UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C.
20549



FORM 10-Q



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



For the quarterly period ended:September
30, 2013



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



Commission File Number:000-53223



GBS ENTERPRISES INCORPORATED

(Exact name of registrant as specified in
its charter)



|Nevada                                           |  | 27-3755055                          
|------------------------------------------------ |  | ------------------------------------
|(State or other jurisdiction of incorporation or |  | (I.R.S. Employer Identification No.)
|organization)                                    |  |                                     
|                                                 |  |                                     
|585 Molly Lane
        Woodstock, GA             |  | 30189                               
|(Address of principal executive offices)         |  | (Zip Code)                          



(404) 891-1711

(Registrant’s telephone number, including
area code)



With a copy to:

Philip Magri, Esq.

The Magri Law Firm, PLLC

11 Broadway, Suite 615

New York, NY 10004

T: (646) 502-5900

F: (646) 826-9200

pmagri@magrilaw.com

www.MagriLaw.com



N/A

(Former name, former address and former
fiscal year, if changed since last report)



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



Yes   x
No    ̈



Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).



Yes    ̈
No   x



Indicate by check mark 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 ct. (Check one):



|Large accelerated filer    ̈                                             | Accelerated filer    ̈        
|----------------------------------------------------------------------- | -----------------------------
|                                                                        |                              
|Non-accelerated filer    ̈ (Do not check if a smaller reporting company) | Smaller reporting company   x



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



Yes    ̈
No   x



APPLICABLE ONLY TO CORPORATE REGISTRANTS



Indicate the number of shares outstanding of each of the registrant’s
classes of common stock, as of the latest practicable date. As of November 14, 2013, there were 30,837,624 shares of common stock,
par value $0.001 per share, of the Registrant issued and outstanding.











TABLE OF CONTENTS



|           |                                                                                       |  | Page No:
|---------- | ------------------------------------------------------------------------------------- |  | --------
|           | PART I - FINANCIAL INFORMATION                                                        |  |         
|Item 1.    | Financial Statements                                                                  |  | 3       
|Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 45      
|Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                            |  | 59      
|Item 4.    | Controls and Procedures                                                               |  | 59      
|           |                                                                                       |  |         
|           | PART II - OTHER INFORMATION                                                           |  |         
|Item 1.    | Legal Proceedings                                                                     |  | 60      
|Item 1A.   | Risk Factors                                                                          |  | 60      
|Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 60      
|Item 3.    | Defaults Upon Senior Securities                                                       |  | 60      
|Item 5.    | Other Information                                                                     |  | 60      
|Item 6.    | Exhibits                                                                              |  | 61      
|Signatures |                                                                                       |  | 62      



2







PART I - FINANCIAL INFORMATION



Item 1.          Financial
Statements



GBS Enterprises Incorporated

Interim Consolidated Balance Sheets

September 30, 2013 (Unaudited) and December 31, 2012 (Audited
and Restated)





|                                                          |  |               |             |   | Restated     | 
|--------------------------------------------------------- |  | ------------- | ----------- | - | ------------ | 
|                                                          |  | September 30, |             |   | December 31, | 
|                                                          |  | 2013          |             |   | 2012         | 
|                                                          |  | $             |             |   | $            | 
|Assets                                                    |  |               |             |   |              | 
|Current Assets                                            |  |               |             |   |              | 
|Cash and cash equivalents - Note 6                        |  |               | 259,614     |   |              | 
|Accounts Receivable - Note 7                              |  |               | 3,528,260   |   |              | 
|Inventory - Note 3                                        |  |               | 21,684      |   |              | 
|Prepaid expenses - Note 8                                 |  |               | 207,811     |   |              | 
|Other current receivables - Note 9                        |  |               | 276,856     |   |              | 
|Assets held for sale                                      |  |               | -           |   |              | 
|Total current assets                                      |  |               | 4,294,224   |   |              | 
|                                                          |  |               |             |   |              | 
|Non-Current Assets                                        |  |               |             |   |              | 
|Assets held for sale                                      |  |               | -           |   |              | 
|Property, plant and equipment - Note  11                  |  |               | 282,601     |   |              | 
|Other non-current receivables - Note 12                   |  |               | 1,217       |   |              | 
|Deferred tax assets non-current - Note 10                 |  |               | 1,076,010   |   |              | 
|Goodwill - Note 13                                        |  |               | 31,260,500  |   |              | 
|Software - Note 14                                        |  |               | 10,232,633  |   |              | 
|Other assets - Note 15                                    |  |               | 132,489     |   |              | 
|Total non-current assets                                  |  |               | 42,985,450  |   |              | 
|                                                          |  |               |             |   |              | 
|Total assets                                              |  |               | 47,279,675  |   |              | 
|                                                          |  |               |             |   |              | 
|Liabilities and stockholders' equity                      |  |               |             |   |              | 
|Current liabilities                                       |  |               |             |   |              | 
|Notes payable                                             |  |               | 1,775,010   |   |              | 
|Liabilities to banks - Note 16                            |  |               | 3,887,764   |   |              | 
|Accounts payables and accrued liabilities - Note 17       |  |               | 3,946,070   |   |              | 
|Deferred income - Note 18                                 |  |               | 6,846,920   |   |              | 
|Other short term liabilities - Note 19                    |  |               | 242,252     |   |              | 
|Due to related parties                                    |  |               | -           |   |              | 
|Liabilities held for sale                                 |  |               | -           |   |              | 
|Total current liabilities                                 |  |               | 16,698,017  |   |              | 
|                                                          |  |               |             |   |              | 
|Non-Current liabilities                                   |  |               |             |   |              | 
|Liabilities to banks                                      |  |               | -           |   |              | 
|Retirement benefit obligation                             |  |               | 172,414     |   |              | 
|Liabilities held for sale                                 |  |               | -           |   |              | 
|Total non-current liabilities                             |  |               | 172,414     |   |              | 
|                                                          |  |               |             |   |              | 
|Total liabilities                                         |  |               | 16,870,431  |   |              | 
|                                                          |  |               |             |   |              | 
|Stockholders' equity                                      |  |               |             |   |              | 
|Capital stock - Note 20                                   |  |               |             |   |              | 
|Authorized:                                               |  |               |             |   |              | 
|75,000,000 common shares of $.001 par value each          |  |               |             |   |              | 
|25,000,000 preferred shares of $.001 par value each       |  |               |             |   |              | 
|Issued and outstanding:                                   |  |               |             |   |              | 
|30,837,624   shares of common stock                       |  |               |             |   |              | 
|(29,461,664  shares of common stock at December 31, 2012) |  |               | 30,838      |   |              | 
|Additional paid in capital                                |  |               | 50,009,107  |   |              | 
|Subscription Receivable                                   |  |               | 50,000      |   |              | 
|Accumulated deficit                                       |  |               | (21,646,422 | ) |              | 
|Other comprehensive income                                |  |               | (299,034    | ) |              | 
|                                                          |  |               |             |   |              | 
|                                                          |  |               | 28,144,489  |   |              | 
|Noncontrolling interest in subsidiaries                   |  |               | 2,264,754   |   |              | 
|                                                          |  |               |             |   |              | 
|Total stockholders' equity                                |  |               | 30,409,243  |   |              | 
|                                                          |  |               |             |   |              | 
|Total stockholders' equity and liabilities                |  |               | 47,279,675  |   |              | 



Subsequent events - Note 25



3







GBS Enterprises Incorporated

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

For the three and nine month periods ended September 30,
2013 and September 30, 2012 (Restated)

(Unaudited)







|                                                                                |  | For the three months ended |            |   | For the nine months ended |  
|------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------- | -
|                                                                                |  |                            |            |   | Restated                  |  
|                                                                                |  | September 30,              |            |   | September 30,             |  
|                                                                                |  | 2013                       |            |   | 2012                      |  
|                                                                                |  | $                          |            |   | $                         |  
|                                                                                |  |                            |            |   |                           |  
|Revenues - Note 21                                                              |  |                            |            |   |                           |  
|Products                                                                        |  |                            | 4,133,565  |   |                           |  
|Services                                                                        |  |                            | 932,091    |   |                           |  
|                                                                                |  |                            | 5,065,656  |   |                           |  
|Cost of goods sold                                                              |  |                            |            |   |                           |  
|Products                                                                        |  |                            | 563,950    |   |                           |  
|Services                                                                        |  |                            | 1,709,105  |   |                           |  
|                                                                                |  |                            | 2,273,055  |   |                           |  
|Gross profit                                                                    |  |                            | 2,792,601  |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Operating expenses                                                              |  |                            |            |   |                           |  
|Selling expenses                                                                |  |                            | 2,033,242  |   |                           |  
|Administrative expenses                                                         |  |                            | 1,145,304  |   |                           |  
|General expenses                                                                |  |                            | 120,364    |   |                           |  
|                                                                                |  |                            | 3,298,910  |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Operating income (loss)                                                         |  |                            | (506,309   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Other Income (expense) - Note 22                                                |  |                            |            |   |                           |  
|Other Income (expense)                                                          |  |                            | 44,726     |   |                           |  
|Interest income                                                                 |  |                            | -          |   |                           |  
|Interest expense                                                                |  |                            | (140,213   | ) |                           |  
|                                                                                |  |                            | (95,487    | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Income (loss) before income taxes                                               |  |                            | (601,796   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Income tax (income) expense                                                     |  |                            | 487        |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Income (loss) before discontinued
    operations                                |  |                            | (602,283   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Discontinued operations - Note 4                                                |  |                            | -          |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Net income (loss)                                                               |  |                            | (602,283   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Net Loss Attributable to noncontrolling Interest                                |  |                            | 535,588    |   |                           |  
|Net income (loss) attributable to stockholders                                  |  |                            | (1,137,871 | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Net earnings (loss) per share, basic and diluted                                |  | $                          | (0.0373    | ) |                           | $
|                                                                                |  |                            |            |   |                           |  
|Weighted average number of common stock outstanding, basic and diluted          |  |                            | 30,492,650 |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Statement of Comprehensive Income (Loss):                                       |  |                            |            |   |                           |  
|                                                                                |  |                            |            |   |                           |  
|Net Income (Loss)                                                               |  |                            | (602,283   | ) |                           |  
|Foreign currency Translation Adjustment                                         |  |                            | (365,488   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Comprehensive income (loss)                                                     |  |                            | (967,771   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Less: Net Income (Loss) attributable to noncontrolling interest                 |  |                            | 535,588    |   |                           |  
|Less: Other Comprehensive Income (Loss) attributable to noncontrolling interest |  |                            | (182,378   | ) |                           |  
|                                                                                |  |                            |            |   |                           |  
|Total Comprehensive income (loss) attributed to stockholders                    |  |                            | (1,320,981 | ) |                           |  



4







GBS Enterprises Incorporated

Interim Consolidated Statements of Cash Flows

For the nine months ended September 30, 2013 and September
30, 2012 (Restated)

(Unaudited)





|                                                               |  |                    |            |   | Restated           | 
|-------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | 
|                                                               |  | September 30, 2013 |            |   | September 30, 2012 | 
|                                                               |  | $                  |            |   | $                  | 
|                                                               |  |                    |            |   |                    | 
|Cash flow from operating activities                            |  |                    |            |   |                    | 
|Net loss / net income                                          |  |                    | (3,012,689 | ) |                    | 
|Adjustments                                                    |  |                    |            |   |                    | 
|Deferred income taxes                                          |  |                    | 56,093     |   |                    | 
|Depreciation and amortization                                  |  |                    | 3,399,200  |   |                    | 
|Write-down of Goodwill and Intangibles                         |  |                    | -          |   |                    | 
|Consulting expense                                             |  |                    | 74,000     |   |                    | 
|Interest Expense                                               |  |                    | 195,288    |   |                    | 
|Gains (Losses)  on Sale of Assets                              |  |                    | -          |   |                    | 
|Gains (Losses) from equity investment                          |  |                    | -          |   |                    | 
|Changes in operating assets and liabilities:                   |  |                    |            |   |                    | 
|Accounts receivable, prepaid assets, other current receivables |  |                    | 3,574,403  |   |                    | 
|Other Assets                                                   |  |                    | -          |   |                    | 
|Retirement benefit obligation                                  |  |                    | 6,538      |   |                    | 
|Inventories                                                    |  |                    | (21,684    | ) |                    | 
|Accounts payable and other liabilities                         |  |                    | (2,915,625 | ) |                    | 
|                                                               |  |                    |            |   |                    | 
|Net cash provided (used) by operating activities               |  |                    | 1,355,523  |   |                    | 
|Net cash provided (used) by discontinued                       |  |                    | -          |   |                    | 
|                                                               |  |                    |            |   |                    | 
|Cash flow from investing activities                            |  |                    |            |   |                    | 
|Sale (Purchase) of intangible assets                           |  |                    | 487,309    |   |                    | 
|Sale (Purchase) of property, plant and equipment               |  |                    | -          |   |                    | 
|Increase (Decrease) in Financial assets                        |  |                    | -          |   |                    | 
|                                                               |  |                    |            |   |                    | 
|Net cash provided (used) in investing activities               |  |                    | 487,309    |   |                    | 
|                                                               |  |                    |            |   |                    | 
|Cash flow from financing activities                            |  |                    |            |   |                    | 
|Net borrowings - banks                                         |  |                    | 164,889    |   |                    | 
|Other borrowings                                               |  |                    | (538,562   | ) |                    | 
|Capital paid-in                                                |  |                    | 100,000    |   |                    | 
|Loans from related party                                       |  |                    | (2,115,869 | ) |                    | 
|                                                               |  |                    |            |   |                    | 
|Net cash provided (used) in financing activities               |  |                    | (2,389,541 | ) |                    | 
|                                                               |  |                    |            |   |                    | 
|Effect of exchange rate changes on cash                        |  |                    | (348,280   | ) |                    | 
|                                                               |  |                    |            |   |                    | 
|Net increase (decrease) in cash                                |  |                    | (894,988   | ) |                    | 
|Cash and cash equivalents - Beginning of the year              |  |                    | 1,154,602  |   |                    | 
|                                                               |  |                    |            |   |                    | 
|Cash and cash equivalents - End of Quarter                     |  |                    | 259,614    |   |                    | 





5







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
1          COMPANY AND BACKGROUND



GBS
Enterprises Incorporated, a Nevada corporation, through its subsidiaries, is a global provider
of technology solutions for businesses and government agencies. We focus on developing and delivering solutions that help our
customers to gain value and reduce cost in the development, deployment and management of the applications used in the course of
conducting their business (“business applications”). We do this by building software and providing services that aid
in:



| |  ̈ | Information
                                                                                                             Technology (“IT”)
                                                                                                             systems analysis,
                                                                                                             planning and management;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  ̈ | Automating
                                                                                                             business processes;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| |  ̈ | Optimizing
                                                                                                             system and application
                                                                                                             performance;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  ̈ | Ensuring
                                                                                                             the security and
                                                                                                             compliance of systems,
                                                                                                             applications and
                                                                                                             processes; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  ̈ | Migrating
                                                                                                             and integrating systems,
                                                                                                             applications and
                                                                                                             processes.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our customers include corporate
and government IT departments, solutions integrators (“SIs”) and independent software vendors (“ISVs”).
Our corporate customers are from a variety of industries, including insurance, financial services, pharmaceuticals, healthcare,
manufacturing, logistics, and education. The install-base of our software products spans more than 5,000,000 users in 38 countries
on four continents. We principally market and sell our products and services directly in the United States, Canada, United Kingdom,
Germany, Austria, Switzerland, the Nordics and India; and indirectly through local distributors and resellers representing Australia,
South America and regionally in Europe.



Our software and services are designed
to mainly serve organizations that have investments in IBM’s Lotus® Notes and Domino platform. The IBM Lotus® Notes
and Domino platform is both a system for enterprise email as well as an application platform, meaning that it can be used as both
an email system and an environment in which business applications can be deployed and used. This platform was originally brought
to market by Lotus Development Corp. in 1989, and was subsequently acquired by IBM in 1995. According to Radiate, in 2011, IBM
Lotus Domino will have a worldwide installed base of 189 million mailboxes. Currently, the installed base for On-Premises IBM
Lotus Domino mailboxes represents the majority of worldwide IBM Lotus Domino mailboxes, accounting for 87% of worldwide IBM Lotus
Domino mailboxes. By 2015, this percentage is expected to decrease to 80%, as hosted email grows in popularity. (The Radiate Group
Inc., April 2011, “IBM Lotus Notes/Domino Market Analysis, 2011-2015“)



6







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



We,
through our subsidiaries, have executed our strategy to acquire companies, which have developed software and specialized services
for the Lotus Notes and Domino market. This growth by acquisition strategy has resulted in less competition for our software products;
a large concentration of highly skilled employees with unique expertise in the area of Lotus Notes and Domino; staff and physical
offices on three continents providing greater access to a global market; significant market awareness and greater market share
amongst organizations that use Lotus Notes and Domino; and a comprehensive portfolio of solutions specific to the needs and requirements
of organizations which use Lotus Notes and Domino.



While
our products and services remain in use and demand, over the last several years, the market itself has been undergoing a paradigm
shift. New technologies, especially in the areas of Cloud Computing and Mobile applications, have grown in popularity due to the
potential cost savings and operational efficiencies they can offer. As organizations make investments in these new technologies,
they are faced with highly complex and costly projects to migrate (“migration”) or replace their existing systems
that don’t operate in the cloud or on mobile devices (“modernization”) – this includes their existing
email and business applications that run on Lotus Notes and Domino.



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



General
Corporate History



We
were incorporated in Nevada on March 20, 2007 as SWAV Enterprises Ltd. (“SWAV”). SWAV was an importer and wholesaler
of Chinese manufactured goods.



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



7







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



On
September 6, 2010, SWAV’s name was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company’s trading
symbol on the OTC Bulletin Board was changed from SWAV to GBSX.



About
Lotus Holdings, Ltd.



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



SPPEFs



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



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



In
early April 2010, the SPPEF Members decided to acquire SWAV. As disclosed above, on April 26, 2010, Lotus, on behalf of the SPPEF
Members, acquired an aggregate of 11,984,770 shares of SWAV common stock from the selling shareholders of SWAV for an aggregate
purchase price of $370,000. The 11,984,770 shares of SWAV common stock represented approximately 79.9% of the 15,000,000 outstanding
shares of SWAV common stock on April 26, 2010. Upon the consummation of the acquisition, the then executive officers and directors
of SWAV resigned and Mr. Joerg Ott, the Chief Executive Officer of GROUP and a GROUP Major Shareholder, was appointed the Chief
Executive Officer of SWAV and sole member of SWAV’s Board of Directors.



