Annual Report (10-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2012
o	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From ________ to ________

Commission File No. 33-19961

Santeon Group Inc.

(Exact name of registrant as specified in its charter)

Delaware		01-0623010
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification Number)

11720 Plaza America Drive, Suite 150, Reston, Virginia 20190

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (703) 970-9200

Securities Registered under Section 12(b) of the Exchange Act: None

Securities Registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

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

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

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

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

The number of shares outstanding of the issuer’s common equity, par value $0.001, as of March 18, 2013 was 1,189,899 shares. The aggregate market value of the voting and non-voting common equity held by non-affiliates (810,785 shares) computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s second fiscal quarter ended June 30, 2012 was $3,243,140

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “target”, “goal” and similar expressions are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in the forward-looking statements. Our ability to achieve our financial objectives could be adversely affected by many factors, including, without limitation, the following factors:

– the strength of the United States economy

– changes in the securities markets

– legislative or regulatory changes

– the loss of key personnel

– technological changes

– changes in customer habits

– our ability to manage these and other risks

– our ability to deliver products and services on time

However, other factors besides those listed above or discussed elsewhere in this Report also could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. These forward-looking statements are not guarantees of future performance, but reflect the present expectations of future events by our management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Any forward-looking statements made by us speak only as of the date they are made. We do not undertake to update any forward-looking statement, except as required by applicable law.

PART I

Item 1. Business

Overview

Santeon Group Inc. (“Santeon”, the “Company” or “we” or “our”) is a diversified software products and services company specializing in the transformation and optimization of business performance through the deployment or the development of innovative products and services using Agile in across the commercial, government and consumer sectors. Our innovative products and services enable organizations to optimize performance and maximize value. Our clients include state and local governments, federal agencies and numerous private sector customers.

While our roots are in healthcare, our name means health (“santé” is French for health), we have expanded into a more horizontal solution offering carrying the same principals of building a “healthy” organization. Whether we are building solutions for commercial, government or consumers, the overall performance and health of the organization and how they benefit from our products and services is of the utmost importance.

Innovation forward is the mindset that drives our product development, service delivery and the solutions we offer our customers. We approach each business opportunity with an open mind and creativity always looking for what is best, not what is traditional or common. We strongly believe our innovation is what sets us apart from our competition and what will set our customers apart from their competition. We always look ahead at what is of long-term value. We are agile in our thinking but focused in our execution. We are not chasers of what is trendy or what is buzz, we are evaluators of what is sustainable and reliable. Innovation is what drives our business and forward is where we are moving. We are focused on two specific aspects of our operations, specifically securing and growing the current client base and revenue, as well as new sales through both direct and in-direct sales channels.

It is important that the Company’s technology offerings are scalable, easy to implement, attract market leading channel partners, and provide tremendous value for the end customer. We continue to refine our technology assets, making them easier to deploy through partners into targeted vertical markets. Over the past two years, in spite of difficult global financial circumstances and an exceptionally soft business climate, the Company was able to acquire large enterprise customers as well as federal government agencies. As we continue to innovate in new products and services, the Company expects new revenue opportunities to emerge.

Our corporate offices are located in Reston, Virginia with branch offices in Tampa, Florida and Cairo, Egypt. Our common stock is quoted on the inter-dealer quotation system operated by the OTC Market Group under the symbol SANT.

Recent Developments

Reverse Stock Split

On November 23, 2012 the shareholders holding a majority of the voting power of the Company’s outstanding voting stock (the “Majority Shareholder”) acted by written consent approving an amendment to our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) to (a) effect a reverse stock split of our common stock by a ratio of one-for-four hundred (1:400) as shall be determined at the sole discretion of the Chief Executive Officer at any time prior to March 31, 2013, subject to receiving all requisite approvals and completion of required notice periods, and (b) reduce the number of authorized shares of our common stock from seven hundred million (700,000,000) shares to fifty million (50,000,000) shares.

On December 10, 2012 the Chief Executive Officer, in accordance with the above-mentioned written consent, determined that the reverse stock split ratio shall be a ratio of one-for-four hundred (1:400). The actions to be taken pursuant to the Written Consent became effective on January 4, 2013 following receipt of approval from FINRA and the filing of the Amended Certificate of Incorporation with the Delaware Secretary of State (the “Effective Date”). The amendment to the Certificate of Incorporation reflecting the Reverse Stock Split that was filed with the Delaware Secretary of State is attached as an Exhibit to this Form 10-K. To avoid the existence of fractional shares of our common stock, the Company will pay cash in lieu of fractional shares.

All references to common stock, share and per share amounts have been retroactively restated to reflect the stock split, unless explicitly stated otherwise.

Purpose and Material Effects of Reverse Stock Split

The Board believes that, among other reasons, the low market price of the Company’s Common Stock has contributed to a lack of investor interest in the Company and has made it difficult to attract new investors. The Board has proposed the Reverse Stock Split as one method to attract new investors and believes the expected proportionate increase in stock price will enable investment from certain institutional investors who may have internal policies and practices that either prohibit or discourage them from recommending low-priced stocks.

We believe the Reverse Stock Split may improve the price level of our Common Stock and the expected proportionate increase in share price could help generate interest in the Company among investors and create other business opportunities. If the Company’s stock continues to trade at current levels, without effecting a reverse stock split, the low market price of our stock makes it increasingly difficult and potentially impossible to raise additional financing. It should be noted that the effect of the Reverse Stock Split upon the market price for our Common Stock is unpredictable, and the history of similar reverse stock split combinations for companies like ours is varied. The Board does believe however, although there can be no assurance, that the Company’s recent improvement in financial performance will have a positive effect on the post reverse stock split stock value. Accordingly, for these and other reasons discussed below, we believe effecting the Reverse Stock Split is in the Company’s and our stockholders’ best interests.

The principal effect of the Reverse Stock Split will be that the number of shares of common stock outstanding will be reduced from four hundred seventy-five million, nine hundred ninety one thousand, six hundred ninety-one (475,991,691) to one million, one hundred eighty nine thousand, eight hundred ninety-nine (1,189,899) shares of Common Stock, including 5,000 shares of common stock that were not physically certificated until after 2012 due to an administrative delay.

The number of authorized shares of Common Stock will, simultaneous with the Reverse Stock Split, be reduced to fifty million (50,000,000) The following chart depicts the capitalization structure of the Company, both, pre- and post-split, which, for the purpose of showing an example, shows the post-split with a number of different ratios up to one for one thousand:

Pre-Reverse Stock Split

Class of Shares	Authorized		Issued and Outstanding		Authorized but unissued
Common Stock		700,000,000		475,991,691		224,008,309

Preferred Stock		50,000,000		-		50,000,000

Post-Reverse Stock Split (after giving effect to payment of fractional shares)

Class of Shares	Authorized		Issued and Outstanding		Authorized but unissued
Common Stock		50,000,000		1,189,899		48,810,101

Preferred Stock		50,000,000		-		50,000,000

Except as may result from the treatment of fractional shares, the Reverse Stock Split will not change the proportionate equity interests or voting power of our stockholders. All other rights of stockholders will remain unaltered, except for possible immaterial changes. The Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split is not intended as, and will not have the effect of, a "going private transaction" covered by Rule 13e-3 under the Securities Exchange Act of 1934. We will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934.

Stockholders should recognize that they will own a fewer number of shares than they presently own. While we anticipate that the Reverse Stock Split will result in a potential increase in the market price of our Common Stock, there can be no assurance that the reverse split will achieve this. Should the market price of our Common Stock decline, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than in the absence of a reverse split. Furthermore, the possibility exists for an adverse affect on the liquidity of the market price of our Common Stock following the Reverse Stock Split.

Plans, Proposals or Arrangements to Issue Available Shares of Common Stock

The main purpose of completing this Reverse Stock Split is to increase the market value of our Common Stock in order to have the ability to issue shares to attract investors for future financing and business partners. The Company currently has no such financing or business partnership agreements pending.

2012 Employee Incentive Stock Option Plan

In November 2012, the 2012 Employee Incentive Stock Option Plan (the “Plan”) was adopted pursuant to the written consent of Majority Stockholders as of November 23, 2012. The Plan provides for various types of awards denominated in shares of Company’s Common Stock to employees, officers and employee directors of the Company.

The Plan shall be administered and interpreted by the Board or by a Committee appointed by the Board. If the Board administers the Plan, references to the “Committee” shall be deemed to refer to the Board. The Committee has the authority to administer and interpret the fair market value of the Common Stock, to select the employees to whom Options may be granted; to determine whether and to what extent Options are granted in accordance with the Plan; to determine the number of shares to be covered by each Option granted under the Plan; to approve forms of agreements for use under the Plan; to determine the number of shares of Restricted Stock to be granted under the Plan; to construe and interpret the terms of the Plan and any award granted under the Plan; to determine vesting schedules; to determine whether and under what circumstances an award may be settles in Common Stock or other consideration instead of cash and to make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.

Shares subject to the Plan and types of awards

The Plan provides that up to one hundred fifty thousand (150,000) shares shall be available for grant pursuant to the various types of awards that may be granted under the plan. Restricted stock and nonqualified stock options may be granted to employees, officers and directors. Incentive stock options may only be granted to employees. An employee who has been granted an award, if they are otherwise eligible, may be granted additional awards.

More detail regarding the 2012 Employee Incentive Stock Option Plan can be found on the Form 8-K filed on December 17, 2012.

Amendment to Articles of Incorporation

Pursuant to the November 23, 2012 written consent of a majority of holders of the Company’s voting stock and the unanimous adoption by our Board of Directors of the resolutions on November 7, 2012 and November 20, 2012, the Company amended its Certificate of Incorporation to reduce the authorized common stock available for issuance from 700,000,000 shares to 50,000,000 shares. The amendment was filed with the Delaware Secretary of State on December 27, 2012.

Our Business

Santeon is an innovation centric platform and services company serving the enterprise, government and consumer markets with platforms and services that enable organizational growth through transformation, automation, integration, outsourcing and online user experiences. Santeon is an expert and thought leader on software development and the innovative practices that enable organizations to build software and users to experience software and offers training, consulting, coaching, outsourcing, staffing and operation and maintenance services related to software development. Additionally, Santeon invests in building its own software platform in the areas of transformation, automation, electronic exchange and content management.

Santeon’s strategy is provide shareholder value through the continuous investment in platforms that are incubated, released to clients, commercialized, generate revenue and profits then spun-out to bring in cash-infusion to continue to support our innovation forward. As industry thought leaders we are always looking for innovation to support our growing client base and look forward to develop what is complementary to our core strengths. With this vision in mind, we divided our organization into practice areas that feed into the cycle of client acquisition through client retention and growth by being a one-stop full service solution company offering platforms and services to meet their demand as they transform, evolve and grow.

Strategic Consulting Practice

During 2011 and 2012, we contracted with a number of large corporate customers to provide assistance with strategic enterprise-wide Agile transformations of their information technology (“IT”) organizations. The services we provide to these customers entail Agile training, coaching and consulting work. The contribution of these contracts enabled the Company to increase revenue in 2012 by nearly $1.1 million over 2011.

In particular in 2012, we expanded our consulting and services practice into the US federal government and added another significant customer for whom the Company is a sub-contractor under a US government contract with the Department of Homeland Security. The revenue from this new contract is reflected in our 2012 financial results.

When it comes to transformation and adoption, Santeon believes it is one of the leading providers of Agile-based services. Our Agile portfolio covers the full Agile life cycle that entails: training, consulting, coaching and software development. Santeon’s consultants are well recognized in the technical community and the Company is a thought leader in large-scale enterprise Agile transformation.

With the increased pressure on organizations to perform under strict financial and competitive conditions, the demand for a transformational approach has increased and many commercial and governmental agencies are searching for new disciplines to increase output while reducing costs. Santeon has developed its own proprietary consulting framework that guides enterprises through the Agile transformation path by providing training, consulting and coaching supported by Santeon software and platforms.

