UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

                   For the fiscal year ended December 31, 2005

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

     For the transition period from January 1st, 2005 to December 31st, 2005

                        Commission file number 000-499628

                           TELEPLUS ENTERPRISES, INC.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

               NEVADA                                    98-0045023
  (State or other jurisdiction of           (IRS Employer Identification No.)
   incorporation or organization)

         7575 TransCanada, Suite 305, St-Laurent, Quebec, Canada H4T 1V6
                -------------------------------------------------
                    (Address of principal executive offices)

                                 (514) 344-0778
                         -------------------------------
                         (Registrant's telephone number)

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

                                      NONE

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

                    COMMON STOCK, $.001 PAR VALUE PER SHARE

      Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

<PAGE>

      The issuer's revenues for the most recent fiscal year ended December 31,
2005 were $8,092,689.

      The aggregate market value of the issuer's voting and non-voting common
equity held by non-affiliates computed by reference to the average bid and ask
price of such common equity as of March 9, 2006, was approximately $13,635,737.

      As of March 10, 2006 the issuer had 86,403,786 shares of common stock,
$.001 par value per share outstanding.

                    Documents Incorporated by Reference: NONE

          Transitional Small Business Disclosure Format: Yes |_| No |X|

<PAGE>

                           TELEPLUS ENTERPRISES, INC.
                                   FORM 10-KSB
                          YEAR ENDED December 31, 2005
                                      INDEX

                                     Part I

Item 1.  Description of Business ............................................  3

Item 2.  Description of Property ............................................ 14

Item 3.  Legal Proceedings .................................................. 14

Item 4.  Submission of Matters to a Vote of
         Security Holders ................................................... 15

                                     Part II

Item 5.  Market for Common Equity and Related
         Stockholder Matters ................................................ 15

Item 6.  Management's Discussion and Analysis or
         Plan of Operation .................................................. 16

Item 7.  Financial Statements ............................................... 28

Item 8.  Changes in and Disagreements with
         Accountants on Accounting and Financial
         Disclosure ......................................................... 46

Item 8A. Controls and Procedures ............................................ 46

                                    Part III

Item 9.  Directors, Executive Officers, Promoters
         and Control Persons; Compliance with
         Section 16(a) of the Exchange Act .................................. 47

Item 10. Executive Compensation ............................................. 50

Item 11. Security Ownership of Certain Beneficial
         Owners and Management and Related Stockholder Matters .............. 51

Item 12. Certain Relationships and Related
         Transactions ....................................................... 52

Item 13. Exhibits and Reports on Form 8-K
         (a)   Exhibits ..................................................... 52

         (b)   Reports on Form 8-K .......................................... 52

Item 14. Principal Accountant Fees and Services ............................. 54

Signatures .................................................................. 55

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Certain statements in this Annual Report on Form 10-KSB (this "Form 10
KSB"), including statements under "Item 1. Description of Business," and "Item
6. Management's Discussion and Analysis", constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995 (collectively,
the "Reform Act"). Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of forward-looking terminology such as
"believes", "expects", "may", "will", "should", or "anticipates", or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Teleplus Enterprises, Inc. ("TelePlus", "the Company", "we", "us" or "our") to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. References in this form
10-KSB, unless another date is stated, are to December 31, 2005.

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

      TelePlus Enterprises, Inc. ("TelePlus") is a provider of Wireless and
Telecom products and services across North America. TelePlus Connect, Corp. is a
reseller of a variety of Telecom services including landline, long distance and
internet services. TelePlus Wireless, Corp. -under the brand name "Liberty
Wireless" - operates a virtual wireless network selling cellular network access
to distributors in the United States. www.telepluswireless.com,
www.libertywireless.com and www.vivaliberty.com are among some of the websites
operated by TelePlus.

      The Company was originally incorporated in Nevada as Terlingua Industries,
Ltd. on April 16, 1999. The Company's business plan was to engage in online
marketing and distribution of organic herbal supplements in an international
market. On January 27, 2000, the Company changed its name to HerbalOrganics.com,
Inc. ("HerbalOrganics"). Prior to the acquisition, discussed below, the Company
had not generated any revenues from operations and was considered a development
stage enterprise, as defined in Financial Accounting Standards Board No. 7,
whose operations principally involved research and development, market analysis,
securing and establishing a new business, and other business planning
activities.

      In September 2003, the Company formed a wholly-owned foreign subsidiary,
Teleplus Retail Services, Inc. ("Retail"), a Canadian corporation formed under
the laws of the province of Quebec. In October 2003, Retail acquired a
significant amount of assets from, and assumed certain liabilities of, 3577996
Canada, Inc., a Canadian Business Corporation ("3577996") relating to 3577996's
"TelePlus Consumer Services" business. Also in October 2003, Visioneer Holdings
Group Inc. acquired control of the Company. 3577996 and Visioneer Holdings Group
Inc. ("Visioneer") are controlled by the same shareholders. Marius Silvasan, the
Company's Chief Executive Officer and sole Director, controls Visioneer and
3577996. Mr. Silvasan indirectly controls the Company through Visioneer.

      For accounting purposes, the transaction was treated as an acquisition of
HerbalOrganics and a recapitalization of 3577996 with accounting treatment
similar to that used in a reverse acquisition. 3577996 emerged as the accounting
acquirer and the results of its operations carryover. The operations of
HerbalOrganics are not carried over and were adjusted to $0. HerbalOrganics
(which changed its name to TelePlus Enterprises, Inc.), however, remained as the
legal reporting entity.

      Prior to the acquisition, 3577996 had operated the TelePlus Consumer
Services business since 1999. As a result of the acquisition by Retail of the
TelePlus Consumer Services business from 3577996 and a change in business focus,
HerbalOrganics.com, Inc. changed its name to TelePlus Enterprises, Inc.
Hereinafter, a reference to the Company or TelePlus includes a reference to the
TelePlus Consumer Services business and vice-versa unless otherwise provided.

      In March 2003, the Company declared a 10:1 forward stock split. In October
2003, the Company declared a 2.375:1 forward stock split. The effects of the
stock splits have been retroactively reflected in this report on Form 10-KSB
unless otherwise stated.

      In February 2006, the Company completed its transition from retail
operations to wireless and telecom services reselling as more fully described
below in the section on Recent Business Developments.


                                       3
<PAGE>

      GROWTH IN CANADA:

      The Company through its wholly owned subsidiary TelePlus Connect, Corp. is
offering landline and long distance prepaid services to selected individuals in
Canada who cannot obtain basic telecom services from traditional telecom
carriers. These individuals are often called the unbanked. Current estimates
place the unbanked market in North America at 9.5% of total households and the
market size is estimated at over $1 billion.

      To facilitate the rollout of this service, the Company acquired 100% of
the shares of (a) Keda Consulting Corp. and Freedom Phones Lines on April 1st,
2005 (b) Avenue Reconnect, Inc. on June 1st, 2005, and (c) Telizon Inc. in July
2005.

      o     Keda Consulting Corp. provides a broad range of management
            consulting services to the North American telecommunications
            industry, specializing in business development, sales/marketing, and
            operations. Following closing of the acquisition, Keda changed its
            name to TelePlus Connect Corp. and Keda's management have taken over
            the operations of TelePlus' prepaid landline and long distance
            telephone service operations. The Company is expected to benefit
            from Keda's and Freedom's management teams which have much
            experience in the telecommunications industry. The Company believes
            a seasoned and experienced management team, familiar with all
            aspects of the rapidly growing and changing telecommunications
            business, is a key strategic asset.

      o     Freedom Phone Lines, headquartered in Ontario, Canada, is a Bell
            Canada reseller of landline and long distance services, which
            services over 3,300 customers in the Ontario area and generates
            yearly revenues of $2.5 million and EBITDA of $0.300 million.

      o     Avenue Reconnect, Inc., headquartered in Windsor, Canada, is a
            reseller of landline, long distance and internet prepaid services to
            over 2,000 residential users primarily in Ontario, area and
            generates yearly revenues of $1.1 million and EBITDA of $0.200
            million.

      o     Telizon Inc, headquartered in Ontario, Canada, is a reseller of
            landline and long distance services as well as an internet service
            provider. Telizon currently services over 18,000 commercial and
            residential lines in the Ontario area. Telizon has annual revenues
            of $12.0 million and EBITDA of $1.6 million.

GROWTH IN THE UNITED STATES:

      The Company through its wholly owned subsidiary TelePlus Wireless, Corp.
("TelePlus Wireless") is offering wireless prepaid services commonly called MVNO
("Mobile Virtual Network Operator"). TelePlus Wireless services are primarily,
but not exclusively, catered to the "Unbanked" segment of the market, "Unbanked"
customers are those customers who are not able to access the carriers' offers as
they don't qualify under the carriers' credit policies. Nonetheless the
"unbanked" segment is the fastest growing segment in the wireless and telecom
industry. This segment is currently poorly serviced by the incumbents, thus
creating an opportunity for TelePlus Wireless to take a substantial share of the
market. This market was developed first in Europe, where more than 20 MVNO's can
be found. Virgin Mobile of England and Wireless Maingate of Sweden were among
the first group of MVNO's launched in Europe.


                                       4
<PAGE>

      To facilitate the rollout of Teleplus' MVNO service, the Company
announced:

      o     On December 29, 2005, the acquisition from Star Number, Inc. (which
            is part of the Inphonic group) of certain assets of Liberty
            Wireless, the third largest wireless reseller on the Sprint PCS
            network. This acquisition has provided TelePlus with an established
            customer base and strong infrastructure.

PRINCIPAL PRODUCTS AND SERVICES

TelePlus is a provider of wireless and telecommunications services in Canada and
the U.S. Our products include prepaid and postpaid wireless, landline, long
distance and internet services. To our wireless users we also provide a full
range of handsets and related accessories.

DISTRIBUTION

We distribute our products through our websites, third party websites, select
distributors in U.S. and Canada and through a variety of direct marketing
initiatives.

COMPETITIVE OVERVIEW

      WIRELESS SECTOR

      The wireless industry is a growing industry of the Telecommunications
Sector.

      As time passes, wireless phones are becoming more and more commonplace.
According to EMC, a leading researcher and publisher of intelligence about
wireless markets, there are now more than 1 billion wireless phone subscribers
worldwide and 50% of all calls in the world will soon be wireless. IDC estimates
that total sales of worldwide mobile phones increased 20% in 2004 to 658 million
units. Some key trends that investors should be aware of and are important in
evaluating the industry's potential growth include the following:

      o     The cost of acquiring and maintaining a wireless plan has dropped
            over the years as a result of pricing pressures, promotional events
            by carriers, and increased customer churn (customer churn is defined
            as the number of clients who cancel their contracts with the carrier
            prior to the end of the term);

      o     The wireless telecommunications industry is experiencing (and will
            continue to experience) significant technological change, which has
            led wireless carriers to upgrade their wireless networks
            capabilities and rollout new products and service offerings, such as
            photos, music, and wireless Internet (Wi-Fi)

      o     Wireless phones manufactures, such as Samsung , LG, and Pantech, are
            now marketing next generation phones with advanced features;


                                       5
<PAGE>

      o     The image of wireless devices has changed from a luxury gadget to a
            business and entertainment tool. Moreover, the Yankee Group has
            stated that Americans are now looking at wireless services as a
            utility rather than a novelty;

      o     Wireless numbers portability, which recently took effect, provides
            customers with more flexibility when choosing a carrier and
            increases the rate of new activations, and according to J.D. Power,
            consumers are increasingly more satisfied with their wireless
            service, call quality, and cost.

NORTH AMERICAN INDUSTRY OVERVIEW

AMERICAN WIRELESS INDUSTRY

      The growing nature of the American wireless industry is illustrated by the
following statistics:

      In a January 2005 Business Week article, Gartner estimated that 2005
wireless revenues will grow 11% to $122.5 billion;

      o     Euromonitor, in a July 2003 report, estimated that in 2003 the
            retail post-paid wireless industry totaled $3.8 billion, and is
            expected to reach $5.1 billion by 2007. Atlantic-ACM estimated in
            February 2003, that the pre-paid retail wireless industry will grow
            from $4.4 billion in 2003 to $9.5 billion in 2007;

      o     The Yankee Group stated in an August 2004 report that 50% of 13 to
            17 year olds have a wireless phone, a sizable increase from a 2003
            survey in which 33% of teens were reported to have a wireless phone.

      o     According to First Global Research, the domestic wireless market is
            adding 4 to 5 million net new subscribers each quarter.

CANADIAN WIRELESS INDUSTRY

      According to industry data, by the end of 2005, more than half of all
Canadians will be mobile phone customers, Canadians currently use more than 12
million wireless phones on a daily basis. According to the Canadian
Radio-television and Telecommunications Commission, the wireless industry is a
key driver of the Canadian Telecommunications sector, consistently posting
double digit sales gains, recently increasing 13% to over $8 billion. The
Canadian Wireless Telecommunications Association estimates that in 2004 there
were over 13,6 million wireless subscribers, including 10,4 million postpaid and
3,2 million prepaid,

MVNO MARKET OVERVIEW

      Mobile Virtual Network Operators (or MVNOs), which buy mobile services
from established wireless operators and resell the service under their own brand
names, were first developed in Europe, where there are currently over 20 MVNOs,
including Tele2 and Mobilcom of Germany, Virgin Mobile from the UK and Wireless
Maingate from Sweden. The last two companies are believed to be two of the early
pioneers in this space. Others companies that have or are developing MVNO
offerings in North America include AT&T (NYSE: T), Boost, ESPN, Tracfone, Qwest
(NYSE: Q), and TelePlus.


                                       6
<PAGE>

      The primary advantage of operating as an MVNO is that such an operation
requires much less capital and overhead than the operations of a traditional
wireless carrier. An MVNO simply utilizes existing networks from established
carriers. However, substantial amounts of monies may be needed to build brand
recognition and pay for access to a carrier's network.

      A secondary advantage to retail oriented companies, such as TelePlus, is
that an MVNO offering may provide opportunity to expand its overall margins as
it picks up incremental revenues at higher margins.

INTELLECTUAL PROPERTY

TelePlus holds the following trademarks.

      o     In Canada: SimplySellular trademark granted January 7th 2005.

      o     In the United States:

            o     Trademark Ser. No. 78/326,834 Liberty Wireless for All;
                  Register Number 2,979,533

            o     Trademark Ser. No. 78/371,483 Liberty Wireless; Register
                  Number 2,928,910

NEED FOR GOVERNMENT APPROVAL

TelePlus needs the following governmental approvals to operate:

      1.    Section 214 authorization; and

      2.    FCC Form 499 Registration.

EMPLOYEES

      TelePlus has a total of 50 employees, most of which are employed on a
full-time basis.

RECENT BUSINESS DEVELOPMENTS

      In December 2004, the Company announced it had signed a definitive
agreement to acquire 100% of the shares of Freedom Phones Lines. Freedom Phone
Lines, headquartered in Ontario, Canada, is a Bell Canada reseller of landline
and long distance services, which serves over 3,300 customers in the Ontario
area and generates yearly revenues of $2.5 million and EBITDA of $0.300 million.
The terms of the acquisition call for the Company to pay $0.480 million in cash
upon closing and issue $0.328 million worth of shares also upon closing to the
shareholders of Freedom. The Company closed the acquisition of Freedom on April
1st, 2005.

      In December 2004, the Company announced it had signed a definitive
agreement to acquire 100% of the shares of Keda Consulting Corp. Keda Consulting
Corp. provides a broad range of management consulting services to the North
American telecommunications industry, specializing in business development,
sales/marketing, and operations. Upon the completion of the acquisition of Keda,
its name was changed to TelePlus Connect Corp. and Keda's management took over
the operations of TelePlus' prepaid landline and long distance telephone service
operations. The Company is expected to benefit from Keda's and Freedom's
management teams which have much experience in the telecommunications industry.
The Company believes a seasoned and experienced management team, familiar with
all aspects of the rapidly growing and changing telecommunications business, is
a key strategic asset. The terms of the transaction call for TelePlus to pay the
shareholders of Keda on an earn-out basis up to $16 million based on the
achievement by TelePlus Connect Corp. of specific EBITDA benchmarks during the
next 48 months. The Company closed the acquisition of Keda on April 1st 2005.


                                       7
<PAGE>

      In January 2005, the Company announced it entered into a definitive
agreement to acquire Telizon, Inc., subject to the Company receiving financing
for the deal. The transaction calls for TelePlus to pay a total consideration of
$8.6M to the shareholders of Telizon in exchange of 100% of the Telizon shares.
$3.3M is to be paid on closing, $1.93M 12 months after closing and $1.45M 24
months after closing, the remaining balance of $1.93M is being paid in 24
monthly payments of $80.6k per month. Telizon is a reseller of landline/long
distance services and also an Internet service provider. Telizon has annual
revenues of $12.0 million and EBITDA of $1.6 million. The Company obtained the
required financing to close the transaction on July 15th, 2005. Once the
financing was obtained the Company closed the acquisition of Telizon.

      As at March 28, 2005 Teleplus received $750,000 from Cornell Capital
Partners LP. These funds were drawn against the $10,000,000 Standby Equity
Agreement that was secured on July 16, 2004.

      In April 2005, the Company announced it entered into a definitive
agreement to acquire Avenue Reconnect, Inc. The transaction calls for TelePlus
to pay a combination of cash and stock valued at $565k to the shareholders of
Avenue in exchange for 100% of Avenue's shares. Avenue is a reseller of
landline/long distance services and also an Internet service provider. Avenue
has annual revenues of $1.1 million and EBITDA of $200k and services over 2,000
customers. The Company closed the acquisition of Avenue on June 1st, 2005.

      In April 2005, the Company announced it entered into a definitive
agreement to acquire Canada Reconnect, Inc., Canada's largest reseller of
landline, long distance and Internet prepaid services. The transaction calls for
TelePlus to pay a combination of cash and stock valued at $3.0M to the
shareholders of Canada Reconnect in exchange for 100% of Canada Reconnect's
shares. Canada Reconnect has annual revenues of $5.4 million and EBITDA of $1.0
million and services over 6,000 customers across Canada. On January 4, 2006, the
Company announced that it decided not to proceed with the acquisition of Canada
Reconnect.

