UNITED STATES
SECURITIES AND EXCHANGE COMMISISON
WASHINGTON, D.C. 20549
AMENDMENT No.1
to
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of the earliest event reported) May 31, 2006
TEXXON, INC
Oklahoma
--------
(State or Other Jurisdiction of Incorporation or Organization)
000-49648 73-1554122
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
11601 Wilshire, Suite 2030, Los Angeles, CA 90025
- --------------------------------------------------------------------------------
(Address or Principal executive offices) (Zip Code)
(310) 439-3119
--------------
(Registrant's telephone number, including Area Code)
17623 Old Richmond Road, Sugarland,Texas 33782-6105
---------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.01 DISCUSSION
As previously reported on Form 8-K filed June 7, 2006, on May 31, 2006, the
Company acquired Teleplus, Inc., ("Teleplus"), a California corporation, in a
share-for-share exchange under Section 358(a)(1)(B) of the Internal Revenue
Code. Teleplus is a MVNO, a Mobile Virtual Network Operator, with headquarters
at 11601 Wilshire Boulevard, Suite 2030, Los Angeles, California 90025. The
prior filing gave a description of Teleplus, as well as other relevant
information about the Company, as required by Item 201(f) of Form 8-K.
Inadvertently, the original filing did not contain two (2) items:
1. The audit opinion of the independent accountants with respect to
their audit of the Company's financial statements at December 31, 2005; and
2. The pro forma consolidation of the two companies, Teleplus, Inc. and
Texxon, Inc., based upon the unaudited financial statements at March 31, 2006.
This Amendment is to provide the omitted items. To avoid confusion with respect
to the audit opinion, we are re-filing the financial statements to which it is
applicable.
(a) FINANCIAL STATEMENTS
[SUTTON ROBINSON FREEMAN LETTERHEAD]
To the Shareholders of
Teleplus, Inc.
Tulsa, Oklahoma
We have audited the accompanying balance sheet of Teleplus, Inc. (a development
stage company) for the years ended December 31, 2005 and 2004, and the related
statements of operations, shareholders' equity, and cash flows for the years
ended December 31, 2005 and 2004 and for the period from December 16, 1996
(inception) to December 31, 2005. 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 auditing standards of the Public
Company 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 Teleplus, Inc. as of December
31, 2005 and 2004, and the results of its operations and its cash flows for the
years ended December 31, 2005 and 2004 and for the period from December 16, 1996
(inception) to December 31, 2005 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Sutton Robinson Freeman & Co., P. C.
Sutton Robinson Freeman & Co., P. C.
Certified Public Accountants
May 10, 2006
Tulsa, Oklahoma
3
TELEPLUS, INC.
BALANCE SHEET
AS OF DECEMBER 31, 2005 AND 2004
(a development stage company)
ASSETS
------
2005 2004
----------- -----------
CURRENT ASSETS:
Cash $ 25,539 $ 65,034
Accounts receivable 38,154 --
----------- -----------
Total current assets 63,693 65,034
FURNITURE AND EQUIPMENT, net 48,781 44,688
----------- -----------
OTHER ASSETS:
Intangible assets, net 70,935 71,370
Developed software, net 556,509 430,227
Security deposit 14,400 14,400
----------- -----------
Total other assets 641,844 515,997
Total assets $ 754,318 $ 625,719
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 120,573 $ 20,863
Accrued liabilities 85,817 58,021
Accrued management fees 96,500 --
Current portion of capital lease 10,183 6,882
Notes payable 623,368 827,482
----------- -----------
Total current liabilities 936,441 913,248
LONG TERM LIABILITIES
Capital lease, net of current portion 8,722 10,037
SHAREHOLDERS' DEFICIT
Common stock; par value of .001; 10,000,000 shares authorized 8,816,483 and
5,000,000 shares issued and outstanding
as of December 31, 2005 and 2004, respectively 8,816 5,000
Additional paid in capital 2,037,792 615,758
Deficit accumulated during the development stage (2,237,453) (918,325)
----------- -----------
Total shareholders' deficit (190,845) (297,567)
----------- -----------
Total liabilities and shareholders' equity $ 754,318 $ 625,719
=========== ===========
The accompanying notes are an integral part of these financial statements
4
TELEPLUS, INC.
