UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-KSB

[X]  Annual Report Under Section 13 or 15(d) of The  Securities  Exchange Act of
     1934

          For the fiscal year ended June 30, 2005

[ ]  Transition Report Under Section 13 or 15(d) of The Securities  Exchange Act
     of 1934

          For the transition period from ______________ to _____________


                         Commission File Number: 0-29523

                              TS Electronics, Inc.
        (Exact name of small business issuer as specified in its charter)

          Delaware                                             73-1564807
----------------------------                          --------------------------
  (State of incorporation)                             (IRS Employer ID Number)

                      12890 Hilltop Road, Argyle, TX 76226
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (972) 233-0300
                           ---------------------------
                           (Issuer's telephone number)

                      111 Hilltop Lane, Pottsboro, TX 75076
              (Former name, former address and former fiscal year,
                         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


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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Company's knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

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

The issuer's revenues for the fiscal year ended June 30, 2005 were $-0-.

The aggregate market value of voting common equity held by  non-affiliates as of
September 22, 2005 was approximately $1,406,149.

As of September 19, 2005, there were 2,500,060 shares of Common Stock issued and
outstanding.

Transitional Small Business Disclosure Format : Yes     No  X
                                                    ---    ---

<PAGE>

                              TS Electronics, Inc.

                                Index to Contents


Part I

Item 1   Description of Business
Item 2   Description of Property
Item 3   Legal Proceedings
Item 4   Submission of Matters to a Vote of Security Holders

Part II

Item 5   Market for Common Equity, Related Stockholders Matters
         and Small Business Issuer Purchases of Equity Securities
Item 6   Management's Discussion and Analysis or Plan of Operation
Item 7   Financial Statements
Item 8   Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosures
Item 8A  Controls and Procedures

Part III

Item 9   Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act
Item 10  Executive Compensation
Item 11  Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters
Item 12  Certain Relationships and Related Transactions
Item 13  Exhibits
Item 14  Principal Accountant Fees and Services

Signatures





                                       2
<PAGE>

                  Caution Regarding Forward-Looking Information
                  ---------------------------------------------

     Certain  statements  contained in this annual  filing,  including,  without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

     Such factors include, among others, the following: international,  national
and local  general  economic and market  conditions:  demographic  changes;  the
ability of the company to sustain, manage or forecast its growth; the ability of
the company to successfully make and integrate acquisitions; existing government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse  publicity;  competition;  fluctuations  and difficulty in
forecasting  operating  results;  changes in business  strategy  or  development
plans;  business  disruptions;  the  ability  to attract  and  retain  qualified
personnel; and other factors referenced in this and previous filings.

     Given these  uncertainties,  readers of this Form 10-KSB and  investors are
cautioned not to place undue reliance on such  forward-looking  statements.  The
company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.


                                     PART I

Item 1 - Description of Business

     TS  Electronics,  Inc.  (formerly,  Softstone,  Inc.) was  incorporated  on
January 28, 1999 pursuant to the  provisions of the General  Corporation  Act of
the State of  Delaware.  On May 31,  1999,  we merged  with Soft Stone  Building
Products,  Inc., an Oklahoma corporation that was a predecessor to our company's
business.  Our initial  business  operations were conducted at 620 Dallas Drive,
Denton TX 76205.  On February 1, 2000,  we moved our offices and  facilities  to
Ardmore,  OK. In June 2002, we moved our production  facilities to a building in
Ardmore,  OK at an industrial air park and we moved our office facilities to 111
Hilltop Lane, Pottsboro, TX 75076. On August 13, 2003, we changed our name to TS
Electronics, Inc.

     Our focus  initially was solely on realizing the  commercial  benefits of a
process developed and patented by our first president,  Frederick  Parker.  This
process  converts  waste tires into useful  products.  We were not successful in
promoting this business,  wrote off all assets  associated with the business and
shifted  our  attention  to  the  commercial  possibilities  of  a  then,  newly
discovered  devulcanization  process to which we  acquired a 5.5-year  exclusive
license for the Western  Hemisphere.  In addition we began an important business
dealing in hard-to-find and specialty crumb rubber.  We were also not successful
in this endeavor, and have abandoned all efforts regarding these pursuits.

     Effective  August 11,  2004,  the  company  entered  into a Stock  Exchange
Agreement with Mr. Hou Xiao, the sole stockholder 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  engaged  in  the
development and  manufacturing of electrical  energy saving systems and products
in the PRC.

     The consummation of the transaction with China ESCO was subject to a number
of conditions,  including receipt by us of financial statements of China ESCO as
required  under  applicable  regulations,  and  satisfaction  of all  applicable
regulatory  requirements.  In  January  2005,  we  declared  China ESCO to be in
material breach of the Agreement and rescinded the Agreement.

     Effective  February  8, 2005,  we  executed  a Letter of Intent  with Osage
Energy  Company,  LLC  ("Osage")  whereby  Osage would acquire 90% of the equity
interests of the company. This transaction was never consummated by the parties.

     The company has had no operations or  significant  assets since the quarter
ended December 31, 2004.


                                       3
<PAGE>

     On May 11, 2005,  we sold to Halter  Financial  Group,  Inc.,  in a private
placement,  1,875,045  shares of restricted  common stock at a purchase price of
$0.1066641 per share,  pursuant to the terms of a Stock Purchase  Agreement (the
"Purchase  Agreement").  The private  placement was exempt from the registration
requirements of the Securities Act of 1933, as amended, in reliance upon Section
4(2)  thereunder.  As a result of the purchase,  Halter  Financial  Group,  Inc.
became our controlling  stockholder,  owning approximately 75% of our issued and
outstanding shares of common stock.

     Immediately   subsequent  to  and  as  a  result  of  the  closing  of  the
transactions  contemplated  by the Purchase  Agreement,  Gene F. Boyd,  Keith P.
Boyd,  Fredrick W. Parker and Leo G. Templer resigned as officers and directors,
as applicable, of the company. Timothy P. Halter was concurrently appointed as a
member of the Board of Directors, and Mr. Halter was elected as President, Chief
Accounting Officer, and Secretary of the company.

     Our  current  principal  business  activity  is to seek a suitable  reverse
acquisition  candidate  through  acquisition,  merger or other suitable business
combination method.

     Our  equity   securities   are  eligible   for   quotation  on  the  NASD's
Over-the-Counter Bulletin Board under the trading symbol TSET.OB.

     We may be referred to as a reporting shell corporation.  Shell corporations
have zero or nominal  assets and typically no stated or contingent  liabilities.
Private  companies  wishing to become publicly  trading may wish to merge with a
shell (a reverse merger or reverse  acquisition) whereby the stockholders of the
private company become the majority of the stockholders of the combined company.
The private  company may purchase for cash all or a portion of the common shares
of the shell corporation from its major stockholders.  Typically,  the board and
officers  of the  private  company  become  the new  board and  officers  of the
combined  company and often the name of the private  company becomes the name of
the combined entity.

     We have very limited  capital,  and it is unlikely  that we will be able to
take  advantage of more than one such  business  opportunity.  We intend to seek
opportunities  demonstrating  the  potential of  long-term  growth as opposed to
short-term  earnings.  However,  at the present time, we have not identified any
business  opportunity that we plan to pursue,  nor have we reached any agreement
or definitive understanding with any person concerning an acquisition.

     No  assurance  can be  given  that we  will be  successful  in  finding  or
acquiring a desirable  business  opportunity,  given the limited  funds that are
expected to be available  for  acquisitions.  Furthermore,  no assurance  can be
given  that  any  acquisition,  which  does  occur,  will be on  terms  that are
favorable to us or our current stockholders.

     Our search will be directed toward enterprises that have a desire to become
public corporations.  These enterprises may wish to satisfy, either currently or
in the reasonably near future,  the minimum tangible asset  requirement in order
to qualify  shares for trading on a national  exchange or quotation  medium.  We
intend to concentrate  acquisition  efforts on properties or businesses  that we
believe may realize a substantial benefit from being publicly owned.