      On July 15, 2005, TelePlus entered into an Equity Distribution Agreement
with Cornell Capital Partners, dated as of July 15, 2005. Pursuant to the Equity
Distribution Agreement, TelePlus may, at its discretion, periodically sell to
Cornell Capital Partners shares of TelePlus' common stock for a total purchase
price of up to $35 million. For each share of common stock purchased under the
Equity Distribution Agreement, Cornell Capital Partners will pay TelePlus 98% of
the lowest volume weighted average price of TelePlus' Company's common stock as
quoted by Bloomberg, LP on the Over-the-Counter Bulletin Board or other
principal market on which TelePlus' common stock is traded for the five days
immediately following the notice date. The price paid by Cornell Capital
Partners for TelePlus' stock shall be determined as of the date of each
individual request for an advance under the Equity Distribution Agreement.
Cornell Capital Partners will also retain 5% of each advance under the Equity
Distribution Agreement. The amount of each cash advance is limited to $2,000,000
per five consecutive trading days after the advance notice is provided to
Cornell Capital Partners, with no cash advance occurring within seven trading
days of a prior advance.


                                       8
<PAGE>

      Upon the execution of the Equity Distribution Agreement, Cornell Capital
Partners received as a one-time commitment fee 2,500,000 shares of TelePlus'
common stock and two warrants to purchase 20,000,000 shares of TelePlus' common
stock. Each warrant entitles the holder thereof to purchase 10,000,000 shares of
TelePlus' common stock. The first warrant for 10,000,000 shares of TelePlus'
common stock has an exercise price equal to $0.38 or as adjusted under the terms
of the warrant. The second warrant for 10,000,000 shares of TelePlus' common
stock has an exercise price equal to $0.25 or as adjusted under the terms of the
warrant. The warrants expire three years from July 15, 2005.

      In relation with the Equity Distribution Agreement, we have also entered
into a Placement Agent Agreement, dated as of July 15, 2005, with Newbridge
Securities Corporation. Upon execution of the Placement Agent Agreement,
Newbridge Securities Corporation received, as a one-time placement agent fee,
27,027 shares of TelePlus' common stock in an amount equal to $10,000 divided by
the volume weighted average price of TelePlus' shares, as quoted on Bloomberg,
LP, as of July 15, 2005.

      On July 15, 2005, we also entered into a Securities Purchase Agreement
with Cornell Capital Partners. Pursuant to the Securities Purchase Agreement,
Cornell Capital Partners purchased secured convertible debentures to Cornell
Capital Partners in the original principal amount of $5,625,000. The debentures
have an 18-month term and accrue annual interest of 10%. The $5,625,000 under
the debentures was disbursed to TelePlus within five days of the execution of
the Securities Purchase Agreement. The debentures may be redeemed by TelePlus at
any time, in whole or in part. If on the date of redemption, the closing price
of TelePlus' common stock is greater than the conversion price in effect,
TelePlus shall pay a redemption premium of 20% of the amount redeemed in
addition to such redemption. The debentures are also convertible at the holder's
option at a conversion price equal to $0.285, which may be adjusted pursuant to
the terms of the Secured Convertible Debentures. The debentures are secured by
substantially all the assets of TelePlus.

      On December 13, 2005 Teleplus entered into a certain Securities Purchase
Agreement ( "SPA") with Cornell Capital Partners , LP Pursuant to which the
company issued to Cornell $9,225,000 in secured convertible debentures of even
date with the SPA. The Debentures are convertible in whole or in part, at any
time and from time to time before maturity at the option of the holder at the
lesser of $0.275 or ninety - five percent (95%) of the lowest volume weighted
price of common stock for thirty trading days immediately preceding the
conversion date. The Debentures have a term of three (3) years, piggy-back
registration rights and accrue interest at a rate equal to ten percent (10%) per
year. The Debentures are secured by certain pledged assets of the Company. In
connection with the Debentures the company issued 1,250,000 shares of common
stock as financing costs. As at December 31, 2005 the balance outstanding in
Convertible Debentures was $9,225,000. In connection with the SPA the Company
also issued Cornell a warrant to purchase 33,000,000 shares of the Company's
common stock.


                                       9
<PAGE>

      On January 13, 2006. Teleplus Retail Services , Inc.( " Retail "), a
Canadian subsidiary of the Company , filed in Canada a Notice of Intention to
Make a Proposal under the Bankruptcy and Insolvency ACT ( Canada) ( " the Act")
as a first step toward the divestiture by the Company of its unprofitable retail
division. The Company elected not to have Retail make a proposal and, as a
result, Retail was deemed to have made an assignment of its assets to its
creditors under the Act and discontinued its operations as of February 12, 2006.
The Company has also determined that it will have no continuing involvement in
retail operations going forward and that retail operations will no longer
constitute a segment of the overall business operations of the Company in the
year ending December 31, 2006.

      On December 29, 2005, Teleplus Wireless, Corp. ("TelePlus Wireless"), a
wholly-owned subsidiary of the Company purchased from Star Number, Inc. ("SNI"),
a wholly-owned subsidiary of InPhonic, Inc. ("InPhonic"), certain assets related
to its Liberty Wireless business (the "Purchased Assets") including customer
lists, the "Liberty Wireless" brand and SNI's rights under certain agreements,
the whole effective as of December 31, 2005. The aggregate purchase price (the
"Purchase Price") payable by TelePlus Wireless to SNI for the Purchased Assets
shall, subject to adjustment in accordance with the Agreement shall be a maximum
of $1,900,000, which amount is payable as follows: (a) $1,400,000 in cash on the
closing date; and (b) $500,000 in four (4) equal successive quarterly cash
instalments of US$125,000 each subject to adjustment in accordance with the
Agreement, the first such instalment payable 90 days from the closing date.

ITEM 2. DESCRIPTION OF PROPERTY

      TelePlus currently has in place 1 lease for its principal office in
Montreal, Canada and 1 lease for its office in Miami, Florida. The Company's
principal office is located in approximately 5,500 square feet of leased office
and the monthly rental commitment is USD$5,834. The Company's Miami office is
located in approximately 3031 square feet of leased space and the monthly rental
commitment is USD$5676. The term of each lease is for 5 years.

ITEM 3. LEGAL PROCEEDINGS

      The following proceedings have been initiated against TelePlus. Management
does not believe that the following legal proceedings would have a materially
adverse impact on our business or our results of operations.


                                       10
<PAGE>

Proposed Tax Assessment. TelePlus is involved in proceedings with the Minister
of Revenue of Quebec. The Minister of Revenue of Quebec has proposed an
assessment of for the Goods and Services Tax and Quebec Sales Tax of
approximately CDN$474,000 and penalties of approximately CDN$168,000. The
proposed tax assessment is for CDN$322,000 for Quebec Sales Tax and CDN$320,000
for Goods and Services Tax. TelePlus believes that certain deductions initially
disallowed by the Minister of Revenue of Quebec for the Quebec Sales Tax are
deductible and is in the process of compiling the deductions to the Minister of
Revenue of Quebec. It is possible that cash flows or results of operations could
be materially affected in any particular period by the unfavorable resolution of
one or more of these contingencies.

Wrongful Dismissal. A former employee of TelePlus retail Services, Inc., a
subsidiary of TelePlus, has initiated a claim in Quebec Superior Court in the
amount of $90,000 against TelePlus for wrongful dismissal. The parties are at
discovery stages.

Wrongful Dismissal. There is a claim from three individuals in British Columbia
for an amount of about $ 147,000 and the issuance of 510,000 shares for which a
letter of demand has been served on the Company. The Company doesn't believe the
claim to be founded and intends to vigorously contest such claim. No court
proceedings have been instituted and we are presently in discussion with the
aforementioned individuals.

Consulting Fee. On 13, 2005, a lawsuit was filed in the United States District
Court, District of New Jersey (Newark) (Case No. 05-2058) by Howard Salamon d /b
/a "Salamon Brothers" (as the plaintiff) against Teleplus. This matter arises
out of an alleged agreement between the plaintiff and Teleplus. The plaintiff is
seeking specific performance of the alleged agreement, money damages and a
declaratory judgment for the payment of a commission allegedly due to the
plaintiff in an amount equal to 10% of all funds the Company receives from
Cornell Capital. Teleplus has filed a counterclaim against the plaintiff seeking
rescission of the alleged agreement and a refund of $100,000 paid by Teleplus to
the plaintiff. Teleplus believes that this lawsuit is without any merit, that
the plaintiff's claims are unfounded and that Teleplus has good defenses against
the claims asserted by the plaintiff. Teleplus also believes that it has good
claims for the rescission of the agreement and for the refund of the amount paid
to the plaintiff. Teleplus intends to contest and defend against the plaintiff's
claims. The foregoing notwithstanding, total liability to Teleplus, if it loses
this lawsuit, could reach a maximum of 10% of all funds the Company receives
from Cornell Capital.


                                       11
<PAGE>

Consulting Fee. On November 30, 2005, a lawsuit was filed in the Superior Court,
State of California, County of San Diego (Case No. GIC 857605) by Business
Consulting Group Unlimited (also known as BCGU) against Teleplus. The suit
arises out of an agreement between BCGU and Teleplus. BCGU has alleged that
Teleplus is in breach of the agreement and is seeking damages from Teleplus for
certain tranches of compensation it allegedly earned and was to receive under
the agreement. The compensation allegedly earned consists of $45,000 in cash,
560,000 shares of Teleplus restricted common stock, the right to exercise the
rights under certain warrants to purchase shares of Teleplus common stock at
$.65 per share and the right to exercise the rights under certain warrants to
purchase shares of Teleplus common stock at $1.00 per share. Teleplus filed a
counterclaim against BCGU for breach of the agreement for failing to properly
and fully perform the services BCGU undertook to perform under the agreement.
Teleplus is seeking a declaratory judgment that BCGU has breached the agreement
and the return of cash and stock payment it has already made to BCGU. Teleplus
believes that this lawsuit is without any merit, that BCGU's claims are
unfounded and that Teleplus has good defenses against the claims asserted by
BCGU. Teleplus also believes that it has good claims for breach of the agreement
by BCGU and for a refund of the amount paid to BCGU.

Teleplus intends to vigorously defend all the lawsuits and claims against it.
However, Teleplus cannot predict the outcome of these lawsuits and claims. An
adverse resolution of the proposed tax assessment or the Salamon Brothers
consulting fee could have a material adverse effect on our business, financial
condition and results of operations.

The company has instigated the following claim against Wal-Mart Canada, corp.:

Wal-Mart Canada, Corp. The Company's subsidiary, TelePlus Management, instigated
ON September 23rd, 2004 in the Ontario Superior Court of Justice a USD$5.0
million claim against Wal-Mart Canada Corp. for breach of agreement. The parties
are at discovery stages.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None


                                       12
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

"Bid" and "asked" offers for the common stock are listed on the NASDAQ
OTC-Bulletin Board published by the National Quotation Bureau, Inc. The
Company's common stock began trading in the first quarter of 2003, under the
trading symbol, "HBOG". The symbol was changed to "TLPE" in connection with the
Company's name change on October 10, 2003.

The following table sets forth the high and low bid prices for the Company's
common stock for the periods indicated as reported by the NASDAQ OTC-Bulletin
Board. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.

                                                                  Bid Prices

Quarter Ended                                                  High        Low
------------------                                             -----       -----
December 31, 2005                                              $0.30       $0.21
September 30, 2005                                             $0.48       $0.27
June 30, 2005                                                  $0.55       $0.15
March 31, 2005                                                 $0.48       $0.34


                                       13
<PAGE>

There were 87 holders of record of the common stock as of March 10, 2006. The
Company has never paid a cash dividend on its common stock and does not
anticipate the payment of a cash dividend in the foreseeable future. The Company
intends to reinvest in its business operations any funds that could be used to
pay a cash dividend. The Company's common stock is considered a "penny stock" as
defined in certain rules (the "Rules") under the Securities Exchange Act of
1934. In general, a security which is not quoted on NASDAQ or has a market price
of less than $5 per share where the issuer does not have in excess of $2,000,000
in net tangible assets (none of which conditions the Company meets) is
considered a penny stock. The SEC's rules regarding penny stocks impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally persons with net worth in excess of $1,000,000 or an annual income
exceeding $200,000 or $300,000 jointly with their spouse). For transactions
covered by the rules, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's written agreement to
the transaction prior to the sale. Thus the Rules affect the ability of
broker-dealers to sell the Company's shares should they wish to do so because of
the adverse effect that the Rules have upon liquidity of penny stocks. Unless
the transaction is exempt under the Rules, under the Securities Enforcement
Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer
transactions in penny stocks are required to provide their customers with (i) a
risk disclosure document; (ii) disclosure of current bid and ask quotations if
any; (iii) disclosure of the compensation of the broker-dealer and its sales
personnel in the transaction; and (iv) monthly account statements showing the
market value of each penny stock held in the customer's account. As a result of
the penny stock rules the market liquidity for the Company's securities may be
severely adversely affected by limiting the ability of broker-dealers to sell
the Company's securities and the ability of purchasers of the securities to
resell them.

RECENT SALES OF UNREGISTERED SECURITIES

      None.

CHANGES IN SECURITIES

2003

      On October 10, 2003, we issued 17,600,000 shares of common stock to
Visioneer Holdings Group, Inc. pursuant to an asset purchase agreement with
3577996 Canada, a company in which Visioneer Holdings Group was a majority
shareholder. The shares were issued for the aggregate purchase price of $17,600.

      On October 10, 2003, we issued 1,235,000 shares of common stock to
TransCalling Communications, Inc., pursuant to an asset purchase agreement with
3577996 Canada, a company in which TransCalling Communications, Inc was a
shareholder. The shares were issued for the aggregate purchase price of $1,235.


                                       14
<PAGE>

      On October 10, 2003, we issued 665,000 shares of common stock to Nicholas
Shamy, pursuant to an asset purchase agreement with 3577996 Canada, a company in
which Mr. Shamy was a shareholder. The shares were issued for the aggregate
purchase price of $665.

      On November 24, 2003, we sold an aggregate of 750,000 restricted shares of
our common stock for an aggregate of $750,000 in a private placement transaction
with three entities that are not affiliated with us.

2004

      In January 2004, we issued 10,000 shares of common stock, $.001 par value
per share to an unaffiliated entity in consideration for $10,000.

      In February 2004, we issued 25,000 shares of common stock, $.001 par value
per share to an unaffiliated entity in consideration for $25,000.

      In April 2004, we issued 500,000 shares of common stock, $.001 par value
per share to an unaffiliated entity in exchange for $500,000.

      On May 14, 2004, we issued 285,000 shares to the 5 shareholders of Smart
Cell following the acquisition by TelePlus of 100% of the issued and outstanding
shares of SmartCell. Shares were valued at $202,350.

      On May 18, 2004 we sold 57,000 shares of our common stock for $0.10 per
share in connection with a private placement. Shares were valued at $5,700. On
June 25, 2004 we issued Cornell Capital Partners 245,193 shares of our common
stock as a commitment fee under an Equity Distribution Agreement between
TelePlus and Cornell Capital Partners. The value of the shares was $190,000.

      On June 25, 2004 we issued a secured convertible debenture to Cornell
Capital Partners pursuant to a Securities Purchase Agreement with Cornell
Capital Partners. The aggregate amount of the secured convertible debenture was
$1,000,000.

      On June 25, 2004 we issued 12,905 shares of our common stock to Newbridge
Securities Corporation as a placement agent fee. The value of the shares was
$10,000.

      In October, 2004 we issued 223,664 shares to Cornell Capital Partners in
connection with the partial repayment of a Promissory Note and Convertible
Debenture outstanding with Cornell Capital Partners. Repayment totaled 100,000.

      In November, 2004 we issued 839,642 shares to Cornell Capital Partners in
connection with the partial repayment of a Promissory Note and Convertible
Debenture outstanding with Cornel Capital Partners. Repayments totaled 300,000.


                                       15
<PAGE>

      In December, 2004, we issued an aggregate of 140,000 shares of its common
stock, $.001 par value per share which were not registered under the Act to the
Cellz principals in connection with the acquisition of Cellz.

      In December, 2004, we issued an aggregate of 120,000 shares of its common
stock, $.001 par value per share which were not registered under the Act to the
SmartCell principals in connection with the acquisition of SmartCell.

      In December, 2004 we issued 10,000 shares of our common stock to Michael
Karpheden, a director of TelePlus, as director's compensation pursuant to a
private placement. Shares were valued at $1,000.

      In December, 2004 we issued 10,000 shares of our common stock to Hakan
Wretsell, a director of TelePlus, as director's compensation pursuant to a
private placement. Shares were valued at $1,000.

2005

      During the first quarter, 2005 we issued 2,388,694 shares to Cornell
Capital Partners in connection with the partial repayment of a Promissory Note
and Convertible Debenture outstanding with Cornell Capital Partners. Repayments
totaled $850,000.

      March 31, 2005, we issued an aggregate of 964,706 shares of its common
stock, $.001 par value per share which were not registered under the Act to the
Freedom principal in connection with the acquisition of Freedom. Shares were
valued at $328,000.

      During the second quarter, 2005 we issued 6,275,896 shares to Cornell
Capital Partners in connection with the partial repayment of a Promissory Note
and Convertible Debenture outstanding with Cornell Capital Partners. Repayments
totaled $1.1M

      April 5, 2005, we issued 50,000 shares to its directors as payment of
director fees. Shares were valued at $15,500.

      May 12, 2005, we issued 50,000 shares to Bondy & Schloss LLP as part of a
settlement reached by TelePlus with Ivan Berkowitz, Michael Rosenbaum and BG
Holdings, LLC in relation to a failed financing transaction. Shares were valued
at $11,000.

      May 30, 2005, we issued 187,500 shares to a third party for payment of
services rendered. The shares were valued at $28,125. June 10, 2005, we issued
333,333 shares to a third party for payment of services rendered. The shares
were valued at $130,000.

      July 15, 2005, we issued 2,500,000 shares to Cornell Capital Partners
("Cornell") as a fee under the Standby Equity Distribution agreement signed that
same day. These shares were valued at $800,000. December 19, 2005, Cornell
returned to us 1,250,000 shares as part of a new finance arrangement. These
shares were valued at $400,000.

                                       16
<PAGE>

      August 19th, 2005, we issued 60,000 common shares to its directors as
payment of director fees. These shares were valued at $19,800.

      September 29th, 2005, we issued 70,000 common shares to its directors as
payments of director fees. These shares were valued at $20,300.

      September 2nd, 2005, we issued 800,503 shares to a third party as finder
fee for the Telizon Inc. acquisition. These shares were valued at $248,156.

      October 28th, 2005, we issued 424,000 to various employees as payment of
bonuses earned in 2005. These shares were valued at $101,760.

      November 7th, 2005, we issued 280,000 shares to a third party as finder
fee for the Avenue Reconnect Inc. acquisition. These shares were valued at
$64,400.

      November 7th, 2005, we issued 280,000 shares to a third party as finder
fee for the Freedom acquisition. These shares were valued at $84,000.

      November 23rd, 2005, we issued 850,000 shares to two third parties for
payment of a variety of consulting services rendered. The shares were valued at
$187,000.