8









Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Transactions
following the acquisition



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



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



Reverse
Merger



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



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



9









Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Additional
Acquisition



On
February 27, 2012, the Company acquired an additional 883,765 shares of common stock of GROUP from GAVF LLC for an average purchase
price of $.070 per share, or approximately $619,000, after an outstanding loan of GROUP was converted into an aggregate of 1,750,000
shares of GROUP common stock, thereby increasing GROUP’s outstanding common stock to 26,982,000 shares. By acquiring the
new shares, the Company increased its ownership of GROUP common stock to an aggregate of 13,525,000 shares, representing approximately
50.1% of the outstanding common stock of GROUP.



Acquisition/Dissolution
of Subsidiary Companies



Pavone
AG



Effective
April 1, 2011, the Company acquired 100% of the outstanding common shares of Pavone AG, a German corporation, for $350,000 in
cash and 1,000,000 shares of its common stock. The fair value of the common stock was determined to be $4.90 per share, representing
the market value at the end of trading on the date of the acquisition. The total value of the investment, including the assumption
of $ 583,991 in debt was $5,843,991. Pavone’s extensive workflow software for Lotus Notes and Domino along with their large
customer base is well suited to GBS Enterprises portfolio strategy. The acquisition of Pavone complements GBS's majority ownership
in GROUP and the Company believes that it further strengthens their leading industry position on the IBM Lotus Platforms and expands
their cloud computing technology offerings beyond the IBM Lotus market. Pavone currently has offices in Germany and the UK. They
have over 2,500 customers and over 150,000 users worldwide.



GroupWare,
Inc.



Effective
June 1, 2011, the Company acquired 100% of the outstanding common shares of GroupWare, Inc., a Florida corporation (“GroupWare”).
As consideration the Company paid $250,000 and issued 250,000 shares of its common stock. The fair value of the common stock was
determined to be $4.34 per share, representing the market value at the end of trading on the date of the acquisition. The total
value of the investment, including the assumption of $ 694,617 in debt was $ 2,029,617. Upon the consummation of the acquisition,
the management and board of GroupWare resigned and Joerg Ott, the Company’s Chief Executive Officer and sole director, was
appointed as the Chief Executive Officer and sole director of GroupWare. GroupWare is based in Lubeck, Germany with offices in
St. Petersburg, Florida. GroupWare's ePDF server delivers centralized, network-wide PDF solutions for messaging, workflow, document,
content and data management. The Company believes that the acquisition strengthens the GBS Modernizing/Migrating offering, which
helps bring IBM Lotus Notes client applications to the web, by substituting traditional printing methods provided by the Notes
client with simple-to-use print-to-PDF capabilities in the browser.



10









Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



IDC
Global, Inc.



On
July 25, 2011, the Company acquired 100% of the issued and outstanding shares of common stock of IDC Global, Inc., a Delaware
corporation (“IDC”). Pursuant to the acquisition agreement, dated July 15, 2011, the Company agreed to issue the shareholders
an aggregate of 800,000 shares of common stock and made a cash payment of $750,000. The agreement required an additional payment
to the management shareholders of 80,000 shares of common stock and signing bonuses to personnel of $35,000. The Company also
agreed to reimburse IDC up to $25,000 for incurred accounting and legal fees related to the transaction. The fair value of the
common stock was determined to be $3.70 per share, representing the market value at the end of trading on the date of the agreement.
The total value of the investment, including $883,005 of debt assumption, was $4,066,000. IDC was a privately held company that
provides nationwide network and data center services. IDC delivers customized, high availability technology solutions for WAN,
Wireless Services, Co-location & Hosting, Managed Services, and Network Security. IDC includes two Data Center facilities
located in the downtown Chicago area and Colocation facilities in three other Data Centers in New York, London, England and Frankfurt,
Germany. IDC provides internet infrastructure Services (IaaS) to the business community helping customers make the transition
from large, static and expensive on-premise computing to dynamic, flexible and cost-effective off-premise computing. IDC is helping
customers make the transition from large, static and expensive on-premise computing to dynamic, flexible and cost-effective off-premise
computing.



Due
to the Company’s perceived increase in the demand for Modernization, Mobility and Optimization offerings, the Company made
a strategic decision in 2012 to focus on its core offerings in the IBM Notes and Domino market and to divest its non-core businesses,
including IDC.



11







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



On
February 1, 2013, GBS entered into a Stock Purchase Agreement, dated February 1, 2013 (the “Agreement”), with IDC
and Global Telecom & Technology Americas, Inc., a Virginia corporation (“GTT). Pursuant to the Stock Purchase Agreement,
we sold 100% of the issued and outstanding capital stock of IDC to GTT for an aggregate purchase price of $4,600,000 (the “Purchase
Price”), subject to certain holdback provisions amounting to $1.093 million as described more fully in the Stock Purchase
Agreement. The Purchase Price is also subject to adjustment on a dollar-for-dollar basis for adjustments the Net Working Capital
(defined as Current Assets minus Current Liabilities) of IDC by GTT within 90 days of closing.



SD
Holdings, Ltd.



On
September 27, 2011, the Company entered into an acquisition agreement with SD Holdings, Ltd. (“SYN”), a Mauritius
corporation, and the shareholders of SYN owning 100% of issued and outstanding shares of SYN. SYN owns 100% of all issued and
outstanding shares of Synaptris, Inc., a California corporation (“Synaptris”), and 100% of all issued and outstanding
shares of Synaptris Decisions Private Limited, a company formed in India (“Synaptris India”). Pursuant to the acquisition
agreement, the Company purchased one hundred percent (100%) of the issued and outstanding shares of SYN (“SYN Shares”)
effective November 1, 2011 in consideration for $525,529 and agreed to issue 700,000 shares of common stock, subject to adjustment.
Actual shares issued were 612,874. The fair value of the common stock was determined to be $2.05 per share, representing the market
value at the end of trading on the date of the agreement.



On
April 1, 2012, the Company sold SYN, Synaptris and Synaptris India for $1,877,232 to Lotus Holding, Ltd. in an effort to restructure
the Company’s multilevel subsidiary - structure derived from the historical mergers and acquisitions, and to reduce overhead
and administrative costs.



GBS
India Private Limited



Pursuant
to an existing transfer agreement, effective July 1, 2012, the Company entered into a purchase agreement with SYN for $1,877,232,
which transferred all assets, including intellectual property rights, and liabilities of the IntelliPRINT and FewClix product
lines, customer contracts and certain employees for operations in a new subsidiary, GBS India Private Limited, an incorporated
entity formed under the Indian Companies Act 1956 (“GBS India”). A royalty fee in the amount of approximately $350,000
has been agreed upon for the benefit the Company. Additionally a profit based fee of up to $700,000 may be earned based on license
and revenue recognized from the sold IntelliVIEW and IntelliVIEW NXT products.



12







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



On
August 1, 2012, the Company acquired 100% of the outstanding shares of capital stock of GBS India. We anticipate GBS India’s
presence in India to accelerate our plan to expand our product development team particularly for our strategic offerings in India.



Pavone
AG/Groupware AG



On
July 6, 2012 and August 9, 2012, wholly-owned subsidiaries Pavone AG and Groupware AG, respectively, were merged into Pavone GmbH.
The mergers were consummated solely for administrative purposes. Pavone GmbH is a wholly-owned subsidiary of the Company.



Pavone,
Ltd.



The
Company serves the UK market with GROUP’s subsidiary GBS, Ltd. Therefore, subsidiary Pavone, Ltd, as being a shell company,
was dissolved on July 8, 2012.



EbVokus,
GmbH.



On
October 1, 2012, GROUP Business Software AG sold all of the software and operational assets (constituting substantially all of
the assets) of its wholly-owned subsidiary, ebVokus GmbH, along with the associated maintenance and project agreements to a non-affiliated
third party for a purchase price of approximately $459,000, approximately $258,000 (200,000 Euros: 1 EUR = $1.29 USD on October
1, 2012) was paid at closing and the remaining $201,000 was paid on February 15, 2013 (150,000 Euro: 1EUR = $1.35 USD on February
15, 2013).



B.E.R.S.
AD



On
November 23, 2012, GROUP Business Software AG sold its entire participation (50%) in B.E.R.S AD for a total of 25,000 BGN.



Group
Live, N.V.



Group
Live N.V. operating under the laws of the Netherlands and a 100% subsidiary of GROUP declared its end of business May 31, 2012,
registered in the commercial register June 22, 2012. Following the local procedures the company has been dissolved from the register
as per April 5, 2013, registered April 16, 2013.



13







Notes
                                                                   to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
2         INTERIM REPORTING



The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial statements prepared under the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America. They do not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, except as disclosed herein, they include all adjustments, which
are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for
the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These
interim financial statements follow the same accounting policies and methods of their application as the Company’s audited
financial statements. All adjustments are of a normal recurring nature.



Operating
results for the nine months ended September 30, 2013 are not necessarily indicative of the results that can be expected for the
year ending December 31, 2013.



Note
3         ACCOUNTING POLICIES



The
financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United
States of America, the more significant of which are as follows:



Critical
Accounting Policies and Estimates



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



Segment
Reporting



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



14







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Comprehensive
Income (Loss)



The
Company adopted the FASB Codification topic (“ASC”) 220, “Reporting Comprehensive Income”, which establishes
standards for the reporting and display of comprehensive income and its components in the financial statements. Comprehensive
income consists of net income and other gains and losses affecting stockholder's equity that are excluded from net income, such
as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses and minimum pension
liability. Since inception, the Company’s other comprehensive income represents foreign currency translation adjustments
and small net actuarial losses on pension plans.



Net
Income per Common Share



ASC
260, “Earnings per share,” requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation
of the numerator and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares
of common stock outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss
or increase earnings per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments
is not presented where anti-dilutive. Accordingly, although the diluted weighted average number of common stock outstanding is
disclosed on the statements of operation, the calculated net loss per share is the same for both the basic and diluted as both
are based on the basic weighted average of common stock outstanding. There were no adjustments required to net income for the
period presented in the computation of diluted earnings per share.



Financial
Instruments



Financial
instruments consist of cash and cash equivalents, accounts and other receivable, financial assets, notes payable, liabilities
to banks, accounts payable, accrued liabilities and other liabilities, due to related parties and retirement benefit obligations.
Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date. Changes in
fair value are recognized through profit and loss. Unless otherwise noted, it is management’s opinion that the Company is
not exposed to significant interest or credit risks arising from these financial instruments.



15







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Currency
Risk



We
use the US dollar as our reporting currency. The functional currencies of our significant foreign subsidiaries are the local currency,
which includes the Euro, the British Pound, the Indian Rupee, and the Bulgarian Lev. Accordingly, some assets and liabilities
are incurred in those currencies and we are subject to foreign currency risks.



Fair
Value Measurements



The
Company follows ASC 820, “Fair Value Measurements and Disclosures”, for all financial instruments and non-financial
instruments accounted for at fair value on a recurring basis. This new accounting standard establishes a single definition of
fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information
used in fair value measurement and expands disclosures about fair value measurements required under other accounting pronouncements.
It does not change existing guidance as to whether or not an instrument is carried at fair value. The Company defines fair value
as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required
to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact
and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such
as inherent risk, transfer restrictions and credit risk.



The
Company has adopted ASC 825, Financial Instruments, which allows companies to choose to measure eligible financial instruments
and certain other items at fair value that are not required to be measured at fair value. The Company has not elected the fair
value option for any eligible financial instruments.



Cash
and cash equivalents



The
Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.



Inventories



Pursuant
to ASC 330 (Inventories), inventories held for sale are recognized under inventories. Inventories were measured at the lower of
cost or market. Cost is determined on a first-in-first out basis, without any overhead component.



16







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Goodwill
and other Intangible Assets



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



Company
created software can be intended for sale to third parties or used by the Company itself. If the conditions for capitalization
are not met, the expenses are recorded with their effect on profit in the year in which they were incurred.



The
Company amortizes intangible assets with a limited useful life to the estimated residual book value in accordance with ASC regulations.
In addition, in special circumstances according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled
amortization is considered.



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



Intangible
assets obtained as part of an acquisition which do not meet the criteria for a separate entry are identified as goodwill. Goodwill
is reviewed once a year during an impairment test, whereby the appraised fair value of the invested capital of the reporting unit,
is compared with the carrying (book) value of its invested capital amount (including goodwill.) Use value is generally applied
in order to determine the recoverability of goodwill and intangible assets with an indefinite useful life. The projected financial
plan prepared by the management serves as the basis for this determination of use value and the planning assumptions are each
adjusted for the current state of knowledge. Reasonable assumptions regarding macroeconomic trends and historical developments
are taken into account in making these adjustments. Future estimated cash flows are determined based on the expected growth rates
of the markets in question.



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



Property,
Plant and Equipment



Property,
plant and equipment are valued at acquisition or manufacturing costs reduced by scheduled and, if necessary, unscheduled depreciation.
Fixed assets are depreciated on a straight-line basis, prorated over their expected useful life. Scheduled depreciation for property,
plant and equipment is based on useful lives of 3 to 10 years. Leasehold Improvements are depreciated up to 40 years.



17







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



If
fixed assets are sold, retired or scrapped, the profit or loss arising from the difference between the net sales proceeds and
the residual book value are included under other operating earnings and expenses.



Impairment
or Disposal of Long-Lived Assets



The
Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC topic, 360.10. This guidance
requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its’ expected
cash flows or appraised value In this instance, the asset is considered to be impaired and is written down to fair value.



Revenue
Recognition



Sources
of Revenues:



License
revenues



Our
license revenues consist of revenues earned from the licensing of our software products. These products are generally licensed
on a perpetual basis. Pricing models have generally been based either upon the physical infrastructure, such as the number of
physical desktop computers or servers, on which our software runs or on a per user basis. License revenues are recognized when
the elements of revenue recognition for the licensed software are complete, generally upon electronic shipment of the software
and the software key to provide full access to all functionalities for our customers. In general, our invoices reflect license,
service and maintenance components. In the case of multi element contracts, the revenues allocated to the software license in
most cases represent the residual amount of the contract after the fair value of the other elements has been determined. Certain
products of our software offering are licensed on a subscription basis.



Software
maintenance revenues



Software
maintenance revenues are recognized ratably on a pro-rata basis over the range of the contract period. Our contract periods typically
range from one to five years. Vendor-specific objective evidence (“VSOE”) of fair value for software maintenance services
is established by the rates charged in stand-alone sales of software maintenance contracts or the stated renewal rate for software
maintenance. Customers who are party to software maintenance agreements with us are entitled to receive support, product updates
and upgrades on a when-and-if-available basis.



18







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Professional
services revenues



Professional
services include pre-project consulting, software design, customization, project management, implementation and training. Professional
services are not considered essential to the functionality of our products, as these services do not alter the product capabilities
and may be performed by our customers or by other vendors. Professional services engagements performed for a fixed fee, for which
we are able to make reasonably dependable estimates of progress toward completion, are recognized on a proportional performance
basis based on hours incurred and estimated hours of completion. Professional services engagements that are on a time and materials
basis are recognized based on hours incurred. Revenues on all other professional services engagements are recognized upon completion.
Our professional services may be sold with software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE)
of fair value for professional services is based upon the standard rates we charge for such services when sold separately.



Foreign
Currency Translation



The
functional currency of the Company is US dollars. For financial reporting purposes, the financial statements of the subsidiary
companies whose functional currency is other than US dollars were translated into US dollars using the current rate method. Assets
and liabilities were translated at the exchange rates at the balance sheet dates, revenue and expenses were translated at the
average exchange rates and stockholders’ equity was translated at historical exchange rates. Any translation adjustments
resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income,
a component of stockholders’ equity.



Other
Provisions



According
to FASB ASC 450 “Contingencies”, provisions are made whenever there is a current obligation to third parties resulting
from a past event which is likely in the future to lead to an outflow of resources and of which the amount can be reliably estimated.
Provisions not already resulting in an outflow of resources in the following year are recognized at their discounted settlement
amount on the financial statement date. The discount taken is based on market interest rates. The settlement amount also includes
the expected cost increases. Provisions are not set off against contribution claims. If the amended estimate leads to a reduction
of the obligatory amount, the provision is proportionally reversed and the earnings are recognized in other operating earnings.



19







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Deferred
Taxes



Income
taxes are provided in accordance with FASB Codification topic 740, “Accounting for Income Taxes”. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax reporting and net operating loss-carry forwards.



Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that, that some
portion or all of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effect
of changes in tax laws and rates on the date of enactment.



Recent
Accounting Pronouncements



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



Off
- Balance Sheet Arrangements



We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity
or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do
not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support
to us or engages in leasing, hedging or research and development services with us.



20







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Principles
of Consolidation and Reverse Acquisition



As
previously disclosed, the Company has exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding
common shares of GROUP. Although the Company was the legal acquirer, the transaction was accounted for as a recapitalization of
GROUP in the form of a reverse merger, whereby GROUP becomes the accounting acquirer and is deemed to have retroactively adopted
the capital structure of the Corporation. Accordingly, the accompanying consolidated financial statements reflect the historical
consolidated financial statements of GROUP for periods presented prior to January 6, 2011. All costs associated with the reverse
merger transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were included in professional
fees in administrative expenses.



The
Company has based its financial reporting for the consolidation with GROUP in accordance with the FASB ASC 805-40 as it relates
to reverse acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred
by the Company, the acquiree, for financial reporting purposes, over the net amount of the Company’s recognized identifiable
assets and liabilities.



We
have recorded the acquired assets and liabilities of Group Business Software Enterprises, Inc. on the acquisition date of January
6, 2011, at their fair value and the operations of Group Business Software Enterprises, Inc. have been included in the consolidated
financial statements since the acquisition date.



The
assets and liabilities of GROUP, the acquirer for financial reporting purposes, are measured and recognized in the consolidated
financial statements at their precombination carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, the non-controlling
interest reflects the non-controlling shareholders’ proportionate interest in the pre-combination carrying amounts of GROUP’s
net assets even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition
date.



