SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 6, 2012
ePhoto Image, Inc.
(Exact name of small business issuer as specified
in its charter)
|(State or other jurisdiction of incorporation or organization)
||(IRS Employer Identification No.)|
1006 - 20 Eglinton Ave. W.
Canada M4R 1K8
|(Address of principal executive offices)|
|(Issuer’s telephone number)|
G18, Zheng Cheng Bui Xing Jie, Chang Ping
Dongguan, China 523560
(Former name or former address, if changed since
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
[ ] Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 1 – Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
On April 6, 2012, ePhoto Image, Inc., a Nevada
corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
GroveWare Technologies Ltd., a privately held Delaware corporation (“GroveWare”) and ePhoto Acquisition Corp., a Nevada
corporation and wholly-owned subsidiary of the Company (“Acquisition Sub”), pursuant to which GroveWare merged with
and into Acquisition Sub (the “Merger”) with the filing of the Articles of Merger with the Nevada Secretary of State
on April 9, 2012 and became a wholly-owned subsidiary of the Company. In accordance with the terms of the Merger Agreement, at
the closing an aggregate of 4,000,000 shares of the Company’s common stock were issued to the holders of GroveWare’s
common stock in exchange for their shares of GroveWare. Each of the Company, GroveWare and Acquisition Sub provided customary representations
and warranties, pre-closing covenants and closing conditions in the Merger Agreement.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger Agreement which
is filed as Exhibit 2.1 to this report and incorporated herein by reference.
Immediately following the closing of the Merger
Agreement, under the terms of an Assignment of Assets Agreement (the “Assignment Agreement”), the Company transferred
all of its pre-merger assets and liabilities (the “Split-Off”) to its former officer and director, Yong Feng Sara Yi,
and shareholder, Namuun Ganbaatar, in exchange for certain indemnifications, waivers and releases, along with the cancellation
of an aggregate of 5,600,000 shares of the Company’s common stock and the cancellation of related party loans in the amount
The foregoing description of the Assignment
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Assignment
Agreement, which is filed as Exhibit 2.2 hereto and incorporated herein by reference.
Section 2 – Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
The Company completed the
acquisition of GroveWare pursuant to the Merger Agreement, under the terms of which GroveWare merged with and into Acquisition
Sub and the stockholders of GroveWare received 4,000,000 shares of our common stock in exchange for 100% of the outstanding capital
stock of GroveWare.
Pre-Merger stockholders of
GroveWare will be required to exchange their existing stock certificates for the Company’s certificates. The Company’s
common stock is currently quoted on the OTCQB operated by OTC Markets Group, Inc. under the symbol EPHO.
The Merger and its related
transactions were approved by the holders of a requisite number of shares of (i) GroveWare’s common stock by written consent
in lieu of a meeting, and (ii) ePhoto Acquisition Corp.’s common stock by written consent in lieu of a meeting. Under Delaware
law, GroveWare’s stockholders who did not consent to the Merger may demand in writing, pursuant to the exercise of their
appraisal rights, that GroveWare pay them the fair value of their shares. Determination of fair value is based on all relevant
factors, except for any appreciation or depreciation resulting from the anticipation or accomplishment of the Merger.
The Merger is being accounted
for as a reverse acquisition and recapitalization. GroveWare is the acquirer for accounting purposes and the Company is the issuer.
Accordingly, GroveWare’s historical financial statements for periods prior to the acquisition become those of the acquirer
retroactively restated for the equivalent number of shares received in the Merger. The accumulated deficit of GroveWare is carried
forward after the acquisition. Operations prior to the Merger are those of GroveWare. Earnings per share for the period prior to
the Merger are restated to reflect the equivalent number of shares outstanding.
Upon the closing of the Merger,
Yong Feng Sara Yi resigned as President, Secretary, Chief Executive Officer and Chief Financial Officer of the Company and the
sole director of the Company. Hrair Achkarian was appointed as Chief Executive Officer and President, and W. Scott Boyes was appointed
Chief Financial Officer, Secretary and Treasurer. Simultaneous with the closing, Hrair Achkarian and W. Scott Boyes were appointed
The Company sold its prior
business of digital image transaction software and a website through which visual artists can sell original photographic content
and any assets that relate to that business to Yong Feng Sara Yi, along with a former shareholder, Namuun Ganbaatar, in exchange
for the cancellation of 5,600,000 shares of the Company’s common stock owned by them, and the forgiveness of related party
indebtedness owed by the Company in the amount of $39,154.
There were 7,750,000 shares
of the Company’s common stock outstanding before giving effect to the stock issuances in the Merger and the cancellation
of 5,600,00 shares by Yong Feng Sara Yi, and Namuun Ganbaatar. Following these transactions, there were 6,150,000 shares outstanding,
||Existing Company Shareholders|
The Company intends to establish
a stock option plan for its employees, directors and consultants. It is expected that a minimum of 250,000 shares will be reserved
under the plan and issued in the near future.
Prior to the Merger, there were no material
relationships between the Company and GroveWare, or any of their respective affiliates, directors or officers, or any associates
of their respective officers or directors, other than as disclosed in this Current Report.
Said shares were not registered
under the Securities Act, but were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities
Act and Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering.
The Company intends to carry
on the business of GroveWare, as its primary line of business. The Company has relocated its principal executive offices to 1006
- 20 Eglinton Ave. W., Toronto, Ontario, Canada M4R 1K8 and its telephone number is (416) 644-5111.
the Merger, the Company intends to change its name to GroveWare Technologies Ltd. Unless the context otherwise requires, hereafter
in this Current Report the terms “GroveWare,” “the Company,” “we”, “us” or “our”
refer to ePhoto Image, Inc. (to be named GroveWare Technologies Ltd.), after giving effect to the Merger.
DESCRIPTION OF BUSINESS
Forward Looking Statements
Some of the statements contained
in this Form 8-K that are not historical facts are “forward-looking statements” which can be identified by the use
of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,”
“anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve
risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained
in this Form 8-K, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties
and other factors affecting operations, successful capital raises, market growth, services, and products. No assurances can be
given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and
actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors
that may cause actual results, performance or achievements, or industry results, to differ materially from those contemplated by
such forward-looking statements include without limitation:
|·||Our ability to attract and retain management
and field personnel with experience in our industry; |
|·||Our ability to raise capital when needed
and on acceptable terms and conditions; |
|·||The intensity of competition; and |
|·||General economic conditions. |
All written and oral forward-looking
statements made in connection with this Form 8-K that are attributable to us or persons acting on our behalf are expressly qualified
in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not
to place undue reliance on such forward-looking statements.
Information regarding market
and industry statistics contained in this report is included based on information available to us that we believe is accurate.
It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic
analysis. We have not reviewed or included data from all sources, and we cannot assure you of the accuracy or completeness of the
data included in this report. Forecasts and other forward-looking information obtained from these sources are subject to the same
qualifications and the additional uncertainties accompanying any estimates of future market size, revenue. We have no obligation
to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those
statements. See “Risk Factors” for a more detailed discussion of uncertainties and risks that may have an impact on
The modern world of communications technology
is an arena of constant and rapid evolution. There is no greater evidence of this change than in the accelerating adoption of sophisticated
wireless devices to streamline and facilitate the exchange of voice and data communication. Over the past two decades, we have
witnessed the successive introduction of hardwired cellular phones, handheld “dumbphones”, the handheld Palm™
computers and then a revolution with the advent of the BlackBerry® smartphone followed by the iPhone® and a myriad of similar
devices utilizing the Android™ smartphone platform developed by Google©. During the last few years, we have seen the
emergence and incredible growth of tablet technologies led by Apple’s iPad®, Research in Motion’s Playbook™,
and a variety of tablet devices utilizing the Android™ and Windows Mobile™ mobile operating systems.
Wireless devices are changing how people communicate
and exchange information. The wireless revolution has brought about monumental changes to global politics, to the scale and complexity
of social interaction, to the accessibility of information and has simplified consumer transactions such as banking, advertising
and the buying and selling of goods and services.
Smartphone and wireless tablet devices are
now being discovered by business and government as transformational tools for the collection, transfer and utilization of information
and for streamlining business-to-business (B2B) transactions. The adoption of wireless technologies, and in particular of wireless
tablet devices, is expected to far exceed the use of conventional PC’s over the next five years.
It is in this rapidly changing business environment
that GroveWare has positioned itself. GroveWare’s products are uniquely suited to helping companies, governments and institutions
gather and exchange data. In an environment where all commercial and government entities are seeking to find cost-saving and efficiency-gaining
productivity tools, the increasingly sophisticated smartphone and tablet hardware can now be paired with GroveWare’s software
to generate productivity enhancements on a level not seen since the advent of micro-computers over 30 years ago.
GroveWare provides Commercial Off-the Shelf–based
(COTS) SmartForm, advanced workflow technology and mobile solutions for automating and mobilizing business processes at the enterprise
level. Such technology greatly helps organizations to move away from “paper-based” operations to smart, dynamic, mobile
electronic “e-forms,” thus enabling enterprises to achieve operational efficiencies by extending their enterprise
ERP functions from the “back office” to a “field application” seamlessly.
Our company specializes in the rapidly-growing
Mobile Business Process Management (BPM) marketplace. It has developed an advanced e-form-centric mobile application, “MobiTask™”
for all of the mainstream wireless operating systems used by smartphones and tablets such as: Apple iOS®, Android™ smartphones,
BlackBerry® and Windows™. GroveWare’s MobiTask™ is a single platform application compatible with all wireless
devices such as: iPhone®, iPad®, Samsung Galaxy®, BlackBerry® Playbook™, etc. and employs a powerful core
technology that has helped our company to become a leader in the field of “Rapid Mobile Application Development” for
GroveWare believes it is uniquely positioned
to take advantage of the transformation that is currently taking place in the enterprise space, i.e. the massive shift from laptops
to wireless tablets devices and the rush to develop productivity applications for enterprise use.
