UNITED
      STATES




SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549




**FORM
      10-KSB/A**




ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE
      SECURITIES EXCHANGE ACT OF 1934




For
      the
      fiscal year ended December 31, 2005


Commission
      file number 000-49628




**TELEPLUS
                WORLD, CORP.**(Exact
                Name of Registrant as Specified In Its
                Charter)




NEVADA
            
            98-0045023(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer Identification No.)




**6101
                Blue Lagoon Drive, Suite 450, Miami, Florida,**
            **33126**(Address
                of Principal Executive Offices)
            (Zip
                Code)




(786)
                594-3939(Registrant's
                Telephone Number,
              Including
                Area Code)





Teleplus
      Enterprises, Inc.


7575
      Transcanadienne, Suite 305, St-Laurent, Quebec, Canada H4T 1V6


**(Former
      Name and Address)**





Check
      mark 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:o





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




Yes:o
            No:x





The
      registrants revenues for the most recent fiscal year ended December 31, 2005
      was
      $8,092,689.





The
      aggregate market value of the registrants 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 October 5, 2006, was approximately
      $7,947,006.





State
      the
      number of shares outstanding of each of the registrant's classes of common
      stock, as of November 03, 2006:




Class
            
            Number
                of SharesCommon
                Stock, $0.001 par value
            
            
            114,500,945













TABLE
      OF CONTENTS




PART
              IItem
                1.
            Description
                of Business
            
            3Item
                2.
            Description
                of Property
            
            8Item
                3.
            Legal
                Proceedings
            
            8Item
                4.
            Submission
                of Matters To A Vote Of Security Holders
            
            10PART
                IIItem
                5.
            Market
                for Common Equity and Related Stockholder Matters
            
            10Item
                6.
            Management’s
                Discussion and Analysis
            
            14Item
                7.
            Financial
                Statements
            
            26Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            27Item
                8A.
            Controls
                and Procedures
            
            27PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16 (a) of the Exchange Act
            
            28Item
                10.
            Executive
                Compensation
            
            31Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            33Item
                12.
            Certain
                Relationships and Related Transactions
            
            34Item
                13.
            Exhibits
                and Reports on Form 8-K
            
            34(a)Exhibits
            
            35(b)Reports
                on Form 8-K
            
            35Item
                14.
            Principal
                Accountant Fees and Services
            
            38SIGNATURES
            
            
            39













*SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS*





*Certain
      statements in this Annual Report on Form 10-KSB/A, including statements under
      “Item 1. Description of Business,” and “Item 6. Management’s Discussion and
      Analysis,” 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. Forward-looking statements include, among other things, business strategy
      and expectations concerning industry conditions, market position, future
      operations, margins, profitability, liquidity and capital resources.
      Forward-looking statements generally can be identified by the use of terminology
      such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate” or “believe”
or similar expressions or the negatives thereof. These expectations are based
      on
      management’s assumptions and current beliefs based on currently available
      information. Although the Company believes that the expectations reflected
      in
      such statements are reasonable, it can give no assurance that such expectations
      will be correct. You are cautioned not to place undue reliance on these
      forward-looking statements, which speak only as of the date of this annual
      report on Form 10-KSB/A. The Company’s operations are subject to a number of
      uncertainties, risks and other influences, many of which are outside its
      control, and any one of which, or a combination of which, could cause its actual
      results of operations to differ materially from the forward-looking statements.*





2





**Part
      I**





**Item
              1.**
            **Description
                of Business**





**Business
      Development**





Teleplus
      World, Corp. (the “Company”) is a provider of wireless and telecom products and
      services across North America. The Company’s wholly-owned subsidiaries include
      TelePlus Connect, Corp., a competitive local exchange carrier (“CLEC”), which
      provides landline, long distance and Internet services in Canada under the
      “Telizon”, “Freedom”, “Avenue” and Liberty brands; and Liberty Wireless, Corp.,
      which operates a virtual wireless network (“MVNO”) selling cellular network
      access to consumers and distributors in the United States under the “Liberty
      Wireless” and “MX Mobile” brand names.





The
      Company was originally incorporated in Nevada as Terlingua Industries, Ltd.
      on
      April 16, 1999. This company was formed to engage in online marketing and
      distribution of organic herbal supplements internationally. Terlingua
      Industries, Ltd. changed its name on January 27, 2000 to HerbalOrganics.com,
      Inc.





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 split
      have been retroactively reflected in this report unless otherwise
      stated.





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. Retail, in October 2003, 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.





Immediately
      following the Company’s acquisition of 3577996, in October 2003, Visioneer
      Holdings Group, Inc. (“Visioneer”) acquired control of the Company. Visioneer
      and 3577996 were controlled by the same shareholders.





For
      accounting purposes, the transaction was treated as an acquisition of
      HealthOrganics.com, Inc. and a recapitalization of 3577996 with accounting
      treatment similar tot hat used in a reverse acquisition. 3577996 emerged as
      the
      accounting acquirer and the results of its operations carryover. The Company
      acquired $11,327 in cash and assumed $700 in liabilities as a result of the
      transaction. Additionally, the Company changed its name to TelePlus World,
      Corp.





Post-reverse
      merger, the Company is a provider of wireless and telecommunications services
      in
      Canada and the United States of America. The Company’s products include prepaid
      and postpaid wireless, landline, long distance and Internet services. The
      Company distributes their products through their websites, third party websites,
      select distributors in Canada and the United States of America, and through
      a
      variety of direct marketing initiatives.





3




The
      Company acquired Keda Consulting Corp., a North American telecommunications
      industry management consulting service company on April 1, 2005; 1523813 Ontario
      Limited (Freedom Phone Lines), a Bell Canada reseller of landline and long
      distance services on April 15, 2005; Avenue Reconnect, Inc. a reseller of
      landline and long distance services and Internet service provider on June 1,
      2005; and Telizon, Inc. and 1500536 Ontario, Inc. (One Bill, Inc.), a reseller
      of landline and long distance service and Internet service provider on July
      15,
      2005.





On
      January 13, 2006, Retail, filed in Canada a Notice of Intention to Make a
      Proposal Under the Bankruptcy and Insolvency Act (Canada) (the “Act”). This was
      done to divest the Company of its retail division. 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 retail operations
      will no longer be a segment of the Company’s business for the year ending
      December 31, 2006.





On
      December 29, 2005 the Company purchased certain assets of Star Number, Inc.,
      a
      wholly-owned subsidiary of InPhonic, Inc., related to its Liberty Wireless
      business, including customer lists, the "Liberty Wireless" brand and SNI's
      rights under certain agreements, the whole effective as of December 31, 2005.
      The purchased assets have been used and will continue to be used to sell
      pre-paid and post-paid wireless telecommunications services under the name
      "Liberty Wireless".





On
      June
      21, 2006, the Company purchased all the issued and outstanding shares of Maximo
      Impact, Inc. (“Maximo”), a Cleveland, Ohio based company, under certain
      agreements, the whole effective as of that date. Maximo specializes in marketing
      and distribution as a Mobile Virtual Network Operator (“MVNO”) in the United
      States of America. As part of this transaction, Maximo launched its own wireless
      brand called MX Mobile which caters to mass merchandisers, general retailers
      and
      c-channel retailers calling on convenience stores and gas stations.





In
      February, 2006, the Company completed its transition from retail operations
      to
      wireless and telecom services reselling.





On
      October 24, 2006 the Company changed its corporate name to TelePlus World,
      Corp.





**Growth
      in the United States of America**





The
      Company through its wholly owned subsidiary, Liberty Wireless Corp. (“Liberty
      Wireless”) (f/k/a Teleplus Wireless, Corp.) is offering wireless prepaid
      services through its Mobile Virtual Network Operator (“MVNO”) agreement with
      Sprint/Nextel. Liberty Wireless services are primarily, but not exclusively,
      catered to the “unbanked” or “prepaid” 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 Liberty Wireless to take a substantial share of
      the
      market. This market was first developed 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





To
      facilitate the rollout of this service in the United States, the Company
      acquired:





·
            Certain
                assets of Star Number, Inc., a wholly-owned subsidiary of InPhonic,
                Inc.
                related to its Liberty Wireless business on December 29, 2005, effective
                December 31, 2005, the third largest wireless reseller on the Sprint
                PCS
                network, which provided the Company with an established customer
                base and
                strong infrastructure; and





·
            Maximo
                Impact, Inc., (“Maximo”) a Cleveland, Ohio based company specializing in
                marketing and distribution as a Mobile Virtual Network Operator (“MVNO”)
                in the United States of America. As part of this transaction, Maximo
                launched its own wireless brand called MX Mobile which caters to
                mass
                merchandisers, general retailers and c-channel retailers calling
                on
                convenience stores and gas stations.





**Growth
      in Canada**





The
      Company through its wholly owned subsidiary TelePlus Connect Corp. (“TelePlus
      Connect”) 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”.





To
      facilitate the rollout of this service in Canada, the Company
      acquired:





·
            Keda
                Consulting Corp., a North American telecommunications industry management
                consulting service company on April 1, 2005 specializing in business
                development, sales and marketing and operations. Following this
                acquisition, Keda Consulting Corp. changed its name to TelePlus Connect
                Corp. and their management took over the operations of the Company’s
                prepaid landline and long distance telephone service
                operations;





·
            1523813
                Ontario Limited (Freedom Phone Lines), a Bell Canada reseller of
                landline
                and long distance services on April 15, 2005 headquartered in Ontario,
                Canada which services over 3,300 customers in the Ontario area, generating
                approximately $2,500,000 in annual
                revenues;





·
            Avenue
                Reconnect, Inc. a reseller of landline and long distance services
                and
                Internet service provider on June 1, 2005 headquartered in Windsor,
                Ontario which services over 2,000 residential users primarily in
                Ontario,
                generating approximately $1,100,000 in annual revenues;
                and





·
            Telizon,
                Inc. and 1500536 Ontario, Inc. (One Bill, Inc.), a reseller of landline
                and long distance service and Internet service provider on July 15,
                2005
                headquartered in Ontario, Canada which services over 18,000 commercial
                and
                residential lines in the Ontario area, generating approximately
                $12,000,000 in annual revenues.





Current
      estimates place the “unbanked “ or “prepaid” market in North America at 9.5% of
      total households and the market size is estimated at over $ 1
      billion.





5





**Recent
      Business Developments**





In
      June
      2006, the Company acquired Maximo Impact, Inc., (“Maximo”) a Cleveland, Ohio
      based company specializing in marketing and distribution as a Mobile Virtual
      Network Operator (“MVNO”) in the United States of America. As part of this
      transaction, Maximo launched its own wireless brand called MX Mobile which
      caters to mass merchandisers, general retailers and c-channel retailers calling
      on convenience stores and gas stations.





In
      June
      2006, Liberty Wireless and PeopleSupport, Inc. (“PSPT”) entered into a
      three-year customer support agreement. Under the agreement, PSPT will provide
      customer management, transcription and captioning, accounts receivable
      management and additional business process outsourcing services from its centers
      in the Philippines, Costa Rica and the United States of America, as its
      strategic provider of customer management support.





**Principal
      Products and Services**





TelePlus
      World is a provider of wireless and telecommunications services in Canada and
      the United States. 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 the United States and Canada and through a variety of direct
      marketing initiatives.





**Competitive
      Overview**





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 the total sales
      of worldwide mobile phones increased 20% in 2004 to 658 million units. Some
      key
      trends that investors should be aware of and important in evaluating the
      industry’s potential growth include the following:





·
            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);





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





·
            Wireless
                phone manufacturers, such as Samsung, LG and Pantech, are now marketing
                their next generation phones with advanced
                features;






6





·
            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; and





·
            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.





**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;





·
            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;





·
            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;
                and





·
            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. Canadian 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
      pre-paid customers.





**MVNO
      Market Overview**





Mobile
      Virtual Network Operators (or MVNO’s), 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 MVNO’s
      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. Other companies that have or are developing MVNO
      offerings in North America include AT & T, Boost, ESPN, Tracfone, Qwest and
      TelePlus World.





7




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:





·
            In
                Canada: SimplySellular trademark granted January 7,
                2005;





·
            In
                the United States:





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





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





**Need
      For Government Approval**





Teleplus
      needs the following government approvals to operate:





·
            Section
                214 authorization; and





·
            FCC
                Form 499 Registration.





**Employees**





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





**Item
              2.**
            **Description
                of Business**





TelePlus
      currently has in place one lease for its principal office in Montreal, Canada
      and one lease for its office in Miami, Florida. Teleplus’s principal office is
      located in approximately 3,031 square feet in its Miami, Florida office and
      its
      Montreal office has approximately 5,500 square feet of leased office space.
      The
      Company pays monthly rent of $5,834 and $5,676 in Montreal and Miami,
      respectively. Each lease has a term of 5 years.





**Item
              3.**
            **Legal
                Proceedings**





The
      following proceedings have been instigated against the Company. The Company
      does
      not believe that the following legal proceedings have a materially adverse
      impact on the Company’s business or on its results of its
      operations.





8




*Proposed
      Tax Assessment* :
      3577996
      Canada, Inc. which the Company had acquired substantially all of their assets,
      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 $474,000 (CND $) and penalties of
      approximately $168,000 (CND $). The proposed tax assessment including penalties
      is for $322,000 (CND $) for QST and $320,000 (CND $) for GST. The Company
      believes that certain deductions initially disallowed by the MRQ for the QST
      are
      deductible and is in the process of compiling the deductions to the MRQ. 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 a subsidiary of the Company, has instigated a claim in Quebec
      Superior Court in the amount of $90,000 (CND $) against the Company for wrongful
      dismissal. The Company does not believe the claim to be founded and intends
      to
      vigorously contest such claim. The parties are in the discovery stages.





*Wrongful
      Dismissal* :
      There
      is a claim from three individuals in British Columbia in the amount of
      approximately $147,000 and the issuance of 510,00 shares of common stock for
      which a letter of demand has been served to the Company. The Company does not
      believe the claim to be founded and intends to vigorously contest such claim.
      No
      court proceedings have been instituted and the Company has been in discussions
      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 the Company. This matter arises
      out of an alleged agreement between the plaintiff and the Company. The plaintiff
      is seeking specific performance of the alleged agreement, monetary 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. The Company has filed a counterclaim against the plaintiff seeking
      rescission of the alleged agreement and a refund of $100,000 paid by the Company
      to the plaintiff. The Company believes that this lawsuit is without merit,
      that
      the plaintiff’s claims are unfounded and that the Company has good defenses
      against the claims asserted by the plaintiff. The Company also believes that
      it
      has good claims for the rescission of the alleged agreement and for the refund
      of the amount paid to the plaintiff. The Company is currently contesting and
      defend against the plaintiff’s claims. The foregoing notwithstanding, total
      liability to the Company, should it lose the lawsuit, could reach a maximum
      of
      10% of all funds received by Cornell.





*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 (“BCGU”) against the Company. The suit arises out of an
      agreement between BCGU and the Company. BCGU alleges that the Company is in
      breach of the agreement they entered into, and is seeking damages from the
      Company for certain tranches of compensation it allegedly earned and was to
      receive under this agreement. The compensation allegedly earned consist of
      $250,000 in cash, 1,400,000 shares of the Company’s restricted common stock, the
      right to exercise warrants ranging between $0.65 and $1.00 per share. The
      Company has not granted the warrants to BCGU to purchase additional shares
      of
      common stock.




9





The
      Company believes the case is without merit, that BCGU’s claim’s are unfounded
      and that the Company has good defenses against the claims asserted by BCGU
      and
      is vigorously defending the case. The Company filed a cross-complaint against
      BCGU and filed a third party complaint against a company recommended by BCGU
      who
      failed to provide promised services. The Company also believes that it has
      good
      claims for breach of the agreement by BCGU and for a refund of the amount
      already paid to BCGU.





The
      following claim has been instigated by the Company:





A
      subsidiary of the Company has instigated a claim against Wal-Mart Canada Corp.
      on September 23, 2004 in the Ontario Superior Court of Justice in the amount
      of
      $5,000,000 for breach of an agreement between the partiers. This claim is in
      the
      discovery stages.





**Item
              4.**
            **Submissions
                Of Matters To A Vote Of Security
                Holders**





On
      September 25, 2006 a majority of shareholders consented to an amendment to
      the
      Company’s Articles of Incorporation to change the corporate name to Teleplus
      World, Corp.





**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
                PricesQuarter
                Ended
            
            High
            
            LowDecember
                31, 2005
            
            $
            0.30
            
            $
            0.21September
                30, 2005
            
            $
            0.48
            
            $
            0.27June
                30, 2005
            
            $
            0.55
            
            $
            0.15March
                31, 2005
            
            $
            0.48
            
            $
            0.34





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.




10





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, Inc. 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 majority
      shareholder. The shares were issued for the aggregate purchase price of $1,235.





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 to an unaffiliated entity
      in consideration for $10,000.




11





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





In
      April
      2004, we issued 500,000 shares of common stock to an unaffiliated entity in
      consideration for $500,000.





On
      May
      14, 2004, we issued 285,000 shares of common stock to the 5 shareholders of
      Smart Cell following the acquisition of 100% of the issued and outstanding
      shares of Smart Cell. The value of this transaction was $202,350.





On
      May
      18, 2004, we sold 57,000 shares of common stock in a private placement at $0.10
      per share for a total of $5,700.





On
      June
      25, 2004, we issued Cornell Capital Partners 245,193 shares of common stock
      as a
      commitment fee under an Equity Distribution Agreement between the Company and
      Cornell. The value of these shares were $190,000.





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





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





In
      October, 2004, we issued 223,664 shares of common stock to Cornell Capital
      in
      connection with the partial repayment of a Promissory Note and Convertible
      Debenture outstanding. The value of these shares were $100,000.





In
      November, 2004, we issued 839,642 shares of common stock to Cornell Capital
      in
      connection with the partial repayment of a Promissory Note and Convertible
      Debenture outstanding. The value of these shares were $300,000.





In
      December, 2004, we issued 140,000 shares of common stock to the principals
      of
      Cellz in connection with the acquisition of Cellz.





