<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended December 31, 2004

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ____________ to ____________

                              TS ELECTRONICS, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)

   Delaware                          0-29523                       73-1564807
   --------                          -------                       ----------
  (state of                  (Commission File Number)             (IRS Employer
incorporation)                                                     I.D. Number)
                    3795 Georgetown Road, Pottsboro, TX 75076
                                  903-786-9618
              ----------------------------------------------------
             (Address and telephone number of registrant's principal
               executive offices and principal place of business)


                      111 Hilltop Lane, Pottsboro, TX 75076
              ----------------------------------------------------
                 (Former address, if changed since last report)

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

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

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of Class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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 [ ]

         As of February 17, 2005, the Company had 600,015 shares of its $.001
par value common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]




<PAGE>


                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

PART I - FINANCIAL INFORMATION                                                3

Item 1.  Financial Statements                                                 3

Item 2.  Management's Discussion and Analysis or Plan of Operation           13

Item 3.  Controls and Procedures                                             14

PART II - OTHER INFORMATION                                                  14

Item 1.  Legal Proceedings                                                   14

Item 2.  Unregistered Sales of Equity Securities                             15

SIGNATURES                                                                   17


                                       2


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

         Balance Sheet December 31, 2004 (Unaudited)                         4
         Statements of Operations for the Three-Month and Six
           Month Periods Ended December 31, 2004 and 2003 (Unaudited)        5
         Statements of Cash Flows for the Six Month Periods
           Ended December 31, 2004 and 2003 (Unaudited)                      6
         Notes to the Financial Statements                                   7



                                       3


<PAGE>
<TABLE>

                                  TS ELECTRONICS, INC.
                               (Formerly, Softstone, Inc.)
                                     Balance Sheets
                                       (Unaudited)
<CAPTION>

                                                                Dec 31        June 30,
                                                                 2004           2004
                                                             ------------   ------------
<S>                                                          <C>            <C>
                                 ASSETS

CURRENT ASSETS
     Cash and Cash Equivalents                               $        84    $        84
                                                             ------------   ------------
          Total Current Assets                                        84             84

          Total Assets                                       $        84    $        84
                                                             ============   ============


                 LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts Payable and Accrued Expenses                     $    96,487    $    68,406
                                                             ------------   ------------
          Total Current Liabilities                               96,487         68,406

          Total Liabilities                                       96,487         68,406

STOCKHOLDERS' DEFICIT
     Common stock - $.001 Par Value; 30,000,000 shares
         authorized; 600,015 shares issued and outstanding           600            600
     Shares To Be Issued                                           2,000          2,000
     Additional Paid in Capital                                3,763,359      3,763,359
     Deficit Accumulated                                      (3,862,362)    (3,834,281)
                                                             ------------   ------------

          Total Stockholders' Deficit                            (96,403)       (68,322)
                                                             ------------   ------------

          Total Liabilities and Stockholders' Deficit        $        84    $        84
                                                             ============   ============



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

                                           4
</TABLE>



<PAGE>
<TABLE>

                                          TS ELECTRONICS, INC.
                                      (Formerly, Softstone, Inc.)
                                        Statements of Operations
                                              (Unaudited)
<CAPTION>

                                                          3 months ended           6 Months Ended
                                                            December 31,             December 31,
                                                      -----------------------   -----------------------
                                                         2004         2003        2004          2003
                                                      ----------   ----------   ----------   ----------
                                                                                             (Restated)
<S>                                                   <C>

REVENUES                                                     --    $      --           --    $   7,317

EXPENSES
  Impairment of Property & Equipment                         --           --           --           --
  Cost of Goods Sold                                         --           --           --       29,705
  General and Administrative Expenses                 $  17,357          563    $  28,081       62,502
                                                      ----------   ----------   ----------   ----------
     Total Expenses                                      17,357          563       28,081       92,207
                                                      ----------   ----------   ----------   ----------

Loss from Operations                                    (17,357)        (563)     (28,081)     (84,890)

OTHER INCOME AND (EXPENSES)
Miscellaneous Income                                         --           --           --           --
Loss on Disposal of Assets and Liabilities                   --           --           --     (504,190)
Interest Expense                                             --           --           --       (5,595)
Gain (Loss) on Settlement of Debt                            --           --           --      120,362
                                                      ----------   ----------   ----------   ----------
  Total Other (Income) and Expenses                          --           --           --     (389,423)