Outsourcing Practice

Santeon is an established provider of software development outsourcing and leverages its offshore development facilities to deliver these services with aggressive service level agreements to ensure quality and reliability of service deliveries while providing our customers with cost efficiencies and value. Currently, Santeon offers software development support to several clients and is looking to expand its client list in 2013. Building on it’s success in benefits enrollment outsourcing through the eBN offering, Santeon has leveraged its business process management (“BPM”) platform to deliver these value added services and has significantly increased its number of partnerships and distribution channels in the latter half of 2012 and early part of 2013.

Software Development

With respect to software development, Santeon’s methodology is a value-driven development approach overcoming the pitfalls of traditional development process techniques. The Santeon approach ensures quick return on investment by producing tangible, working results early and throughout the project’s life cycle, in contrast to traditional development strategies that focus on end-results only at the end of production cycle.

Our Agile development approach aims to achieve specific goals, namely:

·	Decrease time of development and gain earlier return on investment;

·	Increase stakeholders’ involvement by enhancing the team’s ownership;

·	Improve planning and prioritization of features;

·	Build flexibility and adaptation to change; and

·	Improve transparency and tracking of progress.

Santeon continues to expand its offshore development capacity and introduce additional cost benefits to our clients through rapid release cycles and increased quality and time to market. Santeon plans on expanding its software development outsourcing business in 2013 to meet the anticipated demand for enterprises to lower development costs and speed up product delivery and revenue realization.

Electronic Benefits Network (“eBN”)

Santeon’s eBN practice offers an automated and electronic cloud-based business process outsourcing (BPO) service for benefits management by connecting hundreds of employers with SGI’s network of hundreds of health and non-health benefits providers. During 2012, Santeon licensed its technology to several human resources management software providers as well as payroll software providers and service bureaus to implement and market the Company’s eBN service.

Santeon’s eBN service simplifies benefits administration, reduces costs and improves employee service. eBN eliminates the potential for error by automatically extracting the enrollment data already maintained in an employer’s human resource information system (“HRIS”) and transferring it to accurately and securely to insurance carriers. With eBN, employers no longer have to prepare and update enrollment reports for carriers and can avoid duplicate data entries in carrier web portals.

Platforms

Santeon is focused on balancing its service delivery model with a mixture of proprietary and licensable platforms that support the delivery. Santeon will continue to invest in the development of innovative platform as market demands increase and evolve. With over ten years of innovation and transformation, Santeon platforms can be found powering many of the leading solutions in the market today. Our platforms power government and private sector entities and meet the challenging demands of electronic compliance, multi-party integration and business automation.

Business Process Management Platform

By approaching BPM with a full suite of integrated tools, we offer our customers the ability to manage their entire BPM initiative from beginning to end. The Santeon BPM platform focuses on the modernization and process improvement within and across organizational boundaries. Santeon’s BPM platform is a complete, tightly integrated suite of products that include process modeling and simulation, process integration and process monitoring. The suite is designed with a collaborative approach to meet the needs of both business and technical users, improving the collaboration between all stakeholders involved to ensure successful and rapid implementations to meet business goals.

In addition to directly selling our products and services directly to end-user clients, several leading technology organizations license our technology and offer it to their customers as a “white-label” product. We offer the following three products to our healthcare clients.

Agile Assessment and Management Platform

As thought leaders in the Agile community, Santeon continues to invest in research and development to develop a platform that models the Agile project management discipline rather than using platforms that are based on traditional development practices and then made to look “agile”. We released the first module of our project management framework to conduct an Agile readiness assessment and deployed it at two large enterprises during 2012. Also during 2012, we released publically a smaller version of the Agile readiness assessment for smaller enterprises and individual IT teams. In 2013 we plan on releasing additional modules of our Agile project management framework based on feedback and client needs.

Rich Content Management and Media Streaming Platform

Santeon’s rich video media platform (RVMP) is a sophisticated, out-of-the-box, component-based, and integrated IPTV network community that is ready to populate and deploy in minutes. This ease of use provides new and existing users with an advanced and rich video viewing experience. The feature-rich RVMP enables you to provide end-users with an extraordinary media experience right at their desktop or laptop computer or on any mobile device. In addition to the more efficient compression standard used by IPTV technology, the advantages over regular, traditional television are many: Internet video channels offer viewers a much more interactive and personalized experience through content search, channel browsing or surfing, participation in surveys and voting for favorite channels or video clips. Moreover, the RVMP also allows video on demand television as well as pay-per-view. In this case, the viewer can browse the catalogue of videos or schedule of programs and select the content of choice to watch on any size screen. Santeon’s RVMP gives an administrator total control of managing video content with ease.

The built-in content management system (CMS) allows users or administrators to easily manage clips or targeted ads in a highly efficient manner. Santeon supports its RVMP through training, integration, and customization services (when requested). The RVMP offers fully customizable components from simple to complex enterprise-level, branding, custom development, site management, and operational support. Online media technologies are rapidly growing and changing: by using different video formats and encoders, Santeon keeps abreast of these updates to give users the best experience under all platforms.

In addition to serving the enterprise with a sophisticated video content management system, Santeon also offers consumers a version/instance of that platform under the brand “ubroadcast.com”. ubroadcast supports user-generated video in live stream or video-on-demand modes with sophisticated capabilities for advertisers, content providers, social networking experiences and a cross-section of collaboraters combined with high-definition playback technology on one platform to reach users anywhere, on any platform or device. ubroadcast.com was originally launched as the combination of two technologies to address the unique needs of bringing video-based rich user experiences to the market. ubroadcast.com offers a complete broadcasting platform for TV and radio that enables anyone to quickly and easily broadcast a live or on-demand channel to an interactive global audience via the Internet. With our simple-to-use broadcasting application and tools, anyone can produce a high quality interactive broadcasting and customize their channel on ubroadcast.com. In addition, the ubroadcast.com player can be embedded and shared on other websites, blogs, and social networking sites, making it the ultimate viral video-content distribution tool.

Technology and Intellectual Property

The Company claims rights in its inventions, code, and other intellectual property that it has created and that is contained in its products. As of the date of this filing, the Company has not yet sought formal registration or filed any U.S. patent or copyright applications for such intellectual property; however, the Company may chose to do so for certain proprietary software code and processes that it has developed. The Company relies primarily upon a combination of trade secret, nondisclosure and other contractual arrangements to protect its proprietary rights. The Company generally enters into confidentiality agreements with its employees, consultants, clients and potential clients and limits access to and distribution of its proprietary information. There can be no assurance that the steps taken by the Company in this regard will be adequate to deter misappropriation of its proprietary information or that the Company will be able to detect unauthorized use and take appropriate steps to enforce its intellectual property rights.

Customers

Four customers accounted for 26%, 17%, 15% and 11%, respectively, of revenues in 2012 compared with two customers who accounted for 21% each of revenues in 2011. One of these customers accounted for approximately 26% of our net revenues in 2012 compared with 21% in 2011. The other customer accounted for approximately 17% of our revenues in 2012 compared with 0% in 2011.

Sales and Marketing

Our sales and marketing strategy in based on direct sales forces with the company has been investing in as well as through partnerships. The Company has obtained nearly all its large and medium-size customer through referral or as a result of attendance at Santeon-sponsored training events and conferences. In 2013, the Company intends to invest significantly in dedicated sales and business development resources to accelerate the growth of and diversify our revenue base. The refinement of this strategy will evolve over time and be an iterative process. Our strategy for communicating with existing and potential clients is:

·	Focusing on large enterprise customers;

·	Partnering with prime government contractors; and

·	Selling or licensing our products both directly and through indirect sales channels.

Competition

We believe that Santeon is well positioned in the market to take advantage of emerging needs in transformation and business optimization. Our strong, large and financially secure client base provides us a platform to grow and compete. Our through-leadership position also allows us to attract clients who are seeking a world-class organization with depth in skills without the high price tag traditionally associated with the larger firms with significant overhead to cover. Our innovative approach to problem solving reflected in the sophisticated of our platforms positions us strongly against competitors who offer high-cost of ownership and support.

Competitors in the software development market are numerous with some of them being large and well established. There are little to no barriers to entry in the software development market however, the company’s entrenched relationships with existing marquee customers, our thought leadership in Agile software development for distributed teams and our extensive technical skills provide us with a competitive advantage over any other provider.

Some of our competitors in the Agile training, coaching and consulting services market are large and well established, with vendors such as IBM Global Services, Accenture and HP/EDS, offering a wide range of services. We also compete with smaller, regional companies that are of similar size and market penetration as Santeon. Historically, we have maintained long-term relationships with our current customers and believe we will be able to continue renewing contracts and in signing multi-year agreements with them in addition to acquiring new clients

We believe our healthcare practice, specifically our eBN business, is one of the leading benefits enrollment platforms and our continued expansion of the network features and functionality has made it difficult for competitors to enter this market or challenge our market position. The network platform was developed over a substantial period and during that time we established strong customer relationships and state-of-the-art technology. Our continued focus on its growth and development makes the barriers to entry high for our competitors.

Regulation

Currently, we do not require any government approval for our products and services. This may change in the future. However, we cannot predict how any such future regulations will affect our business.

Employees

The Company has 50 support staff, of whom 20 are located in the United States and four are executive officers. As our operations expand, we expect that we will hire additional support staff as needed

Corporate History

Prior to May 2010, we were known as ubroadcast, Inc. (“ubroadcast”), the owner of ubroadcast.com, an Internet broadcasting web site, and were in a series of unrelated businesses. From January 2009 until May 2010, our principal business activity was the development of the ubroadcast.com proprietary software that provided a platform for hosting live interactive radio shows on the Internet.

In February 2010, ubroadcast acquired all of the issued and outstanding equity of iVu Media Corp. (“iVu”), an Alexandria, Virginia-based software company in exchange for twenty-five thousand (25,000) shares of its common stock. iVu Media Corp., developed and owned a state-of-the-art video content management (“VCM”) system. iVu Media’s VCM worked in tandem with a high-definition playback technology, an Internet broadcasting platform that attracted Fortune 500 clients and many leading international broadcasting firms.

In April 2010, ubroadcast acquired X2A Consulting, LLC, (“X2A”) an Alexandria, Virginia-based software company for twenty-five thousand (25,000) shares of its common stock.

In May 2010, ubroadcast acquired a significant majority (99.2%) of the issued and outstanding capital stock of Santeon, Inc. (“Santeon”) in exchange for an aggregate amount of three hundred seventeen thousand five hundred forty-six shares (317,546) of ubroadcast common stock (the “Merger Transaction”). Prior to the Merger Transaction, Santeon was a privately held company specializing in the development of software products and offers software services including software development outsourcing services and solutions across industries. The Merger Transaction was structured, as a transaction in which Santeon would merge into a wholly owned subsidiary of ubroadcast and as a result of the Merger Transaction Santeon would become a wholly owned subsidiary of ubroadcast. Pursuant to the terms of the Merger Transaction, the Company’s board of directors was reconstituted and Santeon was granted the right to appoint three members to the Board of Directors while ubroadcast maintained two board seats. In May 2010 and concurrent with the Merger Transaction, ubroadcast changed its name from ubroadcast, Inc. to Santeon Group Inc. (“SGI” or the “Company”) and the common stock symbol was changed from “UBCI” to “SANT”.

At the closing of the Merger Transaction on May 12, 2010, a majority of the shares of Santeon (99.2%) were delivered to Santeon Group Inc., formerly known as ubroadcast, and 317,546 shares of SGI were issued to Santeon’s participating shareholders.

The Merger Transaction has been accounted for as a reverse acquisition of SGI, formerly known as ubroadcast, by Santeon but in substance as a capital transaction, rather than a business combination, since SGI had nominal operations and assets prior to and as of the closing of the Merger Transaction. The former stockholders of Santeon represent a significant constituency of the Company’s voting power as a result of the Merger Transaction and Santeon’s management has assumed operational, financial and governance control. The transaction is deemed a reverse recapitalization and the accounting is similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets has been recorded. For accounting purposes, Santeon is treated as the surviving entity and accounting acquirer although SGI was the legal acquirer. Accordingly, the Company’s historical financial statements are those of Santeon, Inc.

The Company filed the certificate of merger with the Delaware Secretary of State on March 26, 2012 to complete the administrative procedures required for the Merger Transaction. Despite the effective date of the certificate of merger (March 26, 2012), for accounting and operational purposes, Company management has accounted for the Merger Transaction as if it occurred with an effective date of May 12, 2010, as originally intended.