NOTE
4         DISCONTINUED OPERATIONS



Due
to the Company’s perceived increase in the demand for Modernization, Mobility and Optimization offerings, the Company made
a strategic decision in 2012 to focus on its core offerings in the IBM Notes and Domino market and to divest its non-core businesses.
As a result, on February 1, 2013, GBS entered into a Stock Purchase Agreement, dated February 1, 2013 (the “Agreement”),
with IDC Global, Inc., a Delaware corporation and a wholly-owned subsidiary of GBS (“IDC”), and Global Telecom &
Technology Americas, Inc., a Virginia corporation (“GTT). Pursuant to the Stock Purchase Agreement, we sold 100% of the
issued and outstanding capital stock of IDC to GTT for an aggregate purchase price of $4,600,000 (the “Purchase Price”),



21







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Discontinued
Operations and their results of operations, financial positions and cash flows are shown separately for the nine months ended
on September 30, 2012 for comparative purposes. Summarized financial information for discontinued operations is set forth as follows:



|Revenues                              |  |  |            |  
|------------------------------------- |  |  | ---------- | -
|Services                              |  |  | (2,648,976 | )
|Cost
    of goods sold                |  |  |            |  
|Products                              |  |  | (1,278,740 | )
|Services                              |  |  | (589,808   | )
|                                      |  |  |            |  
|Operating
    expenses                |  |  |            |  
|Selling
    expenses                  |  |  | (554,448   | )
|Administrative
    expenses           |  |  | (109,845   | )
|General
    expenses                  |  |  | (33,250    | )
|                                      |  |  |            |  
|Operating
    income                  |  |  | (82,885    | )
|                                      |  |  |            |  
|Other
    Income (expense)            |  |  |            |  
|Other
    Income (expense)            |  |  | (13,486    | )
|                                      |  |  |            |  
|Income
    (loss) before income taxes |  |  | (96,371    | )



Note
5          SUBSIDIARY COMPANIES



The
subsidiaries listed below were included in the basis of consolidation (KUSD = 1,000’s of US Dollars):







|                                      |  |              |  | Stockholders' Equity as
    of 9/30/2013 |         |  | Percentage
    of Subscribed Capital |  |        |      |  | Profit of the consolidated
    quarter |           |   | Date of the First
|------------------------------------- |  | ------------ |  | ---------------------------------------- | ------- |  | ------------------------------------ |  | ------ | ---- |  | -------------------------------------- | --------- | - | -----------------
|                                      |  | Headquarters |  | KUSD                                     |         |  | KUSD                                 |  |        | in % |  |                                        | Ownership |   | KUSD             
|                                      |  |              |  |                                          |         |  |                                      |  |        |      |  |                                        |           |   |                  
|                                      |  |              |  |                                          |         |  |                                      |  |        |      |  |                                        |           |   |                  
|GROUP Business Software
    (UK) Ltd. |  | Manchester   |  |                                          | -1,236  |  |                                      |  | 23     |      |  |                                        | 50,1      | % |                  
|GROUP Business Software Corp.         |  | Woodstock    |  |                                          | -15,601 |  |                                      |  | 1      |      |  |                                        | 50,1      | % |                  
|GROUP LIVE N.V.                       |  | Den Haag     |  |                                          | 1,274   |  |                                      |  | 134    |      |  |                                        | 50,1      | % |                  
|Permessa Corporation                  |  | Waltham      |  |                                          | 10      |  |                                      |  | 0      |      |  |                                        | 50,1      | % |                  
|Relavis Corporation                   |  | Woodstock    |  |                                          | -842    |  |                                      |  | 2      |      |  |                                        | 50,1      | % |                  
|GROUP Business Software AG            |  | Eisenach     |  |                                          | 9,973   |  |                                      |  | 36,107 |      |  |                                        | 50,1      | % |                  
|Pavone GmbH                           |  | Boeblingen   |  |                                          | -863    |  |                                      |  | 47     |      |  |                                        | 100.0     | % |                  
|Groupware Inc.                        |  | Woodstock    |  |                                          | -482    |  |                                      |  | 1      |      |  |                                        | 100.0     | % |                  
|GBS India                             |  | Chennai      |  |                                          | 191     |  |                                      |  | 12     |      |  |                                        | 100.0     | % |                  













D - Direct Subsidiary

I -   Indirect Subsidiary

Indirect Subsidiaries are owned 50.1% through GROUP Business Software AG









22







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
6          CASH AND CASH EQUIVALENTS



As
of the financial statement date, the Company’s cash and cash equivalents totaled 259 KUSD (December 31, 2012 restated year
end: 1,155 KUSD). Included in that amount are cash equivalents of 3 KUSD (December 31, 2012 restated year end: 3 KUSD).



Note
7          ACCOUNTS RECEIVABLE



As
of the financial statement date, Accounts Receivable was 3,528 KUSD (December 31, 2012 restated year end: 4,143 KUSD). Receivables
are generally measured at their nominal value and taking into account all foreseeable risks. Probable default risks are handled
with specific allowances for bad debts. With regard to the trade receivables which are neither impaired nor delinquent, there
are no indications as of the financial statement date that the debtors will not meet their payment obligations.



Note
8          PREPAID EXPENSES

Prepaid
expenses in the amount of 208 KUSD were primarily recorded for prepaid rent, insurance and advance on technological collaboration
events (December 31, 2012 restated year end: 84 KUSD).



Note
9          OTHER RECEIVABLES - CURRENT





Other Receivables as of the financial statement
date were 277 KUSD (December 31, 2012 restated year end: 677 KUSD) which includes tax deposits (248 KUSD), benefit credits (14
KUSD), other deposits (4K USD) and other miscellaneous receivables (11 KUSD).





23







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
10          DEFERRED TAX ASSETS



Deferred tax assets as of the financial statement
date were 1,076 KUSD (December 31, 2012 restated year end: 1,132 KUSD). All deferred tax assets are long term.





|Deferred Tax Assets                   |  | KUSD      |       |  | KUSD       | 
|------------------------------------- |  | --------- | ----- |  | ---------- | 
|                                      |  | 9/30/2013 |       |  | 12/31/2012 | 
|                                      |  |           |       |  |            | 
|Deferred
    Tax Assets – Current     |  |           | 0     |  |            | 
|                                      |  |           |       |  |            | 
|Deferred
    Tax Assets – Non-current |  |           | 1,076 |  |            | 
|                                      |  |           |       |  |            | 
|Balance                               |  |           | 1,076 |  |            | 



Note
11          PROPERTY, PLANT AND EQUIPMENT



Property,
plant and equipment are measured at cost less scheduled straight-line depreciation. Depreciation of the computer hardware listed
as office equipment is distributed over a period of three to five years. The depreciation period for other office equipment is
three to ten years. Office furnishings are depreciated over a period of eight to ten years. Leasehold Improvements are depreciated
up to 40 years.



|Property, Plant and EquipmentkUSD |  | Developmentof the cost |         |  | Developmentofaccumulateddepreciation |  |         | Balance | 
|--------------------------------- |  | ---------------------- | ------- |  | ------------------------------------ |  | ------- | ------- | 
|                                  |  |                        |         |  |                                      |  |         |         | 
|12/31/2012                        |  |                        | 7,219.4 |  |                                      |  | 6,893.7 |         | 
|Additions                         |  |                        | 42      |  |                                      |  | 12      |         | 
|Disposals                         |  |                        | 33      |  |                                      |  | 6       |         | 
|Currency
    differences          |  |                        | 8       |  |                                      |  | 3       |         | 
|Reclassifications                 |  |                        | 0       |  |                                      |  | 0       |         | 
|9/30/2013                         |  |                        | 7,219.4 |  |                                      |  | 6,893.7 |         | 



24







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
12         OTHER RECEIVABLES NON-CURRENT



The
major components of the Non-current Receivables include the following:



|                                                |  | KUSDRestated |   |  | KUSDRestated | 
|----------------------------------------------- |  | ------------ | - |  | ------------ | 
|                                                |  | 9/30/2013    |   |  | 12/31/2012   | 
|                                                |  |              |   |  |              | 
|Cooperative
    shares                          |  |              | 1 |  |              | 
|Intercompany
    Loan Values during the quarter |  |              | 0 |  |              | 
|Other
    long term receivables                 |  |              | 0 |  |              | 
|Balance                                         |  |              | 1 |  |              | 



Note
13         GOODWILL



Goodwill
derives from the following business acquisitions:







|30-Sep-13                         |  | Date of
 first
 Consolidation |  |  | 12/31/2012 |  |  |  | Additions |  |  |  | Adjustments |  |  |  | Written off |   |  |  | 9/30/2013 | 
|--------------------------------- |  | ----------------------------- |  |  | ---------- |  |  |  | --------- |  |  |  | ----------- |  |  |  | ----------- | - |  |  | --------- | 
|GROUP Business Software AG        |  | 1/6/2011                      |  |  | 18,425.6   |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 18,425.60 | 
|GROUP Business Software (UK) Ltd. |  | 12/31/2005                    |  |  | 2,765.1    |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 2,765.10  | 
|IDC Global, Inc.                  |  | 7/25/2011                     |  |  | 2,994.4    |  |  |  |           |  |  |  |             |  |  |  | (2,994.4    | ) |  |  | 0.00      | 
|Permessa Corporation              |  | 9/22/2011                     |  |  | 2,387.4    |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 2,387.40  | 
|Pavone GmbH                       |  | 1/4/2011                      |  |  | 5,950.5    |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 5,950.50  | 
|GBS India                         |  | 8/1/2012                      |  |  | 1,731.9    |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 1,731.90  | 
|                                  |  |                               |  |  | 34,254.9   |  |  |  | -         |  |  |  | -           |  |  |  | -           |   |  |  | 31,260.50 | 







Note
14          SOFTWARE



Development
costs



The
costs of developing new software products and updating products already marketed by the Company are generally recognized as expenses
in the period in which they arise. Provided they meet the conditions for capitalization as per FASB ASC 985-20-25, they are capitalized.
Capitalized development costs can be attributed to the defined products. These products are technically realizable and there is
a target market for them.



The
development costs arising in the reporting period result from the personnel costs attributed to the development work as well as
overhead costs, provided that these are related to the development work and do not represent general administrative costs. The
ascribable overhead costs are directly recognized.



Capitalized
development costs are generally amortized over a period of three years starting with the date of marketability of the new products
or major releases.



25







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Concessions,
Industrial Property Rights, Licenses



The
intangible financial assets carried in this item are licenses acquired in exchange for payment.



These
financial assets are measured at acquisition cost less scheduled straight-line amortization. The assets added in the scope of
the cost price allocation of the business divisions acquired this year.



The
useful life spans were based uniformly throughout the Company according to those used by the parent company. Scheduled amortization
is performed over a period from three to ten years.



The
useful life of the domain “gbs.com”, was estimated as unlimited. This is because no other legal, contractual or other
factors exist which would limit its useful life. It is not systematically amortized, but rather annually. Should there exist signs
indicating towards impairment it is tested for recoverability and, if necessary, written down to the amount which could be obtained
for it if sold.



Amortization
of concessions, industrial property and similar rights and assets, as well as licenses to such rights and assets are presented
in the Statement of Operations and Comprehensive Income/Loss within Cost of Goods Sold.



|Concessions and licenseskUSD |  | Developmentof the cost |          |  | Developmentofaccumulateddepreciation |  |          | Balance | 
|---------------------------- |  | ---------------------- | -------- |  | ------------------------------------ |  | -------- | ------- | 
|                             |  |                        |          |  |                                      |  |          |         | 
|12/31/2012                   |  |                        | 31,913.9 |  |                                      |  | 21,341   |         | 
|Additions                    |  |                        | 907      |  |                                      |  | 159      |         | 
|Disposals                    |  |                        | 1,018    |  |                                      |  | 122      |         | 
|Currency
    differences     |  |                        | 143      |  |                                      |  | 126      |         | 
|Reclassifications            |  |                        | 0        |  |                                      |  | 0        |         | 
|9/30/2013                    |  |                        | 31,913.9 |  |                                      |  | 21,341.0 |         | 



Note
15        OTHER ASSETS



The
balance of this account of 132 KUSD primarily includes rent and other security deposits (December 31, 2012 restated year end:
156 KUSD).



26







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
16        LIABILITIES TO BANKS – CURRENT



Included
in this account of 3,888 KUSD (December 31, 2012 restated year end: 7 KUSD) is primarily an operating line of credit of
GROUP AG.



Note
17       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



Trade
payables





As of the financial statement
date, trade accounts payable amounted to 2,061 KUSD (December 31, 2012 restated year end: 3,095 KUSD). Trade payables are carried
at their repayment amount and all have a residual term of up to one year.







Other
Accrual



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





|                                                                     |  | 12/31/2012 |       |  | 9/30/2013 | 
|-------------------------------------------------------------------- |  | ---------- | ----- |  | --------- | 
|                                                                     |  | KUSD       |       |  | KUSD      | 
|Tax provision                                                        |  |            | 53    |  |           | 
|Salary                                                               |  |            | 861   |  |           | 
|Vacation                                                             |  |            | 315   |  |           | 
|Workers Compensation Insurance Association                           |  |            | 25    |  |           | 
|Compensation Levy for Non-Employment of Severely Handicapped Persons |  |            | 19    |  |           | 
|Outstanding Invoices                                                 |  |            | 1,059 |  |           | 
|Annual accounting and consulting                                     |  |            | 128   |  |           | 
|Other Provisions                                                     |  |            | 446   |  |           | 
|Warranties                                                           |  |            | 96    |  |           | 
|Provision for Legal Costs                                            |  |            | 73    |  |           | 
|Severance                                                            |  |            | 70    |  |           | 
|Total                                                                |  |            | 3,147 |  |           | 





27







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited





Provisions for salaries
of 599 KUSD (December 31, 2012 restated year end: 861 KUSD) include the provisions created for the variable salaries of the sales
staff for the sales objectives reached in this business period.



Vacation provisions of
247 KUSD (December 31, 2012 restated year end: 315 KUSD) include the obligations of GROUP’s companies to their employees
for remaining vacation claims from the reporting period. The amount of the provision is calculated on the gross salary of the individual
employee plus the employer contribution to social security/Medicare and based on the unused vacation days as of the financial statement
date.



Other employment of 97
KUSD (December 31, 2012 restated year end: 114 KUSD) were accrued for severance and compensation insurance and compensation levy.







For liabilities not yet
settled, a provision totaling 196 KUSD (December 31, 2012 restated year end: 1059 KUSD) was created.



Other Provisions of 465
KUSD (December 31, 2012 restated year end: 446 KUSD) include miscellaneous provisions.



Expenses of accounting and other external consulting
of the Company were recognized at 109 KUSD (December 31, 2012 restated year end: 128 KUSD).



A provision for anticipated legal consulting
of 68 KUSD was recorded (December 31, 2012 restated year end: 73 KUSD).



For warranty claims, a
provision of 82 KUSD (December 31, 2012 restated year end: 96 KUSD) was created determined by service income.





Note
18       DEFERRED INCOME



Accruals
for future periods leading to realization of sales after the financial statement date are reported under deferred income. The
deferred income items listed as of the financial statement date in the amount of 6,847 KUSD (December 31, 2012 restated year end:
6,100 KUSD) primarily include maintenance income collected in advance for the period after the end of the financial statement
date. They are amortized on a straight-line basis over their respective contract terms.



28







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
19        OTHER SHORT TERM LIABILITIES



Other short-term liabilities of 242 KUSD (December 31, 2012 restated year end: 860 KUSD) and includes
miscellaneous short term obligations including amounts due on business assets



Note
20         COMMON STOCK



The
Company has authorized capital of 75,000,000 shares of common stock and 25,000,000 shares of “blank check” preferred
stock, each with a par value of $0.001. No class of preferred stock has been designated or issued. As of September 30, 2013, there
were shares 30,837,624 of common stock outstanding. At the time of the Reverse Merger of the Company by GROUP on January 6, 2011,
there were 16,500,000 shares of common stock of the Company outstanding and, as the Reverse Merger was accounted for as a recapitalization
and applied retroactively, this balance is recorded as the balance outstanding since inception.



Transactions occurring in 2012



| | · | In
                                                                                                               March, 2012 another
                                                                                                               investor exercised
                                                                                                               their private purchase
                                                                                                               warrant and bought
                                                                                                               5,000 shares of
                                                                                                               common stock for
                                                                                                               net proceeds of
                                                                                                               $7,500.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Also
                                                                                                               in March, 2012,
                                                                                                               as a result of
                                                                                                               purchasing warrants
                                                                                                               at nominal value,
                                                                                                               wherein each warrant
                                                                                                               allowed the holder
                                                                                                               to purchase one
                                                                                                               common share at
                                                                                                               $0.50 for a period
                                                                                                               of three years,
                                                                                                               certain investors
                                                                                                               exercised those
                                                                                                               warrants and bought
                                                                                                               900,000 shares
                                                                                                               of common stock
                                                                                                               for net proceeds
                                                                                                               of $450,000.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               April 16, 2012,
                                                                                                               the Company sold
                                                                                                               120,000 Units to
                                                                                                               Joerg Ott, the
                                                                                                               then Chief Executive
                                                                                                               Officer and Chairman
                                                                                                               of the Board of
                                                                                                               Directors of the
                                                                                                               Company, for a
                                                                                                               price of $1.50
                                                                                                               per Unit, for a
                                                                                                               total purchase
                                                                                                               price of $180,000.
                                                                                                               Each Unit consisted
                                                                                                               of one share of
                                                                                                               Common Stock of
                                                                                                               the Company and
                                                                                                               one warrant to
                                                                                                               purchase one share
                                                                                                               of Common Stock
                                                                                                               of the Company
                                                                                                               from the date of
                                                                                                               issuance until
                                                                                                               the third anniversary
                                                                                                               date of the date
                                                                                                               of issuance for
                                                                                                               $1.50 per share.
                                                                                                               The Company sold
                                                                                                               the Units and underlying
                                                                                                               securities to Mr.
                                                                                                               Ott in reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