Net Income (Loss)                                     $ (17,357)   $    (563)   $ (28,081)   $(474,313)
                                                      ==========   ==========   ==========   ==========

Earnings (Loss) Per Common Share, Basic and Diluted   $   (0.03)   $   (0.00)   $   (0.05)   $   (0.89)
                                                      ==========   ==========   ==========   ==========

Weighted Average common Shares Outstanding              600,015      600,015      600,015      530,886
                                                      ==========   ==========   ==========   ==========


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

                                                   5
</TABLE>


<PAGE>
<TABLE>

                                TS ELECTRONICS, INC.
                             (FORMERLY, SOFTSTONE, INC.)
                              STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)
<CAPTION>

                                                            6 Months Ending December 31,
                                                                2004         2003
                                                             ----------   ----------
                                                                          (Restated)
<S>                                                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                     $ (28,081)   $(474,313)
  Adjustments to Reconcile Net Income to
     Net Cash Flows used in Operating Activities:
Loss on sale of assets                                              --      504,190
Issuance of common stock for services                               --        8,599
(Gain) Loss on settlement of debt                                   --     (120,362)
Increase (decrease) of accounts payable & accrued expenses      28,081       46,080
                                                             ----------   ----------

          Total Adjustments                                     28,081      438,507
                                                             ----------   ----------

          Net Cash Flows used in Operating Activities               --      (35,806)
                                                             ----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets                                        --       (2,500)
                                                             ----------   ----------

          Net Cash Flows provided by Investing Activities           --       (2,500)
                                                             ----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on loans and debts                                         --       (3,804)
Proceeds from borrowing                                             --       40,411
                                                             ----------   ----------

         Net Cash Flows provided by Financing Activities            --       36,607
                                                             ----------   ----------

Net Increase (Decrease) in Cash and Cash Equivalents                --       (1,699)

Cash and Cash Equivalents at Beginning of Period                    84        1,789
                                                             ----------   ----------

Cash and Cash Equivalents at End of Period                   $      84    $      90
                                                             ==========   ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid for Interest                                       $      --    $   5,595



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

                                         6
</TABLE>


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


1.       ORGANIZATIONS AND DESCRIPTION OF BUSINESS

         TS Electronics, Inc. (formerly, Softstone, Inc.) (the "Company"), a
         Delaware corporation, was incorporated on October 7, 1998. The Company
         was formed to manufacture a patented rubber product used in the road
         and building construction industries. Its principal activities have
         consisted of financial planning, establishing sources of production and
         supply, developing markets, and raising capital. Prior to July 2002,
         the Company was in the development stage as defined by Statement of
         Financial Accounting Standards No. 7 "ACCOUNTING AND REPORTING BY
         DEVELOPMENT STAGE ENTERPRISES". Its principal operations began in the
         quarter ended September 30, 2002. On August 13, 2003, the Company
         changed its name to TS Electronics, Inc.

         The accompanying unaudited interim financial statements have been
         prepared by the Company in accordance with accounting principles
         generally accepted in the United States of America for interim
         financial reporting and the instructions to the Quarterly Report on
         Form 10-QSB and Item 310 of Regulation S-B. Accordingly, certain
         information and footnote disclosures normally included in financial
         statements prepared under generally accepted accounting principles have
         been condensed or omitted pursuant to such principles and regulations.
         The information furnished reflects all adjustments, which are, in the
         opinion or management, of a normal recurring nature and necessary for a
         fair presentation of the Company's financial position, results of
         operations and cash flows for the interim periods presented. The
         accompanying financial statements and related notes should be read in
         conjunction with the audited financial statements of the Company, and
         notes thereto, for the year ended June 30, 2004, as filed with our Form
         10K-SB. Results for interim periods are not necessarily an indication
         of results to be expected for the year.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid debt instruments with an
         original maturity of three months or less to be cash equivalents.

         REVENUE RECOGNITION

         Revenue is recognized when merchandise is shipped to a customer.

         ACCOUNTS PAYABLE AND RECEIVABLE

         The Company has an amount payable to a related party of $3,528 as of
         December 31, 2004 which represents professional fees and miscellaneous
         expenses paid by the related party on behalf of the Company. The
         amounts are due on demand, unsecured and interest free.