     We do not propose to restrict our search for combination  opportunities  to
any particular geographical area or industry. Our discretion in the selection of
business  opportunities  is  unrestricted,  subject to the  availability of such
opportunities, economic conditions, and other factors.

     Any entity that has an interest in being  acquired  by, or merging into us,
is  expected  to be an  entity  that  desires  to  become a public  company  and
establish a public trading market for its securities.  In connection with such a
merger or acquisition,  it is highly likely that an amount of stock constituting
control of the company  would  either be issued by us or be  purchased  from the
current  principal  stockholders  of the company by the acquiring  entity or its
affiliates.  If stock is purchased from the current principal stockholders,  the
transaction  is likely to result in substantial  gains to the current  principal
stockholders  relative to their purchase price for such stock.  In our judgment,
none of the officers and directors  would thereby become an  underwriter  within
the meaning of the Section 2(11) of the Securities  Act of 1933, as amended,  as
long  as  the  transaction  is  a  private  transaction  rather  than  a  public
distribution of securities.

     Depending  upon the nature of the  transaction,  the current  officers  and
directors of the company may resign their  management  and board  positions with
the company in connection  with a change of control or acquisition of a business


                                       4
<PAGE>

opportunity.  In  the  event  of  such  a  resignation,  the  company's  current
management  would  thereafter  have no control over the conduct of the company's
business.

     It is anticipated  that business  opportunities  will come to the company's
attention from various sources,  including its officers and directors, its other
stockholders,   professional   advisors  such  as  attorneys  and   accountants,
securities  broker-dealers,   venture  capitalists,  members  of  the  financial
community,  and others who may present unsolicited proposals. The company has no
plan,  understandings,  agreements,  or commitments with any individual for such
person to act as a finder of opportunities for the company.

     To a large  extent,  a  decision  to  participate  in a  specific  business
opportunity may be made upon  management's  analysis of the quality of the other
company's  management  and  personnel,  the  anticipated  acceptability  of  new
products  or  marketing  concepts,  the  merit  of  technological  changes,  the
perceived benefit the business  opportunity will derive from becoming a publicly
held entity, and numerous other factors which are difficult,  if not impossible,
to analyze through the application of any objective criteria. In many instances,
it  is  anticipated  that  the  historical  operations  of a  specific  business
opportunity  may not  necessarily  be indicative of the potential for the future
because of a variety of factors,  including,  but not  limited to, the  possible
need  to  expand  substantially,  shift  marketing  approaches,  change  product
emphasis,  change or  substantially  augment  management,  raise capital and the
like.

     Certain types of business acquisition transactions may be completed without
any   requirement   that  the  company  first  submit  the  transaction  to  the
stockholders  for  their  approval.  In the event the  proposed  transaction  is
structured in such a fashion that stockholder approval is not required,  holders
of our  securities  (other than  principal  stockholders  holding a  controlling
interest)  should  not  anticipate  that they will be  provided  with  financial
statements  or  any  other   documentation   prior  to  the  completion  of  the
transaction.   Other  types  of  transactions  require  prior  approval  of  the
stockholders.

     In the  event a  proposed  business  combination  or  business  acquisition
transaction is structured in such a fashion that prior  stockholder  approval is
necessary,  the  company  will be  required  to  prepare a Proxy or  Information
Statement describing the proposed  transaction,  file it with the Securities and
Exchange  Commission  for  review  and  approval,  and  mail a copy of it to all
stockholders  prior to holding a stockholders  meeting for purposes of voting on
the  proposal.  Minority  stockholders  that do not vote in favor of a  proposed
transaction may then have the right, in the event the transaction is approved by
the required number of stockholders,  to exercise  statutory  dissenter's rights
and elect to be paid the fair value of their shares.

     The analysis of business  opportunities  will be undertaken by or under the
supervision of our officers and  directors.  Although there are no current plans
to do so, company  management might hire an outside  consultant to assist in the
investigation and selection of business opportunities,  and might pay a finder's
fee.  Since  company  management  has  no  current  plans  to  use  any  outside
consultants or advisors to assist in the investigation and selection of business
opportunities,  no policies have been adopted  regarding use of such consultants
or advisors,  the criteria to be used in selecting such consultants or advisors,
the  services to be provided,  the term of service,  or the total amount of fees
that may be paid.  However,  because of the limited resources of the company, it
is likely that any such fee the company agrees to pay would be paid in stock and
not in cash.

     Otherwise,  in  analyzing  potential  business  opportunities,   management
anticipates that it will consider, among other things, the following factors:

o    Potential  for  growth  and  profitability  indicated  by  new  technology,
     anticipated market expansion,  or new products;  o The company's perception
     of  how  any  particular  business  opportunity  will  be  received  by the
     investment community and by the company's stockholders;
o    Whether, following the business combination, the financial condition of the
     business  opportunity would be, or would have a significant prospect in the
     foreseeable future of becoming,  sufficient to enable the securities of the
     company to qualify for  listing on an  exchange or on a national  automated
     securities quotation system, such as NASDAQ, so as to permit the trading of
     such securities to be exempt from the requirements of Rule 15g-9 adopted by
     the Securities and Exchange Commission.
o    Capital requirements and anticipated  availability of required funds, to be
     provided by the company or from operations,  through the sale of additional
     securities,  through joint ventures or similar arrangements,  or from other
     sources;


                                       5
<PAGE>

o    The extent to which the business opportunity can be advanced;
o    Competitive  position as compared to other  companies  of similar  size and
     experience  within the industry segment as well as within the industry as a
     whole; and
o    Strength and diversity of existing management or management  prospects that
     are scheduled for recruitment.

     No single factor  described above will be controlling in the selection of a
business  opportunity,  and  management  will  attempt  to analyze  all  factors
appropriate to each  opportunity and make a determination  based upon reasonable
investigative  measures  and  available  data.  Potentially  available  business
opportunities  may occur in many  different  industries and at various stages of
development,  all of which will make the task of comparative  investigation  and
analysis  of  such  business  opportunities  extremely  difficult  and  complex.
Potential  investors  must  recognize  that,  because of the  company's  limited
capital  available for  investigation  and  management's  limited  experience in
business analysis,  the company may not discover or adequately  evaluate adverse
facts about the opportunity to be acquired.

     We are unable to predict when we may participate in a business opportunity.

     Prior to making a decision to  participate  in a business  opportunity,  we
will generally request that we be provided with written materials  regarding the
business opportunity containing as much relevant information as management deems
appropriate.

     Management  believes that various types of potential  merger or acquisition
candidates might find a business  combination with the company to be attractive.
These  include  acquisition  candidates  desiring to create a public  market for
their shares in order to enhance liquidity for current stockholders, acquisition
candidates which have long-term plans for raising capital through public sale of
securities and believe that the possible prior  existence of a public market for
their securities would be beneficial,  and acquisition  candidates which plan to
acquire  additional  assets through issuance of securities rather than for cash,
and believe that the  possibility  of  development  of a public market for their
securities will be of assistance in that process.

     It is impossible to predict the manner in which the company may participate
in a business opportunity.  Specific business  opportunities will be reviewed as
well as the respective needs and desires of the company and the promoters of the
opportunity  and,  upon the basis of the  review  and the  relative  negotiating
strength of the company and such promoters, the legal structure or method deemed
by management to be suitable will be selected.  Such structure may include,  but
is not limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual  arrangements.  The company may act directly or indirectly
through an interest in a partnership, corporation or other form of organization.
Implementing   such   structure  may  require  the  merger,   consolidation   or
reorganization  of the  company  with other  corporations  or forms of  business
organization.  In  addition,  the present  management  and  stockholders  of the
company  most likely will not have  control of a majority of the voting stock of
the company following a merger or reorganization  transaction. As part of such a
transaction,  the company's  existing directors may resign and new directors may
be appointed without any vote by stockholders.

