UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-K





|[X]       | ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--------- | ------------------------------------------------------------------------------
|          |                                                                               
|[
      ] | TRANSITION     REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
|          |                                                                               
|          |                                                                               
|          |                                                                               



|ePhoto Image, Inc.                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(Exact
    name of registrant as specified in its charter)                                                                                                           
|Nevada                                                                                                                                                               
|(State
                                                          or other jurisdiction of incorporation or organization)                                             
|No.
                                                          181 Dragon Villas,
        No.
        8 Shun An Nan Road
        Shunyi
        County, Beijing, China
|(Address
    of principal executive offices)                                                                                                                         
|Registrant’s
        telephone number:0086-137-175-28189                                                                                                             



|Securities
                                                                      registered under Section 12(b) of the Exchange Act:
|------------------------------------------------------------------------------------------------------------------------------------
|Title
    of each class                                                                                                             
|none                                                                                                                                
|Securities
        registered under Section 12(g) of the Exchange Act:                                                              
|Title
    of class                                                                                                                  
|none                                                                                                                                







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 [X]
No [ ]



Indicate
by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act during the past 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 [ ] No [X]



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 (§ 229.405 of this chapter) during the
preceeding 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 of this chapter) 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. Yes [X] No [ ]



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



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



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



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. Not available



Indicate
the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
7,750,000 as of August 17, 2011.






Table of Contents


TABLE OF CONTENTS



|                                                                             |                                                                                                                 | Page
|---------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ----
|                                                                             |                                                                                                                 |     
|PART
                                                                      I
|Item
    1.                                                                  | Business                                                                                                        | 3   
|Item
    1A.                                                                 | Risk Factors                                                                                                    | 9   
|Item
    1B.                                                                 | Unresolved Staff Comments                                                                                       | 9   
|Item
    2.                                                                  | Properties                                                                                                      | 9   
|Item
    3.                                                                  | Legal Proceedings                                                                                               | 9   
|Item
    4.                                                                  | (Removed and Reserved)                                                                                          | 9   
|PART
        II                                                             
|Item
    5.                                                                  | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | 10  
|Item
    6.                                                                  | Selected Financial Data                                                                                         | 11  
|Item
    7.                                                                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           | 11  
|Item
    7A.                                                                 | Quantitative and Qualitative Disclosures About Market Risk                                                      | 13  
|Item
    8.                                                                  | Financial Statements and Supplementary Data                                                                     | 13  
|Item
    9.                                                                  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                            | 14  
|Item
    9A.                                                                 | Controls and Procedures                                                                                         | 14  
|Item
    9B.                                                                 | Other Information                                                                                               | 15  
|PART
        III                                                            
|Item
    10.                                                                 | Directors, Executive Officers and Corporate Governance                                                          | 16  
|Item
    11.                                                                 | Executive Compensation                                                                                          | 17  
|Item
    12.                                                                 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  | 19  
|Item
    13.                                                                 | Certain Relationships and Related Transactions, and Director Independence                                       | 19  
|Item
    14.                                                                 | Principal Accountant Fees and Services                                                                          | 19  



|PART
IV     
|------------
|Item
    15.



2


Table of Contents


PART
I

Item
1. Business



Company
Overview



We were
incorporated as “ePhoto Image Inc.” (“ePhoto”) on September 20, 2007, in the State of Nevada for the purpose
of developing digital image transaction software and a website through which visual artists can sell original photographic content.



Business
of Company



We are engaged
in the business of developing digital image transaction software and a website through which visual artists can sell low-cost,
original photographic content specifically to both low-end and high-end users of stock photographic images, such as newsletter
and magazine publishers and website designers based primarily in Asia. We hope that such a website, once established, will provide
photographers, illustrators, graphic designers, animators, cinematographers and other visual artists a low-priced, online venue
to sell their work to users of stock photographic images. Unlike many stock image houses presently operating in the market, our
objective is to not purchase large portfolios of stock images from a select group of established photographers. Instead, we intend
that photographers affiliated with our company will maintain ownership of their stock images. We plan to generate revenue by charging
affiliate photographers a commission on the images they sell through our website. The images sold on our website will primarily
feature Asian themes. We are currently in the process of designing and developing our software and our website, which will utilize
the software to manage our database of images, display available images, and manage all associated transactions. We are continually
refining this software and our website through research and trial runs. When we are satisfied that our software, website, and
products will compete effectively in the Visual Content Industry by being the most cost-efficient and accessible software and
website to offer a diverse selection of images from Asia, we will conduct the public launch of the website for use by visual artists
and their potential customers.



We have
not successfully launched our website or generated any revenues to date. The success of our business is dependent on building
our website, acquiring artist images, and making commission from sales of artwork on our website. If we are unable to successfully
implement our business plan, our business will fail and you will lose your entire investment in our company.



Our offices
are located at No. 181 Dragon Villas, No. 8 Shun An Nan Road, Shunyi County, Beijing, China. Our telephone number is 0086-137-175-28189.



Stock
and Microstock Photography



Stock photography
consists of existing photographs that can be licensed for specific uses. Publishers, advertising agencies, graphic artists, and
others use stock photography to fulfill the needs of their creative assignments. A customer who uses stock photography instead
of hiring a photographer can save time and money. Stock images can be presented in searchable online databases, purchased online,
and delivered via download or email. A collection of stock photography may also be called a photo archive, picture library, photo
bank, or image bank, as modern stock photography distributors often carry stills, video, and illustrations. Images are filed at
an agency that negotiates licensing fees on the photographer’s behalf in exchange for a percentage, or in some cases owns
the images outright. This is increasingly done online, especially with newer microstock models. Pricing is determined by the size
of audience or readership, how long the image is to be used, the country or region where the images will be used and whether royalties
are due to the image creator or owner. Often, an image can be licensed for less than $200, or in the case of the microstock photography
websites as little as $1.



Rights Managed
stock photography involves an individual licensing agreement, which is negotiated for each use and details the specific conditions
under which the image can be used. Royalty-free stock photography offers a photo buyer the ability to use an image an unlimited
number of times and in any medium for a single license fee.

3


Table of Contents


Microstock
photography is an offshoot of traditional stock photography. What defines a company as a microstock photography company is that
they 1) source their images almost exclusively via the Internet, 2) do so from a wider range of photographers than the traditional
stock agencies (including a willingness to accept images from amateurs and hobbyists), and 3) sell their images at a very low
rate (anywhere from $.20 - $10) for a royalty-free image. Many microstock sites also sell vector art, and some sell Flash animations
and video, as well as still images.