      December 6th, 2005 we issued 70,000 common shares to its directors as
payment of director fees. The shares were valued at $18,900.

      July 1st 2005 we issued 2,000,000 shares of Class A Preferred shares to
Visioneer Holdings Group, Inc. which is beneficially owned by our CEO &
Chairman, Marius Silvasan, for services rendered. The Class A Preferred shares
entitle the holders to 10 votes each, are not convertible into shares of any
other class or series of stock of TelePlus, are non participating and no
dividends can be declared there on.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This report contains forward looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934. These forward looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Factors that may affect future results" in this Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
report. The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's financial statements and notes
thereto included elsewhere in this report.

OVERVIEW

      The Company was originally incorporated in Nevada as Terlingua Industries,
Ltd. on April 16, 1999. The Company's business plan was to engage in online
marketing and distribution of organic herbal supplements in an international
market. On January 27, 2000, the Company changed its name to HerbalOrganics.com,
Inc. ("HerbalOrganics"). Prior to the transactions discussed below, the Company
had not generated any revenues from operations and was considered a development
stage enterprise, as defined in Financial Accounting Standards Board No. 7,
whose operations principally involved research and development, market analysis,
securing and establishing a new business, and other business planning
activities.


                                       17
<PAGE>

      On October 10, 2003, Visioneer Holdings Group Inc. ("Visioneer")
subscribed to purchase 18,050,000 restricted, newly issued shares of the
Company's common stock, $.001 par value per share. Also on that same date,
Visioneer purchased 23,750,000 shares of issued and outstanding common stock
from Thomas Whalen, the Company's former Chief Executive Officer. As a result of
the subscriptions and the purchase, control of the Company shifted to Marius
Silvasan, the beneficial owner of Visoneer.

      In September 2003, the Company formed a wholly-owned subsidiary, Teleplus
Retail Services, Inc., a Quebec, Canada Corporation ("Teleplus Retail"). In
October 2003, Teleplus Retail purchased substantially all of the assets of
3577996 Canada Inc., a Canada Business Corporation ("3577996"), that related to
3577996's "TelePlus Consumer Services" business.

      TelePlus Enterprises, Inc. ("TelePlus") is a provider of Wireless and
Telecom products and services across North America. TelePlus Connect, Corp. - is
a reseller of a variety of Telecom services including landline, long distance
and internet services. TelePlus Wireless, Corp. -under the brand name "Liberty
Wireless" - operates a virtual wireless network selling cellular network access
to distributors in the United States. www.telepluswireless.com,
www.libertywireless.com and www.vivaliberty.com are among some of the websites
operated by TelePlus.

GROWTH IN CANADA:

      The Company through its wholly owned subsidiary TelePlus Connect, Corp. is
offering landline and long distance prepaid services to selected individuals in
Canada who cannot obtain basic telecom services from traditional telecom
carriers. These individuals are often called the unbanked. Current estimates
place the unbanked market in North America at 9.5% of total households and the
market size is estimated at over $1 billion.

      To facilitate the rollout of this service the Company acquired 100% of the
shares of (a) Keda Consulting Corp. and Freedom Phones Lines April 1st, (b)
Avenue Reconnect, Inc June 1st and (c) Telizon Inc. in July 2005

      o     Keda Consulting Corp. provides a broad range of management
            consulting services to the North American telecommunications
            industry, specializing in business development, sales/marketing, and
            operations. Following closing of the acquisition Keda, has changed
            its name to TelePlus Connect Corp. and Keda's management have taken
            over the operations of TelePlus' prepaid landline and long distance
            telephone service operations. The Company is expected to benefit
            from Keda's and Freedom's management teams which have much
            experience in the telecommunications industry. The Company believes
            a seasoned and experienced management team, familiar with all
            aspects of the rapidly growing and changing telecommunications
            business, is a key strategic asset.


                                       18
<PAGE>

      o     Freedom Phone Lines, headquartered in Ontario, Canada, is a Bell
            Canada reseller of landline and long distance services, which
            services over 3,300 customers in the Ontario area and generates
            yearly revenues of $2.5 million and EBITDA of $0.300 million.

      o     Avenue Reconnect, Inc., headquartered in Windsor, Canada, is a
            reseller of landline, long distance and internet prepaid services to
            over 2,000 residential users primarily in Ontario, area and
            generates yearly revenues of $1.1 million and EBITDA of $0.200
            million.

      o     Telizon Inc, headquartered in Ontario, Canada, is a reseller of
            landline and long distance services as well as internet service
            provider. Telizon currently services over 18,000 commercial and
            residential lines in the Ontario area. Telizon has annual revenues
            of $12.0 million and EBITDA of $1.6 million.

GROWTH IN THE UNITED STATES:

      The Company through its wholly owned subsidiary TelePlus Wireless, Corp.
("TelePlus Wireless") is offering wireless prepaid services commonly called MVNO
("Mobile Virtual Network Operator"). TelePlus Wireless services are primarily,
but not exclusively, catered to the "Unbanked" segment of the market, "Unbanked"
customers are those customers not being able to access the carriers offers as
these they don't qualify the carriers' credit policies. Nonetheless the
"unbanked" segment is the fastest growing segment in the wireless and telecom
industry. This segment is currently poorly serviced by the incumbents creating
an opportunity for TelePlus Wireless to take a substantial share of the market.
This market was developed first in Europe, where more than 20 MVNO's can be
found. Virgin Mobile of England and Wireless Maingate of Sweden were among the
first group of MVNO's launched in Europe.

      To facilitate the rollout of Teleplus' MVNO service, the Company
announced:

      o     January 1st, 2006 the acquisition from Star Number, Inc. (which is
            part of the Inphonic group) of certain assets of Liberty Wireless,
            the third largest wireless reseller on the Sprint PCS network. This
            acquisition has provided TelePlus with an established customer base
            and strong infrastructure.

COMPARISON OF OPERATING RESULTS

      On January 13th, 2006 ,Teleplus Retail Services, Inc.("Retail"), a
Canadian subsidiary of the Company, filed in Canada a Notice of Intention to
Make a proposal under the Bankruptcy and Insolvency Act (Canada) (the "Act") as
a first step toward the divestiture by the Company of its unprofitable retail
division. The Company elected not to have retail make a proposal under the Act
and discontinued its operations as of February 12, 2006. The Company has also
determined that it will have no continuing involvement in retail operations
going forward and that the retail operations will no longer constitute a segment
of the overall business operations of the Company in the year ended December 31,
2006. Therefore, the Company reclassified as discontinued operations the
operating results of this division. The comparative operating are also
classified to reflect the operating results of the discontinued operations
separately in the comparative period.


                                       19
<PAGE>

FISCAL YEAR ENDED DECEMBER 31, 2005 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2004

      Sales revenues for the fiscal year ended December 31, 2005 for the
discontinued operation was $11,043,352 as compared to $12,180,501 for the fiscal
year ended December 31, 2004.

      Net loss from discontinued operations for the fiscal year ended December
31, 2005 was $2,228,438 as compared to $602,386 for the fiscal year ended
December 31, 2004.

      The continuing operations were acquired during the fiscal year ended
December 31, 2005. As a result, there is no comparative analysis herein to the
results of the fiscal year ended December 31, 2004.

      Sales revenues for the fiscal year ended December 31, 2005 for the
continuing operation was $8,092,689. Cost of revenues for the fiscal year ended
December 31, 2005 for the continuing operation was $5,409,705.

Gross profit for the fiscal year ended December 31, 2005 for the continuing
operation was $2,682,984 and gross profit as a percentage of sales was 33%.

General administrative expenses for the fiscal year ended December 31, 2005 for
the continuing operation was $2,612,572.

Interest expense for the continuing operation increased to $406,737 for the
fiscal year ended December 31, 2005 from $48,207 for the fiscal year ended
December 31, 2004.

      Amortization expense for the continuing operation was $406,737 for the
fiscal year ended December 31, 2005 as compared to $57,471 for the fiscal year
ended December 31, 2004.

The increase of interest expense and amortization expense was due mainly to the
accrual of amortization and interest on the convertible debt and promissory note
as part of the capital raised by the Company during the fiscal year ended
December 31, 2005.

The Company had a net loss for the continuing operations of $598,455 for the
fiscal year ended December 31, 2005, as compared to net loss of $471,584 for the
fiscal year ended December 31, 2004.

Including both discontinued and continuing operations for the fiscal year ended
December 31, 2005, the Company incurred a net loss of $2,826,893 as compared to
$1,073,970 for the fiscal year ended December 31, 2004.

      As of December 31, 2005, the Company had an accumulated deficit of
$4,586,023.


                                       20
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

This discussion on liquidity and capital resources includes only the results
from the continuing operation.

      As of December 31, 2005, total current assets were $4,299,788 which
consisted of $2,604,915 of cash, $1,545,727 of accounts receivable, $31,130 of
income tax receivable, and $184,411 of prepaid expenses.

      As of December 31, 2005, total current liabilities were $8,912,959 which
consisted of $997,666 of accounts payable expenses, $2,074,256 of accrued
expenses, accrued acquisition obligations of $4,575,558 and unearned revenue of
$1,265,479.

      The Company had negative net working capital as at December 31, 2005 of
$(4,546,776). The ratio of current assets to current liabilities was 0.51. The
Company can force the exercise of warrants in accordance with the new Securities
Purchase agreement entered into on December 13, 2005. The new agreement states
that the company can force the exercise of warrants if the Company maintains
specific levels of the stock price and trading volume for a period of ten
consecutive days. Should all warrants be exercised the total consideration
available to the Company is approximately $ 9,350,000.

In addition approximately $ 1,000,000 of the accrued acquisition obligations
must be settled by cash flow generated from the operations for the year ended
December 31, 2006 and $359,000 of the accrued acquisition obligations will be
settled by the issuance of common stock.

      The Company had a net increase in cash of $2,316,291 for the fiscal year
ended December 31, 2005. Cash flows from financing activities represented the
Company's principal source of cash for the fiscal period ended December 31,
2005. Cash flows from financing activities during the fiscal period ended
December 31, 2005 were $7,718,194, consisting of proceeds in the amount of
$1,137,002 from the raising of debts and financing, and $6,581,192 from the
issuance of convertible debentures. During the fiscal year ended December 31,
2004, the Company received $1,577,973 from the raising of debts and financing,
$160,658 from the issuance of common stock and $692,388 from the issuance of
convertible debentures.

      During the fiscal period ended December 31, 2005, the Company had $231,929
cash used in operating activities as compared to the fiscal period ended
December 31, 2004, where the Company had $426,611 cash used in operating
activities. The cash used in operating activities for the fiscal year ended
December 31, 2005 was due to accounts receivable that increased by $252,111
income tax receivables that increased by $10,791 and accrued expenses that
decreased by 14,502, which were offset by inventory that decreased by $8,390,
accrued receivables that decreased by 45,297, prepaid expenses that decreased by
34,525, accounts payable that increased by $133,359,and deferred revenue that
increased by $160,229. The cash used in operating activities for the fiscal year
ended December 31, 2004 was due to accounts receivable that increased by
$30,000, inventories that increased by $8,390 and prepaid expenses that
increased by $173,113, which were offset by accrued expenses that increased by
$199,005.


                                       21
<PAGE>

      Capital expenditures were $162,699 for the fiscal period ended December
31, 2005 as compared to $43,915 for the fiscal year ended December 31, 2004.The
Company used $6,451,716 to acquire other companies in 2005, as compared to
$170,839 in 2004. The expenditures represent negative cash flows from investing
activities.

      The Company requires additional capital to support strategic acquisitions
and its current expansion plans. Should the Company not be able to draw access
additional capital, this may require the Company to delay, curtail or scale back
some or all of its expansion plans. Any additional financing may involve
dilution to the Company's then-existing shareholders.

COMMITMENTS FOR OPERATING LEASES:

      Teleplus has several non-cancelable operating leases, primarily for office
space and storage that expire through December 31, 2009. These leases require
Teleplus to pay all operating costs such as maintenance and insurance. Rental
expense for the operating leases for the years ended December 31, 2005 and 2004
was $176,801 and $1,018,007 respectively. The amounts for 2004 include amounts
paid for the discontinued operation. As of December 31, 2005, the minimum lease
payment under these leases during 2006 was $176,800.

RISK FACTORS

      Management recognizes that we may need to raise additional financing to
fund our ongoing operations and implement our business plan. The Company may
require additional capital to support strategic acquisitions and its current
expansion plans. Their can be no guaranty that such capital will be available to
the Company when required or that such capital would be on terms acceptable to
the Company. In addition, any additional financing may involve dilution to the
Company's then-existing shareholders.

      The Company is involved in proceedings with the Minister of Revenue of
Quebec ("MRQ"). The MRQ has proposed an assessment for the Goods and Services
Tax ("GST") and Quebec Sales Tax ("QST"), of approximately $474,000CDN and
penalties of approximately $168,000CDN. The proposed tax assessment is for
$322,000CDN for QST and $320,000CDN for GST. Teleplus has made an initial
payment of $80,500 towards the proposed tax assessment as of December 31, 2005.
this a Teleplus believes that certain deductions initially disallowed by the MRQ
for the QST are deductible and is in the process of compiling the deductions to
present to the MRQ. Teleplus also believes that export sales to the United
States of America are exempt from the GST. In accordance with SFAS No. 5,
"Accounting for Contingencies," Teleplus makes a provision for a liability when
it is both probable that a liability has been incurred and the amount of the
loss can be reasonably estimated. No provision for this matter has been accrued.
Teleplus reviews these provisions at least quarterly and adjusts these
provisions to reflect the impacts of negotiations, settlements, rulings, advice
of legal counsel, and other information and events pertaining to a particular
case. Dealing with taxing authorities is inherently unpredictable. However,
Teleplus believes that it has valid defenses with respect to the proposed tax
assessment pending against it. Nevertheless, it is possible that cash flows or
results of operations could be materially affected in any particular period by
the unfavorable resolution of one or more of these contingencies. It is possible
that the outcome of these proceedings could have a material adverse effect on
our cash flows or on our results of operations.


                                       22
<PAGE>

      Consulting Fee. On 13, 2005, a lawsuit was filed in the United States
District Court, District of New Jersey (Newark) (Case No. 05-2058) by Howard
Salamon d /b /a "Salamon Brothers" (as the plaintiff) against Teleplus. This
matter arises out of an alleged agreement between the plaintiff and Teleplus.
The plaintiff is seeking specific performance of the alleged agreement, money
damages and a declaratory judgment for the payment of a commission allegedly due
to the plaintiff in an amount equal to 10% of all funds the Company receives
from Cornell Capital. Teleplus has filed a counterclaim against the plaintiff
seeking rescission of the alleged agreement and a refund of $100,000 paid by
Teleplus to the plaintiff. Teleplus believes that this lawsuit is without any
merit, that the plaintiff's claims are unfounded and that Teleplus has good
defenses against the claims asserted by the plaintiff. Teleplus also believes
that it has good claims for the rescission of the agreement and for the refund
of the amount paid to the plaintiff. Teleplus intends to contest and defend
against the plaintiff's claims. The foregoing notwithstanding, total liability
to Teleplus, if it loses this lawsuit, could reach a maximum of 10% of all funds
the Company receives from Cornell Capital. It is possible that the outcome of
these proceedings could have a material adverse effect on our cash flows or on
our results of operations.

      Our Inability To Secure Competitive Pricing Arrangements In A Market
Dominated By Larger Competitors With Higher Financial Resources Could Have A
Material Adverse Affect On Our Operations. Profit margins in the wireless and
communication industry are low. Our larger competitors, who have more resources,
have the ability to reduce their prices significantly lower than current prices.
This would further reduce our profit margins. Should such an event occur and
management chose not to offer competitive prices, we could lose our market
share. If we chose to compete, the reduction in profit margins could have a
material adverse effect on our business and operations.

      We have historically lost money and losses may continue in the future,
which may cause us to curtail operations. Since 2003 we have not been profitable
and have lost money on both a cash and non-cash basis. For the year ended
December 31, 2005 we incurred a net loss of $2,826,893, including a loss from
discontinued operations of $2,228,438, and our accumulated deficit was
$4,586,023. Our net loss for the year ended December 31, 2004 was $1,073970,
including a loss from discontinued operations of $602,386, and our accumulated
deficit at the end of December 31, 2004 was $1,759,130. No assurances can be
given that we will be successful in reaching or maintaining profitable
operations. Accordingly, we may experience liquidity and cash flow problems. If
our losses continue, our ability to operate may be severely impacted.

      We are subject to a working capital deficit, which means that our current
assets on December 31, 2004 and 2005, were not sufficient to satisfy our current
liabilities and, therefore, our ability to continue operations is at risk. We
had a working capital deficit of $4,088,371 (excluding discontinued operations)
for the year ended December 31, 2005 and $1,695,868 for the year ended December
31, 2004, which means that our current liabilities exceeded our current assets
on December 31, 2005 by $4,546,776 and by $1,695,868 on December 31, 2004.
Current assets are assets that are expected to be converted to cash within one
year and, therefore, may be used to pay current liabilities as they become due.
Our working capital deficit means that our current assets on December 31, 2005,
and on December 31, 2004 were not sufficient to satisfy all of our current
liabilities on those dates. If our ongoing operations do not begin to provide
sufficient profitability to offset the working capital deficit, we may have to
raise additional capital or debt to fund the deficit or curtail future
operations.


                                       23
<PAGE>

      Our Obligations Under The Secured Convertible Debentures Are Secured By
All of Our Assets. Our obligations under the secured convertible debentures,
issued to Cornell Capital Partners are secured by all of our assets. As a
result, if we default under the terms of the secured convertible debentures,
Cornell Capital Partners could foreclose its security interest and liquidate all
of our assets. This would cease operations.

      Our Common Stock May Be Affected By Limited Trading Volume And May
Fluctuate Significantly, Which May Affect Our Shareholders' Ability To Sell
Shares Of Our Common Stock. Prior to this filing, there has been a limited
public market for our common stock and there can be no assurance that a more
active trading market for our common stock will develop. An absence of an active
trading market could adversely affect our shareholders' ability to sell our
common stock in short time periods, or possibly at all. Our common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations, which could adversely affect the market price of our common
stock without regard to our operating performance. In addition, we believe that
factors such as quarterly fluctuations in our financial results and changes in
the overall economy or the condition of the financial markets could cause the
price of our common stock to fluctuate substantially. These fluctuations may
also cause short sellers to enter the market from time to time in the belief
that we will have poor results in the future. We cannot predict the actions of
market participants and, therefore, can offer no assurances that the market for
our stock will be stable or appreciate over time. The factors may negatively
impact shareholders' ability to sell shares of our common stock.

      Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It More
Difficult For Investors To Sell Their Shares Due To Suitability Requirements.
Our common stock is deemed to be "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934, AS AMENDED. These
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline. Penny stocks are stock:

      o     With a price of less than $5.00 per share;

      o     That are not traded on a "recognized" national exchange;

      o     Whose prices are not quoted on the NASDAQ automated quotation system
            (NASDAQ listed stock must still have a price of not less than $5.00
            per share); or

      o     In issuers with net tangible assets less than $2.0 million (if the
            issuer has been in continuous operation for at least three years) or
            $10.0 million (if in continuous operation for less than three
            years), or with average revenues of less than $6.0 million for the
            last three years.


                                       24
<PAGE>

      o     Broker/dealers dealing in penny stocks are required to provide
            potential investors with a document disclosing the risks of penny
            stocks. Moreover, broker/dealers are required to determine whether
            an investment in a penny stock is a suitable investment for a
            prospective investor.

      We Could Fail To Attract Or Retain Key Personnel, Which Could Be
Detrimental To Our Operations. Our success largely depends on the efforts and
abilities of key executives, including Marius Silvasan, our Chief Executive
Officer, Robert Krebs, our Chief Financial Officer, Kelly McLaren, our
President, and Tom Davis, our Chief Operating Officer. The loss of the services
of any of the foregoing persons could materially harm our business because of
the cost and time necessary to find their successor. Such a loss would also
divert management attention away from operational issues. We do not presently
maintain key-man life insurance policies on any of the foregoing persons. We
also have other key employees who manage our operations and if we were to lose
their services, senior management would be required to expend time and energy to
find and train their replacements. To the extent that we are smaller than our
competitors and have fewer resources we may not be able to attract the
sufficient number and quality of staff.

      We Are Subject to Price Volatility Due to Our Operations Materially
Fluctuating. As a result of the evolving nature of the markets in which we
compete, as well as the current nature of the public markets and our current
financial condition, we believe that our operating results may fluctuate
materially, as a result of which quarter-to-quarter comparisons of our results
of operations may not be meaningful. If in some future quarter, whether as a
result of such a fluctuation or otherwise, our results of operations fall below
the expectations of securities analysts and investors, the trading price of our
common stock would likely be materially and adversely affected. You should not
rely on our results of any interim period as an indication of our future
performance. Additionally, our quarterly results of operations may fluctuate
significantly in the future as a result of a variety of factors, many of which
are outside our control. Factors that may cause our quarterly results to
fluctuate include, among others:

      o     our ability to retain existing clients and customers;

      o     our ability to attract new clients and customers at a steady rate;

      o     our ability to maintain client satisfaction;

      o     the extent to which our products gain market acceptance;

      o     the timing and size of client and customer purchases;

      o     introductions of products and services by competitors;

      o     price competition in the markets in which we compete;

      o     our ability to attract, train, and retain skilled management,

      o     the amount and timing of operating costs and capital expenditures
            relating to the expansion of our business, operations, and
            infrastructure; and

      o     general economic conditions and economic conditions specific to the
            wireless and portable communication device industry.


                                       25
<PAGE>

      We May Not Be Able To Compete Effectively In Markets Where Our Competitors
Have More Resources. Many of our competitors have longer operating histories,
larger customer bases, longer relationships with clients, and significantly
greater financial, technical, marketing, and public relations resources than
TelePlus. Based on total assets and annual revenues, we are significantly
smaller than many of our competitors. Similarly, we compete against
significantly larger and better-financed companies in our business. We may not
successfully compete in any market in which we conduct business currently or in
the future. The fact that we compete with established competitors who have
substantially greater financial resources and longer operating histories than
us, enables them to engage in more substantial advertising and promotion and
attract a greater number of customers and business than we currently attract.
While this competition is already intense, if it increases, it could have an
even greater adverse impact on our revenues and profitability.

      Our Limited Operating History In Our Industry Makes It Difficult To
Forecast Our Future Results. As a result of our limited operating history, our
historical financial and operating information is of limited value in predicting
our future operating results. We may not accurately forecast customer behavior
and recognize or respond to emerging trends, changing preferences or competitive
factors facing us, and, therefore, we may fail to make accurate financial
forecasts. Our current and future expense levels are based largely on our
investment plans and estimates of future revenue. As a result, we may be unable
to adjust our spending in a timely manner to compensate for any unexpected
revenue shortfall, which could force us to curtail or cease our business
operations.

      If We Do Not Successfully Establish Strong Brand Identity In The Markets
We Are Currently Serving, We May Be Unable To Achieve Widespread Acceptance Of
Our Products. We believe that establishing and strengthening our products is
critical to achieving widespread acceptance of our future products and to
establishing key strategic relationships. The importance of brand recognition
will increase as current and potential competitors enter the market with
competing products. Our ability to promote and position our brand depends
largely on the success of our marketing efforts and our ability to provide high
quality products and customer support. These activities are expensive and we may
not generate a corresponding increase in customers or revenue to justify these
costs. If we fail to establish and maintain our brand, or if our brand value is
damaged or diluted, we may be unable to attract new customers and compete
effectively.

      Future Acquisitions May Disrupt Our Business And Deplete Our Financial
Resources. Any future acquisitions we make could disrupt our business and
seriously harm our financial condition. We intend to consider investments in
complementary companies, products and technologies. While we have no current
agreements to do so, we anticipate buying businesses, products and/or
technologies in the future in order to fully implement our business strategy. In
the event of any future acquisitions, we may:

      o     issue stock that would dilute our current stockholders' percentage
            ownership;

      o     incur debt;

      o     assume liabilities;

      o     incur amortization expenses related to goodwill and other intangible
            assets; or

      o     incur large and immediate write-offs.


                                       26
<PAGE>

The use of debt or leverage to finance our future acquisitions should allow us
to make acquisitions with an amount of cash in excess of what may be currently
available to us. If we use debt to leverage up our assets, we may not be able to
meet our debt obligations if our internal projections are incorrect or if there
is a market downturn. This may result in a default and the loss in foreclosure
proceedings of the acquired business or the possible bankruptcy of our business.

Our operation of any acquired business will also involve numerous risks,
including:

      o     integration of the operations of the acquired business and its
            technologies or products;

      o     unanticipated costs;

      o     diversion of management's attention from our core business;

      o     adverse effects on existing business relationships with suppliers
            and customers;

      o     risks associated with entering markets in which we have limited
            prior experience; and

      o     potential loss of key employees, particularly those of the purchased
            organizations.

      If We Are Unable To Respond To The Rapid Changes In Technology And
Services Which Characterize Our Industry, Our Business And Financial Condition
Could Be Negatively Affected. Our business is directly impacted by changes in
the wireless communications industry. The wireless communication products and
services industry is subject to rapid technological change, frequent new product
and service introductions and evolving industry standards. Changes in technology
could affect the market for our products, accelerate the obsolescence of our
inventory and necessitate changes to our product line. We believe that our
future success will depend largely on our ability to anticipate or adapt to such
changes, to offer on a timely basis, services and products that meet these
evolving standards and demand of our customers, and our ability to manage and
maximize our product inventory and minimize our inventory of older and obsolete
products. We also believe that our future success will depend upon how
successfully our wireless carrier service providers and product vendors are able
to respond to the rapidly changing technologies and products. New wireless
communications technology, including personal communication services and voice
communication over the internet may reduce demand for the wireless communication
devices and services we currently are able to offer through our wireless carrier
service providers. We cannot offer any assurance that we will be able to respond
successfully to these or other technological changes, or to new products and
services offered by our current and future competitors, and cannot predict
whether we will encounter delays or problems in these areas, which could have a
material adverse affect on our business, financial condition and results of
operations.

      We Rely In Large Part On One Wireless Telecommunications Carrier With Whom
We Have Business Arrangements. Our Success Depends On Our Ability To Meet Our
Obligations To This Carrier And The Abilities Of Our Wireless Telecommunication
Carrier. We depend on our wireless telecommunications carriers and product
manufacturers to provide our customers with wireless services and communication
devices. Currently, our wireless products and services accounts are dependant
upon arrangements with Sprint Spectrum L.P. After an initial 3-year term, such
arrangement may be renewed for additional 1-year terms, unless either party
elects not to renew by providing 120 days prior written notice. Failure to
maintain continuous relationships with this and other wireless communications
carriers and product manufacturers would materially and adversely affect our
business, including possibly requiring us to significantly curtail or cease our
operations. Additionally, wireless telecommunications carriers may sometimes
experience equipment failures and service interruptions, which could, if
frequent, adversely affect customer confidence, our business operations and our
reputation.


                                       27
<PAGE>

      We Rely In Large Part On One Telecom Services Provider With Whom We Have
Business Arrangements. Our Success Depends On Our Ability To Meet Our
Obligations To This Provider And The Abilities Of Our Provider. We depend on one
provider to provide our customers with telecom services. Currently, our telecom
services accounts are dependant upon arrangements with Bell Canada. Our long
distance contract expires in 2007 and our line contract expires in 2008. Each
agreement may be renewed for additional terms of at least 2 years, unless either
party elects not to renew by providing 30 days prior written notice. Failure to
maintain continuous relationships with this and other telecom providers would
materially and adversely affect our business, including possibly requiring us to
significantly curtail or cease our operations.

      No Product Exclusivity. The products we currently sell are not exclusive
to us thus allowing our competitors to offer similar products and potentially
better prices.

      Price Erosion. The Company is faced with high price elasticity resulting
in the erosion of its margin on certain products. Price wars oftentimes occur in
the industry, which have a negative impact on profit margins.

CRITICAL ACCOUNTING POLICIES

      Our discussion and analysis of our financial condition and results of
operations is based upon our audited financial statements, which have been
prepared in accordance with accounting principals generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of any contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to uncollectible receivable, investment values, income taxes, the
recapitalization and contingencies. We base our estimates on various assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.


                                       28
<PAGE>

      We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements:

Inventories

Inventories consist of wireless and telephony products and related accessories
and are stated at the lower of cost, determined by average cost method, or
market.

Long-Lived Assets

Property and equipment are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements, maintenance and
repairs are charged to current operations. Depreciation is computed by applying
the straight-line method over the estimated useful lives of machinery and
equipment (three to seven years). The majority of Teleplus' long-lived assets
are located in Canada. Teleplus performs reviews for the impairment of
long-lived assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

Acquisitions and Business Combinations

The Company accounts for acquisitions and business combinations under the
purchase method of accounting. The Company includes the results of operations of
the acquired business from the acquisition date. Net assets of the companies
acquired are recorded at their fair value at the acquisition date. The excess of
the purchase price over the fair value of net assets acquired are included in
intangible assets in the accompanying consolidated balance sheets.

Intangibles, Goodwill and Other Assets

The Company regularly reviews all of its long-lived assets, including goodwill
and other intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors
the Company considers important that could trigger an impairment review include,
but are not limited to, significant underperformance relative to historical or
projected future operating results, significant changes in the manner of use of
the acquired assets or the strategy for the Company's overall business, and
significant negative industry or economic trends. When management determines
that an impairment review is necessary based upon the existence of one or more
of the above indicators of impairment, the Company measures any impairment based
on a projected discounted cash flow method using a discount rate commensurate
with the risk inherent in our current business model. Significant judgments is
required in the development of projected cash flows for these purposes including
assumptions regarding the appropriate level of aggregation of cash flows, their
term and discount rate as well as the underlying forecasts of expected future
revenue and expense. To the extent that events or circumstances cause
assumptions to change, charges may be required which could be material.


                                       29
<PAGE>

The Company adopted SFAS No 142,"Goodwill and Other Intangible Assets". SFAS No.
142 no longer permits the amortization of goodwill and indefinite-lived
intangible assets. Instead, these assets must be reviewed annually (or more
frequently under prescribed conditions) for impairment in accordance with this
statement. If the carrying amount of the reporting unit's goodwill or
indefinite-lived intangible assets exceeds the implied fair value, an impairment
loss is recognized for an amount equal to that excess. Intangible assets that do
not have indefinite lives are amortized over their useful lives.

Revenue Recognition

Teleplus' revenue is generated primarily from the sale of wireless, telephony
products and accessories to end users. Teleplus recognizes revenue when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, and collectibility is probable.

Teleplus recognizes product sales generally at the time the product is shipped.
Concurrent with the recognition of revenue, Teleplus provides for the estimated
cost of product warranties and reduces revenue for estimated product returns.
Sales incentives are generally classified as a reduction of revenue and are
recognized at the later of when revenue is recognized or when the incentive is
offered. Shipping and handling costs are included in cost of goods sold.

The company receives co - operation advertising revenue from the telephone
suppliers based on certain requirements to spend the available co-op advertising
allotment. Any amount received under their program is deducted from advertising
expense.

Teleplus' suppliers generally warrant the products distributed by Teleplus and
allow returns of defective products, including those that have been returned to
Teleplus by its customers. Teleplus does not independently warrant the products
that it distributes, but it does provide warranty services on behalf of the
supplier.

Teleplus also recognizes revenue through the resale of residential and
commercial telephone lines. The resale of long - distance revenues are recorded
at the time of customer usage based upon minutes of use. Basic monthly charges
for business and residential customers are billed in advance and revenue is
recognized when the customer receives the service,

Income Taxes

The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. Teleplus records a valuation allowance to
reduce the deferred tax assets to the amount that is more likely than not to be
realized.


                                       30
<PAGE>

Foreign Currency Translation

The Canadian dollar is the functional currency of Teleplus. Transactions in
foreign currency are translated at rates of exchange rates ruling at the
transaction date. Monetary assets and liabilities denominated in foreign
currencies are retranslated at rates ruling at the balance sheet date. The
resulting translation adjustment is recorded as a separate component of
comprehensive income within stockholders' equity.

Deferred Charges

The Company amortizes the initial costs of its customers in the commercial
telephone lines business over five years. The determination of the length of
time being amortized is based on the average life that the customer is provided
services by the Company. As at December 31, 2005 the cost being deferred by the
Company is $81,295.

Basic and Diluted Net Income (loss) per Share

Net income (loss) per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period. Diluted net
income per share includes the potentially diluted effect of outstanding common
stock options and warrants which are convertible to common shares. Diluted net
loss per share has not been provided as the effect would be anti - dilutive.

Fair Value of Financial Instruments

The recorded amounts of cash and cash equivalents, accounts receivable,
short-term borrowings, accounts payable and accrued expenses approximate their
respective fair values because of the short maturity of those instruments and
the variable nature of any underlying interest rates. The rates of fixed
obligations approximate the rates of the variable obligations. Therefore, the
fair value of these loans has been estimated to be approximately equal to their
carrying value.

Concentrations of Credit Risk

Financial instruments which potentially subject Teleplus to concentrations of
credit risk consist primarily of cash, cash equivalents, and trade accounts
receivable. Teleplus maintains its cash and cash equivalents with high quality
financial institutions as determined by Teleplus' management. To reduce risk of
trade accounts receivable, ongoing credit evaluations of customers' financial
condition are performed, guarantees or other collateral may be required and
Teleplus maintains a broad customer base.

Deferred Financing Fees

Deferred financing fees represent fees paid in connection with the issue of
convertible debt that runs for a period of 36 months. The deferred financing
fees will be amortized over the terms of the respective debt. The Company
incurred $170,212 in amortization expense for the year ended December 31, 2005.


                                       31
<PAGE>

Comprehensive Income

The Company has adopted Statement of Financials Accounting Standards No. 130,
Reporting Comprehensive Income. Comprehensive income is comprised of foreign
currency translation adjustments and unrealized gains and losses on available
for sale of marketable securities.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standard Boards ("FASB") issued
Statements No. 123 (R), Share - Based Payments which will require compensation
costs related to share based payment transactions to be recognized in the
financial statements. As permitted by the predecessor Statement No. 123, we do
not recognize compensation expense with respect to stock options we have issued
because the option price was no greater than the market price at the time the
option was issued. Statement 123(R) will be effective for us in our fiscal
quarter beginning January 1, 2006. We have not completed an evaluation of the
impact of Adopting Statements 123 (R).

In November 2004, the FASB ratified the Emerging Issues Task Force ("EITF")
consensus on Issue 03 -13, "Applying the Conditions in Paragraph 42 of FASB
STATEMENT NO 144, "Accounting for the impairment or Disposal of Long - Lived
ASSETS," in Determining Whether to Report Discontinued Operations, which is
effective for us at the beginning of fiscal 2005. The adoption of the new
pronouncements will not have a material impact on our financial position or
results of operations.

In November 2004 , the FASB issued Statement No. 151 Inventory costs, an
amendment of ARB No. 43, Chapter 4 , to clarify that abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage) should
be recognized as current period charges , and that fixed production overheads
should be allocated to inventory based on normal capacity of production
facilities. Statement No. 151 will be effective for our fiscal year beginning
January 1, 2006, and its adoption will not have a material impact on our
financial position or Results of operations.

In May 2005, the FASB issued SFAS No. 154 "Accounting Changes and Error
Corrections" ("SFAS No. 154") which supersedes APB Opinion No. 20, "Accounting
Changes" and SFAS No 3 "Reporting Accounting Changes in Interim Financial
Statements". SFAS No. 154 changes the requirements for accounting for and
reporting of changes in accounting principle. The statement requires the
retroactive application to prior periods' financial statements of changes in
accounting principles, unless it is impracticable to determine either the period
specific effects or the cumulative effects of the change. SFAS No. 154 does not
change the guidance for reporting the correction of an error in previously
issued financial Statements or the change in accounting estimate .SFAS No. 154
is effective for accounting changes and Corrections of errors made in fiscal
years beginning after December 15, 2005. The company does not believe SFAS No.
154 will have a significant impact on its consolidated financial position or
results of operations.


                                       32
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                           TELEPLUS ENTERPRISES, INC.

                        CONSOLIDATED FINANCIAL STATEMENT

                               FOR THE YEAR ENDED

                                December 31, 2005


                                       33
<PAGE>

                    REPORT OF INDEPENDENT REGISTERED AUDITORS

To the Shareholders
Teleplus Enterprises, Inc.

We have audited the accompanying consolidated balance sheet of Teleplus
Enterprises, Inc. as of December 31, 2005, and the related consolidated
statements of operations, shareholders' equity and cash flows for the two years
ended December 31, 2005 and December 31, 2004. 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 audit.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board ( United States ). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Teleplus Enterprises, Inc. as of December 31, 2005, and the consolidated results
of its operations and its cash flows for the two years ended December 31, 2005
and December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.