     It is  anticipated  that any new  securities  issued in any  reorganization
would be issued in reliance upon one or more exemptions from registration  under
applicable  federal and state securities laws to the extent that such exemptions
are available.  In some  circumstances,  however, as a negotiated element of the
transaction,  the company may agree to register  such  securities  either at the
time the  transaction is  consummated  or under certain  conditions at specified
times thereafter.  The issuance of substantial  additional  securities and their
potential  sale into any  trading  market  that might  develop in the  company's
securities may have a depressive effect upon such market.

     The  company  will  participate  in a business  opportunity  only after the
negotiation  and  execution of a written  agreement.  Although the terms of such
agreement  cannot  be  predicted,  generally  such an  agreement  would  require
specific  representations and warranties by all of the parties thereto,  specify
certain events of default,  detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing,  outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.

     We currently  have no  employees.  Management  expects to use  consultants,
attorneys and accountants as necessary, and does not anticipate a need to engage
any  full-time  employees  so  long as it is  seeking  and  evaluating  business
opportunities.  The need for employees and their  availability will be addressed
in  connection  with the decision  whether or not to acquire or  participate  in
specific business opportunities.


                                       6
<PAGE>

     Our business and plan of  operation  is subject to numerous  risk  factors,
including, but not limited to, the following:

     There  is  No  Agreement  for  a  Business   Combination   and  No  Minimum
Requirements for a Business Combination. The company has no current arrangement,
agreement or  understanding  with respect to engaging in a business  combination
with a specific  entity.  There can be no  assurance  that the  company  will be
successful in identifying and evaluating  suitable business  opportunities or in
concluding a business  combination.  No particular industry or specific business
within an industry has been selected for a target company. There is no assurance
that the  company  will be able to  negotiate  a business  combination  on terms
favorable to the company.

     Lack of  Diversification.  Because of the limited financial  resources that
the company has, it is unlikely  that the Company will be able to diversify  its
acquisitions or operations.  The company's  probable  inability to diversify its
activities  into  more  than one area  will  subject  the  company  to  economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the company's operations.

     Only One  Director  and Officer.  Because  management  consists of only one
person, while seeking a business  combination,  Timothy P. Halter, the company's
President,  will be the only person  responsible  in conducting  the  day-to-day
operations of the company.  The company does not benefit from multiple judgments
that a greater number of directors or officers  would  provide,  and the company
will rely  completely  on the  judgment  of its one officer  and  director  when
selecting a target company.

     Mr. Halter  devotes only a limited amount of time per month to the business
of the company.  Mr. Halter has not entered into a written employment  agreement
with  the  company  and he is  not  expected  to do so.  The  company  does  not
anticipate  obtaining  key man life  insurance  on Mr.  Halter.  The loss of the
services of Mr.  Halter would  adversely  affect  development  of the  company's
business and its likelihood of continuing operations.

     Conflicts of Interest.  Certain  conflicts  of interest  exist  between the
company and its officers and directors.  They have other  business  interests to
which they currently devote attention, and are expected to continue to do so. As
a result,  conflicts  of interest  may arise that can be resolved  only  through
their exercise of judgment in a manner which is consistent  with their fiduciary
duties to the company.

     It is anticipated  that the company's  principal  stockholders may actively
negotiate  or  otherwise  consent to the  purchase of a portion of their  common
stock as a condition to, or in connection with, a proposed merger or acquisition
transaction.  In this process, the company's principal stockholders may consider
their own  personal  pecuniary  benefit  rather than the best  interest of other
company  stockholders.  Depending  upon the  nature of a  proposed  transaction,
company  stockholder  other than the principal  stockholders may not be afforded
the opportunity to approve or consent to a particular transaction.

     Possible Need for Additional Financing. The company has very limited funds,
and such funds, may not be adequate to take advantage of any available  business
opportunities.  Even if the  company's  currently  available  funds  prove to be
sufficient to pay for its operations until it is able to acquire an interest in,
or complete a transaction with, a business opportunity,  such funds will clearly
not be sufficient to enable it to exploit the  opportunity.  Thus,  the ultimate
success of the company  will depend,  in part,  upon its  availability  to raise
additional  capital.  In the event that the company  requires  modest amounts of
additional  capital  to fund  its  operations  until  it is able to  complete  a
business acquisition or transaction,  such funds, are expected to be provided by
its  principal  stockholders.  However,  the  company has not  investigated  the
availability,  source,  or  terms  that  might  govern  the  acquisition  of the
additional  capital  which is  expected  to be  required  in order to  exploit a
business  opportunity,  and will not do so until it has  determined the level of
need for  such  additional  financing.  There is no  assurance  that  additional
capital  will be  available  from any  source or, if  available,  that it can be
obtained on terms  acceptable to the company.  If not  available,  the company's
operations  will be  limited  to those  that  can be  financed  with its  modest
capital.

     There may be a Scarcity  of and/or  Significant  Competition  for  Business
Opportunities  and  Combinations.  The  company  is and will  continue  to be an
insignificant   participant  in  the  business  of  seeking   mergers  with  and
acquisitions   of  business   entities.   A  large  number  of  established  and
well-financed  entities,  including venture capital firms, are active in mergers
and  acquisitions  of  companies  which  may be  merger  or  acquisition  target
candidates for the company.  Nearly all such entities have significantly greater
financial  resources,  technical expertise and managerial  capabilities than the
company and, consequently,  the company will be at a competitive disadvantage in
identifying  possible  business  opportunities  and  successfully  completing  a
business combination.  Moreover, the company will also compete in seeking merger


                                       7
<PAGE>

or acquisition  candidates with other public shell companies,  some of which may
also have funds available for use by an acquisition candidate.

     Possible Dilution of Value of Shares upon Business Combination.  A business
combination  normally  will  involve  the  issuance of a  significant  number of
additional  shares.  Depending  upon the value of the  assets  acquired  in such
business  combination,  the per share value of the  company's  common  stock may
increase or decrease, perhaps significantly.

     Doing Business in a Foreign Country.  The company may effectuate a business
combination with a merger target whose business operations or even headquarters,
place of formation or primary  place of business are located  outside the United
States  of  America.  In such  event,  the  company  may  face  the  significant
additional risks associated with doing business in that country.  In addition to
the  language  barriers,   different  presentations  of  financial  information,
different business practices,  and other cultural  differences and barriers that
may make it difficult to evaluate such a merger target,  ongoing  business risks
result from the international  political situation,  uncertain legal systems and
applications of law, prejudice against foreigners,  corrupt practices, uncertain
economic policies and potential  political and economic  instability that may be
exacerbated in various foreign countries.

     Taxation.  Federal and state tax consequences  will, in all likelihood,  be
major considerations in any business combination that the company may undertake.
Currently,  such  transactions  may be  structured  so as to result in  tax-free
treatment  to  both  companies,  pursuant  to  various  federal  and  state  tax
provisions.  The company intends to structure any business  combination so as to
minimize  the  federal  and state tax  consequences  to both the company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory  requirements of a tax-free  reorganization  or that the
parties will obtain the intended tax-free  treatment upon a transfer of stock or
assets. A non-qualifying  reorganization  could result in the imposition of both
federal and state taxes, which may have an adverse effect on both parties to the
transaction.

Item 2 - Description of Property

     The company  currently  maintains a mailing  address at 12890 Hilltop Road,
Argyle, TX 76226. The company's telephone number there is (972) 233-0300.  Other
than this mailing  address,  the company does not  currently  maintain any other
office  facilities,  and does not  anticipate  the need for  maintaining  office
facilities at any time in the  foreseeable  future.  The company pays no rent or
other  fees  for the use of the  mailing  address  as  these  offices  are  used
virtually full-time by other businesses of the company's President.