STATEMENTS OF OPERATIONS
(a development stage company)
September 16,
2002
Year Ended December 31, (inception) to
-------------------------- December 31,
2005 2004 2005
----------- ----------- -----------
REVENUES
EXPENSES:
Direct costs 63,122 40,988 163,609
Selling expenses 267,249 178,614 479,007
General and administrative expenses 905,631 424,825 1,449,420
----------- ----------- -----------
Total expenses 1,236,002 644,427 1,928,427
OTHER EXPENSES:
Interest expense 104,593 33,704 138,297
Depreciation and amortization 46,898 21,724 74,747
Other income -- (62) (62)
----------- ----------- -----------
Total other expenses 151,491 55,366 212,982
----------- ----------- -----------
LOSS BEFORE PROVISION FOR
STATE INCOME TAXES (1,317,528) (699,793) (2,235,053)
PROVISION FOR STATE INCOME TAXES 1,600 800 2,400
----------- ----------- -----------
NET LOSS $(1,319,128) $ (700,593) $(2,237,453)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements
5
TELEPLUS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(a development stage company)
Deficit
Accumulated
Additional During the Total
Common Paid in Development Shareholders
Shares Stock Capital Stage Equity (Deficit)
----------- ----------- ----------- ----------- -----------
Issuance of Common Stock 150,000 $ 150 $ 195,100 $ -- $ 195,250
Net loss -- -- -- (217,732) (217,732)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2003 150,000 150 195,100 (217,732) (22,482)
Issuance of Common Stock
upon conversion of note payable 4,850,000 4,850 420,658 -- 425,508
Net loss -- -- -- (700,593) (700,593)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2004 5,000,000 5,000 615,758 (918,325) (297,567)
Issuance of Common Stock
upon conversion of note payable
and accrued interest 3,659,000 3,659 1,389,191 -- 1,392,850
Issuance of Common Stock 157,483 157 32,843 -- 33,000
Net loss -- -- -- (1,319,128) (1,319,128)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2005 8,816,483 $ 8,816 $ 2,037,792 $(2,237,453) $ (190,845)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
6
TELEPLUS, INC.
STATEMENT OF CASH FLOWS
(a development stage company)
Period from
September 16,
2002
Year Ended December 31, (inception) to
--------------------------- December 31,
2005 2004 2005
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,319,128) $ (700,593) $(2,237,453)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 46,898 21,724 74,746
(Increase) decrease in assets:
Accounts receivable (38,154) -- (38,154)
Security deposit -- (10,100) (14,400)
Increase (decrease) in liabilities:
Accounts payable 99,710 20,862 120,573
Accrued liabilities 27,796 17,300 85,817
Management fees 96,500 -- 96,500
----------- ----------- -----------
Net cash used in operating activities (1,086,378) (650,807) (1,912,371)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for intangible assets (9,726) (70,648) (96,006)
Payment for software development costs (150,268) (97,286) (409,762)
Purchase of equipment (6,234) (984) (20,111)
----------- ----------- -----------
Net cash used in investing activities (166,228) (168,918) (525,879)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft -- (2,372) --
Sale of common stock 33,000 -- 33,000
Borrowings on notes payable 1,188,737 889,442 2,441,727
Payments on capital lease obligations (8,626) (2,311) (10,937)
----------- ----------- -----------
Net cash provided by financing activities 1,213,111 884,759 2,463,790
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (39,495) 65,034 25,540
CASH AND CASH EQUIVALENTS, beginning of the year 65,034 -- --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of the year $ 25,539 $ 65,034 $ 25,540
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ --
=========== =========== ===========
Income taxes paid $ 800 $ 800 $ 2,400
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF
NON CASH INVESTING AND FINANCING ACTIVITIES
Furniture and equipment acquired through exchange of stock $ 30,250
===========
Developed software acquired through exchange of stock $ 165,000
===========
Conversion of notes payable and accrued interest into common stock $ 1,392,849 $ 425,508 $ 1,818,357
=========== =========== ===========
Purchase of equipment through capital leases $ 10,613 $ 19,230 $ 29,843
=========== =========== ===========
The accompanying notes are an integral part of these financial statements
7
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
Teleplus, Inc. (the Company) was incorporated under the laws of the State of
California on September 16, 2002. The Company is a development stage entity and
is primarily engaged in the development and marketing of wireless networks for
international travelers. The initial focus of the Company will be to test market
their product and work to obtain customers through trials in smaller test
markets and to find partners to aid in the cross promotion of their product.