GroveWare’s eXFORMA™ middleware
and MobiTask™ client applications are at the heart of the solution offered. It is a process automation platform that can
be configured to dynamically capture data utilizing web-based forms integrated with a sophisticated workflow engine. The application
is delivered on thin client mobile devices. The system resides on numerous industry-standard back-end databases and is supported
by flexible reporting capabilities.
Responding to the growing demand for such solutions,
the Company has developed unique technologies with a simple mission: to become best of the breed in enterprise-level mobile computing
by developing a solution that provides a device-agnostic, robust data-transfer engine with a simplified end-user experience. From
this mission, the Company’s flagship product, the MobiTask™ solution has emerged. All the complexity usually associated
with business process management products has been hidden away and replaced with a powerful web-based, wireless and feature-rich
front-end which easily deploys sophisticated data capture forms, management, automation, and reporting applications.
Our customers and channel partners confirm
that MobiTask™ is a “best of breed” application in Mobile Business Process automation marketplace. GroveWare’s
core technology is based on automating paper-based business processes and converting them to a fully-electronic solution using
its core BPM Suite for Smart Forms and workflow technologies that allow GroveWare’s customers to quickly and cost-effectively
implement a mobile solution in an unprecedented period of time. Full mobile solutions that previously required months and vast
amounts of IT resources and cost to implement are now deployed in a matter of weeks at a fraction of the cost.
The Company’s products offer the ease
of use and simplicity which should be associated with all enterprise solutions. The products can help any enterprise with their
data collection and business process management needs using advanced web, mobile, and wireless technologies. The Company’s
exciting line of software products and solutions appeal to many organizations because of the cost and time savings generated from
automating manual processes. All the products are standards-based and designed to integrate within any enterprise environment with
ease. This inter-operability ensures longevity and compatibility with both past and future infrastructure investments. Additionally,
all of the Company’s products interact with each other in order to provide a complete and highly-secure, web, mobile, and
wireless environment which can be used to automate every function of an organization while being managed with minimal IT resources.
The Company’s products include:
• MobiTask™ is a mobile client
application for all smartphones and tablets and has been built to extend workflow tasks from most enterprise applications to smartphones
• eXFORMA BPM Suite™ is a business
process automation tool for automating paper-based business processes and creating online, electronic web-based forms and workflow;
• eXFORMA Mobile™ – is
a tablet PC platform for mobile data collection, inspection, and reporting purposes;
Together, these technologies have been combined
into a highly versatile, secure, robust and simple to install and integrate solution that makes the mobile employee more task-efficient,
BPM Suite: At the core of GroveWare’s success is the eXFORMA application suite, a revolutionary enterprise platform
for creating XML-driven dynamic electronic forms, advanced workflow, schedules, and reports for rapid web application development.
These intelligent, dynamic e-forms require no programming and can be configured quickly and easily, drastically lowering the cost
of automating complex business processes and empowering enterprises to quickly and easily capture and process data accurately
in real-time over the web, on mobile tablets, and/or on BlackBerry®, iOS®, Android™ and Windows Mobile™ devices.|
is built on a foundation of open standards such as XML and J2EE, making it easy for customers to integrate it quickly into their
existing infrastructure. This is why all our solutions are built based on core eXFORMA technology. It makes it easy for compatibility
with other enterprise software such as PeopleSoft, SharePoint, Kronos, Oracle e-Business Suite, SAP, and more.
Using the power of dynamic web-based
forms with integrated workflow, new web-based business processes can be implemented quickly and cost-effectively. Our customers
are able to create active documents which capture information more efficiently, feed legacy systems, and improve communications
and collaboration throughout their organization.
GroveWare solutions make it possible
for non-IT users to easily create intelligent web-based forms because we eliminate the need for programming. Our software looks
after all of the scripting and building of the database and interfaces for the user automatically. Users can now automate new business
processes in a fraction of the time and cost when compared to traditional approaches.
GroveWare is committed to helping
our customers achieve their business objectives. We have built our business one client at a time and we understand that in order
to be successful we must form strong partnerships with our clients. We are committed to being a great partner to our customers
and to being a market leader in our industry.
|2.||MobiTask™ is the only wireless client application
compliant with all smartphones and tablets including: iPhone®, iPad®, BlackBerry®, BlackBerry®
Playbook™, Samsung Galaxy®, Motorola Xoom™, Windows Mobile™, and Tablet PCs. MobiTask™ mobilizes
employee tasks in the field and connects them wirelessly directly to the organization’s enterprise applications.
MobiTask™ allows organizations to rapidly deploy mobile solutions for workers on the go. MobiTask™ provides the
convenience of using DYNAMIC e-FORMS to collect field data, manage workflow tasks wirelessly, store documents locally and
integrates seamlessly with most ERP systems and back-end databases.|
MobiTask™ is a one-of-a-kind
data and task management, and process automation solution. MobiTask™ provides a unified platform on the smartphone or tablet
for extending workflow tasks from multiple enterprise software applications (ERP systems) to a single mobile client application
MobiTask™ operates from a
Unified Mobile Dashboard, with bi-directional communication, allowing field employees to complete, or initiate workflow tasks,
and capture field data using dynamic electronic forms and incorporating device capabilities including signature capture, photographs,
bar code scanning, and GPS time and geolocation data. MobiTask™ is fast and works both within and outside areas covered by
wireless signals. The use of mobile tablet devices is expanding exponentially as enterprise and government discover the uses of
the MobiTask™ platform for data gathering, site inspection, and remote reporting applications.
The unique design of the MobiTask™
application allows a wireless user “Single Sign-On” access to view, initiate and approve workflow tasks from multiple,
different enterprise applications simultaneously. For example, a manager can HR tasks such as “Time and Attendance”
and payroll approvals originating from Kronos, as well as expense, procurement or sales/order tasks originating from a separate
financial system such as Oracle eBusiness all from the same screen. A user can also initiate new tasks such as service requests,
time stamps and time sheets or download company brochures, price lists, etc. from SharePoint, populate site inspections reports,
customer service reports, inventory status reports, etc. using the same sign-on from the same device, all within a highly application
fully integrated with the organizations back-end systems and with the highest degree of data integrity and enterprise-level security.
|3.||eXFORMA Mobile is the portable version of the eXFORMA BPM
Suite. Built for laptops and tablet PCs, this product is a complete mobile data collection and field-work solution. This fully
equipped platform integrates seamlessly with eXFORMA web-based users, and its secure storage and live real-time communication capabilities
means that mobile users will always have the most accurate and up-to-date information at their disposal. |
It is this real-time connectivity
of eXFORMA BPM Suite that gives this mobile product its edge. E-forms and workflow processes modeled on eXFORMA are fully integrated
with the mobile worker’s tablet PC application, allowing them to complete tasks from anywhere as if they were in the office.
With this level of integration, a change done by a web-based user from the office will affect the mobile worker instantly, and
managers back at the office can print real-time, up-to-the-minute reports to see exactly the status of the mobile employee.
eXFORMA Mobile has offline or online
capabilities, and the ability to update data remotely, automatically eliminating the downtime and cost of bringing workers in
from the field. It makes data collection from the field efficient, easy and cost effective. Like all of the Company’s products,
this incredible mobile platform truly supports a unified environment for fully integrated information management.
eXFORMA Mobile is a very powerful
mobile tool for businesses who wish to increase their field employee’s productivity. eXFORMA Mobile is user friendly and
allows for a seamless transition from paper to digital field data collection. The ease of use and incredible GroveWare technology
behind this product make it one of the top mobile data collection solutions available on the market today for any organization.
Sales and Marketing – GroveWare’s
Channel Partner Strategy
The Company has recently been through a transformation,
evolving from a focus on technology development to an orientation as a sales and marketing organization, and beginning the monetization
of years and millions of dollars committed to research and development. The Company has streamlined its operations with a focus
on efficiency and profitability, while positioning itself with the expertise and technological capabilities to exploit the burgeoning
market potential. The Company has realigned its marketing strategy to focus primarily on MobiTask™ and the delivery of the
solution to large and mid-market enterprise clients and to the government, institutional and healthcare sectors.
The Company, through the auspices of an affiliate,
is a vendor of IT services to the United States government under Schedule IT-70 of the US General Services Administration (GSA#
GS 35F-0642V). This greatly facilitates the purchase capability of federal, state and local government by eliminating the need
for product certification and public tender.
Additionally, the Company has joined ranks
with Verizon Wireless (www.verizonwireless.com) as a Business Solutions Alliance Partner receiving the certification and endorsement
of Verizon to its nationwide enterprise customer base. Verizon’s enterprise sales organization intends to use the GroveWare
solution to encourage greater wireless enterprise usage and expansion of its wireless sales opportunities. The Company’s
management believes that, primarily through the active promotion by the over 5,000 strong Verizon sales and technical sales organization,
its MobiTask™ subscription sales will expand rapidly through this carrier channel to almost 50,000 per year by 2015.
GroveWare also enjoys the support of some
of the largest hardware and enterprise software providers. Our company is a Research in Motion® Technology Partner, an authorized
Apple iOS®, Android™ and Windows Mobile™ developer, and has ongoing partnerships with HP™, Oracle®,
Kronos©, Samsung® amongst other leaders in the mobility and enterprise space.
With these strategic partnerships, management
believes that the Company is positioned for significant revenue growth. The strategy behind this approach is to leverage off of
each partners’ market leadership. Apple® is the largest single tablet device manufacturer in the world. iPad® is
dominating the tablet market and leading the charge into the enterprise use of these devices. Samsung is the largest consumer electronics
company in the world with the largest global share of Android-based smartphone and tablet sales. RIM is still the world leader
in enterprise, Smartphone technology. Oracle is the largest software company in the world and Verizon is America’s largest
wireless telecommunications carrier. As a channel partner with all of these companies, GroveWare is extremely well situated to
rapidly expand its presence in the mobile enterprise marketplace.