Each microstock
company uses a different pricing and payment scheme. Photographers can upload the same pictures on multiple sites or, with some
agencies, become an exclusive supplier and receive an increased commission and additional benefits. There is no fee to post photos
on a microstock site. However, microstock companies do not accept all artists or all photographs. Each employs a team of reviewers
who check every picture submitted for technical quality, as well as artistic and commercial merit. Photographers add keywords
that help potential buyers filter and find pictures of interest.



Visual
Content Industry



The visual
content industry supplies images to a varied and growing customer base, ranging from individual consumers to major multinational
corporations. Market segments include graphic designers, art directors and art buyers at advertising agencies, marketing and communications
professionals, Web and new media designers, newspaper, magazine, book, music and video publishers, and broadcast and media production
companies. In addition, emerging market segments include business users, who are not graphic designers or other professional users
of images, such as managerial and sales professionals and small or home office (SOHO) users. Images are used to communicate messages
in a wide variety of applications, including print, electronic and broadcast advertising, direct mail and marketing brochures,
educational and training publications, books, magazines, newspapers, corporate communications and annual reports, motion pictures,
broadcasting, CD-ROM products, sites on the Internet, other online uses, sales and in-house presentations, and various consumer
uses.



The worldwide
digital content market, including the market for stock digital photographic images, reached $2.9 billion annually in 2004. The
visual content industry has grown substantially in recent years. This growth may be attributed to several factors, including greater
appreciation of the value of images for conveying, symbolizing and reinforcing marketing and editorial messages visually; technological
innovations that have made it easier and cheaper to select, use, edit and distribute images; and a proliferation of communications
channels, particularly via the Internet and in the cable and satellite broadcasting industry. The video footage sector is expected
to continue to grow as technological developments in cable and satellite broadcasting and new media industries lead to a major
increase in demand for stock and archival footage.



A number
of technological advances have contributed to recent developments in the visual content industry and to increased demand for digital
images. These advances include:



- Advances in computer hardware: the
development of faster and less expensive desktop computers, high-quality color monitors and CD-ROM drives and related compression
technologies have made it possible for personal computer users to review and distribute high-quality color images.



- Software development: Developments
in software applications and tools, such as Adobe PhotoShop and PhotoDeluxe, as well as the popularity of low-priced desktop publishing
applications have enabled personal computer users to enhance, manipulate, and edit color images and combine them on a single page
with text and other graphics.



- Advances in printing technologies:
Advances in commercial four color printing technologies have made professional printing more accessible and cost effective for
many professional applications. In addition, the recent introduction of relatively inexpensive, higher resolution color printers
have made it possible for non-professionals and personal computer users to print high-quality color images at low cost without
professional assistance.

4


Table of Contents




- The Internet: Significant increases
in the use of the Internet, both as a medium for communications and as a platform for commercial transactions, have occurred.
According to Internet World Stats (www.internetworldstats.com/emarketing.htm), the number of people who are using the World Wide
Web has grown from 16 million users, or 0.4% of the global population in December of 1995, to 1,319,872,109 and 20% of the global
population in December of 2007. Asia alone has over 500 million users, accounting for 38.7% of the Internet usage of the world.
Asia has shown a 346.6% Internet use growth from the years 2000 to 2007. This increased use of the Internet has resulted in growth
in commercial promotion and advertising in websites and other online communications, which, in turn, have contributed to an increase
in demand for and use of digital images for such promotion, advertising and communication. In addition, the Internet provides
a new, more efficient means of marketing and distributing images for such uses, as well as more traditional uses.



Our Products



The rising
demand for stock photographic images within the growing visual content industry in conjunction with the widespread and increasing
use of the Internet in general and as a source for visual content have resulted in what we anticipate will be a highly receptive
potential market for our website and our products. The vast pool of potential consumers of stock photographic images within the
visual content industry as well as the many prospective consumers working outside of the visual content industry are all seeking
high-quality, affordable images from visual artists who, in turn, are seeking ways to reach and sell their work to a wide range
of customers at fair-market value. The subject matter of our stock photographic images will focus primarily on Asian themes and
will target an Asian audience. This specialization offers several benefits, including a less complicated keyword image search.



To date,
we have reserved a domain name at www.ePhotoImage.com. Our website is currently under construction. We are currently in the process
of developing the site to manage a database of images, display available images, and manage all associated transactions with artist
affiliates. We are continually refining this software and our website through research and trial runs. When we are satisfied that
our software, website, and products will compete effectively in the Visual Content Industry by being the most cost-efficient and
accessible software and website to offer a diverse selection of images from Asia, we will conduct the public launch of the website
for use by visual artists and their potential customers.



Once established,
we anticipate that our website will be an online stock image transaction site, similar to other online stock image agency websites
in that it provides the opportunity for corporations and individuals to purchase image usage rights online and to take digital
delivery of the image electronically. Our strategy is to differ from many online stock image companies, however, in that we plan
to allow contributing photographers the ability to retain ownership of their images. We are in the process of developing an affiliate-based
website, branded “ePhotoImage.com,” where our images will be available for viewing, purchasing and downloading. We
plan to solicit photographic originals from photographers and create an inventory of stock images available for online viewing.
Our plan is that the website will include still photographic images, illustrations, clip art and video clips. Customers should
be able to freely browse our inventory of stock images and download thumbnail sketch samples of stock images. However, customers
must pay the contributing photographer prior to downloading usable images. We plan to generate revenues by charging our affiliated
photographers a sales commission of approximately 30% on all sales transacted on our website.



Our business
plan is to offer digital product, transaction, and delivery. We believe the advantage of our digital approach is a significant
reduction in costs. Unlike companies that sell physical products (including photographs and other artwork), our products, once
established, will be digital in nature and will not require facilities to warehouse products, and consequently no staff is required
to manage inventory and prepare orders. Likewise, financial transactions and the delivery of purchases will be accomplished digitally,
so no sales and fulfillment staff will be required and no shippers, drivers or vehicles are needed. Staff will still be required
in the areas of administration, marketing, and support. Whenever possible, information we gain from staff activities will be used
to further automate our processes.

