Original Filing)
	December 31, 2011			March 31, 2012			Difference
	$			$			$
Cash flow from operating activities
Net loss / net income		(23,732,787	)		(23,994,214	)		261,427
Loss from discontinued operations		(521,979	)					(521,979	)
Adjustments
Deferred income taxes		(2,193,941	)		(2,520,875	)		(326,934	)
Depreciation and amortization		5,840,688			5,951,366			(110,678	)
Loss from equity investment					46,754			(46,754	)
Consulting Expense		34,000			34,000			0
Write-down goodwill and intangibles					14,923,517			(14,923,517	)
Changes in operating assets and liabilities
Accounts receivable and other assets		4,147,043			2,700,062			1,446,981
Retirement benefit obligation		(3,433	)		22,510			(25,943	)
Inventories		(236,712	)		(236,712	)		0
Accounts payable and other liabilities		(1,031,853	)		2,604,285			(3,636,138	)
Net cash provided by operating activities		(17,698,974	)		(469,307	)		(17,229,667	)

Cash flow from investing activities
Purchase of intangible assets		(3,941,396	)		(7,003,787	)		3,062,391
Purchase of property, plant and equipment		0			(1,623,369	)		1,623,369
Purchase of subsidiaries		(1,910,529	)		0			(1,910,529	)
Purchase of Equity Investments		(244,219	)		0			(244,219	)
Increase (Decrease ) of financial assets		13,465,619			(1,141,631	)		14,607,250
Net cash used in investing activities		7,369,475			(9,768,786	)		17,138,261

Cash flow from financing activities
Net borrowings - banks		2,651,919			2,744,216			(92,297	)
Other borrowings		(59,442	)		(3,346,034	)		3,286,592
Capital Paid-in		9,703,920			3,482,470			6,221,450
Loans from related party		432,421			344,947			87,474
Net cash used in financing activities		12,728,818			3,225,599			9,503,219

Cash flow from discontinued operations
Net cash provided (used in) operating activities		(990,050	)		0			(990,050	)

Effect of exchange rate changes on cash		(139,029	)		(15,393	)		(123,636	)

Net increase in cash		1,270,240			(7,027,887	)		8,298,127
Cash and cash equivalents - Beginning of the period		1,872,068			8,530,864			(6,658,796	)

Cash and cash equivalents - End of period		3,142,308			1,502,977			1,639,331

10K Originally Filed compared to 10K Amendment No. 1

In accordance with topic ASC 250, all differences in the financial statements presented above can be attributed to the Company’s fiscal year end date changing from March 31 to December 31.

Note 4 SUBSIDIARY COMPANIES

As of December 31, 2011, GBS Enterprises Incorporated had the following subsidiaries. Such subsidiaries were included in the basis of consolidation (KUSD = 1,000’s of US Dollars):

F-23

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

		Stockholders'
		Equity As of Dec. 31, 2011			Percentage of Subscribed Capital					Profit of the Consolidated Year			Date of the First
	Headquarters	KUSD			KUSD		in %		Ownership	KUSD			Consolidation

ebVOKUS Software GmbH	Dresden		399			54		50.1	I		22		01/11/05
GROUP Business Software (UK) Ltd.	Manchester		(1,219	)		23		50.1	I		(217	)	12/31/05
GROUP Business Software Corp.	Woodstock		(7,766	)		1		50.1	I		(6,132	)	12/31/05
GROUP LIVE N.V.	Den Haag		(3,430	)		134		50.1	I		(1,013	)	12/31/05
GROUP Technologies GmbH	Karlsruhe		70			33		50.1	I		0		01/10/05
Permessa Corporation	Waltham		(672	)		0		50.1	I		(304	)	09/22/10
Relavis Corporation	New York		(806	)		2		50.1	I		(328	)	01/08/07
GROUP Business Software AG	Eisenach		25,401			28		50.1	I		(1,101	)	01/06/11
Pavone AG	Paderborn		(537	)		1,240		100	D		(39	)	01/04/11
Pavone GmbH	Boeblingen		28			47		100	D		18		01/04/11
Pavone Ltd.	North Yorkshire		(65	)		584		100	D		(14	)	01/04/11
Groupware Inc.	Woodstock		(482	)		1		100	D		0		01/06/11
Groupware AG	Luebeck		(112	)		74		100	D		86		01/06/11
IDC Global, Inc.	Chicago		2,074			0		100	D		194		07/25/11
SD Holdings	Mauritius		2,844			3,372		100	D		(17	)	09/27/11
Synaptris Private Decisions Ltd.	Chennai		903			200		100	D		48		09/27/11
Synaptris, Inc.	San Jose		(4,364	)		1		100	D		37		09/27/11