Available Information

We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”). The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at I -800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov.

We also make available, free of charge through our Internet website (www.santeon.com), our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We are providing the address to our Internet site solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents of the website into the report.

Item 1A. Risk Factors

We operate in a rapidly changing economic and technological environment that presents numerous risks, many of which are driven by factors that we cannot control or predict. The following discussion, as well as our “Critical Accounting Policies and Estimates” discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7), highlights some of these risks. The risks described below are not exhaustive and you should carefully consider these risks and uncertainties before investing in our securities.

Economic, political and market conditions, including the recent recession and global economic crisis, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. These include:

•

general economic and business conditions;

•

the overall demand for software systems and services;

•

general political developments; and

•

currency exchange rate fluctuations.

Macroeconomic developments like the recent recessions in the U.S. and Europe and the debt crisis in certain countries in the European Union could negatively affect our business, operating results or financial condition that, in turn, could adversely affect our ability to sell or companies’ willingness to purchase our products and services. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their information technology (IT) and/or training budgets or be unable to fund software, hardware systems or services purchases, which could cause customers to delay, decrease or cancel purchases of our products, services and training programs or cause customers not to pay us or to delay paying us for previously purchased products and services.

In addition, political unrest in regions like the Middle East, terrorist attacks around the globe and the potential for other hostilities in various parts of the world, potential public health crises and natural disasters, continue to contribute to a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability. These factors generally have the strongest effect on our sales of new software licenses, hardware systems products, hardware systems support and related services and, to a lesser extent, also may affect our renewal rates for software license updates and product support.

We may fail to achieve our financial forecasts due to inaccurate sales forecasts or other factors. Our revenues, and particularly our new software license revenues, are difficult to forecast, and, as a result, our operating results can fluctuate substantially.

We use a “pipeline” system, a common industry practice, to forecast sales and trends in our business. Our sales personnel monitor the status of all proposals and estimate when a customer will make a purchase decision and the dollar amount of the sale. These estimates are aggregated periodically to generate a sales pipeline. Our pipeline estimates can prove to be unreliable both in a particular quarter and over a longer period of time, in part because the “conversion rate” or “closure rate” of the pipeline into contracts can be very difficult to estimate. A contraction in the conversion rate, or in the pipeline itself, could cause us to plan or budget incorrectly and adversely affect our business or results of operations. In particular, a slowdown in IT spending or economic conditions generally can unexpectedly reduce the conversion rate in particular periods as purchasing decisions are delayed, reduced in amount or cancelled. The conversion rate can also be affected by the tendency of some of our customers to wait until the end of a fiscal period in the hope of obtaining more favorable terms, which can also impede our ability to negotiate, execute and deliver upon these contracts in a timely manner.

Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services. Rapid technological advances and evolving standards in computer hardware and software development and communications infrastructure, changing and increasingly sophisticated customer needs and frequent new product introductions and enhancements characterize the enterprise software and hardware systems markets in which we compete. If we are unable to develop new or sufficiently differentiated products and services, or enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy our software products and/or support contracts. Renewals of these support contracts are important to the growth of our business. In addition, IT standards from both consortia and formal standards-setting forums as well as de facto marketplace standards are rapidly evolving. We cannot provide any assurance that the standards on which we choose to develop new products will allow us to compete effectively for business opportunities in emerging areas.

We are also subject to a variety of other risks and challenges in managing an organization operating in multiple locations, including those related to:

•

general economic conditions in each country or region;

•

fluctuations in currency exchange rates and related impacts to our operating results;

•

political unrest, terrorism and the potential for other hostilities, particularly in the Middle East;

•

public health risks, particularly in areas in which we have significant operations;

•

longer payment cycles and difficulties in collecting accounts receivable; and

•

difficulties in transferring funds from or converting currencies in certain countries.

We may experience foreign currency gains and losses. We conduct a certain number of transactions in currencies other than the U.S. Dollar. Changes in the value of foreign currencies relative to the U.S. Dollar can significantly affect revenues and our operating results.

We may lose key employees or may be unable to hire enough qualified employees. We rely on the continued service of our senior management, including our Chief Executive Officer and founder, members of our executive team and other key employees and the hiring of new qualified employees. In the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical, training and other personnel. We may also experience increased compensation costs that are not offset by either improved productivity or higher sales. We may not be successful in recruiting new personnel and in retaining and motivating existing personnel. With rare exceptions, we do not have long-term employment or non-competition agreements with our employees. Members of our senior management team may leave for a variety of reasons, and we cannot assure you that there will not be additional departures, which may be disruptive to our operations. We continually focus on improving our cost structure by hiring personnel in countries where advanced technical expertise is available at lower costs. When we make adjustments to our workforce, we may incur expenses associated with workforce reductions that delay the benefit of a more efficient workforce structure. We may also experience increased competition for employees in these countries as the trend toward globalization continues, which may affect our employee retention efforts and increase our expenses in an effort to offer a competitive compensation program. Our compensation program includes grants of restricted stock, which is an important tool in attracting and retaining employees in our industry. If our stock price performs poorly, it may adversely affect our ability to retain or attract employees. In addition, because we expense all stock-based compensation, we may in the future change our stock-based and other compensation practices. Some of the changes we consider from time to time include a reduction in the number of employees granted stock, a reduction in the number of shares granted per employee and a change to alternative forms of stock-based compensation. Any changes in our compensation practices or changes made by competitors could affect our ability to retain and motivate existing personnel and recruit new personnel.

Our sales to government clients subject us to risks including early termination, audits, investigations, sanctions and penalties. We derive revenues from contracts with some state and local governments and other agencies, that may terminate at any time, without cause. There is increased pressure for governments and their agencies, to reduce spending. Our contracts at the state and local levels are subject to government funding authorizations. Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.

We may need to change our pricing models to compete successfully. The intense competition we face in the sales of our products and services and general economic and business conditions can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to lower prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Our software license updates and product support fees and hardware systems support fees are generally priced as a percentage of our net new software license fees and net new hardware systems products fees, respectively. Our competitors may offer lower pricing on their support offerings, which could put pressure on us to further discount our new license prices.

Any broad-based change to our prices and pricing policies could cause our revenues to decline or be delayed as our sales force implements and our customers adjust to the new pricing policies. Some of our competitors may bundle products for promotional purposes or as a long-term pricing strategy or provide guarantees of prices and product implementations. These practices could, over time, significantly constrain the prices that we can charge for certain of our products. If we do not adapt our pricing models to reflect changes in customer use of our products or changes in customer demand, our revenues could decrease.

We might experience significant errors or security flaws in our software products and services. Despite testing prior to their release, software products frequently contain errors or security flaws, especially when first introduced or when new versions are released. The detection and correction of any security flaws can be time consuming and costly. Errors in our software products could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products and could adversely affect market acceptance of our products. If we experience errors or delays in releasing new software products or new versions of software products, we could lose revenues. End users, who rely on our software products and services for applications that are critical to their businesses, may have a greater sensitivity to product errors and security vulnerabilities than customers for software products generally. Software product errors and security flaws in our products or services could expose us to product liability, performance and/or warranty claims as well as harm our reputation, which could impact our future sales of products and services. In addition, we may be legally required to publicly report security breaches of our services, which could adversely impact future business prospects for those services.

We may not receive significant revenues from our current research and development efforts for several years, if at all. Developing software and hardware products is expensive, and the investment in product development often involves a long return on investment cycle. We have made and expect to continue to make investments in research and development and related product opportunities. Accelerated product introductions and short product life cycles require material levels of expenditures for research and development that could adversely affect our operating results if not offset by revenue increases. We believe that we must continue to dedicate a material amount of resources to our research and development efforts to maintain our competitive position. It is possible that we may not receive significant revenues from these investments for several years, if at all.

We may not be able, in the near term, to increase the Company’s stock price above current levels. The Company’s stock price has traded at or below one penny for an extended period of time and therefore can be considered a “penny stock”. Traditionally, penny stocks are low-priced shares of small companies. Penny stocks may trade infrequently – which means that it may be difficult to sell penny stock shares if you own them due to a perceived lack of liquidity or other risk associated with the company issuing them. While penny stocks generally trade over-the-counter, they may also trade on U.S. securities exchanges, facilities of U.S. exchanges, or foreign exchanges. It may be difficult to find quotations for penny stocks, because national exchanges may either de-list the companies they represent or may not provide timely records of trading activity. It is likely that the Company’s stock price will experience significant fluctuations, as measured in percentage terms and investors in the Company’s stock should be prepared for the possibility that they may lose their entire investment.

Changes in our relationships with significant customers or suppliers could adversely affect us. During 2012, our two largest customers accounted for approximately 43% of our total revenues. There can be no assurance that all significant customers will continue to purchase our products and or services in the same quantities or on the same terms as in the past. The loss of a significant customer or a material reduction in sales to a significant customer could materially and adversely affect our product sales, financial condition and results of operations.

Item 1B. Unreserved Staff Comments

None.

Item 2. Properties

Our corporate headquarters are located in Reston, Virginia, where we lease approximately 1,850 square feet of space for our corporate headquarters, general administrative functions, and sales and marketing efforts. In November 2010, we entered into an eight (8) year sub-lease agreement with an initial monthly cost of approximately $4,500 and annual rent escalations on the anniversary date of each subsequent year. We believe our existing facilities are adequate for our current needs and suitable additional or substitute space will be available as needed to accommodate expansion of our operations.

Item 3. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

Item 4. Mine Safety Disclosures

Not applicable.

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

Market Information

Currently, the common stock of our company is quoted on the inter-dealer quotation system operated by the OTC Market Group, Inc. under the symbol “SANT”. The table below sets forth, for the periods indicated, the high and low prices for our common stock, as reported by the OTC Market Group. These quotations as reported by the OTC Markets Group reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

Period		High	Low
2012	First Quarter	$5.76	$2.80
	Second Quarter	$8.40	$2.76
	Third Quarter	$4.00	$1.32
	Fourth Quarter	$4.00	$1.20
2011	First Quarter	$5.60	$2.80
	Second Quarter	$5.00	$2.40
	Third Quarter	$3.60	$1.40
	Fourth Quarter	$3.20	$2.00

You should note that our common stock is likely to experience significant fluctuations in its price and trading volume. We cannot predict the future trading patterns of our common stock.

Holders

On December 31, 2012, the number of record holders of our common stock, excluding nominees and brokers, was 135. The number of shares outstanding was 1,184,899 as of December 31, 2012.

Dividends

We have never paid cash dividends on our common stock. For the foreseeable future, we intend to re-invest into the Company any future earnings.

Securities Authorized for Issuance Under Equity Compensation Plans

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Individual Compensation Arrangements

Recent Sales of Unregistered Securities

All share figures below are presented after giving effect to the 1:400 reverse stock split that became effective on January 4, 2013. During the twelve months ended December 31, 2012, the Company:

1.	Issued 6,250 shares of common stock to a certain senior employee of the Company pursuant to an employment agreement that was valued at $22,500.

2.	Certificated the previously authorized and issued shares of common stock as follows:

a.	200,000 shares of common stock to the shareholders of Santeon, Inc. in connection with the Merger Transaction consummated in May 2010;

b.	25,000 shares of common stock to the shareholders of X2A Consulting LLC in connection with the Merger Transaction consummated in April 2010;

c.	968 shares of common stock to investors for cash valued at $227,000;

d.	188,169 shares of common stock as stock-based compensation valued at $87,250, which included the 6,250 shares of common stock valued at $22,500 as disclosed in item #1 above;

e.	11,973 shares of common stock for services rendered valued at $42,750; and

f.	4,977 shares of common stock as loan repayments valued at $21,590.

Received into treasury 7,322 shares of returned common stock originally valued at $18,750 that were issued to a vendor of the Company for services rendered in a previous period. The vendor returned the common stock to the Company for no consideration and the Company recorded $18,750 as other income as there is no further obligation from the Company.