The Company, both directly utilizing its own
sales organization, and indirectly through the Verizon carrier channel, aims to target Verizon’s current clients and future
prospects. By targeting specific companies which are common Verizon clients of Oracle®, Microsoft®, RIM® and/or Apple®, the Company
believes it can leverage current client investments and promote greater customer productivity and return on investment through
the use of MobiTask™.
The Company has spent the last two years developing
and perfecting the MobiTask™ and eXFORMA products which combine to create a market-leading enterprise-based mobile platform.
The Company is now bringing its application to a very receptive market and needs capital to support the rapid growth in sales expected
to materialize with the combined efforts of its growing in-house sales and support organization, and the new business referrals
being produced by Verizon and others.
To support this revenue expansion and to continue
to enhance and develop its product offerings, the Company will need to raise capital, and intends to explore various alternatives
to secure a minimum investment of $2,000,000 (maximum $5,000,000) in the form of subordinate debt or equity financing.
GroveWare’s Market Opportunity
The age of Information Technology had promised
to bring about an era of paperless, virtual offices. Yet today most businesses and government agencies continue to be burdened
by the inefficiency of paper -based processes. These archaic, manual transactions still exist in spite of a myriad of information
technologies, chaining professionals to their desks in fear of failing to deliver on critical business needs/decisions within
an acceptable amount of time. The continued reliance on paper and desk-bound activity resulted largely from the challenges associated
with remote connectivity to the enterprise (i.e. the need for expensive laptop computers, a reliable internet connection and sophisticated
VPN connectivity just to access and manage the most basic of enterprise functions).
The convergence of the Internet, tablet computing
and wireless smartphones and tablets will greatly enhance the growth and productivity of the world’s mobile workforce. These
mobile workers, electronically-linked to their offices by cell phones, laptops, and handheld devices, (and now with the additional
emergence of wireless tablets such and the iPad®, Playbook™, Galaxy® etc.), now comprise over 40% of the knowledge
workforce. They are on the road, working closer to the customer, and telecommuting from home and all other points between the corporate
office and the client environment. They are high-value employees, yet their time-productivity is often still minimized as they
are forced to return to their offices to complete routine tasks such as signing off on documentation, approving tasks and collecting
and transferring important business information.
There is clearly a business need to effectively
and efficiently manage and support the mobile workforce. Specifically, there is a need to provide workforce management capabilities
to all workers, regardless of their location or environment. Yet IT resources and budgets are already stretched as companies try
to deliver more with less. Solutions must leverage existing infrastructure to support an increasingly diverse workforce. GroveWare’s
products provide a ready, timely and cost-effective response to these needs.
While working in the field is nothing new,
according to both International Data Corp. and AT&T, the North American workforce today includes more than 60 million mobile
workers. That number is projected to grow with an annual 10-15% increase as telecommuting options evolve with the explosive growth
rate in the use of smartphones and other wireless devices.
Businesses of all sizes are looking to mobile
technology to boost productivity. A survey by the Advanced Technology Alliance revealed 65% of businesses believe mobile technology
can help them to better compete and 55% are looking to mobile solutions in key departments or across the entire organizations.
Organizations are recognizing the importance of mobile technology in delivering business value, increasing operational efficiency
and cutting costs.
Our market research and intelligence from Kronos,
Oracle, RIM and Verizon sales representatives reveals that millions of organizations are looking for the same thing: a more efficient,
secure and cost-effective way to process their workforce management tasks for mobile workers. It is a common trend that crosses
the boundaries of industry sectors and extends to government, healthcare, non-for-profit institutions. An increasingly mobile workforce
requires increasingly-sophisticated and robust mobile solutions. These organizations are ready to make such an investment because
the resulting cost/time efficiencies produce an attractive return on investment and assist productivity gains during a period of
time complicated by budget cuts and staff reductions.
GroveWare has already established partner relationships
with major North American carriers and major hardware manufacturers. These relationships are critical for jump-starting the selling
of wireless-based business solutions through these carriers. Currently, GroveWare is working with national and regional sales teams
in the USA, particularly focused with Verizon Wireless’ four area data solution teams. The first phase was started during
2011 with our training the Advance Solution Architects within Verizon. GroveWare is now focusing in Q1 2012 to training a number
of the 5,000 Verizon account executives active in the business/government sectors across America. The company is working directly
with each team to promote a strategy of ”Sell-In” and “Sell-With.” It is GroveWare’s responsibility
to engage team leaders in each channel market, to encourage them to Sell-In MobiTask™ and to develop an effective marketing
program. Once the product is highlighted within the sales teams, the Sell-With strategy comes into play as the Verizon sales organization
can utilize GroveWare’s solutions as an effective sales compliment to the selling of hardware and wireless service activations.
Targeting B2B Verticals:
GroveWare will be recruiting and deploying
a roster of sales consultants to market its software products and professional services and to provide support to our carrier and
hardware partners’ B2B sales teams and the marketing initiatives in various business verticals. Our Company will assist in
delivering the MobiTask™ business solution. Our solution is a “horizontal play,” designed to be adaptable for
all industry sectors, and sophisticated enough to be quickly customizable at a very low cost.
The following verticals are currently being
served with fully-implemented solutions or have deployed test and trial initiatives:
|·||Enterprise: Field Force automation|
|·||SMB (small and medium enterprises) for field
|·||Federal and state government departments
for inspections, licensing, surveys, investigative functions|
|·||Construction - HVAC service, electrical,
plumbing, and sub-contractors|
The Company’s objective is to use its
wireless technology leadership to distinguish itself amongst other business software technology providers. GroveWare is actively
looking to leverage its infrastructure to deliver unique productivity solutions and to promote itself to business clients, large
and small, and to any organization looking for ways to leverage their existing technology investments and to deliver business
value by way of increased productivity and profitability. MobiTask™ is a unique solution that appeals to all types of commercial
and institutional clients. GroveWare’s ability to provide access to mission critical enterprise applications from anywhere,
anytime, from any mobile device has quickly becoming a critical, and distinctive, business advantage. Customers are rapidly recognizing
the productivity potential of such a solution and are finally and aggressively adopting a more coordinated and comprehensive mobile
Our valued channel partner, Verizon Wireless,
has already delivered dozens of key introductions to many of their major clients. Over the past few months, we have commenced an
association with a very large number of clients and potential clients implementing both production and trial solutions. GroveWare
and Verizon Wireless are currently co-operating with over 100 new client initiatives including potential customers ranging from
small plumbing and HVAC contractors to the U.S. Army and the U.S. Department of Agriculture. GroveWare’s initial introduction
to Verizon Wireless was orchestrated by Research in Motion (BlackBerry®) and this partnership has rapidly developed to the
level that Verizon now represents the most significant component of GroveWare’s near-term “go-to-market” strategy
(as more-fully described below).
GroveWare’s Partner Strategy
As noted above, “Channel Partnering”
is an essential aspect of GroveWare’s “Go-to-Market” success strategy. We partner with technology companies to
ensure that our products are fully compliant with and take advantage of the best hardware features available in the market. We
partner with telecom carriers to ensure that our market reach extends into every vertical, is well-designed, and well-executed.
We partner with implementation specialists to ensure that GroveWare’s solutions are tailored to meet the needs of its clients
and those of its partners. We partner with customers to deliver the best possible product and support to their business processes.
The GroveWare “Open Alliance Program”
is our framework for managing relationships with technology companies, carriers and implementation partners. It uses industry
best practices to build partnerships that deliver predictable support across a wide range of opportunities – and establishes
a basis for long term mutual success for itself and all partners.
In today’s Smartphone & Tablet marketplace,
mobile solutions, especially those targeted to enterprise customers are the product of collaboration across many different types
of companies. Providers of platform technologies (i.e. operating systems such as Apple’s iOS®, Android™, Windows™,
QNX® ), Smartphone and tablet manufacturers such as Apple®, Samsung®, BlackBerry®, Microsoft®, Motorola™,
Fujitsu©, Panasonic© and carriers like Verizon Wireless, ATT and Sprint, are each service providers that help customers
to deploy technology addressing business requirements, and finally, companies like GroveWare that design and deploy the unique
software that links all these providers together, thus delivering a meaningful value proposition to the end user.
The GroveWare Open Alliance Program is designed
to address the present B2B market reality. Our Company program reaches out to different types of technology companies, hardware
manufacturers, carriers and implementation partners to enable them to partner seamlessly with GroveWare and with each other. This
ensures that we work concurrently and cohesively to meet the needs of the customer.
With its partners, GroveWare is looking to
establish and maintain the market reach, domain expertise, technological and business innovation and cost efficiencies that only
leveraging strong partnerships can provide. The Company is committed to attracting and managing the right relationships with technology
and service firms in a structure that creates a long-term and mutually-profitable relationship. GroveWare has partnered with Verizon
Wireless, and multiple key hardware vendors to provide integrated solutions to each client.
These relationships provide the Company with
access to a larger client base and increase the market exposure of the Company’s technology. In exchange, the Company provides
the technology and applications that partners can use to deliver complete enterprise solutions to their clients. The use of MobiTask™,
for example, provides Verizon the ability to offer a full-scale wireless solution to their clients that they would otherwise not
be able to provide which, in turn, increases Verizon’s competitive position and drives revenues.
The benefits of a partnership with GroveWare
to current and future partners include:
• With MobiTask™, partners can
expand their customer footprint by offering software, services and solutions in the rapidly growing web-based and wireless business
• With MobiTask™, partners can
expand their customer footprint by offering solutions in the mobile and wireless markets;
• With MobiTask™, partners provide
high-speed, high-profit, high-value solutions for faster billing schedules, improved customer satisfaction and higher margins,
especially on fixed-price solutions;
• MobiTask™ offers the advantage
of rapid prototyping demo solutions with testing and prototype deployed in days, not months, for a fraction of the cost;
• MobiTask™ minimizes the effort
to integrate disparate technologies by using a single platform with a “No Assembly Required” approach – fewer
moving parts and no vendor conflicts;
• Partners can engage the Company’s
broader talent base to deliver high-value, high-margin services/solutions;
• The Company’s partners grow
intellectual capital on vertical solutions by accessing reusable application components that can be easily modified and re-packaged
for other clients;
• The Company’s partners are
able to demonstrate to their clients, knowledge leadership in the area of web-based and wireless BPM automation; and
• The Company’s partners provide
their customers with market-leading wireless access to backend applications for clients with highly mobile workforce.