A domination and profit transfer agreement was in place between GROUP Business Software AG as the dominating company and Group Technologies GmbH for the last reporting period. GROUP Business Software AG sold this Company on March 8, 2012 for a price of 49 KUSD.

On September 2, 2011, GROUP Business Software AG acquired the outstanding 0.5% of Relavis Corporation.

Note 5

ASSOCIATED 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 acquired B.E.R.S AD for 265 (KEUR). 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 35 KUSD (previous year: 59 KUSD.)

F-24

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Total Value

Assets

12.31.11

Debts

Sales Revenues

Annual Profit/Loss

Associated Companies

Headquarters

KUSD

B.E.R.S. AD

Varna

244

104

502

Note 6

CASH AND CASH EQUIVALENTS

As of the financial statement date, the Company’s cash and cash equivalents totaled 3,142 KUSD (December 31, 2010 year end restated: 1,872 KUSD).

Note 7

ACCOUNTS RECEIVABLE

As of the financial statement date, Accounts Receivable was 4,851 KUSD (December 31, 2010 year end restated: 5,712 KUSD). 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.

Note 8

PREPAID EXPENSES

Prepaid expenses in the amount of 390 KUSD were primarily recorded for prepaid rent, insurance and advance on technological collaboration events (December 31, 2010 year end restated: 1,421 KUSD).

Note 9

ASSETS AND LIABILITIES HELD FOR SALE

In the fiscal year 2011, the outgoing assets and liabilities associated with the sale of Group Technologies GmbH, were recognized under this category in the amount of 24 KUSD. A breakdown of the assets included is disclosed below.

F-25

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Balance Sheet	2011
	$
Current assets
Cash and cash equivalents		132,620
Accounts Receivable		156,687
Prepaid expenses		54,375
Other receivables		339,317
Assets held for sale		682,999

Non - current assets
Property, plant and equipment		1,083,018
Deferred tax assets		297,000
Software		8,705
Other assets		-
Assets held for sale		1,388,723

Current liabilities
Accounts payables and accrued liabilities		415,854
Deferred income		1,170
Other liabilities		135,007
Liability held for sale		552,031

Non - current liabilities
Other liabilities		7,662
Liability held for sale		7,662

Note 10

OTHER RECEIVABLES - CURRENT

Other Receivables as of the financial statement date were 681 KUSD (December 31, 2010 year end restated: 1,983 KUSD) and decreased primarily due to the reclassification of other current receivables into Assets Held for Sale.

Note 11

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are measured at cost less scheduled straight-line depreciation. 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. Leasehold Improvements are depreciated up to 40 years.

F-26

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Property, Plant and Equipment kUSD	Development of the cost		Development of accumulated depreciation		Balance
Restated 12.31.2010		4,494		4,196		298
Additions		3,750		3,548
Disposals		58		72
Currency differences		273		265
Reclassifications		0		0
Restated 12.31.2011		8,459		7,937		522

Note 12

OTHER RECEIVABLES NON-CURRENT

Non-current Receivables as of the financial statement date were 549 KUSD (December 31, 2010 restated 1,370 KUSD) includes

An amount still outstanding against the purchaser of GEDYS IntraWare GmbH of 544 KUSD, being repaid in monthly installments of 20 KUSD and 5 KUSD in miscellaneous other long term receivables.