Toronto, Canada                                           Mintz & Partners LLP
March 27, 2006                                            Chartered Accountants


                                      F-1
<PAGE>

                           TELEPLUS ENTERPRISES, INC.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005
                            (ALL NUMBERS ARE IN USD)

                                     ASSETS

Current assets

  Cash                                                             $  2,604,915

  Trade Accounts Receivables (note 2)                                 1,389,698
  Accrued and other accounts receivable                                 156,029
  Income Taxes Receivable                                                31,130
  Prepaid expenses                                                      118,016
  Assets Held From Discontinued Operations  (note 11)                 1,075,367
                                                                   ------------
Total current assets                                                  5,375,155

Property and equipment, net (note 3)                                    219,641
Goodwill                                                             17,778,185
Deferred Financing
Fees                                                                  2,165,377
Deferred Income Taxes                                                    35,506
Deferred Connection Charges (note 14)                                    81,295
                                                                   ------------
Total assets                                                         25,655,159
                                                                   ============

                  LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

  Accounts Payable                                                      997,666
  Accrued Expenses                                                    2,074,256
  Accrued Acquisition Obligations (note 6)                            4,050,758
  Unearned Revenue                                                    1,265,479
  Liabilities Held From Discontinued Operations  note 11)             1,043,344
                                                                   ------------
Total current liabilities                                             9,431,503

Convertible Debentures (note 9)                                       9,225,000

Accrued Acquisition Obligations (note 6)                              6,213,720

SHAREHOLDERS' EQUITY:

Class A Preferred Stock, $.001 par value 10,000,000 shares
      Authorized, 2,000,000 issued and outstanding                        2,000
Common Stock $.001 par value ,150,000 shares authorized,
      86,404,786 issued and outstanding                                  86,404
Additional Paid in Capital                                            5,437,536
Accumulated Deficit                                                  (4,652,418)
Accumulated Other Comprehensive Income                                  (88,586)
                                                                   ------------

Total Shareholders' Equity                                              784,936

                                                                   ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 25,655,159
                                                                   ============

               See accompanying summary of accounting policies and
                  notes to consolidated financial statements.


                                      F-2
<PAGE>

                           TELEPLUS ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (ALL NUMBERS ARE IN USD)
                                                             Years Ended
                                                             December 31,
                                                   ----------------------------
                                                      2005            2004
                                                   ------------    ------------
                                                                     (note 11)

Net revenues                                       $  8,092,689    $         --

Cost of Revenues                                      5,409,705

                                                   ------------    ------------

Gross Margin                                          2,682,984              --

General, Administrative and Selling                   2,612,572         365,906

                                                   ------------    ------------
Income (loss) before interest, income taxes ,
depreciation and amortization and discontinued
operations                                               70,412        (365,906)

Depreciation of Property and Equipment                   91,917

Amortization of Deferred Finance Fees                   170,213          57,471

Interest Expense                                        406,737          48,207

                                                   ------------    ------------

Income (loss) before Income Taxes                      (598,455)       (471,584)


Income Taxes                                                 --              --

                                                   ------------    ------------

Net  income (loss) from Continuing Operations          (598,455)       (471,584)

Net loss on Discontinued Operations (note 11)        (2,294,833)       (602,386)
                                                   ------------    ------------

Net Income (loss) for the Year                     $  2,893,288)   $ (1,073,970)

Loss per share

From continuing operations                         $      (0.01)   $      (0.01)

From discontinued operations                              (0.03)          (0.01)
                                                   ------------    ------------
Net income (loss) per share                        $      (0.04)   $      (0.02)

Weighted average shares outstanding:                 78,871,864      67,152,705
                                                   ============    ============

               See accompanying summary of accounting policies and
                  notes to consolidated financial statements.


                                      F-3
<PAGE>

                           TELEPLUS ENTERPRISES, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     Years Ended December 31, 2005 and 2004

                            (ALL NUMBERS ARE IN USD)

<TABLE>
<CAPTION>
                                 ---------------------------------------------------------------------------------------------
                                         Common Stock            Additional                     Accumulated Other
                                                                  Paid-In         Accumulated     Comprehensive
                                                                  Capital           Deficit           Income         Total
                                   Shares          Amount
                                 ---------------------------------------------------------------------------------------------
<S>                               <C>            <C>             <C>              <C>              <C>             <C>
Balance
  December 31, 2003               66,122,500     $    66,123     $   666,655      ($  685,160)     $     2,726     $    50,344

Comprehensive loss:
   Net loss                                                                       ($1,073,970)                     ($1,073,970)
   Foreign currency
   translation                                                                                     ($    2,298)    ($    2,298)


Issuance of common
   stock in connection with
   acquisition of Smart Cell         465,000     $       465     $   329,685                                       $   330,150

Issuance of common
   stock in connection with
   acquisition of Cellz              405,000     $       405     $   437,995                                       $   438,400

Issuance of common
   stock in connection with
   conversion of convertible
   debentures, net                   512,181     $       512     $   102,378                                       $   102,890

Issuance of common
   stock in connection with
   raising of Company
   financing, net                    551,125     $       551     $   183,899                                       $   184,450

Issuance of common
   stock in connection with
   raising of debt and capital       342,098     $       341     $   193,050                                       $   193,391

Issuance of common
  stock to directors                  20,000     $        20                                                       $        20

Issuance of common
   stock for cash, net               500,000     $       500     $   325,226                                       $   325,726

Cost of financing
   activities                                                    ($  111,467)                                      ($  111,467)

                                 ---------------------------------------------------------------------------------------------
Balance,
   December 31, 2004              68,917,904     $    68,917     $ 2,127,421      ($1,759,130)     $       428     $   437,636
                                 =============================================================================================
</TABLE>

               See accompanying summary of accounting policies and
                  notes to consolidated financial statements.


                                      F-4
<PAGE>

<TABLE>
<CAPTION>
                                 -----------------------------------------------------------------------------------------------
                                         Common Stock            Additional                     Accumulated Other
                                                                  Paid-In         Accumulated     Comprehensive
                                                                  Capital           Deficit           Income         Total
                                   Shares          Amount
                                 -----------------------------------------------------------------------------------------------
<S>                               <C>            <C>             <C>              <C>              <C>             <C>
Balance
  December 31, 2004               68,917,904     $     68,917    $  2,127,421     ($ 1,759,130)    $        428    $    437,636

Comprehensive loss:
   Net loss                                                                       ($ 2,893,288)                    ($ 2,893,288)
   Foreign currency
   translation                                                                                     ($    89,014)   ($    89,014)

Issuance of common
   stock in connection with
   acquisition of Telizon Inc
   and Freedom Phone Lines         1,080,503            1,080         311,476                                      $    312,556

Issuance of common
   stock in connection with
   acquisition of freedom
   phone lines                       964,706              965         327,035                                      $    328,000

Issuance of common
   stock in connection with
   conversion of convertible
   debentures, net                 4,966,808            4,967         450,384                                      $    455,351

Issuance of common
   stock in connection with
   raising of Company
   financing, net                  9,750,865            9,751       2,201,755                                      $  2,211,507



Issuance of common
  stock to directors                 250,000              250          74,250                                      $     74,500

Issuance of common stock
  To settle a lawsuit                 50,000               50          10,950                                      $     11,000

 Issuance of common stock
   inconnection with
   employee compensation             424,000              424         101,336                                      $    101,760

Cost of financing
   Activities                                                        (167,071)                                         (167,071)

                                 -----------------------------------------------------------------------------------------------
Balance,
   December 31, 2005              86,404,786           86,404       5,437,536     $ (4,652,418)    $    (88,586)   $    784,936
                                 ===============================================================================================
</TABLE>

               See accompanying summary of accounting policies and
                  notes to consolidated financial statements.


                                      F-5
<PAGE>

                           TELEPLUS ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (ALL NUMBERS ARE IN USD)

<TABLE>
<CAPTION>
                                                                  Years Ended
                                                                  December 31,
                                                          --------------------------
                                                              2005           2004
                                                          -----------    -----------
<S>                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss) From Continuing Operations            $  (598,455)   $  (471,584)
  Adjustments to reconcile net loss to cash provided by
    (used in) operating activities:
      Depreciation and amortization                            91,917              0
      Issuance of Common Shares for Compensation              158,517
      Amortization of Intangible Assets                       170,213         57,471
        Changes in assets and liabilities:
          Accounts Receivable                                (251,367)       (30,000)
          Accrued Receivables                                  45,298              0
          Income Tax Receivables                              (10,791)
          Inventory                                             8,390         (8,390)
          Prepaid expenses                                    100,921       (173,113)
          Accounts payable                                    111,310              0
          Accrued expenses                                    (49,130)       199,005
          Deferred Revenue                                    160,229              0
                                                          -----------    -----------
CASH FLOWS (USED IN) OPERATING ACTIVITIES                 $   (62,948)   $  (426,611)
                                                          ===========    ===========

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of business                                  (6,516,678)      (170,839)
  Acquisition of property and equipment                      (126,485)       (43,915)
  Deferred Connection Charges                                  (71489)            --
                                                          -----------    -----------
CASH FLOWS (USED IN) INVESTING ACTIVITIES                 $(6,714,852)   $  (214,754)
                                                          ===========    ===========

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock, net                                160,658

  Payments of debts and financing, net                       (535,000)            --
  Proceeds from raising of debt and financing, net            750,000      1,577,973
  Proceeds from issuance of convertible debentures, net     7,399,731        692,388
                                                          -----------    -----------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES               $ 7,614,731    $ 2,431,019
                                                          ===========    ===========

Effect of Exchange Rate Changes on Cash                       (38,462)        (2,299)

NET INCREASE (DECREASE) IN CASH
Cash provided by (used in) Continuing Operations              798,469      1,789,654
  Cash acquired from acquisitions                           1,517,822              0
  Cash provided by (used in) discontinued operations          184,820     (1,504,846)
  Cash held by discontinued operations                       (279,509)             0
  Cash, beginning of period                                   383,313        100,804
                                                          -----------    -----------
  Cash, end of period From  Continuing  Operations        $ 2,604,915    $   383,313
                                                          ===========    ===========
</TABLE>

               See accompanying summary of accounting policies and
                  notes to consolidated financial statements.


                                      F-6
<PAGE>

                           TELEPLUS ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND BASIS OF PRESENTATION

Nature of business. The Company is a vertically integrated provider of wireless
and landline products and services across North America. The Company's retail
division - TelePlus Retail Services - owns and operates a national chain of
TelePlus branded stores in major shopping malls, selling a comprehensive line of
wireless and portable communication devices. TelePlus Wireless, Corp. operates a
virtual wireless network selling cellular network access to distributors in the
United States. TelePlus Connect, Corp. is a reseller of landline and long
distance services including internet services. Teleplus was incorporated in
Nevada in January 1999.

In October 2003, Visioneer Holdings Group, Inc. ("Visioneer"), subscribed to
18,050,000 and its partners to 4,512,500 newly issued shares of
Herbalorganics.com, Inc. ("Herbalorganics") and on that same date Visioneer
acquired 23,750,000 shares of Herbalorganics. As a result of the transactions,
Visioneer acquired control of Herbalorganics. In connection with the
transactions Herbalorganics changed its name to Teleplus Enterprises, Inc.
("Teleplus"). After the above transactions, there were 65,312,500 shares of
common stock outstanding. Herbalorganics retained 19,000,000 shares of common
stock.

In October 2003, Teleplus formed a wholly owned subsidiary Teleplus Retail
Services, Inc. ("Retail"), a Quebec, Canada Corporation. Retail acquired certain
assets and assumed certain liabilities from 3577996 Canada, Inc. 3577996 Canada,
Inc. is controlled by the shareholders of Visioneer.

For accounting purposes, this transaction was treated as an acquisition of
Herbalorganics and a recapitalization of 3577996 Canada, Inc. 3577996 Canada,
Inc. is the accounting acquirer and the results of its operations carryover.
Accordingly, the operations of Herbalorganics were not carried over and were
adjusted to $0. In connection with the reverse merger, 3577996 Canada, Inc.
acquired $11,327 in cash and assumed $700 in liabilities.

As shown in the accompanying financial statements, the company has a working
capital deficit from Continuing operations of $4,088,371 because accrued
acquisition obligations of $ 4,050,758 have been classified as current
liabilities. The Company has the right to force the exercise of warrants issued
with the new Securities Purchase Agreement entered into on December 13, 2005.
The agreement states that the Company can force the exercise of warrants if the
Company maintains specific levels of the stock prices and trading volume for a
period of ten consecutive days. Should all warrants be exercised the total
consideration available to the Company is approximately $ 9,350,000. In addition
approximately $ 3,420,000 of the accrued acquisition obligations must be settled
by cash flow generated by operations from the year ended December 2006 and $
359,000 of the accrued obligations will be settled by the issuance of Common
stock.

Principles of Consolidation

The consolidated financial statements include the accounts of Teleplus' wholly
owned subsidiaries. All significant intercompany transactions and balances have
been eliminated.

Use of Estimates

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


                                      F-7
<PAGE>

Discontinued Operations

The Company has followed SFAS 144. Accounting for the impairment or disposal of
Long - Lived Assets accordingly recognized as discontinued operation. the
results from the retail division being abandoned. The Company has also written
down the assets relating to the retail division to their fair values.

Cash and Cash Equivalents

Cash equivalents include highly liquid, temporary cash investments having
original maturity dates of three months or less.

Inventories

Inventories consist of wireless and telephony products and related accessories
and are stated at the lower of cost, determined by average cost method, or
market.

Long-Lived Assets

Property and equipment are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements, maintenance and
repairs are charged to current operations. Depreciation is computed by applying
the straight-line method over the estimated useful lives of machinery and
equipment (three to seven years). The majority of Teleplus' long-lived assets
are located in Canada. Teleplus performs reviews for the impairment of
long-lived assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

Acquisitions and Business Combinations

The Company accounts for acquisitions and business combinations under the
purchase method of accounting. The Company includes the results of operations of
the acquired business from the acquisition date. Net assets of the companies
acquired are recorded at their fair value at the acquisition date. The excess of
the purchase price over the fair value of net assets acquired are included in
intangible assets in the accompanying consolidated balance sheets.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically
identified amounts that management believes to be uncollectible . The criteria
for allowance provision are determined based on historical experience and the
Company's assessment of the general financial conditions affecting its customer
base. If the Company `s actual collections experience changes , revisions to the
allowance may be required.

Intangibles, Goodwill and Other Assets

The Company regularly reviews all of its long-lived assets, including goodwill
and other intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors
the Company considers important that could trigger an impairment review include,
but are not limited to, significant underperformance relative to historical or
projected future operating results, significant changes in the manner of use of
the acquired assets or the strategy for the Company's overall business, and
significant negative industry or economic trends. When management determines
that an impairment review is necessary based upon the existence of one or more
of the above indicators of impairment, the Company measures any impairment based
on a projected discounted cash flow method using a discount rate commensurate
with the risk inherent in our current business model. Significant judgments is
required in the development of projected cash flows for these purposes including
assumptions regarding the appropriate level of aggregation of cash flows, their
term and discount rate as well as the underlying forecasts of expected future
revenue and expense. To the extent that events or circumstances cause
assumptions to change, charges may be required which could be material.


                                      F-8
<PAGE>

The Company adopted SFAS No 142,"Goodwill and Other Intangible Assets". SFAS No.
142 no longer permits the amortization of goodwill and indefinite-lived
intangible assets. Instead, these assets must be reviewed annually (or more
frequently under prescribed conditions) for impairment in accordance with this
statement. If the carrying amount of the reporting unit's goodwill or
indefinite-lived intangible assets exceeds the implied fair value, an impairment
loss is recognized for an amount equal to that excess. Intangible assets that do
not have indefinite lives are amortized over their useful lives.

Revenue Recognition

The Company's revenue is also generated from the sale of wireless, telephony
products and accessories to end users. Teleplus recognizes revenue when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, and collectibility is probable.

The Company's recognizes product sales generally at the time the product is
shipped. Concurrent with the recognition of revenue, Teleplus provides for the
estimated cost of product warranties and reduces revenue for estimated product
returns. Sales incentives are generally classified as a reduction of revenue and
are recognized at the later of when revenue is recognized or when the incentive
is offered. Shipping and handling costs are included in cost of goods sold.

The Company receives co -operative advertising revenue from the telephone
suppliers based on certain requirements to spend the available co-op advertising
allotment.. Any amount received under their program is deducted from advertising
expense.

The Company's suppliers generally warrant the products distributed by Teleplus
and allow returns of defective products, including those that have been returned
to Teleplus by its customers. Teleplus does not independently warrant the
products that it distributes, but it does provide warranty services on behalf of
the supplier.

Teleplus also recognizes revenue through the resale of residential and
commercial telephone lines. The resale of long - distance revenues are recorded
at the time of customer usage based upon minutes of use. Basic monthly charges
for business and residential customers are billed in advance is recorded as
unearned revenue and recognized when the customer receives the service,

Income Taxes

The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. Teleplus records a valuation allowance to
reduce the deferred tax assets to the amount that is more likely than not to be
realized.

Foreign Currency Translation

The Canadian dollar is the functional currency of the Company. Transactions in
foreign currency are translated at rates of exchange rates ruling at the
transaction date. Monetary assets and liabilities denominated in foreign
currencies are retranslated at rates ruling at the balance sheet date. The
resulting translation adjustment is recorded as a separate component of
comprehensive income within stockholders' equity.

Deferred Connection Charges

Deferred connection charges are costs incurred in setting up new commercial
telephone lines for customers. The Company amortizes deferred connection charges
over five years. The determination of the length of time being amortized is
based on the average life that the customer are provided services by the
Company. As at December 31, 2005 the cost being deferred by the Company is $
81,295.


                                      F-9
<PAGE>

Basic and Diluted Net Income (loss) per Share

Net income (loss) per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period. Diluted net
income per share includes the potentially diluted effect of outstanding common
stock options and warrants which are convertible to common shares. Diluted net
loss per share will not been provided when the effect would be anti - dilutive.

Fair Value of Financial Instruments

The recorded amounts of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and accrued acquisition obligations approximate their
respective fair values because of the short maturity of those instruments and
the variable nature of any underlying interest rates. The rates of fixed
obligations approximate the rates of the variable obligations. Therefore, the
fair value of convertible debentures has been estimated to be approximately
equal to their carrying value.

Concentrations of Credit Risk

Financial instruments which potentially subject Teleplus to concentrations of
credit risk consist primarily of cash, cash equivalents, and trade accounts
receivable. Teleplus maintains its cash and cash equivalents with high quality
financial institutions as determined by Teleplus' management. To reduce risk of
trade accounts receivable, ongoing credit evaluations of customers' financial
condition are performed, guarantees or other collateral may be required and
Teleplus maintains a broad customer base.