The benefits of a partnership to the Company
• Expansion of our market coverage
through various partners in different geographies and business verticals;
• Leverage of our partners’ domain
expertise in specific industries to develop re-usable, re-marketable solutions on the MobiTask™ platform;
• Enables technology and business innovation
to allow MobiTask™ to be the platform of choice to solve critical and valuable business problems; and
• Provides expansion of technological
and business innovation opportunities that only partners can provide.
In order for MobiTask™ to reach the
marketplace quickly and efficiently, the Company determined its need for high profile channel partners. Channel partners can move
products to market faster and more cost-efficiently than the Company could ever achieve independently. Furthermore, each channel
partner has the service, support and systems in place to ensure a high degree of customer satisfaction. However, to take advantage
of these marketing channels, and to manage more than the existing channels, the Company requires a significant additional investment
in partner infrastructure (specifically, dedicated business development and sales/customer support staff) to make it expedient
for partners to work with the Company.
The Company has identified 4 essential channel
partner categories for its go-to-market strategy: (i) carrier partners; (ii) system integrators (iii) technology partners and (iv)
hardware partners. Within each of these categories, GroveWare has developed, and is continuing to develop, strategic relationships
with a variety of partners like Verizon Wireless, Apple®, RIM®, Samsung®, and Oracle®. In each of these relationships,
our role will be to provide our core technologies i.e. eXFORMA BPM Suite, Mobile Task Manager and MobiTask™ as ‘Out-of-the
Box” solutions that compliment each partner’s offerings and provides them with incremental revenue opportunities. RIM®
does not sell to any of its client directly; all BlackBerry® devices are sold through carriers such as Verizon Wireless, ATT,
Sprint, and 500 other carriers worldwide. Applications on smartphones are built and delivered by mobile solution ISV partners,
either direct to clients, or through carrier partnerships. Our strategy to partner with telecommunications carriers is intended
to take full advantage of the existing carrier relationship with its customers, by providing a unique mobile product that delivers
a value-added solution to the catalogue of carrier data plans and applications.
In order to fully comprehend the Company’s
competitive position, first we need to understand the market that GroveWare is competing in and the capabilities of competing players
in that particular market. MobiTask provides a unified platform for e-forms, workflow, e-docs, and time and attendance (time
sheets) applications on ALL smartphones and ALL tablets thus extending enterprise applications to mobile users via its eXFORMA
server-side BPM Suite. In other words, GroveWare provides solutions both for the WEB via smart dynamic electronic forms that are
instantly extendable to any wireless smartphone or tablets i.e. build once and deploy everywhere, to any device: iPhone®,
iPad®, BlackBerry®, Playbook™, Android™, Galaxy®, Motorola, Windows Mobile™, and Tablet PCs.
The competitive landscape for the Company’s
products and technologies is highly fragmented. There are many companies that support a single area of the business. For example,
some specialize in web forms applications, other just workflow engines, while other competitors are platform-based. The latter
includes major software and technology development companies, mobile software providers, and many more. There are many companies
which provide custom-made solutions on their platform, and there are others that are focused on industry-specific verticals. There
are many and diverse products in the market with a wide range of capabilities that can be used as platforms for building business
process solutions, but are designed to be used only on an internal network or on the web. In this category of “build and
deploy,” GroveWare competes with software publishers of electronic forms and workflow. The competition in electronic forms
includes major players such as IBM (Filenet e-forms - just recently discontinued), Adobe (Adobe PDF forms server), Oracle Forms
and Microsoft (Infopath) as well as many smaller players. In the workflow space market there are again many major players including
Microsoft, IBM and BEA.
With our flagship MobiTask product, the Company
encounters competition in two areas at the platform level, with companies such as Dexterra and Pyxis Mobile which have similar
server platforms as GroveWare’s eXFORMA allowing connectivity to back-end applications with a wireless client application.
As well, there are companies that provide only Mobile forms with limited capabilities. In these categories there are Pronto Forms,
Canvas, Actsoft, Formotus. The key differentiating factor and competitive advantage enjoyed by GroveWare is that the Company’s
MobiTask is focused on solutions which are end-to-end with full and simple integration to ERP systems such as KRONOS, Oracle, SAP
and PeopleSoft, or any proprietary ERP, and are capable of managing a limitless variety of workflow tasks, whether related to field
level work management, HR functions, financial transactions etc.
A common theme throughout the industry, and
amongst the Company’s competitors, is that a complete BPM solution is available only through the exhaustive and expensive
building and assembling of many different components and modules, such as a separate studio to build electronic forms, a different
application to build workflows, and then a web application to host and manage the BPM solution. The Company’s eXFORMA BPM
Suite, however, is an all-in-one platform and there is “no assembly required.” This differentiating factor drastically
narrows the competitive field. That field is further reduced when we understand how simple and quickly eXFORMA’s can be integrated
with the enterprise’s “back-end” or an existing ERP system. GroveWare’s eXFORMA’s ability to integrate
with any major ERP system makes the product best of the breed and highly competitive.
MobiTask is a one-of-a-kind data collection,
workflow task management, and process automation solution. GroveWare has developed industry-specific solutions as well as vertical-specific
solutions. Our Company’s solutions are highly desirable with government’s diverse need for mobilizing and automating
all types of inspection, licensing and field data collection applications. In response to this need, GroveWare’s MobiTask
application has significant competitive advantages since it is highly flexible, highly adaptable to all types of departmental or
agency needs, and more importantly, is comparatively inexpensive and can be installed and operational within two or three weeks
versus other custom made solutions that are very expensive and typically take many months, if not years, to develop and deploy.
In the construction industry, or in service
industries such as HVAC, plumbing, electrical etc., the Company competes with industry-specific applications with specific task
capabilities that may or may not have a mobility component. GroveWare provides customers a wide range of task solutions from a
single application, which can operate on many different devices and can be easily customized to suit the specific needs of the
client. GroveWare has a superior solution for delivering a mobile work order management solution with workflow, complete with a
time and labor module, and e-docs.
Our solution also allows the customer to adapt
their paper-based processes to a mobile environment, with the business process information captured in a real time transaction.
Customers can leap forward from a paper-based business into twenty-first century business processes technology in a single step,
thereby generating enormous operational and financial efficiencies. MobiTask provides a unified platform on the smartphone or tablet
for extending workflow tasks from multiple client-side enterprise software applications on a single client interface. MobiTask
users can execute tasks or initiate new ones simultaneously on any application such as Oracle® e-Business Suite™, PeopleSoft™,
SharePoint™ and Kronos® Workforce Central™. Users can wirelessly clock-in/out, approve and initiate workflow tasks,
or use dynamic e-Forms for inspections, licensing and data collection all from their smartphones.
With the massive market penetration of iPhone®,
iPad®, Android™, and BlackBerry®, mobile applications are becoming much more prevalent. Businesses are starting to
look for opportunities to leverage mobile investments and MobiTask is uniquely positioned in that it can provide an access level
to any enterprise application leveraging not only corporate mobile investments but also ERP and other application investments as
well. The dynamic ease of use and low operational costs, allow businesses to see near instant return on their investment.
Our channel partners and customers tell us
that there is no other productive available with such a wide range of capability, flexibility, ease of installation and cost effectiveness.
The Company will continue to invest into new research and development efforts to enhance technology that will strengthen its technical
competency and competitive leadership.
Management believes that GroveWare’s
products and services are uniquely poised to exploit a rapidly-growing awareness by business, government and institutions of the
huge productivity potential available from the recent confluence of wireless infrastructure, hardware device technology and wireless-based
software applications. At the enterprise level, the wireless revolution is just in its infancy. GroveWare’s products have
gone through a similar evolution and have joined that confluence at the most propitious time.
GroveWare’s technology has been fully-developed,
tested and deployed successfully with multiple installations operating successfully. Its high-profile partnerships are in place
and its new customer pipeline is already long and growing quickly with multiple daily referrals from these partners now the norm.
With the proper funding and management’s
successful execution of the Company’s business plan, GroveWare is attractively positioned for rapid revenue growth and profitability
in a virtually limitless market opportunity.
The Company’s growth plan calls for a
rapid growth of its revenues every year for at least the next three years. The Company has an aggressive plan to market the MobiTask™
solution to Fortune 1000, other smaller and mid-market companies and to the government, education and healthcare sectors.
The market for MobiTask is just beginning to
evolve. A flexible and innovative solution such as MobiTask will be in the envious position to lead the pack. The Company’s
strength is in its research & development and its technical expertise. We plan to continue to invest no less than 8-10% of
our revenue in product enhancement and new research and development so as to continue to drive solutions forward. The mobile marketplace
is rapidly evolving and will require new and upgraded mobile applications to serve an ever-changing demand.
Government Approval and Regulation
Our products are subject to government regulation
in many areas, including user privacy, telecommunications, data protection, and more. The application of these laws and regulations
to our business is often unclear and sometimes may conflict. It may take years to determine whether and how existing laws such
as those governing intellectual property, privacy, advertising, and others will apply. Nonetheless, laws and regulations directly
applicable to the Internet, communications, commerce and advertising are becoming more prevalent. Due to the increasing popularity
and use of the Internet, it is possible that laws and regulations may be adopted covering issues such as user privacy, content,
quality of products and services and much more. Further, the growth and development of the market for e-commerce may prompt calls
for more stringent consumer protection laws, both in the United States and abroad, which may impose additional burdens on companies
conducting business online. Compliance with these regulations may involve significant costs or require changes in business practices
that result in reduced revenue. Noncompliance could result in penalties being imposed on us or orders that we stop the alleged
Currently, the Company does not need government approval in connection with our products or services.