                                       7


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


         EARNINGS PER SHARE

         Net loss per share is calculated in accordance with the Statement of
         financial accounting standards No. 128 (SFAS No. 128), "Earnings per
         share". Basic net loss per share is based upon the weighted average
         number of common shares outstanding. Diluted net loss per share is
         based on the assumption that all dilutive convertible shares and stock
         options were converted or exercised. Dilution is computed by applying
         the treasury stock method. Under this method, options and warrants are
         assumed to be exercised at the beginning of the period (or at the time
         of issuance, if later), and as if funds obtained thereby were used to
         purchase the Company's common stock at the average market price during
         the period.

         Basic and diluted net loss per share for the three month and six month
         periods ended December 31, 2004 and 2003 were determined by dividing
         net loss for the periods by the weighted average number of basic and
         diluted shares of common stock outstanding. Weighted average number of
         shares used to compute basic and diluted loss per share is the same
         since there are no dilutive securities outstanding.

         USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles 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. Actual results could differ
         from those estimates.

         ACCOUNTING DEVELOPMENTS

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
         of Variable Interest Entities", an interpretation of accounting
         Research Bulletin ("ARB") No. 51 "Consolidated Financial Statement". In
         December 2003, the FASB issued a revised version of FIN 46 (FIN 46R)
         that replaced the original FIN 46. Interpretation No. 46R addresses
         consolidation by business enterprises of variable interest entities,
         which one or both of the following characteristics: (i) the equity
         investment at risk is not sufficient to permit the entity to finance
         its activities without additional subordinated support from other
         parties, which is provided through other interest that will absorb some
         or all of the expected losses of the entity; (ii) the equity investors
         lack one or more of the following essential characteristics of a
         controlling financial interest: the direct or indirect ability to make
         decisions about the entities activities through voting rights or
         similar rights; or the obligation to absorb the expected losses of the
         entity if they occur, which makes it possible for the entity to finance
         its activities; the right to receive the expected residual returns of
         the entity if they occur, which is the compensation for the risk of
         absorbing the expected loss.


                                       8


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS



         Interpretation No. 46R, also requires expanded disclosures by the
         primary beneficiary (as defined) of a variable interest entity and by
         an enterprise that holds a significant variable interest in a variable
         interest entity but is not the primary beneficiary. Interpretation No.
         46 as revised, applies to small business issues no later than the end
         of the first reporting period that ends after December 15, 2004. The
         Company does not believe adoption of this interpretation will have a
         material impact on the Company's financial position or results of
         operations.

         In June 2003, the FASB issued an Exposure Draft for a proposed
         statement of financial accounting standards ("SFAS") entitled
         "Qualifying Special Purpose Entities ("QSPE") and Isolation of
         Transferred Assets", an amendment of SFAS No. 140 ("The Exposure
         Draft"). The Exposure Draft is a proposal that is subject to change and
         as such is not yet authoritative. If the proposal is enacted in its
         current form, it will amend and clarify SFAS 140. The Exposure Draft
         would prohibit an entity from being a QSPE if it enters into an
         agreement that obligated a transferor of financial assets, its
         affiliates or its agents to deliver additional cash or other assets to
         fulfill the special-purpose entity's obligation to beneficial interest
         holders. The Company does not believe that this exposure draft will
         have a material effect on the Company's financial position or results
         of operations.

3.       NOTES PAYABLE

         During the quarter ended September 30, 2003, the Company issued 6,879
         shares of common stock valued at $40,519 for settlement of amounts
         payable to related parties totaling $160,881, resulting in a gain of
         $120,362 on settlement of debt.

         Also during the quarter ended September 30, 2003, the Company issued
         239,273 shares of common stock to a related party for the assumption by
         the related party of all remaining notes payable, accounts payable and
         accrued expenses, net of an accounts receivable of $1,765. The stock
         was valued at $1,409,318. The net debt and assets disposed of totaled
         $905,128 resulting in a loss of $504,190. The Company has no notes
         payable as of December 31, 2004.