Deferred Financing Fees

Deferred financing fees represents fees paid in connection with the issue of a
convertible debentures. that runs for a period of 36 months. The deferred
financing fees will be amortized over the terms of the respective debt. The
Company incurred $ 170,212 in amortization expense for the year ended December
31, 2005.

Comprehensive Income

The Company has adopted "Statement of Financials Accounting Standards No. 130",
Reporting Comprehensive Income . Comprehensive income is comprised of foreign
currency translation adjustments

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standard Boards ("FASB") issued
Statements No. 123 (R), Share - Based Payments which will require compensation
costs related to share based payment transactions to be recognized in the
financial statements. As permitted by the predecessor Statement No. 123, we do
not recognize compensation expense with respect to stock options we have issued
because the option price was no greater than the market price at the time the
option was issued. Statement 123(R) will be effective for us in our fiscal
quarter beginning January 1, 2006. We have not completed an evaluation of the
impact of Adopting Statements 123 (R).

In November 2004, the FASB ratified the Emerging Issues Task Force ("EITF")
consensus on Issue 03 -13, "Applying the Conditions in Paragraph 42 of FASB
STATEMENT NO 144, "Accounting for the impairment or Disposal of Long - Lived
ASSETS," in Determining Whether to Report Discontinued Operations, which is
effective for us at the beginning of fiscal 2005. The adoption of the new
pronouncements will not have a material impact on our financial position or
results of operations.

In November 2004 , the FASB issued Statement No. 151 Inventory costs, an
amendment of ARB No. 43, Chapter 4 , to clarify that abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage) should
be recognized as current period charges , and that fixed production overheads
should be allocated to inventory based on normal capacity of production
facilities. Statement No. 151 will be effective for our fiscal year beginning
January 1, 2006, and its adoption will not have a material impact on our
financial position or Results of operations.


                                      F-10
<PAGE>

In May 2005, the FASB issued SFAS No. 154 "Accounting Changes and Error
Corrections" ("SFAS No. 154") which supersedes APB Opinion No. 20, "Accounting
Changes" and SFAS No 3 "Reporting Accounting Changes in Interim Financial
Statements". SFAS No. 154 changes the requirements for accounting for and
reporting of changes in accounting principle. The statement requires the
retroactive application to prior periods' financial statements of changes in
accounting principles, unless it is impracticable to determine either the period
specific effects or the cumulative effects of the change. SFAS No. 154 does not
change the guidance for reporting the correction of an error in previously
issued financial Statements or the change in accounting estimate .SFAS No. 154
is effective for accounting changes and Corrections of errors made in fiscal
years beginning after December 15, 2005. The company does not believe SFAS No.
154 will have a significant impact on its consolidated financial position or
results of operations.

NOTE 2 - TRADE ACCOUNTS RECEIVABLE

The Company's trade accounts receivable are shown net of allowance for doubtful
accounts of as at December 31, 2005 as follows:

       Accounts receivable                                       $1,448,827
       Less: Allowance for doubtful accounts                         59,129
                                                                 ----------
                                                                 $1,389,698

The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of Teleplus' customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

NOTE 3 - PROPERTY AND EQUIPMENT:

Components of property and equipment, at December 31, 2005 are as follows:

       Equipment                                                  $ 183,174
       Furniture and fixtures                                        92,504
       Business software                                            153,414
       Computer Hardware
                                                                    299,687
       Leasehold improvements                                        25,653
                                                                  ---------
                                                                    754,432
       Less: accumulated depreciation and amortization
                                                                   (534,791)
                                                                  $ 219,641

Depreciation and amortization expense was $ 91,917 and $267,300 for 2005 and
2004, respectively. It should be noted that the depreciation from 2004 was
solely from the discontinued operation.

NOTE 4 - ACQUISITIONS

In April 2005 The Company purchased 100% of the issued and outstanding shares of
1523813 Ontario Lmited (Freedom Phone Lines), an Ontario based company.

The total purchase price was $ 910,010. The allocation to the assets acquired
and liabilities assumed was as follows:

       Cash                                                      $ 185,194
       Accounts Receivables                                      $  74,497
       Fixed Assets ( net)                                       $  21,640
       Goodwill                                                  $ 893,212
       Accounts payable                                          $ (146,540)
       Deferred Revenue                                          $ ( 45,503)
       Accrued Liabilities                                       $ ( 72,490)
                                                                 ---------

       Net assets acquired at fair value                         $ 910,010

       Total Consideration:

       964,706 Common shares                                     $ 328,000
       Cash                                                      $ 582,010
                                                                 ---------
                                                                 $ 910,010


                                      F-11
<PAGE>

Goodwill of $894,000 represents the excess of the purchase price over the
carrying value of the net tangible assets acquired and is not deductible for tax
purposes.. A formal valuation of the purchase price will be completed after year
end to determine if any other allocation to intangible asset other than goodwill
is necessary. Goodwill will not be amortized and will be tested for impairment ,
at least annually

The results of operations of Freedom Phone Lines Inc have been included in The
Company's consolidated statements of operations since the completion of the
acquisition in April 2005.

In June 2005 The Company purchased 100% of the issued and outstanding shares of
Avenue Reconnect Inc., an Ontario based company.

The total purchase price was $ 641,285. The allocation to the assets acquired
and liabilities assumed based on the established fair market value was estimated
as follows.

       Cash                                                       $   7,784
       Accounts Receivable                                        $  13,546
       Other Assets                                               $  15,936
       Fixed Assets ( net)                                        $  18,868
       Goodwill                                                   $ 616,698
       Accounts Payable                                           $ (31,547)
                                                                  ---------

       Net assets acquired at fair value                          $ 641,285

       Total Consideration:

       Cash (of which $118,246 is payable                         $ 641,285
         as at December 31, 2005)

Goodwill of $616,698 represents the excess of the purchase price over the
carrying value of the net tangible assets acquired and is not deductible for tax
purposes.. A formal valuation of the of the purchase price will be completed
after year end to determine if any allocation to intangible assets other than
goodwill is necessary. Goodwill will not be amortized and will be tested for
impairment , at least annually.

The results of operations of Avenue Reconnect Inc have been included in The
Company's consolidated statements of operations since the completion of the
acquisition in June 2005.

In July 2005 the Company purchased 100% of the issued and outstanding shares of
Telizon Inc and 1500536 Ontario Inc ( One Bill) , Ontario based Companies.

The total purchase price was $ 9,391,322 . The allocation to the assets acquired
and liabilities was estimated as follows:

       Cash                                                     $   617,844
       Accounts Receivables                                     $ 1,262,285
       Prepaid Assets                                           $    41,285
       Fixed Assets (Net)                                       $   108,798
       Deferred Taxes                                           $    33,796
       Goodwill                                                 $ 8,979,284
       Accounts Payable                                         $  (669,198)
       Accrued Liabilities                                      $  (629,045)
       Unearned Income                                          $  (353,727)
                                                                -----------

       Net assets acquired at fair value                        $ 9,391,322

       Total Consideration:

       Cash (of which $ 4.980,000 is                            $ 9,391,322
         Payable after December 2005)


                                      F-12
<PAGE>

Goodwill.of $8,979,284 represents the excess of the purchase price over the
carrying value of the net tangible assets acquired and is not deductible for tax
purposes.A formal valuation of the purchase price will be completed after year
end to determine if any allocation of the purchase price to intangible assets
other than goodwill is necessary. Goodwill will not be amortized and will be
tested for impairment. . The results of operations of Telizon Inc and One Bill
Inc have been included in The Company's consolidated statements of operations
since the completion of the acquisition in July 2005.

In connection with the above acquisitions , the Company has agreed to additional
consideration of up to $17,839,000 payable on an earn out basis based on the
achievements of specific operating benchmarks during 48 months period following
the acquisitions

An additional amount of $5,086,674 has been allocated to goodwill as at December
31, 2005 based on the achievements of Freedom Phone Lines, Avenue Reconnect and
Telizon Inc and One Bill Inc reaching specific benchmarks up to December 31,
2005

A formal valuation of the acquisitions will be evaluated after year end to
determine the maximum that may be added to goodwill based on the future payout
on the achievements of Freedom Phone Lines , Avenue Reconnect, Telizon Inc, and
One Bill Inc reaching specific benchmarks over the next 48 months.

On December 29, 2005 the Company acquired certain assets of Liberty Wireless a
division of Star Number, Inc. The estimated purchase price was $1,918,346 which
comprised payments for assets and obligations to provide service to customers
that had paid for such service.

The allocation to the assets acquired and liabilities assumed was estimated as
follows:

       Prepaid deposits                                         $   707,000
       Unearned Income                                             (707,000)
       Goodwill                                                   1,918,346
                                                                -----------
       Net assets acquired at fair value                        $ 1,918,346

       Total consideration :

       Cash payable on closing                                  $ 1,418,346
       Cash payable within one year                                 500,000
                                                                -----------

                                                                $ 1,918,346

Goodwill of $1,918,346 represents the excess of the purchase price over the
carrying value of the net tangible assets acquired and is not deductible for tax
purposes. Goodwill will not be amortized and will be tested for impairment, at
least annually. A formal valuation of the purchase price will be done after year
end to determine if any allocation of the purchase price to intangible assets
other than goodwill is necessary.

The company paid $553,000 in January 2006 as part of the total purchase price in
connection with the acquisition.


                                      F-13
<PAGE>

Since the effective date of the purchase was December 29, 2005 there was no
impact on the results of operations for the year ended December 31, 2005.
Results for the periods prior to the acquisition were material to Teleplus and
accordingly pro forma results were filed prior to the release of the financial
statements for the year ended December 31, 2005..

NOTE 5 - INCOME TAXES

Deferred income taxes consist of the following at December 31:

                                             2005                2004
                                        ---------------     ---------------
       Short-term:
         Deferred tax assets            $            --     $            --

       Long-term:
         Deferred Tax Assets            $     1,235,506
         Valuation Allowance                 (1,200,000)                 --
                                        ---------------     ---------------
                                        $        35,506     $            --
                                        ===============     ===============

The Company has net operating losses carry-forwards of approximately
$(3,290,000) which will expire between years 2010 to 2025.

Reconciliations between the statutory federal income tax rate and the Company's
effective income tax rate were as follows :

Year Ended December 31, 2005

Effective income tax rate 36%

The total provision for income tax differs from the amount which would be
computed by applying the United States income tax rate to income (loss ) before
provision for income taxes. The reason for These differences are as follows:

Year Ended December 31, 2005

       Expected income tax provision                             (1,041,000)
       Losses on Discontinued Operations                            379,000
       Other Timing Differences                                          --
       Use of loss not provided for                                 662,000
                                                                 ----------

       Current income tax provision                                      --

NOTE 6 - ACCRUED ACQUISITON OBLIGATIONS

Included in the accrued acquisition obligations is an amount of $4,596,102
payable on an earn-out basis from 2006 operations based on the achievement of
specific benchmarks by Freedom Phone Lines Inc., Avenue Reconnect Inc, Telizon
Inc , and One Bill Inc as at December 31, 2005. The amount of $526,650 has been
included in current liabilities as at December 31, 2005. An amount of $490,572
was paid from accrued acquisition obligations as at December 31, 2005. There is
an interest rate of 6% on the outstanding balance payable.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company paid management fees of $174,409 and $76,335 of an amount of
consideration established and agreed to by both parties, to an entity owned by
the majority shareholder for 2005 and 2004, respectively.

During the year ended December 31, 2005 the Company issued 2,000,000 Class A
Preferred stock As a bonus for services rendered to an entity owned by the
majority shareholder.


                                      F-14
<PAGE>

NOTE 8 - COMMON STOCK

The following shares were issued by the company during the year 2005:

The Company issued 4,966,808 common stock in connection with the conversion of
convertible debentures.

The Company issued 9,750,865 common stock in connection with the raising of
Company financing.

The Company issued 250,000 common stock to directors of the company.

The Company issued 964,706 common stock in connection with the acquisition of
Freedom Phone Lines.

The Company issued 50,000 common stock in connection with the settlement of a
lawsuit.

The Company issued 424,000 common stock in connection with employee
compensation.

The Company issued 1,080,503 in connection with the acquisition of Telizon Inc
and Freedom Phone Lines

In addition to the common stock the Company also issued 2,000,000 shares of
Class A Preferred shares. The Class A Preferred shares entitle the holders to 10
votes each, are not convertible into shares of any other class or series of
stock of the Company , are non participating and no dividends can be declared
there on.

STOCK OPTIONS

Pursuant to the company's stock option plan for employees, the Company granted
7,635,000 stock options in 2004 and 3,917,500 stock options in 2005.

Options granted are being accounted for under Accounting Principles Board
Opinion No 25 (APB Opinion No. 25), Accounting for stock Issued to Employees.
All options have been granted at a price equal to or greater that the fair value
of the Company's common stock at the date of the grant.

Had compensation cost for the employee and non - employee director stock options
been determined based on the fair value at the grant date for awards in 2004 and
2005, consistent with the provisions of SFAS No. 123, our net loss per share
would have been increased to the pro forma amounts below.

                                                                    2005
                                                                    ----
       As reported
       Net income(loss)                                       $  (2,893,288)

       Pro Forma
       Compensation expense                                        (163,000)

       Pro forma:
       Net income (loss)                                      $  (3,056,288)
                                                              -------------

       Net income (loss) per share as reported                $       (0.04)
       Pro forma compensation expense per share                       (0.00)
                                                              -------------
       Pro forma earnings (loss) per share                    $       (0.04)

The fair value of each option grant is estimated on the date of grant using the
Black - Scholes option - pricing model. The following weighted average
assumptions were used in the model:

                                                                      2005

       Dividend yield                                                    0%
       EXPECTED volatility                                              47%
       Risk free interest rates                                         3.5%
       Expected lives (years)                                            3


                                      F-15
<PAGE>

Options outstanding at December 31, 2005 are summarized as follows:

  Number           Price      Year of Issued      Vesting Period         Term
1,640,000          .36              2004           Immediately          3 years
  225,000          .36              2004           1 Year               3 years
2,180,000          .38              2004           Immediately          3 years
   40,000          .40              2004           1 Year               3 years
  200,000          .38              2004           2 Years              3 years
   50,000          .45              2004           2 Years              3 years
2,500,000          .40              2004           2 Years              3 years
  400,000          .40              2004           3 Years              3 years
  200,000          .45              2004           4 Years              3 years
  200,000          .50              2004           5 Years              3 years
  932,500          .21              2005           Current year         3 years
  100,000          .21              2005           Current year         3 years
1,015,000          .22              2005           Current year         3 years
   75,000          .22              2005           1 year               3 years
1,270,000          .23              2005           1 year               3 years
   25,000          .24              2005           1 year               3 years
  100,000          .22              2005           2 years              3 years
  100,000          .23              2005           2 years              3 years
  100,000          .23              2005           3 years              3 years
  100,000          .24              2005           4 years              3 years
  100,000          .25              2005           5 years              3 years

WARRANTS

In connection with Company Financing the Company issued the following warrants :

9,000,000 shares of the Company's Common Stock for a period of three years at an
exercise price per share equal to $0.25

4,000,000 shares of the Company's Common Stock for a period of three years at an
exercise price per share equal to $0.20.

10,000,000 shares of the Company's Common Stock for a period of three years at
an exercise price per share equal to $0.38

10,000,000 shares of the Company's Common Stock for a period of three years at
an exercise price per share equal to $0.25

Should all exercisable warrants as of December 31, 2005 be exercised , the total
additional consideration Available to the Company is approximately $ 9,350,000.
A maximum of 33,000,000 common stock Would be issued for these warrants.


                                      F-16
<PAGE>

NOTE 9 - COMPANY FINANCING

On July 12, 2004, The Company secured a $11,000,000 financing committment from
Cornell Capital Partners LP. The terms of the transaction call for The Company
to receive initial funding in the amount of $1,000,000 payable in three (3)
installments: $ 450,000 payable on closing, $400,000 payable upon filing of a
registration statement and the balance of $150,000 payable upon the registration
statement becoming effective. As part of the transaction the Company also
secured $10,000,000 under a Standby Equity Agreement. The Company could draw the
funds under the Standby Equity Agreement over a 24 month period based on The
Company's funding requirements subject to an effective registration with the SEC
which became effective Oct 1st 2004. The proceeds were used to finance existing
and future acquisitions, capital expenditures, increases in inventory and for
general working purposes. Agreements pertaining to the financial arrangements
were filed. In connection with the Standby Equity Agreement, TelePlus issued
258,098 shares of common stock as financing costs.

The convertible debentures of $ 450,000,$ 400,000 and $ 150,000 were secured by
all of the assets and property of the Company, bear interest at 5% per annum and
are repayable on their third year anniversary dates of July 2, 2007, September
1, 2007 and October 1, 2007 respectively. The Company had the option of
converting the principal amounts and all accrued interest before their third
year anniversary dates. As at December 31, 2005 $ 1,000,000 of the convertible
debentures has been converted into common shares.

The Company received $ 8,125,000 under three promissory notes. The first
promissory note was received in the last quarter of 2004. in the amount of
$2,000,000 . A second promissory note was received in the first quarter of 2005
in the amount of $750,000. As at December 31, 2005 the original amounts of
$2,750,00 had been repaid A third promissory note of $5,625,000 that was
received in July 2005 was issued in secured convertible debentures as part of an
new financing agreement on December 13, 2005.

On December 13, 2005 Teleplus entered into a certain Securities Purchase
Agreement ( "SPA") with Cornell Capital Partners , LP Pursuant to which the
company issued to Cornell Nine Million Dollars Two Hundred and Twenty Five
Thousand ( $ 9,225,000 ) in secured convertible debentures of even date with the
SPA. The Debentures are convertible in whole or in part , at any time and from
time to time before maturity at the option of the holder at the lesser of $0.275
or ninety - five percent (95%) of the lowest volume weighted price of common
stock for thirty trading days immediately preceding the conversion date. The
Debentures have a term of three (3) years , piggy -back registration rights and
accrue interest at a rate equal to ten percent ( 10% ) per year. The Debentures
are secured by certain pledged assets of the Company. In connection with the
Debentures the company issued 1,250,000 shares of common stock as financing
costs. As at December 31, 2005 the balance outstanding in Convertible Debentures
was $9,225,000.

In connection with the SPA the Company also issued Cornell a warrant to purchase
33,000,000 shares of the Company's common stock.

NOTE 10 - CONSOLIDATED STATEMENT OF CASH FLOWS

Non cash financing and investing activities during 2005 were as follows:

The Company issued 4,966,808 common shares upon the conversion of debentures
having face value of values of $ 800,000.