As of the date of
this Current Report, the Company has two full-time employees, Mr. Hrair Achkarian and Mr. Scott
The Company’s corporate office is located
at 20 Eglinton Ave. W., Suite 1006, Toronto, Ontario M4R 1K8. This location is a commercial office tower at a major midtown Toronto
intersection and the Company is a subtenant operating out of such location at cost of approximately $5,000 per month. The Company’s
telephone number at that facility is (416) 955-9890. It is the Company’s belief that the space is adequate for its immediate
needs. Additional space may be required as the Company expands its operations and a U.S. office will likely be established during
the next twelve months. The Company does not foresee any significant difficulties in obtaining any required additional facilities.
The Company does not presently own any real property.
The Company does not know of any material,
existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which the Company’s directors, officers or any affiliates, or any registered or beneficial
shareholder, are an adverse party or have a material interest adverse to its interest.
Risks Related to the Business
and Financial Condition
auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our
We have incurred cumulative
net losses of $457,095 since inception to December 31, 2011. We have recurring losses and are dependent upon obtaining financing
or generating revenue from operations to continue operations for the next twelve months. As of December 31, 2011, we had cash in
the amount of $89. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve
the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to
raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds.
For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going
concern. As a result, there is an increased risk that you could lose the entire amount of your investment in our company.
We have a limited operating
history and if we are not successful in continuing to grow the business, then we may have to scale back or even cease ongoing business
We have a very limited history
of revenues from operations. There can be no assurance that we will ever operate profitably in the long term. Operations will be
subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence
of a significant operating history. Potential investors should be aware of the difficulties normally encountered in commercializing
new products. If the business plan is not successful, and we are not able to operate profitably, investors may lose some or all
of their investment in us.
failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies could
reduce our ability to compete successfully and adversely affect our results of operations.
need to raise additional funds to achieve our future strategic objectives, and we may not be able to obtain additional debt or
equity financing on favorable terms, if at all. If we raise additional equity financing, our security holders may experience significant
dilution of their ownership interests and the value of shares of our common stock could decline. If we engage in debt financing,
we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity
or other ratios or restrict our ability to pay dividends or make acquisitions. If we need additional capital and cannot raise it
on acceptable terms, we may not be able to, among other things:
and enhance our existing products and services;
• continue to
expand our technology development, sales and/or marketing organizations;
• hire, train and
• or respond
to competitive pressures or unanticipated working capital requirements.
to do any of the foregoing could reduce our ability to compete successfully and adversely affect our results of operations.
We are a small company with limited resources
compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share.
The market for our technologies is highly competitive
and although we believe our technologies offer unique features that are in high demand, we cannot guarantee that these unique features
are enough to effectively capture a significant enough market share to successfully launch and sustain our current or future product
line. Our current and potential competitors may have longer operating histories, significantly greater resources and name recognition,
and a larger base of customers than we have. Our competitors may also be able to adopt more aggressive pricing policies and devote
greater resources to the development, marketing and sale of their products and services than we can. To be competitive, we must
continue to invest significant resources in research and development, sales and marketing, and customer support. We may not have
sufficient resources to make these investments or to develop the technological advances necessary to be competitive, which in turn
will cause our business to suffer and restrict our profitability potential.
Problems with the quality and technical
aspects of our products could result in decreases in revenue, unexpected expenses and loss of market share.
We plan to market and distribute our products,
which are sophisticated technologies requiring regular upgrades and improvements to keep us in line with competitors, advancing
technology, and public demands. Due to the complexity of our products, they may contain undetected errors or defects which could
cause us to incur significant re-engineering costs, divert management’s attention away from the marketing and distribution
of our products and significantly affect our customer relations and business reputation. Any one of these results could cause a
decrease in our revenues.
The products we intend to distribute
may not gain market acceptance, which would prevent us from achieving sales and market share.
The development of a successful market for
our technologies may be adversely affected by a number of factors, some of which are beyond our control, including:
our failure to offer products that compete favorably against other similar products on the basis
of cost, quality and performance;
• our failure to market and distribute our products effectively;
our failure to create profitable business opportunities for our customers;
our failure to meet the public’s demand for instant access to an unlimited amount of information, products and services;
our failure to develop and maintain successful relationships with customers, investors and strategic business partners.
If the products we intend to distribute
fail to gain market acceptance, we will be unable to achieve sales and market share.
Technological changes in the software
industry could render our products uncompetitive or obsolete, which could prevent us from achieving market share and sales.
The industry in which we compete is characterized
by rapidly evolving technologies, frequent new product introductions, significant competition and dynamic customer requirements.
Our failure to upgrade or enhance our current product line or to develop new products in light of technological advances in the
industry could cause us to become uncompetitive and our products to become obsolete. We believe that a variety of competing technologies
may currently be under development by companies similar to us that could result in higher product performance and quality than
those products selected by us. We may need to invest significant financial resources to keep pace with technological advances in
the industry; however, we may be unable to secure such financing. If our products were to become uncompetitive and obsolete, we
would be unable to achieve market share and sales.
Security vulnerabilities in our products and services could
lead to reduced revenues or to liability claims.
Maintaining the security of computers and computer
networks is a critical issue for us and our customers. Hackers develop and deploy viruses, worms, and other malicious software
programs that attack our products and gain access to our networks and data centers. Although this is an industry-wide problem that
affects computers and mobile devises across all platforms, it affects our products in particular because hackers tend to focus
their efforts on the most popular operating systems and programs and we expect them to continue to do so. We will devote significant
resources to address security vulnerabilities through:
|·||engineering more secure products;|
|·||enhancing security and reliability features
in our products;|
|·||helping our customers make the best use
of our products and services to protect against computer viruses and other attacks;|
|·||improving the deployment of software updates
to address security vulnerabilities;|
|·||investing in mitigation technologies that
help to secure customers from attacks even when such software updates are not deployed; and|
|·||providing customers with online automated
security tools, published security guidance, and security software such as firewalls and anti-virus software.|
The cost of these steps could reduce our operating
margins. Despite these efforts, actual or perceived security vulnerabilities in our products could lead some customers to lose
confidence in the Company and our products.
Privacy concerns could increase our costs,
damage our reputation, deter current and potential users from using our products and services and negatively affect our operating
From time to time, concerns may arise about
whether our products and services compromise the privacy of users and others. Concerns about our practices with regard to the collection,
use, disclosure or security of personal information or other privacy-related matters, even if unfounded, could damage our reputation
and deter current and potential users from using our products and services, which could negatively affect our operating results.
Any failure or perceived failure to comply with data protection laws and regulations may result in proceedings or actions against
us by governmental entities or others, which could potentially have an adverse effect on our business. Increased scrutiny by regulatory
agencies, such as the Federal Trade Commission and state agencies, of the use of customer information, could also result in additional
expenses if we are obligated to reengineer systems to comply with new regulations or to defend investigations of our privacy practices.
In addition, as some of our products and services
are web-based, the amount of data we store for our users on our servers (including personal information) will increase as our operations
increase. Any systems failure or compromise of our security that results in the release of our users’ data could seriously
harm our reputation and brand and, therefore, our business. A security or privacy breach may:
|·||Cause our customers to lose confidence in our services;|
|·||Deter consumers from using our services;|
|·||Require that we expend significant additional resources related to
our information security systems and result in a disruption of our operations;|
|·||Subject us to unfavorable regulatory restrictions and requirements
imposed by the Federal Trade Commission or similar authority;|
|·||Cause us to incur expenses related to remediation costs; and|
|·||Decrease market acceptance of the use of e-commerce transactions.|
The risk that these types of events could adversely
affect our business is likely to increase as we expand the number of products we offer as well as increase the number of countries
where we operate, as more opportunities for such breaches of privacy will exist.
Our commercial success depends significantly
on our ability to develop and commercialize our potential products without infringing the intellectual property rights of third
Our commercial success will depend, in part,
on operating our business without infringing the patents or proprietary rights of third parties. Third parties that believe we
are infringing on their rights could bring actions against us claiming damages and seeking to enjoin the development, marketing
and distribution of our technologies and products. If we become involved in any litigation, it could consume a substantial portion
of our resources, regardless of the outcome of the litigation. If any of these actions are successful, we could be required to
pay damages and/or to obtain a license to continue to develop or market our products, in which case we may be required to pay substantial
royalties. However, any such license may not be available on terms acceptable to us or at all. Ultimately, we could be prevented
from commercializing a product or forced to cease some aspect of our business operations as a result of patent infringement claims,
which would harm our business.
Our success depends on continuing to
hire and retain qualified personnel, including our director and officers and our technical personnel. If we are not successful
in attracting and retaining these personnel, our business will suffer.
Our success depends
substantially on the performance of our management team and key personnel. Currently, we have two full-time employees, Hrair Achkarian
and W. Scott Boyes. Due to the specialized technical nature of our business, we are particularly dependent on our technical personnel.
Our future success will depend on our ability to attract, integrate, motivate and retain qualified technical, sales, operations,
and managerial personnel, as well as our ability to successfully implement a plan for management succession. Competition for qualified
personnel in our business areas is intense, and we may not be able to continue to attract and retain key personnel. In addition,
if we lose the services of any of our management team or key personnel and are not able to find suitable replacements in a timely
manner, our business could be disrupted and we may incur increased operating expenses.