There can be no assurance that the Company will obtain customers.
For the year ended December 31, 2005, revenues of $69,965 were from a test
marketing study. The Company has no significant operating history and, from
(inception) to December 31, 2005, has generated a net loss of $2,237,453. The
accompanying financial statements for the year ended December 31, 2005 and 2004
have been prepared assuming the Company will continue as a going concern. During
the year 2006, management intends to raise equity financing through a reverse
merger and private placement to fund future operations and to provide additional
working capital. However, there is no assurance that such financing will be
consummated or obtained in sufficient amounts necessary to meet the Company's
needs.
The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result from the
possible inability of the Company to continue as a going concern.
Income taxes
- ------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets, including tax loss and credit carry forwards, and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Deferred income tax expense represents the change during the
period in the deferred tax assets and deferred tax liabilities. The components
of the deferred tax assets and liabilities are individually classified as
current and non-current based on their characteristics. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.
Revenue recognition
- -------------------
The Company recognizes revenues when it receives confirmation that customers
used cellular phone minutes.
Cash and cash equivalents
- -------------------------
The Company defines cash and cash equivalents as short-term investments in
highly liquid debt instruments with original maturities of three months or less,
which are readily convertible to known amounts of cash.
8
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
Use of estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Financial instruments
- ---------------------
Financial accounting standards require disclosure of the fair value of financial
instruments held by the Company. Fair value of financial instruments is
considered the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying amount of receivables,
accounts payable, and other liabilities included on the accompanying balance
sheet approximate their fair value due to their short-term nature.
Furniture and Equipment
- -----------------------
Property and equipment are carried at cost and depreciation is computed over the
estimated useful lives of the individual assets ranging from 3 to 15 years. The
Company uses the straight-line method of depreciation.
The related cost and accumulated depreciation of assets retired or otherwise
disposed of are removed from the accounts and the resultant gain or loss is
reflected in earnings. Maintenance and repairs are expensed currently while
major renewals and betterments are capitalized.
Long-term assets of the Company are reviewed annually as to whether their
carrying value has become impaired. Management considers assets to be impaired
if the carrying value exceeds the future projected cash flows from related
operations. Management also re-evaluates the periods of amortization to
determine whether subsequent events and circumstances warrant revised estimates
of useful lives. As of December 31, 2005 and 2004, management expects these
assets to be fully recoverable.
Patent application costs
- ------------------------
Patent application costs relate to the Company's U.S. patent applications an
consist primarily of legal fees, the underlying clinical studies and other
direct fees. The recoverability of the patent application costs is dependent
upon, among other factors, the success of the underlying technology.
Developed Software
- ------------------
Developed software is carried at the cost of development and depreciation is
computed over the estimated useful life of the software which is currently 15
years. The Company uses the straight-line method of depreciation.
Capital Leases
- --------------
Assets held under capital leases are recorded at the lower of the net present
value of the minimum lease payments or the fair value of the leased asset at the
inception of the lease. Amortization expense is computed using the straight-line
method over the shorter of the estimated useful lives of the assets or the
period of the related lease.
9
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following as of December 31, 2005 and
2004:
2005 2004
------------ ------------
Furniture and fixtures $ 12,272 $ 12,000
Computers and equipment 62,198 45,625
------------ ------------
Total 74,470 57,625
Less: accumulated depreciation (25,689) (12,937)
------------ ------------
Machinery and equipment, net $ 48,781 $ 44,688
============ ============
Depreciation expense amounted to $12,748 and $6,995 for the years ended December
31, 2005 and 2004, respectively.
NOTE 3 - BUSINESS CONCENTRATIONS
The Company maintains its cash in bank deposit accounts and the balances may
exceed federally insured limits from time to time. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
significant risks on its cash in bank deposit accounts. As of December 31, 2005
and 2004, the Company did not have deposits in excess of federally insured
limits.