The Company issued 9,750,865 common shares in connection with the raising of
Company financing valued at $ 2,284,791

The Company issued 250,000 common shares to directors valued at $74,500.

The Company issued 964,706 common shares in connection with the acquisition of
Freedom Phone Lines valued at $328,000..

The Company issued 50,000 common shares in connection with the settlement of a
lawsuit valued at $11,000.


                                      F-17
<PAGE>

The Company issued 1,080,503 common shares in connection with the acquisition of
Telizon Inc and Freedom Phone Lines valued at $312,556.

The Company issued 424,000 common shares in connection with employee
compensation valued at $101,760.

The Company issued 2,000,000 Preferred A shares in connection with consulting
fees paid having a face value of $2,000.

NOTE 11 - DISCONTINUED OPERATIONS

On January 13TH , 2006 , Teleplus Retail Services , Inc .( "Retail") , a
Canadian subsidiary of the Company, filed in Canada a Notice of Intention to
Make a proposal under the Bankruptcy and Insolvency Act ( Canada) ( the "Act ")
as a first step toward the divestiture by the Company of its unprofitable retail
division.The Company elected not to have retail make a proposal under the Act
and discontinued its operations as of February 12, 2006. The Company has also
determined that it will have no continuing involvement in retail operations
going forward and that the retail operations will no longer constitute a segment
of the overall business operations of the Company in the year ended December 31,
2006. Therefore, the Company reclassified as discontinued operations the
operating results of this division. The comparative operating are also
classified to reflect the operating results of the discontinued operations
separately in the comparative period.

STATEMENT OF OPERATIONS
RETAIL DIVISION

                                                         YEARS ENDED
                                                         DECEMBER 31,

                                                    2005            2004
                                                    ----            ----

       Net Revenues                             $ 11,043,352    $ 12,180,501
                                                ------------    ------------

       Cost of Revenues                            8,234,701       8,882,478
       General,Administraitve and Selling          4,326,341       3,609,412
       Depreciation of Property and Equipment        347,401         267,300
       Interest Expense                               17,509          23,697
       Write Down of Assets and Liabilities         (709,080)             --
       Write Down of Goodwill                      1,121,313              --
                                                ------------    ------------

       Loss before Income Taxes                   (2,294,833)       (602,386)

       Income Taxes                                       --              --
                                                ------------    ------------

       Net Loss on Discontinued Operations      $ (2,294,833)   $   (602,386)
                                                 ------------    ------------


The Company will have available loss carry forwards from the remaining business
entities of the retail division that have not declared bankruptcy . The
intention is to apply these losses against future profits from its remaining
business operations


                                      F-18
<PAGE>

SUMMARY OF NET ASSETS REMAINING
RETAIL DIVISION

ASSETS

       Cash                                                      $  279,659
       Accounts Receivable                                           596,758
       Inventory                                                     195,882
       Prepaid Expenses                                                3,068
                                                                  ----------
                                                                   1,075,367

       LIABILITIES

       Accounts Payable                                           $  851,897
       Accrued Liabilities                                           191,447
                                                                  ----------
                                                                   1,043,344

       Net Assets Remaining                                       $   32,023
                                                                  ----------

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The following proceedings have been instigated against the Company. The Company
does not believe that the following legal proceedings would have a materially
adverse impact on the Company's business or its results of operations,
nevertheless such proceedings are disclosed.

Proposed Tax Assessment. Teleplus is involved in proceedings with the Minister
of Revenue of Quebec ("MRQ"). The MRQ has proposed an assessment for the Goods
and Services Tax ("GST") and Quebec Sales Tax ("QST"), of approximately
$474,000CDN and penalties of approximately $168,000CDN. The proposed tax
assessment is for $322,000CDN for QST and $320,000CDN for GST. Teleplus has made
an initial payment of $80,500 towards the proposed tax assessment as of December
31, 2005. Teleplus believes that certain deductions initially disallowed by the
MRQ for the QST are deductible and is in the process of compiling the deductions
to present to the MRQ. Teleplus also believes that export sales to the United
States of America are exempt from the GST. In accordance with SFAS No. 5,
"Accounting for Contingencies," Teleplus makes a provision for a liability when
it is both probable that a liability has been incurred and the amount of the
loss can be reasonably estimated. No provision for this matter has been accrued.
Teleplus reviews these provisions at least quarterly and adjusts these
provisions to reflect the impacts of negotiations, settlements, rulings, advice
of legal counsel, and other information and events pertaining to a particular
case. Dealing with taxing authorities is inherently unpredictable. However,
Teleplus believes that it has valid defenses with respect to the proposed tax
assessment pending against it. Nevertheless, it is possible that cash flows or
results of operations could be materially affected in any particular period by
the unfavorable resolution of one or more of these contingencies.

Wrongful Dismissal. A former employee of TelePlus retail Services, Inc., a
subsidiary of the Company, has instigated a claim in Quebec Superior Court in
the amount of $90,000CDN against the Company for wrongful dismissal. The company
doesn't believe the claim to be founded and intends to vigorously contest such
claim. The parties are at discovery stages.

Wrongful Dismissal. There is a claim from three individuals in British Columbia
for an amount of about $ 147,000 and the issuance of 510,000 shares for which a
letter of demand has been served on the Company. The Company doesn't believe the
claim to be founded and intends to vigorously contest such claim. No court
proceedings have been instituted and we are presently in discussion with the
aforementioned individuals.

Consulting Fee. On April 13, 2005, a lawsuit was filed in the United States
District Court, District of New Jersey (Newark) (Case No. 05-2058) by Howard
Salamon d /b /a "Salamon Brothers" (as the plaintiff) against Teleplus. This
matter arises out of an alleged agreement between the plaintiff and Teleplus.
The plaintiff is seeking specific performance of the alleged agreement, money
damages and a declaratory judgment for the payment of a commission allegedly due
to the plaintiff in an amount equal to 10% of all funds received by the Company
from Cornell Capital. Teleplus has filed a counterclaim against the plaintiff
seeking rescission of the alleged agreement and a refund of $100,000 paid by
Teleplus to the plaintiff. Teleplus believes that this lawsuit is without any
merit, that the plaintiff's claims are unfounded and that Teleplus has good
defenses against the claims asserted by the plaintiff. Teleplus also believes
that it has good claims for the rescission of the agreement and for the refund
of the amount paid to the plaintiff. Teleplus intends to contest and defend
against the plaintiff's claims. The foregoing notwithstanding, total liability
to Teleplus, if it loses this lawsuit, could reach a maximum of 10% of all funds
received by the Company from Cornell Capital.


                                      F-19
<PAGE>

Consulting Fee. On November 30, 2005, a lawsuit was filed in the Superior Court,
State of California, County of San Diego (Case No. GIC 857605) by Business
Consulting Group Unlimited (also known as BCGU) against Teleplus. The suit
arises out of an agreement between BCGU and Teleplus. BCGU has alleged that
Teleplus is in breach of the agreement and is seeking damages from Teleplus for
certain tranches of compensation it allegedly earned and was to receive under
the agreement. The compensation allegedly earned consists of $45,000 in cash,
560,000 shares of Teleplus restricted common stock, the right to exercise the
rights under certain warrants to purchase shares of Teleplus common stock at
$.65 per share and the right to exercise the rights under certain warrants to
purchase shares of Teleplus common stock at $1.00 per share. Teleplus filed a
counterclaim against BCGU for breach of the agreement for failing to properly
and fully perform the services BCGU undertook to perform under the agreement.
Teleplus is seeking a declaratory judgment that BCGU has breached the agreement
and the return of cash and stock payment it has already made to BCGU. Teleplus
believes that this lawsuit is without any merit, that BCGU's claims are
unfounded and that Teleplus has good defenses against the claims asserted by
BCGU. Teleplus also believes that it has good claims for breach of the agreement
by BCGU and for a refund of the amount paid to BCGU.

Teleplus intends to vigorously defend all the lawsuits and claims against it.
However, Teleplus cannot predict the outcome of these lawsuits and claims. An
adverse resolution of the proposed tax assessment or the Salamon Brothers
consulting fee could have a material adverse effect on our business, financial
condition and results of operations.

The company has instigated the following claim against Wal-Mart Canada, corp.:

      Wal-Mart Canada, Corp. The Company's subsidiary, TelePlus Management, has
instigated September 23rd, 2004 in the Ontario Superior Court of Justice a
USD$5.0 million claim against Wal-Mart Canada Corp. for breach of agreement.
Parties are at discovery stages.

Operating Leases

Teleplus has several non-cancelable operating leases, primarily for office space
and storage that expire through December 31, 2009. These leases require Teleplus
to pay all operating costs such as maintenance and insurance. Rental expense for
the operating leases for the years ended December 31, 2005 and 2004 was $176,801
and $1,018,007 respectively. The amounts for 2004 include amounts paid for the
discontinued operation.

Future minimum lease payments under non-cancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 2005
are:

      December 31,                                                  Amount
                                                                    --------
        2006                                                        $176,800
        2007                                                         176,800
        2008                                                          79,390
        2009                                                          79,390
                                                                    --------
                                                                    $512,380


                                      F-20
<PAGE>

NOTE 13 - PROFORMA INFORMATION -

The Company's historical statements of operations include the results of Freedom
Phone Lines, Avenue Reconnect Inc. , Telizon Inc. and One Bill Inc. subsequent
to the acquisition dates of April 2005 , June 2005, and July 2005 respectively.
The following information for the year ended December 31, 2005 presents the
consolidated results of the Company as if the acquisitions of Freedom Phone
lines , Avenue Reconnect Inc. , and Telizon Inc and One bill Inc had occurred at
the beginning of 2005. This unaudited pro forma information for the year ended
December 31, 2005 is not intended to be indicative of future operating results.


                                                                     2005

       Revenues                                                 $ 15,089,791

       Net Income (Loss) From Continuing Operations             $    453,726

       Net Income (Loss) From Discontinuing Operations          $ (2,294,833)
                                                                ------------

       Net Income (Loss) $                                        (1,841,107)

       Income (Loss) per share :
          Basic Income (loss) per share                         $      (0.02)

NOTE 14  - DEFERRED CONNECTION CHARGES

       Gross carrying amount                                       $435,394

       Accumulated amortization                                    (354,099)
                                                                   --------

                                                                     81,295


Amortization expense for the year ended December 31, 2005 was $ 14,546

NOTE 15- SUBSEQUENT EVENT

In January 2006 the company paid $ 553,000 in cash as part of the total purchase
price in connection with the Acquisition of Liberty Wireless.

On January 13, 2006. Teleplus Retail Services , Inc.( " Retail "), a Canadian
subsidiary of the Company , filed in Canada a Notice of Intention to Make a
Proposal under the Bankruptcy and Insolvency ACT ( Canada) ( " the Act") as a
first step toward the divestiture by the Company of its unprofitable retail
division. The Company elected not to have Retail make a Proposal and, as a
result , Retail was deemed to have made an assignment of its assets to its
creditors under the Act and discontinued its operations as of February 12, 2006.
The Company has also determined that it will have no continuing involvement in
retail operations going forward and that retail operations will no longer
constitute a segment of the overall business operations of the Company in the
year ending December 31, 2006.


                                      F-21
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

Effective January 14, 2005, the client-auditor relationship between the TelePlus
Enterprises, Inc. (formerly HerbalOrganics.com, Inc.) and Lopez, Blevin, Bork &
Associates, an independent chartered accountant ("Former Accountant") ceased as
the former accountant was dismissed. Lopez, Blevin, Bork & Associates' report
dated November 15th 2004, on the Company's consolidated balance sheet of
Teleplus Enterprises, Inc. as of September 30, 2004, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the two years then ended, did not contain an adverse opinion or
disclaimer of opinion, or qualification or modification as to uncertainty, audit
scope, or accounting principles.

In connection with the audit of the Company's financial statements, and in the
subsequent interim period, there were no disagreements with Lopez, Blevin, Bork
& Associates on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of Lopez, Blevin, Bork & Associates would have caused Lopez,
Blevin, Bork & Associates to make reference to the matter in their report. The
Company has requested Lopez, Blevin, Bork & Associates to furnish it a letter
addressed to the Commission stating whether it agrees with the above statements.
A copy of that letter, dated January 14, 2005 is filed as Exhibit 16 to this
Form 8-K. Mintz & Partners LLP was engaged on January 14, 2005 as the Company's
principal accountant to audit the financial statements of the Company. The
decision to change accountants was recommended by the Audit Committee of the
Board of Directors of the Company and approved by the Board of Directors.

During the years ended December 31, 2003 and 2002 and subsequent to September
30, 2004 through the date hereof, neither the Company nor anyone on its behalf
consulted with Mintz & Partners LLP regarding either the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's
consolidated financial statements, nor has Mintz & Partners LLP provided to the
Company a written report or oral advice regarding such principles or audit
opinion or any matter that was the subject of a disagreement or reportable
events set forth in Item 304(a)(iv) and (v), respectively, of Regulation S-K
with the Company's former accountant.

The Company has requested Mintz & Partners LLP review the disclosure in this
report on Form 8-K and provided Mintz & Partners LLP the opportunity to furnish
the Company with a letter addressed to the Commission containing any new
information, clarification of the Company's expression of its views, or the
respects in which Mintz & Partners LLP does not agree with the statements made
by the Company in this report. Mintz & Partners LLP has advised the Company that
no such letter need be issued.


                                       34
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

      (a) Evaluation of disclosure controls and procedures. Our chief executive
officer and chief financial officer, after evaluating the effectiveness of the
Company's "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this quarterly report (the "Evaluation Date"), has concluded that as
of the Evaluation Date, our disclosure controls and procedures were adequate and
designed to ensure that material information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act of 1934
is 1) recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms; and 2) accumulated and
communicated to him as appropriate to allow timely decisions regarding required
disclosure.

      (b) Changes in internal control over financial reporting. There were no
significant changes in our internal control over financial reporting during our
most recent fiscal quarter that materially affected, or were reasonably likely
to materially affect, our internal control over financial reporting.


                                       35
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS AND OFFICERS

      Generally, each of our directors is elected by the stockholders to a term
of one year and serves until his or her successor is elected and qualified.
Pursuant to the Company's Bylaws, Robert Krebs, Michael Karpheden, Hakan
Wretsell and Kelly McLaren was appointed as directors by a majority of the board
of directors to fill vacancies that existed on the board of directors at the
time of her appointment. Each of the officers is elected by the Board of
Directors to a term of one year and serves until his or her successor is duly
elected and qualified, or until he or she is removed from office. The Board of
Directors has no nominating compensation committees. The Directors and Officers
of the Company are as follows:

<TABLE>
<CAPTION>
Name                       Age              Position                           Term
------------------------------------------------------------------------------------------------------
<S>                        <C>              <C>                                <C>
Marius Silvasan            32               Chief Executive Officer and        October 2003 to present
                                            Director
Robert B. Krebs            49               Chief Financial Officer and        February 2004 to present
                                            Director
Thomas Davis               57               Chief Operating Officer and        November 2005 to present
                                            Director
Kelly McLaren              42               President and Director             November 2004 to present
Michael L. Karpheden       44               Director                           March 2004 to present
Hakan Wretsell             45               Director                           March 2004 to present
Gordon Chow                50               Director                           August 2005 to present
------------------------------------------------------------------------------------------------------
</TABLE>


                                       36
<PAGE>

Marius Silvasan, MBA, has served as our CEO and as a Director since October
2003. Prior to joining TelePlus, Mr. Silvasan held the position of President &
CEO for Visioneer Calling Card Inc. and Alliance TeleCard Corp. from 1995 to
June 1999. Prior to Visioneer and Alliance Mr. Silvasan held the position of
National Sales Manager for The Home Phone Club from 1990 to 1995. Graduate of
the HEC University in Montreal, Mr. Silvasan holds a B.A.C. in business
administration and an MBA (2003).

Robert Krebs, has served as TelePlus' Chief Financial Officer and as a Director
since February 2004. Prior to joining the Company, Mr. Krebs worked nine years
for GB MICRO Electronics where he held the position of Vice-President, Finance.
Prior to GB MICRO, Mr. Krebs held the position of Controller for Future
Electronics and Le Chateau retail stores. Mr. Krebs holds a C.A. and a Bachelor
of Commerce both from McGill University. Mr. Krebs is an active member of the
Canadian Institute of Chartered Accountants.

Tom Davis, has served as the Company's COO since November 2005. Prior to joining
TelePlus Mr. Davis served as President and CEO of Telizon Inc. from December,
2002 until its acquisition by Teleplus in July, 2005. Prior to December 2002 Mr.
Davis was Senior Vice President, Customer Operations at Axxent Inc., a
Competitive Local Exchange Carrier (CLEC). He has also held senior management
and consulting roles at AT&T Canada (consulting), Cam Net Communications
(President and COO) and ACC Long Distance (President and CEO). Graduate of the
Wharton School of Business, University of Pennsylvania with a Bachelor of
Science in Economics.

Kelly McLaren, has served as our President and Director since November 2004.
Prior to joining TelePlus, Ms. McLaren worked 16 years for Pratt & Whitney
Canada, Corp. a subsidiary of United Technologies Corporation, were she held
various senior positions including Business Unit Director - Procurement and most
recently Regional Sales Manager - Latin America. Ms. McLaren holds an MBA from
Ecole des Hautes Etudes Commerciales (HEC) in Montreal were she focused on
marketing and international studies.

Michael L. Karpheden, has served as a Director of TelePlus since March 2004. Mr.
Karpheden has served as CFO of iCurie Lab, based in the UK since September 2004.
He has concurrently held this position with positions at other companies
discussed below since January 2003. From January 2003 to June 2003, Mr.
Karpheden was a Sales Representative for First Investors 2003. From February
2001 to January 2003, Mr. Karpheden held various positions at STRAX, Inc., a
leader in the distribution of mobile phones and accessories, based in Miami,
Florida, that included Chief Operating Officer and VP Finance and Operations.
Mr. Karpheden is a veteran in the wireless industry having worked for Ericsson
Mobile Phones for a twelve-year period from 1989 to 2001. While at Ericsson, Mr.
Karpheden held, among others, the position of VP Finance & Logistics, Americas
Region and President and CFO/Director of Finance for Ericsson Telecommunications
in Moscow Russia. Mr. Karpheden holds a degree in Business and Management from
the University of Lund in Sweden.

Hakan Wretsell, has served as a Director of TelePlus since March 2004. Mr.
Wretsell currently serves as CEO for iCurie Lab, based in the UK since September
2004. Between 2000 and 2003, Mr. Wretsell held the position of President for
STRAX Inc. Mr. Wretsell has over sixteen years experience in the wireless
industry. Fourteen of those years, from 1987 to 2000, he spent at Ericsson
having held, among others, the position of Executive VP and GM, Americas Region
and VP Sales and Marketing, Latin America Region. Mr. Wretsell holds a degree in
Business and Management from the Universities of Umea, Uppsala and Lund in
Sweden.


