SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) : June 29th, 2005
Commission File No. 000-49628
TELEPLUS ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 90-0045023
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7575 Transcanadienne, Suite 305, St-Laurent, Quebec, Canada H4T 1V6
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(Address of principal executive offices)
514-344-0778
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(Issuer telephone number)
465 St. Jean, Suite 601, Montreal, Quebec, Canada H2Y 2R6
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(Former Name and Address)
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ITEM 2.01 ACQUISITION OR DISPOSITION OF ASSETS.
AVENUE RECONNECT, INC. ACQUISITION:
On May 31, 2005, Teleplus Connect Corp. ("TelePlus Connect"), a subsidiary
of TelePlus Enterprises, Inc. ("TelePlus") purchased 100% of the issued and
outstanding shares of Avenue Reconnect, Inc. ("Avenue"), an Ontario Company. At
the time of the transaction Avenue had total assets of $101,696 CDN (comprised
of $26,204 cash, $17,000 deposits, $14,790 income taxes recoverable, $23,702 of
fixed and other assets, and $20,000 goodwill) and total liabilities of $46,971
CDN (comprised entirely of accounts payable).
Immediately following closing Avenue was rolled into TelePlus Connect.
Avenue currently services 2,000 customers in Ontario, Canada with local and long
distance prepaid telephone services. TelePlus purchased Avenue from Ronald W.
Winney, Lance D. Peters and Damon W. Winney who owned 100% of the shares of
Avenue prior to the acquisition (referred to herein as the "Sellers"). Neither
TelePlus nor its affiliates, directors, or officers or associates of TelePlus'
Directors or officers had a relationship with the Sellers or Avenue prior to the
purchase.
The aggregate purchase price (the "Avenue Purchase Price") payable by
TelePlus to the Sellers for the Avenue Shares shall, subject to adjustment in
accordance with the Agreement shall be a maximum of $710,000 in lawful money of
Canada, which amount is payable as follows:
(a) $400,000 CDN paid in cash to the Sellers at the Time of Closing;
(b) the issuance of a promissory note in the amount of $310,000 (the
"Promissory Note") to be paid to the Sellers in eight (8) monthly
installments, the first two (2) of which shall be for $25,000 and
the following six (6) of which shall be for $20,000, commencing on
the first month following the Closing Date with the remaining
balance to be paid on the date which is nine (9) months following
the Closing Date. The Promissory Note shall be secured by an
assignment of that portion of the Contracts which value in aggregate
equals the remaining amount outstanding under the Promissory Note at
any given time, all in accordance with the security agreement (the
"Security Agreement").
DESCRIPTION OF THE BUSINESS AND PRINCIPAL PRODUCTS
o Avenue Reconnect, Inc. headquartered in Ontario, Canada, is a Bell
Canada reseller of landline and long distance services, which
services over 2,000 customers in the Ontario area. Avenue offers
prepaid landline, long distance and internet services to selected
individuals in Canada who cannot obtain basic telecom services from
traditional telecom carriers. These individuals are often called the
"unbanked". Current estimates place the "unbanked" market in North
America at 9.5% of total households and the market size is estimated
at over $1 billion.
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NO DEPENDENCE ON ONE OR A FEW CUSTOMERS
Avenue is currently not dependent on any one customer. However the
business of Avenue is dependent on 1 supplier, Bell Canada which currently
represents over 90% of Avenue's total costs.
PATENTS, TRADEMARKS & LICENSES
Avenue does not own any patents, trademarks, licenses or other intellectual
property rights.
NO NEED FOR GOVERNMENT APPROVAL
Avenue does not need any government approval to operate their business.
EMPLOYEES
Avenue employs a total of less than 10 employees most being full time.
DESCRIPTION OF PROPERTY
The acquisition of Avenue did not include the leased premises.
LEGAL PROCEEDINGS
As of the date of filing of this report, Avenue was neither a party to nor
aware of any legal proceedings involving it.
RELATED PARTY TRANSACTIONS
As part of the respective purchase transactions TelePlus Connect executed
a consulting agreements with some of the Sellers to assist in the transition.
RISKS:
Business Risk:
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o Churn Risk
The customers in this marketplace have a higher propensity to move
or cancel service than the general residential market.
o Product Replacement
In the future, there is the potential for wireless technology to be
a replacement for landline technology.
o Competition
Currently there are approximately 50 small competitors in the
Canadian marketplace. The barrier to entry in this market is
financial and operating system related and new competitors may
surface in the future.
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o Price Erosion
As competitors enter the market and attempt to secure marketshare,
there will be the threat of price reductions.
o Integration Challenges
Teleplus' plan is to integrate all the acquisitions onto a single
platform. Failure to accomplish this in an organized, coordinated
fashion could result in a loss of customers
o Technology
New technology could potentially replace landline as a technology
for the reconnect market. If this new technology (i.e., VOIP) is not
regulated then the carriers would have the ability to enter the
market.
Competition
There are currently approximately fifty competitors in the Canadian market,
ranging from 100 to 6,500 customers in size. All but a handful of these
competitors are regional. Avenue Phone Lines is one of the larger players in the
market and is one half the size of the largest provider in the Canadian market.
Avenue has recently expanded its serving areas to include western Canada and
will be entering the East coast market by the end of this summer. Teleplus
Connect's business plan to consolidate the players in this industry will
drastically change the landscape of the marketplace in Canada.
ITEM 8.01 OTHER EVENTS.
As a result of the purchase of Avenue, Marius Silvasan, TelePlus' Chief
Executive Officer, was appointed President and Chief Executive Officer of
Avenue.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements of Avenue.
(a) Financial Statements of Businesses Acquired - To be Provided on later Date
(b) Pro Forma Financial Information - To be Provided on later Date
(c) Exhibits:
10.1 Stock Purchase Agreement Avenue
10.2 Amendment to Stock Purchase Agreement Avenue
10.3 Promissory Note
10.4 Consulting Agreement
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Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Teleplus Enterprises, Inc.
June 29, 2005 /s/ Marius Silvasan
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Marius Silvasan
Chief Executive Officer
June 29, 2005 /s/ Robert Krebs
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Robert Krebs
Chief Financial Officer
June 29, 2005 /s/ Kelly McLaren
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Kelly McLaren
President & COO