29







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                               April 28, 2012,
                                                                                                               $632,500 in notes
                                                                                                               payable were converted
                                                                                                               at $1.15 per unit
                                                                                                               into 550,000 units
                                                                                                               with each unit
                                                                                                               consisting of one
                                                                                                               common share of
                                                                                                               common stock and
                                                                                                               one warrant. Each
                                                                                                               warrant allows
                                                                                                               the holder to purchase
                                                                                                               one common share
                                                                                                               at $1.75 for a
                                                                                                               period of three
                                                                                                               years. The Company
                                                                                                               issued the Note
                                                                                                               pursuant to Section
                                                                                                               4(a)(2) (formerly
                                                                                                               Section 4(2)) under
                                                                                                               the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               April 30, 2012,
                                                                                                               $460,000 in notes
                                                                                                               payable to Lotus
                                                                                                               Holdings Ltd. (“Lotus
                                                                                                               Holdings”)
                                                                                                               were converted
                                                                                                               at $1.15 per unit
                                                                                                               into 400,000 units,
                                                                                                               with each unit
                                                                                                               consisting of one
                                                                                                               share of common
                                                                                                               stock and one warrant.
                                                                                                               Each warrant allows
                                                                                                               the holder to purchase
                                                                                                               one common share
                                                                                                               at $1.75 for a
                                                                                                               period of three
                                                                                                               years. The Company
                                                                                                               issued the Lotus
                                                                                                               Note pursuant to
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) under the
                                                                                                               Securities Act
                                                                                                               due to the fact
                                                                                                               that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Also
                                                                                                               on April 30, 2012,
                                                                                                               $172,500 in debt
                                                                                                               to a company owned
                                                                                                               by Joerg Ott, the
                                                                                                               then Chief Executive
                                                                                                               Officer and Chairman
                                                                                                               of the Board of
                                                                                                               Directors of the
                                                                                                               Company, were converted
                                                                                                               at $1.15 per unit
                                                                                                               into 150,000 units,
                                                                                                               with each unit
                                                                                                               consisting of one
                                                                                                               share of common
                                                                                                               stock and one warrant.
                                                                                                               Each warrant allows
                                                                                                               the holder to purchase
                                                                                                               one common share
                                                                                                               at $1.75 for a
                                                                                                               period of three
                                                                                                               years. The Company
                                                                                                               issued the debt
                                                                                                               pursuant to Section
                                                                                                               4(a)(2) (formerly
                                                                                                               Section 4(2)) under
                                                                                                               the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               May 10, 2012, the
                                                                                                               Company sold 30,000
                                                                                                               Units to Markus
                                                                                                               R. Ernst, the Chief
                                                                                                               Financial Officer
                                                                                                               of the Company,
                                                                                                               for a purchase
                                                                                                               price of $1.50
                                                                                                               per unit, for a
                                                                                                               total purchase
                                                                                                               price of $45,000.
                                                                                                               Each unit consists
                                                                                                               of one share of
                                                                                                               common stock of
                                                                                                               the Company and
                                                                                                               one warrant, allowing
                                                                                                               the holder to purchase
                                                                                                               one share of common
                                                                                                               stock of the Company
                                                                                                               from the date of
                                                                                                               issuance until
                                                                                                               the third anniversary
                                                                                                               date of the date
                                                                                                               of issuance for
                                                                                                               $1.50 per share.
                                                                                                               The Company sold
                                                                                                               the units and underlying
                                                                                                               securities to Mr.
                                                                                                               Ernst in reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                               May 15, 2012, the
                                                                                                               Company issued
                                                                                                               150,000 unregistered
                                                                                                               shares of common
                                                                                                               stock to Kjell
                                                                                                               Jahn, the former
                                                                                                               selling stockholder
                                                                                                               of GroupWare, AG,
                                                                                                               a Florida corporation
                                                                                                               purchased by the
                                                                                                               Company in June
                                                                                                               2011. The Company
                                                                                                               issued the shares
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               July 5, 2012, the
                                                                                                               Company entered
                                                                                                               into a convertible
                                                                                                               promissory note
                                                                                                               agreement (the
                                                                                                               “Loan Agreement”)
                                                                                                               with Mohammad A.
                                                                                                               Shihadah, a member
                                                                                                               of the Board. Pursuant
                                                                                                               to the Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a convertible promissory
                                                                                                               note, dated July
                                                                                                               5, 2012 (the “Note”),
                                                                                                               to Mr. Shihadah
                                                                                                               for the principal
                                                                                                               amount of $50,000,
                                                                                                               bearing interest
                                                                                                               at a rate of 8%
                                                                                                               per year and maturing
                                                                                                               on the earlier
                                                                                                               of the first anniversary
                                                                                                               date of the date
                                                                                                               of issuance or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Note was convertible
in full at $0.50 per share into common stock of the Company if this conversion was exercised on or before September 30, 2012.
If not exercised, Mr. Shihadah would receive a 3-year warrant to purchase shares at 50,000 shares of common stock at $1.00 per
share.



The conversion was not
exercised by September 30, 2012, therefore, as per the termsof the Loan Agreement Mr. Shihadah was issued a 3-year warrant
to purchase shares at 50,000 shares of common stock at $1.00 per share.



| | · | On
                                                                                                               July 5, 2012, the
                                                                                                               Company entered
                                                                                                               into a convertible
                                                                                                               promissory note
                                                                                                               agreement (the
                                                                                                               “Loan Agreement”)
                                                                                                               with K Group Ltd.
                                                                                                               Pursuant to the
                                                                                                               Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a convertible promissory
                                                                                                               note, dated July
                                                                                                               5, 2012 (the “Note”),
                                                                                                               to K Group Ltd.
                                                                                                               for the principal
                                                                                                               amount of $250,000,
                                                                                                               bearing interest
                                                                                                               at a rate of 8.5%
                                                                                                               per year and maturing
                                                                                                               on the earlier
                                                                                                               of the first anniversary
                                                                                                               date of the date
                                                                                                               of issuance or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



31







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



The Note was convertible
in full at $0.50 per share into common stock of the Company if this conversion was exercised on or before September 30, 2012.
If not exercised, K Group Ltd. would receive a 3-year warrant to purchase shares at 250,000 shares of common stock at $1.00 per
share.



The conversion was not
exercised by September 30, 2012, therefore, as per the terms of the Loan Agreement K Group was issued a 3-year warrant to purchase
shares at 250,000 shares of common stock at $1.00 per share.



| | · | On
                                                                                                               July 5, 2012, the
                                                                                                               Company entered
                                                                                                               into a convertible
                                                                                                               promissory note
                                                                                                               agreement (the
                                                                                                               “Loan Agreement”)
                                                                                                               with Vitamin B
                                                                                                               Venture GmbH. Pursuant
                                                                                                               to the Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a convertible promissory
                                                                                                               note, dated July
                                                                                                               5, 2012 (the “Note”),
                                                                                                               to Vitamin B Venture
                                                                                                               GmbH for the principal
                                                                                                               amount of $252,500,
                                                                                                               bearing interest
                                                                                                               at a rate of 8.5%
                                                                                                               per year and maturing
                                                                                                               on the earlier
                                                                                                               of the first anniversary
                                                                                                               date of the date
                                                                                                               of issuance or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Note was convertible
in full at $0.50 per share into common stock of the Company if this conversion was exercised on or before September 30, 2012.
If not exercised Vitamin B Venture GmbH would receive a 3-year warrant to purchase shares at 250,000 shares of common stock at
$1.00 per share.



The conversion was not
exercised by September 30, 2012, therefore, as per the terms of the Loan Agreement Vitamin B Venture GmbH was issued a 3-year
warrant to purchase shares at 250,000 shares of common stock at $1.00 per share.



| | · | On
                                                                                                               August 13, 2012,
                                                                                                               the Company entered
                                                                                                               into a note purchase
                                                                                                               and security agreement
                                                                                                               (the “Loan
                                                                                                               Agreement”)
                                                                                                               with John A. Moore,
                                                                                                               a member of the
                                                                                                               Board. Pursuant
                                                                                                               to the Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a secured promissory
                                                                                                               note, dated October
                                                                                                               26, 2012 (the “Note”),
                                                                                                               to Mr. Moore for
                                                                                                               the principal amount
                                                                                                               of $1,000,000,
                                                                                                               bearing interest
                                                                                                               at a rate of 20%
                                                                                                               per year and maturing
                                                                                                               on the earlier
                                                                                                               of the first anniversary
                                                                                                               date of the date
                                                                                                               of issuance or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note, without
                                                                                                               any penalty for
                                                                                                               prepayment. To
                                                                                                               secure the obligations
                                                                                                               of the Company
                                                                                                               under the Note,
                                                                                                               the Company granted
                                                                                                               Mr. Moore a secured
                                                                                                               priority security
                                                                                                               interest in the
                                                                                                               Company’s
                                                                                                               Accounts Receivable
                                                                                                               and its subsidiaries
                                                                                                               located in the
                                                                                                               United States of
                                                                                                               America, as more
                                                                                                               fully described
                                                                                                               in the full text
                                                                                                               of the document.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



32







Notes
                                                                                   to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



In
connection with the execution of the Loan Agreement, on October 26, 2012, the Company issued
the Lender a common stock purchase warrant (the “Warrant”), pursuant to which the Lender is entitled to purchase 100,000
shares of common stock at an exercise price of $0.35 until the third anniversary date of the date of issuance. The Warrant was
issued in a private transaction between the Company and the Lender and was exempt from registration under the Securities and Exchange
Act of 1933, as amended, pursuant to Section 4(a)(2) (formerly Section 4(2)) thereof.



In connection with the
Loan Agreement, on February 22, 2013, the Company and Mr. Moore amended the Note pursuant to which Mr. Moore agreed to convert
the interest due under the Note into shares of GBSX common stock at a rate of $0.30 per share. Pursuant to the amendment, the
Company issued 450,960 shares of Common Stock to Mr. Moore. The Company issued the shares in reliance on Section 4(a)(2) (formerly
Section 4(2)) of the Securities Act due to the fact that the issuance was isolated and did not involve a public offering of securities.



| | · | On
                                                                                                               October 26, 2012,
                                                                                                               the Company entered
                                                                                                               into a note purchase
                                                                                                               and security agreement
                                                                                                               (the “Loan
                                                                                                               Agreement”)
                                                                                                               with Stephen D.
                                                                                                               Baksa, a member
                                                                                                               of the Board. Pursuant
                                                                                                               to the Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a secured promissory
                                                                                                               note, dated October
                                                                                                               26, 2012 (the “Note”),
                                                                                                               to Mr. Baksa for
                                                                                                               the principal amount
                                                                                                               of $1,000,000,
                                                                                                               bearing interest
                                                                                                               at a rate of 20%
                                                                                                               per year and maturing
                                                                                                               on the earlier
                                                                                                               of the first anniversary
                                                                                                               date of the date
                                                                                                               of issuance or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note, without
                                                                                                               any penalty for
                                                                                                               prepayment. To
                                                                                                               secure the obligations
                                                                                                               of the Company
                                                                                                               under the Note,
                                                                                                               the Company granted
                                                                                                               the Baksa a first
                                                                                                               priority security
                                                                                                               interest in all
                                                                                                               of the Company’s
                                                                                                               right, title and
                                                                                                               interest in and
                                                                                                               to the shares of
                                                                                                               IDC Global, Inc.
                                                                                                               then owned by the
                                                                                                               Company. The Note
                                                                                                               contains customary
                                                                                                               provisions upon
                                                                                                               an Event of Default,
                                                                                                               as more fully described
                                                                                                               in the full text
                                                                                                               of the document.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



In connection with the
execution of the Loan Agreement, on October 26, 2012, the Company issued the Lender a common stock purchase warrant (the “Warrant”),
pursuant to which the Lender is entitled to purchase 500,000 shares of common stock at an exercise price of $0.20 until the third
anniversary date of the date of issuance. The Warrant was issued in a private transaction between the Company and the Lender and
was exempt from registration under the Securities and Exchange Act of 1933, as amended, pursuant to Section 4(a)(2) (formerly
Section 4(2)) thereof. On February 12, 2013, Mr. Baksa exercised the right to purchase 500,000 shares of common stock at the exercise
price of $0.20.



In connection with the
Loan Agreement, on February 22, 2013, the Company and Mr. Baksa amended the Note pursuant to which Mr. Baksa agreed to convert
the interest due under the Note into shares of GBSX common stock at a rate of $0.30 per share. Pursuant to the amendment, the
Company issued 200,000 shares of Common Stock to Mr. Baksa. The Company issued the shares in reliance on Section 4(a)(2) (formerly
Section 4(2)) of the Securities Act due to the fact that the issuance was isolated and did not involve a public offering of securities



Transactions occurring in 2013



| | · | As
                                                                                                               stated above, on
                                                                                                               February 12, 2013,
                                                                                                               and in connection
                                                                                                               with the above
                                                                                                               October 26, 2012
                                                                                                               Loan Agreement
                                                                                                               the Company issued
                                                                                                               an aggregate of
                                                                                                               500,000 restricted
                                                                                                               shares of Common
                                                                                                               Stock to Board
                                                                                                               Member, Stephen
                                                                                                               Baksa pursuant
                                                                                                               to exercise of
                                                                                                               a common stock
                                                                                                               purchase warrant
                                                                                                               issued on October
                                                                                                               26, 2012 and exercisable
                                                                                                               for $0.20 per share.
                                                                                                               The Company issued
                                                                                                               the securities
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               February 12, 2013,
                                                                                                               the Company sold
                                                                                                               an aggregate of
                                                                                                               250,000 restricted
                                                                                                               shares of Common
                                                                                                               Stock to an Accredited
                                                                                                               Investor (as that
                                                                                                               term is defined
                                                                                                               the Securities
                                                                                                               Act) pursuant to
                                                                                                               exercise of a common
                                                                                                               stock purchase
                                                                                                               warrant issued
                                                                                                               on November 30,
                                                                                                               2012 and exercisable
                                                                                                               for $0.20 per share.
                                                                                                               The Company issues
                                                                                                               the securities
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



34







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



As of March 31, 2013,
these shares had not yet been issued and remain as Subscriptions Receivable.



| | · | As
                                                                                                               stated above, on
                                                                                                               February 22, 2013
                                                                                                               and in connection
                                                                                                               with the above
                                                                                                               August 13, 2012
                                                                                                               Loan Agreement,
                                                                                                               the Company and
                                                                                                               Board Member, John
                                                                                                               Moore amended the
                                                                                                               Note pursuant to
                                                                                                               which Mr. Moore
                                                                                                               agreed to convert
                                                                                                               the interest due
                                                                                                               under the Note
                                                                                                               into shares of
                                                                                                               GBSX common stock
                                                                                                               at a rate of $0.30
                                                                                                               per share. Pursuant
                                                                                                               to the amendment,
                                                                                                               the Company issued
                                                                                                               450,960 shares
                                                                                                               of Common Stock
                                                                                                               to Mr. Moore. The
                                                                                                               Company issued
                                                                                                               the shares in reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | As
                                                                                                               stated above, on
                                                                                                               February 22, 2013,
                                                                                                               and in connection
                                                                                                               with the above
                                                                                                               October 26, 2012
                                                                                                               Loan Agreement,
                                                                                                               the Company and
                                                                                                               Board Member Stephen
                                                                                                               Baksa amended the
                                                                                                               Note pursuant to
                                                                                                               which Mr. Baksa
                                                                                                               agreed to convert
                                                                                                               the interest due
                                                                                                               under the Note
                                                                                                               into shares of
                                                                                                               GBSX common stock
                                                                                                               at a rate of $0.30
                                                                                                               per share. Pursuant
                                                                                                               to the amendment,
                                                                                                               the Company issued
                                                                                                               200,000 shares
                                                                                                               of Common Stock
                                                                                                               to Mr. Baksa. The
                                                                                                               Company issued
                                                                                                               the shares in reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               March 20, 2013,
                                                                                                               the Company issued
                                                                                                               an aggregate of
                                                                                                               450,950 restricted
                                                                                                               shares of Common
                                                                                                               Stock to Board
                                                                                                               Member, John Moore
                                                                                                               pursuant to a February
                                                                                                               22, 2013 amendment
                                                                                                               to a Secured Promissory
                                                                                                               Note Agreement
                                                                                                               entered into on
                                                                                                               August 13, 2012
                                                                                                               between the Company
                                                                                                               and the Board Member.
                                                                                                               The Company issued
                                                                                                               the securities
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               March 27, 2013,
                                                                                                               the Company issued
                                                                                                               an aggregate of
                                                                                                               200,000 restricted
                                                                                                               shares of Common
                                                                                                               Stock to Board
                                                                                                               Member, Stephen
                                                                                                               Baksa pursuant
                                                                                                               to a February 22,
                                                                                                               2013 amendment
                                                                                                               to a Secured Promissory
                                                                                                               Note Agreement
                                                                                                               entered into on
                                                                                                               October 26, 2012
                                                                                                               between the Company
                                                                                                               and the Board Member.
                                                                                                               The Company issued
                                                                                                               the securities
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



35







Notes
                                                                   to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                               March 27, 2013,
                                                                                                               the Company issued
                                                                                                               200,000 restricted
                                                                                                               shares of Common
                                                                                                               Stock to a third
                                                                                                               party non-affiliated
                                                                                                               consultant in consideration
                                                                                                               for consulting
                                                                                                               services rendered
                                                                                                               by the consultant
                                                                                                               to the Company.
                                                                                                               The Company issued
                                                                                                               the securities
                                                                                                               in reliance on
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) of the Securities
                                                                                                               Act due to the
                                                                                                               fact that the issuance
                                                                                                               was isolated and
                                                                                                               did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               April 26, 2013,
                                                                                                               the Company entered
                                                                                                               into a note purchase
                                                                                                               and security agreement
                                                                                                               (the “Loan
                                                                                                               Agreement”)
                                                                                                               with Stephen D.
                                                                                                               Baksa (the “Lender’),
                                                                                                               a member of the
                                                                                                               Board. Pursuant
                                                                                                               to the Loan Agreement,
                                                                                                               the Company issued
                                                                                                               a secured promissory
                                                                                                               note, dated April
                                                                                                               26, 2013 (the “Note”),
                                                                                                               to Mr. Baksa for
                                                                                                               the principal amount
                                                                                                               of $200,000, bearing
                                                                                                               interest at a rate
                                                                                                               of 2% per month
                                                                                                               and maturing on
                                                                                                               June 30, 2013 or
                                                                                                               such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note, without
                                                                                                               any penalty for
                                                                                                               prepayment. This
                                                                                                               Note is secured
                                                                                                               by fifty percent
                                                                                                               (50%) of certain
                                                                                                               financial holdbacks
                                                                                                               to the Company
                                                                                                               pursuant to the
                                                                                                               Stock Purchase
                                                                                                               Agreement, dated
                                                                                                               February 1, 2013,
                                                                                                               by and among the
                                                                                                               Company, IDC Global,
                                                                                                               Inc. and Global
                                                                                                               Telecom & Technology
                                                                                                               Americas, Inc.
                                                                                                               The Company issued
                                                                                                               the Note upon reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly 4(2))
                                                                                                               of the Securities
                                                                                                               Act in light of
                                                                                                               the fact it was
                                                                                                               a private transaction
                                                                                                               and did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | § | In connection with the execution of the Loan Agreement, on April 29, 2013, the Company issued the Lender a common stock purchase
warrant (the “Warrant”), pursuant to which the Lender is entitled to purchase 100,000 shares of common stock at an
exercise price of $0.25 from May 1, 2013 until April 30, 2016. The Warrant was issued in a private transaction between the Company
and the Lender and was exempt from registration under the Securities pursuant to Section 4(a)(2) (formerly Section 4(2)) thereof.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In
                                                                                                               connection with
                                                                                                               the execution of
                                                                                                               the Loan Agreement,
                                                                                                               on April 29, 2013,
                                                                                                               the Company issued
                                                                                                               the Lender a conditional
                                                                                                               common stock purchase
                                                                                                               warrant (the “Conditional
                                                                                                               Warrant”)
                                                                                                               which is exercisable
                                                                                                               in the event that
                                                                                                               Note is not paid
                                                                                                               in full by June
                                                                                                               30, 2013, pursuant
                                                                                                               to which the Lender
                                                                                                               is entitled to
                                                                                                               purchase 100,000
                                                                                                               shares of common
                                                                                                               stock at an exercise
                                                                                                               price of $0.25
                                                                                                               from July 1, 2013
                                                                                                               until June 30,
                                                                                                               2016 as described
                                                                                                               more fully in the
                                                                                                               Note. The Conditional
                                                                                                               Warrant was issued
                                                                                                               in a private transaction
                                                                                                               between the Company
                                                                                                               and the Lender
                                                                                                               and was exempt
                                                                                                               from registration
                                                                                                               under the Securities
                                                                                                               Act, pursuant to
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) thereof.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