5


Table of Contents


We are in
the process of refining the format for our website, which will be integral to its success. We are designing and developing our
website by conducting research to improve on quality and cost. This research includes performing trial runs of our software and
website in order to refine their essential qualities, such as ease of access and software reliability. Refining these qualities
will ensure that our final website and products are practical, affordable, and dependable.



We have
not yet begun the process of soliciting an inventory of digital images from photographers. We have, however, analyzed the market
and believe our unique twists in the stock image market will appeal to new, amateur and experienced photographers. We believe
that the established stock image business has grown complex and intimidating to most photographers. Leading stock image vendors
tend to boast about the vast number of images they hold online. We believe that such an inventory almost insures that individual
works will get “lost” in the database. In contrast, we hope to develop a site to focus on the emerging middle class
Chinese market. It will have the nuances and cultural cues that appeal to the modern photographer interested in the Chinese culture,
whether they are amateurs or professionals. We intend to draw these photographers to our site, by engaging in the following:



- We intend to attract photographers
with regionally based theme categories. For example, unlike current stock image sites which classifies in broad terms such as
“people,” “animals,” etc. we will also create categories for regions such as “Great Wall,”
‘"Barrier Reef,” etc. We will classify regions, history and subject-matter items that are appealing to China,
such as its rich history, food, cultural icons.



- We also plan to offer a “mobile
upload” area to attract photographers. Though most mobile images are of poor quality, we feel the hardware makers are now
offering phone cameras that create acceptable images. These “live” and “authentic” images will be of non-posed
and choreographed images. We plan to capture mobile uploads, offer many royalty-free photos, but create a market in the future
for licensed images from this source. We feel that the mobile upload market will only grow in popularity. This could be the “blog”
or “twitter” for images. As of March 2010, it is estimated that China has 747 million mobile phone users; many of
these phones are equipped with cameras. It is projected that in 2014, China alone will have about 957 million mobile phone users.
(see: http://www.emarketer.com/blog/index.php/staggering-mobile-stats-bric-countries/ )



- We also intend to advertise our
website through a combination of Skype, MSN and Facebook in China. This social networking and communications portal is rich with
young, affluent Chinese consumers creating images. These images are history captured as China grows. These images are what Chinese
marketers and international marketers will be interested in to "speak" to its audience. In the next twelve months, we
hope to commence the process of developing the infrastructure to link with this social networking community.



We have
not yet marketed our website to attract customers, but we intend to do so in the next twelve months. We intend to attract customers
with value pricing and offering ease of use. We intend to draw in customers by engaging in the following:



- We are using SEO as part of our
website development architecture. SEO or “Search Engine Optimization” is the process of improving the volume or quality
of traffic thru the web site. To ensure we are associated and found by users of the most popular search engines such as Google,
Bing or Yahoo, we are incorporating the most current organic and algorithmic processes.



- We also plan to do limited marketing
at websites that focus on amateur photographers seeking advice and information. Sites such as blogs or forums that offer inexpensive
internet banners for exposure and marketing.



- We also intend to use mutual internet
links. Other than tapping into the search engine user base, we will also market and offer mutual link marketing. So manufacturers,
photo studios and accessory makers will have links within our site and in return they will link ePhoto to theirs.

6


Table of Contents


Competition



We plan
to compete with a number of established online stock image companies who sell stock images to visual content consumers in Asia
and internationally. These companies enjoy brand recognition which exceeds that of our brand name and have significantly greater
financial, distribution, advertising, and marketing resources than we do, including:



- Getty Images has a user friendly
website where its vast inventory of stock photographic images may be previewed and purchased by prospective customers. They have
long standing business relationships with photographers and publishers and are the leading supplier of stock images for business
and consumers with an archive of 70 million still images and illustrations and more than 30,000 hours of stock film footage. The
company targets 3 markets: creative professionals (advertising and graphic design), the media (print and online publishing), and
corporate communication departments for other businesses. The company generates revenue of approximately $807 million each year.



- iStockphoto is an online, royalty
free, international microstock photography provider operating with the micropayment business model. Images cost between 1 and
20 credits, depending on size (with credits ranging from $.96 to $1.30 each). The company was the pioneer for the microstock photography
industry, and claims to be “the world’s fastest growing collection of original, independent, royalty-free images.”
As of March 2008, the online photo library contains over 2.8 million images contributed by over 50,000 photographers. The company
has over 3 million registered members (as of February 2008) that participate in Internet forums, a creative-network for keeping
track of friends, and a peer review/rating system. They have a reputation for interacting with their member-base and discussing
changes and new ideas openly before and after implementation, but they also have a reputation for censorship among some photographers.
The company was acquired by Getty Images for $50 million in February 2006.



- ShutterStock is a microstock photography
website selling images by subscription. As of February 2008, the company had more than 3 million royalty-free images available
to subscribers, taken by more than 70,000 photographers. Subscribers can download up to 25 images per day (750 per month) and
may continue to use the pictures even after their membership has expired. As of June 2007, the fee for subscribers began at $199
per month. Contributing photographers must apply before they are eligible to upload their images, and, once approved, can begin
uploading their work through the website. They supply keywords, categorize the images, and submit them to inspection, where each
image is examined to ensure that it meets the standards of quality, usefulness and copyright and trademark laws. Each time an
image is downloaded, the photographer receives a flat rate of $.25 ($.30 if the photographer has reached $500 in lifetime earnings).



- Fotolia is a microstock photography
agency that provides means for worldwide distribution of photographs, through PayPal and Moneybookers. Some photographs are offered
for free; those that are sold are priced from $1 to as high as $2,000. As of December 2007, Fotolia had more than 500,000 members
who had uploaded more than 2.7 million photographs and graphic illustrations.



- Corbis is a buyer/seller of high-quality
photography and film footage and related rights. It has a collection of over 100 million creative, entertainment and historic
images, a comprehensive footage library, extensive rights and clearances expertise, and a roster of elite assignment photographers.
Corbis is privately owned by Bill Gates. It sells to over 50 countries, but since its founding in 1989, the company has never
had a profitable year. Corbis claims to have the broadest, deepest and most easily accessible and searchable collection of imagery
in the world. In June 2007, Corbis launched a microstock website, SnapVillage. The company intended to use its microstock site
as a farm club to find photographers who could also sell their photographs on the main Corbis website. SnapVillage offers two
pricing models: per-image pricing like iStockphoto, or subscriptions like those offered by ShutterStock.