4.       GOING CONCERN

         The accompanying unaudited interim financial statements have been
         prepared in conformity with generally accepted accounting principles
         which contemplate continuation of the company as a going concern.
         However, the Company has an accumulated deficit of $3,862,362 at
         December 31, 2004 and a negative working capital of $96,403 at December
         31, 2004. In view of the matters described above, the ability to pay
         the obligations shown in the accompanying balance sheet is dependent
         upon continued operations of the company, which in turn is dependent
         upon the Company's ability to raise additional capital, obtain
         financing and succeed in its future operations. The financial
         statements do not include any adjustments relating to the
         recoverability and classification of recorded asset amounts or amounts
         and classification of liabilities that might be necessary should the
         Company be unable to continue as a going concern.


                                       9


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


         Management's plan of operations anticipates that the cash requirements
         for the next twelve months will be met by obtaining funding from
         related parties to pay for professional fees to sustain the Company
         until the Company is sold to a new entity. However, there is no
         assurance that the Company will be able to implement its plan.

5.       REORGANIZATION

         On July 31, 2003, the Company entered in to a reorganization agreement
         with TS Electronics Corporation (TSEC), a Delaware corporation. Under
         the reorganization agreement, TSEC shareholders were to purchase from
         the Company, 5,350,000 shares of its common stock in a private
         placement under rule 506 of the Regulation D of the Securities Act of
         1933, in exchange for the transfer to the Company of all the capital
         stock of TSEC. Under the agreement, all of the directors of the Company
         were to be replaced by the designee of TSEC to fill this vacancy and
         become the director of the Company.

         Per the agreement, TSEC and its shareholders were to be indemnified by
         the Company against any liabilities arising either from a failure of
         the Company or its current president to discharge all liabilities of
         the Company. The closing of the agreement was to be effective subject
         to compliance of Securities and Exchange filing rules and regulations.

         Pursuant to the reorganization agreement, on August 13, 2003, the
         Company filed its Certificate of Amendment to Certificate of
         Incorporation with the Secretary of State of the State of Delaware
         changing its name to "TS Electronics, Inc." and consolidating the
         common stock of the corporation. The stock consolidation to 600,000
         shares, $0.001 par value, effective August 14, 2003, consolidates each
         21.8045 outstanding shares to one share, with fractional shares being
         rounded up or down to the nearest whole number.

         On January 20, 2004, the Company withdrew the preliminary information
         statement and amendments for the reason that the proposed business
         combination between the two companies had been abandoned.

6.       RESTATEMENT

         Subsequent to the issuance of the Company's unaudited interim financial
         statements for the three months ended September 30, 2003, the Company
         determined that certain transactions and presentations in the financial
         statements had not been accounted for properly. The Company reevaluated
         the fair value of the 246,152 shares of common stock issued during the
         three months ended September 30, 2003 for the settlement of accounts
         payable and disposal of all other notes payable, accounts payable and
         accrued expenses.


                                       10


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


         The Company determined that the 6,879 shares issued for settlement of
         accounts payable - related parties should be valued at $40,519 instead
         of $25,796 and the 239,273 shares issued for disposal of all other
         notes payable and accrued expenses should be valued at $1,409,318
         instead of $1,359,071. The Company's unaudited interim financial
         statements have been restated to correct errors as follows:
<TABLE>

                                                         AS PREVIOUSLY       AS
         Six months ended December 31, 2003                 REPORTED       RESTATED
                                                          ------------   ------------
<S>                                                       <C>
         BALANCE SHEET
                   Accumulated deficit:                   $(3,139,611)   $(3,804,302)
                   Total stockholders' deficit            $   (43,889)   $  (108,580)

         STATEMENT OF OPERATIONS:
                   Loss on disposal of assets and
                       liabilities                        $   454,220    $   504,190
                   Gain on settlement of debt             $   135,083    $   120,362
                   Net loss                               $   409,622    $   474,313
                   Basic and diluted net loss per share   $     (0.77)   $     (0.89)
</TABLE>

7.       STOCK EXCHANGE AGREEMENT

         Effective August 11, 2004 the Company entered into a Stock Exchange
         Agreement (the "Agreement") with Mr. Hou Xiao, the sole shareholder of
         China ESCO Holdings Limited ("China ESCO"), a company organized in the
         Hong Kong Special Administration Region in The People's Republic of
         China and its wholly owned operating subsidiary, AsiaNet PE Systems
         Limited. China ESCO was incorporated on February 13, 2004, to be the
         present holding company of AsiaNet PE Systems Limited that was
         organized on April 25, 2000, in the Zhu Hai City Economic Special
         District, Guangdong Province in the People's Republic of China (the
         "PRC"). China ESCO is engaged in the development and manufacturing of
         electrical energy saving systems and products in the PRC.