36







Notes
                                                                                   to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                               April 26, 2013,
                                                                                                               the Company entered
                                                                                                               into a note purchase
                                                                                                               and security agreement
                                                                                                               (the “Loan
                                                                                                               Agreement”)
                                                                                                               with Vitamin B
                                                                                                               Venture GmbH (the
                                                                                                               “Lender”),
                                                                                                               an entity of which
                                                                                                               Joerg Ott, the
                                                                                                               Company’s
                                                                                                               Chairman and Chief
                                                                                                               Executive Officer,
                                                                                                               has voting and
                                                                                                               dispositive control.
                                                                                                               Pursuant to the
                                                                                                               Loan Agreement,
                                                                                                               the Company issued
                                                                                                               to the Lender a
                                                                                                               secured promissory
                                                                                                               note, dated October
                                                                                                               26, 2012 (the “Note”),
                                                                                                               for the principal
                                                                                                               amount of $200,000,
                                                                                                               bearing interest
                                                                                                               at a rate of 2%
                                                                                                               per month and maturing
                                                                                                               on June 30, 2013
                                                                                                               or such other time
                                                                                                               as described in
                                                                                                               more detail in
                                                                                                               the Note, without
                                                                                                               any penalty for
                                                                                                               prepayment. This
                                                                                                               Note is secured
                                                                                                               by fifty percent
                                                                                                               (50%) of certain
                                                                                                               financial holdbacks
                                                                                                               to be paid to the
                                                                                                               Company pursuant
                                                                                                               to the Stock Purchase
                                                                                                               Agreement, dated
                                                                                                               February 1, 2013,
                                                                                                               by and among the
                                                                                                               Company, IDC Global,
                                                                                                               Inc. and Global
                                                                                                               Telecom & Technology
                                                                                                               Americas, Inc.
                                                                                                               The Company issued
                                                                                                               the Note upon reliance
                                                                                                               on Section 4(a)(2)
                                                                                                               (formerly 4(2))
                                                                                                               of the Securities
                                                                                                               Act in light of
                                                                                                               the fact it was
                                                                                                               a private transaction
                                                                                                               and did not involve
                                                                                                               a public offering
                                                                                                               of securities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In
                                                                                                               connection with
                                                                                                               the execution of
                                                                                                               the Loan Agreement,
                                                                                                               on April 29, 2013,
                                                                                                               the Company issued
                                                                                                               the Lender a common
                                                                                                               stock purchase
                                                                                                               warrant (the “Warrant”),
                                                                                                               pursuant to which
                                                                                                               the Lender is entitled
                                                                                                               to purchase 100,000
                                                                                                               shares of common
                                                                                                               stock at an exercise
                                                                                                               price of $0.25
                                                                                                               from May 1, 2013
                                                                                                               until April 30,
                                                                                                               2016. The Warrant
                                                                                                               was issued in a
                                                                                                               private transaction
                                                                                                               between the Company
                                                                                                               and the Lender
                                                                                                               and was exempt
                                                                                                               from registration
                                                                                                               under the Securities
                                                                                                               Act pursuant to
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) thereof.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In
                                                                                                               connection with
                                                                                                               the execution of
                                                                                                               the Loan Agreement,
                                                                                                               on April 29, 2013,
                                                                                                               the Company issued
                                                                                                               the Lender a conditional
                                                                                                               common stock purchase
                                                                                                               warrant (the “Conditional
                                                                                                               Warrant”)
                                                                                                               which is exercisable
                                                                                                               in the event that
                                                                                                               Note is not paid
                                                                                                               in full by June
                                                                                                               30, 2013, pursuant
                                                                                                               to which the Lender
                                                                                                               is entitled to
                                                                                                               purchase 100,000
                                                                                                               shares of common
                                                                                                               stock at an exercise
                                                                                                               price of $0.25
                                                                                                               from July 1, 2013
                                                                                                               until June 30,
                                                                                                               2016 as described
                                                                                                               more fully in the
                                                                                                               Note. The Conditional
                                                                                                               Warrant was issued
                                                                                                               in a private transaction
                                                                                                               between the Company
                                                                                                               and the Lender
                                                                                                               and was exempt
                                                                                                               from registration
                                                                                                               under the Securities
                                                                                                               Act, pursuant to
                                                                                                               Section 4(a)(2)
                                                                                                               (formerly Section
                                                                                                               4(2)) thereof.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



37







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                              August 6, 2013,
                                                                                                              the Company issued
                                                                                                              25,000 restricted
                                                                                                              shares of Common
                                                                                                              Stock to a third
                                                                                                              party non-affiliated
                                                                                                              consultant in consideration
                                                                                                              for consulting services
                                                                                                              rendered by the
                                                                                                              consultant to the
                                                                                                              Company. The Company
                                                                                                              issued the securities
                                                                                                              in reliance on Section
                                                                                                              4(a)(2) (formerly
                                                                                                              Section 4(2)) of
                                                                                                              the Securities Act
                                                                                                              due to the fact
                                                                                                              that the issuance
                                                                                                              was isolated and
                                                                                                              did not involve
                                                                                                              a public offering
                                                                                                              of securities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other changes in common stock are
disclosed in Note 23, Supplementary Cash Flow Disclosures.



Options





The Company has not issued any options, so that
none are outstanding as of September 30, 2013.







Warrants



The
Company has issued warrants in four different manners. In each instance, the warrant allows the holder to purchase a common share
within a three year period from issuance at a specific price per share. In the first instance, warrants have been issued as part
of a private placement offering wherein the investor purchases a common share, and a warrant. The fair value of those warrants
has been determined (and is shown below) by utilizing the residual method, whereby the current market value of the stock is deducted
from the unit price and the remainder is allocated to the warrant. The valuation of the warrants issued is for disclosure purposes
only and has no impact to the financial statements. A description of those warrants has been described above under common shares.



The
second manner in which warrants are issues is in respect to financing by way of the issuance of notes payable or the conversion
of debt into shares. In these instances, the fair value of the warrant has been determined using the effective interest rate method
whereby the note is discounted when the interest rate is less than other similar notes and discount is allocated to the warrant
and credited to additional paid in capital. The corresponding charge to discount is then amortized over the life of the note.
Where there is no difference in interest terms, no value is attributable to the warrant.



38







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



The
Company has also sold warrants at nominal value to certain investors. In this instance the fair value of the warrants has been
determined using a Black-Scholes option pricing model with volatility, equity value and interest rate inputs noted below. The
valuation of the warrants issued is for disclosure purposes only and has no impact to the financial statements.



Lastly,
the Company has issued warrants to outside consultants in payments for services. The warrants are issued as “cashless”
warrants and have been valued using a Black-Scholes option pricing model with volatility, equity value and interest rate inputs
noted below.. The fair value of warrants issued for financing are determined for disclosure purposes as there is no impact to
the financial statements. The fair value for other services, namely legal, and consulting have been recorded in the financial
statements with a charge to the corresponding expense account and a credit to additional paid in capital.



Black
Scholes assumptions for warrants issued were as follows:



|                             |  | For the Period Ending
    September 30, |                                                                  
|---------------------------- |  | --------------------------------------- | -----------------------------------------------------------------
|                             |  | 2013                                    |                                                                  
|Annualized Volatility        |  |                                         | 120.26                                                           
|Risk Free  Interest
    Rate |  |                                         | 0.66                                                             
|Expected Life                |  |                                         | 3
                                                          years
|Dividend Rate                |  |                                         | Nil                                                              



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



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



39







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



In March 2012, the Company issued an aggregate
of 2,020,000 warrants to five “accredited investors” pursuant to Section 4(a)(2) (formerly Section 4(2)) of the Securities
Act. Each investor warrant is exercisable for the three-year period commencing from the date of issuance for $0.50 per share of
Common Stock and has the same terms as the Private Placement Warrants. As noted above investors immediately exercised warrants
and purchased 900,000 shares of common stock for $450,000.On March 27, 2012, the Company issued an aggregate of 250,000 warrants
to 3 outside consultants pursuant to Section 4(a)(2) (formerly Section 4(2)) of the Securities Act. Each warrant is exercisable
for the three-year period commencing from the date of issuance for $1.10 per share of Common Stock and has the same terms as the
Private Placement Warrants. The value of this issuance, using the Black Scholes pricing model was determined to $270,208 and this
amount was recorded as a professional expense.







In December 2012, The Company issued
16,875 warrants to an outside consultant pursuant to Section 4(a)(2) (formerly Section 4(2)) of the Securities Act. Each warrant
is exercisable for the three-year period commencing from the date of issuance for $0.21 per share of Common Stock and has the
same terms as the Private Placement Warrants. The value of this issuance, using the Black Scholes pricing model was determined
to $2,624 and this amount was recorded as a consulting expense.



40







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited





|                                   |  | #
    of shares |            |   |       |            |        |            |        |  |      | Fair
    value |  |  |           |     |  |           |           |  | Balance    | 
|---------------------------------- |  | --------------- | ---------- | - | ----- | ---------- | ------ | ---------- | ------ |  | ---- | -------------- |  |  | --------- | --- |  | --------- | --------- |  | ---------- | 
|                                   |  | allowed
    to  |            |   | Issue |            | Expiry |            | Strike |  |      | at             |  |  |           |     |  |           |           |  | End
    of | 
|                                   |  | purchase        |            |   | Date  |            | Date   |            | Price  |  |      | Issuance       |  |  | Issued    |     |  | Exercised |           |  | Period     | 
|                                   |  |                 |            |   |       |            |        |            | $      |  |      | $              |  |  | #         |     |  | #         |           |  | #          | 
|                                   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|                                   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Opening
    - Jan 1, 2012          |  |                 | 6,846,280  |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Amended                            |  |                 | (2,000,000 | ) |       | 10/1/2010  |        | 6/1/2013   |        |  | 4.00 |                |  |  | -         |     |  |           | -         |  |            | 
|Reissued                           |  |                 | 2,000,000  |   |       | 6/1/2012   |        | 6/1/2015   |        |  | 1.00 |                |  |  | 556,785   |     |  |           | -         |  |            | 
|Issued for legal
    services      |  |                 |            |   |       | 3/31/2012  |        | 3/31/2012  |        |  | 1.10 |                |  |  | 270,208   | (2) |  |           | 250,000   |  |            | 
|Issued for nominal
    value       |  |                 |            |   |       | 3/28/2012  |        | 3/28/2015  |        |  | 0.50 |                |  |  | 2,457,662 |     |  |           | 2,020,000 |  |            | 
|Sold with share
    units          |  |                 |            |   |       | 4/16/2012  |        | 4/16/2015  |        |  | 1.50 |                |  |  | 90,000    |     |  |           | 120,000   |  |            | 
|Issued with debt
    conversion    |  |                 |            |   |       | 4/28/2012  |        | 4/28/2015  |        |  | 1.75 |                |  |  | -         |     |  |           | 550,000   |  |            | 
|Issued with debt
    conversion    |  |                 |            |   |       | 4/30/2012  |        | 4/30/2015  |        |  | 1.75 |                |  |  | -         |     |  |           | 500,000   |  |            | 
|Sold with share
    units          |  |                 |            |   |       | 5/10/2012  |        | 5/10/2015  |        |  | 1.50 |                |  |  | 25,800    |     |  |           | 30,000    |  |            | 
|Issued with debt                   |  |                 |            |   |       | 7/5/2012   |        | 7/5/2012   |        |  | 0.50 |                |  |  | 26,500    |     |  |           | 550,000   |  |            | 
|Issued with debt                   |  |                 |            |   |       | 8/13/2012  |        | 8/13/2015  |        |  | 0.35 |                |  |  | -         |     |  |           | 100,000   |  |            | 
|Issued with debt                   |  |                 |            |   |       | 10/26/2012 |        | 10/29/2015 |        |  | 0.20 |                |  |  | -         |     |  |           | 500,000   |  |            | 
|Issued with debt                   |  |                 |            |   |       | 11/30/2012 |        | 11/30/2015 |        |  | 0.20 |                |  |  | -         |     |  |           | 500,000   |  |            | 
|Issued for consulting
    services |  |                 |            |   |       | 12/21/2012 |        | 12/21/2015 |        |  | 0.21 |                |  |  | 2,624     | (1) |  |           | 16,875    |  |            | 
|Closing - Dec 31,
    2012         |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           | 5,136,875 |  |            | 
|                                   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Opening - Jan 1,
    2013          |  |                 | 10,328,155 |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Transfer (3/11/2011)               |  |                 | 739,000    |   |       | 2/6/2013   |        | 3/11/2014  |        |  | 1.50 |                |  |  | -         |     |  |           | -         |  |            | 
|Closing - Mar 31,
    2013         |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           | 5,136,875 |  |            | 
|                                   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Issued with debt                   |  |                 |            |   |       | 4/26/2013  |        | 4/26/2016  |        |  | 0.25 |                |  |  | -         |     |  |           | 400,000   |  |            | 
|Closing - Jun 30,
    2013         |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           | 5,536,875 |  |            | 
|                                   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           |           |  |            | 
|Closing - September
    30, 2013   |  |                 |            |   |       |            |        |            |        |  |      |                |  |  |           |     |  |           | 5,536,875 |  |            | 









(1) recorded as consulting expense

(2) recorded as legal expense









Note 21        REVENUE
ALLOCATION



Gross revenue
may be broken down by the following products for the nine months ended September 30, 2013 are as follows:





|Sales Revenues           |  | 9/30/2013 |       
|------------------------ |  | --------- | ------
|                         |  | KUSD      |       
|                         |  |           |       
|                         |  |           |       
|Licenses                 |  |           | 2,605 
|Maintenance              |  |           | 7,500 
|Service                  |  |           | 2,443 
|Third-Party Products     |  |           | 1,736 
|LND Third-Party Products |  |           | 1,330 
|Others                   |  |           | 0     
|                         |  |           | 15,613



41







Notes
                                                                                        to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Revenues by
geographical area for the nine months ended September 30, 2013 are as follows:





|Sales Revenues     |  | 9/30/2013 |       
|------------------ |  | --------- | ------
|by geographic area |  | KUSD      |       
|                   |  |           |       
|                   |  |           |       
|US                 |  |           | 2,550 
|Germany            |  |           | 12,370
|United Kingdom     |  |           | 678   
|Others             |  |           | 15    
|                   |  |           | 15,613



Note 22          OTHER
INCOME/EXPENSE



At the financial
statement date, Other income was 20 KUSD (December 31, 2012 year end: Other Expense 33 KUSD).



42







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



Note
23          SUPPLEMENTAL CASH FLOW DISCLOSURES



The significant
non-cash transactions through September 30, 2013 were as follows:



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

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

| | · | On
                                                                                                               July 25, 2011,
                                                                                                               the Company acquired
                                                                                                               IDC Global, Inc.
                                                                                                               for 750 KUSD, $
                                                                                                               883,005 assumption
                                                                                                               of debt, 25 (KUSD)
                                                                                                               reimbursement for
                                                                                                               accounting and
                                                                                                               legal fees, 35
                                                                                                               KUSD signing bonuses
                                                                                                               and 880,000 shares
                                                                                                               of common stock.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | · | On
                                                                                                               February 27, 2012,
                                                                                                               an outstanding
                                                                                                               debt of GROUP was
                                                                                                               converted into
                                                                                                               an aggregate of
                                                                                                               1,750,000 shares
                                                                                                               of GROUP common
                                                                                                               stock, increasing
                                                                                                               GROUP’s total
                                                                                                               outstanding common
                                                                                                               stock to 26,982,000
                                                                                                               shares. As a result
                                                                                                               of the foregoing
                                                                                                               increase in the
                                                                                                               number of total
                                                                                                               outstanding shares
                                                                                                               of GROUP common
                                                                                                               stock, the Company
                                                                                                               increased its ownership
                                                                                                               of GROUP common
                                                                                                               stock to an aggregate
                                                                                                               of 13,525,000 shares,
                                                                                                               representing approximately
                                                                                                               50.1% of the outstanding
                                                                                                               common stock of
                                                                                                               GROUP, by purchasing
                                                                                                               the 883,765 shares
                                                                                                               of GROUP common
                                                                                                               stock from GAVF
                                                                                                               LLC for an average
                                                                                                               purchase price
                                                                                                               of $0.70 per share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On
                                                                                                               March 31, 2012,
                                                                                                               warrants were issued
                                                                                                               in lieu of consulting
                                                                                                               services and the
                                                                                                               fair value, based
                                                                                                               on the Black Scholes
                                                                                                               pricing model,
                                                                                                               was determined
                                                                                                               to be $ 270,208
                                                                                                               and recorded as
                                                                                                               Additional Paid-In
                                                                                                               Capital.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On
                                                                                                               April 28, 2012,
                                                                                                               $ 632,500 in notes
                                                                                                               payable to RealRisk
                                                                                                               Ventures, LL were
                                                                                                               converted into
                                                                                                               550,000 shares
                                                                                                               of common stock
                                                                                                               and into 550,000
                                                                                                               warrants with each
                                                                                                               warrant allowing
                                                                                                               the holder to purchase
                                                                                                               one common share
                                                                                                               at $1.75 for a
                                                                                                               period of 3 years.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On
                                                                                                               April 30, 2012,
                                                                                                               $ 460,000 in notes
                                                                                                               payable to Lotus
                                                                                                               Holdings Ltd. were
                                                                                                               converted into
                                                                                                               400,000 shares
                                                                                                               of common stock
                                                                                                               and 400,000 warrants,
                                                                                                               with each warrant
                                                                                                               allowing the holder
                                                                                                               to purchase one
                                                                                                               common share at
                                                                                                               $1.75 for a period
                                                                                                               of 3 years.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On
                                                                                                               April 30, 2012
                                                                                                               $ 172,500 of accounts
                                                                                                               payable due to
                                                                                                               Vitamin B Venture,
                                                                                                               GmbH was converted
                                                                                                               into 150,000 shares
                                                                                                               of common stock
                                                                                                               in satisfaction
                                                                                                               of a converted
                                                                                                               note to Kjell Jahn.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On
                                                                                                               July 5, 2012, promissory
                                                                                                               notes for $552,500
                                                                                                               were issued at
                                                                                                               8.5% and had a
                                                                                                               conversion feature.
                                                                                                               Similar notes without
                                                                                                               the conversion
                                                                                                               were issued at
                                                                                                               20%. Therefore,
                                                                                                               it was determined
                                                                                                               that the conversion
                                                                                                               feature had a value
                                                                                                               which was calculated
                                                                                                               by discounting
                                                                                                               the note as if
                                                                                                               the cost of capital
                                                                                                               was 20% and based
                                                                                                               on the due date
                                                                                                               set forth of 6
                                                                                                               months. The calculated
                                                                                                               value was classified
                                                                                                               as discounted debt
                                                                                                               and amortized over
                                                                                                               the life of the
                                                                                                               promissory notes
                                                                                                               resulting in additional
                                                                                                               Interest expense
                                                                                                               and a credit to
                                                                                                               Additional Paid-In
                                                                                                               Capital for $26,700.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43