Received into treasury 438 shares of returned common stock originally valued at $175 that were previously issued pursuant to a stock subscription agreement put in place in 2006. Prior to the Merger Transaction in 2010, the party to the subscription agreement returned the common stock to the Company to settle the unpaid portion of the subscription receivable and cancelled the remaining portion of the subscription agreement. There is no further obligation on the part of the Company or the subscriber with respect to the stock subscription agreement.

5.	Repurchased 8,478 shares of common stock from a former officer and employee of the Company pursuant to a settlement agreement for cash valued at $20,000.

During 2011, the Company’s Board authorized issuances of common shares as follows:

1.	117,548 shares of common stock were physically certificated during 2011 to Santeon, Inc.’s shareholders in connection with the Merger Transaction that occurred in 2010.

2.	87,218 shares of common stock were issued for cash to certain investors for $205,000 in cash during the period from January to May 2011. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

3.	34,346 shares of common stock were issued to a former officer of the Company as stock-based compensation for services rendered during 2010.

4.	17,857 shares of common stock were issued as stock-based compensation to the Company’s Acting Chief Financial Officer pursuant to a consulting agreement and were valued at $68,119. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

3,125 shares of common stock were issued in December 2011 to a certain individual as payment of interest expense in lieu of cash pursuant to a short-term loan agreement between the Company and the lender, which shares are valued at $8,250. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

6.	6,016 shares of common stock were issued to a certain senior employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $17,088. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

7.	7,500 shares of common stock were issued to a former employee of the Company as compensation pursuant to an employment agreement and were valued at $15,000.

8.	486 shares of common stock were issued to a former employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $1,750.

The above securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. Shares not physically certificated until after 2012 have been included in the 2012 calculations of weighted average number of common shares outstanding and earnings (loss) per share as they are considered outstanding.

Warrants Outstanding

For the years ended December 31, 2012 and 2011, there were no warrants outstanding.

I tem 6. Selected Financial Data

Not applicable.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide information that is supplemental to, and should be read together with, the Company’s consolidated financial statements and the accompanying notes contained in this Annual Report on Form 10-K. Information in this Item 7 is intended to assist the reader in obtaining an understanding of the consolidated financial statements, the changes in certain key items in those financial statements from year to year, the primary factors that accounted for those changes, and any known trends or uncertainties that the Company is aware of that may have a material effect on the Company’s future performance, as well as how certain accounting principles affect the consolidated financial statements. MD&A includes the following sections:

·	Recent Developments

·	Results of Operations—an analysis of the Company’s consolidated results of operations, for the two years presented in the consolidated financial statements

·	Liquidity and Capital Resources—an analysis of the effect of the Company’s operating, financing and investing activities on the Company’s liquidity and capital resources

·	Off-Balance Sheet Arrangements—a discussion of such commitments and arrangements

·	Critical Accounting Policies and Estimates—a discussion of accounting policies that require significant judgments and estimates

·	New Accounting Pronouncements—a summary and discussion of the Company’s plans for the adoption of relevant new accounting standards relevant

Results of Operations

For the Year Ended December 31, 2012 Compared to the Year Ended December 31, 2011

The following table set forth key components of the Company’s results of operations for the years ended December 31, 2012 and 2011, respectively.

	2012		2011

Revenues	$	4,276,488	$	2,245,389
Cost of revenues		2,269,426		1,355,873

Gross Profit		2,007,062		889,516

Total operating expenses		1,875,077		1,372,529

Income (loss) from operations		131,985		(483,013	)

Other income & expenses		53,004		8,549
Gain (loss) from foreign currency transactions		826		(869	)

Income (loss) before tax		185,815		(475,333	)
Income tax (benefit) expense		-		-

Net income (loss)	$	185,815	$	(475,333	)

Revenues

During the year ended December 31, 2012, we generated a total of $4,276,488 in revenues as compared to $2,245,389 for the year ended December 31, 2011. Of the $2,031,099 year over year increase in revenues, $1,097,888 was generated by the Agile business for the following two reasons: (a) realizing a full year of revenues for certain customers acquired in mid-2011; and (b) an increased level of activity in that line of business. In addition, we realized $897,961 of higher software development and support revenues from on-going and one-off customer projects. The eBN and media businesses combined for an aggregate revenue increase of $35,250 in 2012 as compared to 2011.

Cost of Revenues

Cost of revenues for the year ended December 31, 2012 was $2,269,426 compared to $1,355,873 for the year ended December 31, 2011. The largest component of the year over year increase of $913,553 is the addition of outsourced labor from third-party providers ($665,980). Other components of the increase are: $285,887 of salaries and expenses associated with Agile; a reduction of $18,364 related to software purchased for resale; and a decrease of $19,950 due to a reduction in hosting and other software related expenses.

Expenses

Overall operating expenses for the year ended December 31, 2012 were $1,875,077 compared to $1,372,529 for the year ended December 31, 2011. Of the $502,548 year over year increase in total operating expenses, following are the primary components of the change: an increase of $480,622 for personnel and related expenses, an increase of $24,084 related to administrative office leases and a net decrease of $2,158 in all other administrative expenses.

Asset Impairment

During the year ended 2012, the Company performed an asset impairment test on the software acquired in connection with the Merger Transaction, mainly software assets, and it was determined that the fair value exceeded the carrying value of the assets. Thus, the Company did not record an impairment charge.

Net (Loss) Income

The Company had net income of $185,815 for the year ended December 31, 2012, compared to a net loss of $475,333 for the year ended December 31, 2011. Included in the years ended 2012 and 2011 was a foreign currency transaction gain of $826 and a foreign currency transaction loss of $869, respectively, an income tax benefit of $0 in 2012 and income tax expense of $0 in 2011. During the years ended 2012 and 2011, the Company realized a gain on the forgiveness of debt of $56,945 and $56,499, respectively, due to the forgiveness of accrued but unpaid interest expense and $18,751 of Other Income related to the return of equity compensation provided to a vendor for services rendered in a prior period.

Liquidity and Capital Resources

Financial Condition

Net cash provided by operating activities during 2012 was $358,916 as compared to net cash used in operating activities during 2011 of $228,499. The additional cash provided by operating activities during the year ended December 31, 2012 is primarily due to the increase in revenue from the Agile and software development and support businesses and higher operating margins in 2012 as compared to 2011. Accounts receivable increased by $214,986 from $581,479 in 2011 to $796,466 at the end of 2012 due to the overall increase in revenue, but this was entirely offset by a similar increase of ($315,910) in accounts payable and accrued expenses.

Net cash used in investing activities was $23,733 and $12,427 for the years ended December 31, 2012 and 2011, respectively. The net cash used in investing activities increased as the Company spent $16,299 for additional software development for its ubroadcast live-streaming media platform during the year ended December 31, 2012.

Net cash used in financing activities for the year ended December 31, 2012 was $168,358 as compared to $230,533 of cash provided by financing activities for the prior year ended December 31, 2011 due to the company making $148,358 in principal repayments on debt and repurchasing $20,000 of treasury stock in 2012 versus $46,500 in principal repayments on debt, $72,033 of new notes payable and $205,000 of equity issued for cash 2011.

As of December 31, 2012 and 2011, the Company had working capital deficits (Current Liabilities exceeded Current Assets) of $222,025 and $586,813, respectively. The Company had accumulated deficits of $1,494,601 and $1,680,416 as of December 31, 2012 and 2011, respectively. While there is no assurance that the Company will generate sufficient net income in subsequent years such that the accumulated deficit will turn into positive retained earnings, the Company intends to invest prudently in the growth of its products and services in order to grow top-line revenue and generate net income in future periods.

Our Capital Needs

We believe that we will be able to sustain and potentially increase our current level of operations for at least the next twelve months plus a day from the date of filing this report. We also anticipate that our relatively low level of capital needs will be met through cash generated from operations; however, to achieve our business objectives, we may require additional funding through the bank loans, the sale of shares for cash and other fund-raising methods. To date, we have not received a commitment for capital in any amount and we cannot assure you that we will be able to obtain any capital.

Management’s Plans Relating to Future Liquidity

As of December 31, 2012 and 2011, the Company had $183,785 and $16,960, respectively, in cash. Over the last two years, the Company has met its operating needs and made principal repayments on debt through internally-generated cash flow. In order to achieve its growth objectives, the Company may need additional sources of capital to fund working capital and capital investments. In the event additional capital is required, the Company may seek alternate methods of financing including bank loans, bank lines of credit, accounts receivable factoring facilities and other available fund-raising methods to enhance its working capital position. Management believes that it will be successful in obtaining additional financing; however, no assurance can be provided that the Company will be able to do so on satisfactory terms and conditions, if at all. There can be no assurance that efforts to raise adequate capital will be successful nor any assurance that these funds will be sufficient to enable the Company to continue recurring profitable operations and to expand our operations. To the extent that the Company is unsuccessful in obtaining additional funding, the Company may need to curtail its operations and implement a plan to extend payables and reduce overhead until sufficient additional capital is raised to support further operations.

Management believes that the Company’s current cash balance, the recent trends of strong revenue growth attained, net profit achieved, the positive cash generated from operating activities, contracts in hand and current customer base and the projected cash flow and revenues for the next two years will be sufficient to sustain our operations and meet projected cash flow requirements for at least the next twelve months plus a day from the filing date of this report.

Capital Expenditures

During 2012, we made capital investments in fixed assets in the amount of $23,733, as compared to $12,427 during 2011. Most of the Company’s capital expenditure program in 2012 was related to additional development of the ubroadcast software development platform.

The Company may make additional capital expenditures if it has access to additional capital; however, we cannot predict the exact amount of these potential expenditures at this time.

Off-Balance Sheet Arrangements

The Company does not have any off balance sheet or other arrangements other than the operating leases disclosed above that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Critical Accounting Policies and Estimates

Significant Accounting Policies

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

General

The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and/or services rendered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered and/or services has not been rendered or is subject to refund until such time that the Company and the customer jointly determine that the product and/or services has been delivered or no refund will be required. ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing 605-25 on our consolidated financial position and results of operations was not significant.

The Company’s sources of revenues include: (1) customized software development, which includes software systems support revenues and are recognized when completed and invoiced to the customer; (2) fees from Agile training services, which includes the revenue for training classes that range in duration from 1 to 3 days, which are recognized immediately after the completion of the training class and deemed to be earned; (3) software license fees, which includes sales of licenses to use or re-sell pre-existing software, including client consulting, either on a fixed fee or a per end-user fee arrangement and are recognized over the term that the license for use is granted to the customer (one month, one year, etc.).

Stock-Based Compensation

We account for stock, stock options and warrants using the fair value method promulgated by Accounting Standards Codification subtopic 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”) which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services. Therefore, our results include non-cash compensation expense as a result of the issuance of stock, stock options and warrants and we expect to record additional non-cash compensation expense in the future. We follow Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

The Company does not have any issued or outstanding employee stock options, warrants or stock under employee stock purchase plans as of December 31, 2012 and 2011.

Impairment of Long-Lived Assets

We follow ASC 360, "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. We evaluate the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived assets and certain identifiable intangibles will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less disposal costs.

Fair Value of Financial Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the consolidated financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company adopted Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company’s consolidated financial position, results of operations or cash flows.

Newly Issued Accounting Standards

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the Boards) on fair value measurement. The collective efforts of the Boards and their staffs, reflected in ASU 2011-04, have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value.” The Boards have concluded the common requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The amendments to the FASB Accounting Standards Codification (Codification) in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. We adopted ASU No. 2011-04 effective January 1, 2012 and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 8. Financial Statements and Supplementary Data

The required financial statements appear at the end of the Annual Report on Form 10-K, beginning on page F-1.

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

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended December 31, 2012 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were not effective as of December 31, 2012.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

With the participation of our Chief Executive Officer and Acting Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2012 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation and the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2012 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and professional accounting consultants. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.

In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended December 31, 2012 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the year ended December 31, 2012 are fairly stated, in all material respects, in accordance with US GAAP.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Acting Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls

During the fiscal quarter ended December 31, 2012, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting

Item 9B. Other Information.

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Officers

The following table sets forth the officers and directors of Santeon Group Inc. as of December 31, 2012.