                                       37
<PAGE>

Gordon Chow, has served as a Director of TelePlus since August 2005. Mr. Chow
currently serves as President of VTech Telecommunications Canada Ltd., where he
is responsible for the Telecommunication Products Business in Canada, having
established the Canadian operations, VTech Electronics Canada Ltd., in 1986 Mr.
Chow was originally appointed General Manager and promoted President in 1987.
Prior to joining VTech, Mr. Chow had his own Management Consulting practice, and
held management positions with a real estate development company and a Chartered
Accountant firm. Mr. Chow holds a Bachelor of Commerce degree from the
University of British Columbia and is a member of the Institute of Chartered
Accountants of British Columbia and a member of the Board of Governors of
Crofton House School in Vancouver. Mr. Chow has served as a member of the
President's Advancement Council of the British Columbia Institute of Technology
and a director of the BCIT Foundation. He was also a member of the Royal Roads
University - MBA Advisory Board, and a director of the Canadian Toy Association.

DIRECTOR COMPENSATION

      All Directors of the Company will hold office until the next annual
meeting of the shareholders, and until their successors have been elected and
qualified. Officers of the Company are elected by the Board of Directors and
hold office at the pleasure of the Board. The Company compensates its board
members $2,000 per director's meeting and 30,000 shares of the Company's common
stock for every year served as a director. In the event that a board member
provides additional consultation and advisory services to management either
before or after a board meeting, the Company will pay such board member at a
rate of $1,000 per week for the services provided. From time to time, the
Company's management, in its sole discretion, may assign special projects to a
board member. Directors will also receive bonus compensation of 5% payable in
stock on the value of each special project completed. The Company will pay a
maximum of 200,000 shares of its common stock per year for special projects. The
Company and director may agree on an alternate remuneration for completion of
special projects.

INVOLVEMENT IN LEGAL PROCEEDINGS

None of our executive officers or directors have been the subject of any order,
judgment, or decree of any court of competent jurisdiction, or any regulatory
agency permanently or temporarily enjoining, barring suspending or otherwise
limiting him from acting as an investment advisor, underwriter, broker or dealer
in the securities industry, or as an affiliated person, director or employee of
an investment Company, bank, savings and loan association, or insurance Company
or from engaging in or continuing any conduct or practice in connection with any
such activity or in connection with the purchase or sale of any securities.


                                       38
<PAGE>

None of our executive officers or directors have been convicted in any criminal
proceeding (excluding traffic violations) or is the subject of a criminal
proceeding that is currently pending.

None of our executive officers or directors are the subject of any pending legal
proceedings.

AUDIT COMMITTEE

Messrs. Karpheden and Wretsell serve on TelePlus' audit committee. The audit
committee reports to the Board of Directors regarding the appointment of our
independent public accountants, the scope and results of our annual audits,
compliance with our accounting and financial policies and management's
procedures and policies relative to the adequacy of our internal accounting
controls

EMPLOYEE STOCK OPTION COMMITTEE

Messrs. Karpheden and Wretsell serve on TelePlus' Employee Stock Option
Committee. The Employee Stock Option committee reports to the Board of Directors
regarding the issuance of stock options to employees in compliance with the
Company's stock option program.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the securities Exchange Act of 1934, as amended, requires the
Company's directors, executive officers and persons who own more than 10% of a
class of the Company's equity securities which are registered under the Exchange
Act to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of such registered securities.
Such executive officers, directors and greater than 10% beneficial owners are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms filed by such reporting persons.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on representations that no other reports
were required, no person required to file such a report failed to file during
fiscal 2003. Based on stockholder filings with the SEC, Marius Silvasan, Robert
Krebs, Michael Karpheden, Hakan Wretsell, Kelly McLaren, Tom Davis and Gordon
Chow are subject to Section 16(a) filing requirements (.

CODE OF ETHICS

The Board of Directors adopted a Code of Ethics in January 2004, meeting the
requirements of Section 406 of the Sarbanes-Oxley Act of 2002. The Company will
provide to any person without charge, upon request, a copy of such Code of
Ethics. Persons wishing to make such a request should contact Marius Silvasan,
Chief Executive Officer, 7575 TransCanada, Suite 305, St-Laurent, Quebec, Canada
H4T 1V6, (514) 344-0778.


                                       39
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Compensation paid to Officers and Directors is set forth in the Summary
Compensation Table below. The Company may reimburse its Officers and Directors
for any and all out-of-pocket expenses incurred relating to the business of the
Company.

                                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      LONG-TERM COMPENSATION
                                                                                      ----------------------
                                         ANNUAL COMPENSATION             AWARDS                     PAYOUTS
                                         -------------------             ------                     -------
                                                                       RESTRICTED    SECURITIES
NAME AND PRINCIPAL                                          OTHER         STOCK      UNDERLYING      LTIP       ALL OTHER
POSITION                 YEAR      SALARY      BONUS    COMPENSATION    AWARD(S)    OPTIONS/SARs   (NUMBER)   COMPENSATION
--------                 ----      ------      -----    ------------    --------    ------------   --------   ------------
<S>                      <C>        <C>         <C>       <C>             <C>         <C>            <C>      <C>
Marius Silvasan,         2005       $174,409      --             --           --      3,000,000         --             --
CEO and Director         2004        $76,335      --             --           --      6,000,000         --             --
                         2003        $60,000      --             --           --             --         --             --

Robert Krebs,            2005        $70,738      --             --           --        245,000         --             --
CFO and Director         2004        $48,400      --             --           --        490,000         --             --

Kelly McLaren,           2005       $101,420      --             --           --        500,000         --             --
President and Director   2004        $10,137      --             --           --      1,000,000         --             --

Tom Davis,               2005       $165,879                                            600,000
COO and Director
</TABLE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth information as of March 10, 2006, with respect to
the beneficial ownership of the common stock by (i) each director and officer of
the Company, (ii) all directors and officers as a group and (iii) each person
known by the Company to own beneficially 5% or more of the common stock:

                       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                       -----------------------------------------------

<TABLE>
<CAPTION>
                                                                                         Shares Owned         % of Class
Title of Class          Name and Address of Beneficial Owner                            Beneficially(1)          Owned
--------------          ------------------------------------                            ---------------          -----
<S>                     <C>                                                               <C>                    <C>
                        Marius Silvasan                                                   41,090,000(2)          44.46%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

                        TOTAL                                                             41,090,000             44.46%
</TABLE>


                                       40
<PAGE>

<TABLE>
<CAPTION>
                                                                                         Shares Owned         % of Class
Title of Class          Name and Address of Beneficial Owner                            Beneficially(1)          Owned
--------------          ------------------------------------                            ---------------          -----
<S>                     <C>                                                               <C>                    <C>
Common                  Marius Silvasan                                                   41,090,000(2)          44.46%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  Robert Krebs                                                         400,000              0.43%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  Kelly McLaren                                                        340,000              0.37%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  Tom Davis                                                             10,000              0.00%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  Gordon Chow                                                           20,000              0.00%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  Michael L. Karpheden                                                 138,000              0.15%
                        8510 SW 149 Ave. # 1115
                        Miami, Florida 33193

Common                  Hakan Wretsell                                                       122,000              0.13%
                        7575 TransCanada, Suite 305
                        St-Laurent, Quebec H4T 1V6

Common                  All Officers and Directors as a Group (4 People)                  42,120,000             45.58%
</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

(1)   Applicable percentage of ownership is based on 86,403,186 shares of common
      stock outstanding, plus 6,010,000 exercisable option shares for a total of
      92,413,786 shares of common stock outstanding as of January 26, 2006 for
      each stockholder. Beneficial ownership is determined in accordance with
      the rules of the Securities and Exchange Commission and generally includes
      voting or investment power with respect to securities. Shares of common
      stock subject to securities exercisable or convertible into shares of
      common stock that are currently exercisable or exercisable within 60 days
      of January 26, 2006 are deemed to be beneficially owned by the person
      holding such securities for the purpose of computing the percentage of
      ownership of such person, but are not treated as outstanding for the
      purpose of computing the percentage ownership of any other person. Note
      that affiliates are subject to Rule 144 and Insider trading regulations -
      percentage computation is for form purposes only.

(2)   Beneficially owned through Visioneer Holdings Group Inc.


                                       41
<PAGE>

Kelly McLaren: options to purchase: (i) 100,000 shares at an exercise price of
USD$0.21 that vest on September 29, 2005; (ii) 100,000 shares at an exercise
price of USD$0.22 that vest on April 1, 2007; (iii) 100,000 shares at an
exercise price of USD$0.23 that vest on April 1, 2008; (iv) 100,000 shares at an
exercise price of USD$0.24 that vest on April 1, 2009; and (v) 100,000 shares at
an exercise price of USD$0.25 that vest on April 1, 2010. 200,000 shares at an
exercise price of USD$0.36 that vest the 29 of September 2005; 200,000 shares at
an exercise price of USD$0.38 that vest the 29 of September 2006; 200,000 shares
at an exercise price of USD$0.40 that vest the 29 September 2007; 200,000 shares
at an exercise price of USD$0.45 that vest 29 September 2008; 200,000 shares at
an exercise price of USD$0.50 that vest 29 September 2009

Robert Krebs: options to purchase: (i) 70,000 shares at an exercise price of
USD$0.21 that vest on September 1, 2005; (ii) 75,000 shares at an exercise price
of USD$0.22 that vest on June 1, 2006; and (iii) 100,000 shares at an exercise
price of USD$0.23 that vest on December 1, 2007. 140,000 shares at an exercise
price of USD$0.36 that vest the 1of December 2004; 150,000 shares at an exercise
price of USD$0.38 that vest the 1 of December 2005; 200,000 shares at an
exercise price of USD$0.40 that vest 1 June 2007

Marius Silvasan: options to purchase: (i) 750,000 shares at an exercise price of
USD $0.21 that vest on September 1, 2005; (ii) 1,000,000 shares at an exercise
price of USD $0.22 that vest on December 1, 2005; and (iii) 1,250,000 shares at
an exercise price of USD $0.23 that vest on December 1, 2006. 1,500,000 shares
at an exercise price of $0.36 that vest the 3 of December 2004; 2,000,000 shares
at an exercise price of $0.38 that vest the 3 of June 2005; 1,250,000 shares at
an exercise price of $0.40 that vest the 3 of June 2006

Tom Davis: options to purchase: (i) 150,000 shares at an exercise price of USD
$0.21 that vest on May 1, 2006; (ii) 150,000 shares at an exercise price of USD
$0.22 that vest on November 1, 2006; (iii) 150,000 shares at an exercise price
of USD $0.23 that vest on May 1, 2007; and (iv) 150,000 shares at an exercise
price of USD $0.24 that vest on November 1, 2007.

Michael Karpheden: an option to purchase 50,000 shares at an exercise price of
USD$0.21 that vest on December 1, 2005.

Hakan Wretsell: an option to purchase 50,000 shares at an exercise price of
USD$0.21 that vest on December 1, 2005.

CHANGES IN CONTROL

The Company does not anticipate any changes in control of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


                                       42
<PAGE>

The Company paid management fees of $174,409 and $76,335 to an entity owned by
the majority shareholder for 2005 and 2004, respectively.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   EXHIBITS

            Exhibit No.              Description

            31.1                  Certificate of the Chief Executive
                                  Officer pursuant Section 302 of the
                                  Sarbanes-Oxley Act of 2002        *

            31.2                  Certificate of the Chief Financial
                                  Officer pursuant Section 302 of the
                                  Sarbanes-Oxley Act of 2002                   *

            32.1                  Certificate of the Chief Executive
                                  Officer pursuant to Section 906 of
                                  the Sarbanes-Oxley Act of 2002               *

            32.2                  Certificate of the Chief Financial
                                  Officer pursuant to Section 906 of
                                  the Sarbanes-Oxley Act of 2002               *

*     Filed herein

      (b)   REPORTS ON FORM 8-K

The Company filed the following four reports on Form 8-K, 8-KA and 14C during
the 2005 fiscal period covered by this report:

            (1) Form 8-K filed on January 21, 2005 to advise investors that the
Company dismissed Lopez, Blevin, Bork & Associates (the "Former Accountant") on
January 14th 2005 as the Company's independent auditors and appointed Mintz &
Partners, LLP on that same day as the Company's auditor.

            (2) Form 8-K filed on May 4, 2005, to describe acquisition of
Freedom Phone Lines ("Freedom") and Keda Consulting, Inc. ("Keda"). Such report
included the description of (a) the assets acquired, (b) the targets' business,
(c) the purchase price, (d) competitive business conditions and (e) risks. The
Company also provided as an exhibit the stock purchase agreement signed with the
Freedom & Keda principals

            (3) Schedule 14C filed on June 3, 2005, to increase our authorized
to 600,000,000 common shares. Preliminary 14C was filed on June 3, 2005 with the
definitive version filed June 15, 2005. The 14C filed did not require a vote
from our shareholders as we received consent to proceed with the 14C from our
majority shareholder.

            (4) Form 8-K filed on June 29, 2005, to describe the acquisition of
Avenue Reconnect, Inc. ("Avenue"). Such report included the description of (a)
the assets acquired, (b) the targets' business, (c) the purchase price, (d)
competitive business conditions and (e) risks. The Company also provided as
exhibits the transaction documents signed with the Avenue principals.


                                       43
<PAGE>

            (5) Form 8-K filed on July 19, 2005, to describe the financing
arrangement established with Cornell Capital Partners, LP ("Cornell"). Such
report included the description of the transaction and all material terms
including the associated risks. The Company also provided as exhibits the
transaction documents signed with Cornell.

            (6) Form 8-K filed on July 20, 2005, to describe the acquisition of
Telizon, Inc. ("Telizon"). Such report included the description of (a) the
assets acquired, (b) the targets' business, (c) the purchase price, (d)
competitive business conditions and (e) risks. The Company also provided as
exhibits the transaction documents signed with the Telizon principals. Also
included to this 8k was the issuance of 2,000,000 preferred shares to a company
controlled by our CEO, the creation of a Phantom Stock Program and issuance of
certain options to our executives.

            (7) Form 8-K filed on September 21, 2005, to announce the
appointment of Gordon Chow to the board of directors of TelePlus.

            (8) Form 8-K/A filed on September 22, 2005, as an amended to form
8-k filed 20 July 2005 to provide the audited financial statements of Telizon,
Inc ("Telizon"), recently acquired by TelePlus Connect Corp ("TelePlus
Connect"), a fully owned subsidiary of TelePlus Enterprises, Inc. ("TelePlus").
Also included in this amendment are pro forma financials between Telizon and
TelePlus.

            (9) Form 8-K filed on December 1, 2005, to announce the appointment
of Tom Davis as the Company's COO and a new member of the board of directors of
TelePlus.

            (10) Form 8-K filed on December 15, 2005, to describe the financing
arrangement established with Cornell Capital Partners, LP ("Cornell"). Such
report included the description of the transaction and all material terms
including the associated risks. The Company also provided as exhibits the
transaction documents signed with Cornell.

            (11) Form 8-K filed on January 4, 2006, to describe the acquisition
of certain assets of Liberty Wireless ("Liberty"). Such report included the
description of (a) the assets acquired, (b) the targets' business, (c) the
purchase price, (d) competitive business conditions and (e) risks. The Company
also provided as exhibits the transaction documents signed with the Liberty
principals.

            (12) Form 8-K filed on January 9, 2006, to describe the lead
generation agreement signed with Inphonic, Inc.

            (13) Form 8-K filed on January 17, 2006, to describe the divestiture
of the Company's retail operations by having Teleplus Retail Services Inc.
("Retail") file a Notice of Intention to Make a Proposal to its creditors under
the Bankruptcy and Insolvency Act (Canada).


                                       44
<PAGE>

            (14) Form 8-K filed on February 14, 2006, to describe the completion
of the divestiture of the Company's retail operations by electing not to have
Retail make a proposal to its creditors, thereby resulting in Retail having been
deemed to make an assignment of its assets to its creditors under the Bankruptcy
and Insolveny Act (Canada).

            (15) Form 8-K/A filed on March 14, 2006, as an amended to form 8-k
filed 4 January 2006 to provide the audited financial statements of Liberty
Wireless, Division of Star Number, Inc. ("Liberty Wireless"), recently acquired
by TelePlus Wireless, Corp. ("TelePlus Wireless"), a fully owned subsidiary of
TelePlus Enterprises, Inc. ("TelePlus"). Also included in this amendment are pro
forma financials between Liberty Wireless and TelePlus.

(UPDATE 8K IN YELLOW)

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed for each of the fiscal years ended December 31, 2005
and2004 for professional services rendered by the principal accountant for the
audit of the Company's annual financial statements was $71,183 and $21,375,
respectively. The aggregate fees billed for each of the fiscal years ended
December 31, 2005 and 2004 for professional services rendered by the principal
accountant for review of the financial statements included in the registrant's
Form 10-QSB or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years was $12,669 and $12,860, respectively.

AUDIT RELATED FEES

None

TAX FEES

None

ALL OTHER FEES

The aggregate fees billed for each of the fiscal years ended December 31, 2005
and 2004 for products and services provided by the principal accountant, other
than the services reported above was $0 and $0, respectively.

                          Signatures on Following Page


                                       45
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       TELEPLUS ENTERPRISES, INC.

DATED: March 31, 2006                  By: /s/ Marius Silvasan
                                           -------------------------------------
                                           Marius Silvasan
                                           Chief Executive Officer

      In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME                                    TITLE                                       DATE
<S>                                     <C>                                         <C>
/s/ Marius Silvasan                     Chief Executive Officer                     March 31, 2006
----------------------                  and Director
Marius Silvasan                         (Principal Executive Officer)

/s/ Robert B. Krebs                     Chief Financial Officer                     March 31, 2006
----------------------                  and Director
Robert B. Krebs                         (Principal Financial Officer)

/s/ Kelly McLaren                       President and Director,                     March 31, 2006
----------------------
Kelly McLaren

/s/ Tom Davis                           Chief Operating Officer                     March 31, 2006
----------------------                  and Director
Tom Davis

/s/ Michael L. Karpheden                Director                                    March 31, 2006
----------------------
Michael L. Karpheden

/s/ Hakan Wretsell                      Director                                    March 31, 2006
----------------------
Hakan Wretsell

/s/ Gordon Chow                         Director                                    March 31, 2006
----------------------
Gordon Chow
</TABLE>


                                       46