Notes
to the Interim Financial Statements

September
30, 2013

GBS
Enterprises Incorporated

Unaudited



| | · | On
                                                                                                               December 21, 2012,
                                                                                                               warrants were issued
                                                                                                               in lieu of consulting
                                                                                                               services and the
                                                                                                               fair value, based
                                                                                                               on the Black Scholes
                                                                                                               pricing model,
                                                                                                               was determined
                                                                                                               to be $ 2,624 and
                                                                                                               recorded as Additional
                                                                                                               Paid-In Capital.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               March 1, 2013,
                                                                                                               $700,000 of Notes
                                                                                                               Payable and Accounts
                                                                                                               Payable due to
                                                                                                               Vitamin VbV GmbH
                                                                                                               was dissolved as
                                                                                                               payment against
                                                                                                               a Loan Payable
                                                                                                               from Group AG.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               March 20, 2013,
                                                                                                               450,960 shares
                                                                                                               were issued at
                                                                                                               a rate of .30/share
                                                                                                               on conversion of
                                                                                                               accrued interest
                                                                                                               due on a Note Payable
                                                                                                               to John Moore.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               March 27, 2013,
                                                                                                               200,000 shares
                                                                                                               were issued at
                                                                                                               a rate of .30/share
                                                                                                               on conversion of
                                                                                                               accrued interest
                                                                                                               due on a Note Payable
                                                                                                               to Stephen Baksa.
                                                                                                               Also on March 27,
                                                                                                               2013, 200,000 shares
                                                                                                               were issued in
                                                                                                               lieu of services
                                                                                                               and the fair value
                                                                                                               based on the Black
                                                                                                               Scholes pricing
                                                                                                               model, was determined
                                                                                                               to be $ 70,000
                                                                                                               and recorded as
                                                                                                               Additional Paid-In
                                                                                                               Capital.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | On
                                                                                                               August 6, 2013,
                                                                                                               25,000 shares were
                                                                                                               issued at a rate
                                                                                                               of .16/share in
                                                                                                               lieu of consulting
                                                                                                               services and recorded
                                                                                                               as Additional Paid-In
                                                                                                               Capital.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 24        SUBSEQUENT
EVENTS



On July 10,
2013, the Board of Directors of the Company reappointed Joerg Ott as the Chief Executive Officer (Principal Executive Officer)
of the Company, effective immediately. Mr. Ott replaced Mr. Gary D. MacDonald who had been serving as the Company’s Interim
Chief Executive Officer since July 11, 2012.



On August 2,
2013, Gary D. MacDonald resigned as member of the Board of Directors of the Company and as, Managing Director of GBS-UK. From
March 1, 2012 to the date of his resignation, Mr. MacDonald also served as member of the Board’ Audit Committee. Mr. MacDonald’s
resignation was not due to any disagreement with the Company or the Board.







On August 13, 2012,
the Company entered into a note purchase and security agreement (the “Loan Agreement”) with John A. Moore, a member
of the Board. Pursuant to the Loan Agreement, the Company issued a secured promissory note, dated October 26, 2012 (the “Note”),
to Mr. Moore for the principal amount of $1,000,000, bearing interest at a rate of 20% per year and maturing on the earlier of
the first anniversary date of the date of issuance or such other time as described in more detail in the Note, without any penalty
for prepayment. To secure the obligations of the Company under the Note, the Company granted Mr. Moore a secured priority security
interest in the Company’s Accounts Receivable and its subsidiaries located in the United States of America, as more fully
described in the full text of the document.



| | · | In
                                                                                                               connection with
                                                                                                               the execution of
                                                                                                               the Loan Agreement,
                                                                                                               on October 26,
                                                                                                               2012, the Company
                                                                                                               issued the Lender
                                                                                                               a common stock
                                                                                                               purchase warrant
                                                                                                               (the “Warrant”),
                                                                                                               pursuant to which
                                                                                                               the Lender is entitled
                                                                                                               to purchase 100,000
                                                                                                               shares of common
                                                                                                               stock at an exercise
                                                                                                               price of $0.35
                                                                                                               until the third
                                                                                                               anniversary date
                                                                                                               of the date of
                                                                                                               issuance. The Warrant
                                                                                                               was issued in a
                                                                                                               private transaction
                                                                                                               between the Company
                                                                                                               and the Lender
                                                                                                               and was exempt
                                                                                                               from registration
                                                                                                               under the Securities
                                                                                                               and Exchange Act
                                                                                                               of 1933, as amended,
                                                                                                               pursuant to Section
                                                                                                               4(2) thereof. On
                                                                                                               October 16, 2013,
                                                                                                               Mr. Moore exercised
                                                                                                               the right to purchase
                                                                                                               100,000 shares
                                                                                                               of common stock
                                                                                                               at the price of
                                                                                                               $0.35.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





On
October 23, 2013, the Company filed a lawsuit (GBS Enterprises, Inc. v. Reliance Globalcom, Inc.) in the Superior Court of the
State of California, County of San Francisco, seeking a declaratory judgment that the Company has no obligation to Reliance Globalcom
Inc. (“Reliance”) for any claims or liabilities in connection with a Master Services Agreement (“MSA”)
executed by Reliance and IDC Global Inc. (“IDC”) a then wholly owned subsidiary of the Company in March 2010. On February
1, 2013, GBS sold IDC to Global Telecom & Technology Inc. (“GTT”). Pursuant to the governing Stock Purchase Agreement
(SPA), GTT gained all right, title and interest in 100% of all of IDC’s stock, all of which had been owned by GBS. Pursuant
to the Stock Purchase Agreement, GTT withheld $528,777.93 of the purchase price from payment to GBS to cover potential exposure
due to the Identified Dispute described herein between IDC and Reliance. The Stock Purchase Agreement requires that, within three
days of notice to GTT that the Identified Dispute described herein has been resolved, GTT will release the $528,777.93 to GBS.
The Company is seeking declaratory relief from the Court stating the Company is not liable to Reliance and that GTT may release
the $528,777.93 in funds owed to the Company. There were no material developments in this case since the filing of the lawsuit.



The Company intends
to vigorously defend its interests in this matter.







44







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



Note Regarding Forward-Looking Statements



The following discussion and analysis
should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere
in the Quarterly Report. Our discussion includes forward-looking statements based upon current expectations that involve risks
and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ
materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth
under the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description
of Business” sections in the Company’s latest Annual Report on Form 10-K and subsequent filings. We use words such
as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,”
“expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe
the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bounds of our knowledge
of our business, our actual results could differ materially from those discussed in these statements. We undertake no obligation
to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur
in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully review and
consider the various disclosures made throughout the entirety of this quarterly report, which attempt to advise interested parties
of the risks and factors that may affect our business, financial condition, results of operations, and prospects.



OVERVIEW



GBS Enterprises Incorporated, a Nevada
corporation (the “Company,” “GBS,” “GBSX,” “we,” “us,” “our”
or similar expressions), conducts its primary business through its 50.1% owned subsidiary, GROUP Business Software AG (“GROUP”),
a German-based public-company whose stock trades on the Frankfurt Exchange under the stock symbol INW. GROUP’s software and
consulting business is focused on serving IBM’s Lotus Notes and Domino market. GROUP caters primarily to mid-market and enterprise-size
organizations with over 3,500 customers in thirty-eight countries spanning four continents, representing more than 5,000,000 active
users of its products. GROUP’s customers include Abbot, Ernst & Young, Deutsche Bank, Bayer, HBSC, Merck and Toyota.
GROUP provides IBM Lotus Notes/Domino Application and Transformation technology. Headquartered in Eisenach, Germany, GROUP has
offices throughout Europe and North America. The Company maintains a website at www.gbsx.us. GROUP maintains a website at www.gbs.com.
The information contained in the Company’s and GROUP’s websites is not incorporated by reference herein.



Products and Services



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



Historically, GROUP had achieved growth
by acquiring companies with complimentary operations and leveraging GROUP’s expertise to turnaround and integrate these companies.
Key success factors for this strategy are: enhanced portfolio, positioning GROUP as the ‘one-stop-shop’ for Lotus applications
and services, expanded customer support, fast code migration, and cloud enablement/XPages conversion of acquired applications.



In 2012, in order to reduce overhead and
administrative costs, we decided to restructure the Company’s multilevel subsidiary-structure. As of the fiscal quarter ended
September 30, 2013, we restructured or sold the following subsidiaries:



| | n | SD Holdings, Ltd./GBS India Private Limited
| | - | -------------------------------------------
| | n | Pavone AG                                  
| | n | GroupWare AG                               
| | n | Pavone, Ltd.                               
| | n | ebVokus, GmbH                              
| | n | B.E.R.S. AD (Investment)                   
| | n | IDC Global, Inc.                           
| | n | Group Live, NV.                            



45







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



Pavone AG/Groupware
AG. On July 6, 2012 and August 9, 2012, wholly-owned subsidiaries Pavone AG and Groupware AG, respectively, were merged
and consolidated into one wholly-owned subsidiary, Pavone GmbH. The mergers were consummated solely for administrative purposes.



Pavone, Ltd.
On July 8, 2012, Pavone, Ltd., a subsidiary of Pavone AG and a shell company, was dissolved. The Company serves the United Kingdom
market through GROUP’s subsidiary GBS, Ltd.



EbVokus, GmbH. On October
1, 2012, GROUP sold all of the software and operational assets (constituting substantially all of the assets) of its wholly-owned
subsidiary, ebVokus GmbH, along with the associated maintenance and project agreements to a non-affiliated third party for a purchase
price of approximately $459,000, approximately $258,000 (200,000 Euros: 1 EUR = $1.29 USD on October 1, 2012) was paid at closing
and the remaining $201,000 was paid on February 15, 2013 (150,000 Euro: 1EUR = $1.35 USD on February 15, 2013).



B.E.R.S. AD. On November
23, 2012, GBS AG sold its entire participation (50%) in B.E.R.S AD for a total of 25,000 BGN.



IDC Global,
Inc. On February 1, 2013, GBS entered into a Stock Purchase Agreement, dated February 1, 2013 (the “Agreement”),
with IDC Global, Inc., a Delaware corporation and a wholly-owned subsidiary of GBS (“IDC”), and Global Telecom &
Technology Americas, Inc., a Virginia corporation (“GTT). Pursuant to the Agreement, we sold 100% of the issued and outstanding
capital stock of IDC to GTT for a purchase price of $4,600,000 (the “Purchase Price”), subject to certain holdback
provisions, including a holdback of approximately $217,000 for accounts receivable and which is to be paid by GTT to GBS within
one business day of IDC receiving such payment, $334,000 for GroupLive liabilities and liens on IDC which is to be paid by GTT
to GBS within three business days that GTT is reasonably satisfied that such liabilities and liens have been removed, less any
amounts up to $12,500 which GTT or IDC is required to pay to either satisfy the obligations or purchase replacement equipment;
and approximately $528,000 for an outstanding dispute which is to be paid by GTT to GBS within three days that GTT is reasonably
satisfied has been resolved, subject however to a term of 18 months from the closing date or, if after 18 months, the holdback
will be used to offset any indemnifications by GBS under the Agreement. The Purchase Price was also subject to adjustment on a
dollar-for-dollar basis for adjustments to the Net Working Capital (defined as Current Assets minus Current Liabilities) of IDC
by GTT.



Group Live N.V. operating
under the laws of the Netherlands and a 100% subsidiary of GROUP declared its end of business May 31, 2012, registered in the commercial
register June 22, 2012. Following the local procedures the Company has been dissolved from the register as per April 5, 2013, registered
April 16, 2013.



The Board of Directors of the Company has
approved each of the transactions discussed above.



Messaging and Business Applications
Software & Solutions



GBS Messaging and Business Application
Software & Solutions product lines include software and advisory services for email and Instant Messaging (IM) Management,
Security, Compliance, Archiving and Productivity, CRM Applications, Governance, Risk & Compliance (GRC) Management software,
Workflow and Business Process Management software, ePDF Archiving & Document Management.



GBS develops, sells and installs well-known
business process and management software suites based on Lotus Notes / Domino and IBM Portal technology, mainly for major international
companies and medium-sized customers.



Through GBS’s comprehensive messaging
software product lines and associated services, Lotus Notes, Microsoft Exchange or SMTP-based-email customers, as well as Lotus
Sametime, customers are able to provide their users with a secure, efficient and centrally administered use of e-mail and IM while
maintaining control over their compliance with current legal requirements and corporate guidelines.



46







Consulting Services



GBS develops, sells and orchestrates customer-specific
Lotus Domino strategy and consulting services, such as CIO and IT department leader Strategic Advisory Services, Managed Services,
Outsourcing, Administration, Assessments and Implementations, Performance Improvements, Custom Application Development, Governance
and Security, Technical Support, and Training, as well as Email Migration Services.



Based on GBS’s unique concentration
of industry talent and expertise, mainly in the areas inside and around IBM Lotus Notes/Domino, inside and around corporate messaging
(IBM, Microsoft, SMTP) and inside and around IT environmental and application assessment, analysis and reporting, commercial and
governmental customers, as well as Software Integrators (SI) and channel partners, are able to rely on the company’s strategic
and tactical advisory services for evaluating, planning, staffing and execution of related customer projects. GBS Consulting Services’
global teams of consultants use modern project management techniques, proprietary methodologies and GBS accelerator technologies
to complete client projects on time and with reduced risk.



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



As a Premier IBM Business Partner, GBS
is one of the few partners that can sell and support licenses for all five IBM software brands: Lotus, WebSphere, Rational, Tivoli,
and DB2.



Market Trends



As IT departments face continuous budget
reductions and constant pressure for higher performance and efficiency, CIOs are focusing on modern technologies to support their
need for increased scalability, flexibility and lower costs. GBS has identified this demand as a strategic growth opportunity for
the company and has placed a significant focus on expanding its Modernizing/Migrating technology, which will assist client companies
as they move to scale and adapt while remaining cost conscious.



GBS Lotus Application Modernization
and Migration



GBS Lotus Application Modernization and
Migration activities are focused on the IBM Lotus / Domino applications market and the offering spans from expert services and
accelerator technologies to modernized, web enabled (also named “cloud” or “cloud computing”) and migrated
Lotus applications; and thus ultimately to take the Lotus applications from legacy to the future. The foundation of the Modernizing/Migrating
Suite Software offering is GBS’s significant R&D investment in a set of methodologies and key technology accelerators
to automate the conversion of traditional Notes based client-server applications, into the IBM XPages framework which enables Domino
applications to be run and accessed via the Lotus client, a web browser or on a mobile device. The patent-pended software that
underpins Modernizing/Migrating was developed by GBS with assistance and guidance from IBM’s Software Group to ensure alignment
with future releases of the IBM Lotus / Domino and XPages technology.



Revenue Model



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



Strategy and Focus Areas



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



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



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



47







General Corporate History



The Company was originally incorporated
in the state of Nevada on March 20, 2007 as SWAV Enterprises Ltd. (“SWAV”). SWAV was in a different industry and had
a different management team and Board of Directors.



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



Upon the consummation of the April 26,
2010 acquisition, the then executive officers and directors of SWAV resigned and Mr. Joerg Ott, the Chief Executive Officer of
GROUP and a GROUP Major Shareholder, was appointed the Chief Executive Officer of SWAV and sole member of SWAV’s Board of
Directors. Mr. Ott currently serves as the Chairman of the Board of Directors of GBSX and the Chief Executive Officer of GROUP.



On September 6, 2010, SWAV’s name
was changed to GBS Enterprises Incorporated. On October 14, 2010, the Company’s trading symbol on the OTC Bulletin Board
was changed from SWAV to GBSX. The Company’s common stock is currently quoted on the OTC Market OTCQB under the ticker symbol
GBSX.



About Lotus Holdings, Ltd.



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



SPPEFs



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



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



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



Transactions following the April
26, 2010 Transaction



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



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



48







Reverse Merger



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



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



Additional GROUP Acquisition



On February 27, 2012, we acquired an additional
883,765 shares of GROUP common stock for $619,000 in order to maintain our 50.1% majority ownership of GROUP due to an increase
in the outstanding common stock of GROUP.



Executive Offices



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



Changes in Financial Condition



Assets:



Total Assets decreased from $56,802,492 at December 31, 2012
to $47,279,675 at September 30, 2013.  Total Assets consists of Total Current Assets and Total Non-Current Assets.



Total Current Assets



At September 30, 2013, Total Current Assets
were $4,294,224 as compared to $6,444,192 at December 31, 2012. Total Current Assets consist of: Cash and Cash Equivalents, Accounts
Receivable, Inventory, Prepaid Expenses, and Other Receivables-current.



| | n | Cash and Cash Equivalents decreased from $1,154,602 at December 31, 2012 to $259,614
at September 30, 2013 as a result of our investments in strategic technology areas such as application migration and modernization
and the associated costs necessary to build and implement the go- to- market strategy and losses in operations.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Accounts Receivable decreased from $4,143,448 at December 31, 2012 to $3,528,260
at September 30, 2013 due to increased collections during the reporting period and less revenue.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Inventory increased from $nil at December 31, 2012 to $21,684 at September 30, 2013.
| | - | ------------------------------------------------------------------------------------



| | n | Prepaid Expenses increased from $84,304 at December 31, 2012 to $207,811 at September
30, 2013 from prepaid rent, insurance and advances on technological events.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Other Receivables-current decreased from $676,976 at December 31, 2012 to $276,856
at September 30, 2013.
| | - | ---------------------------------------------------------------------------------------------------------



Total Non-Current Assets



At September 30, 2013, Total Non-Current
Assets were $42,985,450 as compared to $50,358,300 at December 31, 2012.  Total Non-Current Assets consist of: Property
Plant and Equipment, Other Receivables non-current, Deferred Tax Assets non-current, Goodwill, Software, and Other Assets.