In
      December, 2004, we issued 120,000 shares of common stock to the principals
      of
      SmartCell in connection with the acquisition of SmartCell.





In
      December, 2004, we issued 20,000 shares of common stock to a director of the
      Company for compensation valued at $2,000.





2005:





In
      the
      first quarter of 2005, we issued 2,388,694 shares of common stock to Cornell
      Capital in connection with the partial repayment of a Promissory Note and
      Convertible Debenture outstanding. The value of these shares were
      $850,000.





In
      the
      second quarter of 2005, we issued 6,275,896 shares of common stock to Cornell
      Capital in connection with the partial repayment of a Promissory Note and
      Convertible Debenture outstanding. The value of these shares were
      $1,100,000.




12





On
      March
      31, 2005, we issued 964,706 shares of common stock to the principals of Freedom
      in connection with the acquisition of Freedom valued at $328,000.





On
      April
      5, 2005, we issued 50,000 shares of common stock to its directors for director
      fees valued at $15,500.





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





On
      May
      30, 2005, we issued 187,500 shares of common stock to a third party for services
      rendered. The transaction was valued at $28,125.





On
      June
      10, 2005, we issued 333,333 shares of common stock to a third party for services
      rendered. The transaction was valued at $130,000.





On
      July
      15, 2005, we issued 2,500,000 shares of common stock to Cornell Capital as
      a fee
      under the Standby Equity Distribution Agreement, entered into the same day.
      These shares were valued at $800,000. On December 19, 2005, half of these
      shares, 1,250,000, valued at $400,000 were returned to the Company.





On
      August
      19, 2005, we issued 60,000 shares of common stock to directors as director
      fees.
      The transaction was valued at $19,800.





On
      September 2, 2005, we issued 800,503 shares of common stock to a third party
      as
      a finders’ fee for the acquisition of Telizon. The transaction was valued at
      $248,156.





On
      September 29, 2005, we issued 70,000 shares of common stock to directors as
      director fees. The transaction was valued at $20,300.





On
      October 28, 2005, we issued 424,000 shares of common stock to various employees
      for their bonuses. The transaction was valued at $101,760.





On
      November 7, 2005, we issued 280,000 shares of common stock to a third party
      as a
      finders’ fee for the acquisition of Freedom. The transaction was valued at
      $84,000.





On
      November 7, 2005, we issued 280,000 shares of common stock to a third party
      as a
      finders’ fee for the acquisition of Avenue Reconnect. The transaction was valued
      at $64,400.





On
      November 23, 2005, we issued 850,000 shares of common stock to two third parties
      payment of a variety of consulting services rendered. The transaction was valued
      at $187,000.





On
      December 6, 2005, we issued 70,000 shares of common stock to directors as
      director fees. The transaction was valued at $18,900.





On
      July
      1, 2005, we issued 2,000,000 shares of Class A Preferred stock to Visioneer
      Holdings Group, Inc. which is beneficially owed by our CEO & Chairman,
      Marius Silvasan, for services rendered. The Class A Preferred stock entitles
      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 on them.





13


.


**Item
              6.**
            **Management’s
                Discussion and Analysis**





**Overview**




In
      this
      Section, the Company will discuss the following: (i) results of operations
      and
      financial condition for the years ended December 31, 2005 versus December 31,
      2004; (ii) liquidity and capital resources; (iii) a discussion of the Company’s
      risk factors; and (iv) the Company’s critical accounting policies.





**Results
      of Operations and Financial Condition**





***Years
      Ended December 31, 2005 versus December 31, 2004***





*Total
      Operating Revenues*





The
      Company generated $8,092,689 of revenues for the year ended December 31, 2005
      as
      compared to $0 for the year ended December 31, 2004, an increase of $8,092,689.
      The increase was attributable to the acquisitions made by the Company since
      June
      30, 2005. The Company’s primary business for the year ended December 31, 2004
      was the retail business which was discontinued.





*Total
      Operating Costs and Expenses*





Total
      operating costs and expenses for the year ended December 31, 2005 were
      $8,474,694 as compared to $365,906 for the year ended December 31, 2004. This
      represented an increase of $8,108,788 or 2,316%. The increase was attributable
      to the acquisitions made by the Company since June 30, 2005. Of these amounts,
      $5,409,703 (64% of revenues) and $0 (0% of revenues), respectively comprised
      of
      costs of services, which increased primarily due to higher profit margins in
      the
      Company’s acquired companies than historically reflected in Teleplus’ business.
      The other operating costs and expenses includes payroll, professional fees
      and
      related expenses of $1,630,230, advertising and marketing expenses of $326,926,
      and other general and administrative expenses of $548,212 which as a percentage
      of sales, is comparable to the operations of the Company including its recent
      acquisitions for the year ended December 31, 2004.





14





Depreciation
      and amortization expenses include depreciation on the Company’s fixed assets,
      amortization on the Company’s intangible assets, not including goodwill, and
      amortization of the Company’s deferred connection charges. The Company
      determines the fair value of the undiscounted cash flows annually, and sooner
      if
      circumstances change and determination is required, to value any impairment
      on
      its goodwill, intangible assets and long-lived assets. As of December 31, 2005,
      the Company has determined that there is no impairment charge. The intangible
      assets, not including goodwill is currently being amortized over estimated
      lives
      ranging from 2 to 20 years.





*Other
      Income (Expense)*





Included
      in other income (expense) is amortization on the deferred financing fees paid
      to
      Cornell Capital Partners, LP in association with the Securities Purchase
      Agreement and Secured Convertible Debenture entered into with Cornell on
      December 13, 2005. The amortization charge for the period ended December 31,
      2005 was $170,213. The Company also recognized amortization on the debt discount
      on the convertible debenture of $180,366 for the period ended December 31,
      2005
      based on the Effective Interest Method calculation, and recognized a loss on
      the
      valuation of its derivative liability of $1,309,113. There were no corresponding
      comparable amounts for these items for the year ended December 31, 2004 due
      to
      the financing occurring December 13, 2005.





Interest
      expense was $483,612 compared to $48,207 for the year ended December 31, 2005
      and 2004, respectively. Interest expense increased due to the increase in the
      Company’s borrowings.





*Net
      Income (Loss) from Continuing Operations*





The
      Company reported net income (loss) from continuing operations of $(2,525,309),
      or $(0.03) per share on a basic and diluted basis for the year ended December
      31, 2005 versus $(471,584), or $(0.01) per share on a basic and diluted basis
      for the year ended December 31, 2004. The decrease is attributable to the
      Company’s charges related to their Cornell Capital financing for the year ended
      December 31, 2005. The operating income (loss) lines in the consolidated
      statements of operations is believed by management to be the true indicator
      of
      the Company’s performance during the period.





*Provision
      for Income Taxes*





There
      was
      no provision for income taxes for the years ended December 31, 2005 and 2004,
      respectively, There was no provision due to the carryforward of approximately
      $5,000,000 of net operating losses as of December 31, 2005, that the Company
      has
      reserved in valuation allowances against this deferred tax asset.





15





**Liquidity
      and Capital Resources**





During
      the year ended December 31, 2005, the balance in cash and cash equivalents
      increased by $2,316,291compared to an increase of $1,787,355 for the year ended
      December 31, 2004 from continuing operations.





As
      of
      December 31, 2005, the Company had $5,375,155 in current assets primarily
      consisting of $2,604,915 in cash and cash equivalents, $1,389,698 in accounts
      receivable - trade, $156,029 in other accounts receivable and assets held from
      discontinued operations of $1,075,367.





As
      of
      December 31, 2005, the Company had $18,596,665 in current liabilities primarily
      consisting of $5,243,758 in the current portion of accrued acquisition
      obligations, $1,955,797 in accounts payable and accrued expenses, and $9,088,287
      of derivative liabilities resulting from the Securities Purchase Agreement
      and
      Secured Convertible Debenture entered into on December 13, 2005. The derivative
      liability is being converted to equity upon conversion by Cornell to the
      Company’s common stock. The balance is adjusted based on market adjustments to
      fair value on a quarterly basis.





As
      a
      result, the Company as of December 31, 2005 has a working capital deficiency
      of
      $13,221,510. On July 28, 2006, the Company entered into another Securities
      Purchase Agreement with Cornell Capital pursuant to which the Company issued
      to
      Cornell $3,000,000 in secured convertible debentures. The $3,000,000 will be
      utilized to pay certain obligations of the Company with respect to its accrued
      acquisition obligations. The Company could generate additional funds through
      the
      warrants granted to Cornell, however, with the stock price below exercise price
      levels, the Company cannot rely on these proceeds at this time to cure their
      working capital deficiency.





Not
      withstanding the present working capital deficiency these financial statements
      have been prepared on the assumption that the Company continues to have the
      ability to generate sufficient cash flows from operations or raise sufficient
      capital to ensure the reduction of the working capital deficiency and fund
      future operations.





The
      increase in cash from continuing operations for the year ended December 31,
      2005
      of $2,316,291 was attributable to proceeds of debt of $8,149,731, expenditures
      of cash used to acquire businesses of $6,516,878, and the use of cash for
      capital expenditures of $126,485.





The
      increase in cash from continuing operations for the year ended December 31,
      2004
      of $1,787,355 was attributable to expenditures of cash used to acquire
      businesses of $170,839, use of cash for capital expenditures of $43,915, offset
      by the proceeds of debt of $2,270,361.


.


On
      December 13, 2005, the Company entered into a certain Securities Purchase
      Agreement (“SPA”) with Cornell, pursuant to which Cornell was issued $9,225,000
      in secured convertible debentures dated December 13, 2005 under the SPA. Under
      the SPA, the Company and Cornell entered into various agreements as described
      below. The convertible 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 the common stock for the thirty trading days immediately preceding
      such
      conversion date. The convertible debentures which are secured by certain pledged
      assets of the Company have a term of three (3) years, have piggy-back
      registration rights and accrue interest at a rate of ten percent (10%) per
      annum. In connection with the convertible debentures, the Company issued
      1,250,000 shares of common stock as financing fees.




16





**Risk
      Factors**





***Risks
      Related to the Company’s Business***





Investing
      in the Company’s securities involves a high degree of risk. Before investing in
      the Company’s securities, you should consider the following discussion of risk
      factors, other information contained in this Annual Report on Form 10-KQSB/A.
      The Company’s future results may also be impacted by other risk factors listed
      from time to time in the Company’s future filings with the SEC.





***We
      Are Currently Involved in Legal Proceedings***





As
      more
      fully described in Part I -Item 3. Legal Proceedings, the Company is involved
      in
      various legal proceedings which may materially affect the cash flows or results
      of


its
      operations should there be unfavorable resolutions.





***We
      Have Lost Money Historically Which Means That We May Not Be Able to Maintain
      Profitability***





From
      2003
      up through December 31, 2005, we have not been profitable and have lost money
      on
      both a cash and overall basis. 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***





As
      of
      December 31, 2005, we had a working capital deficit of $13,221,510, and should
      we be unable to increase our current assets to satisfy our current liabilities,
      our operations could be at risk.





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 deficiency means that our current assets as of December 31,
      2005
      were not sufficient to satisfy all of our current liabilities as of that date.
      If our ongoing operations do not begin to provide sufficient profitability
      to
      offset the working capital deficiency, we may have to raise additional capital
      or debt to fund the deficit or curtail future operations.





***Our
      Obligations Under The Secured Convertible Debentures Are Secured By All of
      Our
      Assets***





Our
      obligations under the secured convertible debentures, issued to Cornell are
      secured by all of our assets. As a result, if we default under the terms of
      the
      secured convertible debentures, Cornell 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***





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. These factors
      may negatively impact shareholders’ ability to sell shares of our common
      stock.




17





***Our
      Common Stock Is Deemed To Be A “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:





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





·
            That
                are not traded on a “recognized” national
                exchange;





·
            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





·
            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;
                and





·
            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 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
      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 the
      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.




18





Factors
      that may cause our quarterly results to fluctuate include, among
      others:





·
            Our
                ability to retain existing clients and
                customers;





·
            Our
                ability to attract new clients and customers at a steady
                rate;





·
            Our
                ability to maintain customer
                satisfaction;





·
            The
                extent to which our products gain market
                acceptance;





·
            The
                timing and size of client and customer
                purchases;





·
            Introductions
                of products and services by
                competitors;





·
            Price
                competition in the markets in which we
                compete;





·
            Our
                ability to attract, train, and retain skilled
                management;





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





·
            General
                economic conditions and economic conditions specific to wireless
                and
                portable communication device
                industry.





***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 the Company. 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 well 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 businesses 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.




19





***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 establish 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:





·
            Issue
                stock that would dilute our current shareholders’ percentage ownership;





·
            Incur
                debt;





·
            Assume
                liabilities;





·
            Incur
                impairment charges related to goodwill and other intangible assets
                we
                acquire; or





·
            Incur
                large and immediate write-offs.





The
      use
      of debt 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:





·
            Integration
                of the operations of the acquired business and its technologies or
                products;





·
            Unanticipated
                costs;





·
            Diversion
                of management’s attention from our core business;





·
            Adverse
                effects on existing business relationships with suppliers and
                customers;





·
            Risks
                associated with entering markets in which we have limited prior
                experience; and





·
            Potential
                loss of key employees, particularly those of the purchased
                companies.





***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 communications 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
      of 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 our operations.




20





***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 Telecommunications
      Carrier***





We
      depend
      on our wireless telecommunications carrier and product manufacturers to provide
      our customers with wireless services and communication devices. Currently our
      wireless products and services accounts are dependent upon arrangements with
      Sprint Spectrum L.P. After an initial three-year term, such arrangement may
      be
      renewed for additional one-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 with this and other
      wireless communication carriers and product manufactures would materially and
      aversely 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.





***We
      Rely In Large Part On One Telecom Service 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 service accounts are dependent 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 two-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.




21





***Price
      Erosion***





We
      are
      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**





Critical
      accounting polices include the areas where we have made what we consider to
      be
      particularly subjective or complex judgments in making estimates and where
      these
      estimates can significantly impact our financial results under different
      assumptions and conditions.





We
      prepare our financial statements in conformity with accounting principles
      generally accepted in the United States of America. As such, we are required
      to
      make certain estimates, judgments and assumptions that we believe are reasonable
      based upon the information available. These estimate, judgments and assumptions
      affect the reported amounts of assets and liabilities at the date of the
      financial statement and the reported amounts of revenue and expenses during
      the
      periods presented. Actual results could be different than those estimates.





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





***Principles
      of Consolidation***





The
      consolidated financial statements include the accounts of the Company and all
      of
      its wholly owned subsidiaries. All significant intercompany accounts and
      transactions have been eliminated in consolidation.





***Discontinued
      Operations***




The
      Company has followed Statement of Financial Accounting Standard No. 144 (“SFAS
      144”), “Accounting for the Impairment or Disposal of Long-Lived Assets”.
      Accordingly, the Company recognized as discontinued operations the results
      from
      the retail division that has been abandoned. The Company has also written down
      the assets relating to the retail division to their respective fair values.





***Goodwill
      and Other Intangible Assets***





Under
      SFAS No. 142, “Goodwill and Other Intangible Assets”. (“SFAS 142”), goodwill and
      other indefinite-lived intangible assets are no longer amortized but instead
      are
      reviewed for impairment annually and on an interim basis if events or changes
      in
      circumstances between annual tests indicate that an asset might be impaired.
      Under SFAS 142, indefinite-lived intangible assets are tested for impairment
      by
      comparing their fair values to their carrying values. Testing for impairment
      of
      goodwill is a two-step process. The first step requires the Company to compare
      the fair value of its reporting units to the carrying value of the net assets of
      the respective reporting units, including goodwill. If the fair value of the
      reporting unit is less than the carrying value, goodwill of the reporting unit
      is potentially impaired and the Company then completes Step 2 to measure the
      impairment loss, if any. The second step requires the calculation of the implied
      fair value of goodwill by deducting the fair value of all tangible and
      intangible net assets of the reporting unit from the fair value of the reporting
      unit. If the implied fair value of goodwill is less then the carrying amount
      of
      goodwill, an impairment loss is recognized equal to the difference. Intangible
      assets that do not have indefinite lives are amortized over their useful
      lives.




22





***Revenue
      Recognition***





The
      Company 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 recorded as unearned revenue
      and recognized upon the customer receiving the service.





The
      Company’s revenue is also generated from the sale of wireless, telephony
      products and accessories to end-users. The Company recognizes this revenue
      when
      the criteria for Staff Accounting Bulletin 101 (and as clarified in Staff
      Accounting Bulletin 104) is achieved. The criteria are as follows: when
      persuasive evidence of an arrangement exists; delivery has occurred; the sales
      price is fixed or determinable; and collectibility is probable.





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





***Accounts
      Receivable***




The
      Company conducts business and extends credit based on an evaluation of the
      customers’ financial condition, generally without requiring collateral. Exposure
      to losses on receivables is expected to vary by customer due to the financial
      condition of each customer. The Company monitors exposure to credit losses
      and
      maintains allowances for anticipated losses considered necessary under the
      circumstances. 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.





***Income
      Taxes***





The
      Company accounts for income taxes utilizing the liability method of accounting.
      Under the liability method, deferred taxes are determined based on differences
      between financial statement and tax bases of assets and liabilities at enacted
      tax rates in effect in years in which differences are expected to reverse.
      Valuation allowances are established, when necessary, to reduce deferred tax
      assets to amounts that are expected to be realized.





***Currency
      Translation***





The
      Company translates income and expense amounts at average exchange rates for
      the
      year, translates assets and liabilities at year-end exchange rates and equity
      at
      historical rates. The Company’s reporting currency is that of the US dollar
      while its functional currency is that of the Canadian dollar. The Company
      records these translation adjustments as accumulated other comprehensive income
      (loss).