NOTE 4 - DEVELOPED SOFTWARE
The company has developed internal use software for the purpose of managing its
wireless network. The total capitalized cost of this software at December 31,
2005 and 2004 was $574,763 and $430,227, respectively. Total accumulated
amortization related to this software at December 31, 2005 and 2004 was $18,254
and $0, respectively. Amortization expense amounted to $18,254 and $0 for the
years ended December 31, 2005 and 2004, respectively.
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consisted of the following at December 31, 2005 and 2004,
respectively:
2005 2004
------------ ------------
Patent application costs $ 60,830 $ 45,373
Website development costs 40,908 40,908
------------ ------------
Total 101,738 86,281
Less: accumulated amortization (30,801) (14,911)
------------ ------------
Intangible assets, net $ 70,937 $ 71,370
============ ============
Amortization expense amounted to $15,890 and $14,729 for the years ended
December 31, 2005 and 2004, respectively.
10
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has received loans from related parties. These related parties
consist of various members of management. As of December 31, 2005 and 2004, the
Company had loans due to related parties of $100,764 and $50,944, respectively.
NOTE 7 - ADVERTISING EXPENSE
Advertising and sales promotion costs are expensed as incurred. For the year
ended December 31, 2005 and 2004, advertising expense totaled $24,286 and
$36,829, respectively.
NOTE 8 - LEASES
Operating lease
- ---------------
The Company leases its office facilities under a non-cancelable operating lease
agreement. The lease expires in 2006. Lease expense totaled $57,334 and $42,702
for the years ended December 31, 2005 and 2004, respectively.
The following future minimum rental payments required under the operating lease
agreement are:
Year Ending
December 31, Amount
------------ ------
2006 $ 51,600
Thereafter --
Capital lease
- -------------
The Company leases certain computers under agreements that are classified as
capital leases. The cost of equipment under capital leases is included in the
Balance Sheets as property and equipment and amounted to $29,843 and $19,230 at
December 31, 2005 and 2004, respectively. Accumulated amortization of the leased
equipment at December 31, 2005 and 2004 was approximately $4,730 and $0,
respectively. Amortization of assets under capital leases is included in
depreciation expense.
The future minimum lease payments required under the capital leases and the
present value of the net minimum lease payments as of December 31, 2005, are as
follows:
Year Ending
December 31, Amount
-------------- ----------
2006 $ 10,183
2007 5,006
2008 2,652
2009 1,064
Thereafter --
----------
Total minimum lease payments 18,905
Less: Amount representing interest
----------
Present value of net minimum lease payments 18,905
Less: Current maturities of capital lease obligations (10,183)
----------
Long-term capital lease obligations $ 8,722
==========
11
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - NOTES PAYABLE
Notes payable at December 31 consisted of the following:
2005 2004
---------- ----------
Promissory note issued to Celine Coicaud (Holder) on December 31, 2003.
Interest of 10% and principal installments $50 to be made monthly,
beginning July 1, 2004 with an additional payment of $9,900 due
August 10, 2004 and the remaining principal balance and accrued
interest due on December 31, 2004. $ 15,026 $ 17,532
Promissory note issued to Sephanie Buchert (Holder) on May 1, 2004.