Note 13

GOODWILL

Goodwill derives from the following business acquisitions:

Affiliated Company	Date of the First Consolidation	Goodwill 2011 in kUSD (Restated)
GROUP Business Software AG	01/06/11		20,194.40
GROUP Business Software Corp.	12/31/05		2,177.50
GROUP Business Software Ltd	12/31/05		2,765.10
ebVOKUS Software GmbH	01/10/05		443.6
Permessa	09/22/10		2,387.40
Pavone GmbH	01/04/11		4,956.40
Groupware Inc.	01/06/11		994.1
IDC	07/25/11		2,994.40
SD Holding	09/27/11		2,308.70
12/31/2011 Restated			39,221.60

F-27

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 14

SOFTWARE

Development costs

The costs of developing new software products and updating products already marketed by the Company 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 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 Company according to those used by the parent company. Scheduled amortization is performed over a period from three to ten years.

The useful life of the domain “gbs.com”, 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. Should there exist signs indicating towards impairment it is tested for recoverability and, if necessary, written down to the amount which could be obtained for it if sold.

Amortization of concessions, industrial property and similar rights and assets, as well as licenses to such rights and assets are presented in the profit and loss statement under "Depreciation and Amortization."

Concessions and licenses kUSD	Development of the cost			Development of accumulated depreciation			Balance

Restated 12.31.2010		40,339			23,824			16,515
Additions		1,524			1,650
Disposals		3,945			3,434
Currency differences		(929	)		(1,637	)
Reclassifications		(3,904	)		(1,568	)
Restated 12.31.2011		33,085			18,835			14,250

F-28

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 15

OTHER ASSETS NON-CURRENT

The balance of this account of 93 KUSD (December 31, 2010 year end restated: 224 KUSD) and includes Reinsurance claims of 93 KUSD from life insurance (reinsurance of pension obligations) were recognized as actuarial reserves. Corresponding communications by the insurance companies form the basis for the valuation.

Note 16

NOTES PAYABLE

Notes Payable had a balance of 1,382 KUSD at December 31, 2011 (December 31, 2010 year end restated: 1,441 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.

Note 17

LIABILITIES TO BANKS – CURRENT

Included in this account is an operating line of credit of 20 KUSD (December 31, 2010 year end restated: 50 KUSD) with interest at a 3.25% daily periodic rate with a credit limit of 100 KUSD.

Note 18

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Trade payables

As of the financial statement date, trade accounts payable amounted to 2,765 KUSD (December 31, 2010 year end restated: 1,874 KUSD). Trade payables are carried at their repayment amount and all have a residual term of up to one year.

Other Accrual

Other provisions are created as of the financial statement date in an amount necessary according to a reasonable commercial appraisal, to cover future payment obligations, perceivable risks and uncertain liabilities of the Company. Amounts deemed to be most likely to occur, in careful assessment, are accrued.

F-29

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

KUSD	Restated								Currency			Restated
	12.31.10		Utilization		Dissolution		Increase		Differences			12.31.11

Tax provision		112		117		0		32		4			32
Salary		1,241		1,197		87		903		(1	)		859
Vacation		224		194		0		427		(18	)		439
Workers Compensation Insurance Association		15		15		0		30		(1	)		27
Compensation Levy for Non-Employment of Severely Handicapped Persons		17		18		0		18		(1	)		17
Outstanding Invoices		889		650		182		849		(24	)		882
Annual Financial Statement Costs		205		133		23		358		(5	)		401
Other Provisions		66		38		30		350		19			367
Warranties		125		76		9		19		1			60
Gesture of Goodwill		0		0		0		161		(1	)		160
Provision for Legal Costs		36		18		3		60		(4	)		71
Total		2,930		2,456		334		3,207		(32	)		3,314

Provisions for salaries of 859 KUSD (December 31, 2010 year-end restated: 1,241 KUSD) include the provisions created for the variable salaries of the sales staff for the sales objectives reached in this business period.