***Impairment
      of Long-Lived Assets***





Long-lived
      assets, primarily fixed assets and intangible assets, are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the assets might not be recoverable. The Company does not
      perform a periodic assessment of assets for impairment in the absence of such
      information or indicators. Conditions that would necessitate an impairment
      assessment include a significant decline in the observable market value of
      an
      asset, a significant change in the extent or manner in which an asset is used,
      or a significant adverse change that would indicate that the carrying amount
      of
      an asset or group of assets is not recoverable. For long-lived assets to be
      held
      and used, the Company recognizes an impairment loss only if its carrying amount
      is not recoverable through its undiscounted cash flows and measures the
      impairment loss based on the difference between the carrying amount and
      estimated fair value.




23





***Earnings
      (Loss) Per Share of Common Stock***





Basic
      net
      earnings (loss) per common share is computed using the weighted average number
      of common shares outstanding. Diluted earnings per share (EPS) includes
      additional dilution from common stock equivalents, such as stock issuable
      pursuant to the exercise of stock options and warrants. Common stock equivalents
      will not be included in the computation of diluted earnings per share when
      the
      Company reports a loss because to do so would be antidilutive for periods
      presented.





***Stock-Based
      Compensation***





On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
      Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
      Payment” (“SFAS 123R”). SFAS 123R requires that compensation cost related to
      share-based payment transactions be recognized in the financial statements.
      Share-based payment transactions within the scope of SFAS 123R include stock
      options, restricted stock plans, performance-based awards, stock appreciation
      rights, and employee share purchase plans. The provisions of SFAS 123R, as
      amended, are effective for small business issuers beginning as of the first
      interim period after December 15, 2005. The Company adopted these provisions
      on
      January 1, 2006 and the adoption of this pronouncement did not have a material
      effect on the consolidated financial statements of the Company.





***Fair
      Value of Financial Instruments (other than Derivative Financial
      Instruments)***





The
      carrying amounts reported in the consolidated balance sheet for cash and cash
      equivalents, and accounts payable approximate fair value because of the
      immediate or short-term maturity of these financial instruments. For the notes
      payable, the carrying amount reported is based upon the incremental borrowing
      rates otherwise available to the Company for similar borrowings. For the
      convertible debentures, fair values were calculated at net present value using
      the Company’s weighted average borrowing rate for debt instruments without
      conversion features applied to total future cash flows of the
      instruments.




***Convertible
      Instruments***





The
      Company reviews the terms of convertible debt and equity securities for
      indications requiring bifurcation, and separate accounting, for the embedded
      conversion feature. Generally, embedded conversion features where the ability
      to
      physical or net-share settle the conversion option is not within the control
      of
      the Company are bifurcated and accounted for as a derivative financial
      instrument. (See Derivative Financial Instruments below). Bifurcation of the
      embedded derivative instrument requires allocation of the proceeds first to
      the
      fair value of the embedded derivative instrument with the residual allocated
      to
      the debt instrument. The resulting discount to the face value of the debt
      instrument is amortized through periodic charges to interest expense using
      the
      Effective Interest Method.




24





***Derivative
      Financial Instruments***





The
      Company generally does not use derivative financial instruments to hedge
      exposures to cash-flow or market risks. However, certain other financial
      instruments, such as warrants or options to acquire common stock and the
      embedded conversion features of debt and preferred instruments that are indexed
      to the Company’s common stock, are classified as liabilities when either (a) the
      holder possesses rights to net-cash settlement or (b) physical or net share
      settlement is not within the control of the Company. In such instances, net-cash
      settlement is assumed for financial accounting and reporting, even when the
      terms of the underlying contracts do not provide for net-cash settlement. Such
      financial instruments are initially recorded at fair value and subsequently
      adjusted to fair value at the close of each reporting period.





***Recent
      Accounting Pronouncements***





In
      May
      2005, the FASB issued Statement of Financial Accounting Standard No. 154,
“Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 is a
      replacement of APB No. 20, *“Accounting
      Changes”* ,
      and
      SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS
      154 applies to all voluntary changes in accounting principle and changes the
      requirements for accounting and reporting of a change in accounting principle.
      This statement establishes that, unless impracticable, retrospective application
      is the required method for reporting of a change in accounting principle in
      the
      absence of explicit transition requirements specific to the newly adopted
      accounting principle. It also requires the reporting of an error correction
      which involves adjustments to previously issued financial statements similar
      to
      those generally applicable to reporting an accounting change retrospectively.
      SFAS 154 is effective for accounting changes and corrections of errors made
      in
      fiscal years beginning after December 15, 2005. The Company believes the
      adoption of SFAS 154 will not have a material impact on its consolidated
      financial statements.





In
      February 2006, the FASB issued Statement of Financial Accounting Standard No.
      155, “Accounting for Certain Hybrid Instruments” (“SFAS 155”). FASB 155 allows
      financial instruments that have embedded derivatives to be accounted for as
      a
      whole (eliminating the need to bifurcate the derivative from its host) if the
      holder elects to account for the whole instrument on a fair value basis. This
      statement is effective for all financial instruments acquired or issued after
      the beginning of an entity’s first fiscal year that begins after September 15,
      2006. The Company will evaluate the impact of SFAS 155 on its consolidated
      financial statements.





In
      March
      2006, the FASB issued Statement of Financial Accounting Standard No. 156,
“Accounting for Servicing of Financial Assets, an amendment of FSB Statement
      No.
      140” (“SFAS 156”). SFAS 156 requires all separately recognized servicing assets
      and servicing liabilities to be initially measured at fair value, if
      practicable. The standard permits an entity to subsequently measure each class
      of servicing assets or servicing liabilities at fair value and report changes
      in
      fair value in the statement of operations in the period in which the changes
      occur. SFAS 156 is effective for the Company as of December 1, 2006. The Company
      does not expect the new standard to have any material impact on its financial
      position or results of its operations.




25





**Item
              7.**
            **Financial
                Statements.**




**TELEPLUS
        ENTERPRISES, INC.**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 26
  **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 Report
                  of Independent Registered Public Accounting Firm
              
              F-1Consolidated
                  Balance Sheets as of December 31, 2005 (Restated) and 2004
              
              F-2Consolidated
                  Statements of Operations and Accumulated Other Comprehensive Income
                  (Loss)
                  for the Years Ended December 31, 2005 (Restated) and 2004
              
              F-3Consolidated
                  Statement of Changes in Shareholders’ Equity (Deficit) for the Years Ended
                  December 31, 2005 (Restated) and 2004
              
              F-4Consolidated
                  Statements of Cash Flows for the Years Ended December 31, 2005
                  (Restated)
                  and 2004
              
              F-5Notes
                  to Consolidated Financial Statements
              
              F-7
                  -
                  F-40
 
 
  **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  
 To
          the
          Shareholders
 Teleplus
          Enterprises, Inc.
 
 We
          have
          audited the accompanying consolidated balance sheets of Teleplus Enterprises,
          Inc. as of December 31, 2005 and 2004, and the related consolidated statements
          of operations, shareholders’ equity and cash flows for the 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 audits.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit 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 the management, as well as evaluating the
          overall
          financial statement presentation. We believe that our audits provide a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the consolidated financial position of Teleplus
          Enterprises, Inc. as of December 31, 2005 and 2004, 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.
 
 As
          discussed in Note 15, the accompanying consolidated financial statements
          have
          been restated.
 
 Toronto,
                    CanadaMarch
                    27, 2006 except as to Notes 1, 4,
                Mintz
                    & Partners LLP13
                    and 15 which are as of July 31, 2006
                Chartered
                    Accountantsand
                    Note 16 which is as of October 24, 2006
 F-1
 **TELEPLUS
          ENTERPRISES, INC.**
 **CONSOLIDATED
          BALANCE SHEETS**
 **DECEMBER
          31, 2005 AND 2004**
 **IN
                      US$****(Restated)**
                  
                  **(Reclassified)****DECEMBER
                      31,**
                  
                  **DECEMBER
                      31,****2005**
                  
                  **2004****ASSETS**Current
                      Assets:Cash
                      and cash equivalents
                  
                  $
                  2,604,915
                  
                  $
                  301,544Accounts
                      receivable, net - trade
                  
                  
                  1,389,698
                  
                  
                  -Other
                      accounts receivable
                  
                  
                  156,029
                  
                  
                  30,000Income
                      taxes receivable
                  
                  
                  31,130
                  
                  
                  -Inventory
                  
                  
                  -
                  
                  
                  8,390Prepaid
                      expenses and other current assets
                  
                  
                  118,016
                  
                  
                  173,113Assets
                      held from discontinued operations
                  
                  
                  1,075,367
                  
                  
                  3,782,310Total
                      Current Assets
                  
                  
                  5,375,155
                  
                  
                  4,295,357Fixed
                      assets, net of depreciation
                  
                  
                  843,635
                  
                  
                  73,784Other
                      Assets:Intangible
                      assets, net
                  
                  
                  7,435,564
                  
                  
                  -Goodwill
                  
                  
                  9,358,127
                  
                  
                  1,116,243Deferred
                      financing fees, net of amortization
                  
                  
                  825,732
                  
                  
                  471,336Deferred
                      connection charges, net of amortization
                  
                  
                  81,295
                  
                  
                  -Deferred
                      income taxes
                  
                  
                  35,506
                  
                  
                  -Total
                      Other Assets
                  
                  
                  17,736,224
                  
                  
                  1,587,579**TOTAL
                      ASSETS**
                  
                  $
                  23,955,014
                  
                  $
                  5,956,720**LIABILITIES
                      AND SHAREHOLDERS' EQUITY (DEFICIT)****LIABILITIES**Current
                      Liabilities:Accounts
                      payable and accrued expenses
                  
                  $
                  1,955,797
                  
                  $
                  321,091Current
                      portion of accrued acquisition obligations
                  
                  
                  5,243,758
                  
                  
                  359,000Unearned
                      revenue
                  
                  
                  1,265,479
                  
                  
                  -Derivative
                      liability
                  
                  
                  9,088,287
                  
                  
                  -Promissory
                      note
                  
                  
                  
                  
                  
                  1,550,000Liabilities
                      held from discontinued operations
                  
                  
                  1,043,344
                  
                  
                  2,562,451Total
                      Current Liabilities
                  
                  
                  18,596,665
                  
                  
                  4,792,542Long-term
                      Liabilities:Convertible
                      debentures, net of discount
                  
                  
                  1,626,192
                  
                  
                  726,542Accrued
                      acquisition obligations, net of current portion
                  
                  
                  6,213,720
                  
                  
                  -Total
                      Long-term Liabilities
                  
                  
                  7,839,912
                  
                  
                  726,542**Total
                      Liabilities**
                  
                  
                  26,436,577
                  
                  
                  5,519,084**SHAREHOLDERS'
                      EQUITY (DEFICIT)**Class
                      A Preferred stock, $0.001 Par Value; 10,000,000 sharesauthorized
                      and 2,000,000 shares issued and outstanding
                  
                  
                  2,000
                  
                  
                  -Common
                      stock, $0.001 Par Value; 600,000,000 shares authorizedand
                      86,403,786 shares issued and outstanding
                  
                  
                  86,404
                  
                  
                  68,917Additional
                      paid-in capital
                  
                  
                  4,097,891
                  
                  
                  2,127,421Accumulated
                      deficit
                  
                  
                  (6,579,272
                  )
                  
                  (1,759,130
                  )Accumulated
                      other comprehensive income (loss)
                  
                  
                  (88,586
                  )
                  
                  428**Total
                      Shareholders' Equity (Deficit)**
                  
                  
                  (2,481,563
                  )
                  
                  437,636**TOTAL
                      LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)**
                  
                  $
                  23,955,014
                  
                  $
                  5,956,720
  The
          accompanying notes are an integral part of the consolidated financial
          statements.
  F-2
  **TELEPLUS
          ENTERPRISES, INC.**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS AND**
 **ACCUMULATED
          OTHER COMPREHENSIVE INCOME (LOSS)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **IN
                    US$****DECEMBER
                    31,****2005**
                
                **2004****CONTINUING
                    OPERATIONS:**
                
                **(Restated)**
                
                **(Note
                    11)****OPERATING
                    REVENUES**Revenues
                
                $
                8,092,689
                
                $
                -**OPERATING
                    COSTS AND EXPENSES**Costs
                    of services (exclusive of depreciation and amortization)
                
                
                5,409,703
                
                
                -Payroll,
                    professional fees and related expenses
                
                
                1,630,230
                
                
                249,193Advertising
                    and marketing expenses
                
                
                326,926
                
                
                61,140Office
                    rent and expenses
                
                
                107,206
                
                
                6,495Other
                    general and administrative expenses
                
                
                548,212
                
                
                49,078Depreciation
                    and amortization
                
                
                452,417
                
                
                -**Total
                    Operating Expenses**
                
                
                8,474,694
                
                
                365,906**OPERATING
                    INCOME (LOSS)**
                
                
                (382,005
                )
                
                (365,906
                )**OTHER
                    INCOME (EXPENSE)**Amortization
                    of deferred finance fees
                
                
                (170,213
                )
                
                (57,471
                )Amortization
                    of debt discount
                
                
                (180,366
                )
                
                -Interest
                    expense
                
                
                (483,612
                )
                
                (48,207
                )Gain
                    (loss) on derivative liability
                
                
                (1,309,113
                )
                
                -**Total
                    Other Income (Expense)**
                
                
                (2,143,304
                )
                
                (105,678
                )**NET
                    INCOME (LOSS) BEFORE PROVISION****FOR
                    INCOME TAXES**
                
                
                (2,525,309
                )
                
                (471,584
                )**Provision
                    for Income Taxes**
                
                
                -
                
                
                -**NET
                    INCOME (LOSS) FROM CONTINUING OPERATIONS**
                
                
                (2,525,309
                )
                
                (471,584
                )**Net
                    loss from discontinued operations**
                
                
                (2,294,833
                )
                
                (602,386
                )**NET
                    INCOME (LOSS)**
                
                $
                (4,820,142
                )
                $
                (1,073,970
                )**NET
                    INCOME (LOSS) PER BASIC SHARES****From
                    continuing operations**
                
                $
                (0.03
                )
                $
                (0.01
                )**From
                    discontinued operations**
                
                $
                (0.03
                )
                $
                (0.01
                )$
                (0.06
                )
                $
                (0.02
                )**NET
                    INCOME (LOSS) PER DILUTED SHARES****From
                    continuing operations**
                
                $
                (0.03
                )
                $
                (0.01
                )**From
                    discontinued operations**
                
                $
                (0.03
                )
                $
                (0.01
                )$
                (0.06
                )
                $
                (0.02
                )**WEIGHTED
                    AVERAGE NUMBER OF COMMON****SHARES
                    OUTSTANDING - BASIC**
                
                
                78,871,864
                
                
                67,152,705**WEIGHTED
                    AVERAGE NUMBER OF COMMON****SHARES
                    OUTSTANDING - DILUTED**
                
                
                162,648,969
                
                
                74,787,705**ACCUMULATED
                    OTHER COMPREHENSIVE INCOME (LOSS)**Net
                    income (loss)
                
                $
                (4,820,142
                )
                $
                (1,073,970
                )Other
                    comprehensive income (loss)Currency
                    translation adjustments
                
                
                (89,014
                )
                
                (2,298
                )Accumulated
                    other comprehensive income (loss)
                
                $
                (4,909,156
                )
                $
                (1,076,268
                )
  The
        accompanying notes are an integral part of the
        consolidated financial statements.
  F-3
  **TELEPLUS
          ENTERPRISES, INC.**
 **CONSOLIDATED
          STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **IN
                      US$****Accumulated****Preferred**
                  
                  **Common**
                  
                  **Additional**
                  
                  
                  
                  **Other****Stock**
                  
                  **Stock**
                  
                  **Paid-in**
                  
                  **Accumulated**
                  
                  **Comprehenisve****Shares**
                  
                  **Amount**
                  
                  **Shares**
                  
                  **Amount**
                  
                  **Capital**
                  
                  **Deficit**
                  
                  **Income
                      (Loss)**
                  
                  **Total**Balance
                      January 1, 2004
                  
                  
                  
                  
                  
                  
                  
                  
                  66,122,500
                  
                  $
                  66,123
                  
                  $
                  666,655
                  
                  $
                  (685,160
                  )
                  $
                  2,726
                  
                  $
                  50,344Shares
                      issued in connection with acquisitionof
                      Smart
                      Cell
                  
                  
                  
                  
                  
                  
                  
                  
                  465,000
                  
                  
                  465
                  
                  
                  329,685
                  
                  
                  -
                  
                  
                  -
                  
                  
                  330,150Shares
                      issued in connection with acquisitionof
                      Cellz
                  
                  
                  
                  
                  
                  
                  
                  
                  405,000
                  
                  
                  405
                  
                  
                  437,995
                  
                  
                  -
                  
                  
                  -
                  
                  
                  438,400Shares
                      issued in conversion of convertible debentures
                  
                  
                  
                  
                  
                  
                  
                  
                  512,181
                  
                  
                  512
                  
                  
                  102,378
                  
                  
                  -
                  
                  
                  -
                  
                  
                  102,890Shares
                      issued in connection with raising of capital, net
                  
                  
                  
                  
                  
                  
                  
                  
                  893,223
                  
                  
                  892
                  
                  
                  265,482
                  
                  
                  -
                  
                  
                  -
                  
                  
                  266,374Shares
                      issued to directors
                  
                  
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  20
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  20Shares
                      issued for cash
                  
                  
                  
                  
                  
                  
                  
                  
                  500,000
                  
                  
                  500
                  
                  
                  325,226
                  
                  
                  -
                  
                  
                  -
                  
                  
                  325,726Net
                      loss for the year ended December 31, 2004
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,073,970
                  )
                  
                  (2,298
                  )
                  
                  (1,076,268
                  )Balance
                      December 31, 2004
                  
                  
                  -
                  
                  
                  -
                  
                  
                  68,917,904
                  
                  
                  68,917
                  
                  
                  2,127,421
                  
                  
                  (1,759,130
                  )
                  
                  428
                  
                  
                  437,636Shares
                      issued in connection with acquisitions ofTelizon
                      and Freedom Phone Lines
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,045,209
                  