     It is likely that the company  will not  establish  an office  until it has
completed a business acquisition transaction,  but it is not possible to predict
what   arrangements  will  actually  be  made  with  respect  to  future  office
facilities.

Item 3 - Legal Proceedings

     The company is not a party to any pending  legal  proceedings,  and no such
proceedings are known to be contemplated.

Item 4 - Submission of Matters to a Vote of Security Holders

     The company has not conducted any meetings of its  stockholders  during the
preceding quarter or periods subsequent thereto.

                                     PART II

Item 5 - Market for Company's  Common  Stock,  Related  Stockholder  Matters and
Small Business Issuer Purchase of Equity Securities

Market for Trading

     Our common  stock  became  eligible  for  quotation  on the NASD's Over the
Counter  Bulleting  Board on April 17,  2002.  Its stock  symbol  initially  was
"SOFS".  On August 15, 2003 the symbol was changed to  "TSET.OB".  The following
table  shows the  quarterly  high and low  prices  of the stock for the  periods


                                       8
<PAGE>

presented. The prices reflect inter-dealer quotations without mark-up, mark-down
or commissions and may not represent actual transactions.

------------------------------------------------------ ------------ -----------
                                                           High         Low
------------------------------------------------------ ------------ -----------
Calendar 2003:
------------------------------------------------------ ------------ -----------
         1st Qtr                                       $       0.10 $      0.10
------------------------------------------------------ ------------ -----------
         2nd Qtr                                               0.10        0.05
------------------------------------------------------ ------------ -----------
         3rd Qtr                                               5.40        0.08
------------------------------------------------------ ------------ -----------
         4th Qtr                                               5.20        2.00
------------------------------------------------------ ------------ -----------

------------------------------------------------------ ------------ -----------
Calendar 2004:
------------------------------------------------------ ------------ -----------
         1st Qtr                                               0.20        0.60
------------------------------------------------------ ------------ -----------
         2nd Qtr                                               0.65        0.52
------------------------------------------------------ ------------ -----------
         3rd Qtr                                               1.15        1.01
------------------------------------------------------ ------------ -----------
         4th Qtr                                               1.15        0.40
------------------------------------------------------ ------------ -----------

------------------------------------------------------ ------------ -----------
Calendar 2005:
------------------------------------------------------ ------------ -----------
         1st Qtr                                               0.55        0.35
------------------------------------------------------ ------------ -----------
         2nd Qtr                                               2.00        0.50
------------------------------------------------------ ------------ -----------
         3rd Qtr (through September 22, 2005)                  2.25        1.05
------------------------------------------------------ ------------ -----------

Common Stock

     The  company's  Certificate  of  Incorporation  authorizes  the issuance of
30,000,000 shares of $0.001 par value common stock. Each record holder of common
stock  is  entitled  to one vote for each  share  held on all  matters  properly
submitted to the  stockholders  for their vote. The Certificate of Incorporation
does not permit cumulative voting for the election of directors.

     Holders  of  outstanding  shares  of  common  stock  are  entitled  to such
dividends as may be declared  from time to time by the board of directors out of
legally  available  funds;  and,  in the event of  liquidation,  dissolution  or
winding up of the  affairs of the  company,  holders  are  entitled  to receive,
ratably,  the  net  assets  of  the  company  available  to  stockholders  after
distribution  is made to the  preferred  stockholders,  if  any,  who are  given
preferred rights upon liquidation. Holders of outstanding shares of common stock
have no  preemptive,  conversion  or  redemptive  rights.  All of the issued and
outstanding shares of common stock are, and all unissued shares when offered and
sold will be, duly authorized,  validly issued,  fully paid, and non-assessable.
To the extent that additional  shares of the company's  common stock are issued,
the relative interests of then existing stockholders may be diluted.

Transfer Agent

     Our independent  stock transfer agent is Securities  Transfer  Corporation,
located in Frisco,  Texas.  Their mailing address and telephone  number is: 2591
Dallas Parkway, Suite 102, Frisco, TX 75034; (469) 633-0300.

Dividend policy

     No dividends  have been paid to date and the  Company's  Board of Directors
does not  anticipate  paying  dividends  in the  foreseeable  future.  It is the
current  policy to retain all  earnings,  if any, to support  future  growth and
expansion.

Recent Sales of Unregistered Securities

     During the year ended June 30,  2005 we issued  unregistered  shares of our
common stock as follows:


                                       9
<PAGE>
<TABLE>
<CAPTION>

                                                          Dollar
                                                        Amount of
Date      Amount      Purchasers                      Consideration  Type of Consideration
--------  ---------  -------------------------------  -------------  ---------------------
<C>       <C>        <C>                              <C>            <C>
04/05/05     25,000  Thomas J. Kennan(1)                   -0-       In  satisfaction of $12,500
                                                                     owed for legal services
05/11/05  1,875,045  Halter Financial Group, Inc.(1)  $  199,999.99
</TABLE>

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

     (1)  Sold  in  an  offering  exempt  from  registration   pursuant  to  the
          provisions of Section 4(2) of the Act.

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

Results of Operations

     We had no  revenue  for the  year  ended  June 30,  2005 and  approximately
$23,000 for the year ended June 30, 2004  related to the  Company's  proprietary
process of converting used tires to usable products.  Related to these revenues,
we experienced costs of sales of approximately  $-0- and $48,000,  respectively.
All operations  related to the used tire  conversion  process were  discontinued
effective June 30, 2004 in  anticipation of a business  combination  transaction
which was subsequently abandoned.

     General and  administrative  expenses for the years ended June 30, 2005 and
2004 were  approximately  $1.8  million and $93,000,  respectively.  The largest
increase in these costs relate to stock based compensation  expense,  consulting
fees paid to legal counsel and other  individuals  to facilitate the Fiscal 2005
change in control.

     It is anticipated that future  expenditure levels will increase if and when
the company  consummates a business  combination  transaction  with an operating
entity.

     Earnings per share for the  respective  years ended June 30, 2005 and 2004,
respectively,   were   approximately   $(2.20)   and   $(0.89)   based   on  the
weighted-average  shares issued and  outstanding  at the end of each  respective
year.

     We do not expect to  generate  any  meaningful  revenue or incur  operating
expenses for  purposes  other than  fulfilling  the  obligations  of a reporting
company  under the  Securities  Exchange  Act of 1934 unless and until such time
that the company's operating subsidiary begins meaningful operations.

     At June  30,  2005  and  2004,  respectively,  we had  working  capital  of
approximately $(4,500) and $(68,000).


Liquidity and Capital Resources

     On or  about  April  5,  2005,  we  issued  25,000  shares  of  restricted,
unregistered  common  stock,  valued at  $12,500,  for  payment of legal fees to
Thomas Kenan, our legal counsel.

     On or  about  May  17,  2005,  we  sold  1,875,045  shares  of  restricted,
unregistered common stock for cash proceeds of approximately  $200,000 to Halter
Financial  Group,  Inc. We used these proceeds to retire 100% of the outstanding
accounts payable and other operating debts of the company and to retire, through
negotiation,  all amounts  owed for  whatever  reason to the former  controlling
shareholders.  As a result of this  transaction,  the company had no outstanding
liabilities. This transaction was executed at less than the closing price on the
date of the  respective  transaction  and resulted in a charge to  operations of
approximately $1,694,000.

     We relied upon an exemption  from  registration  under  Section 4(2) of the
Securities Act of 1933, as amended,  and no underwriter  was used in conjunction
with any of the above listed transactions.

     Through  June 30,  2005,  Halter  Financial  Group,  Inc.  has advanced the
company an  aggregate  of  approximately  $4,500 to support  operations,  settle
outstanding  trade accounts payable and provide working capital.  These advances
are repayable upon demand, are non-interest bearing and are unsecured.