Vacation provisions of 439 KUSD (December 31, 2010 year-end restated: 224 KUSD) include the obligations of GROUP’s companies to their employees for remaining vacation claims from the reporting period. The amount of the provision is calculated on the gross salary of the individual employee plus the employer contribution to social security/Medicare and based on the unused vacation days as of the financial statement date.

For liabilities not yet settled, a provision totaling 882 KUSD (December 31, 2010 year-end restated: 889 KUSD) was created.

Other Provisions of 367 KUSD (December 31, 2010 year-end restated: 66 KUSD) include miscellaneous provisions.

Expenses for the audit of the Company and preparation of the annual consolidated financial statements were recognized at 401 KUSD (December 31, 2010 year-end restated: 205 KUSD).

A provision for anticipated legal consulting of 71 KUSD (December 31, 2010 year-end restated: 36 KUSD) was recorded.

For warranty claims, a provision of 60 KUSD (December 31, 2010 year-end restated: 125 KUSD) was created determined by service income.

Note 19

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 6,342 KUSD (December 31, 2010 year end restated 6,213 KUSD) primarily include maintenance income collected in advance for the period after the end of the financial statement date. They are amortized on a straight-line basis over their respective contract terms.

F-30

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 20

OTHER SHORT TERM LIABILITIES

Other short-term liabilities of 4,252 KUSD (December 31, 2010 year end restated: 2,822 KUSD) are comprised of obligations and payments currently due for the purchase of assets from Lotus 911, Permessa and Salesplace.

Other Short-Term Liabilities	12.31.11 Restated		12.31.10 Restated
	KUSD		KUSD
Purchase Assets L911		1,094		746
Purchase Assets Fastworks		0		119
Purchase Assets Permessa		1,900		738
Purchase Assets Salesplace		0		490
Tax Liabilities		739		604
Purchase Archiving Software		324		0
Other Liabilities		196		126
		4,252		2,822

Note 21

DUE TO RELATED PARTIES

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 includes the remuneration of the Board of Directors and that of the Supervisory Board.

F-31

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

	12/31/2011
	KUSD
Accounts payable and accruals
Green Mind Ventures		21.1
Vitamin-B Venture Gmbh		360.0
Board of Directors fees and expenses		-
Notes payable - related party (per Note 17)		-
Due to associated company		51.3
		432.4

Note 22

LIABILITIES TO BANK – NON CURRENT

Liabilities to banks as of the financial statement date was 3,463 KUSD (December 31, 2010 year end restated: 781 KUSD) represent bank obligations of GROUP AG with Baden-Württembergische Bank.

Note 23

OTHER LIABILITIES – NON CURRENT

Other long term liabilities as of the financial statement date was 2,266 KUSD (December 31, 2010 year end restated: 6,131 KUSD) and represents the amounts due on the purchase of Lotus 911.

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 is 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 $0.001. No preferred shares have been issued. As at December 31, 2011, there were 27,306,664 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.

Unless otherwise noted, in each instance where the Company issued its securities to a U.S. Person, the Company relied on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) afforded the Company under Section 4(2) promulgated under the Securities Act due to the fact that it was an isolated issuance and did not involve a public offering of securities. In the instances where the Company issued its securities to a non-U.S. Person, the Company relied on the exemption from the registration requirements of the Securities Act afforded the Company under Regulation S promulgated under the Securities Act:

F-32

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

The following are changes to the Company’s capital stock from April 1, 2010:

On April 26, 2010, the Company issued 2,265,240 shares in aggregate for goodwill, inventory, licenses, customer lists and computer software valued at $165,000.

On November 5, 2010, the Company purchased 3,043,985 shares from an existing shareholder for $300,000. Thereupon it exchanged those shares for 7,115,500 common shares of GROUP Business Software AG, a German Company, the fair value of which was determined to be $3,898,000.

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 fair value was determined to be $2,796,000. This brought the total ownership of the issued and outstanding shares of GROUP owned by the Company to be 50.1%

The acquisition of GROUP was accounted for as a reverse acquisition whereby GROUP is treated as the accounting acquirer and the Company is treated as the accounting acquiree. As the transaction is accounted for as a recapitalization applied retroactively, the balance of 16,500,000 issued and outstanding at that time has been recorded as outstanding since inception.