                  
                  2,045
                  
                  
                  638,511
                  
                  
                  -
                  
                  
                  -
                  
                  
                  640,556Shares
                      issued in conversion of convertible debentures, net
                  
                  
                  -
                  
                  
                  -
                  
                  
                  4,966,808
                  
                  
                  4,967
                  
                  
                  450,384
                  
                  
                  -
                  
                  
                  -
                  
                  
                  455,351Shares
                      issued in connection with raising of capital, net
                  
                  
                  -
                  
                  
                  -
                  
                  
                  9,750,865
                  
                  
                  9,751
                  
                  
                  695,039
                  
                  
                  -
                  
                  
                  -
                  
                  
                  704,790Shares
                      issued to directors
                  
                  
                  -
                  
                  
                  -
                  
                  
                  250,000
                  
                  
                  250
                  
                  
                  74,250
                  
                  
                  -
                  
                  
                  -
                  
                  
                  74,500Shares
                      issued in settlement of a lawsuit
                  
                  
                  -
                  
                  
                  -
                  
                  
                  50,000
                  
                  
                  50
                  
                  
                  10,950
                  
                  
                  -
                  
                  
                  -
                  
                  
                  11,000Shares
                      issued for employee compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  424,000
                  
                  
                  424
                  
                  
                  101,336
                  
                  
                  -
                  
                  
                  -
                  
                  
                  101,760Shares
                      issued for services rendered
                  
                  
                  2,000,000
                  
                  
                  2,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,000Net
                      loss for the year ended December 31, 2005,as
                      previously reported
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,893,288
                  )
                  
                  (89,014
                  )
                  
                  (2,982,302
                  )Prior
                      period adjustment, see Note 15
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,926,854
                  )
                  
                  -
                  
                  
                  (1,926,854
                  )Net
                      loss for the year ended December
                      31, 2005,as
                      restated
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (4,820,142
                  )
                  
                  (89,014
                  )
                  
                  (4,909,156
                  )Balance
                      December 31, 2005
                  
                  
                  2,000,000
                  
                  $
                  2,000
                  
                  
                  86,404,786
                  
                  $
                  86,404
                  
                  $
                  4,097,891
                  
                  $
                  (6,579,272
                  )
                  $
                  (88,586
                  )
                  $
                  (2,481,563
                  )
  The
        accompanying notes are an integral part of the
        consolidated financial statements.
  F-4
  **TELEPLUS
          ENTERPRISES, INC.**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **IN
                    US$****DECEMBER
                    31,****2005**
                
                **2004****(Restated)****CASH
                    FLOWS FROM OPERATING ACTIVITIES**Net
                    (loss) from continuing operations
                
                $
                (2,525,309
                )
                $
                (471,584
                )**Adjustments
                    to reconcile net (loss) to net cash****provided
                    by (used in) operating activities:**Depreciation
                    and amortization
                
                
                124,173
                
                
                -Amortization
                    of intangible assets
                
                
                328,244Issuance
                    of common shares for compensation
                
                
                158,517
                
                
                -Amortization
                    of deferred finance fees
                
                
                170,213
                
                
                57,471Amortization
                    of convertible debt discount
                
                
                180,366
                
                
                -Loss
                    on derivative liability
                
                
                1,309,113
                
                
                -**Changes
                    in assets and liabilities**(Increase)
                    in accounts receivable - trade
                
                
                (251,367
                )
                
                (30,000
                )Decrease
                    in other accounts receivable
                
                
                45,298
                
                
                -Increase
                    in income tax receivable
                
                
                (10,791
                )
                
                -(Increase)
                    decrease in inventory
                
                
                8,390
                
                
                (8,390
                )(Increase)
                    decrease in prepaid expenses and other current assets
                
                
                100,921
                
                
                (173,113
                )Increase
                    in accounts payable and accrued expenses
                
                
                139,055
                
                
                199,005Increase
                    in unearned revenue
                
                
                160,229Total
                    adjustments
                
                
                2,462,361
                
                
                44,973**Net
                    cash provided by (used in) operating activities**
                
                
                (62,948
                )
                
                (426,611
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Acquisitions
                    of business
                
                
                (6,516,878
                )
                
                (170,839
                )Cash
                    acquired from acquisitions
                
                
                1,517,822
                
                
                -Acquisitions
                    of fixed assets
                
                
                (126,485
                )
                
                (43,915
                )(Increase)
                    in deferred connection charges
                
                
                (71,489
                )
                
                -**Net
                    cash (used in) investing activities**
                
                
                (5,197,030
                )
                
                (214,754
                )**CASH
                    FLOWS FROM FINANCING ACTIVITES**Proceeds
                    from issuance of capital stock
                
                
                -
                
                
                160,658Proceeds
                    from promissory notes
                
                
                8,149,731
                
                
                2,270,361Payments
                    of finance fees
                
                
                (535,000
                )
                
                -**Net
                    cash provided by financing activities**
                
                
                7,614,731
                
                
                2,431,019Effect
                    of foreign currency
                
                
                (38,462
                )
                
                (2,299
                )**NET
                    INCREASE IN CASH AND CASH****EQUIVALENTS
                    - CONTINUING OPERATIONS**
                
                
                2,316,291
                
                
                1,787,355**CASH
                    PROVIDED BY (USED IN) DISCONTINUED OPERATIONS**
                
                
                (12,920
                )
                
                (1,586,615
                )**CASH
                    AND CASH EQUIVALENTS -****BEGINNING
                    OF PERIOD - CONTINUING OPERATIONS**
                
                
                301,544
                
                
                100,804**CASH
                    AND CASH EQUIVALENTS - END OF PERIOD - CONTINUING
                    OPERATIONS**
                
                $
                2,604,915
                
                $
                301,544**CASH
                    PAID DURING THE PERIOD FOR:**Interest
                    expense
                
                $
                26,786
                
                $
                -
  The
        accompanying notes are an integral part of the
        consolidated financial statements.
  F-5
  **TELEPLUS
          ENTERPRISES, INC.**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **(UNAUDITED)**
 **IN
                      US$****2005**
                  
                  **2004****SUPPLEMENTAL
                      NONCASH INFORMATION:**Conversion
                      of of debentures into 4,966,808 shares of common stcok
                  
                  $
                  800,000
                  
                  $
                  -Issued
                      9,750,865 shares of common stock in connection with raising
                      of
                      capital
                  
                  $
                  2,284,791
                  
                  $
                  -Issued
                      250,000 shares of common stock to directors of Company for
                      services
                      rendered.
                  
                  $
                  74,500
                  
                  $
                  -Issued
                      424,000 shares of common stock for employee compensation
                  
                  $
                  101,760
                  
                  $
                  -Issued
                      50,000 shares of common stock for a settlement of a
                      lawsuit
                  
                  $
                  11,000
                  
                  $
                  -Issued
                      2,045,209 shares of common stock in connection with company
                      acquisitions
                  
                  $
                  640,556
                  
                  $
                  -Issued
                      2,000,000 shares of preferred A shares for services
                      rendered
                  
                  $
                  2,000
                  
                  $
                  -
 F-6




**TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION**
 
 Teleplus
        Enterprises, Inc. (the “Company”) is a provider of wireless and telecom products
        and services across North America. The Company’s wholly-owned subsidiaries
        include TelePlus Connect, Corp., a competitive local exchange carrier (“CLEC”),
        which provides landline, long distance and Internet services in Canada under
        the
“Telizon”, “Freedom” and “Avenue” brands; and TelePlus Wireless, Corp., which
        operates a virtual wireless network selling cellular network access to consumers
        and distributors in the United States.
 
 The
        Company was originally incorporated in Nevada as Terlingua Industries, Ltd.
        on
        April 16, 1999. This company was formed to engage in online marketing and
        distribution of organic herbal supplements internationally. Terlingua
        Industries, Ltd. changed its name on January 27, 2000 to HerbalOrganics.com,
        Inc.
 
 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. Retail, in October 2003, 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.
 
 Immediately
        following the Company’s acquisition of 3577996, in October 2003, Visioneer
        Holdings Group, Inc. (“Visioneer”) acquired control of the Company. Visioneer
        and 3577996 were controlled by the same shareholders.
 
 For
        accounting purposes, the transaction was treated as an acquisition of
        HealthOrganics.com, Inc. 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 Company
        acquired $11,327 in cash and assumed $700 in liabilities as a result of the
        transaction. Additionally, the Company changed its name to TelePlus Enterprises,
        Inc.
 
 Post-reverse
        merger, the Company is a provider of wireless and telecommunications services
        in
        Canada and the United States of America. The Company’s products include prepaid
        and postpaid wireless, landline, long distance and Internet services. The
        Company distributes their products through their websites, third party websites,
        select distributors in Canada and the United States of America, and through
        a
        variety of direct marketing initiatives.
 
  F-7
  **TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
 
 As
        discussed in Note 4, the Company acquired Keda Consulting Corp., a North
        American telecommunications industry management consulting service company
        on
        April 1, 2005; 1523813 Ontario Limited (Freedom Phone Lines), a Bell Canada
        reseller of landline and long distance services on April 15, 2005; Avenue
        Reconnect, Inc. a reseller of landline and long distance services and Internet
        service provider on June 1, 2005; Telizon, Inc. and 1500536 Ontario, Inc.
        (One
        Bill, Inc.), a reseller of landline and long distance service and Internet
        service provider on July 15, 2005; certain assets of Star Number, Inc., a
        wholly-owned subsidiary of InPhonic, Inc. related to its Liberty Wireless
        business on December 29, 2005, effective December 31, 2005; and Maximo Impact,
        Inc., (“Maximo”) a Cleveland, Ohio based company specializing in marketing and
        distribution as a Mobile Virtual Network Operator (“MVNO”) in the United States
        of America. As part of this transaction, Maximo launched its own wireless
        brand
        called MX Mobile which caters to mass merchandisers, general retailers and
        c-channel retailers calling on convenience stores and gas stations.
 
 On
        January 13, 2006, Retail, filed in Canada a Notice of Intention to Make a
        Proposal Under the Bankruptcy and Insolvency Act (Canada) (the “Act”). This was
        done to divest the Company of its retail division. 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 retail operations
        will no longer be a segment of the Company’s business for the year ending
        December 31, 2006 (see Note 11).
 
 As
        shown
        in the accompanying financial statements the Company has a working capital
        deficiency from operations of $13,221,510 as of December 31, 2005 due to
        accrued
        acquisition obligations of $5,243,758 that have been classified as current
        liabilities, as well as $9,088,287 in derivative liability associated with
        the
        convertible debenture issued in December 2005. The Company in July 2006 issued
        another convertible debenture in the amount of $3,000,000 under a three-year
        arrangement to assist in the payment of the outstanding acquisition obligations.
        The Company has discontinued operations of its retail operations which had
        a
        negative impact on operating cash flows.
  F-8
  **TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
 
 As
        stated
        in Note 15, to the consolidated financial statements, the Company has restated
        its consolidated financial statements to account for the following
        transactions:
 
 ·
              Reclassify
                  its convertible debenture financing with Cornell Capital Partners,
                  LP to
                  fully account for the derivative liability on the conversion feature
                  in
                  accordance with SFAS No. 133, the freestanding warrants issued
                  with the
                  convertible debenture and the accretion of the discount on the
                  convertible
                  debenture; and
 ·
              Reclassify
                  a portion of the goodwill recognized in its acquisitions in 2005
                  to other
                  tangible and intangible assets, and to recognize depreciation and
                  amortization expense on the other tangible and intangible assets
                  in
                  accordance with SFAS No. 142.
 
 The
        net
        effect of these adjustments on the previously issued December 31, 2005
        consolidated financial statements was as follows:
 
 ·
              An
                  increase in the net loss for the year ended December 31, 2005 of
                  ($1,926,854) from ($2,893,288) to a net loss of
                  ($4,820,142),
 ·
              An
                  increase in the accumulated deficit of ($1,926,854) from ($4,652,418)
                  to
                  ($6,579,272) at December 31, 2005;
                  and
 ·
              A
                  decrease in the loss per share of ($0.02) from ($0.04) to ($0.06)
                  for the
                  year ended December 31, 2005.
 
 **NOTE
        2-**   **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
  **Principles
        of Consolidation**
 
 The
        consolidated financial statements include the accounts of the Company and
        all of
        its wholly owned subsidiaries. All significant intercompany accounts and
        transactions have been eliminated in consolidation.
 
 **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 and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. On an on-going basis, the Company evaluates
        its
        estimates, including, but not limited to, those related to bad debts, income
        taxes and contingencies. The Company bases its estimates on historical
        experience and on various other assumptions that are believed to be reasonable
        under the circumstances, the results of which form the basis for making
        judgments about the carrying value of assets and liabilities that are not
        readily apparent from other sources. Actual results could differ from those
        estimates.
  F-9
  **TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        2-**   **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid debt instruments and other short-term
        investments with an initial maturity of three months or less to be cash
        equivalents.
 
 **Discontinued
        Operations**
 
 The
        Company has followed Statement of Financial Accounting Standard No. 144 (“SFAS
        144”), “Accounting for the Impairment or Disposal of Long-Lived Assets”.
        Accordingly, the Company recognized as discontinued operations the results
        from
        the retail division that has been abandoned. The Company has also written
        down
        the assets relating to the retail division to their respective fair values.
 
 **Inventories**
 
 Inventories
        consist of wireless and telephony products and related accessories and are
        stated at the lower of cost, determined by the average cost method, or
        market.
 
 **Goodwill
        and Other Intangible Assets**
 
 Under
        SFAS No. 142, “Goodwill and Other Intangible Assets”. (“SFAS 142”), goodwill and
        other indefinite-lived intangible assets are no longer amortized but instead
        are
        reviewed for impairment annually and on an interim basis if events or changes
        in
        circumstances between annual tests indicate that an asset might be impaired.
        Under SFAS 142, indefinite-lived intangible assets are tested for impairment
        by
        comparing their fair values to their carrying values. Testing for impairment
        of
        goodwill is a two-step process. The first step requires the Company to compare
        the fair value of its reporting units to the carrying value of the net assets
        of
        the respective reporting units, including goodwill. If the fair value of
        the
        reporting unit is less than the carrying value, goodwill of the reporting
        unit
        is potentially impaired and the Company then completes Step 2 to measure
        the
        impairment loss, if any. The second step requires the calculation of the
        implied
        fair value of goodwill by deducting the fair value of all tangible and
        intangible net assets of the reporting unit from the fair value of the reporting
        unit. If the implied fair value of goodwill is less then the carrying amount
        of
        goodwill, an impairment loss is recognized equal to the difference. Intangible
        assets that do not have indefinite lives are amortized over their useful
        lives.
  F-10
  
 **TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Goodwill
        and Other Intangible Assets (Continued)**
  Other
        intangible assets consist of trade names, with an estimated useful
        life of 20 years and customer lists, with an estimated useful life of 2 to
        8
        years, of companies acquired by the Company and are reflected
        below:
 **As
                  of  December 31, 2005****Gross****Carrying**
              
              **Accumulated****Amount**
              
              **Amortization**
              
              **Net****Amortized
                  Intangible Assets:**Trade
                  Names
              
              $
              3,761,608
              
              $
              74,372
              
              $
              3,687,236Customer
                  Lists
              
              $
              4,002,200
              
              $
              253,872
              
              $
              3,748,328**Amortization
                  Expense:**For
                  the year ended December 31, 2005
              
              
              
              
              $
              328,244For
                  the year ended December 31, 2004
              
              
              
              
              
              -**Estimated
                  Amortization Expense:**For
                  the year ended December 31, 2006
              
              
              
              
              $
              751,504For
                  the year ended December 31, 2007
              
              
              
              
              
              751,504For
                  the year ended December 31, 2008
              
              
              
              
              
              701,504For
                  the year ended December 31, 2009
              
              
              
              
              
              701,504For
                  the year ended December 31, 2010 through 2025
              
              
              
              
              
              4,529,548Total
              
              
              
              
              $
              7,435,564
 The
          changes in goodwill is as follows:
  **Goodwill:**Balance
                    - January 1, 2004
                
                $
                -Increases
                    in goodwill on acquisitions made
                
                
                1,116,243Impairment
                    of goodwill
                
                
                -Balance
                    - December 31, 2004
                
                
                1,116,243Increases
                    in goodwill on acquisitions made
                
                
                9,363,197Impairment
                    of goodwill
                
                
                (1,121,313
                )Balance
                    - December 31, 2005
                
                $
                9,358,127
   F-11
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          2-**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Revenue
          Recognition**
 
 The
          Company 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 recorded as unearned
          revenue
          and recognized upon the customer receiving the service.
 
 The
          Company’s revenue is also generated from the sale of wireless, telephony
          products and accessories to end-users. The Company recognizes this revenue
          when
          the criteria for Staff Accounting Bulletin 101 (and as clarified in Staff
          Accounting Bulletin 104) is achieved. The criteria are as follows: when
          persuasive evidence of an arrangement exists; delivery has occurred; the
          sales
          price is fixed or determinable; and collectibility is probable.
 
 The
          Company’s suppliers generally warrant the products distributed by the Company
          and allow returns of defective products, including those that have been
          returned
          to the Company by its customers. The Company does not independently warrant
          the
          products that it distributes, but it does provide warranty services on
          behalf of
          the supplier.
 
 **Accounts
          Receivable**
  The
          Company conducts business and extends credit based on an evaluation of
          the
          customers’ financial condition, generally without requiring collateral. Exposure
          to losses on receivables is expected to vary by customer due to the financial
          condition of each customer. The Company monitors exposure to credit losses
          and
          maintains allowances for anticipated losses considered necessary under
          the
          circumstances. 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. As of December
          31, 2005, the allowance for doubtful accounts is $59,129.
 