         The agreement provides that the Company will issue approximately
         11,201,902 shares of its restricted common stock in exchange for 100%
         of the issued and outstanding capital stock of China ESCO which will
         represent approximately 94% of the then total issued and outstanding
         common stock of the Company after the exchange.

         Both the Company and China ESCO have commenced due diligence
         investigations of each other in preparation for the consummation of the
         transaction. The Company plans to prepare appropriate shareholder
         materials for dissemination to the shareholders to obtain shareholder
         approval of the proposed transaction as soon as practicable, subject to
         completion of due diligence and receipt of appropriate financial
         statements of China ESCO and it subsidiary.


                                       11


<PAGE>

                              TS ELECTRONICS, INC.
                           (Formerly, Softstone, Inc.)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


         If the transaction is consummated, the name of the Company is expected
         to be changed to "China ESCO Corporation" or such other name as
         selected by China ESCO. Upon closing, all of the current officers and
         directors of the Company will resign and will be replaced by officers
         and directors of China ESCO. The Agreement also contemplates the
         adoption of a 2004 Stock Benefit Plan, the appointment of new auditors
         as the independent auditors of the Company and the filing of an
         amendment to the Certificate of Incorporation of the Company to change
         its name, as described, and to increase the authorized number of shares
         of common stock from 30,000,000 shares to 50,000,000 shares of common
         stock.

         The consummation of the transaction with China ESCO is subject to a
         number of conditions, including approval by the board of directors of
         the Company and China ESCO and the shareholders of the Company and
         China ESCO, completion of satisfactory due diligence, receipt by the
         Company of financial statements of China ESCO as required under
         applicable regulations, and satisfaction of all applicable regulatory
         requirements. As a result of the exchange of the China ESCO stock in
         exchange for the Company's stock, China ESCO will become a wholly-owned
         subsidiary of the Company.

         In January, 2005, the Company declared China ESCO to be in material
         breach of the Agreement and rescinded the Agreement.

8.       SUBSEQUENT EVENT

         Effective February 8, 2005, the Company executed a Letter of Intent
         with Osage Energy Company, LLC ("Osage") whereby Osage would acquire
         90% of the equity interests of the Company.

         The consummation of the transaction with Osage is subject to a number
         of conditions, including approval by the board of directors of the
         Company and Osage and the shareholders of the Company and Osage,
         completion of satisfactory due diligence, receipt by the Company of
         financial statements of Osage as required under applicable regulations,
         and satisfaction of all applicable regulatory requirements.




                                       12



<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES THERETO AND IS
QUALIFIED IN ITS ENTIRETY BY THE FOREGOING AND BY MORE DETAILED FINANCIAL
INFORMATION APPEARING ELSEWHERE. SEE "ITEM 1. FINANCIAL STATEMENTS."

         RESULTS OF OPERATIONS - SECOND QUARTER (Q2) OF FISCAL YEAR 2005
         COMPARED TO SECOND QUARTER OF FISCAL YEAR 2004

         TS Electronics had no sales in Q2 2005, as compared with sales of
$-0- in Q2 2004 (TS Electronics' fiscal year ends on June 30). Until TS
Electronics (i) successfully sells its devulcanized rubber technology or (ii)
consistently brokers crumb rubber, it will continue to operate at a loss.

         Our general, selling and administrative expenses - which have been
devoted to raising capital and acquiring a public market for our common stock -
were $17,357 in Q2 2005 as compared with $62,502 in Q2 2004.

         We had a loss of $17,357 in Q2 2005, or $0.03 a share, as compared with
a loss of $563 in Q2 2004, or $nil a share.

         RESULTS OF OPERATIONS - FIRST HALF OF FISCAL YEAR 2005 COMPARED TO
         FIRST HALF OF FISCAL YEAR 2004

         TS Electronics had no sales in the first half of FY 2005 (December 31,
2004) compared to sales of $7,317 in the first half of FY 2004 (December 31,
2003). Until TS Electronics (i) successfully sells its devulcanized rubber
technology or (ii) consistently brokers crumb rubber, it will continue to
operate at a loss.