On 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 represents 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.

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.

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 $3,256,000.

On December 13, 2011 the Company issued 2,020,000 shares of common stock on the exercise of warrants.

On December 23, 2011 the Company issued 612,874 share of common stock as partial payment for the purchase of SD Holdings Limited.

F-33

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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 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.

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 date of March 14, 2011, March 24, 2011, March 31, 2011 and April 1, 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	%

Common Stock Warrants Issued to Outside Consultants	Common Shares		Exercise Price		Valuation Date	Fair Value per Warrant Share		Warrants' 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
Issued on April 1, 2011		100,000	$	0.34	4/1/2011	$	0.34	$	34,000
Total Warrant Value								$	279,575

F-34

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

As at December 31, 2011, the number of shares the warrants outstanding could purchase if exercised was as follows:

Warrants	Common Shares		Weighted Average Price/sh
Outstanding, beginning of period		8,000,000	$	4.00
Issued		7,269,420	$	1.50
Expired		-	$	-
Outstanding, end of period		15,269,420	$	2.23

The following share purchase warrant transactions have not been disclosed elsewhere.

On April 1, 2011, the former CFO was issued 100,000 share purchase warrants, which gave him the option of purchasing 100,000 shares of common stock for a period of 3 years at a price of $1.50 per common share. The value of this issuance, using the Black Scholes pricing model was determined to $34,000 and this amount was recorded as a consulting expense.

	# of shares						Fair value							Balance
	allowed to				Strike		at							End of
	purchase		Issue	Expiry	Price		Issuance			Issued		Exercised		Period
	#		Date	Date	$		$			#		#		#
Opening - Jan 1, 2011		2,000,000	10/1/2010	6/1/2013		4.00		-			-		-		2,000,000
Issued for financing services			3/11/2011	3/14/2014		1.50		-			707,280		-		707,280
Issued for financing services			3/28/2011	3/24/2014		1.50		-			15,000		-		15,000
Sold with share units			3/31/2011	3/31/2014		1.50		-			6,044,000		2,020,000		4,024,000
Issued for consulting services			4/1/2011	4/1/2014		1.50		34,000	(1)		100,000		-		100,000
Closing - Dec 31, 2011											6,866,280		2,020,000		6,846,280

Other changes in common stock are disclosed in Note 30, Supplemental Cash Flow Disclosures.

F-35

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 25

REVENUE ALLOCATION

Gross revenue may be broken down by the following products for the fiscal year ended December 31, 2011 are as follows:

Sales Revenues	12.31.11		12.31.10
	KUSD		KUSD

Licenses		5,004		4,787
Maintenance		11,343		9,616
Partner Contribution		0		21
Service		6,485		5,197
Third-Party Products		2,302		3,062
LND Third-Party Products		2,960		4,610
Others		179		173

		28,273		27,467

Revenues by geographical area for the fiscal year ended December 31, 2011 are as follows:

Sales Revenues	12.31.11		12.31.10
by geographic area	KUSD		KUSD

US		9,232		7,768
Germany		17,932		18,973
United Kingdom		1,109		726
Others		-		-

		28,273		27,467

Long-lived assets by geographical area, which primarily include property plant and equipment, are as follows:

Long-lived assets	12.31.11		12.31.10
by geographic area	KUSD		KUSD

US		225		71
Germany		293		224
United Kingdom		4		3
Others		-		-

		522		298

F-36

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Note 26

OTHER INCOME/EXPENSE

At the financial statement date, Other expense was 16,267 KUSD (December 31, 2010 year end restated: Other Income 1,923 KUSD).

Note 27

PENSION PLAN OBLIGATIONS

The Company maintains three retirement plans described as follows:

1. GROUP Business Software AG - A non-contributory defined benefit pension plan (“Qualified Plans”) is maintained by GROUP Business Software AG. 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 December 31.