 **Income
          Taxes**
 
 The
          Company accounts for income taxes utilizing the liability method of accounting.
          Under the liability method, deferred taxes are determined based on differences
          between financial statement and tax bases of assets and liabilities at
          enacted
          tax rates in effect in years in which differences are expected to reverse.
          Valuation allowances are established, when necessary, to reduce deferred
          tax
          assets to amounts that are expected to be realized.
  F-12
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          2-**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Currency
          Translation**
 
 The
          Company translates income and expense amounts at average exchange rates
          for the
          year, translates assets and liabilities at year-end exchange rates and
          equity at
          historical rates. The Company’s reporting currency is that of the US dollar
          while its functional currency is that of the Canadian dollar. The Company
          records these translation adjustments as accumulated other comprehensive
          income
          (loss). The Company recognized a gain (loss) of ($89,014) and ($2,298)
          for the
          years ended December 31, 2005 and 2004.
 
 **Reclassifications
          and Restatement**
 
 Certain
          amounts reported for the year ended December 31, 2004 have been reclassified
          to
          conform with the presentation for the year ended December 31, 2005. The
          reclassifications had no effect on net income for the year ended December
          31,
          2004. In addition, the Company has restated certain amounts in its consolidated
          balance sheet and consolidated statements of operations, comprehensive
          income
          (loss) and cash flow to correct previously reported amounts. See Note 1
          for the
          effect of these changes.
 
 **Comprehensive
          Income**
 
 The
          Company adopted Statement of Financial Accounting Standards No, 130, “Reporting
          Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of
          comprehensive income in addition to net income from operations.
 
 Comprehensive
          income is a more inclusive financial reporting methodology that includes
          disclosure of information that historically has not been recognized in
          the
          calculation of net income.
 
 **Deferred
          Connection Charges**
 
 Deferred
          connection charges are costs incurred in setting up new commercial telephone
          lines. The Company amortizes deferred connection charges over five years.
          The
          determination of the useful life is based on the average life that the
          telephone
          line is provided by the Company. As of December 31, 2005, the deferred
          connection charges are $81,295. Amortization of the deferred connection
          charges
          for the year ended December 31, 2005 and 2004 are $14,546 and $0,
          respectively.
  F-13
 
 **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          2-**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Deferred
          Financing Fees**
 
 Deferred
          financing fees represents fees paid in connection with the issuance of
          convertible debentures. The fees are being amortized over a period of three
          years, the life of the financial instrument. As of December 31, 2005, the
          deferred financing fees are $825,732. Amortization of the deferred finance
          fees
          for the years ended December 31, 2005 and 2004 are $170,213 and $57,471,
          respectively.
 
 **Concentrations
          of Credit Risk**
 
 Financial
          instruments which potentially subject the Company to concentrations of
          credit
          risk consist primarily of cash, cash equivalents and trade accounts receivable.
          The Company maintains its cash and cash equivalents with highly quality
          financial institutions as determined by the Company’s 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 the
          Company maintains a broad customer base.
 
 **Fair
          Value of Financial Instruments (other than Derivative Financial
          Instruments)**
 
 The
          carrying amounts reported in the consolidated balance sheet for cash and
          cash
          equivalents, accounts receivable, and accounts payable approximate fair
          value
          because of the immediate or short-term maturity of these financial instruments.
          For the notes payable, the carrying amount reported is based upon the
          incremental borrowing rates otherwise available to the Company for similar
          borrowings. For the convertible debentures, fair values were calculated
          at net
          present value using the Company’s weighted average borrowing rate for debt
          instruments without conversion features applied to total future cash flows
          of
          the instruments.
 
 **Convertible
          Instruments**
 
 The
          Company reviews the terms of convertible debt and equity securities for
          indications requiring bifurcation, and separate accounting, for the embedded
          conversion feature. Generally, embedded conversion features where the ability
          to
          physical or net-share settle the conversion option is not within the control
          of
          the Company are bifurcated and accounted for as a derivative financial
          instrument. (See Derivative Financial Instruments below). Bifurcation of
          the
          embedded derivative instrument requires allocation of the proceeds first
          to the
          fair value of the embedded derivative instrument with the residual allocated
          to
          the debt instrument. The resulting discount to the face value of the debt
          instrument is amortized through periodic charges to the amortization of
          debt
          discount using the Effective Interest Method.
  F-14
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          2-**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Derivative
          Financial Instruments**
 
 The
          Company generally does not use derivative financial instruments to hedge
          exposures to cash-flow or market risks. However, certain other financial
          instruments, such as warrants or options to acquire common stock and the
          embedded conversion features of debt and preferred instruments that are
          indexed
          to the Company’s common stock, are classified as liabilities when either (a) the
          holder possesses rights to net-cash settlement or (b) physical or net share
          settlement is not within the control of the Company. In such instances,
          net-cash
          settlement is assumed for financial accounting and reporting, even when
          the
          terms of the underlying contracts do not provide for net-cash settlement.
          Such
          financial instruments are initially recorded at fair value and subsequently
          adjusted to fair value at the close of each reporting period. These derivative
          financial instruments are indexed to an aggregate of 38,842,105 shares
          of the
          Company’s common stock as of December 31, 2005 and are carried at fair value of
          $5,087,378.
 
 **Advertising
          Costs**
 
 The
          Company expenses the costs associated with advertising as incurred. Advertising
          expenses are included in the consolidated statements of operations for
          the years
          ended December 31, 2005 and 2004.
 
 **Fixed
          Assets**
  Fixed
          assets are stated at cost less accumulated depreciation. Depreciation is
          computed using the straight-line method over the estimated useful lives
          of the
          assets which are machinery and equipment with estimated useful lives ranging
          between three and seven years; business software with estimated useful
          lives
          ranging between three and ten years; and leasehold improvements with an
          estimated useful life of five years.
 
 When
          assets are retired or otherwise disposed of, the costs and related accumulated
          depreciation are removed from the accounts, and any resulting gain or loss
          is
          recognized in income for the period. The cost of maintenance and repairs
          is
          charged to income as incurred; significant renewals and betterments are
          capitalized. Deduction is made for retirements resulting from renewals
          or
          betterments.
  F-15
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          2-**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Impairment
          of Long-Lived Assets**
 
 Long-lived
          assets, primarily fixed assets and intangible assets are reviewed for impairment
          whenever events or changes in circumstances indicate that the carrying
          amount of
          the assets might not be recoverable. The Company does not perform a periodic
          assessment of assets for impairment in the absence of such information
          or
          indicators. Conditions that would necessitate an impairment assessment
          include a
          significant decline in the observable market value of an asset, a significant
          change in the extent or manner in which an asset is used, or a significant
          adverse change that would indicate that the carrying amount of an asset
          or group
          of assets is not recoverable. For long-lived assets to be held and used,
          the
          Company recognizes an impairment loss only if its carrying amount is not
          recoverable through its undiscounted cash flows and measures the impairment
          loss
          based on the difference between the carrying amount and estimated fair
          value.
 
 **Earnings
          (Loss) Per Share of Common Stock**
 
 Basic
          net
          earnings (loss) per common share is computed using the weighted average
          number
          of common shares outstanding. Diluted earnings per share (EPS) includes
          additional dilution from common stock equivalents, such as stock issuable
          pursuant to the conversion of debentures, and exercise of stock options
          and
          warrants. Common stock equivalents will not be included in the computation
          of
          diluted earnings per share when the Company reports a loss because to do
          so
          would be antidilutive for periods presented.
  F-16
 **TELEPLUS
            ENTERPRISES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
            31, 2005 AND 2004**
 
 **NOTE
            2-**  **SUMMARY
            OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Earnings
            (Loss) Per Share of Common Stock** **(Continued)**
 
 The
            following is a reconciliation of the computation for basic and diluted
            EPS:
 **December
                        31,**
                    
                    **December
                        31,****2005**
                    
                    **2004****(Restated)**Net
                        loss
                    
                    $
                    (4,820,142
                    )
                    $
                    (1,073,970
                    )Weighted-average
                        common sharesOutstanding
                        (Basic)
                    
                    
                    78,871,864
                    
                    
                    67,152,705Weighted-average
                        common stockEquivalentsConvertible
                        debentures
                    
                    
                    38,842,105
                    
                    
                    -Stock
                        options
                    
                    
                    11,935,000
                    
                    
                    7,635,000Warrants
                    
                    
                    33,000,000
                    
                    
                    -Weighted-average
                        common sharesOutstanding
                        (Diluted)
                    
                    
                    162,648,969
                    
                    
                    74,787,705
   **Stock-Based
            Compensation**
 
 On
            December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
            Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
            Payment” (“SFAS 123R”). SFAS 123R requires that compensation cost related to
            share-based payment transactions be recognized in the financial statements.
            Share-based payment transactions within the scope of SFAS 123R include
            stock
            options, restricted stock plans, performance-based awards, stock appreciation
            rights, and employee share purchase plans. The provisions of SFAS 123R,
            as
            amended, are effective for small business issuers beginning as of the
            first
            interim period after December 15, 2005. The Company adopted these provisions
            on
            January 1, 2006. The adoption to FASB 123(R) did not have a material
            impact on
            the consolidated financial statements.
 
 If
            compensation expense for the Company's stock-based compensation plans
            had been
            determined consistent with SFAS 123, amended by SFAS 148 (“Accounting for
            Stock Based Compensation - Transition and Disclosure”), the Company's net income
            and net income per share including pro forma results would have been
            the amounts
            indicated below:
  F-17
  
 **TELEPLUS
            ENTERPRISES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
            31, 2005 AND 2004**
 
 **NOTE
            2-**  **SUMMARY
            OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Stock-Based
            Compensation** **(Continued)**
  Years
                        Ended December 31,2005
                    
                    2004Net
                        income (loss):
                    
                    (Restated)As
                        reported
                    
                    
                    ($4,820,142
                    )
                    
                    ($1,073,970
                    )Add:
                        Stock-based employee compensation expense included in reported
                        net loss,
                        net of related tax effects
                    
                    
                    -
                    
                    
                    -Less:
                        Total stock-based employee compensationexpense
                        determined under fair value basedmethod
                        for all awards, net of related tax effects
                    
                    
                    (163,000
                    )
                    
                    (49,000
                    )Pro
                        forma
                    
                    
                    ($4,983,142
                    )
                    
                    ($1,122,970
                    )Net
                        income (loss) per share:As
                        reported:Basic
                    
                    $
                    (
                        0.06
                    )
                    
                    ($0.02
                    )Diluted
                    
                    
                    ($0.06
                    )
                    
                    ($0.02
                    )Pro
                        forma:Basic
                    
                    
                    ($0.06
                    )
                    
                    ($0.02
                    )Diluted
                    
                    
                    ($0.06
                    )
                    
                    ($0.02
                    )
   **Recent
              Accounting Pronouncements**
 
 In
              May
              2005, the FASB issued Statement of Financial Accounting Standard No.
              154,
“Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 is a
              replacement of APB No. 20, *“Accounting
              Changes”* ,
              and
              SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS
              154 applies to all voluntary changes in accounting principle and changes
              the
              requirements for accounting and reporting of a change in accounting
              principle.
              This statement establishes that, unless impracticable, retrospective
              application
              is the required method for reporting of a change in accounting principle
              in the
              absence of explicit transition requirements specific to the newly adopted
              accounting principle. It also requires the reporting of an error correction
              which involves adjustments to previously issued financial statements
              similar to
              those generally applicable to reporting an accounting change retrospectively.
              SFAS 154 is effective for accounting changes and corrections of errors
              made in
              fiscal years beginning after December 15, 2005. The Company believes
              the
              adoption of SFAS 154 will not have a material impact on its consolidated
              financial statements.
 
 In
              February 2006, the FASB issued Statement of Financial Accounting Standard
              No.
              155, “Accounting for Certain Hybrid Instruments” (“SFAS 155”). FASB 155 allows
              financial instruments that have embedded derivatives to be accounted
              for as a
              whole (eliminating the need to bifurcate the derivative from its host)
              if the
              holder elects to account for the whole instrument on a fair value basis.
              This
              statement is effective for all financial instruments acquired or issued
              after
              the beginning of an entity’s first fiscal year that begins after September 15,
              2006. The Company will evaluate the impact of SFAS 155 on its consolidated
              financial statements.
  F-18
  **TELEPLUS
              ENTERPRISES, INC.**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2005 AND 2004**
 
 **NOTE
              2-**  **SUMMARY
              OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Recent
              Accounting Pronouncements** **(Continued)**
 
 In
              March
              2006, the FASB issued Statement of Financial Accounting Standard No.
              156,
“Accounting for Servicing of Financial Assets, an amendment of FSB Statement
              No.
              140” (“SFAS 156”). SFAS 156 requires all separately recognized servicing assets
              and servicing liabilities to be initially measured at fair value, if
              practicable. The standard permits an entity to subsequently measure
              each class
              of servicing assets or servicing liabilities at fair value and report
              changes in
              fair value in the statement of operations in the period in which the
              changes
              occur. SFAS 156 is effective for the Company as of December 1, 2006.
              The Company
              does not expect the new standard to have any material impact on its
              financial
              position or results of its operations.
 
 **NOTE
              3-**  **FIXED
              ASSETS**
 
 Fixed
              assets as of December 31, 2005 and 2004 were as follows:
 Estimated
                      UsefulLives
                      (Years)
                  
                  December
                      31, 2005
                  
                  December
                      31, 2004Equipment
                  
                  
                  5
                  
                  $
                  183,174
                  
                  $
                  -Furniture
                      and fixtures
                  
                  
                  7
                  
                  
                  92,504
                  
                  
                  29,869Business
                      software
                  
                  
                  3-10
                  
                  
                  809,664
                  
                  
                  43,915Computer
                      hardware
                  
                  
                  5
                  
                  
                  299,687
                  
                  
                  -Leasehold
                      improvements
                  
                  
                  5
                  
                  
                  25,653
                  
                  
                  -1,410,682
                  
                  
                  73,784Less:
                      accumulated depreciation
                  
                  
                  
                  
                  
                  567,047
                  
                  
                  -Fixed
                      assets, net
                  
                  
                  
                  
                  $
                  843,635
                  
                  $
                  73,784
  There
              was
              $124,173 and $ - charged to operations depreciation expense for the
              years ended
              December 31, 2005 and 2004 respectively.
 
 **NOTE
              4-**  **ACQUISTIONS**
 
 **1523813
              Ontario Limited (Freedom Phone Lines)**
 
 In
              April
              2005, the Company purchased 100% of the issued and outstanding shares
              of this
              Ontario based company. The total purchase price was $910,910. The allocation
              of
              the purchase price is presented in the chart below. Goodwill of $731,262
              represents the excess of the purchase price over the fair value of
              the net
              tangible and other intangible assets acquired. The other intangible
              assets
              representing the trade name acquired was determined to have a fair
              value of
              $162,950 and was based on an initial valuation.
  F-19
  **TELEPLUS
              ENTERPRISES, INC.**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2005 AND 2004**
 
 **NOTE
              4-**  **ACQUISTIONS** **(CONTINUED)**
 
 **1523813
              Ontario Limited (Freedom Phone Lines)** **(Continued)**
 
 The
              results of operations of 1523813 Ontario Limited have been included
              in the
              Company’s condensed consolidated statements of operations since the completion
              of the acquisition in April 2005.
 
 **Avenue
              Reconnect, Inc.**
 
 In
              June
              2005, the Company purchased 100% of the issued and outstanding shares
              of this
              Ontario based company. The total purchase price was $641,285. The allocation
              of
              the purchase price is presented in the chart below. Goodwill of $530,933
              represents the excess of the purchase price over the fair value of
              the net
              tangible and intangible assets acquired .The other intangible assets
              representing the trade name acquired was determined to have a fair
              value of
              $85,765 and was based on an initial valuation.
 
 The
              results of operations of Avenue Reconnect, Inc. have been included
              in the
              Company’s condensed consolidated statements of operations since the completion
              of the acquisition in June 2005.
 
 **Telizon
              Inc. and 15000536 Ontario Inc. (One Bill, Inc.)**
 
 In
              July
              2005, the Company purchased 100% of the issued and outstanding shares
              of these
              two Ontario based companies. The total purchase price was $9,391,322.
              The
              allocation of the purchase price is presented in the chart below. Goodwill
              of
              $1,933,834 represents the excess of the purchase price over the fair
              value of
              the net tangible and intangible assets acquired. The other intangible
              assets of
              $6,414,820 comprised of the trade name and customer lists acquired
              were
              determined to have fair values of $2,512,590 and $3,902,230 respectively.
              The
              computer software acquired with an estimated useful life of 10 years
              was
              determined to have a fair value of $630,630. Both the intangible assets
              and
              computer software fair values were determined based on an initial
              valuation.
 
 The
              results of operations of Telizon, Inc. and 15000536 Ontario, Inc. have
              been
              included in the Company’s condensed consolidated statements of operations since
              the completion of the acquisition in July 2005.
 
 In
              connection with the 1523813 Ontario Limited, Avenue Reconnect, Inc.,
              and Telizon
              Inc. and 15000536 Ontario Inc. acquisitions, as of July 28, 2006 the
              Company has
              agreed to additional consideration balance of $3,214,000 payable on
              an earn out
              basis based upon the achievements of specific operating benchmarks
              during the 48
              month period following the acquisitions.
  F-20
  **TELEPLUS
              ENTERPRISES, INC.**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
              31, 2005 AND 2004**
 
 **NOTE
              4-**  **ACQUISTIONS** **(CONTINUED)**
 
 **Liberty
              Wireless, a division of Star Number, Inc.**
 
 On
              December 29, 2005, the Company acquired certain assets of Liberty Wireless,
              a
              division of Star Number, Inc. The total purchase price of these assets
              was
              estimated to be $1,972,321. The allocation of the purchase price is
              presented in
              the chart below. Goodwill of $872,321 represents the excess of the
              purchase
              price over the fair value of the net tangible and intangible assets
              acquired.
              The other intangible assets of $1,100,000 comprised of the trade name
              and
              customer lists acquired were determined to have fair values of $1,000,000
              and
              $100,000 respectively.
 
 The
              results of operations of Liberty Wireless have been included in the
              Company’s
              condensed consolidated statements of operations since the completion
              of the
              acquisition in January 2006.
 