     It is the current  intent of management  and  significant  stockholders  to
provide  sufficient  working  capital  necessary  to support  and  preserve  the
integrity of the corporate  entity.  However,  there is no legal  obligation for
either  management or  significant  stockholders  to provide  additional  future
funding.  Should  this  pledge  fail to provide  financing,  the company has not


                                       10
<PAGE>

identified any alternative  sources.  Consequently,  there is substantial  doubt
about the Company's ability to continue as a going concern.

     The company's need for capital may change  dramatically  as a result of any
business acquisition or combination transaction.  There can be no assurance that
the Company will  identify any such  business,  product,  technology  or company
suitable for acquisition in the future.  Further, there can be no assurance that
the company would be successful in  consummating  any  acquisition  on favorable
terms  or that it will be able  to  profitably  manage  the  business,  product,
technology or company it acquires.


Item 7 - Index to Financial Statements

     The required financial statements begin on page F-1 of this document.

Item 8 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosures

     On August 15, 2005,  Evans,  Gaither & Associates,  PLLC of Oklahoma  City,
Oklahoma resigned as principal independent  accountants of TS Electronics,  Inc.
Evans,  Gaither  had  been  engaged  as TS  Electronics'  principal  independent
accountants  since February 4, 2004, when it replaced Kabani & Company,  Inc. of
Fountain Valley, California as our principal independent accountants.

     The report of Evans,  Gaither on the financial statements of TS Electronics
for its fiscal  year ended  June 30,  2004  contained  no  adverse  opinions  or
disclaimers  of opinion,  and,  other than  raising  substantial  doubt about TS
Electronics'  ability to continue  as a going  concern for the fiscal year ended
June 30, 2004, were not otherwise  modified as to  uncertainty,  audit scope, or
accounting  principles during the period of its engagement (February 4, 2004) to
August 15, 2005,  the date of  resignation.  Similarly,  the reports of Kabani &
Company on the financial statements contained no adverse opinions or disclaimers
of opinion,  and,  other than  raising  substantial  doubt  about the  company's
ability to continue as a going  concern for each of the fiscal  years ended June
30,  2003 and  2002,  were not  modified  as to  uncertainty,  audit  scope,  or
accounting principles during such past years.

     During the past two years or  interim  periods  prior to August  15,  2005,
there were no disagreements  between TS Electronics and either Evans, Gaither or
Kabani  &  Company,  whether  or not  resolved,  on  any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure  which,  if not  resolved  to Evans,  Gaither's  or Kabani & Company's
satisfaction,  would have caused it to make  reference to the subject  matter of
the disagreements in connection with its reports.

     On August 17, 2005, TS Electronics engaged Hansen, Barnett & Maxwell, PC of
Salt Lake City, Utah as its new principal  accountant to audit its  consolidated
financial  statements.  TS  Electronics  did  not  consult  the  new  accountant
regarding the  application of accounting  principles to a specific  completed or
contemplated transaction, or the type of audit opinion that might be rendered on
the issuer's financial statements.

Item 8A.    Controls and Procedures.

     The company's  management,  with the  participation  of the company's Chief
Executive Officer and Chief Accounting Officer,  has evaluated the effectiveness
of the company's  disclosure  controls and procedures as of June 30, 2005. Based
on this evaluation,  the Company's Chief Executive  Officer and Chief Accounting
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.





                                       11
<PAGE>

                                    PART III

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

     The directors and executive officers serving the Company are as follows:

     Name                  Age     Position Held and Tenure
     ----                  ---     ------------------------
     Timothy P. Halter     39      Chief Executive Officer, Chief
                                   Accounting Officer and Director since
                                   May 11, 2005

     The  director  named above will serve until the next annual  meeting of the
company's  stockholders  or  until  his  successors  are duly  elected  and have
qualified.   Directors  will  be  elected  for  one-year  terms  at  the  annual
stockholders meeting.  Officers will hold their positions at the pleasure of the
board of directors,  absent any  employment  agreement,  of which none currently
exists or is contemplated.  There is no arrangement or understanding between any
of the  directors  or officers of the company and any other  person  pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement,  plan or understanding as to whether non-management
stockholders  will exercise their voting rights to continue to elect the current
directors to the company's board. There are also no arrangements,  agreements or
understandings  between   non-management   stockholders  that  may  directly  or
indirectly participate in or influence the management of the company's affairs.

     The directors and officers will devote their time to the company's  affairs
on an as needed basis, which, depending on the circumstances, could amount to as
little as two hours per month, or more than forty hours per month, but more than
likely encompass less than four (4) hours per month.  There are no agreements or
understandings  for any  officer or director to resign at the request of another
person,  and none of the officers or directors  are acting on behalf of, or will
act at the direction of, any other person.

Biographical Information

     Timothy P. Halter, our sole officer and director,  has during the past five
years served as the sole officer and director of Halter Financial Group, Inc., a
financial consulting firm.

Indemnification of Officers and Directors

     The company's by-laws provide for the  indemnification  of its,  directors,
officers, employees, and agents, under certain circumstances, against attorney's
fees and other expenses  incurred by them in any litigation to which they become
a party  arising  from their  association  with or  activities  on behalf of the
company.  The company will also bear the expenses of such  litigation for any of
its directors,  officers,  employees,  or agents,  upon such persons  promise to
repay the company  therefor if it is ultimately  determined that any such person
shall not have been entitled to  indemnification.  This  indemnification  policy
could result in substantial  expenditures by the company, which it may be unable
to recoup.

Conflicts of Interest

     None of the officers of the company  will devote more than a small  portion
of their respective time to the affairs of the company.  There will be occasions
when the time  requirements of the company's  business conflict with the demands
of the officers'  other business and investment  activities.  Such conflicts may
require that the company  attempt to employ  additional  personnel.  There is no
assurance  that the  services of such persons will be available or that they can
be obtained upon terms favorable to the company.

     The  officers,  directors  and  principal  stockholders  of the company may
actively  negotiate  for the  purchase of a portion of their  common  stock as a
condition  to,  or  in  connection   with,  a  proposed  merger  or  acquisition
transaction.  It is  anticipated  that a substantial  premium may be paid by the
purchaser  in  conjunction  with any sale of shares by the  company's  officers,
directors  and principal  stockholders  made as a condition to, or in connection
with, a proposed merger or acquisition transaction.  The fact that a substantial
premium may be paid to members of company  management  to acquire  their  shares
creates a conflict  of  interest  for them and may  compromise  their  state law


                                       12
<PAGE>

fiduciary duties to the company's other  stockholders.  In making any such sale,
members of company  management may consider their own personal pecuniary benefit
rather  than  the  best  interests  of  the  company  and  the  company's  other
stockholders,  and the other  stockholders  are not  expected to be afforded the
opportunity  to  approve  or  consent  to  any  particular  buy-out  transaction
involving shares held by members of company management.

     The company has adopted a policy under which any  consulting or finders fee
that may be paid to a third party for consulting  services to assist  management
in evaluating a prospective  business  opportunity would be paid in stock rather
than in cash.  Any such  issuance  of  stock  would be made on an ad hoc  basis.
Accordingly,  the company is unable to predict whether,  or in what amount, such
stock issuance might be made.

     It is not currently anticipated that any salary, consulting fee, or finders
fee shall be paid to any of the company's directors or executive officers, or to
any  other  affiliate  of  the  company  except  as  described  under  Executive
Compensation below.

     Although  management has no current plans to cause the company to do so, it
is possible  that the company may enter into an  agreement  with an  acquisition
candidate requiring the sale of all or a portion of the common stock held by the
company's  current  stockholders  to the  acquisition  candidate  or  principals
thereof,  or to other individuals or business entities,  or requiring some other
form of payment to the company's current  stockholders,  or requiring the future
employment  of specified  officers  and payment of salaries to them.  It is more
likely  than  not  that  any  sale  of  securities  by  the  company's   current
stockholders  to an  acquisition  candidate  would  be at a price  substantially
higher than that  originally paid by such  stockholders.  Any payment to current
stockholders  in the context of an  acquisition  involving  the company would be
determined  entirely by the largely  unforeseeable  terms of a future  agreement
with an unidentified business entity.