	Pension Benefits in KUSD
	2011			2010

Change in benefit obligation:
Benefit Obligation at beginning of year		154			140
Service cost		0			0
Interest cost		8			8
Actuarial loss (gain)		(7	)		7
Curtailment (gain) loss		0			0
Plan amendments		0			0
Foreign exchange rate changes		(6	)		0
Benefits paid		0			0
Benefit Obligation at end of year		150			154
Change in plan assets:
Fair value of plan assets at beginning of year		93			90
Actual return on plan assets		4			2
Employer contributions		0			0
Participant contributions		0			0
Benefits paid		0			0
Foreign exchange rate changes		(4	)		1
Fair value of plan assets at end of year		93			93
Benefit Obligation at end of year		57			61

F-37

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

	Pension Benefits in KUSD
	2011			2010

Amounts recognized in the Balance Sheet
Noncurrent asset		93			93
Current liabilities		(150	)		(154	)
Net		(57	)		(61	)
Amounts recognized in other accumulated comprehensive earnings
Net actuarial loss (gain)		(2	)		16
Prior service cost (credit)					0
Total net periodic benefit cost		(2	)		16

The following table presents the components of net periodic benefit cost and other comprehensive earnings for Group AG’s pension plan.

	Pension Benefits in KUSD
	2011			2010

Net periodic benefit cost:
Service cost		0			0
Interest cost		8			8
Recognition of net actuarial loss (gain)		(4	)		7
Recognition of prior service cost					0
Total net periodic benefit cost		4			14
Other comprehensive earnings:
Actuarial (gain) loss arising in current year		(6	)		2
Prior service costs (credit) arising in current year		0			0
Recognition of net actuarial loss (gain)		0			0
Recognition of prior service cost		0			0
Benefit Obligation at end of year		(6	)		2
Total recognized		(2	)		16

Assumptions:

The following table presents the weighted average actuarial assumptions that were used to determine benefit obligations and net periodic benefit costs for both pension plans.

F-38

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

	Pension Benefits
	2011			2010
Assumption to determine benefit obligations:
Discount rate		5.9- 7	%		5.7-7	%
Rate of compensation increase		1	%		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 2012/ 2013 is estimated to increase from 150 KUSD in 2011/ 2012 to 172 KUSD. The expected increase of the assets is estimated end of 2012/ 2013 by 5 KUSD

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 reinsurance. In total, the benefits from the permitted pension correspond to the benefits of the reinsurances which have been signed for these pension promises.

2. GBS Corporation maintains a defined contribution 401(k) plan (“Qualified Plans”) for the benefit of the employees of GBS Corporation and Permessa Corporation. Contributions are made at the discretion of the participating employees. No obligation exists for employer contributions.

3. Synaptris Decisions Private Limited includes gratuity obligations representing a government mandated obligation to provide employees with 15 days of wages for every year worked. Obligations are paid when the employee retires or resigns from the company and payable only if employees serve at least five years of employment with the Company.

Details of the provision for gratuity which is included within Accrued Liabilities:

Description	2011
Defined benefit obligation		67,302

Fair value of plan assets		-

Less: Unrecognized past service cost		-

Plan Liability (adjusted from operating revenue/retained earnings)		67,302

F-39

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Changes in present value of the defined benefit obligation are as follows:

Description	2011
Defined benefit obligation as at April 1		71,906
Interest cost		3,635
Current service cost		14,920
Benefits paid		(29,760	)
Actuarial (gain) loss on obligation		6,599
Defined benefit obligation as at March 31		67,301

No fund is created for payment of gratuity and leave wages and the Company would pay the same amount out of its own funds as and when the same becomes payable.

Employee benefits towards compensated absences recognized in the profit and loss accounts are as follows:

Description	2011
Current service cost		14,920

Interest cost		3,635

Note 28

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 not 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 were written off in the fiscal year ended March 31, 2011 and included in income tax expense.