Interest of 10% and principal installments of $200 to be made monthly,
beginning July 1, 2004 with the outstanding principal balance and
accrued interest due on December 31, 2004. 9,093 9,006
Promissory note issued to James Bell (Holder) on May 26, 2004 in the
amount of $25,000 with interest of 10%. There are no monthly payments
and the principal along with accrued interest are due on or before
December 31, 2005 or the date that the Company received proceeds from
the public offering of its shares, whichever is earlier. The promissory
note contains an option for the holder to receive 1% of the outstanding
shares in lieu of repayment of principal. 25,000 25,000
Promissory notes issued to Kurt Hiete (Holder) on various dates between
September 18, 2003 and June 14, 2005 with interest of 10%. Principal
along with accrued interest are payable on the maturity dates between
September 18, 2004 through May 26, 2005. The promissory notes contains
options for the holder to receive shares totaling 2% of the Company
stock in lieu of repayment of principal. 47,500 40,000
Promissory notes issued to ARABIA Corporation on various dates between
September 18, 2003 and May 18, 2004 with interest of 10%. Principal along
with accrued interest are payable on the maturity dates between September
18, 2004 through December 31, 2004. The promissory notes contains options
for the holder to receive shares of the Company stock in lieu of
repayment of principal. 55,000 55,000
12
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - NOTES PAYABLE (CONTINUED)
Promissory note issued to Claude Buchert (Holder) on December 30, 2004
with interest of 10%. Principal along with accrued interest are due on
or before June 30, 2005. 4,762 4,762
Promissory note issued to Edward Shirley (Holder) on February 23, 2004 with
Interest of 10% and principal installments of $340 to be made monthly,
beginning July 1, 2004 with the remaining principal balance and
accrued interest due on December 31, 2004. 30,000 30,000
Promissory notes issued to Humax West, Inc. (Holder) on various dates between
July 9, 2004 and December 2, 2004 with interest of 10%. Principal along with
accrued interest are payable on the maturity date of June 30, 2006. The
promissory notes contains an option for the holder to receive
shares of the Company stock in lieu of repayment of principal. -- 600,000
Promissory notes issued to Humax West, Inc. (Holder) on various dates
between August 26, 2005 and December 30, 2005 with interest of 10%.
Principal along with accrued interest are payable on the maturity dates
between September 30, 2005 and January 30, 2006. The promissory notes
contain options for the Holder to receive shares of the Company stock
in lieu of repayment of principal. 326,000 --
Promissory note issued to Sax Public Relations, Inc. (Holder) December 1,
2005 with Interest accruing from September 1, 2005 at 10%. Payments of
$1,000 to be made monthly, beginning February 1, 2006 through March 2007. 14,986 --
Promissory note issued to Helene Legendre (Holder) on June 30, 2004 with
Interest of 10% and payments of $877 to be made monthly, beginning
July 1, 2004 with the remaining principal balance and accrued interest
due on December 31, 2004. 96,001 46,182
---------- ----------
Totals $ 623,369 $ 827,482
========== ==========
The Company is currently in default on various notes payable and is in the
process of negotiating settlements or payment. All notes payable are included in
current liabilities.
NOTE 10 - STOCKHOLDERS' EQUITY
The Company currently has one class of common stock with a par value of $001 per
share. At the time of formation, the Company had 100,000 shares authorized. In
July 2004, the Company amended its articles of incorporation to authorize the
issuance of 10,000,000 shares. Subsequent to December 31, 2005, the company
again amended its articles of incorporation to authorize the issuance of
15,000,000 shares. The following details the issuance of company stock since its
inception:
In late 2003, the Company issued 150,000 shares of common stock to the president
of the company in exchange for furniture and fixtures of $12,000, computer
equipment of $18,250, and preliminary developed software of $165,000 for a total
value of $195,250.
13
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - STOCKHOLDERS' EQUITY (CONTINUED)
In July 2004, the Company issued 750,000 shares of common stock in exchange for
cancellation of notes payable in the amount of $3,700.
In July 2004, the Company issued 3,600,000 shares of common stock in exchange
for cancellation of notes payable in the amount of $204,559.
In July 2004, the Company issued 500,000 shares of common stock to a member of
management in exchange for cancellation of notes payable in the amount of
$217,249.
In July 2005, the Company issued 3,659,000 shares of common stock in exchange
for cancellation of notes payable and accrued interest in the amount of Si
392,850.
In September 2005, the Company issued 8,000 shares of common stock in exchange
for cash of $16,000.
In December 2005, the Company issued 25,000 shares of common stock in exchange
for cash of $141,483.
NOTE 11 - STOCK OPTIONS
In January 2004, the company granted 375,000 common stock options exercisable at
$05 per share to a non-employee which vested in April 2004. The options expire
in January 2010.
In September 2005, the Company granted 100,000 common stock options exercisable
at $.05 per share to an employee which vest and expire on January 15, 2010.
In September 2005, the Company granted 100,000 common stock options exercisable
at $.01 per share to a non-employee which vest and expire on January 15, 2010.
A summary of the status of, and changes in, the Company's stock option plan as
of and for the years ended December 31, 2005 and 2004, is presented below for
all stock options issued to employees and non-employees.