7


Table of Contents


We believe
that our website will differ from many other stock image services in several respects:



- Once established, our website will
be open to all photographers, illustrators, cinematographers and digital artists worldwide even if they only have a small number
of marketable images.



- We plan to function somewhat like
a photographer's co-operative where members have access to common services that are not otherwise available to photographers on
an individual basis: marketing services, a large pool of clients, online searchable database of images and monetary transaction
processing capabilities. While many photographers have websites, it is neither practical nor economically feasible for an individual
photographer’s website to have the kinds of capabilities that we provide.



- In a traditional stock agency, agency
staff takes physical ownership and possession of the photographer's images and perform the functions necessary to edit, digitize,
upload and catalog them. With our company, photographers will retain possession and control of their images and do the editing,
digitizing, uploading and cataloging of their images themselves, resulting in reduced staff requirements for us and no need for
expensive climate-controlled storage facilities. This should also results in lower commission rates so photographers retain more
of the proceeds of the sale than with traditional stock agencies.



We plan
to compete primarily on the basis of quality, brand name recognition, and price. We believe that our success will depend upon
our ability to be competitive in our product areas. The failure to compete successfully in the future could result in a material
deterioration of customer loyalty and our image and could have a material adverse effect on our business.



Intellectual
Property



Once we
determine the final format for our digital image transaction software and website, we intend to file for patent protection and/or
copyright protection in China and other jurisdictions.



We intend
to aggressively assert our rights under trade secret, unfair competition, trademark and copyright laws to protect our intellectual
property, including software and website design, product research and concepts and recognized trademarks. These rights are protected
through the acquisition of patents and trademark registrations, the maintenance of trade secrets, the development of trade dress,
and, where appropriate, litigation against those who are, in our opinion, infringing these rights.



We are currently
consulting with law firms to protect our brand name and software and website design. While there can be no assurance that registered
trademarks will protect our proprietary information, we intend to assert our intellectual property rights against any infringer.
Although any assertion of our rights can result in a substantial cost to, and diversion of effort by, our company, management
believes that the protection of our intellectual property rights is a key component of our operating strategy.



Regulatory
Matters



We are unaware
of and do not anticipate having to expend significant resources to comply with any governmental regulations of the visual content
industry. We are subject to the laws and regulations of those jurisdictions in which we plan to sell our products, which are generally
applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the development,
manufacture, and sale of our products in Asia is not subject to special regulatory and/or supervisory requirements.



There are
currently few laws or regulations directly applicable to commerce on the Internet. Due to the increasing popularity and use of
the Internet, it is possible that a number of laws and regulations may be adopted with respect to the Internet, relating to issues
such as user privacy, pricing, characteristics and quality of products and services. A number of countries have enacted, or may
enact, laws that regulate Internet content.

8


Table of Contents


Employees



Petra Jaeger,
our President and Director, devotes 10 to 15 hours per week to our business affairs as our employee. We do not have an employment
agreement with Petra Jaeger. Aside from Petra Jeager, we do not have any full or part-time employees. Our President oversees all
responsibilities in the areas of corporate administration, business development, and research. We intend to expand our current
management to retain skilled directors, officers, and employees with experience relevant to our business focus. Petra Jeager is
highly skilled in technical areas such as researching and developing our product, but not skilled in areas such as marketing our
product and business management. Obtaining the assistance of individuals with and in-depth knowledge of operations and markets
will allow us to build market share more effectively.



Environmental
Laws



We have
not incurred and do not anticipate incurring any expenses associated with environmental laws.



Item
1A. Risk Factors.



A smaller
reporting company is not required to provide the information required by this Item.



Item
1B. Unresolved Staff Comments



A smaller
reporting company is not required to provide the information required by this Item.



Item
2. Properties



We maintain
our corporate office at No. 181 Dragon Villas, No. 8 Shun An Nan Road, Shunyi County, Beijing, China.



Item
3. Legal Proceedings



We are not
a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors,
or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.



Item
4. (Removed and Reserved)

9


Table of Contents


PART
II



Item
5. Market for Registrant’s Common Equity and Related Stockholder Mattersand Issuer Purchases of Equity Securities



Market
Information



Our common
stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is sponsored by FINRA. The OTCBB is a network
of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current
"bids" and "asks", as well as volume information. Our shares are quoted on the OTCBB under the symbol “EPHO.OB.”



The following
table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by
the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.



|Fiscal Year Ending April 30, 2011
|---------------------------------
|Quarter Ended                    
|April 30, 2011                   
|January 31, 2011                 
|October 31, 2010                 
|July 31, 2010                    





|Fiscal Year Ending April 30, 2010
|---------------------------------
|Quarter Ended                    
|April 30, 2010                   
|January 31, 2010                 
|October 31, 2009                 
|July 31, 2009                    



Penny
Stock



The SEC
has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges
or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock,
to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level
of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's
or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such
duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including
bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free
telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format,
as the SEC shall require by rule or regulation.



The broker-dealer
also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the
penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which
such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock;
and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

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In addition,
the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks,
and a signed and dated copy of a written suitability statement.



These disclosure
requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty
selling our securities.



Holders
of Our Common Stock



As of April
30, 2011, we had 7,750,000 shares of our common stock issued and outstanding, held by 30 shareholders of record.



Dividends



The Company
has not declared, or paid, any cash dividends since inception and does not anticipate declaring or paying a cash dividend for
the foreseeable future.



Nevada law
prohibits our board from declaring or paying a dividend where, after giving effect to such a dividend, (i) we would not be able
to pay our debts as they came due in the ordinary course of our business, or (ii) our total assets would be less than the sum
of our total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution,
to satisfy the rights of any creditors or preferred stockholders.



Securities
Authorized for Issuance under Equity Compensation Plans



We do not
have any equity compensation plans.



Item
6. Selected Financial Data



A smaller
reporting company is not required to provide the information required by this Item.



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



Forward-Looking
Statements



Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the
words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions. We intend such
forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations
and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory
changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties
should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. Further information concerning our business, including additional factors that could materially affect
our financial results, is included herein and in our other filings with the SEC.

11


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Results
of Operations for the Years Ended April 30, 2011 and 2010, and Period from September 20, 2007 (Date of Inception) until April
30, 2011



We generated
no revenue for the period from September 20, 2007 (Date of Inception) until April 30, 2011.