 **Keda
              Consulting Corp.**
 
 On
              April
              1, 2005, the Company acquired Keda Consulting Corp., a North American
              telecommunications industry management consulting service company specializing
              in business development, sales and marketing and operations. Keda changed
              its
              name to TelePlus Connect Corp. and their management took over the operations
              of
              the Company’s prepaid landline and long distance telephone service operations.
              When the Company acquired Freedom Phone Lines, Avenue Reconnect and
              Telizon, the
              acquisition price was adjusted to account for the acquisition of Keda,
              which was
              to be paid to the former shareholders of Keda on an earn-out basis.
              The Company
              recognized additional goodwill and accrued acquisition obligations
              for this
              acquisition.
 
 On
              July
              28, 2006 as noted in Note 13, the Company and the former shareholders
              of Keda
              negotiated an agreed purchase price and payment terms. The terms call
              for 60
              equal monthly payments of $60,000 (CDN $) for a total note of $3,600,000
              (CDN $)
              which is converted to $3,214,000 (US $) (see Note 5). Goodwill and
              the accrued
              acquisition obligations were adjusted at that time.
  F-21
 **TELEPLUS
                ENTERPRISES, INC.**
 **NOTES
                TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
                31, 2005 AND 2004**
 
 **NOTE
                4-**  **ACQUISTIONS** **(CONTINUED)**
  **Freedom****Phone**
                      
                      **Avenue**
                      
                      **Telizon
                          and**
                      
                      **Liberty****Lines**
                      
                      **Reconnect**
                      
                      **One
                          Bill**
                      
                      **Wireless**Cash
                      
                      $
                      185,194
                      
                      $
                      7,784
                      
                      $
                      617,844
                      
                      $
                      707,000Accounts
                          receivables
                      
                      
                      74,497
                      
                      
                      13,546
                      
                      
                      1,262,285
                      
                      
                      -Prepaid
                          and other currentassets
                      
                      
                      -
                      
                      
                      15,936
                      
                      
                      41,285
                      
                      
                      -Fixed
                          assets
                      
                      
                      21,640
                      
                      
                      18,868
                      
                      
                      739,428
                      
                      
                      -Other
                          intangible assets
                      
                      
                      162,950
                      
                      
                      85,765
                      
                      
                      6,414,820
                      
                      
                      1,100,000Goodwill
                      
                      
                      731,262
                      
                      
                      530,933
                      
                      
                      1,933,834
                      
                      
                      872,321Deferred
                          taxes
                      
                      
                      -
                      
                      
                      -
                      
                      
                      33,796
                      
                      
                      -Accounts
                          payable andaccrued
                          expenses
                      
                      
                      (220,030
                      )
                      
                      (31,547
                      )
                      
                      (1,298,243
                      )
                      
                      -Unearned
                          revenue
                      
                      
                      (45,503
                      )
                      
                      -
                      
                      
                      (353,727
                      )
                      
                      (707,000
                      )Net
                          assets acquiredat
                          fair value
                      
                      $
                      910,010
                      
                      $
                      641,285
                      
                      $
                      9,391,322
                      
                      $
                      1,972,321Total
                          Consideration:Cash
                          (a) (b)
                      
                      $
                      582,010
                      
                      $
                      641,285
                      
                      $
                      9,391,322
                      
                      $
                      1,972,321Common
                          stock (c)
                      
                      
                      328,000
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -$
                      910,010
                      
                      $
                      641,285
                      
                      $
                      9,391,322
                      
                      $
                      1,972,321
  (a)In
                    the One Bill, Inc. acquisition, $4,723,000 of the cash is payable
                    after
                    March 2006(b)In
                    the Liberty Wireless acquisition, $500,000 of the cash is payable
                    within
                    one year(c)Represents
                    964,706 shares of the Company's common
                    stock
  See
          Note
          14, for the unaudited consolidated statements of operations assuming the
          acquisitions occurred January 1, 2005.
  F-22
 
 **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
  **NOTE
          5-**  **ACCRUED
          ACQUISITION OBLIGATIONS**
 
 The
          Company has recorded $11,457,478 in accrued acquisition obligations as
          of
          December 31, 2005. Included in this amount is $4,596,102 which is payable
          on an
          earn-out basis from 2006 operations based on the achievement of specific
          benchmarks by the 1523813 Ontario Limited, Avenue Reconnect, Inc., and
          Telizon
          Inc. and 15000536 Ontario Inc. acquisitions. During the year ended December
          31,
          2005, the Company paid out $6,516,878 of accrued acquisition obligations.
 
 **NOTE
          6-**  **CONVERTIBLE
          DEBENTURES AND DERIVATIVE LIABILITY**
 
 On
          July
          12, 2004, the Company secured an $11,000,000 financing commitment from
          Cornell.
          The terms of the transaction called for the Company to receive initial
          funding
          in the amount of $1,000,000 payable in three (3) installments: $450,000
          payable
          at closing; $400,000 payable upon the filing of a registration statement
          and the
          remaining $150,000 payable upon the registration statement becoming effective,
          which occurred October 1, 2004.
 
 The
          convertible debentures were secured by all of the Company’s assets, bearing
          interest at 5% per annum, repayable on their third anniversary dates of
          July 12,
          2007, September 1, 2007, and October 1, 2007, respectively. The Company
          had the
          option of converting the principal amounts and all accrued interest before
          these
          maturity dates, and has converted the entire amount to common
          shares.
 
 As
          part
          of the transaction, the Company secured a $10,000,000 Standby Equity
          Distribution Agreement (“SEDA”). The Company could draw these funds under the
          SEDA over a 24-month period upon the effective registration. The proceeds
          of the
          SEDA were used to finance existing and future acquisitions, capital
          expenditures, increases in inventory and general working capital. The Company
          issued 258,098 shares of its common stock in connection with the SEDA as
          financing costs.
 
 The
          Company received $8,125,000 under three promissory notes. The Company received
          the initial promissory note of $2,000,000 in the fourth quarter of 2004;
          the
          second promissory note of $500,000 was received in the first quarter of
          2005;
          and a third promissory note of $5,625,000 was received in July 2005. The
          first
          and second promissory notes were repaid, and the third promissory note
          was
          restructured under a new financing agreement dated December 13,
          2005.
  F-23
 
 **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          6-**  **CONVERTIBLE
          DEBENTURES AND DERIVATIVE LIABILITY** **(CONTINUED)**
 
 On
          December 13, 2005, the Company entered into a certain Securities Purchase
          Agreement (“SPA”) with Cornell Capital Partners (“Cornell”), pursuant to which
          Cornell was issued $9,225,000 in secured convertible debentures dated December
          13, 2005 under the SPA. Under the SPA, the Company and Cornell entered
          into
          various agreements as described below. The convertible 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 the common stock for
          the
          thirty trading days immediately preceding such conversion date. The convertible
          debentures which are secured by certain pledged assets of the Company have
          a
          term of three (3) years, have piggy-back registration rights and accrue
          interest
          at a rate of ten percent (10%) per annum. In connection with the convertible
          debentures, the Company issued 1,250,000 shares of common stock as financing
          fees. The amount funded included the restructuring of the third promissory
          note
          funded in July 2005 of $5,625,000 plus interest of $225,000 plus an additional
          funding of $3,375,000.
 
 As
          of
          December 31, 2005, the Company has $9,225,000 outstanding in convertible
          debentures.
 
 *Secured
          Convertible Debenture* .
          The
          Company entered into a secured convertible debenture in the principal amount
          of
          $9,225,000 dated December 13, 2005 and due December 13, 2008. The debenture
          carries an interest rate of 10%. The Company has an option to redeem a
          portion
          or all amounts outstanding under the amended and restated convertible debenture
          upon three days advance written notice. The Company shall pay an amount
          equal to
          the principal amount being redeemed plus a redemption premium of twenty
          percent
          (20%) of the principal amount being redeemed plus accrued and unpaid interest.
          The Company may not redeem more than $1,500,000 during any fifteen (15)
          consecutive trading days.
 
 Under
          the
          terms of the convertible debenture so long as any principal amount or interest
          is owed, the Company cannot, without the prior consent of Cornell (i) issue
          or
          sell any common or preferred stock with or without consideration, (ii)
          issue or
          sell any preferred stock, warrant, option, right, contract or other security
          or
          instrument granting the holder thereof the right to acquire common stock
          with or
          without consideration, (iii) enter into any security instrument granting
          the
          holder of security interest in any of the Company’s assets or (iv) file any
          registration statement on Form S-8, except for a registration statement
          on Form
          S-8 registering up to 2,000,000 shares of common stock under an Employee
          Stock
          Option Plan. Under the terms of the convertible debenture there are a series
          of
          events of default, including failure to pay principal and interest when
          due, the
          Company’s common stock ceasing to be quoted for trading or listing on the OTCBB
          and shall not again be quoted or listed for trading within five days trading
          days of such listing, the Company being in default of any other debentures
          that
          the Company has issued to Cornell.
  F-24
 
 **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          6-**  **CONVERTIBLE
          DEBENTURES AND DERIVATIVE LIABILITY** **(CONTINUED)**
 
 *Investor
          Registration Rights Agreement* .
          On
          December 13, 2005 the Company entered into an investor registration rights
          agreement with Cornell. Under the terms of the registration rights agreement
          the
          Company is obligated to register on Form SB-2 or any other applicable form
          the
          shares of its common stock issuable to Cornell upon conversion of at least
          235,000,000 shares of common stock under the $9,225,000 convertible debenture,
          1,250,000 shares of common stock issued under the SEDA and 33,000,000 shares
          of
          common stock issued upon the exercise of the warrant shares to be issued
          under
          the warrant to Cornell. The Company will pay all expenses in connection
          with
          such registration. The Company is required to file with the SEC in a timely
          manner all reports or other documents required under the Securities Act
          of 1933,
          as amended and the Securities Exchange Act of 1934, as amended to allow
          Cornell
          to take advantage of Rule 144 under the Securities Act of 1933 (as amended).
 
 *Amended
          and Restated Security Agreement* .
          The
          Company entered into an amended security agreement dated December 13, 2005
          with
          Cornell. This agreement amends the agreement entered into on July 15, 2005
          between these two parties.
 
 *Amended
          and Restated Pledge and Escrow Agreement* .
          The
          Company entered into a pledge and escrow agreement dated December 13, 2005
          with
          Cornell, Visioneer Holding Group, Inc. and David Gonzales, Esq., acting
          as
          escrow agent. Under the terms of the pledge and escrow agreement, the Company
          and Visioneer pledged 30,000,000 of their shares of common stock of the
          Company
          to secure the Company’s obligations under the convertible debenture issued to
          Cornell. These shares are being held by David Gonzales, Esq., who is a
          principal
          with Cornell. In the event of default under the pledge and escrow agreement,
          that includes failure of the Company to comply with any of the agreements
          between themselves and Cornell, the pledged shares can be sold to cover
          any of
          the obligations owed by the Company to Cornell under the various financing
          agreements discussed here. The pledged shares shall be returned to the
          parties
          upon payment in full of all amounts owed to Cornell under the convertible
          debentures.
 
 *Warrant* .
          The
          Company issued a warrant dated December 13, 2005 for 33,000,000 shares
          of its
          common stock (subject to adjustment for stock splits, stock dividends and
          recapitalizations) to Cornell at exercise prices ranging between $.20 and
          $0.38
          per share. The warrant is exercisable until December 13, 2008. Cornell
          cannot
          exercise the warrant if doing so would cause it to beneficially own in
          excess of
          4.99% of the total issued and outstanding shares of the Company’s common stock
          unless the exercise is made within sixty days prior to December 13, 2008.
          The
          shares issued upon excise of the warrant have piggyback and demand registration
          rights set forth in the registration rights agreement described
          above.
  F-25
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          6-**  **CONVERTIBLE
          DEBENTURES AND DERIVATIVE LIABILITY** **(CONTINUED)**
 
 *Securities
          Purchase Agreement* .
          The
          Company entered into a securities purchase agreement dated December 13,
          2005
          with Cornell. The securities purchase agreement relates to the $9,225,000
          secured convertible debenture described above. In accordance with the securities
          purchase agreement, the Company agreed to enter into (i) an amended and
          restated
          investor registration rights agreement to provide registration rights under
          the
          Securities Act of 1933, as amended, for shares of the Company’s common stock
          that could be issued upon conversion of the amounts owed for principal
          and
          interest under the convertible debentures described above, (ii) an amended
          and
          restated security agreement to provide a blanket lien against our property
          as
          described above, (iii) an amended and restated pledge and escrow agreement
          under
          which the Company and Visioneer pledged his shares of the Company’s common stock
          to Cornell, and (iv) an amended and restated security agreement among the
          Company and Cornell. Under the securities purchase agreement the Company
          agreed
          to preserve an adequate number of shares to effect any right of conversion
          exercised by Cornell under the warrant and the convertible debenture described
          above. The Company also agreed to pay Yorkville Advisors Management, LLC,
          a
          company affiliated with Cornell Capital, a fee equal to $342,500.
 
 *Amended
          and Restated Subsidiary Security Agreement* .
          The
          Company entered into an amended and restated subsidiary security agreement
          dated
          December 13, 2005. The material terms of the amended and restated subsidiary
          security agreement are the same as the security agreement that the Company
          executed with Cornell.
 
 The
          convertible debentures meet the definition of hybrid instruments, as defined
          in
          SFAS 133, *Accounting
          for Derivative Instruments and Hedging Activities* (SFAS
          No. 133). The hybrid instruments are comprised of a i) a debt instrument,
          as the
          host contract and ii) an option to convert the debentures into common stock
          of
          the Company, as an embedded derivative. The embedded derivative derives
          its
          value based on the underlying fair value of the Company’s common stock. The
          Embedded Derivative is not clearly and closely related to the underlying
          host
          debt instrument since the economic characteristics and risk associated
          with this
          derivative are based on the common stock fair value. The Company has separated
          the embedded derivative from the hybrid instrument based on a valuation
          of
          $5,087,378 as of December 13, 2005 and classified the Embedded Derivative
          as a
          current liability with an offsetting debit to debt discount, which will
          be
          amortized over the term of the debenture based on the effective interest
          method.
 
 The
          embedded derivative does not qualify as a fair value or cash flow hedge
          under
          SFAS No. 133. Accordingly, changes in the fair value of the embedded derivative
          are immediately recognized in earnings and classified as a gain or loss
          on the
          embedded derivative financial instrument in the accompanying statements
          of
          operations. There was a loss of $1,309,113 recognized for the year ended
          December 31, 2005.
  F-26
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
              6-** **CONVERTIBLE
              DEBENTURES AND DERIVATIVE LIABILITY** **(CONTINUED)**
 
 The
          fixed
          freestanding warrants issued in connection with the $9,225,000 convertible
          debentures has been valued at $2,691,796 using relative fair values as
          stipulated in APB 14 based on a Black-Scholes pricing model. The Black-Scholes
          pricing model utilized the following assumptions: expected life of 3 years;
          risk
          free interest rate of 3.5%; and expected volatility of 75% under the various
          exercise prices.
 
 The
          allocation of the proceeds of the convertible debenture to the warrants
          and the
          recognition of the embedded derivative resulted in discounts to the convertible
          debenture of $7,779,174, and is being amortized to par using the effective
          interest method. The amortization for the period ended December 31, 2005
          amounted to $180,366.
 
 Interest
          expense on the convertible debentures was $141,455 for the period ended
          December
          31, 2005 and interest on the promissory notes for the years ended December
          31,
          2005 and 2004 was $331,809 and $48,207, respectively. Accrued interest
          at
          December 31, 2005 is $122,354.
 
 **NOTE
          7-**  **SHAREHOLDERS’
          EQUITY**
  **Preferred
          Stock**
 
 The
          Company has 10,000,000 shares authorized of Class A Preferred Stock with
          a par
          value of $0.001. These 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 on them.
          The
          Company has issued 2,000,000 of these shares and as of December 31, 2005
          the
          2,000,000 shares are issued and outstanding. These shares were issued to
          an
          entity owned by a majority shareholder for services rendered during the
          year
          ended December 31, 2005.
 
 **Common
          Stock**
 
 The
          Company has 600,000,000 shares authorized of common stock with a par value
          of
          $0.001. As of December 31, 2005, the Company has 86,403,786 shares of common
          stock issued and outstanding. On December 19, 2005, the Company increased
          the
          authorized stock from 150,000,000 to 600,000,000 shares.
  F-27
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          7-**  **SHAREHOLDERS’
          EQUITY** **(CONTINUED)**
 
 **Common
          Stock** **(Continued)**
 During
          the year ended December 31, 2005 the Company issued the following
          shares:
 
 The
          Company issued 4,966,808 shares of common stock in connection with the
          conversion of convertible debentures.
 
 The
          Company issued 9,750,865 shares of common stock in connection with the
          raising
          of Company financing.
 
 The
          Company issued 250,000 shares of common stock to directors of the Company
          for
          services.
 
 The
          Company issued 964,706 shares of common stock in connection with the acquisition
          of Freedom Phone Lines.
 
 The
          Company issued 50,000 shares of common stock in connection with the settlement
          of a lawsuit.
 
 The
          Company issued 424,000 shares of common stock in connection with employee
          compensation.
 
 The
          Company issued 1,080,503 shares of common stock in connection with the
          acquisition of Telizon, Inc. and Freedom Phone Lines for finder’s
          fees.
 
 During
          the year ended December 31, 2004 the Company issued the following
          shares:
 
 The
          Company issued 893,223 shares of common stock in connection with the raising
          of
          Company financing.
 
 The
          Company issued 512,181 shares of common stock in connection with the conversion
          of convertible debentures.
 
 The
          Company issued 20,000 shares of common stock to directors of the Company
          for
          services.
 
 The
          Company received $1,000,000 commitment to purchase 1,000,000 shares of
          common
          stock of which $500,000 had been received as at December 31, 2004. No further
          shares will be issued under this commitment.
 
 The
          Company issued 465,000 shares of common stock in connection with the acquisition
          of Smart Cell Ltd.
 