         Our general, selling and administrative expenses - which have been
devoted to raising capital and acquiring a public market for our common stock -
were $28,081 in the first half of FY 2005 as compared with $62,502 in the first
half of FY 2004.

         We had a net loss of $28,081, or $0.05 a share, in the first half of FY
2005 as compared with a net loss of $474,313, or $0.89 a share, in the first
half of FY 2004. The loss was due primarily to a loss of $504,190 on the
disposal of asserts, although we did gain $120,362 in the settlement of debts.

OFF-BALANCE SHEET ARRANGEMENTS

         Our company has not entered into any transaction, agreement or other
contractual arrangement with an entity unconsolidated with us under which we
have

o        an obligation under a guarantee contract,



                                       13


<PAGE>

o        a retained or contingent interest in assets transferred to the
         unconsolidated entity or similar arrangement that serves as credit,
         liquidity or market risk support to such entity for such assets,
o        any obligation, including a contingent obligation, under a contract
         that would be accounted for as a derivative instrument, or
o        any obligation, including a contingent obligation, arising out of a
         variable interest in an unconsolidated entity that is held by us and
         material to us where such entity provides financing, liquidity, market
         risk or credit risk support to, or engages in leasing, hedging or
         research and development services with us.

         OUTLOOK

         THE STATEMENTS MADE IN THIS OUTLOOK ARE BASED ON CURRENT PLANS AND
EXPECTATIONS. THESE STATEMENTS ARE FORWARD LOOKING, AND ACTUAL RESULTS MAY VARY
CONSIDERABLY FROM THOSE THAT ARE PLANNED.

         Management's plan of operations anticipates that the cash requirements
for the next twelve months will be met by obtaining funding from related parties
to pay for professional fees to sustain the Company until the Company is sold to
a new entity. However, there is no assurance that the Company will be able to
implement its plan.

ITEM 3. CONTROLS AND PROCEDURES

         EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's
management, with the participation of the Company's Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures as of December 31, 2004. Based on this
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective
for gathering, analyzing and disclosing the information the Company is required
to disclose in the reports it files under the Securities Exchange Act of 1934,
within the time periods specified in the SEC's rules and forms.

         CHANGES IN INTERNAL CONTROLS. There were no significant changes in
internal controls or other factors that could significantly affect our internal
controls subsequent to the date of our evaluation.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         We are not, and none of our property is, a party to any pending legal
proceedings, and no such proceedings are known to be contemplated.

         No director, officer or affiliate of the company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the company,
or any associate of any such director, officer or security holder is a party
adverse to the company or has a material interest adverse to the Company in
reference to any litigation.


                                       14


<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

                  The following exhibits are filed, by incorporation by
reference, as part of this Form 10-QSB:

         2        Agreement and Plan of Reorganization of July 24, 2002 between
                  Softstone, Inc. and Kilkenny Acquisition Corp.*

         3        Certificate of Incorporation of Softstone Inc.*

         3.1      Bylaws of Softstone, Inc.*

         10       Lease Agreement of February 1, 2000, between Ardmore
                  Development Authority, as lessor, and Softstone, Inc., as
                  lessee.*

         10.1     Scrap Tire Disposal Agreement of January 11, 2000, between
                  Michelin North America, Inc., and Softstone, Inc.*

         10.2     Letter of intent of May 1, 2002, of Little Elm Independent
                  School District regarding the Little Elm Walking Trail.*

         10.3     Agreement of March 15, 2002 with Levgum, Inc. concerning
                  exclusive license to Western Hemisphere for Levgum's
                  devulcanization technology.**

         10.4     Reorganization Agreement of August 2, 2003 between Softstone
                  Inc., TS Electronics Corporation, and other parties.+

         10.5     Escrow Agreement of August 1, 2003 between Softstone Inc., TS
                  Electronics Corporation, and other parties.+

         10.6     Form of August 1, 2003 Lockup Agreement between TS Electronics
                  Corporation, certain shareholders of Softstone Inc. and the
                  custodian.+

         10.7     Stock Exchange Agreement dated August 11, 2004.++

         14       Code of Ethics for CEO and Senior Financial Officers.***


                                       15


<PAGE>

         16.2     Letter of March 8, 2004 of Kabani & Company, Inc. agreeing
                  with the statements made in Amendment No. 1 to Form 8-K by TS
                  Electronics, Inc., concerning TS Electronics' change of
                  principal independent accountants.+++

         31       Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

         31.1     Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

         32       Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

         32.1     Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

         99       United States Patent No. 5,714,219.*

*        Previously filed with Form 8-K August 8, 2002 Commission File No.
         000-29523; incorporated by reference.