Compliance with Section 16 (a) of the Exchange Act

     As a result of the change in control  effected in May 2005,  management  is
unable to ascertain if all persons subject to Section 16(a) filing  requirements
prior to said  date  timely  filed  reports  required  by  Section  16(a) of the
Exchange Act during the fiscal year ended June 30, 2005 or prior  fiscal  years.
All persons subject to Section 16(a) filing  requirements since the May 11, 2005
change in control have filed on a timely basis  reports  required to be filed by
Section 16(a) of the Exchange Act since said date.

Item 10 - Executive Compensation

     No executive officer of the company has received total  compensation in any
of the last three years that  exceeds  $100,000.  The table below sets forth all
compensation  awarded to,  earned by, or paid to the  presidents  of the company
during the last three fiscal years:


          Name                        Year    Salary     Bonus
          ----

          Timothy P. Halter           2005          0        0
          Keith Boyd                  2005          0        0
          Keith Boyd                  2004          0        0
          Keith Boyd                  2003    $36,000        0

Employment Contracts

     We have no long-term  compensation plans or employment  agreements with any
of our officers or directors.

     There are no  employment  contracts,  compensatory  plans or  arrangements,
including payments to be received from our company, with respect to any director
or  executive  officer  which  would in any way result in  payments  to any such
person  because of his or her  resignation,  retirement or other  termination of
employment,  any change in control, or a change in the person's responsibilities
following a change in control of our company.


                                       13
<PAGE>

Stock Options

     There have been no stock  options  granted to the officers and directors of
our  company,  nor have there been any other forms of  compensation  paid to the
officers and directors of the company.

Item 11 - Security Ownership of Certain Beneficial Owners and Management

     The following  table sets forth as of August 23, 2005, the number of shares
of  common  stock  owned of  record  and  beneficially  by  executive  officers,
directors and persons who hold 5% or more of the outstanding common stock of the
company.  Also  included  are the  shares  held by all  executive  officers  and
directors as a group.

                                               Number of Shares
     Name and address                         Beneficially Owned     % of Class
     ----------------                         ------------------     ----------
     Timothy P. Halter                            1,875,045             75%

     All Directors and Executive Officers         1,875,045             75%
     (1 person)


Item 12 - Certain Relationships and Related Transactions

     The company  currently  maintains a mailing  address at 12890 Hilltop Road,
Argyle,  Texas 76226.  The company's  telephone  number there is (972) 233-0300.
This address is maintained  and  controlled by Timothy P. Halter,  the company's
President.  Other than this  mailing  address,  the company  does not  currently
maintain  any other  office  facilities,  and does not  anticipate  the need for
maintaining office facilities at any time in the foreseeable future. The company
pays no rent or other fees for the use of the mailing  address as these  offices
are used virtually full-time by other businesses of the company's President.

Item 13 - Exhibits and Reports on Form 8-K

Exhibits

     31.1  Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     32.1  Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

Reports on Form 8-K

     On May 11, 2005,  the company filed a Current  Report on Form 8-K to report
the  change  in  control  transaction  resulting  from the  purchase  by  Halter
Financial Group, Inc. of 1,875,045 shares of the company's common stock.

Item 14 - Principal Accountant Fees and Services

Fees Paid to Independent Public Accountants for 2005 and 2004 Audit Fees

     The  aggregate   audit  fees  for  2005  were   approximately   $8,000  for
professional  services rendered by Hanson,  Barnett in connection with the audit
of our  financial  statements  as of and for the  2005  fiscal  year and fees of
approximately  $7500 for  professional  services  rendered by Evans,  Gaither in
connection with reviews of our unaudited  interim  financial  statements for the
quarterly  periods  ended  September  30, 2004,  December 31, 2004 and March 31,
2005. The aggregate audit fees for 2004 were  approximately  $5,000. The amounts
include fees for professional  services rendered by Evans, Gaither in connection
with the audit of our financial  statements for the 2004 fiscal year and reviews
of our unaudited consolidated interim financial statements for the first, second
and third quarters of 2004 by both Evans, Gaither and Kabani & Company.


                                       14
<PAGE>

Audit-Related Fees

     There were no audit-related fees billed by Hanson,  Barnett, Evans, Gaither
or Kabani & Company for other  services  rendered to the company for the 2004 or
2005 fiscal years.

Tax Fees

     There  were no fees for tax  services  billed by  Hanson,  Barnett,  Evans,
Gaither or Kabani & Company for the 2004 or 2005 fiscal years.

All Other Fees

     There were no additional aggregate fees billed by Hanson,  Barnett,  Evans,
Gaither or Kabani & Company for other  services  rendered to the company for the
2004 or 2005 fiscal years. The company's  independent auditors may be engaged to
provide  non-audit  services  only  after  the  board  of  directors  has  first
considered the proposed  engagement and has determined in each instance that the
proposed services are not prohibited by applicable regulations and the auditors'
independence  will not be  materially  impaired  as a result of having  provided
these services. In making this determination, the board takes into consideration
whether a reasonable  investor,  knowing all relevant  facts and  circumstances,
would conclude that the auditors'  exercise of objective and impartial  judgment
on all issues  encompassed  within the auditors'  engagement would be materially
impaired.












                                       15
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  in  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  as  amended,  the  company  has caused this report to be
signed on its behalf by the undersigned, thereto duly authorized.

                                                    TS Electronics, Inc.

Dated: September 23, 2005                        By: /s/ Timothy P. Halter
                                                    ----------------------------
                                                    Timothy P. Halter
                                                    President and
                                                    Chief Accounting Officer and
                                                    Sole Director

     Pursuant to the  requirements  in the  Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the company and in the capacities and on the date as indicated.


Dated: September 23, 2005                        By: /s/ Timothy P. Halter
                                                    ----------------------------
                                                    Timothy P. Halter
                                                    President and
                                                    Chief Accounting Officer and
                                                    Sole Director












                                       16
<PAGE>


                              TS Electronics, Inc.

                          Index to Financial Statements

                                                                            Page
                                                                            ----

Report of Hansen, Barnett & Maxwell, Independent
     Registered Public Accounting Firm.......................................F-2

Report of Evans, Gaither & Associates PLLC, Independent
     Registered Public Accounting Firm.......................................F-3

Balance Sheets as of June 30, 2005 and 2004..................................F-4

Statements of Operations for the Years Ended June 30, 2005 and 2004..........F-5

Statements of Changes in Stockholder' Deficit for the Years
     Ended June 30, 2004 and 2005............................................F-6

Statements of Cash Flows for the Years Ended June 30, 2005 and 2004..........F-7

Notes to Financial Statements................................................F-8











                                       F-1
<PAGE>

HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
5 Triad Center, Suite 750
Salt Lake City, UT 84180-1128
Phone: (801) 532-2200
Fax: (801) 532-7944
www.hbmcpas.com



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and the Stockholders
TS Electronics, Inc.

We have audited the balance sheet of TS  Electronics,  Inc. as of June 30, 2005,
and the related statements of operations,  stockholders' deficit, and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of TS Electronics, Inc. as of June 30,
2005,  and the  results of its  operations  and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
financial  statements,  the Company has incurred significant losses and negative
cash flows from operating  activities during the year ended June 30, 2005. As of
June 30, 2005, the Company had no assets, an accumulated  deficit of $5,676,660,
and negative working capital of $4,473.  These matters raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
with respect to these  matters are also  described  in Note C. The  accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

                                                   /s/ Hansen, Barnett & Maxwell
                                                   HANSEN, BARNETT & MAXWELL

Salt Lake City, Utah
September 8, 2005

                                      F-2
<PAGE>

             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------


To the Stockholders and Board of Directors
TS Electronics, Inc. (formerly, Softstone, Inc.)