2005 2004
----------------------- -----------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Options Price Options Price
---------- ---------- ---------- ----------
Outstanding at beginning of year -- $ -- -- $ --
Granted 200,000 0.03 375,000 0.05
Exercised -- -- -- --
Forfeited -- -- -- --
---------- ---------- ---------- ----------
Outstanding at end of year 575,000 $ 0.04 375,000 $ 0.05
========== ========== ========== ==========
Options exercisable at end of year 375,000 375,000
========== ==========
NOTE 12 - COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with two members of management through
March, 2008. These agreements are cancelable at any time by the Company or
member of management. As of December 31, 2005 and 2004, the Company had $96,500
and $0 payable to management in arrears under these agreements. Expenses related
to these agreements is recorded in general and administrative expense and
amounted to $218,951 and $98,750 for the years ended December 31, 2005 and 2004,
respectively.
14
TELEPLUS, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - SUBSEQUENT EVENT
Subsequent to year end, the Company issued 591,000 shares of common stock in
exchange for cancellation of notes payable and accrued interest in the amount of
$339,357.
(d) UNAUDITED PRO FORMA CONSOLIDATION OF THE TWO COMPANIES, TELEPLUS, INC AND
TEXXON,INC
Unaudited Pro Forma condensed combined financials:
- --------------------------------------------------
The following unaudited pro forma condensed combined financial statements are
presented to illustrate the estimated effects of our acquisition of Teleplus,
Inc. ("Teleplus") contemplated under the Share Exchange Agreement ("Exchange")
which was closed on May 31, 2006 on our historical financial position and our
results of operations. We have derived our historical financial data for the
year ended December 31, 2005 from our audited financial statements incorporated
by reference herein. We have derived our historical financial data as of and for
the three months ended march 31, 2006 from our unaudited financial statements
incorporated by reference herein. We have derived Teleplus' historical financial
data for the year ended December 31, 2005 from Teleplus' audited financial
statements, and have derived Teleplus' historical financial data as of and for
the three months ended March 31, 2006 from Teleplus' unaudited condensed
financial statements, in each case, which are included elsewhere in this Form 8
K.
The unaudited pro forma combined statement of operations for the three months
ended March 31, 2006 assumes that the Exchange was consummated on January 1,
2006. The unaudited pro forma combined balance sheet as of March 31, 2006
assumes the Exchange was consummated on that date. The information presented in
the unaudited pro forma condensed combined financial statements does not purport
to represent what our financial position or results of operations would have
been had the Exchange occurred as of the date indicated, nor is it indicative of
our future financial position or results of operations for any period. You
should not rely on this information as being indicative of the historical
results that would have been achieved had the companies always been combined or
the future results that the combined company will experience after the Exchange.
The pro forma adjustments are based upon available information and certain
assumptions that we believe are reasonable under the circumstances.
These unaudited pro forma condensed combined financial statements should be read
in conjunction with the accompanying notes and assumptions and the historical
financial statements and related notes of us and Teleplus.
15
TEXXON INC.
- Successor to Teleplus Inc.
PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
31-Mar-06
Historical Historical Pro Forma Pro Forma
Teleplus Texxon Adjustments (1) Combined
------------ ------------ --------------- ------------
CURRENT ASSETS:
Cash $ 8,589 $ 178 $ 8,767
Accounts receivable 51,405 -- 51,405
Prepaid expenses -- 562,500 562,500
------------ ------------ ------------
Total current assets 59,994 562,678 622,672
------------ ------------ ------------
FURNITURE AND EQUIPMENT, net 45,071 -- 45,071
------------ ------------ ------------
OTHER ASSETS:
Intangible assets, net 68,093 -- 68,093
Developed software, net 546,925 -- 546,925
Security deposit 14,400 -- 14,400
------------ ------------ ------------
Total other assets 629,418 -- 629,418
------------ ------------ ------------
Total assets $ 734,483 $ 562,678 $ 1,297,161
============ ============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 237,879 $ 137,973 $ 375,852
Accrued liabilities 30,169 1,240 31,409
Accrued interest on notes payable - related party 23,123 -- 23,123
Accrued interest on notes payable 25,012 -- 25,012
Accrued management fees 116,500 -- 116,500
Current portion of capital leases 9,847 -- 9,847
Notes payable - related party 168,004 -- 168,004
Notes payable 256,370 -- 256,370
------------ ------------ ------------
Total current liabilities 866,904 139,213 1,006,117
------------ ------------ ------------
LONG TERM LIABILITIES
Capital leases, net of current portion 6,653 -- 6,653
------------ ------------ ------------
SHAREHOLDERS' EQUITY / (DEFICIT)
Common stock 9,578 33,982 81,000 (2) 114,982
(9,578) (3)
Additional paid in capital 2,521,387 4,464,141 (81,000) (2) 2,839,448
9,578 (3)
(4,074,658) (4)
Deficit accumulated during the development stage (2,670,039) (4,074,658) 4,074,658 (4) (2,670,039)
------------ ------------ ------------
Total shareholders' equity / (deficit) (139,074) 423,465 284,391
------------ ------------ ------------
Total liabilities and shareholders' equity $ 734,483 $ 562,678 $ 1,297,161
============ ============ ============
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TEXXON INC.