Name	Age	Position
Dr. Ashraf M. Rofail	46	Chairman of the Board and Chief Executive Officer
Dr. Ahmed Sidky	33	Executive Vice President and Director
Mr. Ashraf Yacoub	47	Independent Director
Mr. Mark Guirgis	44	Executive Vice President, Chief Financial Officer

Dr. Ashraf M. Rofail, Chairman and Chief Executive Officer

Ash has been our Chairman and Chief Executive Officer since May 2010. Ash has a broad executive background leading technology, strategy and overall management for corporations from 1990 to 2000. Ash served as Chief Technology Officer for User Technology Associates, a software consultancy company with over 1,000 employees. Ash was responsible for setting technology strategy and technical leadership. Ash has provided strategic technical vision for several successful and innovative products as Chief Architect for Best Software (acquired by Sage), Product Architect for Solomon/Great Plains (acquired by Microsoft), and State of the Art Software (acquired by Sage). Ash is a thought leader in enterprise software as a member of Microsoft's Visual Basic advisory board since 1997; patent holder for artificial intelligence technology; author of six software engineering books on topics such as XML, .NET, COM/DCOM, building n-Tier Applications and Service Oriented Architectures; and Adjunct Professor at the Johns Hopkins University School of Business. Ash holds a PhD Artificial Intelligence and MS Computer Science. We took into account his prior experience in operating in the leading technology, strategy and overall management for corporations and believe Mr. Rofail’s past experience in these fields gives him the qualifications and skill to serve as a Chairman of Board of Director and Chief Executive Officer.

Dr. Ahmed Sidky, Executive Vice President and Director

Dr. Sidky has been an Executive Vice President and Director since May 2010. Along with many years of experience in software development, Ahmed Sidky has a Ph.D. from Virginia Tech in value-based process frameworks for effective agile adoption. Ahmed’s work has gained popularity and respect in the agile community as a pragmatic approach for organizations of all sizes attempting to adopt agile. Ahmed is frequently referred to as, Dr. Agile, on account of developing a free online agile readiness assessment tool named Doctor Agile (www.doctoragile.com). He is a frequent speaker at numerous national and international agile conferences as well as the co-author of a new book on practical agile adoption titled Becoming Agile. Prior to joining the Company, Dr Sidky was a principal owner of X2A LLC from 2008 to 2010. We took into account his prior experience in software development and believe Mr. Sidky’s past experience in the field gives him the qualifications and skill to serve as an Executive Vice President and Director.

Mr. Ashraf Yacoub, Independent Director and Chairman of the Audit and Compensation Committees

Mr. Yacoub currently serves as an independent member of the board of directors since May 2010. He is chairman of both the audit and compensation committees of the board. Mr. Yacoub is a regional manager in the mortgage finance business for RBC Royal Bank in Toronto, Canada, a position he has held since 2008. He has more than 20 years experience in complex mortgage and real estate finance. Mr. Yacoub won the Leo Award at RBC and the Partnership Excellence Award at TD Bank as a result of his outstanding performance and contributions to the success of both organizations. Mr. Yacoub’s financial expertise and qualifications stem from his experience in real estate finance and his academic credentials; he is considered a financial expert. Mr. Yacoub has a bachelor’s degree in Economics and Business from York University in Canada. The Company took into account his prior experience in complex financing and believe Mr. Yacoub’s past experience in the field gives him the qualifications and skill to serve as a director.

Mr. Mark Guirgis, Executive Vice President and Chief Financial Officer

Mr. Guirgis has served as Acting Chief Financial Officer of the Company since September 2011. In this capacity, Mr. Guirgis has responsibility for all financial operations, reporting, treasury, SEC compliance and investor relations. In addition to these responsibilities, he oversees all internal and external legal matters, human resources and administration. In December 2012, Mr. Guirgis was appointed Executive Vice President and Chief Financial Officer. Prior to joining Santeon, he served as Vice President, Planning & Analysis and Corporate Treasurer at Primus Telecommunications Group, Incorporated (PTGi) from 1998 to 2011 with responsibility for financial planning, mergers and acquisitions, global cash and risk management, general corporate development activities, financial and industry analysis and capital markets transactions. Prior to joining PTGi, Mr. Guirgis was Manager of Corporate Planning and Analysis at MCI Communications Inc., where he worked from 1993 to 1998. Mr. Guirgis has a Master of Business Administration in Finance and Investments from The George Washington University and a Bachelor of Arts degree in Economics from the State University of New York at Stony Brook. The Company took into account Mr. Guirgis prior experience in financial planning, mergers and acquisitions, global cash and risk management, general corporate responsibilities, financial reporting as well as SEC Compliance and believe Mr. Guirgis’ past experience in the field gives him the skills and qualifications to serve as Executive Vice President and Chief Financial Officer.

Board of Directors

The Company’s board took action by unanimous written consent in lieu of a meeting on twenty-one occasions.

Audit Committee

The audit committee is composed of Mr. Ashraf Yacoub, who currently serves as its Chairman.

As established by our board, the purposes of the audit committee are:

–

to oversee the quality and integrity of the financial statements and other financial information we provide to any governmental body or the public;

–

to oversee the independent auditors’ qualifications and independence;

–

to oversee the performance of our independent auditors;

–

to oversee our systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the board have established or will establish in the future;

–

to establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and other auditing matters and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

–

to provide an open avenue of communication among the independent auditors, financial and senior management, the internal auditing department, and the board, always emphasizing that the independent auditors are accountable to the audit committee; and

–

to perform such other duties as are directed by the board.

During 2012, the Audit Committee did not meet nor did it take action by written consent.

Compensation of Directors

We do not pay any of our directors for their services as directors. It is possible that our management could begin to pay our directors for meetings attended or issue shares of our common stock for their services. However, no specific determination in this regard has been made.

Limitation of Liability and Indemnification

Our amended and restated certificate of incorporation contains provisions limiting the liability of directors. Our restated certificate of incorporation provides that a director will not be personally liable to us or to our shareholders for monetary damages for any breach of fiduciary duty as a director, but will continue to be subject to liability for the following:

–

any breach of the director’s duty of loyalty to us or to our shareholders;

–

acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

–

unlawful payment of dividends or unlawful stock repurchases or redemptions; and

–

any transaction from which the director derived an improper personal benefit.

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our restated certificate of incorporation does not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief remain available under Delaware law. Our restated certificate of incorporation does not affect a director’s responsibilities under any other laws, such as state or federal securities laws or state or federal environmental laws.

In addition, we have entered into agreements to indemnify our directors and executive officers to the fullest extent permitted under Delaware law, including the non-exclusivity provisions of Delaware law, and under our bylaws, subject to limited exceptions. These agreements, among other things, provide for indemnification of our directors and executive officers for fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request. We believe that these bylaw provisions and agreements are necessary to attract and retain qualified persons as directors and officers. We also intend to maintain liability insurance for our officers and directors.

The limitation of liability and indemnification provisions in our restated certificate of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit our shareholders and us. A shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Item 11. Executive Compensation

The following table sets forth certain compensation information for: (i) the person who served as the chief executive officer of Santeon Group Inc. during the years ended December 31, 2012 and 2011, regardless of compensation level, and (ii) each of our other executive officers, other than the chief executive officer, serving as an executive officer at any time during 2012 and 2011. The foregoing persons are collectively referred to herein as the “named executive officers”. Compensation information is shown for the years ended December 31, 2012 and 2011.

Summary Compensation Table

						Other Cash		Equity Compensation ($)								Fringe
		Salary ($)		Bonus ($)		Compensation (1)		RSU's		Options		Other		Sub-total		Benefits ($)		Total ($)

Dr. Ahraf M. Rofail	2012	$	230,577	$	-	$	-	$	-	$	-	$	-	$	-	$	10,057	$	240,634
	2011		180,000		-		182,263		-		-		-		-		16,598		378,861

Dr. Ahmed Sidky	2012		173,077		-		-		-		-		-		-		11,608		184,685
	2011		180,000		-		-		-		-		-		-		16,598		196,598

Mark Guirgis	2012		158,846		-		-		-		-		-		-		14,553		173,399
	2011		47,375		-		-		-		-		68,119		68,119		4,292		119,786

Wessam Micheal	2012		116,115		-		-		-		-		-		-		10,057		126,172
	2011		24,000		-		-		-		-		-		-		2,475		26,475

(1)	In the 2011 SEC Form 10-K that was filed on August 16, 2012, the cash compensation of $182,263 paid to Dr. Ashraf M. Rofail during 2011 was incorrectly reported as “Other Equity Compensation”; it should have been presented as “Other Cash Compensation” as revised and presented above.

Employment Contracts and Termination of Employment and Change-in-Control Agreements

Employment Agreements of Drs. Ashraf M. Rofail and Ahmed Sidky

On May 12, 2010, the Company entered into employment agreements with Mssrs. Rofail and Sidky. Set forth below is a summary of the general terms and conditions the employment agreements:

·	Initial term of three (3) years, with automatic three (3) year renewal periods unless previously terminated or notice is provided 90 days in advance;
·	Initially base salary of $180,000 annually beginning on the date on which the merger closed;

·	Reimbursement for the use of a mobile phone;
·	A car allowance;

·	Health insurance benefits for employee and family;
·	Eligibility for equity compensation plans as afforded to other executives of the Company.

Each employment agreement also provides that the named officer cannot, directly or indirectly, in any capacity, provide services to any person or entity that competes with the Company, unless he obtains the Company's prior written consent for a period of 12 months following his termination.

Further, the Company agreed not to terminate the named officer except for “just cause”. For purposes of the employment agreement, “just cause” means (1) the willful failure or refusal of the officer to implement or follow the written policies or directions of the Company’s Board of Directors, provided that the officer’s failure or refusal is not based upon the officer’s belief in good faith, as expressed to the Company in writing, that the implementation thereof would be unlawful; (2) conduct which is inconsistent with the officer’s position with Company and which results in a material adverse effect (financial or otherwise) or misappropriation of assets of Company; (3) conduct which violates the provisions contained in the existing Confidentiality Agreement or the Non-Competition Agreement between Company and the officer; (4) the intentional causing of material damage to Company’s physical property; and (5) any act involving personal dishonesty or criminal conduct against Company.

In the event the officer is terminated by the Company without “just cause” (as such term is defined under the employment agreement), the officer will be entitled to full compensation as indicated in the employment agreement. If the officer should cease his employment hereunder voluntarily for any reason, or is terminated for just cause, all future compensation and benefits payable to the officer shall thereupon, without any further writing or act, cease, lapse and be terminated. However, all salary and reimbursements which accrued prior to the officer’s ceasing employment or termination will become immediately due and payable and shall be payable to the officer.

During the year-ended December 31, 2012, the Company entered into a Retention Bonus Agreement with Dr. Rofail whereby he was paid $182,263 in cash compensation during the year ended 2011. In return for this retention bonus amount, Dr. Rofail is required to serve as the Chief Executive Officer of the Company through December 31, 2013. If Dr. Rofail leaves the Company voluntarily prior to December 31, 2013, he is required to repay to the Company a pro-rata amount of the retention bonus.

Employment Agreement of Mr. Mark Guirgis

Mr. Guirgis is currently operating under a temporary employment agreement pending the finalization of a formal employment agreement. The basic terms of the temporary agreement provide for the following:

·	Base salary of $175,000 per year;

·	Cash bonus equal to 25% of his base salary, subject to Company performance and Board approval;

·	Participation in all equity compensation award programs in accordance with his executive role, scope of responsibility and contributions to the Company;

·	Participation in all standard employee benefits;

·	Termination provision: either party may terminate the temporary employment agreement with 45 days notice.

·	In the event that the Company provides Mr. Guirgis with a notice of termination, the Company agrees to the following:

o	The Company will continue to pay Mr. Guirgis his bi-weekly salary at that time for a period of six months (the “Severance Period”) after the last day of service with the Company;

o	During the Severance Period, Mr. Guirgis will continue to enjoy all customary benefits, including health and retirement benefits;

o	All unvested equity awards will fully and immediately vest on the last day of service with the Company.

Employment Agreement of Mr. Wessam Micheal

Currently Mr. Wessam Micheal is not operating under an employment agreement.