Our operating
expenses were $28,626 for the year ended April 30, 2011, compared with $23,429 for the year ended April 30, 2010, and $58,677
from September 20, 2007 (Date of Inception) to April 30, 2011. Our operating expenses for all periods was mostly attributable
to professional fees associated with the initial development of our business, legal and accounting expenses in connection with
this registration statement, and consulting fees.



We recorded
a net loss of $30,193 for the year ended April, 20, 2011, compared with $23,429 for the year ended April 30, 2010. We recorded
a net loss of $61,412 from September 20, 2007 (Date of Inception) to April 30, 2011.



Liquidity
and Capital Resources



As of April
30, 2011, we had total current assets of $2, consisting of Cash. We had current liabilities as of April 30, 2011 of $53,622. Thus,
we have a working capital deficit of $53,620 as of April 30, 2011.



Operating
activities used $31,141 in cash for the period from September 20, 2007 (Date of Inception) until April 30, 2011. Our net
loss of $61,412 offset by $30,271 in accounts payable and accrued liabilities was the sole basis of our negative operation
cash flow. Financing activities during the period from September 20, 2007 (Date of Inception) until April 30, 2011 generated
$31,143 in cash during the period, represented by $7,792 from the proceeds of sales of our common stock and advances from a
shareholder of $23,351. The advances are non-interest bearing and have no specified terms of repayment.



We expect
to spend approximately $20,000 to implement our business plan over the coming year. Our accounting, legal and administrative expenses
for the next twelve months are anticipated to be $30,000.



As of April
30, 2011, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash
to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining additional
financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our
capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the
sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will
be available to us on acceptable terms, or at all.



Going
Concern



We have
negative working capital, have incurred losses since inception, and have not yet received revenues from sales of products or services.
These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include
any adjustment that might be necessary if we are unable to continue as a going concern.



Our ability
to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt financing
and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining debt
financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in
these efforts.



Off Balance
Sheet Arrangements



As of April
30, 2011, there were no off balance sheet arrangements.

12


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Item
7A. Quantitative and Qualitative Disclosures About Market Risk



A smaller
reporting company is not required to provide the information required by this Item.



Item
8. Financial Statements and Supplementary Data





Index
to Financial Statements Required by Article 8 of Regulation S-X:



|Audited
                                                                                                    Financial Statements:
|---------------------------------------------------------------------------------------------------------------------------------
|F-1                                                                                                                              
|F-2                                                                                                                              
|F-3                                                                                                                              
|F-4                                                                                                                              
|F-5                                                                                                                              
|F-6                                                                                                                              





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Silberstein Ungar, PLLC CPAs and Business Advisors

Phone (248) 203-0080

Fax (248) 281-0940

30600 Telegraph Road, Suite 2175

Bingham Farms, MI 48025-4586

www.sucpas.com





REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



To the Board of Directors

ePhoto Image, Inc.

Beijing, China



We have audited the accompanying balance sheets
of ePhoto Image, Inc. as of April 30, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit),
and cash flows for the years then ended and the period from September 20, 2007 (date of inception) to April 30, 2011. These financial
statements are the responsibility of the Companies management. Our responsibility is to express an opinion on these financial statements
based on our audits.



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



In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of ePhoto Image, Inc., as of April 30, 2011 and 2010
and the results of their operations and cash flows for the years then ended and for the period from September 20, 2007 (date of
inception) to April 30, 2011, in conformity with accounting principles generally accepted in the United States.



The accompanying financial statements have
been prepared assuming that ePhoto Image, Inc. will continue as a going concern. As discussed in Note 7 to the financial statements,
the Company has incurred losses from operations, has limited working capital, and is in need of additional capital to grow its
operations so that it can become profitable. These factors raise substantial doubt about the Company’s ability to continue
as a going concern. Management’s plans with regard to these matters are described in Note 7. The accompanying financial statements
do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Silberstein Ungar, PLLC

Silberstein Ungar, PLLC



Bingham Farms, Michigan

August 16, 2011



F-1


Table of Contents




ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE
COMPANY)

BALANCE SHEETS

AS OF APRIL 30, 2011 AND 2010



|                                                                                                         | 2011 |         | 2010
|-------------------------------------------------------------------------------------------------------- | ---- | ------- | ----
|ASSETS                                                                                                   |      |         |     
|Current Assets                                                                                           |      |         |     
|Cash and equivalents                                                                                     | $    | 2       |     
|                                                                                                         |      |         |     
|TOTAL ASSETS                                                                                             | $    | 2       |     
|                                                                                                         |      |         |     
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                    |      |         |     
|                                                                                                         |      |         |     
|Current Liabilities                                                                                      |      |         |     
|Accounts payable and accrued liabilities                                                                 | $    | 30,271  |     
|Note payable – related party                                                                             |      | 23,351  |     
|Total Liabilities                                                                                        |      | 53,622  |     
|                                                                                                         |      |         |     
|Stockholders’ Deficit                                                                                    |      |         |     
|Common Stock, $.001 par value, 90,000,000 shares authorized, 7,750,000 shares issued and
    outstanding |      | 7,750   |     
|Preferred Stock, $.001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding        |      | 0       |     
|Additional paid-in capital                                                                               |      | 42      |     
|Deficit accumulated during the development stage                                                         |      | (61,412 | )   
|Total stockholders’ deficit                                                                              |      | (53,620 | )   
|                                                                                                         |      |         |     
|TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                              | $    | 2       |     



See accompanying notes to financial statements.