**       Previously filed with Form 8-K August 27, 2002 Commission File No.
         000-29523; incorporated by reference.

***      Previously filed with Form 8-K September 11, 2002 Commission File No.
         000-29523; incorporated by reference.

+        Previously filed with Form 10-QSB 09-30-03 Commission File No.
         000-29523, incorporated by reference.

++       Previously filed with Form 8-K (Exhibit 10.1) 08-17-04 Commission File
         No. 000-29523, incorporated by reference.

+++      Previously filed with Amendment 1 to Form 8-K 02-04-04 Commission File
         No. 000-29523, incorporated by reference.

         (b)      REPORTS ON FORM 8-K

                  None

                                       16


<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: February 22, 2005                     TS ELECTRONICS, INC.


                                             By /S/ KEITH P. BOYD
                                                --------------------------------
                                                Keith P. Boyd, President



                                       17


<PAGE>


                              TS ELECTRONICS, INC.
                         Commission File Number 0-29523


                              INDEX TO EXHIBITS TO
                              FORM 10-QSB 12-31-04

The following exhibits are filed, by incorporation by reference, as part of this
Form 10-QSB:

2        -        Agreement and Plan of Reorganization of July 24, 2001 between
                  Softstone, Inc. and Kilkenny Acquisition Corp.*

3        -        Certificate of Incorporation of Softstone Inc.*

3.2      -        Bylaws of Softstone, Inc.*

10       -        Lease Agreement of February 1, 2000, between Ardmore
                  Development Authority, as lessor, and Softstone, Inc., as
                  lessee.*

10.1     -        Scrap Tire Disposal Agreement of January 11, 2000, between
                  Michelin North America, Inc., and Softstone, Inc.*

10.2     -        Letter of intent of May 1, 2001, of Little Elm Independent
                  School District regarding the Little Elm Walking Trail.*

10.3     -        Agreement of March 15, 2002 with Levgum, Inc. concerning
                  exclusive license to Western Hemisphere for Levgum's
                  devulcanization technology.**

10.4     -        Reorganization Agreement of August 2, 2003 between Softstone
                  Inc., TS Electronics Corporation, and other parties.+

10.5     -        Escrow Agreement of August 1, 2003 between Softstone Inc., TS
                  Electronics Corporation, and other parties.+

10.6     -        Form of August 1, 2003 Lockup Agreement between TS Electronics
                  Corporation, certain shareholders of Softstone Inc. and the
                  custodian.+

10.7     -        Stock Exchange Agreement dated August 11, 2004.++

14       -        Code of Ethics for CEO and Senior Financial Officers.***

16.2     -        Letter of March 8, 2004 of Kabani & Company, Inc. agreeing
                  with the statements made in Amendment No. 1 to Form 8-K by TS
                  Electronics, Inc., concerning TS Electronics' change of
                  principal independent accountants.+++





<PAGE>

31       -        Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

31.1     -        Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

32       -        Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

32.1     -        Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

99       -        United States Patent No. 5,714,219.*

                  *        Previously filed with Form 8-K August 8, 2001
                           Commission File No. 000-29523; incorporated by
                           reference.

                  **       Previously filed with Form 10-QSB May 20, 2002
                           Commission File No. 000-29523; incorporated by
                           reference.

                  ***      Previously filed with Form 8-K September 11, 2002
                           Commission File No. 000-29523; incorporated by
                           reference.

                  +        Previously filed with Form 10-QSB 09-30-03 Commission
                           File No. 000-29523, incorporated by reference.

                  ++       Previously filed with Form 8-K (Exhibit 10.1)
                           08-17-04 Commission File No. 000-29523, incorporated
                           by reference.

                  +++      Previously filed with Amendment 1 to Form 8-K
                           02-04-04 Commission File No. 000-29523, incorporated
                           by reference.