Our officers have no experience in managing
a public company, which increases the risk that we will be unable to establish and maintain all required disclosure controls and
procedures and internal controls over financial reporting and meet the public reporting and the financial requirements for our
Our management has a legal and fiduciary duty
to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements
mandated by the Sarbanes-Oxley Act of 2002. Although our officers have substantial business experience, they have no experience
in managing a public company. The standards that must be met for management to assess the internal control over financial reporting
as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed
standards. Because our officers have no prior experience with the management of a public company, we may encounter problems or
delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure
controls and procedures. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure
controls or implement sufficient control procedures, investor confidence and share value may be negatively impacted.
regulation of the Internet and e-commerce is evolving, and unfavorable changes or our failure to comply with regulations could
harm our operating results.
commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. For example, we
believe increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection,
processing or use of personal or consumer information could affect our customers’ ability to use and share data, potentially
reducing demand for our products. In addition, taxation of products and services provided over the Internet or other charges imposed
by government agencies or by private organizations for accessing the Internet may also be imposed. Any regulation imposing greater
fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet
and the viability of Internet-based services and product offerings, which could harm our business and operating results.
we are unable to attract new customers, or if our existing customers do not purchase additional products, the growth of our business
and cash flows will be adversely affected.
our revenues and cash flows, we must regularly add new customers and, to a somewhat lesser extent, sell additional products to
our existing customers. If we are unable to sell our products to customers that have been referred to us, unable to generate sufficient
sales leads through our marketing programs, or if our existing or new customers do not perceive our products to be of sufficiently
high value and quality, we may not be able to increase sales and our operating results would be adversely affected. In addition,
if we fail to sell new products to existing or new customers, our operating results will suffer, and our revenue growth, cash flows
and profitability may be materially and adversely affected.
If we do not successfully
maintain our brand in our existing markets or successfully market our brand in new markets, our revenues and earnings could be
materially and adversely affected.
that developing, maintaining and enhancing our brand in a cost-effective manner is critical in expanding our customer base. Some
of our competitors have well-established brands. Promotion of our brand will depend largely on continuing our sales and marketing
efforts and providing high-quality products and application software to our customers. We cannot be assured that these efforts
will be successful in marketing our brand. If we are unable to successfully promote our brand, or if we incur substantial expenses
in attempting to do so, our revenues and earnings could be materially and adversely affected.
We may not be successful in our partnerships
and joint ventures with other companies and businesses, which may negatively affect our results of operations and financial condition.
We are currently pursuing partnerships and
joint ventures with other technology companies in order to acquire additional technologies, further develop our product line, increase
our geographic presence, gain greater name recognition, and stay competitive. We are constantly exploring potential relationships
with companies that can offer the right technology that will advance our products and increase our market share while at the same
time allowing us to maintain flexibility in executing our business plan without impediment. However, we may not form these relationships
in a timely manner, on a cost-effective basis, or at all, and we may not realize the expected benefits of any partnership or joint
venture. Even if we are successful in forming these relationships, they may require us to incur significant fees, increase our
short- and long-term expenditures, pose significant integration challenges, require additional expertise or disrupt our current
management or business, which could harm our operations and financial results.
If we are unable to manage our growth
effectively, our business, financial condition and results of operations may be adversely affected.
Expansion of our business across North America
and ultimately overseas is a key element of our marketing strategy. The Company intends to increase our customer base, expand our
product offerings and pursue market opportunities. The expansion of our operations and employee base is expected to place
a significant strain on our management, operational and financial resources. There can be no assurance that our current management
or sales, marketing & support or technical personnel will be able to support our future operations or to identify, manage and
exploit potential market and technological opportunities. If we are unable to manage growth effectively, such inability could have
a material adverse effect on our business, financial condition and results of operations.
Our inability to protect
our patents and proprietary rights in the United States and foreign countries could materially adversely affect our business prospects
and competitive position.
Our success depends on our
ability to obtain and maintain patent and other proprietary-right protection for our technology and systems in the United Stated
and other countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from
using our proprietary rights.
Risks Related to our Common
Because we have available
a significant number of authorized shares of common stock, we may issue additional shares for a variety of reasons which will have
a dilutive effect on our shareholders and on your investment, resulting in reduced ownership and in our company and decreased voting
power, or may result in a change of control.
Our board of directors has
the authority to issue additional shares of common stock up to the authorized amount stated in our Articles of Incorporation. Our
board of directors may choose to issue some or all of such shares to acquire one or more businesses or other types of property,
or to provide additional financing in the future. The issuance of any such shares may result in a reduction of the book value or
market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will
cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result
in a change of control of the company.
Additional financings may dilute the
holdings of our current shareholders.
In order to provide capital for the operation
of the business, we may enter into additional financing arrangements. These arrangements may involve the issuance of new shares
of common stock, preferred stock that is convertible into common stock, debt securities that are convertible into common stock
or warrants for the purchase of common stock. Any of these items could result in a material increase in the number of shares of
common stock outstanding, which would in turn result in a dilution of the ownership interests of existing common shareholders.
In addition, these new securities could contain provisions, such as priorities on distributions and voting rights, which could
affect the value of our existing common stock.
There is currently
a limited public market for our common stock. Failure to develop or maintain a trading market could negatively affect its value
and make it difficult or impossible for you to sell your shares.
There has been a limited
public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain
an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even
if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the
uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim
financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on
the market price of our common stock.
rules may make buying or selling our common stock difficult.
If the market price for our
common stock is below $5.00 per share, trading in our common stock may be subject to the “penny stock” rules. The SEC
has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00
per share, subject to certain exceptions. These rules would require that any broker-dealer that would recommend our common stock
to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination
for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available,
the regulations would require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining
the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose
commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they
offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions
in our common stock, which could severely limit the market price and liquidity of our common stock.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion
highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity
and capital resources for the periods described. This discussion contains forward-looking statements, as discussed above. Please
see the sections entitled “Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties,
risks and assumptions associated with these forward-looking statements.
The following discussion
and analysis of our financial condition and results of operations are based on the audited financial statements as of December
31, 2010 and 2009, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). You
should read the discussion and analysis together with such financial statements and the related notes thereto.
Results of Operations for the Years Ended
December 31, 2011 and 2010
We generated $109,024 in revenues for the year
ended December 31, 2011, as compared with $165,400 for the year ended December 31, 2010. Our revenues for both periods resulted
primarily from the provision of professional services and user subscriptions to smaller enterprises and from proof-of-concept and
trial installations with several state and federal government agencies.
In the future, we expect that our business
model will generate revenue from four primary sources:
|1.||License Sales - eXFORMA BPM Server and MTM Server license as well
as per seat licenses for MobiTask.|
MobiTask, eXFORMA and MTM license fees are
expected to be generated from traditional, paid-up software licenses primarily sold as a result of referral from non-carrier partners
and from leads generated by the Company’s inside sales team. Software license fee revenue is projected to grow from $155,000
in 2012 to $390,000 by 2015. The average enterprise software license fee for eXFORMA is $49,000 per server installation. MTM is
sold as a combination server component and per user license. The average server cost is $8,000 per implementation and $120-$150
perpetual license per MobiTask seat.
|2.||License Subscription Sales – Primarily through the carrier
channel, annual and multi-year subscriptions provide the Company with recurring revenue based on a monthly per user fee.|
The U.S. outbound Business Development Managers
will primarily support and develop leads initiated or referred through the carrier relationship, initially Verizon Wireless, but
anticipated to expand to the other major U.S. carriers. Monthly software license fees are targeted at $19.99 to $24.99 per user
based on a two year subscription. The Company is currently negotiating with Verizon to have these fees collected by the carrier
together with its other wireless charges and remitted to the Company monthly en masse. Initially, we expect monthly subscription
sales to be minimal, averaging only 350 a month in Q2 2012 increasing to 2,000 monthly by Q4 2012.
Gross revenues from carrier channel subscription
sales are projected to grow rapidly from less than $125,000 in Q2-2012 to $3.5 million in 2013 and increasing to in excess of $7.8
million by 2015. Management believes that these numbers are very conservative given the size of the carriers’ enterprise
customer base and the overall market potential.
Support Fees - Annual recurring revenue from maintenance, subscription fees, seat upgrades
and product support services.
Recurring revenue is expected to be generated
from annual technical support and maintenance fees (including seat upgrade fees) and service fees. Recurring revenue from these
sources is projected to grow from $31,000 in 2012 to slightly less than $80,000 by 2015.
Technical Support and Maintenance fees will
apply to the traditional paid-up licenses, calculated at a rate of 20% of the license fees. The subscription fees will apply to
the hosted model and will be earned based on the number of seats. Over the course of time it is expected that customers will increase
the number of end-users (seats) within their organizations, purchasing incremental subscriptions or seat licenses.
Professional Service Fees - For customization, configuration, development and deployment in
support of eXFORMA BPM, MTM and MobiTask.
Service fees include services provided directly
to end-user organizations and to channel partners primarily for implementation services and ongoing consulting services. Due to
the nature of the BPM market initial implementation often requires considerable professional services and service revenue will
be approximately equal to 10%-15% of license fees revenue. The type of services provided will include business analysis, design
and implementation, as MobiTask, eXFORMA and MTM will be implemented to interact with enterprise applications and to meet specific
task requests of the customer. Although paid for by the customer, the IP associated with each customization of the platform remains
with the Company and is available for resale to other clients significantly reducing the direct cost to our Company of future product
Professional Service revenue is expected to
increase commensurate with software sales growing from $1,185,000 in 2012 to in excess of $7.8 million by 2015.
The Company considers service delivery to be
an important component to its success and with every success we will be adding a new stream of future revenue as clients consider
expanding the use of the technology to other areas of their organizations.
With successful funding initiatives and sound
execution of the Company’s business plan, management anticipates total revenues of $1.8 million in 2012 increasing to $20.7
million in 2015.
During 2012, we expect that 74.9% of revenue
will be generated through direct sales, technical support and professional services billings, while only 25.1% of revenue will
result from subscription sales through the Verizon partnership. By the end of 2015, carrier-based subscription sales as a percentage
of total revenue are projected to level out to the 60% range.
We incurred $505,441 in operating expenses
for the year ended December 31, 2011, as compared with operating expenses of $137,073 for the year ended December 31, 2010. Our
general and administrative expenses of $389,784 for the year ended December 31, 2011, as compared with general and administrative
expenses of $42,363 for the year ended December 31, 2010 are the primary reason for the vast difference in operating expenses comparatively.
We incurred $66,977 in interest expenses for
the year ended December 31, 2011, as compared with $22,327 for the year ended December 31, 2010.
As a result of its channel partner distribution
strategy, the business model is highly leveraged. Therefore, the Company expects to maintain a low level of fixed corporate overhead
leading to projections of breakeven profitability beginning in Q4 - 2012.