The following schedule details the reconciliation of the Consolidated Earnings Before Taxes to the Income Tax Expense per the Consolidated Profit and Loss Statement:

December 31	2011			2010
Statutory rate		23.0% - 34.0	%		23.0% - 34.0	%
Consolidated earnings before taxes		(26,539,925	)		(354,215	)

Expected income taxes recovery at the statutory rate		(7,986,340	)		(118,198	)
Effect of change in tax rate		593			(72	)
Permanent differences		533			-348
Temporary differences		66			208
Price allocation from consolidation		2,798			173
Change in deferred income tax asset		889			3,349
Valuation allowance		561			91
Income tax expense (recovery) recognized		(2,546	)		3,283

Income tax expense (recovery) is comprised of:
Current		43			41
Future		(2,589	)		3,243

F-40

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

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
December 31	2011			2010

Intangible assets		(732	)		64
Non-capital losses available for future periods		4,197			588
Price allocation from consolidation		(452	)		(154	)
Intangible assets - opening balance adjustment (acquisition of IDC)		0			(98	)
		3,013			400
Valuation allowance		(561	)		(142	)
		2,452			258

The balances have been disclosed as follows:

	USD		USD
December 31	2011		2010

Short term assets		-		-
Long term assets		2,452		258
Long term liability		-		-
		2,452		257

The Company also has incurred losses for income tax purposes of approximately 12,165 KUSD which may be applied in future years to reduce taxable income. The ability to apply this loss expires starting in 2015.

Note 29

COMMITMENTS

The Company has the following commitments as at December 31, 2011:

	1 Year		Over 1 year		Total
Other Financial Obligations	USD		USD		USD

Liabilities from Rental Agreements		2,126,407		4,813,905		6,940,312
Previous Year - 2010		1,741,048		6,058,332		7,799,381

Liabilities from Vehicle Lease Agreements		217,898		188,182		406,080
Previous Year - 2010		249,541		369,437		618,978

Liabilities from other Lease Agreements		220,810		114,511		335,321
Previous Year - 2010		255,541		144,058		399,599

Current Year ended December 31, 2011		2,565,116		5,116,598		7,681,713
Previous Year ended December 31, 2010		2,246,130		6,571,828		8,817,958

Lease agreement - subsequent to year end		135,733		359,262		494,995

F-41

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

Cash Outlay
For the fiscal year:	Total
1/1/2011 - 12/31/2011	($)

Interest Expense:		170,222

Corporate Income Taxes Paid (Recovered):		56,939

Total Cash Outlay		227,161

Note 30

SUPPLEMENTAL CASH FLOW DISCLOSURES

The significant non-cash transactions for the year ended December 31, 2011 were as follows:

On April 1, 2011, the Company acquired Pavone AG, for 350 KUSD, assumption of $583,991 debt and 1,000,000 shares of its common stock.

On June 1, 2011, the Company acquired GroupWare, Inc., for 250 KUSD, assumption of $694,617 debt and 250,000 shares of its common stock.

F-42

Notes to the Audited Annual Consolidated Financial Statements

December 31, 2011 – Audited and Restated

GBS Enterprises Incorporated

On July 25, 2011, the Company acquired IDC Global, Inc. for 775 KUSD, $35,000 assumption of debt, and 880,000 shares of common stock.

On September 27, 2011, the Company acquired SD Holdings Ltd for $525,529 and issued 612,874 shares of Common Stock.

Note 31

SUBSEQUENT EVENTS

Changes in Corporate Governance in 2012

On February 24, 2012, Markus R. Ernst was appointed as the Company’s Chief Financial Officer.

Audit Committee: John A. Moore, Jr. (Chairman), Woody A, Allen and Gary D. MacDonald

	o	Compensation Committee: Woody A. Allen (Chairman), David M. Darsch, John A. Moore, Jr., Mohammad Shihadah and Stephen D. Baksa

Corporate Governance, Regulatory and Nominating Committee: Woody A. Allen (Chairman), David M. Darsch, John A. Moore, Jr., Mohammad Shihadah and Stephen D. Baksa

F-43