Outstanding Option Awards at Year End

The following table provides certain information regarding unexercised options to purchase common stock, stock options that have not vested and equity-incentive plan awards outstanding at December 31, 2012, for each named executive officer.

		Option Awards							Stock Awards
		Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unex-ercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Equity Incentive Options Exercise Price ($)		Equity Incentives Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

Dr. Ahraf M. Rofail	2012	-	-	-		-		-		-		-	-	-
	2011	-	-	-		-		-		-		-	-	-

Dr. Ahmed Sidky	2012	-	-	-		-		-		-		-	-	-
	2011	-	-	-		-		-		-		-	-	-

Mark Guirgis	2012	-	-	-		-		-		-		-	-	-
	2011	-	-	-		-		-		-		-	-	-

Wessam Micheal	2012	-	-	-		-		-		-		-	-	-
	2011	-	-	-		-		-		-		-	-	-

Director Compensation

The following table sets forth the compensation paid to our directors for our fiscal years ended December 31, 2012 and 2011.

		Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

CURRENT DIRECTORS
Dr. Ashraf M. Rofail	2012	$	-	$	-	$	-	$	-	$	-	$	-	$	-
	2011		-		-		-		-		-		-		-

Dr. Ahmed Sidky	2012		-		-		-		-		-		-		-
	2011		-		-		-		-		-		-		-

Ashraf Yacoub	2012		-		-		-		-		-		-		-
	2011		-		-		-		-		-		-		-

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

The following table sets forth, as of the date hereof, information regarding beneficial ownership of our capital stock by (i) each person, or group of affiliated persons, known by us to be the beneficial owner of more than five percent of any class of our voting securities; (ii) each of our directors; (iii) each of the named executive officers; and (iv) all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC, based on voting or investment power with respect to the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock underlying warrants held by that person are deemed to be outstanding if the warrants are exercisable within 60 days of the date hereof.

All percentages in the following table are based on a total of 1,189,899 shares of common stock outstanding (including 5,000 shares of common stock to be issued that were not physically certificated until after 2012 due to an administrative delay but are considered as outstanding as of December 31, 2012). Except as indicated in the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Unless otherwise indicated, the address for each of the shareholders in the table below is c/o Santeon Group Inc. 11720 Plaza America Drive, Suite 150, Reston, VA 20190.

Name of Beneficial Owner	Position	Shares Owned		% of Total Outstanding

Ashraf M. Rofail	Chairman & CEO		208,431		17.5	%
Ahmed Sidky	Officer and director		146,811		12.3	%
Mark Guirgis	EVP, Chief Financial Officer		17,856		1.5	%
Ashraf Yacoub	Independent director		-		0.0	%

All active directors and executive officers as a group			373,098		31.4	%

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

Please see Item 10 of this Form 10-K for the information required under this Item.

Item 14. Principal Accounting Fees and Services

RBSM, LLP began serving as the Company’s independent registered public accounting firm on March 9, 2011, the date of approval by the Company’s board of directors. The aggregate fees billed to us by RBSM LLP, our principal registered public accounting firm, for professional services rendered during the years ended December 31, 2012 and 2011 are summarized in the table below:

	Year Ended December 31, 2012		Year Ended December 31, 2011

Audit Fees (1)	$	75,000	$	66,855

Audit Related (2)		-		-

Tax (3)		19,000		-

All Other Fees (4)		-		-

	$	94,000	$	66,855

(1) Audit fees consist of fees incurred for professional services rendered for the audits of financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

(2) Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”

(3) Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.

(4) All other fees consist of fees billed for all other services.

Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this Report:

Financial Statements

	–	Report of Independent Registered Public Accounting Firm
	–	Consolidated Balance Sheets as of December 31, 2012 and 2011

	–	Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011
	–	Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2012 and 2011

	–	Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
	–	Notes to Consolidated Financial Statements

Financial Statement Schedules

Other schedules and exhibits are omitted because the required information either is not applicable or is shown in the financial statements or the notes thereto.

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the U.S. Securities and Exchange Commission.

Exhibit Number	Exhibit Title
2.1	Plan and Agreement of Merger by and between SI Acquisition Corp. and Santeon Inc. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
10.4	Employment Agreement between Registrant and Ahmed Sidky. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
10.5	Employment Agreement between Registrant and Ashraf M. Rofail. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
10.6 *	Retention Bonus Agreement between Registrant and Ashraf M. Rofail.
31.1 *	Certification as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002
31.2 *	Certification as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
32.1 *	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 *	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.*	Interactive Data Files

* filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on March 19, 2013 on its behalf by the undersigned, thereunto duly authorized.

	SANTEON GROUP INC.

	By:	/s/ Ashraf M. Rofail
		Dr. Ashraf M. Rofail
		Chairman and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed on March 19, 2013 by the following persons on behalf of the Registrant, in the capacities indicated:

	/s/ Dr. Ashraf M. Rofail
	Chairman of the Board and CEO (principal executive officer)

	/s/ Mark Guirgis
	Executive Vice President, Chief Financial Officer and Principal Accounting Officer

	/s/ Ahmed Sidky
	Executive Vice President and Director

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

As of the date of the filing of this report, neither the Registrant’s proxy materials nor annual report to shareholders has been sent to Registrant’s shareholders. Registrant plans to send a proxy statement to its shareholders.

SANTEON GROUP INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2012 and 2011		F-3

Consolidated Statements of Operations for the years ended December 31, 2012 and 2011		F-4

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2012 and 2011		F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011		F-6

Notes to Consolidated Financial Statements		F-7 to F-19

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Santeon Group Inc.

We have audited the accompanying consolidated balance sheets of Santeon Group Inc. and Subsidiaries (the “Company”) as of December 31, 2012 and 2011 and the related statements of operations, changes in stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to the above present fairly, in all material respects, the consolidated financial position of Santeon Group Inc. and Subsidiaries as of December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the two years ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ RBSM LLP

New York, New York

March 19, 2013

F-2

SANTEON GROUP INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2012 AND 2011

	2012			2011
ASSETS
Current assets:
Cash	$	183,785		$	16,960
Accounts receivable		796,466			581,479
Other current assets		25,578			15,160
Total current assets		1,005,829			613,599

Property and equipment, net		20,364			18,746
Software assets, net		281,212			394,887
Total non-current assets		301,576			413,633

Total Assets	$	1,307,405		$	1,027,232

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	1,107,345		$	861,879
Notes payable - related party		-			97,033
Notes payable		120,509			241,500
Total current liabilities		1,227,854			1,200,412

Long term liabilities:
Notes payable		83,166			-
Total long term liabilities		83,166			-

Stockholders' deficit:
Preferred stock, par value $0.001, 50,000,000 shares authorized: 0 shares issued and outstanding as of December 31, 2012 and 2011, respectively		-			-
Common stock, par value $0.001, 50,000,000 shares authorized; 1,201,137 and 679,050 shares issued as of December 31, 2012 and 2011, respectively and 1,184,899 and 679,050 shares outstanding as of December 31, 2012 and 2011, respectively		1,185			679
Common stock to be issued		10,000			484,590
Additional paid in capital		1,518,726			1,021,967
Treasury Stock, at cost, 16,238 and 0 shares as of December 31, 2012 and 2011, respectively		(38,925	)		-
Accumulated deficit		(1,494,601	)		(1,680,416	)
Total stockholders' deficit		(3,615	)		(173,180	)

Total Liabilities and Stockholders' Deficit	$	1,307,405		$	1,027,232

The accompanying notes are an integral part of these consolidated financial statements.

F-3

SANTEON GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

	Years Ended December 31,
	2012			2011

Revenues	$	4,276,488		$	2,245,389

Cost of revenue		2,269,426			1,355,873
Gross Profit		2,007,062			889,516

Operating expenses:
General, selling and administration		1,869,261			1,367,669
Depreciation and amortization		5,816			4,860
Total operating expenses		1,875,077			1,372,529

Income (loss) from operations		131,985			(483,013	)

Other Income (Expenses):
Interest expense		(20,192	)		(37,949	)
Gain on forgiveness of debt		56,540			56,498
Gain (loss) from foreign currency transactions		826			(869	)
Other income (expense)		16,656			(10,000	)
Total other income		53,830			7,680

Income (loss) before provision for income taxes		185,815			(475,333	)

Provision for income tax expense (benefit)		-			-

Net income (loss)	$	185,815		$	(475,333	)

Net income (loss) per common share, basic and diluted	$	0.16		$	(0.41	)

Weighted average number of common shares outstanding, basic and diluted		1,196,616			1,147,518

The accompanying notes are an integral part of these consolidated financial statements.

F-4

SANTEON GROUP INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

							Common Shares To Be						Additional											Total
	Common stock						Issued						Paid in			Treasury stock					Accumulated			Shareholders'
	Shares			Par Value			Shares			Amount			Capital			Shares		Amount			Deficit			Deficit

Balance, December 31, 2010		519,656		$	520			382,748		$	285,542		$	905,967			-	$	-		$	(1,205,083	)	$	(13,054	)
					-
Common stock issued to Santeon, Inc.'s shareholders in connection with the reverse acquisition on May 12, 2010		117,548			117			(117,548	)		(4,702	)		4,585			-		-			-			-
Common stock sold for cash		-			-			87,218			208,000			(3,000	)		-		-			-			205,000
Stock-based compensation		41,846			42			(2,500	)		(12,500	)		114,415			-		-			-			101,957
Common stock to be issued for accrued interest		-			-			3,125			8,250			-			-		-			-			8,250
Net loss		-			-			-			-			-			-		-			(475,333	)		(475,333	)

Balance, December 31, 2011		679,050		$	679			353,043		$	484,590		$	1,021,967			-	$	-		$	(1,680,416	)	$	(173,180	)

Common stock certificated to Santeon, Inc. shareholders in connection with Merger Transaction in May 2010		200,000			200			(200,000	)		(8,000	)		7,800			-		-			-			-
Common stock certificated to X2A consulting, LLC shareholders in connection with acquisition in April 2010		25,000			25			(25,000	)		(88,000	)		87,975			-		-			-			-
Common stock certificated for cash		91,968			92			(91,968	)		(227,000	)		226,908			-		-			-			-
Common stock certificated as stock-based compensation		188,169			188			(14,125	)		(87,250	)		109,562			-		-			-			22,500
Common stock certificated for services rendered		11,973			12			(11,973	)		(42,750	)		42,738			-		-			-			-
Common stock certificated for loan repayment		4,977			5			(4,977	)		(21,590	)		21,585			-		-			-			-
Repurchase and cancellation of common stock		(16,238	)		(16	)		-			-			191			16,238		(38,925	)		-			(38,750	)
Net income		-			-			-			-			-			-		-			185,815			185,815

Balance, December 31, 2012		1,184,899		$	1,185			5,000		$	10,000		$	1,518,726			16,238	$	(38,925	)	$	(1,494,601	)	$	(3,615	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

SANTEON GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

	Year ended December 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	185,815		$	(475,333	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		135,790			134,527
Other income		(19,155	)		-
Gain on forgiveness of debt		(56,540	)		(56,498	)
Common stock issued for stock-based compensation		22,500			101,957
Common stock to be issued for interest expense		-			8,250
Bad debt expenses		-			6,423
Changes in operating assets and liabilities:
Accounts receivable		(214,986	)		(546,801	)
Other current assets		(10,419	)		(6,377	)
Accounts payable and accrued expenses		315,911			605,353
Net cash provided by (used in) operating activities		358,916			(228,499	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(7,434	)		(12,427	)
Purchase of acquired software		(16,299	)		-
Net cash used in investing activities		(23,733	)		(12,427	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		-			205,000
Purchases of treasury stock		(20,000	)		-
Proceeds from issuance of notes payable - related party		-			72,033
Repayment of notes payable-related party		(97,033	)		(40,000	)
Repayment of notes payable		(51,325	)		(6,500	)
Net cash (used in) provided by financing activities		(168,358	)		230,533

Net increase (decrease) in cash		166,825			(10,393	)
Cash, beginning of the year		16,960			27,353

Cash, end of the year	$	183,785		$	16,960

Supplemental disclosures of cash flow information:
Income tax paid	$	-		$	-
Interest paid	$	6,335		$	-

Supplemental disclosures for non-cash investing and financing activities:
Conversion of accrued interest to note payable	$	13,500		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-6

SANTEON GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012 and 2011

Note 1

Significant Accounting Policies

Nature of Company

Santeon Group Inc. (“SGI” or the “Registrant), a publicly traded Delaware corporation formerly known as Ubroadcast, Inc. (“ubroadcast”), originally formed as a Nevada corporation that was reincorporated under the laws of the State of Delaware in 2009. The Registrant’s subsidiary, SI Acquisitions, Inc., consummated a reverse merger transaction on May 12, 2010 with Santeon, Inc., a privately held Delaware corporation formed in 2001, the accounting acquirer. Upon completion of the reverse merger transaction, the Registrant changed its name to Santeon Group Inc. and the historical financial statements are those of Santeon, Inc., the surviving entity and accounting acquirer. All references that refer to (the “Company” or “SGI” or “we” or “us” or “our”) are Santeon Group Inc., the Registrant, and its wholly owned subsidiaries unless otherwise differentiated. We are a diversified software development and services company specializing in the development of software to facilitate business process management (“BPM”) and document management for the healthcare, environmental/energy and media sectors. We offer innovative software solutions for that enable organizations to optimize performance and maximize their revenues. Our clients include state and local governments, federal agencies and numerous private sector customers.