49







| | n | Net Property (plant and equipment) decreased from $332,839 at December 31, 2012 to
$282,601 at September 30, 2013.
| | - | ------------------------------------------------------------------------------------------------------------------



| | n | Other Receivables non-current decreased from $428,422 at December 31, 2012 to $1,217
at September 30, 2013 and consisted of cooperative shares.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | n | Deferred Tax Assets non-current decreased from $1,132,103 at December 31, 2012 to
$1,076,010 at September 30, 2013 and consisted of Deferred Tax Assets derived from financial assets and losses carried forward.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Goodwill decreased from $34,254,881 at December 31, 2012 to $31,260,500 at September
30, 2013. The decrease in goodwill of $2,994,381 resulted from the sale of the subsidiary IDC Global, Inc. on February 1, 2013.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Software decreased from $12,207,031 at December 31, 2012 to $10,232,633 at September
30, 2013, as a result of the quarterly re-calculation of capitalized development costs, product rights and license for our expert
business software, legacy business software and strategic business software all in the developmental or improvement stage. The
decrease is also related to an overall cost reduction program, resulting in less contribution of capitalized software development.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Other Assets decreased from $156,379 at December 31, 2012 to $132,489 at September
30, 2013. This category includes rent and other security deposits.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------





Liabilities



Total Liabilities decreased from $22,269,060 at December 31,
2012 to $16,870,431 at September 30, 2013.  Total Liabilities consists of Total Current Liabilities and Total Non-Current
Liabilities.



Total Current Liabilities



At September 30, 2013, Total Current Liabilities
were $16,698,017, compared to $18,227,184 at December 31, 2012.  Total Current Liabilities consist of Notes Payable,
Liabilities to Banks, Accounts Payable and Accrued Liabilities, Deferred Income, and Other Liabilities.



| | n | Notes Payable decreased from $2,313,572 at December 31, 2012 to $1,775,010 at September
30, 2013 based on repayments of short terms loans during the quarter.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------





| | n | Liabilities to Banks increased from $6,774 at December 31, 2012 to $3,887,764 at September 30, 2013 and included a line of credit and cash in transit. The increase was mainly as a result from reclassification from non-current liabilities to current liabilities.                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | n | Accounts Payable and Accrued
    Liabilitiesdecreased from $6,241,733 at December 31, 2012 to $3,946,070 at September 30, 2013. The decrease
    was due to the reduction of trade payables by approximately $1,034,000 and a decrease in accrued liabilities of approximately
    $1,262,000 by repayment and as a result of the sale of subsidiary IDC Global. The remaining amounts were reclassified into
    other short term notes and due to related parties.







| | n | Deferred Income increased from $6,099,570 at December 31, 2012 to $6,846,920 at September 30, 2013, and consists mainly of maintenance income collected in advance of the contractual maintenance period. 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                           
| | n | Other Liabilities of
    $860,032 at December 31, 2012 decreased to $242,352 at September 30, 2013 and includes miscellaneous short term obligations
    including current amounts due on business assets.









Total Non-Current Liabilities



At September 30, 2013, our Total Non-Current
Liabilities were $172,414 compared to $4,041,876 at December 31, 2012.  Total Non-Current Liabilities consist of Liabilities
to Banks, Retirement Benefit Obligation, Liabilities Held for Sale, and Deferred Tax Liabilities non-current.



| | n | Liabilities to Banks decreased from $3,716,102 at December 31, 2012 to $Nil at September
30, 2013 as a result from reclassification from non-current liabilities to current liabilities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | Retirement Benefit Obligation increased from $165,876 at December 31, 2012 to $172,414
at September 30, 2013.
| | - | -------------------------------------------------------------------------------------------------------------



50







| | n | Liabilities Held for Sale decreased from $159,898 at December 31, 2012 to $Nil at
September 30, 2013 as a result of the sale of IDC Global, Inc. on February 1, 2013.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Results of Operations



Three Months Ended September 30,
2013 Compared to the Three Months Ended September 30, 2012



Revenues



For the three months ended September 30,
2013, our total revenue decreased to $5,065,656 from $ 5,709,778 for the three months ended September 30, 2012, a decline of $644,122
or 11%. The Company generates revenue from two divisions. The Product division of Revenues includes revenue generated from the
sale of Licenses, Maintenance, Third-Party Products, and Other revenues. The Service division includes revenue generated from services
rendered.



The Product division decreased to $4,133,565
for the three months ended September 30, 2013 from $4,719,446 for the three months ended September 30, 2012, a decrease of $585,881
or 12%. The primary contributing factors were decreases in License revenues of approximately $655,000, Third Party Product revenues
of $350,000, increases in Maintenance revenues of approximately $490,000 and decreases in Other revenues of approximately $65,000
for the three months ended September 30, 2013 compared to the three months ended September 30, 2012. This is mainly as a result
of economic conditions causing an increase in the sales cycles, whereby strategic customers are giving greater consideration towards
the modernization/migration of their current application platform.



The Service division of revenue decreased
$56,634 or 6% from $990,333 for the three months ended September 30, 2012 to $932,091 for the three months ended September 30,
2013, primarily as a result of the sale of subsidiary companies that were contributors to the Service division of revenue.



Cost of Goods Sold



For the three months ended September 30, 2013, total Cost of
Goods Sold decreased to $2,273,055 from $3,212,767 for the three months ended September 30, 2012, a cost reduction of $_939,712
or 29%.



The Company’s Cost of Goods Sold
is segmented into two divisions. The first are costs related to the Product division of revenue which includes the total cost of
materials. The second are the costs related to the Service division of revenue which includes; other operating expenses, depreciation
& amortization expense, and personnel expenses.



Within the Costs of Goods Sold related
to the Product division, the Company saw a $358,890 or 39% decrease from $ 922,839 for the three months ended September 30, 2012
to $_563,950 for the three months ended September 30, 2013. The primary factors contributing to the Company’s lower Costs
of Goods Sold related to the Product division of revenues was a reduction of $282,639 in product material costs and of $76,250
in third party product material costs for the three months ended September 30, 2013 compared to the three months ended September
30, 2012.



Within the Costs of Goods Sold related
to the Service division, the Company had a reduction of $580,822 or 25%, in the total costs of services from $ 2,289,927 for the
three months ended September 30, 2012 to $ 1,709,105 for the three months ended September 30, 2013. The primary factor contributing
to the Company’s reduction in the costs of services was a decrease in the volume of services rendered and a reduction in
personnel costs, depreciation and amortization costs associated with the sale of subsidiary companies. Additional personnel costs
relating to Services are included in Selling Expenses and these were also reduced from the quarter ending September 30, 2012 as
indicated below.



Operating Expenses



The Company’s total operating expense
consists of three segments; selling, administrative and general expenses. For the three months ended September 30, 2013, total
operating expenses decreased $878,493 or 21% to $3,294,910 from $4,173,403 for the three months ended September 30, 2012.



For the three months ended September 30,
2013, Selling Expenses decreased $592,531 or 23% to $ 2,033,242 from $2,625,773 for the three months ended September 30, 2012. 
This was primarily due to decreases in cost of materials of $13,269, personnel expense of $532,914 and in other selling expense
of $81,705, coupled with a reduction in other operating income of $9,522 and a slight increase in depreciation expense of $480.



For the three months ended September 30,
2013, Administrative Expense decreased by $83,977 or 7% to $1,145,304 from $1,229,281 for the three months ended September 30,
2012. This was primarily due to a reduction in personnel costs of $55,535 coupled with an increase in other operating income of
$1,116 and decreases in other administrative expense of $ 142,207 and depreciation expense of $3,812.



51







For the three months ended September 30,
2013, General Expense decreased $197,986 to $120,364 from $318,350 for the three months ended September 30, 2012. This was primarily
due decreases of $50,011 in other operating income and in personnel expense of $16,282, and other operating expense of $231,541.
Depreciation of approximately $22,000 was at the same level as for the three months ended September 2012.



Other Income (Expense)



For the three months ended September 30,
2013, net Other Expenses of $95,487 increased from net Other Income of $759,169for the three months ended September 30, 2012. This
change is primarily due to a decrease in Other Income of $847,976 and an increase in net Interest Expense of $6,472 for the three
months ended September 30, 2013 compared to the three months ended September 30, 2012.



Nine Months Ended September 30, 2013
Compared to the Nine Months Ended September 30, 2012



Revenues



For the nine months ended September 30,
2013, our total revenue decreased $3,151,581 or 16.8% to $15,613,048 from $ 18,764,628 for the nine months ended September 30,
2012. The Company generates revenue from two divisions. The Product division of Revenues includes revenue generated from the
sale of Licenses, Maintenance, Third-Party Products, and Other revenues. The Service division includes revenue generated from services
rendered.



The Product division decreased $2,077,770
or 14% to $13,170,113 from $15,247,833 for the nine months ended September 30, 2012 The primary factors contributing to the decline
were decreases in License revenues of $954,414, Maintenance revenues of $116,808, Third Party Product revenues of $897,551 and
Other revenues of $ 108,998 compared to the nine months ended September 30, 2012. This is mainly as a result of economic conditions
causing an increase in the sales cycles, whereby strategic customers are giving greater consideration towards the modernization/migration
of their current application platform.



The Service division of revenue decreased
$1,073,810 or 31%, from $3,516,745 for the nine months ended September 30, 2012 to $ 2,442,935 for the nine months ended September
30, 2013, primarily as a result of a reduction in service staff.



Cost of Goods Sold



For the nine months ended September 30, 2013, total Cost of
Goods Sold decreased $ 2,760,159 or 26% to $ 7,690,366 from $ 10,450,525 for the nine months ended September 30, 2012.



The Company’s Cost of Goods Sold
is segmented into two divisions. The first are costs related to the Product division of revenue which includes the total cost of
materials. The second are the costs related to the Service division of revenue which includes; other operating expenses, depreciation
& amortization expense, and personnel expenses.



Within the Costs of Goods Sold related
to the Product division the Company shows a $1,095,001 or 29% reduction from $3,833,550 for the nine months ended September 30,
2012 to $2,738,549 for the nine months ended September 30, 2013. The primary factors contributing to the Company’s lower
Costs of Goods Sold related to the Product division of revenues was a reduction of $863,080 in product material costs and a reduction
of $231,921 in third party product material costs, for the nine months ended September 30, 2013 compared to the nine months ended
September 30, 2012.



Within the Costs of Goods Sold related
to the Service division, the Company had a reduction of $_1,665,158 or 25% in the total costs of services from $6,616,975 for the
nine months ended September 30, 2012 to $4,951,817 for the nine months ended September 30, 2013. The primary factor contributing
to the Company’s reduction in the costs of services was a decrease in the volume of services rendered and a reduction in
personnel costs, depreciation and amortization costs associated with the cost reduction program.



Operating Expenses



The Company’s total operating expense
consist of three segments; selling, administrative and general expenses. For the nine months ended September 30, 2013, total operating
expenses decreased $ 3,703,409 or 25 % to $ 10,938,080 from $14,641,489 for the nine months ended September 30, 2012.



For the nine months ended September 30,
2013, Selling Expenses decreased $3,362,859 or 34 % to $ 6,627,311 from $ 9,990,170 for the nine months ended September 30, 2012. 
This was primarily due to decreases in cost of materials of $ 234,736, personnel expense of $ 2,510,500 and in other selling expense
of $ 663,892, coupled with a reduction in other operating income of $ 41,904 and a slight increase in depreciation expense of $
4,365.



52







For the nine months ended September 30,
2013, Administrative Expense decreased by $ 17,652 or .45% to $3,922,440 from $3,940,092 for the nine months ended September 30,
2012. This was primarily due to an increase in other operating income of $ 76,593, an increase in personnel expenses of $ 211,539,
increase in depreciation expense of $ 16,270 offset by a decrease in other operating expenses of $ 168,868



For the nine months ended September 30,
2013, General Expense decreased by $318,898 or 45 % to $392,329 from $711,227 for the nine months ended September 30, 2012. This
was primarily due to a decrease in other operating costs of $ 211,603 and a decrease in personnel expenses of $ 67,508, an increase
in other operating income of $ 159,480 with an increase in depreciation expense of $ 119,649



Other Income (Expense)



For the nine months ended September 30,
2013, net Other Income of $20,517 increased from net Other Expense of $185,996 for the nine months ended September 30, 2012. This
change is primarily due to an increase in Other Income of $513,887 and a net increase in Interest Expense of $307,374 for the nine
months ended September 30, 2013 compared to the nine months ended September 30, 2012.



Liquidity & Capital Resources



As September 30, 2013, the Company had
$ 259,614 in cash and cash equivalents, compared to $1,154,602 at December 31, 2012.



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



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



Since 2012, the Company has been exploring
internal and external sources for financing. To date, these sources have provided necessary funds to support the working capital
needs of the Company; mainly to finance the Company’s strategic offerings.  There can be no assurances, however, that
the Company will be able to obtain additional funds from these or any other sources or that such funds will be sufficient to permit
the Company to implement its intended business strategy. In the event the Company is not able to secure additional funds, management
will postpone any strategic investment until the financing will be sufficient. However, management believes as a result of the
assets purchased and sold to date, in accordance with the above-mentioned statement, the Company will be able to provide sufficient
cash flow to support its standard operations for the next 9 months.





From time to time, the Company has issued promissory notes to
fund its operations. As of September 30, 2013, the Company had an aggregate of $nil.







During the nine-month period ended September 30, 2013, we raised
capital by consummating the following transactions:



| | n | On February 1, 2013, we sold 100% of our ownership in IDC Global, Inc. for net proceeds of $3,577,195.
| | - | ------------------------------------------------------------------------------------------------------



| | n | On February 12, 2013, we issued an aggregate of 500,000 restricted shares of Common Stock to Board Member Stephen Baksa, pursuant
to exercise of a common stock purchase warrant issued on October 26, 2012 and exercisable for $0.20 per share, for total proceeds
of $100,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | On February 12, 2013, the Company issued an aggregate of 250,000 restricted shares of Common Stock to an Accredited Investor
(as that term is defined the Securities Act) pursuant to exercise of a common stock purchase warrant issued on November 30, 2012
and exercisable for $0.20 per share, for total proceeds of $50,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n | On April 26, 2013, the Company entered into a note purchase and security agreement (the “Loan Agreement”) with
Stephen D. Baksa (the “Lender’), a member of the Board. Pursuant to the Loan Agreement, the Company issued a secured
promissory note, dated April 26, 2013 (the “Note”), to Mr. Baksa for the principal amount of $200,000, bearing interest
at a rate of 2% per month and maturing on June 30, 2013 or such other time as described in more detail in the Note, without any
penalty for prepayment. This Note is secured by fifty percent (50%) of certain financial holdbacks to the Company pursuant to the
Stock Purchase Agreement, dated February 1, 2013, by and among the Company, IDC Global, Inc. and Global Telecom & Technology
Americas, Inc.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



53







| | § | In connection with the execution of the Loan Agreement, on April 29, 2013, the Company issued the Lender a common stock purchase
warrant (the “Warrant”), pursuant to which the Lender is entitled to purchase 100,000 shares of common stock at an
exercise price of $0.25 from May 1, 2013 until April 30, 2016. The Warrant was issued in a private transaction between the Company
and the Lender and was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”),
pursuant to Section 4(a)(2) (formerly Section 4(2)) thereof.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In connection with the execution of the Loan Agreement, on April 29, 2013, the Company issued the Lender a conditional common
stock purchase warrant (the “Conditional Warrant”) which is exercisable in the event that Note is not paid in full
by June 30, 2013, pursuant to which the Lender is entitled to purchase 100,000 shares of common stock at an exercise price of $0.25
from July 1, 2013 until June 30, 2016 as described more fully in the Note. The Conditional Warrant was issued in a private transaction
between the Company and the Lender and was exempt from registration under the Securities Act, pursuant to Section 4(a)(2) (formerly
Section 4(2)) thereof.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | The Company  aggressively re-negotiated the terms of the Loan Agreement with the Lender and has swapped the outstanding
loan against receivables.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | n | On April 26, 2013, the Company entered into a note purchase and security agreement (the “Loan Agreement”) with
Vitamin B Venture GmbH (the “Lender”), an entity of which Joerg Ott, the Company’s Chairman and Chief Executive
Officer, has voting and dispositive control. Pursuant to the Loan Agreement, the Company issued to the Lender a secured promissory
note, dated October 26, 2012 (the “Note”), for the principal amount of $200,000, bearing interest at a rate of 2% per
month and maturing on June 30, 2013 or such other time as described in more detail in the Note, without any penalty for prepayment.
This Note is secured by fifty percent (50%) of certain financial holdbacks to be paid to the Company pursuant to the Stock Purchase
Agreement, dated February 1, 2013, by and among the Company, IDC Global, Inc. and Global Telecom & Technology Americas, Inc.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In connection with the execution of the Loan Agreement, on April 29, 2013, the Company issued the Lender a common stock purchase
warrant (the “Warrant”), pursuant to which the Lender is entitled to purchase 100,000 shares of common stock at an
exercise price of $0.25 from May 1, 2013 until April 30, 2016. The Warrant was issued in a private transaction between the Company
and the Lender and was exempt from registration under the Securities Act pursuant to Section 4(a)(2) (formerly Section 4(2)) thereof.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | In connection with the execution of the Loan Agreement, on April 29, 2013, the Company issued the Lender a conditional common
stock purchase warrant (the “Conditional Warrant”) which is exercisable in the event that Note is not paid in full
by June 30, 2013, pursuant to which the Lender is entitled to purchase 100,000 shares of common stock at an exercise price of $0.25
from July 1, 2013 until June 30, 2016 as described more fully in the Note. The Conditional Warrant was issued in a private transaction
between the Company and the Lender and was exempt from registration under the Securities Act, pursuant to Section 4(a)(2) (formerly
Section 4(2)) thereof.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | The Company  aggressively re-negotiated the terms of the Loan Agreement with the Lender and has swapped the outstanding
loan against receivables.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------





| | n | On August  6, 2013 the Company issued 25,000 restricted shares of Common Stock to a third party non-affiliated consultant in consideration for consulting services rendered by the consultant to the Company. The Company issued the securities in reliance on Section 4(a)(2) (formerly Section 4(2)) of the Securities Act due to the fact that the issuance was isolated and did not involve a public offering of securities.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subsequent Events:



On August 13, 2012, the Company entered into a note purchase
and security agreement (the “Loan Agreement”) with John A. Moore, a member of the Board. Pursuant to the Loan Agreement,
the Company issued a secured promissory note, dated October 26, 2012 (the “Note”), to Mr. Moore for the principal amount
of $1,000,000, bearing interest at a rate of 20% per year and maturing on the earlier of the first anniversary date of the date
of issuance or such other time as described in more detail in the Note, without any penalty for prepayment. To secure the obligations
of the Company under the Note, the Company granted Mr. Moore a secured priority security interest in the Company’s Accounts
Receivable and its subsidiaries located in the United States of America, as more fully described in the full text of the document.



| | · | In connection with the execution of the Loan Agreement, on October 26, 2012, the Company issued the Lender
a common stock purchase warrant (the “Warrant”), pursuant to which the Lender is entitled to purchase 100,000 shares
of common stock at an exercise price of $0.35 until the third anniversary date of the date of issuance. The Warrant was issued
in a private transaction between the Company and the Lender and was exempt from registration under the Securities and Exchange
Act of 1933, as amended, pursuant to Section 4(2) thereof. On October 16, 2013, Mr. Moore exercised the right to purchase 100,000
shares of common stock at the price of $0.35.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In the future, the Company may supplement its liquidity to fund
its operations or implement its business strategy through the sale of equity or debt securities or through short or long term loans.
However, there can be no assurances that the Company will be successful in consummating any such financings on favorable terms,
if at all.