We  have  audited  the  accompanying  balance  sheet  of  TS  Electronics,  Inc.
(formerly,  Softstone,  Inc.) as of June 30, 2004 and the related  statements of
operations,  stockholders' deficit and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of TS Electronics, Inc. as of June
30, 2004 and the results of its  operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The Company's  financial  statements are prepared  using the generally  accepted
accounting  principles  applicable to a going concern,  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  The Company had an accumulated deficit of $3,834,281 through June 30,
2004 and negative working capital of $68,322 at June 30, 2004. These factors, as
discussed in Note C to the financial  statements,  raise substantial doubt about
the  Company's  ability to continue as a going  concern.  Management's  plans in
regard to these matters are also  described in Note C. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

/s/ Evans, Gaither & Associates PLLC
Evans, Gaither & Associates PLLC
October 7, 2004
Oklahoma City, Oklahoma

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                              TS Electronics, Inc.
                                 Balance Sheets


                                                                           June 30,
                                                                 --------------------------
                                                                     2005           2004
-------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>
ASSETS

Current Assets
Cash                                                             $      --      $        84
-------------------------------------------------------------------------------------------

Total Current Assets                                                    --               84
-------------------------------------------------------------------------------------------

Total Assets                                                     $      --      $        84
-------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable - trade and accrued liabilities                 $      --      $    68,406
Payable to major stockholder                                           4,473           --
-------------------------------------------------------------------------------------------

Total Current Liabilities                                              4,473         68,406
-------------------------------------------------------------------------------------------

Stockholders' Deficit
Common stock - $0.001 par value; 30,000,000 shares authorized;
2,500,060 shares and 600,015 shares outstanding, respectively          2,500            600
Additional paid-in capital                                         5,669,687      3,763,359
Shares to be issued                                                     --            2,000
Accumulated deficit                                               (5,676,660)    (3,834,281)
-------------------------------------------------------------------------------------------

Total Stockholders' Deficit                                           (4,473)       (68,322)
-------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                      $      --      $        84
-------------------------------------------------------------------------------------------
</TABLE>



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

                                      F-4
<PAGE>

                              TS Electronics, Inc.
                            Statements of Operations


                                          For the Years Ended June 30,
                                           --------------------------
                                               2005           2004
---------------------------------------------------------------------

Revenues                                   $      --      $    23,275
Cost of Sales                                     --           47,681
---------------------------------------------------------------------

Gross Loss                                        --          (24,406)
---------------------------------------------------------------------

General and Administrative Expense
Stock-based compensation                     1,693,728           --
Other                                          148,651         92,963
---------------------------------------------------------------------

Total General and Administrative Expense     1,842,379         92,963
---------------------------------------------------------------------

Loss from Operations                        (1,842,379)      (117,369)

Other Income (Expense)
Other income                                      --            2,500
Interest expense                                  --           (5,595)
Loss on settlement of liabilities                 --         (504,190)
Gain on settlement of debt                        --          120,362
---------------------------------------------------------------------

Net Loss                                   $(1,842,379)   $  (504,292)
---------------------------------------------------------------------

Basic and Diluted Loss per Common Share    $     (2.20)   $     (0.89)
---------------------------------------------------------------------

Basic and Diluted Weighted-Average
Common Shares Outstanding                      837,144        565,450
---------------------------------------------------------------------


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

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                              TS Electronics, Inc.
                 Statements of Changes in Stockholders' Deficit
                   For the Years ended June 30, 2004 and 2005



                                                     Common Stock         Additional      Shares                        Total
                                                 -------------------       Paid-in        to be       Accumulated    Stockholders'
                                                 Shares       Amount       Capital        Issued        Deficit        Deficit
---------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>       <C>           <C>           <C>            <C>            <C>
Balances at July 1, 2003                         350,155   $       350   $ 2,294,088   $     6,515    $(3,329,989)   $(1,029,036)

Issuance for cash received in prior period           344             1         2,514        (2,515)          --             --
Settlement of related party accounts                --            --
payable                                            6,879             7        40,512          --             --           40,519
Issuance for services                              1,988             2        14,143          --             --           14,145
Issuance for payment of interest                     229          --           1,024          --             --            1,024
Issuance as payment of loan incentive
recognized in prior period                         1,147             1         1,999        (2,000)          --             --
Issuance in exchange for the assumption
of liabilities by major stockholders             239,273           239     1,409,079          --             --        1,409,318
Net loss for the year                               --            --            --            --         (504,292)      (504,292)
--------------------------------------------------------------------------------------------------------------------------------

Balances at June 30, 2004                        600,015           600     3,763,359         2,000     (3,834,281)       (68,322)

Issuance for settlement of accounts
payable                                           25,000            25        12,475          --             --           12,500
Issuance for cash                              1,875,045         1,875       198,125          --             --          200,000
Stock-based compensation                            --            --       1,693,728          --             --        1,693,728
Cancellation of obligation to issue
shares paid for in prior period                     --            --           2,000        (2,000)          --             --
Net loss for the year                               --            --            --            --       (1,842,379)    (1,842,379)
---------------------------------------------------------------------------------------------------------------------------------

Balances at June 30, 2005                      2,500,060   $     2,500   $ 5,669,687   $      --      $(5,676,660)   $    (4,473)
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


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

                                      F-6
<PAGE>
<TABLE>
<CAPTION>

                              TS Electronics, Inc.
                            Statements of Cash Flows


                                                                              For the Years Ended June 30,
---------------------------------------------------------------------------------------------------------
                                                                                  2005           2004
---------------------------------------------------------------------------------------------------------
<S>                                                                           <C>            <C>
Cash Flows from Operating Activities
Net loss                                                                      $(1,842,379)   $  (504,292)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on settlement of liabilities                                                    --          504,190
Gain on settlement of debt                                                           --         (120,362)
Expenses paid with common stock                                                    12,500         14,145
Expenses paid by increase in payable due to major stockholder                       4,473
Stock-based compensation                                                        1,693,728           --
Change in accounts payable and accrued expenses                                   (68,406)        70,507
--------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities                                            (204,557)       (35,812)
--------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Cash received from disposition of property and equipment                             --            2,500
--------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                                --            2,500
--------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Principal payments on loans and debts                                                --           (3,804)
Proceeds from borrowing                                                              --           35,411
Proceeds from issuance of common stock                                            200,000           --
--------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                                         200,000         31,607
--------------------------------------------------------------------------------------------------------
Net Decrease in Cash                                                                  (84)        (1,705)
Cash at beginning of year                                                              84          1,789
--------------------------------------------------------------------------------------------------------

Cash at End of Year                                                           $      --      $        84
--------------------------------------------------------------------------------------------------------

Supplemental Disclosures of Cash Flow Information
Interest paid during the year                                                 $      --      $     5,595
--------------------------------------------------------------------------------------------------------
</TABLE>


Supplemental  Schedule of Noncash Investing and Financing  Activities During the
year ended June 30, 2004, the major stockholders of the Company assumed $905,128
of  liabilities  from the Company in exchange  for the transfer of assets with a
fair value of zero and the  issuance  of 239,273  shares of common  stock with a
fair value of $1,409,318.  A $504,190 loss on settlement of the  liabilities was
recognized as a result of the transaction.

During the year ended June 30, 2005, the Company  obtained a  cancellation  of a
$2,000  obligation  to issue common stock that  resulted from cash received in a
prior  period.  The  cancellation  was  recognized  as an increase in additional
paid-in capital.

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

                                       F-7
<PAGE>

                              TS Electronics, Inc.

                          Notes to Financial Statements


Note A - Organization and Description of Business

TS Electronics, Inc. (Company) was incorporated as Softstone, Inc. in accordance
with the Laws of the State of Delaware on October 7, 1998. The Company's initial
business plan was to manufacture a patented  rubber product used in the road and
building construction industries.