Our corporate offices are located in Reston, Virginia with branch offices in Tampa, Florida and Cairo, Egypt.

Basis of Consolidation

As of December 31, 2012, the Company had one wholly owned subsidiary: Santeon, Inc. with Santeon Egypt operating as a branch office under Santeon, Inc. The consolidated financial statements include our accounts and the accounts of our wholly owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require the Company to make certain estimates, judgments and assumptions. The Company believes that the estimates, judgments and assumptions upon which it relies are reasonable based upon information available to it at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, the Company’s consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.

Reclassifications

Certain reclassifications have been made in prior year’s financial statements to conform with the current year’s financial statements presentation.

F-7

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products and/or services delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not yet been delivered and/or service has not yet been rendered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered and/or service rendered or no refund will be required. ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing 605-25 on our consolidated financial position and results of operations was not significant.

The Company’s sources of revenues include: (1) fees from Agile training services, which includes the revenue for training classes that range in duration from 1 to 3 days, which are recognized immediately after the completion of the training class and deemed to be earned; (2) customized software development, which includes software systems support revenues and are recognized when completed and invoiced to the customer; and (3) software license fees, which includes sales of licenses to use or re-sell pre-existing software, including client consulting, either on a fixed fee or a per end-user fee arrangement and are recognized over the term that the license for use is granted to the customer (one month, one year, etc.).

Cost of Revenue

The Company accounts for the direct costs of revenue as Cost of Revenue (“COR”). These include, software purchased for resale, the cost of producing and printing training materials, the cost of Agile training professionals, and the labor cost of software developers whose sole job responsibility is developing and supporting software for resale to our customers.

The Company believes the software products developed by its software developers has a significant useful life and thus amortizes the capitalized labor cost of the software developers (“Capitalized Labor”) over a five-year period. The Capitalized Labor amortization expense is reflected in the COR line of the consolidated statements of operations. The Company undertakes to periodically evaluate the net carrying value of the Capitalized Labor and resulting amortization expense to determine if the net present value of future cash flows as per ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed.

Cash

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.

Fair Value of Financial Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the consolidated balance sheets for accounts receivables, accounts payable and accrued expenses and notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. In accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), the Company groups its assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value.

Accounts Receivable

Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition.

The Company records allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the specific customer or product sold. The Company writes-off a receivable and charges it against the recorded allowance when the Company has exhausted its collection efforts without success. The Company currently has no reserves for uncollectible accounts as of December 31, 2012 and 2011.

F-8

Concentrations of Credit Risk

Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and trade receivables. Our cash is generally held with financially stable banking institutions. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base.

Four customers accounted for 26%, 17%, 15% and 11%, respectively, of revenues in 2012 compared with two customers who accounted for 21% each of revenues in 2011. One of these customers accounted for approximately 26% of our net revenues in 2012 compared with 20% in 2011. The other customer accounted for approximately 17% of our net revenues in 2012 compared with 0% in 2011.

For the years ended December 31, 2012 and 2011, one customer accounted for 53% and two customers accounted for 26% and 23%, respectively, of total accounts receivable, representing a material amount of credit risk. Nearly all of the outstanding amounts were collected early in the subsequent years.

Reliance on Key Personnel and Consultants

The Company has 50 support staff, of whom 20 are located in the United States and four are executive officers. The Company is heavily dependent on the continued active participation of the current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings or loss. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3-7 years.

Software and Software Under Development

In accordance with ASC 985-20, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," the Company capitalizes certain costs related to the development of new software products or the enhancement of existing software products. These costs are capitalized from the point in time that technological feasibility has been established, as evidenced by a working model or detailed working program design to the point in time that the product is available for general release to customers. Capitalized development costs are amortized on a straight-line basis over 5 years based on the estimated economic lives of the products, beginning when the product is placed into service. Software under development are not amortize until completion and when they are in service. Research and development costs incurred prior to establishing technological feasibility and costs incurred subsequent to general product release to customers are charged to expense as incurred. The Company periodically evaluates whether events or circumstances have occurred that indicate that the remaining useful lives of the capitalized software development costs should be revised or that the remaining balance of such assets may not be recoverable.

Long-Lived Assets

The Company follows FASB ASC 360-10-15-3, “Impairment or Disposal of Long-lived Assets,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

F-9

Stock-Based Compensation

The Company accounts for share-based payments, including grants of employee stock options and restricted stock-based awards and purchases under employee stock purchase plans, in accordance with ASC 718, Compensation-Stock Compensation, which requires that share-based payments (to the extent they are compensatory) be recognized in its consolidated statements of operations based on their fair values and the estimated number of shares it ultimately expects will vest. The Company recognizes the full expense of stock-based compensation in the period in which it was earned.

Income Taxes

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences of amortization of assets and stock-based compensation for book and tax purposes.

The Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by the guidance. As a result of this review, the Company concluded that at this time there are no uncertain tax positions that would result in tax liability to the Company. There was no cumulative effect on retained earnings as a result of applying the provisions of this guidance.

Reverse Stock Split

The Company effected a one-for-four hundred (1:400) reverse stock split on January 4, 2013 following receipt of approval from FINRA and the filing of the Amended Certificate of Incorporation with the Delaware Secretary of State (the “Effective Date”). All shares and per share information has been retroactively adjusted to reflect this reverse stock split, unless explicitly stated otherwise.

Earnings (Loss) Per Share

We utilize ASC 260, “Earnings Per Share” for calculating the basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing earnings (loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common share equivalents are excluded from the diluted earnings (loss) per share computation if their effect is anti-dilutive. There were no common share equivalents at December 31, 2012 and 2011.

The Company has included in total shares outstanding of 1,184,899, as of December 31, 2012, 5,000 shares of common stock to be issued that were not physically certificated until after 2012 in computing the weighted average number of common shares outstanding and earnings (loss) per share computations as if they were outstanding during the year ended December 31, 2012.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses for the years ended December 31, 2012 and 2011, respectively.

Segment information

Accounting Standards Codification 280 (the “Segment Reporting Topic”) that establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. The Segment Reporting Topic also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company applies the management approach to the identification of its one reportable operating segment as provided in accordance with the Segment Reporting Topic.

F-10

Recent Accounting Pronouncements

Non-controlling Interest

On the date of the Merger Transaction, May 12, 2010, there was eight-tenths of one percent (0.8%) of the shareholders of Santeon, Inc. that did not participate in the Merger Transaction (the “Non-participating Shareholders”). It is Management’s opinion, that the Non-participating Shareholders are not dissenters to the Merger Transaction; rather, the shares owed to them as part of the Merger Transaction have yet to be issued. The total amount of shares to be issued to the Non-participating Shareholders is 2,614 shares. The Company has not accounted for the 0.8% non-controlling interest in Santeon, Inc. in its consolidated financial statements for the years ended December 31, 2012 and 2011 and it is Management’s opinion that the impact of not accounting for this non-controlling interest on the Company’s consolidated financial statements does not have a material effect on its consolidated financial position, results of operations nor cash flows.

Foreign Currency Transactions

The Company’s functional and reporting currency is the United States dollar and has adopted FASB ASC topic 830 “Foreign Currency Matters” ). Occasional transactions may occur in Egyptian pounds when the Company’s Egypt branch office conducts business in a currency other than the legal entity’s functional currency. Transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in the consolidated statements of operations. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. The Company recognized a gain from foreign currency transactions of $826 for the year ended December 31, 2012 and a loss from foreign currency transactions of $869 for the year ended December 31, 2011, respectively.

F-11

Note 2

Liquidity

The Company had negative working capital (total current liabilities exceeded total current assets) of $222,025 and a stockholders’ deficit of $3,615 as of December 31, 2012. However, the Company’s revenue has increased to $4,276,488 for the year ended December 31, 2012 from the prior year’s revenue of $2,245,389, and generated positive operating cash flow of $358,916 for the year ended December 31, 2012. Management believes that the Company’s current cash balance, the recent trends of strong revenue growth attained, net profit achieved in 2012, positive cash generated from operating activities, contracts in hand and current customer base and the projected cash flow and revenues for the next two years will be sufficient to sustain our operations and meet projected cash flow requirements for at least the next twelve months plus a day from the filing date of this report.

Note 3

Property, Plant and Equipment

Property and equipment at December 31, 2012 and 2011 are as follows:

	2012			2011

Computer equipment	$	37,477		$	34,918
Furniture and fixtures		13,824			13,824
Telephone equipment		5,494			619

Total property and equipment		56,795			49,361
less: Accumulated depreciation		(36,431	)		(30,615	)

Property and equipment, net	$	20,364		$	18,746

During the years ended December 31, 2012 and 2011, depreciation expense charged to operations was $5,816 and $4,860, respectively.

Note 4

Software and Software Under Development

The primary business of the Company is to provide technology products and services that enable organizations to optimize performance and maximize revenues through its BPM software products and services. A substantial number of the employees of the Company are engaged in the development of and further enhancement of the Company’s BPM and IPTV software platforms. The products and services enabled by these software platforms are ultimately sold to customers for their personal use or to partners who then in turn sell the services to their customers.

In accordance with ASC 985-20, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,\" the Company capitalizes certain costs related to the development of new software products or the enhancement of existing software products. These costs are capitalized from the point in time that technological feasibility has been established, as evidenced by a working model or detailed working program design to the point in time that the product is available for general release to customers. Capitalized development costs are amortized on a straight-line basis over the estimated economic lives of the products of 5 years, beginning when the product is placed into service. Software under development are not amortize until completion and when they are in service. Research and development costs incurred prior to establishing technological feasibility and costs incurred subsequent to general product release to customers are charged to expense as incurred. The Company periodically evaluates whether events or circumstances have occurred that indicate that the remaining useful lives of the capitalized software development costs should be revised or that the remaining balance of such assets may not be recoverable.

The Company acquired software in connection with the Merger Transaction completed on May 12, 2010, which consisted of media platforms.

The Company has taken the position that employees whose time was dedicated to development of and further enhancement of the Company’s BPM software platform should be treated as a capital asset and amortized over a five (5) year period. For the years ended December 31, 2012 and 2011, the Company did not capitalize any labor costs. Amortization expense, specifically related to the capitalization of software development, of $128,011 and $128,011 has been recorded under cost of revenues for the years ended December 31, 2012 and 2011, respectively, related to the capitalized labor costs. Also, included in cost of revenue is amortization expense related to software of $1,963 and $1,656 for the years ended December 31, 2012 and 2011, respectively. The table below reflects the capitalized software costs as of December 31, 2012 and 2011, respectively.