F-2


Table of Contents


ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED APRIL 30, 2011 AND 2010

FOR THE PERIOD FROM SEPTEMBER 20, 2007 (INCEPTION)
TO APRIL 30, 2011



|                                                                  |  | Year ended 
April 30, 2011 |           | Year ended 
April 30, 2010 |  | Period from September 20, 2007 (Inception) to 
April 30, 2011
|----------------------------------------------------------------- |  | -------------------------- | --------- | -------------------------- |  | -------------------------------------------------------------
|                                                                  |  |                            |           |                            |  |                                                              
|REVENUES                                                          |  | $                          | 0         |                            |  | $                                                            
|                                                                  |  |                            |           |                            |  |                                                              
|EXPENSES                                                          |  |                            |           |                            |  |                                                              
|Professional fees                                                 |  |                            | 28,446    |                            |  |                                                              
|Registration and filing fees                                      |  |                            | 180       |                            |  |                                                              
|General and administrative expenses                               |  |                            | 0         |                            |  |                                                              
|TOTAL OPERATING EXPENSES                                          |  |                            | 28,626    |                            |  |                                                              
|                                                                  |  |                            |           |                            |  |                                                              
|LOSS FROM OPERATION                                               |  |                            | (28,626   | )                          |  |                                                              
|                                                                  |  |                            |           |                            |  |                                                              
|OTHER INCOME (EXPENSE)                                            |  |                            | (1,567    | )                          |  |                                                              
|                                                                  |  |                            |           |                            |  |                                                              
|LOSS PRIOR TO INCOME TAXES                                        |  |                            | (30,193   | )                          |  |                                                              
|                                                                  |  |                            |           |                            |  |                                                              
|PROVISION FOR INCOME TAXES                                        |  |                            | 0         |                            |  |                                                              
|                                                                  |  |                            |           |                            |  |                                                              
|NET LOSS                                                          |  | $                          | (30,193   | )                          |  | $                                                            
|                                                                  |  |                            |           |                            |  |                                                              
|BASIC AND DILUTED LOSS PER SHARE                                  |  | $                          | (0.00)    |                            |  | $                                                            
|                                                                  |  |                            |           |                            |  |                                                              
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC
    AND DILUTED |  |                            | 7,750,000 |                            |  |                                                              



See accompanying notes to financial statements.

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Table of Contents


ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT)

PERIOD FROM SEPTEMBER 20, 2007 (INCEPTION)
TO APRIL 30, 2011

|                                             | Common Stock |           | Additional Paid |  | Deficit Accumulated During the Development |       |      
|-------------------------------------------- | ------------ | --------- | --------------- |  | ------------------------------------------ | ----- | -----
|                                             | Shares       |           | Amount          |  | in Capital                                 |       | Stage
|                                             |              |           |                 |  |                                            |       |      
|Balance, September 20, 2007 (Inception)      |              | —         |                 |  | $                                          | 0     |      
|                                             |              |           |                 |  |                                            |       |      
|Net loss for the period ended April 30, 2008 |              | —         |                 |  |                                            | —     |      
|                                             |              |           |                 |  |                                            |       |      
|Balance, April 30, 2008                      |              | —         |                 |  |                                            | 0     |      
|                                             |              |           |                 |  |                                            |       |      
|Common stock issued for cash during          |              | 7,750,000 |                 |  |                                            | 7,750 |      
|                                             |              |           |                 |  |                                            |       |      
|Net loss for the year ended April 30, 2009   |              | —         |                 |  |                                            | —     |      
|                                             |              |           |                 |  |                                            |       |      
|Balance, April 30, 2009                      |              | 7,750,000 |                 |  |                                            | 7,750 |      
|                                             |              |           |                 |  |                                            |       |      
|Net loss for the year ended April 30, 2010   |              | —         |                 |  |                                            | —     |      
|                                             |              |           |                 |  |                                            |       |      
|Balance, April 30, 2010                      |              | 7,750,000 |                 |  |                                            | 7,750 |      
|                                             |              |           |                 |  |                                            |       |      
|Net loss for the year ended April 30, 2011   |              | —         |                 |  |                                            | —     |      
|                                             |              |           |                 |  |                                            |       |      
|Balance, April 30, 2010                      |              | 7,750,000 |                 |  | $                                          | 7,750 |      





See accompanying notes to financial
statements.

F-4


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ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED APRIL 30, 2011 AND 2010

FOR THE PERIOD FROM SEPTEMBER 20, 2007 (INCEPTION)
TO APRIL 30, 2011



|                                            | Year ended 
April 30, 2011 |         | Year ended 
April 30, 2010 |  | Period from September 20, 2007 (Inception) to 
April 30, 2011
|------------------------------------------- | -------------------------- | ------- | -------------------------- |  | -------------------------------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES        |                            |         |                            |  |                                                              
|Net loss for the period                     | $                          | (30,193 | )                          |  | $                                                            
|Change in assets and liabilities:           |                            |         |                            |  |                                                              
|Accounts payable and accrued liabilities    |                            | 22,743  |                            |  |                                                              
|CASH FLOWS USED BY OPERATING ACTIVITIES     |                            | (7,450  | )                          |  |                                                              
|                                            |                            |         |                            |  |                                                              
|CASH FLOWS FROM FINANCING ACTIVITIES        |                            |         |                            |  |                                                              
|Proceeds from sales of common stock         |                            | 0       |                            |  |                                                              
|Proceeds from note payable – related party  |                            | 7,450   |                            |  |                                                              
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |                            | 7,450   |                            |  |                                                              
|                                            |                            |         |                            |  |                                                              
|NET INCREASE IN CASH                        |                            | 0       |                            |  |                                                              
|                                            |                            |         |                            |  |                                                              
|Cash, beginning of period                   |                            | 2       |                            |  |                                                              
|Cash, end of period                         | $                          | 2       |                            |  | $                                                            
|                                            |                            |         |                            |  |                                                              
|SUPPLEMENTAL CASH FLOW INFORMATION:         |                            |         |                            |  |                                                              
|Cash paid for interest                      | $                          | 0       |                            |  | $                                                            
|Cash paid for income taxes                  | $                          | 0       |                            |  | $                                                            



See accompanying notes to financial statements.

F-5


Table of Contents


ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL
STATEMENTS

APRIL 30, 2011



NOTE 1 – SUMMARY OF ACCOUNTING POLICIES



Nature of Business

ePhoto Image, Inc. (“ePhoto”) is
a development stage company and was incorporated in Nevada on September 20, 2007. The Company is creating a web portal selling
photo images, both in the Western and Chinese markets. The main focus is on the Asia Theme. The Company plans to target Asian photographers
to sign up and sell their prints on the ePhoto website as well.



Development Stage Company

The accompanying financial statements have
been prepared in accordance with generally accepted accounting principles related to development-stage companies. A development-stage
company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no
significant revenues there from.



Basis of Presentation

The financial statements of the Company have
been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in
US dollars.



Accounting Basis

The Company uses the accrual basis of accounting
and accounting principles generally accepted in the United States of America (“GAAP” accounting).  The Company
has adopted an April 30 fiscal year end.



Cash and Cash Equivalents

ePhoto considers all highly liquid investments
with maturities of three months or less to be cash equivalents. At April 30, 2011 and 2010, the Company had $2 of cash.