- Successor to Teleplus Inc.
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2006
Historical Historical Pro Forma Pro Forma
Teleplus Texxon Adjustments (1) Combined
------------- ------------- ------------- -------------
REVENUES $ 27,451 $ -- $ $ 27,451
------------- ------------- -------------
EXPENSES:
Direct costs 74,343 -- 74,343
Selling expenses 62,761 -- 62,761
General and administrative expenses 218,252 277,104 495,356
------------- ------------- -------------
Total expenses 355,356 277,104 632,460
------------- ------------- -------------
OTHER EXPENSES:
Interest expense 7,593 3,365 10,958
Depreciation and amortization 16,288 -- 16,288
Other income -- -- --
------------- ------------- -------------
Total other expenses 23,881 3,365 27,246
------------- ------------- -------------
LOSS BEFORE PROVISION FOR
STATE INCOME TAXES (351,786) (280,469) (632,255)
-------------
PROVISION FOR STATE INCOME TAXES 800 -- 800
------------- ------------- -------------
NET LOSS $ (352,586) $ (280,469) $ $ (633,055)
============= ============= =============
Weighted average shares outstanding 81,000,000 (5) 30,843,271 111,843,271
============= ============= =============
Loss per share, basic and diluted (0.004)(6) (0.01) (0.01)
============= ============= =============
17
TELEPLUS, INC.
(a development stage company)
Notes to Unaudited Pro Forma Financial Statements
-------------------------------------------------
(1) Because Teleplus' former owners have received the majority voting
rights in the combined entity and Teleplus' senior management has been
appointed to represent the majority of the senior management of the
combined entity following the Exchange, the Exchange is deemed to be a
reverse acquisition. In accordance with the Accounting and Financial
Reporting Interpretations and Guidance prepared by the staff of the
U.S. Securities and Exchange Commission, Texxon, Inc. ("Texxon", the
legal acquirer) is considered the accounting acquiree and Teleplus (the
Legal acquiree) is considered the accounting acquirer. The consolidated
financial statements of the combined entity will in substance be those
of Teleplus, with the assets and liabilities, and revenues and
expenses, of Texxon being included effective from the date of
consummation of the Exchange. Texxon is deemed to be a continuation of
the business of Teleplus. The outstanding stock of Texxon prior to the
Exchange will be accounted for at their net book value and no goodwill
will be recognized.
(2) Reflects the issuance of 81,000,000 shares of Common Stock by Texxon
(as legal acquirer) for the reverse acquisition of all issued and
outstanding shares of capital stock of Teleplus (as legal acquiree, but
accounting acquirer).
(3) Reflects the elimination of Common Stocks of Teleplus.
(4) Reflects the elimination of the pre-acquisition losses of Texxon (as
accounting acquiree).
(5) The weighted average number of shares used for computing the historical
loss per share is based on the number of shares issued in the reverse
acquisition of Teleplus by Texxon.
(6) The historical loss per share is computed based on the historical
income of Teleplus as Teleplus is considered the accounting acquirer
and thus the predecessor.
EXHIBIT INDEX
No. Description of Exhibit
- --- ----------------------
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXXON, INC.
Dated: August 29, 2006
By: /S/ CLAUDE BUCHERT
----------------------------------------
Claude Buchert, CEO and President
18