54







Cash Flows





|                                                                       |  | For the Nine Months Ended September 30, |           
|---------------------------------------------------------------------- |  | --------------------------------------- | ----------
|                                                                       |  | 2013                                    |           
|                                                                       |  |                                         |           
|Net cash provided (used in) Operating Activities                       |  | $                                       | 1,355,523 
|Net cash provided (used) by Discontinued                               |  | $                                       |           
|Net cash provided (used in) Investing Activities                       |  | $                                       | 487,309   
|Net cash provided (used in) Financing Activities                       |  | $                                       | (2,389,541
|Effect of exchange rate changes on cash                                |  | $                                       | (348,280  
|Net increase (decrease) in cash and cash equivalents during the period |  | $                                       | (894,988  
|Cash and cash equivalents, beginning of period                         |  | $                                       | 1,154,602 
|Cash and cash equivalents, end of period                               |  | $                                       | 259,614   





Net cash provided by operating activities for the nine month
period ended September 30, 2013 was $ 1,355,523 compared to net cash used in operating activities of $2,634,397 and net cash provided
by discontinued operation of $63,246 for the nine month period ended September 30, 2012, an increase of approximately $3,989,920.
This change is due to the effects of a group wide cost reduction program and due to a reduction in operating Net Loss of approximately
$ 2,090,934, decrease in Accounts Receivable, Prepaid Assets and other Non Current Assets of approximately $ 2,140,311, Gains on
Sale of Assets of approximately $ 1,566,119, Deferred Income Taxes of approximately $ 1,477,813, shares issued in lieu of Interest
and Consulting expense of approximately $ 269,288, Depreciation and Amortization of approximately $109,817, Gains from Equity Investment
of approximately $ 26,751 and increase in Retirement Benefit Obligation of $ 6,538. This is offset with a write off of Goodwill
of approximately $ (3,079,168). change in Inventory of approximately $ (140,929) and increase in the payment of Accounts Payable
and other liabilities of approximately $ (477,522).





Net cash provided by investing activities during the nine month
period ended September 30, 2013 was $ 487,309 compared to cash used by investing activities in the comparative period ended September
30, 2012 of $ 2,491,803, increasing by approximately $ 2,797,112. The increase was due to cash provided by the Sale of Intangible
Assets of approximately $ 4,146,894,and cash provided by the Sale of property plant and equipment of $ 579,206 as offset by a change
in Financial Assets of approximately $ (1,928,988).





Net cash used in financing activities during the nine month
period ended September 30, 2013 was $ 2,389,541 compared to net cash provided by financing activities in the comparative period
ended September 30, 2012 of $ 2,548,096 decreasing by approximately $ 4,937,637 for the nine month period ended September 30, 2013.
This change was due to a $ 3,483,175 reduction in capital paid-in, coupled with cash used by net borrowings from banks of $ 902,508
and payments towards related party loans of $ 2,087,437. Other borrowings provided approximately$ 1,535,482.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Critical Accounting Policies and Estimates



The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.   The areas where critical estimates were made that have significant importance
to the financial statements are as follows:



i.      Allowance
for doubtful accounts. The company provides for potential bad debts on an account-by-account basis. Bad debts have not been significant
and our allowance has been accurate. Non-trade receivables are also scrutinized and allowed for based on expected recovery.



ii.     Allocation
of the price paid when acquiring subsidiaries.  When the Company acquires subsidiary companies an allocation of the purchase
is required.  The allocation is based on management’s analysis of the value of the net assets, and is based on
estimated future cash flows that each component will produce.  Such components might include software, customer lists
and other intangible assets that are not readily determinable.  The allocation has a significant impact on the future
earnings of the Company as certain assets, customer lists for example, must be amortized and charged to operations over time, while
other assets, notably goodwill, does not.



iii.     Impairment
testing on intangibles and goodwill.  As noted in more detail below, these areas involve numerous estimates as to expected
cash flows, expected rates of return and other factors that are difficult to determine and are often out of the Company’s
direct control.



iv.     Valuation
of deferred tax credits.  The Company provides an allowance for tax recoveries arising from the application of losses
carried forward.  An allowance is provided where management has determined that it is less than likely that the loss
will be applied and income taxes recovered.



55







Comprehensive Income (Loss)



The Company adopted FASB Codification topic
(“ASC”) 220, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements. Comprehensive income consists of net income and other gains and losses affecting
stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale,
foreign currency translation gains and losses and minimum pension liability. Since inception, the Company’s other comprehensive
income represents foreign currency translation adjustments and small net actuarial losses on pension plans.



Net Income per Common Share



FASB Codification topic (“ASC”)
260, Earnings per share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the
numerator and denominator of the EPS computations. Basic earnings per share amounts are based on the weighted average shares of
common stock outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential
common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase
earnings per share. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is
not presented where anti-dilutive. Accordingly, although the diluted weighted average number of common stock outstanding is disclosed
on the statements of operation, the calculated net loss per share is the same for bother basic and diluted as both are based on
the basic weighted average of common stock outstanding. There were no adjustments required to net income for the period presented
in the computation of diluted earnings per share.



Financial Instruments



Financial instruments consist of cash and
cash equivalents, accounts receivable, financial assets, notes payable, liabilities to banks, accounts payable and accrued liabilities
and other liabilities.  As of the financial statement date, the Company does not hold any derivate financial instruments.
Financial assets and liabilities are measured upon first recognition and reviewed at the financial statement date.  Changes
in fair value are recognized through profit and loss.  Unless otherwise noted, it is management’s opinion that
the Company is not exposed to significant interest or credit risks arising from these financial instruments.



Currency Risk



We use the US dollar as our reporting currency.  The
functional currencies of our significant foreign subsidiaries are the local currency, which includes the Euro, the British pound,
and the Indian rupee.  Accordingly, some assets and liabilities are incurred in those currencies and we are subject to
foreign currency risks.



Fair Value Measurements



The Company follows FASB Codification topic
(ASC”) 820, Fair Value Measurements and Disclosures, for all financial instruments and non-financial instruments accounted
for at fair value on a recurring basis. This new accounting standard establishes a single definition of fair value and a framework
for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement
and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing
guidance as to whether or not an instrument is carried at fair value. The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.



The Company has adopted (“ASC”)
825, Financial Instruments, which allows companies to choose to measure eligible financial instruments and certain other items
at fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible
financial instruments.



Cash and Cash Equivalents



The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents.



Inventories



Pursuant to ASC 330 (Inventories), inventories
held for sale are recognized under inventories. Inventories were measured at the lower of cost or market. Cost is determined on
a first-in-first out basis, without any overhead component.



56







Goodwill and other Intangible Assets



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



Company created software can be intended
for sale to third parties or used by the Company itself. If the conditions for capitalization are not met, the expenses are recorded
with their effect on profit in the year in which they were incurred.



The Company amortizes intangible assets
with a limited useful life to the estimated residual book value in accordance with ASC regulations. In addition, in special circumstances
according to ASC 350-30, a recoverability test is performed and, if applicable, unscheduled amortization is considered.



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



Intangible assets obtained as part of an
acquisition which do not meet the criteria for a separate entry are identified as goodwill. Goodwill is reviewed once a year during
an impairment test, whereby the appraised fair value of the invested capital of the reporting unit, is compared with the carrying
(book) value of its invested capital amount (including goodwill.) Use value is generally applied in order to determine the recoverability
of goodwill and intangible assets with an indefinite useful life. The projected financial plan prepared by the management serves
as the basis for this determination of use value and the planning assumptions are each adjusted for the current state of knowledge.
Reasonable assumptions regarding macroeconomic trends and historical developments are taken into account in making these adjustments.
Future estimated cash flows are determined based on the expected growth rates of the markets in question.



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



Property, Plant and Equipment



Property, plant and equipment are valued
at acquisition or manufacturing costs, reduced by scheduled and, if necessary, unscheduled depreciation. Fixed assets are depreciated
on a straight-line basis, prorated over their expected useful life. Scheduled depreciation is mainly based on useful lives of 3
to 10 years. Leasehold improvements are depreciated up to 40 years.



If fixed assets are sold, retired or scrapped,
the profit or loss arising from the difference between the net sales proceeds and the residual book value are included under other
operating earnings and expenses.



Impairment or Disposal of Long-Lived
Assets



The Company evaluates the recoverability
of its fixed assets and other assets in accordance with ASC topic, 360.10. This guidance requires recognition of impairment of
long-lived assets in the event the net book value of such assets exceeds its’ expected cash flows or appraised value In this
instance, the asset is considered to be impaired and is written down to fair value.



Revenue Recognition



License Revenues



Our license revenues consist of revenues
earned from the licensing of our software products. These products are generally licensed on a perpetual basis. Pricing models
have generally been based either upon the physical infrastructure, such as the number of physical desktop computers or servers,
on which our software runs or on a per user basis. License revenues are recognized when the elements of revenue recognition for
the licensed software are complete, generally upon electronic shipment of the software and the software key to provide full access
to all functionalities for our customers. In general our invoices reflect license, service and maintenance components. In the case
of multi element contracts, the revenues allocated to the software license in most cases represent the residual amount of the contract
after the fair value of the other elements has been determined. Certain products of our software offering are licensed on a subscription
basis.



Software Maintenance Revenues



Software maintenance revenues are recognized
ratably on a pro-rata basis over the range of the contract period. Our contract periods typically range from one to five years.
Vendor-specific objective evidence (“VSOE”) of fair value for software maintenance services is established by the rates
charged in stand-alone sales of software maintenance contracts or the stated renewal rate for software maintenance. Customers who
are party to software maintenance agreements with us are entitled to receive support, product updates and upgrades on a when-and-if-available
basis.



57







Professional Services Revenues



Professional services include pre-project
consulting, software design, customization, project management, implementation and training. Professional services are not considered
essential to the functionality of our products, as these services do not alter the product capabilities and may be performed by
our customers or by other vendors. Professional services engagements performed for a fixed fee, for which we are able to make reasonably
dependable estimates of progress toward completion, are recognized on a proportional performance basis based on hours incurred
and estimated hours of completion. Professional services engagements that are on a time and materials basis are recognized based
on hours incurred. Revenues on all other professional services engagements are recognized upon completion. Our professional services
may be sold with software products or on a stand-alone basis. Vendor Specific Objective Evidence (VSOE) of fair value for professional
services is based upon the standard rates we charge for such services when sold separately.



Foreign Currency Translation



The functional currency of the Company
is US dollars. For financial reporting purposes, the financial statements of GROUP were translated into US dollars. Assets and
liabilities were translated at the exchange rates at the balance sheet dates and revenue and expenses were translated at the average
exchange rates and stockholders’ equity was translated at historical exchange rates. Any translation adjustments resulting
are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component
of stockholders’ equity.



Other Provisions



According to FASB ASC 450 Contingencies,
provisions are made whenever there is a current obligation to third parties resulting from a past event which is likely in the
future to lead to an outflow of resources and of which the amount can be reliably estimated. Provisions not already resulting in
an outflow of resources in the following year are recognized at their discounted settlement amount on the financial statement date.
The discount taken is based on market interest rates. The settlement amount also includes the expected cost increases. Provisions
are not set off against contribution claims. If the amended estimate leads to a reduction of the obligatory amount, the provision
is proportionally reversed and the earnings are recognized in other operating earnings.



Deferred Taxes



Income taxes are provided in accordance
with FASB Codification topic 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry forwards.



Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that, some portion or all of the deferred tax asset will
not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of
enactment.



Recent Accounting Pronouncements



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



Principles of Consolidation and Reverse
Acquisition



As previously disclosed, the Company originally
exchanged a total of 5,405,411 shares of common stock in exchange for 50.1% of the outstanding common shares of GROUP (and retained
its 50.1% shareholding by acquiring an additional 883,765 shares of GROUP on February 27, 2012). Although the Company was the legal
acquirer, the transaction was accounted for as a recapitalization of GROUP in the form of a reverse merger, whereby GROUP became
the accounting acquirer and was deemed to have retroactively adopted the capital structure of the Corporation. Accordingly, the
accompanying consolidated financial statements reflect the historical consolidated financial statements of GROUP for all periods
presented, and do not include the historical financial statements of the Company. All costs associated with the reverse merger
transaction were expensed as incurred. Those expenses totaled approximately $300,000 and were included in professional fees in
administrative expenses.



58







The Company has based its financial reporting
for the consolidation with GROUP in accordance with FASB Accounting Standard Codification (ASC) 805-40 as it relates to reverse
acquisitions. Goodwill has been measured as the excess of the fair value of the consideration effectively transferred by the Company,
the acquiree, for financial reporting purposes, over the net amount of the Company’s recognized identifiable assets and liabilities.



We have recorded the acquired assets and
liabilities of GBSX on the acquisition date of January 6, 2011, at their fair value and the operations of GBSX have been included
in the consolidated financial statements since the acquisition date.



The assets and liabilities of GROUP, the
acquirer for financial reporting purposes, are measured and recognized in the consolidated financial statements at their precombination
carrying amounts in accordance with ASC 805-40-45-2(a). Therefore, in a reverse acquisition, the non-controlling interest reflects
the non-controlling shareholders’ proportionate interest in the pre-combination carrying amounts of GROUP’s net assets
even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date.

.

OFF-BALANCE SHEET ARRANGEMENTS



We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development
services with us.



Item 3.  Quantitative and
Qualitative Disclosures about Market Risk.



N/A



Item 4.  Controls and Procedures.



Evaluation of Disclosure Controls and
Procedures



As of September 30, 2013, our management,
with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal
financial and accounting officer), evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2013, our disclosure controls and procedures
were not effective in ensuring that the information required to be disclosed in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s
rules and forms, including ensuring that such material information is accumulated and communicated to our management, including
our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



Changes in Internal Control Over Financial Reporting



As previously reported by the Company on
a Form 8-K filed with the Commission on July 10, 2013, on July 10, 2013, the Board of Directors of the Company reappointed Joerg
Ott as the Chief Executive Officer (Principal Executive Officer) of the Company, effective immediately. Mr. Ott replaced Mr. Gary
D. MacDonald who had been serving as the Company’s Interim Chief Executive Officer since July 11, 2012.



Also as previously reported by the Company
on a Form 8-K filed with the Commission on August 2, 2013, on August 2, 2013, Gary D. MacDonald resigned as member of the Board
of Directors of the Company and as, Managing Director of GBS-UK. From March 1, 2012 to the date of his resignation, Mr. MacDonald
also served as member of the Board’ Audit Committee. Mr. MacDonald’s resignation was not due to any disagreement with
the Company or the Board.



Other than the foregoing, during the quarter
ended September 30, 2013, there were no changes in our internal control over financial reporting that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



59







PART II-OTHER INFORMATION



Item 1. Legal Proceedings.





On October 23, 2013, the Company filed
a lawsuit (GBS Enterprises, Inc. v. Reliance Globalcom, Inc.) in the Superior Court of the State of California, County of San Francisco,
seeking a declaratory judgment that the Company has no obligation to Reliance Globalcom Inc. (“Reliance”) for any claims
or liabilities in connection with a Master Services Agreement (“MSA”) executed by Reliance and IDC Global Inc. (“IDC”)
a then wholly owned subsidiary of the Company in March 2010. On February 1, 2013, GBS sold IDC to Global Telecom & Technology
Inc. (“GTT”). Pursuant to the governing Stock Purchase Agreement (SPA), GTT gained all right, title and interest in
100% of all of IDC’s stock, all of which had been owned by GBS. Pursuant to the Stock Purchase Agreement, GTT withheld $528,777.93
of the purchase price from payment to GBS to cover potential exposure due to the Identified Dispute described herein between IDC
and Reliance. The Stock Purchase Agreement requires that, within three days of notice to GTT that the Identified Dispute described
herein has been resolved, GTT will release the $528,777.93 to GBS. The Company is seeking declaratory relief from the Court stating
the Company is not liable to Reliance and that GTT may release the $528,777.93 in funds owed to the Company. There were no material
developments in this case since the filing of the lawsuit.



The Company intends to vigorously defend its interests in this
matter.





Item 1A. Risk Factors.



The disclosure required under this item
is not required to be reported by small reporting companies; as such term is defined by Item 503(e) of Regulation S-K.



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



None





Item 3. Defaults Upon Senior Securities.



None



Item 5. Other Information.



None



60







Item 6. Exhibits.





|Exhibit     |  |                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------
|No.         |  | Description                                                                             
|            |  |                                                                                         
|31.1(1)     |  | Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer               
|            |  |                                                                                         
|31.2(1)     |  | Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial and Accounting Officer
|            |  |                                                                                         
|32.1(1)     |  | Section 1350 Certification of Principal Executive Officer                               
|            |  |                                                                                         
|32.2(1)     |  | Section 1350 Certification of Principal Financial and Accounting Officer                
|            |  |                                                                                         
|101.INS (2) |  | XBRL Instance Document                                                                  
|            |  |                                                                                         
|101.SCH (2) |  | XBRL Taxonomy Extension Schema Document                                                 
|            |  |                                                                                         
|101.CAL (2) |  | XBRL Taxonomy Extension Calculation Linkbase Document                                   
|            |  |                                                                                         
|101.LAB (2) |  | XBRL Taxonomy Extension Labels Linkbase Document                                        
|            |  |                                                                                         
|101.DEF (2) |  | XBRL Taxonomy Extension Definition Linkbase Document                                    
|            |  |                                                                                         
|101.PRE (2) |  | XBRL Taxonomy Extension Presentation Linkbase Document                                  



|(1) | Filed herewith.
|--- | ---------------



|(2) | To be filed by amendment.
|--- | -------------------------



61







SIGNATURES



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



|                        | GBS ENTERPRISES INCORPORATED                
|----------------------- | --------------------------------------------
|                        |                                             
|Date: November 14, 2013 | By:                                         
|                        | Joerg Ott                                   
|                        | Chief Executive Officer                     
|                        | (Principal Executive Officer)               
|                        |                                             
|Date: November 14, 2013 | By:                                         
|                        | Markus R. Ernst                             
|                        | Chief Financial Officer                     
|                        | (Principal Financial and Accounting Officer)



62