Fair Value of Financial Instruments

The Company’s financial instruments consist
of cash and cash equivalents, accounts payable and accrued liabilities and an amount due to a related party. The carrying amount
of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing
market rates unless otherwise disclosed in these financial statements.



Income Taxes

Income taxes are computed using the asset and
liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.



Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements
and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-6


Table of Contents


ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

APRIL 30, 2011



NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (continued)



Basic Income (Loss) Per Share

Basic income (loss) per share is calculated
by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during
the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents
outstanding as of April 30, 2011.



Revenue Recognition

The Company recognizes revenue when products
are fully delivered or services have been provided and collection is reasonably assured.



Stock-Based Compensation

Stock-based compensation is accounted for at
fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock
options. As of April 30, 2011, the Company has not issued any stock-based payments to its employees.



Recent Accounting Pronouncements

The Company does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial
position or cash flow.



NOTE 2 – INCOME TAXES



For the period ended April 30, 2011, ePhoto
Image, Inc. has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward
has been fully reserved. The cumulative net operating loss carry-forward is approximately $61,400 at April 30, 2011, and will expire
beginning in the year 2029.



The provision for Federal income tax consists of the following:



|                                       |  | 2011 |         | 2010
|-------------------------------------- |  | ---- | ------- | ----
|Federal income tax attributable to:    |  |      |         |     
|Current Operations                     |  | $    | 10,266  |     
|Less: valuation allowance              |  |      | (10,266 | )   
|Net provision for Federal income taxes |  | $    | 0       |     



The cumulative tax effect at the expected rate
of 34% of significant items comprising our net deferred tax amount is as follows:



|                                    |  | 2011 |         | 2010
|----------------------------------- |  | ---- | ------- | ----
|Deferred tax asset attributable to: |  |      |         |     
|Net operating loss carryover        |  | $    | 23,526  |     
|Valuation allowance                 |  |      | (23,526 | )   
|Net deferred tax asset              |  | $    | 0       |     



F-7


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ePHOTO IMAGE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

APRIL 30, 2011



NOTE 3 – ACCRUED EXPENSES



Accrued expenses consisted of amounts due to
the company’s attorney, stock transfer agent and independent auditors as of April 30, 2011.



NOTE 4 – NOTE PAYABLE – RELATED
PARTY



During the year ended April 30, 2011 the company
received advances from a shareholder of $7,450. The advances are non-interest bearing and have no specified terms of repayment.
The total due to the shareholder was $23,351 as of April 30, 2011.



NOTE 5 – COMMON STOCK



At inception, Ephoto issued 5,600,000 shares of stock to its founding
shareholder for $5,600 cash.



During the year ended April 30, 2009, Ephoto issued 2,150,000 shares
of stock for $2,192 cash.



There were no additional shares of common stock
issued during the year ended April 30, 2011. At April 30, 2011, the Company had 7,750,000 shares of common stock issued and outstanding.



NOTE 6 – COMMITMENTS



Ephoto neither owns nor leases any real or
personal property, an officer has provided office services without charge. Such costs are immaterial to the financial statements
and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely
will become involved in other business activities in the future.



NOTE 7 – LIQUIDITY AND GOING CONCERN



The Company has negative working capital, has
incurred losses since inception, and has not yet received revenues from sales of products or services. These factors create substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment
that might be necessary if the Company is unable to continue as a going concern.



The ability of ePhoto Image, Inc. to continue
as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing
and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing
to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these
efforts.



NOTE 8 – SUBSEQUENT EVENTS



In accordance with
ASC 855-10,the Companyhas analyzed its operations subsequent to April 30, 2011 to August 16, 2011, the date these
financial statements were issued, and have determined that it does not have any material subsequent events to disclose in these
financial statements.







F-8


Table of Contents




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



None



Item
9A. Controls and Procedures



Disclosure
Controls and Procedures



As
required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial
officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our sole chief executive
officer and principal financial officer concluded that as of April 30, 2011, these disclosure controls and procedures were not
effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities
Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated
to our company’s management, including our company’s principal executive officer and principal financial officer,
to allow timely decisions regarding required disclosure.



The
conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal
control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over
Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the
material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.



Management’s
Report on Internal Control Over Financial Reporting



Our
company’s management is responsible for establishing and maintaining adequate internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial
reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
in the United States of America. Internal control over financial reporting 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 our
company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles in the United States of America, and that our
company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.



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

14


Table of Contents


Our
Management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and
operation of our internal control over financial reporting as of April 30, 2011 based on the criteria set forth in Internal Control
– Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included
review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness
of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over
financial reporting was not effective as at April 30, 2011 due to the following material weaknesses which are indicative of many
small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written
policies and procedures for accounting and financial reporting with respect to the requirements and application of both United
States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that
such disclosure controls and procedures will not be effective until the material weaknesses are remediated.



Our
company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period
covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending February 28, 2012, subject to obtaining
additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk
management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation
efforts set out above are largely dependent upon our company securing additional financing to cover the costs of implementing
the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely effected in a material
manner.



This
annual report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered
public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s
report in this annual report.



Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.



Changes
in Internal Control Over Financial Reporting.



There
were no changes in the Company’s internal control over financial reporting during the quarter ended April 30, 2011 that
have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.





Item
9B. Other Information



None

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PART
III



Item
10. Directors, Executive Officers and Corporate Governance



The
following information sets forth the names of our current directors and executive officers, their ages as of April 30, 2011 and
their present positions.



|Name                                                                                                                                                                                                                                                                                             | Age | Position
    Held with the Company                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Petra
                                                                                                                                                        Jaeger
        No.
        181 Dragon Villas,
        No.
        8 Shun An Nan Road
        Shunyi
        County, Beijing, China | 49  | President,
    Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial Officer, Principal Accounting
    Officer, and Director



Set forth
below is a brief description of the background and business experience of our executive officer and Directors.



Petra
Jaeger is our President, Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial
Officer, Principal Accounting President and Director. Mr. Jaeger received a diploma from the University Pforzheim in 1990. Shortly
thereafter, he founded HitPit Design and began his own line of jewelry under that name. He has been overseeing all aspects of
management, production, and sales of HitPit Design since 1990.



Term
of Office



Our directors
are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the
board.



Significant
Employees



We do not
currently have any significant employees aside from Petra Jaeger.



Involvement
in Certain Legal Proceedings



To the best
of our knowledge, during the past ten years, none of the following occurred with respect to our present or former director, executive
officer, or employee: (1) 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; (2) any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being
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 or her involvement in any type of business,
securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the
Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.