 The
          Company issued 405,000 shares of common stock in connection with the acquisition
          of Cellz Ltd.
  F-28
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          7-**  **SHAREHOLDERS’
          EQUITY** **(CONTINUED)**
 
 **Stock
          Options**
 
 As
          of
          December 31, 2005, the Company has 11,935,000 stock options issued to employees
          granted and outstanding. Of these options, 4,517,500 were granted in 2005,
          217,500 were forfeited in 2005 and 7,635,000 were granted in 2004.
  Balance,
                      Janaury 1, 2005
                  
                  
                  7,635,000Granted
                  
                  
                  4,517,500Exercised
                  
                  
                  -Forfeited
                  
                  
                  (217,500
                  )Balance,
                      December 31, 2005
                  
                  
                  11,935,000Balance,
                      Janaury 1, 2004
                  
                  
                  -Granted
                  
                  
                  7,635,000Exercised
                  
                  
                  -Forfeited
                  
                  
                  -Balance,
                      December 31, 2004
                  
                  
                  7,635,000
   F-29
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          7-**  **SHAREHOLDERS’
          EQUITY** **(CONTINUED)**
 
 **Stock
          Options** **(Continued)**
 
 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:
 **December
                      31,**
                  
                  **December
                      31,****2005**
                  
                  **2004**Dividend
                      yield
                  
                  
                  0.00
                  %
                  
                  0.00
                  %Expected
                      volatility
                  
                  
                  47.00
                  %
                  
                  47.00
                  %Risk
                      free interest rates
                  
                  
                  3.50
                  %
                  
                  3.50
                  %Expected
                      lives (years)
                  
                  
                  3
                  
                  
                  3
  Options
          outstanding as of December 31, 2005 are summarized as follows:
 **Number
                      of Options**
                  
                  **Exercise**
                      **Price**
                  
                  **Date**
                      **Issued**
                  
                  **Term**
                      **Date**
                  
                  **Vesting**
                      **Date**1,640,000
                  
                  $
                  0.36
                  
                  
                  Nov-04
                  
                  
                  Dec-07
                  
                  
                  Dec-04200,000
                  
                  $
                  0.36
                  
                  
                  Nov-04
                  
                  
                  Sep-08
                  
                  
                  Sep-052,000,000
                  
                  $
                  0.38
                  
                  
                  Nov-04
                  
                  
                  Jun-08
                  
                  
                  Jun-05150,000
                  
                  $
                  0.38
                  
                  
                  Nov-04
                  
                  
                  Dec-08
                  
                  
                  Dec-05200,000
                  
                  $
                  0.38
                  
                  
                  Nov-04
                  
                  
                  Sep-09
                  
                  
                  Sep-062,500,000
                  
                  $
                  0.40
                  
                  
                  Nov-04
                  
                  
                  Jun-09
                  
                  
                  Jun-06200,000
                  
                  $
                  0.40
                  
                  
                  Nov-04
                  
                  
                  Sep-10
                  
                  
                  Sep-07200,000
                  
                  $
                  0.40
                  
                  
                  Nov-04
                  
                  
                  Jun-10
                  
                  
                  Jun-07200,000
                  
                  $
                  0.45
                  
                  
                  Nov-04
                  
                  
                  Sep-11
                  
                  
                  Sep-08200,000
                  
                  $
                  0.50
                  
                  
                  Nov-04
                  
                  
                  Sep-12
                  
                  
                  Sep-09920,000
                  
                  $
                  0.21
                  
                  
                  Jun-05
                  
                  
                  Sep-08
                  
                  
                  Sep-05100,000
                  
                  $
                  0.21
                  
                  
                  Jun-05
                  
                  
                  Dec-08
                  
                  
                  Dec-051,000,000
                  
                  $
                  0.22
                  
                  
                  Jun-05
                  
                  
                  Dec-08
                  
                  
                  Dec-0575,000
                  
                  $
                  0.22
                  
                  
                  Jun-05
                  
                  
                  Jun-09
                  
                  
                  Jun-06100,000
                  
                  $
                  0.22
                  
                  
                  Jun-05
                  
                  
                  Apr-10
                  
                  
                  Apr-071,250,000
                  
                  $
                  0.23
                  
                  
                  Jun-05
                  
                  
                  Dec-09
                  
                  
                  Dec-06100,000
                  
                  $
                  0.23
                  
                  
                  Jun-05
                  
                  
                  Dec-10
                  
                  
                  Dec-07100,000
                  
                  $
                  0.23
                  
                  
                  Jun-05
                  
                  
                  Apr-11
                  
                  
                  Apr-08100,000
                  
                  $
                  0.24
                  
                  
                  Jun-05
                  
                  
                  Apr-12
                  
                  
                  Apr-09100,000
                  
                  $
                  0.25
                  
                  
                  Jun-05
                  
                  
                  Apr-13
                  
                  
                  Apr-10150,000
                  
                  $
                  0.21
                  
                  
                  Nov-05
                  
                  
                  May-09
                  
                  
                  May-06150,000
                  
                  $
                  0.22
                  
                  
                  Nov-05
                  
                  
                  Nov-09
                  
                  
                  Nov-06150,000
                  
                  $
                  0.23
                  
                  
                  Nov-05
                  
                  
                  May-09
                  
                  
                  May-06150,000
                  
                  $
                  0.24
                  
                  
                  Nov-05
                  
                  
                  Nov-10
                  
                  
                  Nov-0711,935,000
   F-30
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          7-**  **SHAREHOLDERS’
          EQUITY** **(CONTINUED)**
 
 **Warrants**
 
 The
          Company granted 33,000,000 warrants to Cornell in connection with the SPA
          entered into December 13, 2005. The warrants expire December 13, 2008.
  **Exercise**
                  
                  **Date****Warrants**
                  
                  **Price**
                  
                  **Issued**
                  
                  **Term**9,000,000
                  
                  $
                  0.25
                  
                  
                  12/13/2005
                  
                  
                  3
                      years4,000,000
                  
                  $
                  0.20
                  
                  
                  12/13/2005
                  
                  
                  3
                      years10,000,000
                  
                  $
                  0.38
                  
                  
                  12/13/2005
                  
                  
                  3
                      years10,000,000
                  
                  $
                  0.25
                  
                  
                  12/13/2005
                  
                  
                  3
                      years33,000,000
  **NOTE
          8-**  **COMMITMENTS
          AND CONTINGENCIES**
 
 **Legal
          Proceedings**
 
 The
          following proceedings have been instigated against the Company. The Company
          does
          not believe that the following legal proceedings have a materially adverse
          impact on the Company’s business or on its results of its operations.
 
 *Proposed
          Tax Assessment* :
          3577996
          Canada, Inc. which the Company had acquired substantially all of their
          assets,
          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 $474,000 (CND $) and penalties of
          approximately $168,000 (CND $). The proposed tax assessment including penalties
          is for $322,000 (CND $) for QST and $320,000 (CND $) for GST. The Company
          believes that certain deductions initially disallowed by the MRQ for the
          QST are
          deductible and is in the process of compiling the deductions to the MRQ.
          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.
  F-31
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          8-**  **COMMITMENTS
          AND CONTINGENCIES** **(CONTINUED)**
 
 **Legal
          Proceedings** **(Continued)**
 
 *Wrongful
          Dismissal* :
          A
          former employee of a subsidiary of the Company, has instigated a claim
          in Quebec
          Superior Court in the amount of $90,000 (CND $) against the Company for
          wrongful
          dismissal. The Company does not believe the claim to be founded and intends
          to
          vigorously contest such claim. The parties are in the discovery stages.
 
 *Wrongful
          Dismissal* :
          There
          is a claim from three individuals in British Columbia in the amount of
          approximately $147,000 and the issuance of 510,000 shares of common stock
          for
          which a letter of demand has been served to the Company. The Company does
          not
          believe the claim to be founded and intends to vigorously contest such
          claim. No
          court proceedings have been instituted and the Company is presently in
          discussions 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 the Company. This matter arises
          out of an alleged agreement between the plaintiff and the Company. The
          plaintiff
          is seeking specific performance of the alleged agreement, monetary 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. The Company has filed a counterclaim against the plaintiff seeking
          rescission of the alleged agreement and a refund of $100,000 paid by the
          Company
          to the plaintiff. The Company believes that this lawsuit is without merit,
          that
          the plaintiff’s claims are unfounded and that the Company has good defenses
          against the claims asserted by the plaintiff. The Company also believes
          that it
          has good claims for the rescission of the agreement and for the refund
          of the
          amount paid to the plaintiff. The Company intends to contest and defend
          against
          the plaintiff’s claims. The foregoing notwithstanding, total liability to the
          Company, should it lose the lawsuit, could reach a maximum of 10% of all
          funds
          received by Cornell.
 
 *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 (“BCGU”) against the Company. The suit arises out of an
          agreement between BCGU and the Company. BCGU alleges that the Company is
          in
          breach of the agreement they entered into, and is seeking damages from
          the
          Company for certain tranches of compensation it allegedly earned and was
          to
          receive under this agreement. The compensation allegedly earned consist
          of
          $250,000 in cash, 1,440,000 shares of the Company’s restricted common stock, and
          the right to exercise warrants ranging between $0.65 and $1.00 per share.
          The
          Company has not granted the warrants to BCGU to purchase additional shares
          of
          common stock.
 
 The
          Company believes the case is without merit, that BCGU’s claim’s are unfounded
          and that the Company has good defenses against the claims asserted by BCGU
          and
          is vigorously defending the case. The Company filed a cross-complaint against
          BCGU and filed a third party complaint against a company recommended by
          BCGU who
          failed to provide promised services. The Company also believes that it
          has good
          claims for breach of the agreement by BCGU and for a refund of the amount
          already paid to BCGU.
  F-32
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          8-**  **COMMITMENTS
          AND CONTINGENCIES** **(CONTINUED)**
 
 **Legal
          Proceedings** **(Continued)**
 
 The
          following claim has been instigated by the Company:
 
 A
          subsidiary of the Company has instigated a claim against Wal-Mart Canada
          Corp.
          on September 23, 2004 in the Ontario Superior Court of Justice in the amount
          of
          $5,000,000 for breach of an agreement between the partiers. This claim
          is in the
          discovery stages.
 
 **Operating
          Lease**
 
 The
          Company has several non-cancelable operating leases, primarily for office
          space
          and storage that expire through December 31, 2009. These leases require
          the
          Company to pay all operating costs such as insurance and
          maintenance.
 
 Future
          minimum lease payments under the non-cancelable leases as of December 31,
          2005
          are:
 **Period
                    Ending****December
                    31,**2006
                
                $
                176,8002007
                
                
                176,8002008
                
                
                79,3902009
                
                
                79,390$
                512,380
  Rent
        expense for the years ended December 31, 2005 and 2004 was $107,206 and $6,495,
        respectively.
 
 **NOTE
        9-**  **RELATED
        PARTY TRANSACTIONS**
 
 In
        2005,
        the Company issued 2,000,000 shares of Class A Preferred Stock for services
        rendered to a company owned by a majority shareholder.
 
 The
        Company paid management fees for the years ended December 31, 2005 and 2004
        to a
        company owned by a majority shareholder in the amount of $174,409 and $76,335,
        respectively.
  F-33
  **TELEPLUS
        ENTERPRISES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
        31, 2005 AND 2004**
 
 **NOTE
        10-**  **PROVISION
        FOR INCOME TAXES**
 
 Deferred
        income taxes are determined using the liability method for the temporary
        differences between the financial reporting basis and income tax basis of
        the
        Company’s assets and liabilities. Deferred income taxes are measured based on
        the tax rates expected to be in effect when the temporary differences are
        included in the Company’s tax return. Deferred tax assets and liabilities are
        recognized based on anticipated future tax consequences attributable to
        differences between financial statement carrying amounts of assets and
        liabilities and their respective tax bases.
 
 At
        December 31, 2005, deferred tax assets consist of the following:
  Net
                    operating losses
                
                $
                1,700,000Amortization
                    of goodwill
                
                
                (350,000
                )Valuation
                    allowance
                
                
                (1,350,000
                )$
                -
  At
          December 31, 2005, the Company had a net operating loss carryforward in
          the
          approximate amount of $5,000,000, available to offset future taxable income
          through 2025. The Company established valuation allowances equal to the
          full
          amount of the deferred tax assets due to the uncertainty of the utilization
          of
          the operating losses in future periods.
 
 A
          reconciliation of the Company’s effective tax rate as a percentage of income
          before taxes and federal statutory rate for the years ended December 31,
          2005
          and 2004 is summarized as follows:
  2005
                  
                  2004Federal
                      statutory rate
                  
                  
                  (34.0
                  )%
                  
                  (34.0
                  )%State
                      income taxes, net of federal benefits
                  
                  
                  0.0
                  
                  
                  0.0Valuation
                      allowance
                  
                  
                  34.0
                  
                  
                  34.00
                  %
                  
                  0
                  %
   F-34
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          11-**  **DISCONTINUED
          OPERATIONS**
 
 On
          January 13, 2006, Retail filed in Canada a Notice of Intention to Make
          a
          Proposal Under the Bankruptcy and Insolvency Act (Canada) (the “Act”). This was
          done to divest the Company of its retail division. 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 retail operations
          will no longer be a segment of the Company’s business for the year ending
          December 31, 2006. Therefore, the Company reclassified as discontinued
          operations the operating results of this division.
 
 The
          following represents the comparative operating results of this division
          for the
          years ended December 31, 2005 and 2004 that is reflected as discontinued
          operations.
 2005
                  
                  2004Net
                      revenues
                  
                  $
                  11,043,352
                  
                  $
                  12,180,501Cost
                      of revenues
                  
                  
                  8,234,701
                  
                  
                  8,882,478General,
                      administrative and selling expenses
                  
                  
                  4,326,341
                  
                  
                  3,609,412Depreciation
                  
                  
                  347,401
                  
                  
                  267,300Interest
                      expense
                  
                  
                  17,509
                  
                  
                  23,697Write
                      down of assets and liabilities
                  
                  
                  (709,080
                  )Write
                      down of Goodwill
                  
                  
                  1,121,313
                  
                  
                  -13,338,185
                  
                  
                  12,782,887Loss
                      before income taxes
                  
                  
                  (2,294,833
                  )
                  
                  (602,386
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -Net
                      loss on discontinued operations
                  
                  $
                  (2,294,833
                  )
                  $
                  (602,386
                  )
  The
          Company will have available loss carryforwards from the remaining business
          entities of the retail division that have not declared bankruptcy. The
          Company’s
          intention is to apply these losses against future profits from its remaining
          business operations.
 F-35
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          11-**  **DISCONTINUED
          OPERATIONS** **(CONTINUED)**
 The
          cash flow from Discontinued Operations
          consists of the following:
 Years
                      EndedDecember
                      31,2005
                  
                  2004Net
                      (loss) from discontinued operations
                  
                  $
                  (2,294,833
                  )
                  $
                  (602,386
                  )Adjustments
                      to reconcile net (loss) to netcash
                      provided by (used in) operating activitiesDepreciation
                      and amortization
                  
                  
                  347,401
                  
                  
                  267,300Writedown
                      of Goodwill
                  
                  
                  1,121,313Gain
                      on writedown of payables
                  
                  
                  (709,080
                  )
                  
                  -Net
                      Change in assets and liabilities
                  
                  
                  1,571,434
                  
                  
                  (636,264
                  )Net
                      Cash provided by (used in) operating activities
                  
                  
                  36,235
                  
                  
                  (971,350
                  )Cash
                      flows from investing activitiesAcquisition
                      of fixed assets
                  
                  
                  (49,155
                  )
                  
                  (615,265
                  )Cash
                      provided by (used in) Discontinued Operations
                  
                  $
                  (12,920
                  )
                  $
                  (1,586,615
                  )
 Summary
            of  Net Assets Remaining - Retail Division
 
 AssetsCash
                
                $
                279,659Accounts
                    Receivable
                
                
                596,758Inventory
                
                
                195,882Prepaid
                    Expenses
                
                
                3,068$
                1,075,367LiabilitiesAccrued
                    expenses
                
                $
                851,897Accounts
                    payable
                
                
                191,4471,043,344Net
                    Assets Remaining
                
                $
                32,023
  F-36
  **TELEPLUS
            ENTERPRISES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
            31, 2005 AND 2004**
 
 
 **NOTE
            12-**  **SEGMENT
            INFORMATION** ****
 
 For
            2005
            and 2004, the Company did not have more than one operating segment. With
            the
            acquisition of Liberty Wireless, the Company commenced segmentation of
            its
            operations. This is effective beginning January 1, 2006.
 
 **NOTE
            13-**  **SUBSEQUENT
            EVENTS** ****
 
 On
            January 13, 2006, Retail, filed in Canada a Notice of Intention to Make
            a
            Proposal Under the Bankruptcy and Insolvency Act (Canada) (the “Act”). This was
            done to divest the Company of its retail division. 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 retail operations
            will no longer be a segment of the Company’s business for the year ending
            December 31, 2006 (see Note 11).
 
 On
            June
            21, 2006, the Company acquired Maximo Impact, Inc. The total purchase
            price of
            these assets were $30,000. Goodwill of $30,000 represents the excess
            of the
            purchase price over the carrying value of the net tangible assets acquired.
            The
            purchase price to be paid is up to a maximum of $1,000,000 to be earned
            on an
            earn out basis.
 
 In
            June
            2006, Liberty Wireless and PeopleSupport, Inc. (“PSPT”) entered into a
            three-year customer support agreement. Under the agreement, PSPT will
            provide
            customer management, transcription and captioning, accounts receivable
            management and additional business process outsourcing services from
            its centers
            in the Philippines, Costa Rica and the United States of America, as its
            strategic provider of customer management support.
 