- Cost of Service/Sales
The cost of service/sales expense is associated
with delivery of a sales unit, including direct labor cost associated with the delivery of implementation and consulting services
provided directly to end-users or to distribution partners and sales commissions. The cost of service/sales is projected to be
approximately 6% of total revenue.
- Sales and Marketing
Sales and marketing expenses include the costs
to market products and to manage and support the channel partners and direct sales team. Initially in 2011, this includes staffing
to recruit distribution partners. Subsequently, staffing grows to provide adequate support, service and account management services.
Sales and marketing expenses also include expenses to recruit distribution partners as well as costs for product promotion. Sales
and marketing expenses, exclusive of commissions, are expected to be approximately 29% of total revenue in 2012 but declining
to 7.5% by 2015 as revenue increases and more normative cost-efficiencies are experienced.
We expect that sales staff at the end of 2012
will include only the newly-engaged VP of Sales, three regional sales reps (focused on the Verizon relationship) for the Northeast,
Western and Central U.S) one inside sales rep and one sales support person, the latter two both based in Toronto. We further expect
the sales roster to expand to eight by the end of 2013 and the complement will be adjusted gradually as dictated by revenue growth.
- Product Development, R&D and Technical Support
Product development expense primarily includes
the costs of direct in-house labor associated with the staffing requirement for development, maintenance and upgrades of the software
product. Product development expenses are expected to approximately average 21% of total revenue in 2012, but will rapidly decline
to 5% by 2015 as revenue increases and more normative cost-efficiencies are experienced.
- General and Administrative (G&A)
The general and administrative costs represent
the labor expense of corporate support staff of both fixed and semi-variable natures, which will increase with additional product
sales. G&A also includes other items such as recruitment and insurance costs associated with the growth
of the Company. General and administrative expenses are projected to be approximately 39% of total revenue in 2012 but again declining
rapidly to 6.5% by 2015 as revenue increases and more normative cost-efficiencies are experienced.
GroveWare has acquired an exclusive license
from GroveWare Technologies Inc. to market and support MobiTask, eXFORMA, eXFORMA BPM SUITE and MTM throughout the United States.
GroveWare is also permitted under the license to further develop and improve these and other product offerings to U.S. customers.
As compensation for these exclusive marketing
and development rights, GroveWare currently pays a royalty equal to 20% of all revenue generated from the sale of the licensed
products. The terms of the royalty arrangement are detailed in an Exclusive Software Master License Agreement executed between
the parties on December 31, 2009.
The Master License Agreement is currently under
renegotiation and the attached projections assume that the royalty rate will be reduced to 15% of revenue and will be levied only
on revenue generated from the sales of software licenses and subscriptions and will no longer include professional services and
technical support revenue. As well, royalties will be paid as subscription revenue is recognized on the books of the Company.
- Depreciation and Amortization
These expenses include depreciation of general
office equipment and computer equipment, based on estimated useful lives of five years for furniture and office equipment, and
three years for computer related equipment. The Company has capitalized the costs associated with the development of the software
product but not the costs to enhance the existing product.
We had a net loss of $461,000 for the year
ended December 31, 2011, as compared with net income of $3,905 for the year ended December 31, 2010.
As with most enterprise software sales, gross
margins are very attractive at 76%. We expect that EBITDA margins will be slightly negative through the end of 2012, but are projected
to increase from 40.1% in 2013 to a very favorable 57% by 2015. We further expect net earnings before taxes will increase from
a loss of $360,000 in 2012 to a profit of over $11.7 million by 2015, primarily because of increasing sales over moderating expense
The break-even monthly sales level of $350,000
are forecast for Q4 of 2012 with cash flows becoming positive at sales levels of less than $400,000, expected to be achieved in
Q1 of 2013.
The Company is projecting a slight pre-tax
loss in 2012 because of the Q2 closing of its re-financing and the subsequent ramp of sales activity with a rapid increase of pre-tax
earnings in 2013 and 2014 to $2.9 million and $7.4 million respectively.
An assumed moderate 25% growth rate in 2015
and 2016 may result in projected recognized revenues of $20.8 and $24.9 million with pre-tax earnings of $11.6 and $14.9 million,
Liquidity and Capital Resources
We had $11,142 in current assets and $468,237
in current liabilities as of December 31, 2011. We therefore had a working capital deficit of $457,095.
Operating activities used $99,417 for the year
ended December 31, 2011. Our net loss of $461,000 is primarily responsible for our negative operating cash flow.
Financing activities provided $99,483 for the
year ended December 31, 2011. We received proceeds of $136,383 from a note payable less $36,900 in the repayment of a factoring
Loans and Debt Service
The Company has no existing bank debt. At December
31, 2010, $206,548 was owed to a factoring company. The Company is currently seeking an investment of a minimum of $2,000,000 either
in the form of subordinated debt or through the issue of common or preferred equity
Capital Requirements: 2011-2012
The Company is seeking to raise an additional
$2.0 - $5.0 million in capital. Operating expenses before interest is expected to begin Q2 2012 at approximately $64,000 per month
and gradually increase, based on the sales growth and related support requirements, to approximately $ 325,000 per month by year
end. Initial pro forma profits beginning in Q4 2012 and cash flow breakeven occurs in Q1 2013.
The proceeds of our capital raise will be used
to fund additional market development, sales & marketing & services staffing, product enhancement and new development,
receivable funding, G&A and to reduce debt obligations.
The Company is projecting to be cash flow positive
in Q1 2013. However, to give further assurance of adequate growth capital, the Company will explore the financing of its accounts
receivable, securing an additional bank line of credit or a capital lease line to assist with funding its monthly cash flow fluctuations
and other working capital requirements. Discussions have commenced with JP Morgan Chase Bank.
The revenue projections are based on the best
conservative estimate of management. While market acceptance and pricing are not likely to present any material challenges to revenue
growth, sales cycles within the enterprise and institutional sectors tend to be less predictable and timing of sales growth may
ultimately be slower or faster than forecast. As a result, cash flow projections may be negatively or positively impacted. The
investment capital currently being solicited will be adequate to meet any interim cash flow shortfalls if the ramp-up of revenue
is slower than projected or to fund more rapid growth if revenue growth is accelerated.
Critical Accounting Policies
Our financial statements and accompanying notes
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies
and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to
our financial statements. In general, management's estimates are based on historical experience, on information from third party
professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results
could differ from those estimates made by management.
We will continue to rely on equity sales of
our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution
to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for
debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Selected Financial Data
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Quantitative and Qualitative Disclosure
about Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
DIRECTORS AND EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following persons became our executive
officers and directors on April 6, 2012, upon the effectiveness of the Merger, and hold the positions set forth opposite their
||Positions and Offices Held|
||President, Chief Executive Officer, and Director|
|W. Scott Boyes
||Chief Financial Officer, Treasurer, Secretary and Director|
The business address of our officers and directors
is c/o ePhoto Image, Inc., 1006 - 20 Eglinton Ave. W., Toronto, Ontario, Canada M4R 1K8.
Our directors hold office for one-year terms
or until their successors have been duly elected and qualified. Our officers are elected annually by the board of directors and
serve at the discretion of the board. Set forth below is a summary description of the principal occupation and business experience
of each of our directors and executive officers for at least the last five years.
Hrair Achkarian. Hrair
Achkarian has over 15 years of experience working within the software development industry. In April 1996, he founded GroveWare
Technologies Inc., where he currently serves as Chief Executive Officer and President and is responsible for all business development,
product development and customer support issues. While working for GroveWare Technologies Inc., Mr. Achkarian has spearheaded the
business operations through four releases of its calendar software product. Additionally, he has successfully penetrated the educational,
government and business markets within the United States and firmly entrenched the GroveWare Technologies name as a reputable software
developer. Mr. Achkarian was appointed as President, Chief Executive Officer and a member of the Board of Directors of the Company
due to his comprehensive knowledge and experience in the software development industry.
W. Scott Boyes. W. Scott Boyes
is a seasoned senior executive with diversified and cross-functional experience, combining MBA credentials with a strong career
background in revenue development and general management. Since 2009, Mr. Boyes has been a Consultant for NCD Associates, where
he focused his consulting services on financial restructuring, revenue enhancement and streamlining business processes for distressed
or high growth companies. In 2005, Mr. Boyes founded and developed Railcrew Xpress Corporation, a specialized passenger transportation
company servicing the U.S. railroads, and served as its President until 2008. There, he developed and led the sales and customer
service teams, managed the acquisition and integration of three competitor companies and developed and deployed sophisticated dispatch,
tracking and reporting technology. From 2000 to 2005, Mr. Boyes served as President and Chief Executive Officer of Hallcon Corporation
where he was responsible for the senior executive management of the company and its operating subsidiaries. Previously he served
as a Vice President a large Canadian Bank and Vice President and General manager of a business unit within a multinational commercial
finance company. In light of Mr. Boyes’ extensive management, business and executive experience, the Board of Directors believed
it was in the Company’s best interests to appoint him as Chief Financial Officer, Secretary, Treasurer and a Director.
There are no family relationships among our
directors and executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past
ten years, none of the following occurred with respect to our present or former director, executive officer, or employee: (1) any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at
the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities;
and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Committees of the Board
Our company currently does not have nominating,
compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation
or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions
of such committees can be adequately performed by the board of directors.
Our company does not have any defined policy
or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes
that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election
of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board
of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election
A shareholder who wishes to communicate with
our board of directors may do so by directing a written request addressed to our President and director, Hrair Achkarian, at the
address appearing on the first page of this Current Report.
Code of Ethics
As of December 31, 2011, we had not adopted
a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions.