Committees
of the Board



Our company
currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company
have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such
committees, at this time, because the functions of such committees can be adequately performed by the board of directors.

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Table of Contents


Our company
does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors.
The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and
of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific
or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure
for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders,
and make recommendations for election or appointment.



A shareholder
who wishes to communicate with our board of directors may do so by directing a written request addressed to our President and
director, Ms. Petra Jaeger, at the address appearing on the first page of this annual report.



Code
of Ethics



April 30,
2011, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions.



Item
11. Executive Compensation



Summary
Compensation Table



The table
below summarizes all compensation awarded to, earned by, or paid to both to our officers and to our directors for all services
rendered in all capacities to us for our fiscal years ended April 30, 2011 and 2010.



|SUMMARY COMPENSATION TABLE                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name  and principal position                                                                                                                                                                           
|Petra Jaeger, President, Chief Executive Officer, Principal Executive
        Officer,
        Chief Financial Officer, Principal Financial Officer,
        Principal Accounting Officer, and Director









Narrative
Disclosure to the Summary Compensation Table



Although
we do not currently compensate our officers, we reserve the right to provide compensation at some time in the future. Our decision
to compensate officers depends on the availability of our cash resources with respect to the need for cash to further our business
purposes.



Stock
Option Grants



We
have not granted any stock options to the executive officers or directors since our inception.



17


Table of Contents




Outstanding
Equity Awards at Fiscal Year-End



The
table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive
officer as of April 30, 2011.

|OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END                                                                                                                                                                                                                                                                           
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|OPTION
    AWARDS                                                                                                                                                                                                                                                                                                      
|Name                                                                                                                                                                                                                                                                                                                   
|Petra
                                                                                                        Jaeger, President, Chief Executive Officer, Principal Executive Officer,
        Chief
        Financial Officer, Principal Financial Officer,
        Principal
        Accounting Officer, and Director

Compensation of Directors



We do not
pay any compensation to our directors at this time. However, we reserve the right to compensate our directors in the future with
cash, stock, options, or some combination of the above.



Stock
Option Plans



We did not
have a stock option plan in place as of April 30, 2011

18


Table of Contents




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



The following
table sets forth, as of April 30, 2011, certain information as to shares of our common stock owned by (i) each person known by
us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive
officers and directors as a group:



|Name
    and Address of Beneficial Owners of Common Stock                                                                                                                                                                                                                                   | Title
    of Class   | Amount and Nature of Beneficial Ownership1 | % of Common Stock2
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------------------ | ------------------
|Petra
                                                                                                                                                   Jaeger
        No.
        181 Dragon Villas,
        No.
        8 Shun An Nan Road
        Shunyi
        County, Beijing, China | Common
        Stock | 2,850,000
        Shares                   | 36.77%            
|DIRECTORS
    AND OFFICERS – TOTAL                                                                                                                                                                                                                                                          |                      | 2,850,000
    Shares                       | 36.77%            
|                                                                                                                                                                                                                                                                                            |                      |                                            |                   
|5%
    SHAREHOLDERS                                                                                                                                                                                                                                                                         |                      |                                            |                   
|Namuun
                                                                                                                                                   Ganbaatar
        Bayanzurkh
        district, 1st khoroo, 12R Khoroolol, 22R Bair, 124 Toot, Ulaanbaatar, Mongolia               | Common
    Stock     | 2,750,000
    Shares                       | 35.48%            







1
As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a
security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition
of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership"
of any security that such person has the right to acquire within 60 days after such date.



2
The percentage shown is based on denominator of 7,750,000 shares of common stock issued and outstanding for the company as of
April 30, 2011.



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



None of
our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns,
directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members
of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material
interest, direct or indirect, in any transaction over the last two years or in any presently proposed transaction which, in either
case, has or will materially affect us.



As of the
date of this annual report, our common stock is traded on the OTC Bulletin Board (the “Bulletin Board”). The Bulletin
Board does not impose on us standards relating to director independence or the makeup of committees with independent directors,
or provide definitions of independence.



Item
14. Principal Accounting Fees and Services



Below is
the table of Audit Fees (amounts in US$) billed by our auditor in connection with the audit of the Company’s annual financial
statements for the years ended:



|Financial Statements for the Year Ended April 30 |  | Audit Services |       | Audit Related Fees |  | Tax Fees |   | Other Fees
|------------------------------------------------ |  | -------------- | ----- | ------------------ |  | -------- | - | ----------
|2011                                             |  | $              | 7,200 |                    |  | $        | 0 |           
|2010                                             |  | $              | 6,750 |                    |  | $        | 0 |           

19


Table of Contents


PART
IV



Item
15. Exhibits, Financial Statements Schedules



(a) Financial Statements and Schedules

The following financial statements and schedules listed below are included in this Form
10-K.
Financial Statements (See Item 8)



|Exhibit
    Number | Description                                                                                                                                                                      
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1                | Articles of Incorporation, as amended (1)                                                                                                                                        
|3.2                | Bylaws, as amended (1)                                                                                                                                                           
|23.1               | Consent of Silberstein Ungar, PLLC                                                                                                                                               
|31.1               | Certification of Chief Executive Officer pursuant
    to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  
|31.2               | Certification of Chief Financial Officer pursuant
    to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  
|32.1               | Certification of Chief Executive Officer and Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



(1)Incorporated by reference to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on
February 25, 2010.



20


Table of Contents




SIGNATURES



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





|    | ePhoto
    Image, Inc.                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|By: | /s/
    Petra Jaeger                                                                                                                                                                                                                                                                
|    | Petra
                                                          Jaeger
        President,
        Secretary,
        Chief
        Executive Officer,
        Chief
        Financial Officer,
        Principal
        Accounting Officer,
        Treasurer,
        and Director
|    | August 18, 2011                                                                                                                                                                                                                                                                     



In accordance
with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:



|    | ePhoto
    Image, Inc.                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|By: | /s/
    Petra Jaeger                                                                                                                                                                                                                                                                
|    | Petra
                                                          Jaeger
        President,
        Secretary,
        Chief
        Executive Officer,
        Chief
        Financial Officer,
        Principal
        Accounting Officer,
        Treasurer,
        and Director
|    | August 18, 2011                                                                                                                                                                                                                                                                     





21