 Effective
            July 28, 2006, the former shareholders of Keda Consulting Corp. and the
            Company
            entered into an amendment of their original stock purchase agreement
            to modify
            the purchase price and payment terms. The parties agreed to a negotiated
            price
            of $3,600,000 (CDN $) ($3,214,000 in US $) more to be paid in 60 equal
            monthly
            installments of $60,000 (CDN $) per month.
  F-37
  **TELEPLUS
            ENTERPRISES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
            31, 2005 AND 2004**
 
 **NOTE
            13-**  **SUBSEQUENT
            EVENTS** **(CONTINUED)**
 
 On
            July
            28, 2006, the Company entered into a certain SPA with Cornell Capital
            Partners,
            LP (“Cornell”) pursuant to which the Company issued to Cornell $3,000,000 in
            secured convertible debentures dated as of July 28, 2006. The debentures
            were
            fully funded on July 28, 2006, are convertible, in whole or in part,
            at any time
            from time to time before maturity at the option of the holder at the
            lesser of
            (a) $0.20 or (b) 90% of the lowest volume weighted average price of common
            stock
            for thirty trading days immediately preceding the conversion date. Beginning
            on
            March 1, 2007, and continuing on the first trading day of each calendar
            month
            thereafter, the Company shall make mandatory redemptions (“Mandatory
            Redemption”) consisting of outstanding principal. The principal amount of each
            Mandatory Redemption shall be equal to $100,000 per calendar month, until
            all
            amounts owed under the debentures have been paid in full. The Company
            has the
            option to redeem a portion or all of the amounts outstanding under the
            debentures prior to the maturity date of the debentures. The debentures
            have a
            term of three 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. The parties have also entered into an
            Investor
            Registration Rights Agreement, pursuant to which the Company has agreed,
            if
            required by Cornell, to provide certain registration rights under the
            Securities
            Act of 1933, as amended, and the rules and regulations there under, and
            applicable state securities laws.
 
 In
            connection with the SPA, the Company also issued Cornell the following
            warrants
            to purchase shares of common stock:
 
 a)
                  5,000,000
                      at $0.11;
 b)
                  10,000,000
                      at $0.13;
 c)
                  10,000,000
                      at $0.15; and
 d)
                  5,000,000
                      at $0.18
 
 On
            July
            31, 2006, the Company’s CEO and Visioneer Holdings, Inc. (a company owned 100%
            by the Company’s CEO) served written notice to the Company of the exercise of
            the right to exchange all of the 2,000,000 shares of Class A Preferred
            Stock
            owned by Visioneer, Inc. into 20,000,000 shares of Common Stock. The
            right to
            exchange the shares became effective upon achieving certain milestones
            contained
            within the CEO’s employment contract.
 
  F-38
  **TELEPLUS
            ENTERPRISES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
            31, 2005 AND 2004**
 
 
 **NOTE
            14-**  **UNAUDITED
            OPERATIONS - 2005** ****
 
 The
            following table reflects the unaudited proforma condensed consolidated
            statements of operations for the Company, assuming that all of the recent
            acquisitions in 2005 occurred as of January 1, 2005:
  **Twelve
                      Months Ended****December
                      31,****2005**Revenues
                  
                  $
                  37,994,541Operating
                      expenses
                  
                  
                  37,423,034Income
                      before other (expense)
                  
                  
                  571,507Other
                      (income) expense
                  
                  
                  2,210,167Net
                      income before provision for income taxes
                  
                  
                  (1,638,660
                  )Provision
                      for income taxes
                  
                  
                  260,988Net
                      lncome
                  
                  $
                  (1,899,648
                  )Net
                      lncome per basic shares
                  
                  $
                  (0.024
                  )Net
                      Income per diluted shares
                  
                  $
                  (0.024
                  )Weighted
                      average number of common sharesoutstanding
                      - basic
                  
                  
                  78,871,864Weighted
                      average number of common sharesoutstanding
                      - diluted
                  
                  
                  162,648,969
   F-39
  **TELEPLUS
          ENTERPRISES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          14-**  **UNAUDITED
          OPERATIONS - 2005** **(CONTINUED)**
 
 The
          unaudited pro forma results of operations for the year ended December 31,
          2005,
          are not necessarily indicative of what the actual results of operations
          of the
          Company would have been had the acquisition been consummated on January
          1,
          2005.
 
 **NOTE
          15-**  **RESTATED
          FINANCIAL STATEMENTS**
 
 As
          stated
          in Note 1, to the consolidated financial statements, the Company has restated
          its’ consolidated financial statements to account for the following
          transactions:
 
 ·
                Reclassify
                    its convertible debenture financing with Cornell Capital Partners,
                    LP to
                    fully account for the derivative liability on the conversion
                    feature in
                    accordance with SFAS No. 133, the freestanding warrants issued
                    with the
                    convertible debenture and the accretion of the discount on the
                    convertible
                    debenture; and
 ·
                Reclassify
                    a portion of the goodwill recognized in its acquisitions in 2005
                    to other
                    tangible and intangible assets, and to recognize depreciation
                    and
                    amortization expense on the other tangible and intangible assets
                    in
                    accordance with SFAS No. 142.
 
 The
          net
          effect of these adjustments on the previously issued December 31, 2005
          consolidated financial statements was as follows:
 
 ·
                An
                    Increase in the net loss for the year ended December 31, 2005
                    of
                    ($1,926,854) from ($2,893,288) to a net loss of
                    ($4,820,142);
 ·
                An
                    increase in the accumulated deficit of ($1,926,854) from ($4,652,418)
                    to
                    ($6,579,272) at December 31, 2005;
                    and
 ·
                A
                    decrease in the basic and diluted earnings per share of ($0.02)
                    from
                    ($0.04) to ($0.06) for the year ended December 31,
                    2005.
 
 The
          increase in the net loss of $1,926,854 is comprised of the following
          items:
 June
                
                September
                
                DecemberSummary
                    of Restatement Items:
                
                2005
                
                2005
                
                2005
                
                TotalAmortization
                    of intangible assets
                
                $
                2,492
                
                $
                162,876
                
                $
                162,876
                
                $
                328,244Depreciation
                    of computer software
                
                
                -
                
                
                16,128
                
                
                16,128
                
                
                32,256Interest
                    expense
                
                
                -
                
                
                -
                
                
                76,875
                
                
                76,875Loss
                    on derivative liability
                
                
                -
                
                
                -
                
                
                1,309,113
                
                
                1,309,113Amortization
                    of debt discount
                
                
                -
                
                
                -
                
                
                180,366
                
                
                180,366$
                2,492
                
                $
                179,004
                
                $
                1,745,358
                
                $
                1,926,854
  **NOTE
          16-**  **SUBSEQUENT
          EVENT**
 
 On
          October 24, 2006, the Company changed its corporate name to Teleplus World,
          Corp.
  F-40






**Item
              8.**
            **Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure.**





Effective
      January 14, 2005, the client-auditor relationship between the Company and Lopez,
      Blevin, Bork & Associates, an independent chartered accountant (“Former
      Accountant”) ceased as the Former Accountant was dismissed. The Former
      Accountants’ report dated November 15, 2004, on the Company’s consolidated
      financial statements as of September 30, 2004, and 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 the Former
      Accountants on any matters of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedures which, if not resolved
      to
      the satisfaction of the Former Accountants would have caused the Former
      Accountants to make reference to the matter in their report. The Company has
      requested the Former Accountants to furnish it a letter addressed to the
      Commission stating whether it agrees with the above statements which is filed
      as
      an Exhibit herein. 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,
      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 event set forth in Item 304 (a) (iv) and (v),
      respectively, of Regulation S-K with the Company’s Former
      Accountant.





**Item
              8A.**
            **Controls
                and Procedures.**





The
      Company is responsible for maintaining disclosure controls and procedures
      designed to ensure that information required to be disclosed in its Exchange
      Act
      reports is recorded, processed, summarized and reported within the time periods
      specified in the Securities Exchange Commission’s rules and regulations, and
      that such information is accumulated and communicated to its management,
      including its chief executive officer and chief financial officer, as
      appropriate, to allow for timely decisions regarding required disclosure.





In
      designing and evaluating the Company’s disclosure controls and procedures,
      management recognized that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving their
      objectives and management necessarily is required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and procedures
      and
      implementing controls and procedures based upon the application of management’s
      judgment.





27




The
      Company’s management, with the participation of the Company’s Chief Executive
      Officer and Chief Financial Officer, evaluated the effectiveness of the
      Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
      15d-15(e) under the Exchange Act) as of the end of the period covered by this
      report. Based upon this evaluation, the Company’s Chief Executive Officer and
      Chief Financial Officer concluded that the Company’s 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 is recorded, processed, summarized, and reported, within
      the time periods specified in the SEC’s rules and regulations and accumulated
      and communicated to them as appropriate to allow timely decisions regarding
      required disclosure.





In
      connection with the Restatements of these financial statements, the Audit
      Committee has reevaluated certain disclosure controls and procedures and
      internal control over financial reporting. As a result, the Audit Committee
      has
      established additional protocols for certifying officers, senior management
      and
      the Company’s accounting and finance staff to monitor closely new accounting
      pronouncements that impact the Company’s financial statements. This includes
      continuing education of its staff including review of new pronouncements and
      awareness of those pronouncements being discussed, and the evaluation of their
      impact on the financial statements and management’s discussion and analysis. The
      Audit Committee and the Company has also engaged an independent consultant
      to
      assist the Company in its reporting process and period-end and annual
      closings.





In
      connection with this Form 10-KSB/A, we have evaluated our disclosure controls
      and procedures as of November 14, 2006, including the remedial actions discussed
      above, and we have concluded that, as of November 14, 2006, our disclosure
      controls and procedures are effective.





**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 s 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 (who has since left the Company), were 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 their appointment. The Board of Directors has no
      nominating compensation committees. The Directors and Officers of the Company
      are as follows:





**Name**
            
            **Age**
            
            **Position**
            
            **Term**Marius
                Silvasan
            
            32
            
            Chief
                Executive Officer
            
            October
                2003 to presentand
                DirectorRobert
                B. Krebs
            
            49
            
            Chief
                Financial Officer
            
            February
                2004 to presentand
                DirectorThomas
                Davis
            
            57
            
            Chief
                Operating Officer
            
            November
                2005 to presentand
                DirectorMichael
                Karpheden
            
            44
            
            Director
            
            March
                2004 to presentHakan
                Wretsell
            
            45
            
            Director
            
            March
                2004 to presentGordon
                Chow
            
            50
            
            Director
            
            August
                2005 to present








28





Marius
      Silvasan, MBA has served as our CEO and as a Director since October 2003. Prior
      to joining the Company, Mr. Silvasan held the position of President and Chief
      Executive Officer 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 the Company’s 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 of
      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 Chief Operating Officer since November 2005.
      Prior to joining the Company, Mr. Davis served as President and Chief Executive
      Officer of Telizon Inc. from December 2002 until its acquisition by the Company
      in July 2005. Prior to December 2002, Mr. Davis was Senior Vice President,
      Customer Operations at Axxnet 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). Mr. Davis is a graduate of the Wharton School of Business,
      University of Pennsylvania with a Bachelor of Science in Economics.





Michael
      Karpheden has served as a Director of the Company 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. 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, FL, 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. Mr. Karpheden held many positions at
      Ericsson including VP of Finance and 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 the Company 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 with Ericsson where he held the positions 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.




29





Gordon
      Chow, has served as a Director of the Company since August 2005. Mr. Chow
      currently serves as President of VTech Telecommunications Canada Ltd., where
      he
      is responsible for the Telecommunications Products Business in Canada, having
      established the Canadian operations, of VTech Electronics Canada Ltd. In 1986.
      In 1987, Mr. Chow was promoted from General Manager to President. 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
      Accounting 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.





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
      proceeding.




30





***Audit
      Committee***





Mr.
      Karpheden and Mr. Wretsell serve on the Company’s audit committee. The audit
      committee reports to the Board of Directors regarding the appointment of our
      independent registered public accounting firm, the scope and results of our
      annual audit, 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***





Mr.
      Karpheden and Mr. Wretsell serve on the Company’s 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 plan.





***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
      2005.





***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 Mr. Marius Silvasan, Chief
      Executive Officer, 7575 TransCanada, Suite 305, St-Laurent, Quebec, Canada
      H4T
      1V6, (514) 344-0778.




**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.





31




**SUMMARY
        COMPENSATION TABLE**
  **Long-term
                  Compensation****Annual
                    Compensation**
              
              **Awards**
              
              **Payouts****Restricted**
              
              **Securities****Name
                  and Principal**
              
              
              
              
              
              
              
              **Other**
              
              **Stock**
              
              **Underlying**
              
              **LTIP**
              
              **All****Position**
              
              **Year**
              
              **Salary**
              
              **Bonus**
              
              **Compensation**
              
              **Awards**
              
              **Options/SARs**
              
              **(Number)**
              
              **Compenation**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





32




**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:




**Title
                of**
            
            **Shares
                Owned**
            
            **%
                of Ownership****Name**
            
            **Class**
            
            **Beneficially
                (1)**
            
            **Beneficially**Marius
                Silvasan
            
            
            Common
            
            
            64,870,000
            (2)
            
            56.5
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6Robert
                B. Krebs
            
            
            Common
            
            
            505,000
            
            
            4.4
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6Thomas
                Davis
            
            
            Common
            
            
            340,000
            
            
            2.9
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6Michael
                Karpheden
            
            
            Common
            
            
            138,000
            
            
            1.2
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6Hakan
                Wretsell
            
            
            Common
            
            
            152,000
            
            
            1.3
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6Gordon
                Chow
            
            
            Common
            
            
            50,000
            
            
            0.43
            %7575
                TransCanadaSuite
                305St-Laurent,
                Quebec H4T 1V6All
                Officers and Directors as a Group
            
            
            
            
            
            66,055,000
            
            
            57.6
            %





(1)
            Applicable
                percentage of ownership is based on 114,500,945 shares of common
                stock
                outstanding, plus 10,335,000 exercisable option shares for a total
                of
                124,835,945 shares of common stock outstanding as of November 03,
                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
                as of November 03, 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 of ownership of any other person.
                Note, that affiliates are subject to Rule 144 and insider trading
                regulations - percentage computation is for form purposes
                only.






33





(2)
            Beneficially
                owned through Visioneer Holdings Group, Inc.





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





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





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





Michael
      Kerpheden: an option to purchase 50,000 shares at an exercise price of $0.21
      (US$) that vest on December 1, 2005.





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





***Change
      in Control***





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





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





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





**Item
              13.**
            **Exhibits****and Reports of Form
                8-K**





(a)
              Exhibits





31.1
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.3
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232.1
            Certification
                pursuant to 18 U.S.C. Section 135032.2
            Certification
                pursuant to 18 U.S.C. Section 135032.3
            Certification
                pursuant to 18 U.S.C. Section 1350






34





(b)
              Reports
                  on Form 8-K





The
      Company filed the following report on Form 8-K during the quarter (and through
      November 14, 2006) for which the report is filed:





(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 14,
      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 the 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 Freedom
      and
      Keda principals.





(3)
      Form
      14C filed on June 3, 2005, to increase our authorized shares 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 an exhibit the Stock
      Purchase Agreement signed with Avenue principals.





(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 an exhibit the Stock
      Purchase Agreement signed with Telizon principals. Also included to this 8-K
      was
      the issuance of 2,000,000 shares of the Company’s preferred stock to a company
      controlled by our CEO, the creation of a Phantom Stock Program and issuance
      of
      certain options to our executives.




35





(7)
      Form
      8-K filed on September 21, 2005, to announce the appointment of Gordon Chow
      to
      the Board of Directors of the Company.





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





(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 the
      Company.





(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).





(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 Insolvency
      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 World, Corp.
      ("TelePlus"). Also included in this amendment are pro forma financials between
      Liberty Wireless and TelePlus.





(16)
      Form
      8-K filed on July 14, 2006 to describe the acquisition of Maximo Impact
      Inc. (“Maximo”). 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 Maximo principal.





(17)
      Form
      8-K filed on July 19, 2006, to advise that Teleplus Connect Corp. ("TelePlus
      Connect"), a subsidiary of the Company, renegotiated a balloon payment owed
      July
      1 st ,
      2006 to
      the Shareholders of Telizon and 1500536 Ontario, Inc. Such
      report included the transaction documents.




36





(18)
      Form
      8-K filed on August 1, 2006, 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.





(19)
      Form
      8-K filed on August 1, 2006, to describe three Amendments negotiated with the
      Keda shareholders involving a reduction of the Company’s debt owed to the Keda
      Shareholders following the acquisition of Keda Consulting in April 2005. Such
      report included the transaction documents.





(20)
      Form
      8-K filed on August 18, 2006 which was amended on September 29, 2006, to inform
      their shareholders of the restatements that will be forthcoming due to certain
      transactions being not properly reflected in the prior filings, and to place
      non-reliance on those issued financial statements.





(21)
      Form
      8-K filed on October 24, 2006, to inform their shareholders of the address
      of
      the new corporate headquarters in Miami, Florida and inform of the new corporate
      name of Teleplus World, Corp.




37




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





***Audit
      Fees***





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 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 the
      reviews of the Company’s quarterly financial statements included in the
      Company’s Form 10-QSB’s was $12,669 and $12,860, respectively.





***Audit
      Related Fees***




None





***Tax
      Fees***




None





***All
      Other Fees***




None





38





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized this 14th day of November,
      2006.


TELEPLUS
              WORLD,
              CORP..Date:November
              14,
              2006
            By:
            /s/
              Marius SilvasanMarius
              SilvasanChief
              Executive Officer




Date:November
              14,
              2006
            By:
            /s/ Robert
              KrebsRobert
              KrebsChief
              Financial Officer




Date:November
                14,
                2006
              By:
              /s/ Tom
                DavisTom
                DavisChief
                Operating Officer
 Date:November
                  14,
                  2006
                By:
                /s/ Michael
                  KarphedenMichael
                  KarphedenDirector
 Date:November
                    14,
                    2006
                  By:
                  /s/ Hakan
                    WretsellHakan
                    WretsellDirector


Date:November
                14,
                2006
              By:
              /s/ Gordon
                ChowGordon
                ChowDirector
   39