The following table sets forth, for the last two fiscal years, the
compensation earned by our executive officer.
|Name and Principal Position
||Stock Awards ($)
||Option Awards ($)
||Non-Equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation Earning
|All Other Compensation ($)
|Yong Feng Sara Yi (1)
|Hrair Achkarian (2)
|W. Scott Boyes (3)
(1) Yong Feng Sara Yi served as our Chief Executive Officer
until the Merger on April 6, 2012.
compensation earned as an officer of GroveWare. On April 6, 2012, Hrair Achkarian was appointed as President, Chief Executive Officer
and a member of the Board of Directors. Mr. Achkarian accrued a salary of $120,000 in 2011 as an officer and director of an affiliated
company and 75% ($90,000) of that amount was charged to the Company as a management fee.
by 4,000,000 shares held by GroveWare Holdings Inc., which is beneficially owned by a trust in which Mr. Achkarian is the beneficial
We do not currently compensate our directors
for acting as such, although we may do so in the future.
As of December 31, 2011, none of our directors
or executive officers held unexercised options, stock that had not vested, or equity incentive plan awards.
We have no pension, annuity, bonus, insurance,
equity incentive, non-equity incentive, stock options, profit sharing or similar benefit plans.
Upon the closing of the Merger,
Yong Feng Sara Yi resigned as the sole director and simultaneously therewith a new board of directors
was appointed consisting of Messrs. Achkarian and Boyes.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as disclosed below,
there have been no transactions, or proposed transactions, which have materially affected or will materially affect us in which
any director, executive officer or beneficial holder of more than 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy
regarding entering into transactions with affiliated parties.
Under the Assignment Agreement, the Company
transferred all of its pre-merger assets and liabilities to its former officer and director, Yong Feng Sara Yi, and shareholder,
Namuun Ganbaatar, in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of
5,600,000 shares of the Company’s common stock and the cancellation of related party loans in the amount of $39,154.
Since its inception in 2008 the Company has
transacted a significant amount of business with entities controlled by Hrair Achkarian, whereby expenses were paid on behalf of
the Company, cash was transferred to the Company, services were provided for the Company, and various other resources were provided
to the Company. These transactions have been recorded and aggregated into related-party payables. The Company also accrues a royalty
equal to 20% of net revenues for the license of its technology which have been recorded as a related-party receivable. During the
2011, the related-party assumed a portion of the Company’s payable, accrued interest and fees due to the factoring company
As of December 31, 2011 and 2010, the Company
has netted the related-party receivable against the related-party payable. As such, the outstanding balance in 2011 totaled $146,858
as a related-party payable and the outstanding balance in 2010 totaled $77,702 in a related-party receivable.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets
forth certain information regarding the beneficial ownership of our common stock, taking into account the consummation of the Merger
(1) by each person or entity who is known by us to beneficially own more than 5% of our common stock, (2) by each of the named
executive officers and directors; and (3) by all of the named executive officers and directors as a group, as of April 6, 2012.
Unless otherwise indicated
in the footnotes to the following table, each of the stockholders named in the table has sole voting and investment power with
respect to such shares of common stock and the address of each of the stockholders listed below is c/o ePhoto Image, Inc., 1006
- 20 Eglinton Ave. W., Toronto, Ontario, Canada M4R 1K8.
|NAME OF OWNER
SHARES OWNED (1)
COMMON STOCK (2)
|All executive officers and directors as a group (1 person)
Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect
to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of April 6, 2012 are deemed outstanding for computing the percentage of the person holding such option or warrant
but are not deemed outstanding for computing the percentage of any other person.
(2) Based upon
6,150,000 shares issued and outstanding on April 6, 2012, and the total number of shares beneficially owned and held by each individual
on April 6, 2012, plus the number of shares that such individual has the right to acquire within 60 days of such date.
by 4,000,000 shares held by GroveWare Holdings Inc., which is beneficially owned by a trust in which Mr. Achkarian is the beneficial
DESCRIPTION OF SECURITIES
Our authorized capital stock
consists of 90,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock,
with a par value of $0.001 per share. Prior to the Merger, there were 7,750,000 shares of common stock issued and outstanding.
In connection with the Merger, the Company issued (i) 4,000,000 shares of common stock in exchange for the issued and outstanding
shares of common stock of GroveWare, and (ii) cancelled 5,600,000 shares in connection with the Split-Off. The outstanding shares
of common stock are validly issued, fully paid and non-assessable. There are no shares of preferred stock issued and outstanding.
Our common stock is entitled to one vote per
share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required
by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders
of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a
majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common
stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock.
Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority
of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment
to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding
series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be
entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.
Subject to any preferential rights of any outstanding
series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the
holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation
with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares
of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind
and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive
rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Our board of directors is authorized by our
articles of incorporation to divide the authorized shares of our preferred stock into one or more series, each of which must be
so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our
board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine
the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including,
but not limited to, the following:
|1.||The number of shares constituting that series and the distinctive
designation of that series, which may be by distinguishing number, letter or title;|
|2.||The dividend rate on the shares of that series, whether dividends
will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares
of that series; |
|3.||Whether that series will have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights; |
|4.||Whether that series will have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board
of Directors determines; |
|5.||Whether or not the shares of that series will be redeemable, and,
if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the
amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;
|6.||Whether that series will have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
|7.||The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment
of shares of that series; |
|8.||Any other relative rights, preferences and limitations of that series |
Provisions in Our Articles of Incorporation and By-Laws That
Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation authorize our
board of directors to issue a class of preferred stock commonly known as a "blank check" preferred stock. Specifically,
the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our
board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to
adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and
to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or
other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether
dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion
rights and liquidation preferences of the shares constituting any class or series of the preferred stock.
In each such case, we will not need any further
action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors
to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the
board of director's authority described above may adversely affect the rights of holders of common stock. For example, preferred
stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited
voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage
bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
We have never declared or paid any cash dividends
on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result,
we do not anticipate paying any cash dividends in the foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding
any warrants to purchase shares of our common stock.
We have not issued and do not have outstanding
any options to purchase shares of our common stock.
We have not issued and do not have outstanding
any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common
Nevada Anti-Takeover Laws
Nevada Revised Statutes sections 78.378 to
78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles
of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation
and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person
or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition
attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200
or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in
the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not
apply to our company.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
The Company’s common stock is currently
quoted on the OTCQB operated by OTC Markets Group, Inc. under the symbol EPHO. There is no trading activity in the Company’s
The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of
less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided
that current price and volume information with respect to transactions in such securities is provided by the exchange or system.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure
document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities
laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and
the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary
actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains
such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide,
prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the
compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices
apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account
statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment
of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and
dated copy of a written suitability statement.
These disclosure requirements may have the
effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.
Holders of Our Common Stock
Before the Merger, we had 7,750,000 shares
of our common stock issued and outstanding, held by 30 shareholders of record.
The Company has not declared, or paid, any
cash dividends since inception and does not anticipate declaring or paying a cash dividend for the foreseeable future.
Nevada law prohibits our board from declaring
or paying a dividend where, after giving effect to such a dividend, (i) we would not be able to pay our debts as they came due
in the ordinary course of our business, or (ii) our total assets would be less than the sum of our total liabilities plus the amount
that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the rights of any creditors
or preferred stockholders.
Securities Authorized for Issuance under
Equity Compensation Plans
We do not have any equity compensation plans.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified
as provided by the Nevada Revised Statutes and our bylaws.
Under the governing Nevada statutes, director
immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically
limited by a company's articles of incorporation. Our articles of incorporation do not contain any limiting language regarding
director immunity from liability. Excepted from this immunity are:
|1.||a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material conflict of interest;|
|2.||a violation of criminal law (unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);|
|3.||a transaction from which the director derived an improper personal
profit; and |
Our bylaws provide
that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we
may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further,
that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated
by such person unless:
|1.||such indemnification is expressly required to be made by law;|
|2.||the proceeding was authorized by our Board of Directors; |
|3.||such indemnification is provided by us, in our sole discretion, pursuant
to the powers vested us under Nevada law; or; |
|4.||such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide
that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a
director or officer, of the company, or is or was serving at the request of the company as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following
request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking
by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to
be indemnified under our bylaws or otherwise.
Our bylaws provide that no
advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of
the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative
or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad
faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.
The information provided
in Item 1.01 of this Current Report on Form 8-K is also incorporated herein by reference.
Section 3 – Securities and Trading
Item 3.02 Unregistered Sales of Equity Securities.
The information provided
in Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Section 5 – Corporate Governance and
Item 5.01 Changes in Control of Registrant.
The information provided
in Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.02 Departure of Directors or Principal
Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
The information provided
in Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Upon the closing of
the Merger on April 6, 2012, Yong Feng Sara Yi resigned as Chief Executive Officer of the Company
and simultaneously therewith Hrair Achkarian was appointed as President, Chief Executive Officer and a member of the Board of Directors,
and W. Scott Boyes was appointed as Chief Financial Officer, Treasurer, Secretary and a member of the Board of Directors.
Item 5.06 Change in Shell Company Status.
The information provided
in Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Following the consummation
of the Merger describer in Item 2.01 of this Current Report on Form 8-K, the Company believes that it is not a shell corporation
as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
Section 9-Financial Statements and Exhibits
Item 9.01 Financial
Statements and Exhibits.
(a) Financial Statements
of Business Acquired.
Audited Financial Statements
(b) Pro forma financial
Pro forma financial
(d) Exhibits. All exhibits
are filed herewith unless otherwise indicated.
||Agreement and Plan of Merger, dated April 6, 2012|
||Assignment of Assets Agreement, dated April 6, 2012|
||Articles of Incorporation(1)|
||Exclusive Master License Agreement, dated December 31, 2009|
||Factoring and Security Agreement, dated October 21, 2010|
||Balance sheets of GroveWare as of December 31, 2011 and 2010 and the related statements of operations, statements of shareholder’s deficit and cash flows for the years ended December 31, 2011 and 2010.|
||Pro forma financial information for December 31, 2011|
|(1)||Incorporated by reference on Form S-1 of the Company's Registration Statement filed on February
25, 2010. |
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ePhoto Image, Inc.
By: /s/ Hrair Achkarian
Date: April 9, 2012