F-12

	2012		2011

Software, net of accumulated amortization of $378,700 and $250,689 at December 31, 2012 and 2011, respectively	$	261,356	$	389,368

Acquired software, net of accumulated amortization of $54,285 and $52,322 at December 31, 2012 and 2011, respectively and accumulated impairment of $243,667 at December 31, 2012 and 2011.		19,856		5,519

Software assets, net	$	281,212	$	394,887

Management performs periodic evaluation on the net carrying value of the Company’s revenue-generating assets as compared to the net present value of cash flows generated by them to determine if they are properly valued and reflected on the Company’s consolidated financial statements. No impairment charges were recognized for the years ended December 31, 2012 and 2011 for the Company’s acquired software.

Note 5

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as of December 31, 2012 and 2011 are comprised of the following:

	2012		2011

Trade payables	$	400,920	$	313,205
Accrued compensation		532,621		316,340
Accrued interest		7,014		66,864
Other accrued expenses		166,790		165,470

Total accounts payable and accrued expenses	$	1,107,345	$	861,879

Note 6

Notes Payable

As of December 31, 2012 and 2011, the Company had outstanding notes payable as follows:

	2012		2011

15.00% Secured Promissory Note due July 2007	$	45,000	$	45,000

2.00% Unsecured Convertible Promissory Note due March 2015		158,675		196,500

	$	203,675	$	241,500

The 15.00% Unsecured Note due July 2007 is classified as short-term as of December 31, 2012 and 2011 as the maturity date has lapsed and the Company is currently negotiating with the lender for revised repayment terms. During the year ended December 31, 2011, the holder of the 15.00% Unsecured Note due July 2007 agreed to waive all accrued and unpaid interest from the original date of issuance, August 6, 2005, until September 30, 2011, resulting in a gain on forgiveness of debt of $56,498.

F-13

In March 2012, the 10.00% Unsecured Convertible Promissory Note due August 2008 (principal amount, $196,500) was restructured into the 2.00% Unsecured Promissory Note due March 2015 with an amortizing monthly payment of $6,015. As per the March 2012 settlement agreement, the outstanding balance of $196,500 plus accrued interest of $70,040 was settled for principal of $210,000. This resulted in a gain on debt forgiveness of $56,540. According to the settlement agreement, if there is a default in any scheduled monthly payments, the outstanding principal will increase to $325,000 less any payments already made. The Company made nine payments during the year ended December 31, 2012 and has not missed any scheduled monthly payments thus far.

Note 7

Income Taxes

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) that requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences primarily include stock compensation and other equity-related non-cash charges, the basis difference of long-lived assets and certain liabilities.

At December 31, 2012, the Company had available for federal income tax purposes a net operating loss carry-forward of approximately $1,913,000, expiring through the year 2032, that may be used to offset future taxable income. The availability of the net operating loss carry-forward to offset future taxable income may be subject to limitations under the Internal Revenue Service tax code due to a variety of reasons, one of them being a significant change in the composition of the Company's stock ownership. Therefore, the Company has provided a valuation allowance against the availability of the net operating loss benefit based on management’s assessment of the earnings history and future limitations as it is more likely than not that the benefits will be realized.

The provision for income taxes (benefit) for the years ended December 31, 2012 and 2011 was as follows:

	Years Ended December 31,
	2012			2011
Current income tax expense (benefit)
Federal	$	98,071		$	(138,711	)
State		11,422			(16,156	)
Total		109,493			(154,867	)

Deferred income tax (benefit)
Federal		(34,253	)		(21,777	)
State		(3,991	)		(2,536	)
Total		(38,244	)		(24,313	)

Utilization of net operating loss carryover		(71,249	)		-

Change in valuation allowance		-			179,180

Provision for income tax (benefit)	$	-		$	-

F-14

Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and the tax purposes. The tax effect of these temporary differences representing deferred tax assets and liabilities result principally from the following:

	Years Ended December 31,
	2012			2011
Deferred tax assets:
Federal net operating loss carry-forward	$	650,552		$	748,624
State net operating loss carry-forward		75,770			87,193
Others		714			1,256
Total deferred tax assets		727,036			837,073
Less: valuation allowance		(649,936	)		(721,729	)

Net long-term deferred tax assets		77,100			115,344

Deferred tax liabilities:
Software and software development		(72,600	)		(109,765	)
Fixed assets		(4,500	)		(5,579	)
Long-term deferred tax liabilities		(77,100	)		(115,344	)

Net deferred tax asset (liabilities)	$	-		$	-

The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, on a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.

Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.

All tax years for the Company remain subject to future examinations by the applicable taxing authorities.

F-15

Note 8

Capital Stock

All share figures below are presented after giving effect to the 1:400 reverse stock split that became effective on January 4, 2013. On December 27, 2012, the authorized shares of common stock available for issue was reduced from 700,000,000 to 50,000,000. As a result of this reduction in authorized shares, the Company is authorized to issue 50,000,000 shares of its common stock, with par value of $0.001 per share. For the years ended December 31, 2012 and 2011, there were 1,201,137 and 679,050 shares of common stock issued and 1,184,899 and 679,050 outstanding, respectively.

Included in the Company’s calculation of total shares outstanding (1,189,899 shares) are 5,000 shares of common stock that were not physically certificated until after 2012 due to an administrative delay. The un-certificated shares have been included for purposes of calculating weighted average common shares outstanding and earnings (loss) per share as if they had been certificated when authorized for issuance.

During the twelve months ended December 31, 2012, the Company:

1.	Issued 6,250 shares of common stock to a certain senior employee of the Company pursuant to an employment agreement that was valued at $22,500.

2.	Certificated the previously authorized and issued shares of common stock as follows:

a.	200,000 shares of common stock to the shareholders of Santeon, Inc. in connection with the Merger Transaction consummated in May 2010;

b.	25,000 shares of common stock to the shareholders of X2A Consulting LLC in connection with the Merger Transaction consummated in April 2010;

c.	968 shares of common stock to investors for cash valued at $227,000;

d.	188,169 shares of common stock as stock-based compensation valued at $87,250, which included the 6,250 shares of common stock valued at $22,500 as disclosed in item #1 above;

e.	11,973 shares of common stock for services rendered valued at $42,750; and

f.	4,977 shares of common stock as loan repayments valued at $21,590.

5.	Repurchased 8,478 shares of common stock from a former officer and employee of the Company pursuant to a settlement agreement for cash valued at $20,000.

During 2011, the Company’s Board authorized issuances of common shares as follows:

1.	117,548 shares of common stock were physically certificated during 2011 to Santeon, Inc.’s shareholders in connection with the Merger Transaction that occurred in 2010.

2.	87,218 shares of common stock were issued for cash to certain investors for $205,000 in cash during the period from January to May 2011. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

F-16

1.	34,346 shares of common stock were issued to a former officer of the Company as stock-based compensation for services rendered during 2010.

2.	17,857 shares of common stock were issued as stock-based compensation to the Company’s Acting Chief Financial Officer pursuant to a consulting agreement and were valued at $68,119. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

4.	6,016 shares of common stock were issued to a certain senior employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $17,088. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.

5.	7,500 shares of common stock were issued to a former employee of the Company as compensation pursuant to an employment agreement and were valued at $15,000.

6.	486 shares of common stock were issued to a former employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $1,750.

Preferred Stock

The Company is authorized to issue 50,000,000 shares of preferred stock with par value of $0.001 per share. As of December 31, 2012 and 2011, there were no shares of preferred stock issued or outstanding.

Warrants and Stock Options

There were no issued and outstanding warrants or common stock options at December 31, 2012 and 2011.

Note 9

Commitments and Contingent Liabilities

Occupancy Leases

The Company had no commitments or contingent liabilities outside the normal course of business. The Company has administrative office lease agreements that are mostly long-term (greater than one year), the aggregate amount of minimum future payments were $406,693 as of December 31, 2012.

Future minimum lease commitments under non-cancellable leases are as follows:

Year ended December 31,

2013	$	72,444
2014		81,673
2015		86,255
2016		64,533
2017		67,119
Thereafter		34,669
Total	$	406,693

Rent expense charged to operations amounted to $100,540 and $75,697 for the years ended December 31, 2012 and 2011, respectively.

F-17

Employment agreements

On the Merger Transaction date, the Company entered into employment agreements with certain officers and employees of the Company for initial terms of three years. The aggregate annual base salaries under those agreements as of the Merger Transaction date was $1,020,000; however, many of the officers and employees who received employment agreements have since left the Company after 2010. Currently, there are 3 officers with continuing employment agreements that amount to $535,000 per annum in the aggregate.

Litigation

The Company is subject to various legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. There was no outstanding litigation as of December 31, 2012 and 2011, respectively.

Note 10

Related Party Transactions

Unsecured Loan Agreement due December 2011

In January 2011, a relative of one of the Company’s directors extended to the Company a non-interest bearing loan in the amount of fifty thousand US dollars ($50,000) for a period of twelve months. The purpose of the loan was to provide capital for growth and general operating needs for Santeon, Inc. In lieu of cash interest, the lender accepted three thousand one hundred twenty-five (3,125) shares of the Company’s common stock, valued at $8,250, as interest for the loan. As of December 31, 2012 and 2011, the outstanding balance was $0 and $30,000, respectively.

Loan from Officer

In June 2011, an officer of the Company extended a loan to the Company in the amount of twenty-two thousand thirty-three dollars ($22,033) for a period of one year. The terms of the loan agreement state that the loan will be interest-free for the first year, but if any part of the loan remained unpaid after the one-year anniversary, the unpaid principal would accrue interest monthly based on an annual rate of 12.00%. The loan amount was fully repaid in August 2012 along with one month of interest. As of December 31, 2012 and 2011, the outstanding balance was $0 and $22,033, respectively. Interest expense for the year ended December 31, 2012 was $555.

ICAgile

The Company provides Agile training, coaching and consulting to certain of its customers. As a vital part of the training program, the Company provides attendees with Agile certificates that evidence their attendance at the class and provides them, in certain cases, with continuing professional education credits. The certifying agency for the certificates that the Company provides to Agile training class attendees is the International Consortium for Agile (“ICAgile”). For the years ended December 31, 2012 and 2011, the Company paid $60,630 and $10,640, respectively, to ICAgile for training course attendee certifications.

An officer and director of the Company, Mr. Ahmed Sidky, sits on the governing board of ICAgile and represent 40% in aggregate of the outstanding voting shares of ICAgile’s capitalization. This director is one of the four founding members of ICAgile and provides thought leadership and direction for ICAgile.

At this time the Company does not believe that the representation of Mr. Sidky on the respective boards of ICAgile or Santeon Group Inc. presents a potential conflict of interest for either company.

F-18

11.00% Unsecured Loan Agreement due September 2007

In June 2006, the holder of the 11.00% Unsecured Loan Agreement due September 2007 (the “Loan Agreement”) signed a loan agreement with Mr. Ashraf M. Rofail for a total of seventy-five thousand dollars ($75,000) in three installments of twenty-five thousand dollars ($25,000) each with the first installment being made in July 2006 and the last installment in September 2006. The purpose of the loan was to provide capital for growth and general operating needs for Santeon, Inc. The loan was set to mature in September 2007, on the first anniversary of the last loan installment of $25,000.

Subsequent to receiving all of the funds, Mr. Rofail immediately deposited the funds into the operating account of Santeon, Inc. and the funds were utilized for business growth and general working capital needs. While Santeon is not specifically named in the Loan Agreement, the purpose of the loan is specifically stated in the Loan Agreement and further, Mr. Rofail deposited into Santeon’s operating account all of the funds received from the lender; thus, the Company believes the obligation for repayment of the loan is on the Company.

In November 2010, the lender sought a judgment in court against Mr. Rofail, personally, as the maturity date as stated in the Loan Agreement had lapsed and the principal amount of the loan together with accrued and unpaid interest remained outstanding. The judgment against Mr. Rofail specified a specific repayment schedule and a forbearance of interest expenses on the outstanding principal as long as Mr. Rofail makes monthly principal payments. The Company has been making, on Mr. Rofail’s behalf, monthly payments of $3,000 in satisfaction of the judgment.

During the year ended December 31, 2012, the loan was fully repaid and a certificate of satisfaction was received from the lender. As of December 31, 2012 and 2011, the outstanding balance was $0 and $45,000, respectively.

Note 11

Subsequent Events

Management evaluated all activities of the Company through the filing date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments to the consolidated financial statements or disclosures in this Form 10-K.

F-19

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