On July 24, 2001, the Company  entered into a plan of  reorganization  involving
Kilkenny Acquisition Corp. (Kilkenny) whereby the Company is the survivor and in
control  of the  Board of  Directors.  The  merger  agreement  provided  for the
exchange of 1,158,387  shares of the  Company's  common stock for all the issued
and  outstanding  common  stock  of  Kilkenny.   For  accounting  purposes,  the
transaction  between the Company and Kilkenny was treated as a re!capitalization
of the Company, with the Company as the accounting acquirer.

On August 13, 2003, the Company changed its name to TS Electronics, Inc.

On or about August 11, 2004 the Company entered into a Stock Exchange  Agreement
(Agreement)  with 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.   The  agreement   provided  that  the  Company  would  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  would
represent  approximately  94% of the then total  issued and  outstanding  common
stock of the Company  after the  exchange.  On January 14, 2005,  the August 17,
2003  Agreement  was  rescinded  on the  grounds  of  material  breaches  of the
agreement by the sole shareholder of China ESCO. Accordingly,  the Agreement was
not given accounting recognition in the accompanying financial statements.

On or about  February 8, 2005,  the Company signed a letter of intent with Osage
Energy Company, LLC with regard to a proposed business combination  transaction.
Subsequent  discussions  between  the Company  and Osage  Energy  resulted in an
abandonment of any further efforts with regard to such a business combination.

Note B - Preparation of Financial Statements

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
a year-end of June 30.

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. Actual results could differ from those estimates.

Management  acknowledges  that  it is  solely  responsible  for  adopting  sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented.

For  segment  reporting  purposes,  the Company  operated  in only one  industry
segment during the periods represented in the accompanying  financial statements
and makes all  operating  decisions and  allocates  resources  based on the best
benefit to the Company as a whole.

Note C - Going Concern Contingency

The  accompanying  consolidated  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 $5,676,660 and negative  working  capital of $(4,473) at
June 30, 2005.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.

                                      F-8
<PAGE>

                              TS Electronics, Inc.

                    Notes to Financial Statements - Continued


The Company anticipates offering equity securities in the future. However, there
is no  assurance  that the  Company  will be able to obtain  additional  funding
through the issuance of additional equity  securities or, that such funding,  if
available, will be obtained on terms favorable to or affordable by the Company.

If no additional  operating  capital is received  during the next twelve months,
the Company will be forced to rely upon additional loans from management  and/or
significant  stockholders  to preserve the integrity of the corporate  entity at
this  time.  In the  event,  the  Company  is unable to  acquire  advances  from
management and/or  significant  stockholders,  the Company's ongoing  operations
would be negatively impacted.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.

Note D - Summary of Significant Accounting Policies

Research  and  Development  Expenses - Research  and  development  expenses  are
charged to operations as incurred.

Advertising  Expenses  -  The  Company  does  not  utilize  direct  solicitation
advertising.  All other  advertising  and  marketing  expenses  are  charged  to
operations   as  incurred.   For  the  years  ended  June  30,  2005  and  2004,
respectively,  an aggregate of $-0- was charged to  operations  for  advertising
expenses.

Stock-Based  Compensation  - The  Company  utilizes  the  fair-value  method  of
accounting for the payment for goods and/or services with the issuance of equity
shares.

Basic and Diluted  Loss per Share - Basic loss per share is computed by dividing
net loss by the weighted-average  number of common shares outstanding during the
period.  Diluted  loss  per  share  is  computed  by  dividing  net  loss by the
weighted-average  number of common shares and dilutive  potential  common shares
outstanding.

New  accounting  pronouncements  - In December  2004,  the Financial  Accounting
Standards Board ("FASB") issued Statement of Financial  Accounting Standards No.
123 (revised 2004),  "Share-Based  Payment" which revised Statement of Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation." This
statement  supersedes  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees."  The revised  statement  addresses the  accounting  for  share-based
payment  transactions  with  employees and other third  parties,  eliminates the
ability to account for share-based  compensation  transactions  using APB 25 and
requires that the compensation costs relating to such transactions be recognized
in the  statement  of  operations  using  the fair  value  method.  The  revised
statement  is  effective  for the  Company as of July 1, 2005.  Adoption  of the
revised statement is not expected to have any effect on the Company's  financial
statements  since the Company has not granted  share-based  compensation  to any
employees.

Note E - Advances from Major Shareholder

Through June 30, 2005, the Company's major shareholder has paid $4,473 to others
on behalf of the Company to support the Company's operations, settle outstanding
trade accounts payable and provide working capital. These advances are repayable
upon demand, are non-interest bearing and are unsecured.

Note F - Income Taxes

The Company had no  provision  for income  taxes during the years ended June 30,
2005 or 2004.

Concurrent  with a May 2005  change in control,  the  Company's  operating  loss
carryforward  for Federal  income tax purposes  will be limited.  The  Company's
income tax expense (benefit) for each of the years ended June 30, 2005 and 2004,
respectively, differed from the statutory federal rate of 34 percent as follows:

                                      F-9
<PAGE>
<TABLE>
<CAPTION>

                              TS Electronics, Inc.

                    Notes to Financial Statements - Continued


                                                                Year Ended       Year Ended
                                                              June 30, 2005    June 30, 2004
                                                              -------------    -------------
<S>                                                           <C>              <C>
Statutory rate applied to income before income taxes          $    (626,400)       $(171,000)
Effect of non-deductible stock-based compensation expense           575,900
Change in deferred tax valuation allowance                           50,500          171,000
                                                              -------------    -------------
         Income tax expense                                   $        --      $        --
                                                              =============    =============

Deferred  tax assets  consisted  of the  following as of June 30, 2005 and 2004,
respectively, after taking the May 2005 change in control into consideration:

                                                              June 30, 2005    June 30, 2004
                                                              -------------    -------------
       Deferred tax assets
         Net operating loss carryforwards                     $       1,500    $        --
         Less valuation allowance                                    (1,500)            --
                                                              -------------    -------------
         Net Deferred Tax Asset                               $        --      $        --
                                                              =============    =============
</TABLE>

Note G - Common Stock Transactions

During  the year  ended  June  30,  2004,  the  Company  issued  344  shares  of
restricted, unregistered common stock for cash received in the prior year.

During  the year  ended  June 30,  2004,  the  Company  issued  6,879  shares of
restricted,  unregistered common stock valued at $40,519 for settlement of notes
payable  amounting to $160,881  resulting in a gain of $120,362 on settlement of
debt.

During  the year  ended  June 30,  2004,  the  Company  issued  1,988  shares of
restricted, unregistered common stock for services valued at $14,145.

During  the year  ended  June  30,  2004,  the  Company  issued  229  shares  of
restricted, unregistered common stock for interest valued at $1,024.

During  the year  ended  June 30,  2004  the  Company  issued  1,147  shares  of
restricted,  unregistered common stock for loan incentives included in the prior
period valued at $2,000.

During  the year ended June 30,  2004,  the  Company  issued  239,273  shares of
restricted,  unregistered common stock valued at $1,409,318, based on the market
value of the common stock on the date of issuance, and transferred its operating
assets to the Company's major  stockholder in exchange for the major stockholder
assuming $905,128 of liabilities from the Company. As a result of the assumption
and  issuance  of the  common  stock,  the  Company  recognized  a  loss  on the
settlement of the liabilities of $504,190.

During  the year  ended June 30,  2005,  the  Company  issued  25,000  shares of
restricted,  unregistered common stock, valued at $12,500,  for payment of legal
fees.

During the year ended June 30,  2005,  the Company  issued  1,875,045  shares of
restricted, unregistered common stock for cash proceeds of $200,000. The Company
used  these  proceeds  to  retire   outstanding   accounts   payable  and  other
liabilities. This transaction was executed at less than the closing market price
for the Company's stock on the date of the transaction and therefore resulted in
recognition of stock-based  compensation for the services rendered by management
of the Company in the amount of $1,693,728.

                                      F-10